-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PURt/Xk/6wE6iBGYd7gxGTFpUSFGTJttU+ncw7JtZj7jrp1qAnLanIe50OqRmhTu Hp7dli51okuYpAuDaeckUw== 0000950150-01-000022.txt : 20010123 0000950150-01-000022.hdr.sgml : 20010123 ACCESSION NUMBER: 0000950150-01-000022 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 20010111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NISSAN AUTO RECEIVABLES CORP /DE CENTRAL INDEX KEY: 0000878032 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 136978161 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-51224 FILM NUMBER: 1507388 BUSINESS ADDRESS: STREET 1: 990 W 190TH ST CITY: TORRANCE STATE: CA ZIP: 90502 BUSINESS PHONE: 3107198013 MAIL ADDRESS: STREET 1: 990 WEST 190TH STREET CITY: TORRANCE STATE: CA ZIP: 90502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NISSAN AUTO RECEIVABLES CORP II CENTRAL INDEX KEY: 0001129068 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 954831541 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-51224-01 FILM NUMBER: 1507389 BUSINESS ADDRESS: STREET 1: 990 WEST 190TH STREET STREET 2: SUITE 825 CITY: TORRANCE STATE: CA ZIP: 90502 BUSINESS PHONE: 3107198583 MAIL ADDRESS: STREET 1: 7900 RIDGEPOINTE DR CITY: IRVINE STATE: TX ZIP: 75063 S-3/A 1 a67668a1s-3a.txt FORM S-3, AMENDMENT NO. 1 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 11, 2001 REGISTRATION NO. 333-51224 REGISTRATION NO. 333-51224-01 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ NISSAN AUTO RECEIVABLES CORPORATION and NISSAN AUTO RECEIVABLES CORPORATION II (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 6189 33-0479655 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL 95-4831541 INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NO.)
NISSAN AUTO RECEIVABLES CORPORATION NISSAN AUTO RECEIVABLES CORPORATION II 990 W. 190TH STREET 990 W. 190th Street TORRANCE, CALIFORNIA 90502 Torrance, California 90502 (310) 719-8013 (310) 719-8583 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------------ ANN M. NISHIMURA, ESQ. NISSAN AUTO RECEIVABLES CORPORATION NISSAN AUTO RECEIVABLES CORPORATION II 990 W. 190TH STREET TORRANCE, CALIFORNIA 90502 (310) 719-8289 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE WITH RESPECT TO THE REGISTRANT) ------------------------ COPIES TO: WARREN R. LOUI, ESQ. O'MELVENY & MYERS LLP 400 SOUTH HOPE STREET LOS ANGELES, CALIFORNIA 90071 (213) 430-6000 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If the only securities being registered on this form are being offered pursuant to a dividend or interest reinvestment plan, please check the following box. [ ] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] __________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. [ ] __________ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ------------------------ CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- PROPOSED MAXIMUM AMOUNT OF PROPOSED TITLE OF AMOUNT TO BE PROPOSED OFFERING MAXIMUM AGGREGATE REGISTRATION SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) FEE - ----------------------------------------------------------------------------------------------------------------------------- Asset Backed Securities............ $8,500,000,000 100% $8,500,000,000 $2,125,014(2) - -------------------------------------------------------------------------------------- -------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee on the basis of the proposed maximum offering price per unit. (2) Of which $264.00 previously has been paid. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 INTRODUCTORY NOTE This Registration Statement contains (i) a form of Prospectus relating to the offering of one or more series of Asset Backed Notes and/or Asset Backed Certificates by various trusts created from time to time by Nissan Auto Receivables Corporation and/or Nissan Auto Receivables Corporation II and (ii) three forms of Prospectus Supplements relating to the offering by each separate trust of a particular series of Asset Backed Certificates or of Asset Backed Notes and Asset Backed Certificates as described therein. Each form of Prospectus Supplement relates only to the securities described therein and is a form which may be used, among others, by Nissan Auto Receivables Corporation and/or Nissan Auto Receivables Corporation II to offer Asset Backed Notes and/or Asset Backed Certificates under this Registration Statement. 3 PROSPECTUS NISSAN AUTO RECEIVABLES TRUSTS ASSET BACKED NOTES ASSET BACKED CERTIFICATES NISSAN AUTO RECEIVABLES CORPORATION OR NISSAN AUTO RECEIVABLES CORPORATION II, SELLER NISSAN MOTOR ACCEPTANCE CORPORATION, SERVICER THE TRUSTS: 1. A new trust will be formed to issue each series of securities. 2. Each trust will consist of: - a pool of retail installment sales contracts secured by new, near-new and used automobiles and light-duty trucks; and - other assets specified in the applicable prospectus supplement. THE SECURITIES: 1. will be asset-backed securities sold periodically in one or more series; 2. will be paid only from the assets of the related trust; 3. will be issued as part of a designated series that may include one or more classes; and 4. will consist of: - notes (which will be treated as indebtedness of the related trust); and/or - certificates (which will represent an undivided ownership interest in the related trust). YOU SHOULD REVIEW CAREFULLY THE FACTORS SET FORTH UNDER "RISK FACTORS" BEGINNING ON PAGE 8 OF THIS PROSPECTUS. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE SECURITIES OR DETERMINED THAT THIS PROSPECTUS OR THE APPLICABLE PROSPECTUS SUPPLEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The amounts, prices and terms of each offering of securities will be determined at the time of sale and will be described in a prospectus supplement that will be attached to this prospectus. This prospectus may be used to offer and sell any series of securities only if accompanied by the prospectus supplement for that series. The date of this prospectus is January 11, 2001. 4 IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT We provide information to you about the securities in two separate documents that progressively provide varying levels of detail: this prospectus, which provides general information, some of which may not apply to a particular series of securities including your series, and the accompanying prospectus supplement, which will describe the specific terms of the offered securities. We have started with several introductory sections describing the trust and the securities in abbreviated form, followed by a more complete description of the terms. The introductory sections are: - Summary of Terms -- gives a brief introduction to the securities to be offered; and - Risk Factors -- describes briefly some of the risks to investors of a purchase of the securities. You can find a listing of the pages where capitalized terms used in this prospectus are defined under the caption "Index of Terms" beginning on page 81 in this prospectus. Whenever we use words like "intends," anticipates" or "expects" or similar words in this prospectus, we are making a forward-looking statement, or a projection of what we think will happen in the future. Forward-looking statements are inherently subject to a variety of circumstances, many of which are beyond our control and could cause actual results to differ materially from what we anticipate. Any forward-looking statements in this prospectus speak only as of the date of this prospectus. We do not assume any responsibility to update or review any forward-looking statement contained in this prospectus to reflect any change in our expectation about the subject of that forward-looking statement or to reflect any change in events, conditions or circumstances on which we have based any forward-looking statement. The securities are not a suitable investment for any investor that requires a regular or predictable schedule of payments or payment on specific dates. The securities are complex investments. We suggest that only investors who, either alone or with their financial, tax and legal advisors, have the expertise to analyze the prepayment, reinvestment and default risks, the tax consequences of the investment and the interaction of these factors should consider purchasing the securities. 2 5 SUMMARY OF TERMS The following summary highlights selected information from this prospectus and provides a general overview of relevant terms of the securities. You should read carefully this entire document and the accompanying prospectus supplement to understand all of the terms of the offering. ISSUER The trust to be formed for each series of securities. If the trust issues notes and certificates, it will be formed by a trust agreement between the seller and the trustee of the trust. If the trust issues only certificates, it will be formed by a pooling and servicing agreement among the seller, the servicer and the trustee of the trust. SELLER Nissan Auto Receivables Corporation or Nissan Auto Receivables Corporation II. SERVICER Nissan Motor Acceptance Corporation. SECURITIES OFFERED Notes -- A series of securities may include one or more classes of notes. Notes of a series will be issued pursuant to an indenture. Certificates -- Each series of securities will include one or more classes of certificates, whether or not a class of notes is issued as part of the series. The applicable prospectus supplement will describe the following: 1. if any notes are issued, the priority of payments (a) between the notes and certificates and (b) among different classes of notes; and 2. the priority of payments among different classes of certificates. Terms -- The terms of each class of notes and certificates in a series described in the applicable prospectus supplement will include the following: 1. the stated principal amount of each class of notes and the stated certificate balance of each class of certificates; and 2. the interest rate (which may be fixed, variable, adjustable or some combination of these rates) or method of determining the interest rate. A class of notes may differ from other classes of notes and a class of certificates may differ from other classes of certificates in one or more aspects, including: 1. timing and priority of payments; 2. seniority; 3. allocations of losses; 4. interest rate or formula; 5. amount of interest or principal payments; 6. whether interest or principal will be payable to holders of the class if specified events occur; and 7. the right to receive collections from designated portions of the receivables owned by the trust. 3 6 THE RECEIVABLES Purchasers of Nissan and Infiniti cars and light-duty trucks often finance their purchases by entering into retail installment sales contracts with Nissan and Infiniti dealers who then resell the contracts to Nissan Motor Acceptance Corporation, including its Infiniti Financial Services division. These contracts are referred to as "receivables," and the underlying vehicles are referred to as the "financed vehicles." The purchasers of the financed vehicles are referred to as the "obligors." The terms of the contracts must meet requirements specified by Nissan Motor Acceptance Corporation. On or before the date the securities of a series are issued, Nissan Motor Acceptance Corporation will sell a specified amount of receivables to the seller. The seller will then sell those receivables to the trust. The sale by the seller to the trust will be documented under: 1. a pooling and servicing agreement among the seller, the servicer and the trustee (if the trust is nominally referred to as a "grantor trust"); or 2. a sale and servicing agreement among the seller, the servicer and the trust (if the trust is nominally referred to as an "owner trust"). The receivables to be sold by Nissan Motor Acceptance Corporation to the seller and resold to the trust will be selected based on criteria specified in the pooling and servicing agreement or the sale and servicing agreement, whichever is applicable. These criteria will be described in the applicable prospectus supplement. THE TRUST PROPERTY The property of each trust: 1. will be described in the prospectus supplement; 2. will primarily be a pool of receivables secured by new, near-new and used financed vehicles and amounts due or collected under the receivables on or after a specified cut-off date; and 3. will include related assets such as: - security interests in the financed vehicles; - proceeds from claims on related insurance policies; - the rights of the seller in rebates of premiums and other amounts relating to insurance policies and other items financed under the receivables; - the rights of the seller in the agreements identified in the prospectus supplement; and - amounts deposited in specified bank accounts. CREDIT AND CASH FLOW ENHANCEMENT The trusts may include features designed to provide protection to one or more classes of securities. These features are referred to as "credit enhancement." Credit enhancement may include any one or more of the following: 1. subordination of one or more other classes of securities; 2. one or more reserve accounts; 4 7 3. over-collateralization; 4. letters of credit or other credit facilities; 5. surety bonds; 6. guaranteed investment contracts; 7. repurchase obligations; 8. cash deposits; or 9. other agreements or arrangements providing for other third party payments or other support. In addition, the trusts may include features designed to ensure the timely payment of amounts owed to securityholders. These features may include any one or more of the following: 1. yield supplement agreements; 2. swap transactions; 3. liquidity facilities; 4. cash deposits; or 5. other agreements or arrangements providing for other third party payments or other support. The specific terms of any enhancement applicable to a trust or to the securities issued by a trust will be described in detail in the applicable prospectus supplement. SERVICING FEE Nissan Motor Acceptance Corporation will service the receivables. In that capacity, the servicer will handle all collections, administer defaults and delinquencies and otherwise service the receivables. The trust will pay the servicer a monthly fee equal to a percentage of the total principal balance of the receivables at the beginning of the preceding month specified in the applicable prospectus supplement. The servicer will also receive additional servicing compensation in the form of investment earnings, late fees, prepayment fees and other administrative fees and expenses or similar charges received by the servicer during that month (unless otherwise described in the applicable prospectus supplement). ADVANCES The servicer will be obligated to advance to the trust interest on the receivables that is due but unpaid by the obligor. The servicer will not be required to make any advance (other than the advance of an interest shortfall arising from a prepaid receivable) if it determines that it will not be able to recover an advance from an obligor. The trust will reimburse the servicer for those advances from subsequent collections on the related receivables. In addition, if a receivable is a "defaulted receivable" or the servicer determines that any recovery from payments made on or with respect to such receivable is unlikely, the servicer will be reimbursed for all outstanding advances from general collections on the receivables. You should refer to "Description of the Transfer and Servicing Agreements -- Advances" in this prospectus for more detailed information on advances and reimbursement of advances. 5 8 TRUSTEE The trustee for each series of securities will be named in the prospectus supplement for that series. INDENTURE TRUSTEE If the trust issues notes, the trustee for the indenture pursuant to which the notes will be issued will be named in the prospectus supplement for that series. OPTIONAL PURCHASE The servicer may redeem any outstanding securities when the outstanding aggregate principal balance of the receivables declines to 10% or less of the original total principal balance of the receivables as of the cut-off date. You should refer to "Description of The Transfer and Servicing Agreements -- Termination" in this prospectus for more detailed information on the optional purchase of securities. TAX STATUS Grantor Trusts -- If a trust is nominally referred to as a "grantor trust" in the applicable prospectus supplement, special tax counsel to the trust will be required to deliver an opinion that: 1. the trust will be treated as a grantor trust for federal income and California franchise and income tax purposes; and 2. the trust will not be subject to federal income tax. Owner Trusts -- If the trust is nominally referred to as an "owner trust" in the applicable prospectus supplement, special tax counsel to the trust will be required to deliver an opinion for federal income tax purposes and California income and franchise tax purposes: 1. as to the characterization as debt of the notes issued by the trust; and 2. that the trust will not be characterized as an association (or a publicly traded partnership) taxable as a corporation. If a trust is nominally referred to as an "owner trust" in the applicable prospectus supplement: 1. by purchasing a note, you will be agreeing to treat the note as indebtedness for tax purposes; and 2. by purchasing a certificate, you will be agreeing to treat the trust (i) as a partnership in which you are a partner or (ii) if you are the sole beneficial owner of the certificates, as a "disregarded entity," for federal income tax purposes and California income and franchise tax purposes. Applicable taxing authorities could impose alternative tax characterizations of the trust and the certificates. However, these characterizations generally will not result in material adverse tax consequences to securityholders. You should refer to "Material Income Tax Consequences" in this prospectus and the applicable prospectus supplement for more detailed information on the application of federal and California tax laws. 6 9 ERISA CONSIDERATIONS Notes -- Notes will generally be eligible for purchase by employee benefit plans. Unsubordinated Grantor Trust Certificates -- Certificates of a class issued by a grantor trust that are not subordinated to any other class will generally be eligible for purchase by employee benefit plans. Other Certificates -- Subordinated classes of certificates issued by a grantor trust and certificates issued by owner trusts generally will not be eligible for purchase by an employee benefit plan or individual retirement account. You should refer to "ERISA Considerations" in this prospectus and the applicable prospectus supplement for more detailed information regarding the ERISA eligibility of any class of securities. 7 10 RISK FACTORS You should consider the following risk factors and the risks described in the section captioned "Risk Factors" in the applicable prospectus supplement in deciding whether to purchase securities of any class. YOU MUST RELY FOR REPAYMENT The securities represent interests solely in the ONLY UPON PAYMENTS FROM THE trust or indebtedness of the trust and will not TRUST'S ASSETS WHICH MAY NOT be insured or guaranteed by Nissan Motor BE SUFFICIENT TO MAKE FULL Acceptance Corporation (the servicer), the PAYMENTS ON YOUR SECURITIES. seller, or any of their respective affiliates, or the related trustee or any other person or entity other than the trust. The only source of payment on your securities are payments received on the receivables and, if and to the extent available, any credit enhancement for the trust, including amounts on deposit in the reserve account or subordination spread account established for that trust. However, although funds in the reserve account or subordination spread account will be available to cover shortfalls in distributions of interest on and principal of your securities, funds to be deposited in this account are limited. If the funds in this account are exhausted, your securities will be paid solely from current distributions on the receivables. See "Subordination; Reserve Account" or "Subordination; Subordination Spread Account" in the applicable prospectus supplement. In limited circumstances, the trust will also have access to the funds in the yield supplement account. See "Description of the Transfer and Servicing Agreements -- Yield Supplement Account; Yield Supplement Agreement" in this prospectus. The indenture authorizes the indenture trustee to sell the receivables following an acceleration of the maturity dates of the notes if the sale meets requirements set forth in the indenture. However, the amount received by the indenture trustee upon selling the receivables may be less than the aggregate principal amount of the outstanding notes and certificates. In that circumstance, the principal amount of the notes and the balance of the certificates will not be paid in full. YOU MAY EXPERIENCE REDUCED You may receive payment of principal on your RETURNS ON YOUR INVESTMENT securities earlier than you expected for the RESULTING FROM PREPAYMENTS, reasons set forth below. You may not be able to REPURCHASES OR EARLY reinvest the principal paid to you earlier than TERMINATION OF THE TRUST. you expected at a rate of return that is equal to or greater than the rate of return on your securities. Prepayments on the receivables by the related obligors and purchases of the receivables by the seller and the servicer will shorten the life of the securities to an extent that cannot be fully predicted. The seller will be required to repurchase receivables from the trust if there is a breach of the representations and warranties relating to those receivables that materially adversely affects those receivables. Nissan Motor Acceptance Corporation, as servicer, will also be required to purchase receivables from the trust if it breaches its servicing obligations with respect to those receivables. The servicer also will be entitled to purchase all remaining receivables from the trust once the aggregate principal balance of the receivables is 10% or less of the initial aggregate principal balance of the receivables on the related cut-off date. 8 11 Further, the receivables included in the trust may be prepaid, in full or in part, voluntarily or as a result of defaults, theft of or damage to the related vehicles or for other reasons. The rate of prepayments on the receivables may be influenced by a variety of economic, social and other factors in addition to those described above. The servicer has limited historical experience with respect to prepayments on receivables. In addition, the servicer is not aware of publicly available industry statistics that detail the prepayment experience for contracts similar to the receivables. For these reasons, the servicer cannot predict the actual prepayment rates for the receivables. You will bear all reinvestment risk resulting from prepayments on the receivables and the corresponding acceleration of payments on the securities. The final payment of each class of securities is expected to occur prior to its scheduled final payment date because of the prepayment and purchase considerations described above. If sufficient funds are not available to pay any class of notes in full on its scheduled final payment date, an event of default will occur and final payment of that class of notes may occur later than that date. INTERESTS OF OTHER PERSONS IN Another person could acquire an interest in a THE RECEIVABLES AND FINANCED receivable that is superior to the trust's VEHICLES COULD BE SUPERIOR TO interest in that receivable because the THE TRUST'S INTEREST, WHICH receivables will not be segregated or marked as MAY RESULT IN REDUCED belonging to the trust. The seller will cause PAYMENTS ON YOUR SECURITIES. financing statements to be filed with the appropriate governmental authorities to perfect the trust's interest in the receivables. However, the servicer will continue to hold the receivables. If another party purchases (or takes a security interest in) one or more receivables for new value in the ordinary course of business and obtains possession of those receivables without actual knowledge of the trust's interest because of the failure to segregate or mark those receivables, the new purchaser (or secured party) will acquire an interest in those receivables superior to the interest of the trust. Another person could acquire an interest in a vehicle financed by a receivable that is superior to the trust's interest in the vehicle because of the failure to identify the trust as the secured party on the related certificate of title. While Nissan Motor Acceptance Corporation, as originator, will assign its security interest in the financed vehicles to the seller, and the seller will assign to the trust its security interests in the financed vehicles, the servicer will continue to hold the certificates of title or ownership for the vehicles. However, for administrative reasons, the servicer will not endorse or otherwise amend the certificates of title or ownership to identify the trust as the new secured party. Because the trust will not be identified as the secured party on any certificates of title or ownership, the security interest of the trust in the vehicles may be defeated through fraud, forgery, negligence or error and as a result the trust may not have a perfected security interest in the financed vehicles in every state. The possibility that the trust may not have a perfected security interest in the financed vehicles may affect the trust's ability to repossess and sell the financed vehicles or may limit the amount 9 12 realized to less than the amount due by the related obligors. Therefore, you may be subject to delays in payment and may incur losses on your investment in the securities as a result of defaults or delinquencies by obligors and because of depreciation in the value of the related financed vehicles. See "Material Legal Aspects of the Receivables -- Security Interests" in this prospectus. RECEIVABLES THAT FAIL TO Many federal and state consumer protection laws COMPLY WITH CONSUMER regulate consumer contracts such as the PROTECTION OR OTHER LAWS MAY receivables. If any of the receivables do not BE UNENFORCEABLE, WHICH MAY comply with one or more of these laws, the RESULT IN LOSSES ON YOUR servicer may be prevented from or delayed in INVESTMENT. collecting amounts due on the receivables. Further, from time to time, as a result of the nature of the industry in which Nissan Motor Acceptance Corporation operates, it is named as a party to litigation, including class action lawsuits involving alleged violations of federal and state laws and regulations. Each of the seller and Nissan Motor Acceptance Corporation will make representations and warranties relating to the receivables' compliance with law and the enforceability of the contracts. If there is a breach of any of these representations or warranties that materially and adversely affects the interests of the noteholders in the related receivable, the trust's sole remedy will be to require the seller and Nissan Motor Acceptance Corporation to repurchase the affected receivable. Nissan Motor Acceptance Corporation believes each such proceeding constitutes ordinary litigation incidental to the business and activities of major lending institutions, including Nissan Motor Acceptance Corporation. The amount of liability on pending claims and actions as of the date of this prospectus is not determinable; however, in the opinion of management of Nissan Motor Acceptance Corporation, the ultimate liability resulting from such litigation should not have a material adverse effect on Nissan Motor Acceptance Corporation's consolidated financial position or results of operations. See "Material Legal Aspects of the Receivables -- Consumer Protection Laws" in this prospectus. BANKRUPTCY OF NISSAN MOTOR If Nissan Motor Acceptance Corporation or the ACCEPTANCE CORPORATION OR THE seller becomes subject to bankruptcy proceedings, SELLER COULD RESULT IN LOSSES you could experience losses or delays in the OR DELAYS IN PAYMENTS ON YOUR payments on your securities. Nissan Motor SECURITIES. Acceptance Corporation will sell the receivables to the seller, and the seller will in turn transfer the receivables to the trust. However, if Nissan Motor Acceptance Corporation or the seller becomes subject to a bankruptcy proceeding, the court in the bankruptcy proceeding could conclude that Nissan Motor Acceptance Corporation or the seller still owns the receivables by concluding that the sale to the seller or the trust was not a "true sale" or, in the case of a bankruptcy of Nissan Motor Acceptance Corporation, that the 10 13 seller should be consolidated with Nissan Motor Acceptance Corporation for bankruptcy purposes. If a court were to reach this conclusion, you could experience losses or delays in payments on the securities as a result of, among other things: 1. the "automatic stay," which prevents secured creditors from exercising remedies against a debtor in bankruptcy without permission from the court and provisions of the U.S. Bankruptcy Code that permit substitution for collateral in limited circumstances; 2. tax or government liens on Nissan Motor Acceptance Corporation's or the seller's property (that arose prior to the transfer of a receivable to the trust) having a prior claim on collections before the collections are used to make payments on your securities; and 3. the trust not having a perfected security interest in (a) one or more of the financed vehicles securing the receivables or (b) any cash collections held by Nissan Motor Acceptance Corporation at the time Nissan Motor Acceptance Corporation becomes the subject of a bankruptcy proceeding. The seller will take steps in structuring each transaction described in this prospectus and the applicable prospectus supplement to minimize the risk that a court would consolidate the seller with Nissan Motor Acceptance Corporation for bankruptcy purposes or conclude that the sale of receivables to the seller or the trust was not a "true sale." See "Material Legal Aspects of the Receivables -- Material Bankruptcy Considerations" in this prospectus. PROCEEDS OF THE SALE OF If so directed by the holders of the requisite RECEIVABLES MAY NOT BE percentage of outstanding notes of a series, SUFFICIENT TO PAY YOUR following an acceleration of the notes upon an SECURITIES IN FULL; FAILURE event of default, the indenture trustee will sell TO PAY PRINCIPAL ON YOUR the receivables owned by the trust only in NOTES WILL NOT CONSTITUTE limited circumstances. However, there is no AN EVENT OF DEFAULT UNTIL assurance that the market value of those MATURITY. receivables will at any time be equal to or greater than the aggregate principal amount of the notes or the sum of the aggregate principal amount of the notes and the aggregate principal balance of the certificates. Therefore, upon an event of default, there can be no assurance that sufficient funds will be available to repay you in full. In addition, the amount of principal required to be paid to the noteholders will generally be limited to amounts available in the collection account (and the reserve account or subordination spread account, if any). Therefore, the failure to pay principal of your notes generally will not result in the occurrence of an event of default until the final scheduled distribution date for your notes. See "The Notes -- The Indenture -- Events of Default; Rights Upon Event of Default" in this prospectus. IF THE TRUST ENTERS INTO A If the trust enters into a currency swap, CURRENCY OR AN INTEREST RATE interest rate swap or a combined currency and SWAP, PAYMENTS ON THE interest rate swap, its ability to protect itself SECURITIES WILL BE DEPENDANT from shortfalls in cash flow caused by currency ON PAYMENTS MADE UNDER THE or interest rate changes will depend to a large SWAP AGREEMENT. extent on the terms of the swap agreement and whether the swap counterparty performs its obligations under the swap. If the trust does not receive the payments it 11 14 expects from the swap counterparty, the trust may not have adequate funds to make all payments to securityholders when due, if ever. If the trust issues securities with adjustable interest rates, interest will be due on the securities at adjustable rates, while interest will be earned on the receivables at fixed rates. In this circumstance, the trust may enter into an interest rate swap to reduce its exposure to changes in interest rates. An interest rate swap requires one party to make payments to the other party in an amount calculated by applying an interest rate (for example, a floating rate) to a specified notional amount in exchange for the other party making a payment calculated by applying a different interest rate (for example, a fixed rate) to the same notional amount. For example, if the trust issues $100 million of securities bearing interest at a floating rate based on the London Interbank Offered Rate ("LIBOR"), it might enter into a swap agreement under which the trust would pay interest to the swap counterparty in an amount equal to an agreed upon fixed rate on $100 million in exchange for receiving interest on $100 million at the floating rate based on the London Interbank Offered Rate. The $100 million would be the "notional" amount because it is used simply to make the calculation. In an interest rate swap, no principal payments are exchanged. If the trust issues securities denominated in a currency other than U.S. dollars, the trust will need to make payments on the securities in a currency other than U.S. dollars, as described in the related prospectus supplement. Payments collected on the receivables, however, will be made in U.S. dollars. In this circumstance, the trust may enter into a currency swap to reduce its exposure to changes in currency exchange rates. A currency swap requires one party to provide a specified amount of a currency to the other party at specified times in exchange for the other party providing a different currency at a predetermined exchange ratio. For example, if the trust issues securities denominated in Swiss Francs, it might enter into a swap agreement with a swap counterparty under which the trust would use the collections on the receivables to pay U.S. dollars to the swap counterparty in exchange for receiving Swiss Francs at a predetermined exchange rate to make the payments owed on the securities. The terms of any swap will be described in more detail in the applicable prospectus supplement. TERMINATION OF A SWAP A swap agreement may be terminated if certain AGREEMENT MAY CAUSE events occur. Most of these events are generally TERMINATION OF THE TRUST. beyond the control of the trust or the swap counterparty. If the swap agreement is terminated, unless a replacement swap can be arranged, the trustee generally will sell the assets of the trust and the trust will terminate. In this type of situation, it is impossible to predict how long it would take to sell the assets of the trust or what amount of proceeds would be 12 15 received. Some of the possible adverse consequences of such a sale are: - The proceeds from the sale of assets under such circumstances may not be sufficient to pay all amounts owed to you. - Amounts available to pay you will be further reduced if the trust is required to make a termination payment to the swap counterparty. - The termination of the swap agreement may expose the trust to currency or interest rate risk, further reducing amounts available to pay you. - The sale may result in payments to you significantly earlier than expected, reducing the weighted average life of the securities and the yield to maturity. - Conversely, a significant delay in arranging a sale could result in a delay in principal payments. This would, in turn, increase the weighted average life of the securities and could reduce the yield to maturity. See "The Swap Agreement -- Early Termination of Swap Agreement" for more information concerning the termination of a swap agreement and the sale of trust assets. Additional information about this subject, including a description of the circumstances that may cause a termination of the swap agreement and the trust and how the proceeds of a sale would be distributed, will be included in the related prospectus supplement. THE RATING OF A SWAP If a trust enters into a swap, the rating COUNTERPARTY MAY AFFECT THE agencies that rate the trust's securities will RATINGS OF THE SECURITIES. consider the provisions of the swap agreement and the rating of the swap counterparty in rating the securities. If a rating agency downgrades the debt rating of the swap counterparty, it is also likely to downgrade the rating of the securities. Any downgrade in the rating of the securities could have severe adverse consequences on their liquidity or market value. To provide some protection against the adverse consequences of a downgrade, the swap counterparty may be permitted, but generally not required, to take the following actions if the rating agencies reduce its debt ratings below certain levels: - assign the swap agreement to another party; - obtain a replacement swap agreement on substantially the same terms as the swap agreement; or - establish any other arrangement satisfactory to the rating agencies. Any swap involves a high degree of risk. A trust will be exposed to this risk should it use either of these mechanisms. For this reason, only investors capable of understanding these risks should invest in the securities. You are strongly urged to consult with your financial advisors before deciding to invest in the securities if a swap is involved. 13 16 FORMATION OF THE TRUSTS Nissan Auto Receivables Corporation or Nissan Auto Receivables Corporation II, as the case may be (the "Seller"), will establish each trust (each, a "Trust") pursuant to a Trust Agreement (as amended and supplemented from time to time, the "Trust Agreement") or a Pooling and Servicing Agreement (as amended from time to time, the "Pooling and Servicing Agreement"), as applicable. The terms of each series of notes (the "Notes") or certificates (the "Certificates" and, together with the Notes, the "Securities") issued by each Trust (the "Issuer"), and additional information concerning the assets of each issuer and any applicable credit enhancement will be set forth in a supplement to this Prospectus (a "Prospectus Supplement"). PROPERTY OF THE TRUSTS The property of each Trust will consist of a pool (each, a "Receivables Pool") of retail installment sale contracts originated on or after the date specified in the applicable Prospectus Supplement, between Nissan and Infiniti dealers (the "Dealers") and retail purchasers (the "Obligors"). These contracts are referred to as the "Receivables" and evidence the indirect financing made available by Nissan Motor Acceptance Corporation ("NMAC") to the Obligors. The Receivables are secured by new, near-new and used Nissan and Infiniti automobiles and light-duty trucks (the "Financed Vehicles") and all principal and interest payments made on or after the applicable cut-off date (each, a "Cut-off Date") and other property, all as specified in the applicable Prospectus Supplement. "Near-new" automobiles and light-duty trucks are pre-owned Nissan and Infiniti vehicles that are not greater than three model-years old as of the contract origination year. "New" vehicles may include "demonstration" vehicles, which are not titled in some states and may be classified as new vehicles in those states. The Receivables were originated by Dealers in accordance with NMAC's requirements under agreements with Dealers governing the assignment of the Receivables to NMAC, including its Infiniti Financial Services division (the "Dealer Agreements"). NMAC will purchase the Receivables of each Receivables Pool in the ordinary course of business pursuant to the Dealer Agreements. On or before the date of the initial issuance of any series of Securities (each, a "Closing Date"), NMAC will sell the Receivables comprising the related Receivables Pool to the Seller, and the Seller will sell those Receivables to the Trust pursuant to, if the trust is to be treated other than as a grantor trust for federal income tax purposes, the related Sale and Servicing Agreement among the Seller, the Servicer and the Trust (as amended and supplemented from time to time, the "Sale and Servicing Agreement") or, if the Trust is to be treated as a grantor trust for federal income tax purposes, the related Pooling and Servicing Agreement. NMAC will continue to service the Receivables. In addition to the Receivables, the property of each Trust will also include the following: 1. amounts that may be held in separate trust accounts established and maintained by the Servicer with the Trustee pursuant to the related Sale and Servicing Agreement or Pooling and Servicing Agreement; 2. security interests in the Financed Vehicles and any related property; 3. the rights to proceeds from claims on physical damage, credit life and disability insurance policies covering the Financed Vehicles or the Obligors; 4. NMAC's right to receive payments from Dealers pursuant to repurchase by the Dealers of Receivables which do not meet specified representations made by the Dealers ("Dealer Recourse"); 5. the Seller's right under, as applicable, the Sale and Servicing Agreement, the Pooling and Servicing Agreement, the Purchase Agreement and the Yield Supplement Agreement, if any; 14 17 6. the Seller's right to realize upon any property (including the right to receive future net liquidation proceeds) that secured a Receivable; 7. the Seller's right in rebates of premiums and other amounts relating to insurance policies and other items financed under the Receivables in effect as of the related Cut-off Date; and 8. all proceeds of the foregoing. Various forms of credit enhancement may be used to benefit holders of the related Securities, including a Reserve Account. In limited circumstances, a Trust will also have access to the funds in the Yield Supplement Account. The property of each Trust will not include amounts on deposit from time to time in any Reserve Account. The applicable Prospectus Supplement will specify whether the property of the Trust will include amounts on deposit from time to time in any Yield Supplement Account. THE RECEIVABLES NMAC purchased the Receivables from the Dealers in the ordinary course of business in accordance with NMAC's underwriting standards. The Receivables to be held by each Trust will be randomly selected from those automobile and/or light-duty truck retail installment sales contracts in NMAC's portfolio that meet several criteria. The Seller will not use selection procedures adverse to Securityholders when selecting the Receivables from qualifying retail installment sale contracts. These criteria provide that each Receivable: 1. was originated in the United States; 2. provides for level monthly payments which provide interest at the annual percentage rate ("APR") and fully amortize the amount financed over an original term to maturity no greater than the specified number of months set forth in the applicable Prospectus Supplement; 3. is attributable to the purchase of a new, near-new or used automobile or light-duty truck and is secured by that vehicle; and 4. satisfies the other criteria, if any, set forth in the applicable Prospectus Supplement. All of the Receivables are simple interest contracts. In general, under a simple interest contract, as payments are received they are applied first to pay accrued interest, second, to pay principal until the principal balance is brought current, and third, to reduce any unpaid late charges or associated fees as provided in the Receivable. Any remaining amounts are then applied to reduce the remaining principal balance of the Receivable. Because interest accrues daily throughout each payment period, if an Obligor pays the fixed monthly installment in advance of the due date, the portion of the payment allocable to interest for that payment period will be less than it would be if the payment were made on the due date. Similarly, the portion of that monthly payment allocable to principal will be correspondingly greater. Conversely, if the Obligor pays the fixed monthly installment after its due date, the portion of the payment allocable to interest for that payment period will be greater than it would be if the payment were made on the due date, and the portion of the payment allocable to principal will be correspondingly smaller. Accordingly, the timing and amount of prior payments will determine the amount of the scheduled final monthly payment. UNDERWRITING OF MOTOR VEHICLE LOANS NMAC purchases automobile and light-duty truck retail installment sales contracts from approximately 1,240 Dealers located throughout the United States, including the District of Columbia, and in Guam. These contracts are underwritten using NMAC's standard underwriting procedures. The Receivables are originated by Dealers in accordance with NMAC's requirements under existing Dealer Agreements and will be purchased in accordance with NMAC's underwriting procedures which emphasize, among other factors, the applicant's willingness and ability to pay and the value of the vehicle to be financed. 15 18 The Seller requires that applications received from Dealers be signed by the applicant and contain, among other information, the applicant's name, address, social security number, residential status, source and amount of monthly income and amount of monthly rent or mortgage payment. Upon receipt of the above information, NMAC obtains a credit report from an independent credit bureau reporting agency. NMAC's credit decision is influenced by, among other things, the applicant's credit score as obtained from a statistically derived empirical credit scoring process. The credit scoring process considers credit bureau, application and contract information. The credit scoring process also takes into account debt ratios, such as car payment to income and total debt payments to total income, residential status, monthly mortgage or rent payment, bank accounts and other personal information. NMAC makes its final credit decision based upon the degree of credit risk perceived and the amount of credit requested. NMAC uses risk-based pricing which includes a tiered system of interest rates and loan-to-value ratios representing the varying degrees of risk assigned to different ranges of credit risk. If NMAC considers an Obligor to be relatively less credit worthy (and, as a result, a greater risk), NMAC will assign the Obligor a higher interest rate and a lower permissible loan-to-value ratio. NMAC's retail contract requires that Obligors maintain specific levels and types of insurance coverage to protect the Financed Vehicle against loss. NMAC requires Obligors to provide evidence of insurance at the time of purchase, but performs no subsequent verification of continued coverage. NMAC will not be obligated to make payments to a Trust for any loss when third party insurance has not been maintained. SERVICING OF THE RECEIVABLES NMAC considers a receivable to be past due when the Obligor fails to make a payment by the due date and delinquent when a payment is 15 days past due. If a payment is delinquent, NMAC will soon thereafter mail notices and initiate telephone contacts requesting payment. If the delinquent receivable cannot be brought current or completely collected within 60 to 90 days, NMAC generally attempts to repossess the vehicle. NMAC holds repossessed vehicles in inventory to comply with any applicable statutory requirements for reinstatement and then sells those vehicles. Any deficiencies remaining after repossession and sale of the vehicle or after the full charge-off of the receivable are pursued by or on behalf of NMAC to the extent practicable and legally permitted. See "Material Legal Aspects of the Receivables -- Deficiency Judgments and Excess Proceeds." NMAC attempts to contact Obligors and establish and monitor repayment schedules until the deficiencies are either paid in full or become impractical to pursue. USE OF PROCEEDS Each Trust will use the net proceeds from the sale of the Securities of a given series to purchase Receivables from the Seller. The Seller will use the net proceeds it receives from any Trust to purchase Receivables from NMAC. THE TRUSTEE The trustee for each Trust (the "Trustee") or the trustee under any Indenture pursuant to which Notes are issued (the "Indenture Trustee") will be specified in the applicable Prospectus Supplement. The Trustee's or the Indenture Trustee's liability in connection with the issuance and sale of the related Securities is limited solely to the express obligations of that Trustee or Indenture Trustee set forth in the related Trust Agreement, Pooling and Servicing Agreement, Sale and Servicing Agreement or Indenture, as applicable. A Trustee or Indenture Trustee may resign at any time, in which event the Servicer, or its successor, will be obligated to appoint a successor thereto. The Administrator of a Trust that is not a grantor trust may also remove a Trustee or Indenture Trustee that becomes insolvent or otherwise ceases to be eligible to continue in that capacity under the related Trust Agreement, Sale and Servicing Agreement or Indenture, as applicable. The Servicer for a Trust that is a grantor trust may remove a Trustee that becomes insolvent or otherwise ceases to be eligible to continue in that capacity under the 16 19 related Pooling and Servicing Agreement. In those circumstances, the Servicer or, in the case of a series that includes Notes, the Administrator, as the case may be, will be obligated to appoint a successor thereto. Any resignation or removal of a Trustee or Indenture Trustee and appointment of a successor trustee will not become effective until acceptance of the appointment by the successor. THE SELLER Nissan Auto Receivables Corporation ("NARC") is a wholly owned subsidiary of NMAC and was incorporated in the State of Delaware on August 5, 1991. Nissan Auto Receivables Corporation II ("NARC II") is a wholly owned subsidiary of NMAC and was incorporated in the State of Delaware on November 9, 2000. Each Seller was organized for limited purposes, which include purchasing receivables from NMAC and transferring those receivables to third parties. Each Seller's certificate of incorporation limits the activities of the relevant Seller to the foregoing purposes. Each Seller has no substantial assets other than those related to those activities. The principal executive offices of NARC and NARC II are located at 990 W. 190th Street, Torrance, California 90502. The telephone number of NARC is (310) 719-8013 and the telephone number of NARC II is (310) 719-8583. THE SERVICER Nissan Motor Acceptance Corporation ("NMAC" or the "Servicer") was incorporated in California in November of 1981 and began operations in February of 1982. NMAC is a wholly owned subsidiary of Nissan North America, Inc. ("NNA"), the primary distributor of Nissan vehicles in the continental United States. NNA is a direct wholly owned subsidiary of Nissan Motor Co., Ltd., a Japanese corporation ("Nissan"), which is a worldwide manufacturer and distributor of motor vehicles, industrial equipment and aerospace products. NMAC provides indirect automotive consumer loan and lease financing and direct dealer financing, through (and to) approximately 1,090 Nissan and 150 Infiniti Dealers in the United States. NMAC's underwriting, servicing and collection activities are conducted principally at a processing center in Dallas, Texas. The principal executive offices of the Servicer are located at 990 W. 190th Street, Torrance, California 90502 and its telephone number is (310) 719-8000. WHERE YOU CAN FIND MORE INFORMATION ABOUT YOUR SECURITIES The Trust -- The Trustee will provide to securityholders ("Securityholders") (which shall be Cede & Co. ("Cede") as the nominee of DTC unless definitive Securities are issued under the limited circumstances described in this Prospectus) unaudited monthly and annual reports concerning the Receivables and other specified matters. See "Description of the Transfer and Servicing Agreements -- Statements to Securityholders" and "-- Evidence as to Compliance" in this Prospectus. Copies of these reports may be obtained at no charge at the offices specified in the applicable Prospectus Supplement. The Seller -- Nissan Auto Receivables Corporation or Nissan Auto Receivables Corporation II, as Seller of the Receivables, has filed with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-3 (the "Registration Statement") under the Securities Act of 1933 (the "Securities Act") of which this Prospectus forms a part. The Registration Statement is available for inspection without charge at the public reference facilities maintained at the principal office of the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the SEC at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300, New York, New York 10048. You may obtain information on the operation of the SEC's reference room by calling the SEC at (800) SEC-0330. You may obtain copies of those materials at prescribed rates by writing to the Public Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains a website (http://www.sec.gov) that 17 20 contains reports, registration statements, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Copies of the operative agreements relating to the Securities will also be filed with the SEC. DELINQUENCIES, REPOSSESSIONS AND NET LOSSES Information concerning NMAC's experience pertaining to delinquencies, repossessions and net losses on its portfolio of new, near-new and used retail automobile and light-duty truck receivables (including receivables previously sold that NMAC continues to service) will be set forth in each Prospectus Supplement. There can be no assurance that the delinquency, repossession and net loss experience on any Receivables Pool will be comparable to prior experience or to the information in any Prospectus Supplement. WEIGHTED AVERAGE LIFE OF THE SECURITIES The weighted average life of the Securities of any series will generally be influenced by the rate at which the principal balances of the related Receivables are paid, which payment may be in the form of scheduled amortization or prepayments. For this purpose, the term "prepayments" includes prepayments in full, partial prepayments (including those related to rebates of extended warranty contract costs and insurance premiums), liquidations due to default as well as receipts of proceeds from physical damage, credit life and disability insurance policies. The rate of principal payment of the Securities may also be affected by (1) repurchase by the Servicer or the Seller for Receivables as to which an uncured breach of specified representations and warranties or specified servicing covenants has occurred and (2) exercise by the Servicer or the Seller of its right to purchase all of the assets of the Trust at its option under the circumstances described in this Prospectus, thereby triggering a redemption of the Securities. The term "weighted average life" means the average amount of time during which each dollar of principal of a Receivable is outstanding. All of the Receivables will be prepayable at any time without penalty to the Obligor. The rate of prepayment of automotive receivables is influenced by a variety of economic, social and other factors, including that an Obligor generally may not sell or transfer the Financed Vehicle securing the related Receivable without the consent of the Servicer. In light of the above considerations, there can be no assurance as to the amount of principal payments to be made on the Securities of a given series on each Distribution Date, since the amount of principal payments will depend, in part, on the amount of principal collected on the related Receivables Pool during the applicable Collection Period. No prediction can be made as to the actual prepayment experience on the Receivables, and any reinvestment risks resulting from a faster or slower rate of prepayment of Receivables will be borne entirely by the Securityholders of a given series. See "Risk Factors -- You may experience reduced returns on your investment resulting from prepayments, repurchases or early termination of the trust" in this Prospectus. The applicable Prospectus Supplement may set forth additional information regarding the maturity and prepayment considerations applicable to the particular Receivables Pool and the related series of Securities. POOL FACTORS AND TRADING INFORMATION The "Note Factor" for each class of Notes will be a seven-digit decimal which the Servicer will compute prior to each payment with respect to that class of Notes. The Note Factor represents the remaining outstanding principal amount of that class of Notes, as of the close of business on the last day of the applicable Collection Period, as a fraction of the initial outstanding principal amount of that class of Notes. The "Certificate Factor" for each class of Certificates will be a seven-digit decimal which the Servicer will compute prior to each payment with respect to that class of Certificates indicating the remaining Certificate Balance of that class of Certificates, as of the close of business on the last day of the 18 21 applicable Collection Period, as a fraction of the Original Certificate Balance of that class of Certificates. The "Certificate Balance" for any class of Certificates as of any Distribution Date will equal the Original Certificate Balance of that class, as reduced by all amounts distributed on or prior to that Distribution Date on that class of Certificates and allocable to principal. The "Original Certificate Balance" for each class of Certificates will be stated in the applicable Prospectus Supplement. Each Note Factor and each Certificate Factor will initially be 1.0000000 and thereafter will decline to reflect reductions in the outstanding principal amount of the applicable class of Notes, or the reduction of the Certificate Balance of the applicable class of Certificates, as the case may be. A Noteholder's portion of the aggregate outstanding principal amount of the related class of Notes is the product of (1) the original denomination of that Noteholder's Note and (2) the applicable Note Factor. A Certificateholder's portion of the aggregate outstanding Certificate Balance for the related class of Certificates is the product of (1) the original denomination of that Certificateholder's Certificate and (2) the applicable Certificate Factor. The "Note Pool Factor" for each class of Notes will be a seven-digit decimal figure which the Servicer will compute prior to each payment with respect to that class of Notes indicating the remaining outstanding principal amount of that class of Notes, as of the close of business on the last day of the applicable Collection Period, as a fraction of the Pool Balance as of the related Cut-off Date. The "Certificate Pool Factor" for each class of Certificates will be a seven-digit decimal figure which the Servicer will compute prior to each payment with respect to that class of Notes indicating the remaining Certificate Balance of that class of Certificates, as of the close of business on the last day of the applicable Collection Period, as a fraction of the Pool Balance as of the related Cut-off Date. The Securityholders will receive monthly reports concerning payments received on the Receivables, the Pool Balance, each Certificate Factor or Note Factor, as applicable, each Certificate Pool Factor or Note Factor, as applicable, and various other items of information. 19 22 THE NOTES GENERAL With respect to each Trust that issues Notes, one or more classes (each, a "class") of Notes of the related series will be issued pursuant to the terms of an indenture (the "Indenture"). A form of the Indenture has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. The following summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Notes and the Indenture. Each class of Notes will initially be represented by one or more Notes, in each case registered in the name of the nominee of DTC, except as set forth below. Notes will be available for purchase in the denominations specified in the applicable Prospectus Supplement in book-entry form only. The Seller has been informed by DTC that DTC's nominee will be Cede, unless another nominee is specified in the applicable Prospectus Supplement. Accordingly, that nominee is expected to be the holder of record of the Notes (a "Noteholder") of each class. No Noteholder will be entitled to receive a physical certificate representing a Note until Definitive Notes are issued under the limited circumstances described in this Prospectus or in the applicable Prospectus Supplement. All references in this Prospectus and in the applicable Prospectus Supplement to actions by Noteholders refer to actions taken by DTC upon instructions from its participating organizations (the "DTC Participants") and all references in this Prospectus and in the applicable Prospectus Supplement to payments, notices, reports and statements to Noteholders refer to payments, notices, reports and statements to DTC or its nominee, as the registered holder of the Notes, for distribution to Noteholders in accordance with DTC's procedures. See "Material Information Regarding the Securities -- Book-Entry Registration" and "-- Definitive Securities." PRINCIPAL AND INTEREST ON THE NOTES The applicable Prospectus Supplement will describe the timing and priority of payment, seniority, allocations of losses, interest rate (the "Interest Rate") and amount of or method of determining payments of principal and interest on each class of Notes of a given series. The rights of holders of any class of Notes to receive payments of principal and interest may be senior or subordinate to the rights of holders of any other class or classes of Notes of that series. Payments of interest on the Notes will generally be made prior to payments of principal. A series may include one or more classes of Notes (the "Strip Notes") entitled to (1) principal payments with disproportionate, nominal or no interest payments or (2) interest payments with disproportionate, nominal or no principal payments. Each class of Notes may have a different Interest Rate, which may be a fixed, variable or adjustable Interest Rate (and which may be zero for some classes of Strip Notes), or any combination of the foregoing. The applicable Prospectus Supplement will specify the Interest Rate for each class of Notes of a given series or the method for determining the Interest Rate. See also "Material Information Regarding the Securities -- Fixed Rate Securities" and "-- Floating Rate Securities." One or more classes of Notes of a series may be redeemable in whole or in part, including as a result of the Servicer or the Seller exercising its option to purchase the related Receivables Pool or other early termination of the related trust. One or more classes of Notes of a given series may have fixed principal payment schedules, in the manner and to the extent set forth in the applicable Prospectus Supplement. Noteholders of those Notes would be entitled to receive as payments of principal on any given Distribution Date the amounts set forth on that schedule with respect to those Notes. One or more classes of Notes of a given trust may have targeted scheduled distribution dates, in the manner and to the extent set forth in the applicable Prospectus Supplement. Such Notes will be paid in full on their respective targeted scheduled distribution dates to the extent the trust is able to issue certain variable pay term notes in sufficient principal amounts. The proceeds of issuance of such variable pay term notes, which may be issued publicly or privately, will be applied to pay the specified class of Notes, in the manner set forth in the related Prospectus Supplement and such variable pay term notes will receive principal payments in the amounts and with the priority specified in the related prospectus supplement. 20 23 Payments of interest to Noteholders of all classes within a series will have the same priority. Under some circumstances, on any Distribution Date the amount available for those payments could be less than the amount of interest payable on the Notes. If this is the case, each class of Noteholders will receive its ratable share (based upon the aggregate amount of interest due to that class of Noteholders) of the aggregate amount of interest available for payment on the Notes. See "Description of the Transfer and Servicing Agreements -- Distributions on the Securities" and "-- Credit and Cash Flow Enhancement." If a series of Notes includes two or more classes of Notes, the sequential order and priority of payment in respect of principal and interest, and any schedule or formula or other provisions applicable to the determination thereof, of each of those classes will be set forth in the applicable Prospectus Supplement. Payments of principal and interest of any class of Notes will be made on a pro rata basis among all the Noteholders of that class. THE INDENTURE MODIFICATION OF INDENTURE. If a Trust has issued Notes pursuant to an Indenture, the Trust and the Indenture Trustee may, with the consent of the holders of a majority of the outstanding Notes of the related series (or relevant class or classes of Notes of such series), execute a supplemental indenture to add provisions to, change in any manner or eliminate any provisions of, the related Indenture, or modify (except as provided below) in any manner the rights of the related Noteholders. Without the consent of the holder of each outstanding affected Note, no supplemental indenture will: 1. change the due date of any installment of principal of or interest on that Note or reduce the principal amount of that Note, the Interest Rate for that Note or the redemption price for that Note or change any place of payment where or the coin or currency in which that Note or any interest on that Note is payable; 2. impair the right to institute suit for the enforcement of specified provisions of the related Indenture regarding payment; 3. reduce the percentage of the aggregate amount of the outstanding Notes of that series, the consent of the holders of which is required for any supplemental indenture or the consent of the holders of which is required for any waiver of compliance with specified provisions of the related Indenture or of specified defaults and their consequences as provided for in that Indenture; 4. modify or alter the provisions of the related Indenture regarding the voting of Notes held by the applicable Trust, any other obligor on those Notes, the Seller or an affiliate of any of them; 5. reduce the percentage of the aggregate outstanding amount of those Notes, the consent of the holders of which is required to direct the related Indenture Trustee to sell or liquidate the Receivables if the proceeds of that sale would be insufficient to pay the principal amount of and accrued but unpaid interest on the outstanding Notes of that series; 6. reduce the percentage of the aggregate principal amount of Notes required to amend the sections of the related Indenture that specify the applicable percentage of aggregate principal amount of the Notes of that series necessary to amend that Indenture or other specified agreements; or 7. permit the creation of any lien ranking prior to or on a parity with the lien of the related Indenture with respect to any of the collateral for those Notes or, except as otherwise permitted or contemplated in that Indenture, terminate the lien of that Indenture on any of the collateral or deprive the holder of any Note of the security afforded by the lien of that Indenture. The Trust and the applicable Indenture Trustee may also enter into supplemental indentures, without obtaining the consent of the Noteholders of the related series, for the purpose of, among other things, adding any provisions to or changing in any manner or eliminating any of the provisions of the related Indenture or of modifying in any manner the rights of those Noteholders; provided that that action will not materially and adversely affect the interest of any of those Noteholders. 21 24 EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT. With respect to the Notes of a given series, "Events of Default" under the related Indenture will consist of: 1. a default for five days or more in the payment of any interest on any of those Notes when the same becomes due and payable; 2. a default in the payment of the principal of or any installment of the principal of any of those Notes when the same becomes due and payable; 3. a default in the observance or performance of any covenant or agreement of the applicable Trust made in the related Indenture and the continuation of the default for a period of 90 days after notice thereof is given to that Trust by the applicable Indenture Trustee or to that Trust and that Indenture Trustee by the holders of at least 25% in principal amount of those Notes then outstanding acting together as a single class; 4. any representation or warranty made by that Trust in the related Indenture or in any certificate delivered pursuant thereto or in connection therewith having been incorrect in a material respect as of the time made, and the breach not having been cured within 30 days after notice thereof is given to that Trust by the applicable Indenture Trustee or to that Trust and that Indenture Trustee by the holders of at least 25% in principal amount of the Notes then outstanding acting together as a single class; or 5. events of bankruptcy, insolvency, receivership or liquidation of the applicable Trust. However, the amount of principal required to be paid to Noteholders of that series under the related Indenture will generally be limited to amounts available to be deposited in the Collection Account. Therefore, the failure to pay any principal on any class of Notes generally will not result in the occurrence of an Event of Default until the final scheduled Distribution Date for that class of Notes. In addition, as described below, following the occurrence of an Event of Default (other than the events of default described in (1) and (2) above) and acceleration of the maturity of the Notes, the Indenture Trustee is not required to sell the assets of the Trust, and the Indenture Trustee may sell the assets of the Trust only after meeting requirements specified in the Indenture. In that case, even if the maturity of the Notes has been accelerated, there may not be any funds to pay principal of the Notes. If an Event of Default should occur and be continuing with respect to the Notes of any series, the related Indenture Trustee or holders of a majority in principal amount of the Notes then outstanding (or relevant class or classes of Notes) may declare the principal of the Notes to be immediately due and payable. This declaration may, under some circumstances, be rescinded by the holders of a majority in principal amount of the Notes then outstanding (or relevant class or classes of Notes). If the Notes of any series are due and payable following an Event of Default with respect thereto, the related Indenture Trustee may institute proceedings to collect amounts due or foreclose on Trust property, exercise remedies as a secured party, sell the related Receivables or elect to have the applicable Trust maintain possession of those Receivables and continue to apply collections on those Receivables as if there had been no declaration of acceleration. However, the Indenture Trustee is prohibited from selling the related Receivables following an Event of Default (other than the events of default described in (1) and (2) above), unless: 1. the holders of all outstanding Notes (or relevant class or classes of Notes) consent to the sale; 2. the proceeds of the sale are sufficient to pay in full the principal of and the accrued interest on all outstanding Notes at the date of the sale; or 3. the Indenture Trustee determines that the proceeds of the Receivables may not be sufficient on an ongoing basis to make all payments on the outstanding Notes as those payments would have become due if the obligations had not been declared due and payable, and the Indenture Trustee obtains the consent of the holders of 66 2/3% of the aggregate outstanding amount of all Notes (or relevant class or classes of Notes). 22 25 Subject to the provisions of the applicable Indenture relating to the duties of the related Indenture Trustee, if an Event of Default occurs and is continuing with respect to a series of Notes, the Indenture Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the holders of those Notes, if the Indenture Trustee reasonably believes it will not be adequately indemnified against the costs, expenses and liabilities that might be incurred by it in complying with the request. Subject to the provisions for indemnification and other limitations contained in the related Indenture, the holders of a majority of the principal amount of the outstanding Notes of a given series (or relevant class or classes of Notes of such series) will have the right to direct the time, method and place of conducting any proceeding or any remedy available to the applicable Indenture Trustee, and the holders of a majority of the principal amount of those Notes then outstanding (or relevant class or classes of Notes) may, in some cases, waive any default with respect thereto, except a default in the deposit of collections or other required amounts, any required payment from amounts held in any trust account in respect of amounts due on the Notes, payment of principal or interest or a default in respect of a covenant or provision of the Indenture that cannot be modified without the waiver or consent of all the holders of the outstanding Notes. No holder of a Note of any series will have the right to institute any proceeding with respect to the related Indenture, unless: 1. that holder of a Note or Notes previously has given to the applicable Indenture Trustee written notice of a continuing Event of Default; 2. the holders of not less than 25% in principal amount of the outstanding Notes of that series (or relevant class or classes of Notes) have requested in writing the Indenture Trustee to institute the proceeding in its own name as Indenture Trustee; 3. that holder or holders of Notes have offered the Indenture Trustee reasonable indemnity; 4. the Indenture Trustee has for 60 days failed to institute the proceeding; and 5. no direction inconsistent with that written request has been given to the Indenture Trustee during the 60-day period by the holders of a majority in principal amount of those outstanding Notes (or relevant class or classes of Notes). In addition, each Indenture Trustee and the related Noteholders, by accepting the related Notes, will covenant that they will not at any time institute against the applicable Trust any bankruptcy, reorganization or other proceeding under any federal or state bankruptcy or similar law. With respect to any Trust, neither the related Indenture Trustee nor the related Trustee in its individual capacity, nor any holder of a Certificate representing an ownership interest in that Trust nor any of their respective owners, beneficiaries, agents, officers, directors, employees, affiliates, successors or assigns will, in the absence of an express agreement to the contrary, be personally liable for the payment of the principal of or interest on the related Notes or for the agreements of that Trust contained in the applicable Indenture. MATERIAL COVENANTS. Each Indenture will provide that the related Trust may not consolidate with or merge into any other entity, unless, among other things, 1. the entity formed by or surviving the consolidation or merger is organized under the laws of the United States, any state or the District of Columbia; 2. that entity expressly assumes that Trust's obligation to make due and punctual payments upon the Notes of the related series and the performance or observance of every agreement and covenant of that Trust under the Indenture; 3. no Event of Default shall have occurred and be continuing immediately after the merger or consolidation; 23 26 4. that Trust has been advised that the rating of the Securities of that series then in effect would not be reduced or withdrawn by the rating agencies then rating the Notes as a result of the merger or consolidation; and 5. that Trust has received an opinion of counsel to the effect that the consolidation or merger would have no material adverse tax consequence to the Trust or to any related Noteholder or Certificateholder. Each Trust will not, among other things, 1. except as expressly permitted by the applicable Indenture, the applicable Transfer and Servicing Agreements or other specified documents with respect to that Trust (collectively, the "Related Documents"), sell, transfer, exchange or otherwise dispose of any of the assets of that Trust; 2. claim any credit on or make any deduction from the principal of and interest payable on the Notes of the related series (other than amounts withheld under the Code or applicable state law) or assert any claim against any present or former holder of those Notes because of the payment of taxes levied or assessed upon that Trust; 3. except as expressly permitted by the Related Documents, dissolve or liquidate in whole or in part; 4. permit the validity or effectiveness of the related Indenture to be impaired or permit any person to be released from any covenants or obligations with respect to those Notes under that Indenture except as may be expressly permitted by that Indenture; or 5. permit any lien or other encumbrance to be created on or extend to or otherwise arise upon or burden the assets of that Trust or any part thereof, or any interest in the assets of that Trust or the proceeds of those assets. No Trust may engage in any activity other than as specified in this Prospectus or in the applicable Prospectus Supplement. No Trust will incur, assume or guarantee any indebtedness other than indebtedness incurred pursuant to the related Notes and the related Indenture, pursuant to any Advances made to it by the Servicer or otherwise in accordance with the Related Documents. ANNUAL COMPLIANCE STATEMENT. Each Trust will be required to file annually with the related Indenture Trustee a written statement as to the fulfillment of its obligations under the Indenture. INDENTURE TRUSTEE'S ANNUAL REPORT. The Indenture Trustee for each Trust will be required to mail each year to all related Noteholders a brief report relating to its eligibility and qualification to continue as Indenture Trustee under the related Indenture, any amounts advanced by it under the Indenture, the amount, interest rate and maturity date of specified indebtedness owing by that Trust to the applicable Indenture Trustee in its individual capacity, the property and funds physically held by that Indenture Trustee and any action taken by it that materially affects the related Notes and that has not been previously reported. SATISFACTION AND DISCHARGE OF INDENTURE. An Indenture will be discharged with respect to the collateral securing the related Notes upon the delivery to the related Indenture Trustee for cancellation of all of those Notes or, with specified limitations, upon deposit with that Indenture Trustee of funds sufficient for the payment in full of all the Notes. 24 27 THE CERTIFICATES GENERAL With respect to each Trust that issues Certificates, one or more classes (each, a "class") of Certificates of the related series will be issued pursuant to the terms of a Trust Agreement or a Pooling and Servicing Agreement, a form of each of which has been filed as an exhibit to the Registration Statement of which this Prospectus forms a part. The following summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Certificates and the Trust Agreement or Pooling and Servicing Agreement, as applicable. Except for the Certificates, if any, of a given series purchased by the Seller, each class of Certificates will initially be represented by one or more Certificates registered in the name of the nominee for DTC, except as set forth below. Except for the Certificates, if any, of a given series purchased by the Seller, the Certificates will be available for purchase in the denominations specified in the applicable Prospectus Supplement in book-entry form only. The Seller has been informed by DTC that DTC's nominee will be Cede, unless another nominee is specified in the applicable Prospectus Supplement. Accordingly, that nominee is expected to be the holder of record of the Certificates (a "Certificateholder") of any series that are not purchased by the Seller. No Certificateholder (other than the Issuer) will be entitled to receive a physical certificate representing a Certificate until Definitive Certificates are issued under the limited circumstances described in this Prospectus or in the applicable Prospectus Supplement. All references in this Prospectus and in the applicable Prospectus Supplement to actions by Certificateholders refer to actions taken by DTC upon instructions from the DTC Participants and all references in this Prospectus and in the applicable Prospectus Supplement to distributions, notices, reports and statements to Certificateholders refer to distributions, notices, reports and statements given, made or sent to DTC or its nominee, as the case may be, as the registered holder of the Certificates, for distribution to Certificateholders in accordance with DTC's procedures with respect thereto. See "Material Information Regarding the Securities -- Book-Entry Registration" and "-- Definitive Securities." Any Certificates of a given series owned by the Seller or its affiliates will be entitled to equal and proportionate benefits under the applicable Trust Agreement, except that those Certificates will be deemed not to be outstanding for the purpose of determining whether the requisite percentage of Certificateholders have given any request, demand, authorization, direction, notice, consent or other action under the Related Documents (other than the commencement by the related Trust of a voluntary proceeding in bankruptcy as described under "Description of the Transfer and Servicing Agreements -- Insolvency Event"). PAYMENTS OF PRINCIPAL AND INTEREST The timing and priority of payments, seniority, allocations of losses, pass through rate (the "Pass Through Rate") and amount of or method of determining payments with respect to principal and interest of each class of Certificates will be described in the applicable Prospectus Supplement. Payments of interest on and principal of those Certificates will be made on the dates specified in the applicable Prospectus Supplement (each, a "Distribution Date"). To the extent provided in the applicable Prospectus Supplement, a series may include one or more classes of Certificates (the "Strip Certificates") entitled to (1) payments in respect of principal with disproportionate, nominal or no interest payments or (2) interest payments with disproportionate, nominal or no payments in respect of principal. Each class of Certificates may have a different Pass Through Rate, which may be a fixed, variable or adjustable Pass Through Rate (and which may be zero for some classes of Strip Certificates) or any combination of the foregoing. The applicable Prospectus Supplement will specify the Pass Through Rate for each class of Certificates of a given series or the method for determining the Pass Through Rate. See also "Material Information Regarding the Securities -- Fixed Rate Securities" and "-- Floating Rate Securities." Payments in respect of the Certificates of a given series that includes Notes may be subordinate to payments in respect of the Notes of that series as more fully described in the applicable Prospectus Supplement. The rights of holders of any class of Certificates to receive payments of principal and interest may also be senior or subordinate to the rights of holders of any other class or classes of Certificates of that series as more fully described in 25 28 the applicable Prospectus Supplement. Payments in respect of principal of and interest on any class of Certificates will be made on a pro rata basis among all the Certificateholders of that class. In the case of a series of Certificates that includes two or more classes of Certificates, the timing, sequential order, priority of payment or amount of payments in respect of interest and principal, and any schedule or formula or other provisions applicable to the determination thereof, of each class shall be as set forth in the applicable Prospectus Supplement. If and as provided in the applicable Prospectus Supplement, amounts remaining on deposit in the Collection Account after all required payments to the related Securityholders have been made may be released to the Seller, NMAC or one or more third party credit or liquidity enhancement providers. MATERIAL INFORMATION REGARDING THE SECURITIES FIXED RATE SECURITIES Any class of Securities (other than some classes of Strip Notes or Strip Certificates) may bear interest at a fixed rate per annum ("Fixed Rate Securities") or at a variable or adjustable rate per annum ("Floating Rate Securities"), as more fully described below and in the applicable Prospectus Supplement. Each class of Fixed Rate Securities will bear interest at the applicable per annum Interest Rate or Pass Through Rate, as the case may be, specified in the applicable Prospectus Supplement. Interest on each class of Fixed Rate Securities will be computed on the basis of a 360-day year consisting of twelve 30-day months. See "The Notes -- Principal and Interest on the Notes" and "The Certificates -- Payments of Principal and Interest." FLOATING RATE SECURITIES Each class of Floating Rate Securities will bear interest during each applicable Interest Period at a rate per annum determined by reference to an interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, in each case as specified in the applicable Prospectus Supplement. The "Spread" is the number of basis points to be added to or subtracted from the related Base Rate applicable to the Floating Rate Securities. The "Spread Multiplier" is the percentage of the related Base Rate applicable to the Floating Rate Securities by which that Base Rate will be multiplied to determine the applicable interest rate on those Floating Rate Securities. The applicable Prospectus Supplement will designate one of the following Base Rates as applicable to a given Floating Rate Security: 1. LIBOR (a "LIBOR Security"); 2. the Commercial Paper Rate (a "Commercial Paper Rate Security"); 3. the Treasury Rate (a "Treasury Rate Security"); 4. the Federal Funds Rate (a "Federal Funds Rate Security"); 5. the CD Rate (a "CD Rate Security"); or 6. any other Base Rate that is set forth in the applicable Prospectus Supplement. Each applicable Prospectus Supplement will specify whether the rate of interest on the related Floating Rate Securities will be reset daily, weekly, monthly, quarterly, semiannually, annually or some other specified period (each, an "Interest Reset Period") and the dates on which that Interest Rate will be 26 29 reset (each, an "Interest Reset Date"). The Interest Reset Date will be, in the case of Floating Rate Securities which reset: 1. daily, each Business Day; 2. weekly, the Wednesday of each week (with the exception of weekly reset Treasury Rate Securities which will reset the Tuesday of each week); 3. monthly, the third Wednesday of each month; 4. quarterly, the third Wednesday of March, June, September and December of each year; 5. semiannually, the third Wednesday of the two months specified in the applicable Prospectus Supplement; and 6. annually, the third Wednesday of the month specified in the applicable Prospectus Supplement. If any Interest Reset Date for any Floating Rate Security would otherwise be a day that is not a Business Day, that Interest Reset Date will be postponed to the next succeeding day that is a Business Day, except that in the case of a Floating Rate Security as to which LIBOR is an applicable Base Rate, if that Business Day falls in the next succeeding calendar month, that Interest Reset Date will be the immediately preceding Business Day. Unless specified otherwise in the applicable Prospectus Supplement, "Business Day" means a day other than a Saturday, a Sunday or a day on which banking institutions in New York, New York, Minneapolis, Minnesota, Wilmington, Delaware, or Los Angeles, California are authorized or obligated by law, regulation, executive order or decree to be closed. With respect to Notes as to which LIBOR is an applicable Base Rate, a Business Day must also be a day that is a London Business Day. "London Business Day" means any day (a) if the Index Currency is other than the Euro, on which dealings in deposits in that Index Currency are transacted in the London interbank market or (b) if the Index Currency is the Euro, a day on which the Trans-European Automated Real-time Gross Settlement Express Transfer System ("TARGET system") is open and on which commercial banks and foreign exchange markets settle payments in London and New York. If any Distribution Date for any Floating Rate Security (other than the final Distribution Date) would otherwise be a day that is not a Business Day, that Distribution Date will be the next succeeding day that is a Business Day except that in the case of a Floating Rate Security as to which LIBOR is the applicable Base Rate, if that Business Day falls in the next succeeding calendar month, that Distribution Date will be the immediately preceding Business Day. If the final Distribution Date of a Floating Rate Security falls on a day that is not a Business Day, the payment of principal, premium, if any, and interest will be made on the next succeeding Business Day, and no interest on that payment shall accrue for the period from and after that final Distribution Date. Each Floating Rate Security will accrue interest on an "Actual/360" basis, an "Actual/Actual" basis, or a "30/360" basis, in each case as specified in the applicable Prospectus Supplement. For Floating Rate Securities calculated on an Actual/360 basis and Actual/Actual basis, accrued interest for each Interest Period will be calculated by multiplying: 1. the face amount of that Floating Rate Security; 2. the applicable interest rate; and 3. the actual number of days in the related Interest Period, and dividing the resulting product by 360 or 365, as applicable (or, with respect to an Actual/Actual basis Floating Rate Security, if any portion of the related Interest Period falls in a leap year, the product of (1) and (2) above will be multiplied by the sum of (x) the actual number of days in that portion of that Interest Period falling in a leap year divided by 366 and (y) the actual number of days in that portion of that Interest Period falling in a non-leap year divided by 365). For Floating Rate Securities calculated on a 30/360 basis, accrued interest for an Interest Period will be computed on the basis of a 360-day year consisting of twelve 30-day months, irrespective of how many 27 30 days are actually in that Interest Period. With respect to any Floating Rate Security that accrues interest on a 30/360 basis, if any Distribution Date, including the related final Distribution Date, falls on a day that is not a Business Day, the related payment of principal or interest will be made on the next succeeding Business Day as if made on the date that payment was due, and no interest will accrue on the amount so payable for the period from and after that Distribution Date. The "Interest Period" with respect to any class of Floating Rate Securities will be set forth in the applicable Prospectus Supplement. As specified in the applicable Prospectus Supplement, Floating Rate Securities of a given class may also have either or both of the following (in each case expressed as a rate per annum): (1) a maximum limitation, or ceiling, on the rate at which interest may accrue during any Interest Period and (2) a minimum limitation, or floor, on the rate at which interest may accrue during any Interest Period. In addition to any maximum interest rate that may be applicable to any class of Floating Rate Securities, the interest rate applicable to any class of Floating Rate Securities will in no event be higher than the maximum rate permitted by applicable law, as the same may be modified by United States law of general application. Each Trust with respect to which a class of Floating Rate Securities will be issued will appoint, and enter into agreements with, a calculation agent (each, a "Calculation Agent") to calculate Interest Rates on each class of Floating Rate Securities issued with respect thereto. The applicable Prospectus Supplement will set forth the identity of the Calculation Agent for each class of Floating Rate Securities of a given series, which may be the related Trustee or Indenture Trustee with respect to that series. All determinations of interest by the Calculation Agent shall, in the absence of manifest error, be conclusive for all purposes and binding on the holders of Floating Rate Securities of a given class. All percentages resulting from any calculation on Floating Rate Securities will be rounded to the nearest one hundred-thousandth of a percentage point, with five one millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting from that calculation on Floating Rate Securities will be rounded to the nearest cent (with one-half cent being rounded upwards). CD RATE SECURITIES. Each CD Rate Security will bear interest for each Interest Reset Period at an interest rate calculated with reference to the CD Rate and the Spread or Spread Multiplier, if any, specified in that Security and in the applicable Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement, the "CD Rate" for each Interest Reset Period shall be the rate as of the second Business Day prior to the Interest Reset Date for that Interest Reset Period (a "CD Rate Determination Date") for negotiable U.S. dollar certificates of deposit having the Index Maturity specified in the applicable Prospectus Supplement as published in H.15(519) under the heading "CDs (Secondary Market)." If that rate is not published prior to 3:00 p.m., New York City time, on the related Calculation Date, then the "CD Rate" on the applicable CD Rate Determination Date will be the rate for negotiable U.S. dollar certificates of deposit of the Index Maturity specified in the applicable Prospectus Supplement as published in H.15 Daily Update, or other recognized electronic source used for the purpose of displaying the applicable rate, under the caption "CDs (secondary market)." If by 3:00 p.m., New York City time, on the related Calculation Date that rate is not yet published in either H.15(519) or H.15 Update, then the "CD Rate" on the applicable CD Rate Determination Date will be the rate calculated by the Calculation Agent as the arithmetic mean of the secondary market offered rates as of 10:00 a.m., New York City time, on the applicable CD Rate Determination Date, of three leading nonbank dealers in negotiable U.S. dollar certificates of deposit in the City of New York selected by the Calculation Agent for negotiable U.S. dollar certificates of deposit of major United States money market banks for negotiable certificates of deposit with a remaining maturity closest to the Index Maturity specified in the applicable Prospectus Supplement in an amount that is representative for a single transaction in that market at that time; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting offered rates as mentioned in this sentence, the "CD Rate" on the applicable CD Rate Determination Date will be the rate in effect on the applicable CD Rate Determination Date. 28 31 "H.15(519)" means the weekly statistical release designated as H.15(519), or any successor publication, published by the Board of Governors of the Federal Reserve System. "H.15 Daily Update" means the daily update of H.15(519), available through the world-wide-web site of the Board of Governors of the Federal Reserve System at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or publication. "Interest Reset Date" will be the first day of the applicable Interest Reset Period, or such other day as may be specified in the related Prospectus Supplement with respect to a class of Floating Rate Securities. The "Calculation Date" pertaining to any CD Rate Determination Date shall be the first to occur of (a) the tenth calendar day after that CD Rate Determination Date or, if that day is not a Business Day, the next succeeding Business Day or (b) the Business Day preceding the applicable Distribution Date. The "Index Maturity" is the period to maturity of the instrument or obligation with respect to which the Base Rate will be calculated. COMMERCIAL PAPER RATE SECURITIES. Each Commercial Paper Rate Security will bear interest for each Interest Reset Period at an interest rate calculated with reference to the Commercial Paper Rate and the Spread or Spread Multiplier, if any, specified in that Security and in the applicable Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement, the "Commercial Paper Rate" for each Interest Reset Period will be determined by the Calculation Agent for that Commercial Paper Rate Security as of the second Business Day prior to the Interest Reset Date for that Interest Reset Period (a "Commercial Paper Rate Determination Date") and shall be the Money Market Yield on the applicable Commercial Paper Rate Determination Date of the rate for commercial paper having the Index Maturity specified in the applicable Prospectus Supplement published in H.15(519) under the heading "Commercial Paper -- Nonfinancial." If that rate is not published prior to 3:00 p.m., New York City time, on the related Calculation Date, then the "Commercial Paper Rate" will be the Money Market Yield on the applicable Commercial Paper Rate Determination Date having the Index Maturity specified in the applicable Prospectus Supplement published in H.15 Daily Update or other recognized electronic source for the purposes of displaying the applicable rate under the caption "Commercial Paper Nonfinancial." If by 3:00 p.m., New York City time, on the related Calculation Date that rate is not yet published in either H.15(519) or H.15 Daily Update, then the Commercial Paper Rate for the applicable Commercial Paper Rate Determination Date will be calculated by the Calculation Agent as the Money Market Yield of the arithmetic mean of the offered rates, at approximately 11:00 a.m., New York City time, on the applicable Commercial Paper Rate Determination Date of three leading dealers of U.S. dollar commercial paper in the City of New York, which may include the Calculation Agent and its affiliates, selected by the Calculation Agent for commercial paper having the Index Maturity designated in the applicable Prospectus Supplement placed for industrial issuers whose bond rating is "Aa" or the equivalent from a nationally recognized securities rating organization; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting offered rates as mentioned in this sentence, the "Commercial Paper Rate" determined on the applicable Commercial Paper Rate Determination Date will be the rate in effect on the applicable Commercial Paper Rate Determination Date. "Money Market Yield" means a yield (expressed as a percentage rounded upwards to the nearest one hundred thousandth of a percentage point) calculated in accordance with the following formula: D x 360 Money Market Yield = ------------- x 100 360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal, and "M" refers to the actual number of days in the Interest Period for which interest is being calculated. The "Calculation Date" pertaining to any Commercial Paper Rate Determination Date shall be the first to occur of (a) the tenth calendar day after that Commercial Paper Rate Determination Date or, if 29 32 that day is not a Business Day, the next succeeding Business Day or (b) the second Business Day preceding the related Distribution Date. FEDERAL FUNDS RATE SECURITIES. Each Federal Funds Rate Security will bear interest for each Interest Reset Period at an interest rate calculated with reference to the Federal Funds Rate and the Spread or Spread Multiplier, if any, specified in that Security and in the applicable Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement, the "Federal Funds Rate" for each Interest Reset Period shall be the effective rate as of the second Business Day prior to the Interest Reset Date for that Interest Reset Period (a "Federal Funds Rate Determination Date") for U.S. dollar federal funds as published in H.15(519) under the heading "Federal Funds (Effective)," as displayed on Bridge Telerate, Inc. or any successor service on page 120 or any other page as may replace the applicable page on that service (Telerate Page 120). If that rate does not appear on Telerate Page 120 or is not so published by 3:00 p.m., New York City time, on the related Calculation Date, the "Federal Funds Rate" for the applicable Federal Funds Rate Determination Date will be the rate on the applicable Federal Funds Rate Determination Date for the U.S. dollar federal funds published in H.15 Daily Update, or other recognized electronic source for the purpose of displaying the applicable rate under the heading "Federal Funds (Effective)." If by 3:00 p.m., New York City time, on the related Calculation Date that rate is not yet published in either H.15(519) or H.15 Daily Update, the "Federal Funds Rate" for the applicable Federal Funds Rate Determination Date will be calculated by the Calculation Agent as the arithmetic mean of the rates for the last transaction in overnight U.S. dollar federal funds arranged by three leading brokers of U.S. dollar federal funds transactions in the City of New York, which may include the Calculation Agent and its affiliates, selected by the Calculation Agent before 9:00 a.m., New York City time, on the applicable Federal Funds Rate Interest Determination Date; provided, however that if the brokers so selected by the Calculation Agent are not quoting rates as mentioned in this sentence, the Federal Funds Rate for the applicable Federal Funds Rate Interest Determination Date will be the Federal Funds Rate in effect on the applicable Federal Funds Rate Determination Date. The "Calculation Date" pertaining to any Federal Funds Rate Determination Date shall be the first to occur of (a) the tenth calendar day after such Federal Funds Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day, or (b) the second Business Day preceding the related Distribution Date. LIBOR SECURITIES. Each LIBOR Security will bear interest for each Interest Reset Period at an interest rate calculated with reference to LIBOR and the Spread or Spread Multiplier, if any, specified in that Security and in the applicable Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement with respect to LIBOR indexed to the offered rates for U.S. dollar deposits, "LIBOR" for each Interest Reset Period will be determined by the Calculation Agent for that LIBOR Security as follows: 1. If "LIBOR Telerate" is specified in the applicable Prospectus Supplement, or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable Prospectus Supplement as the method for calculating LIBOR, LIBOR will be the rate for deposits in the Index Currency having the Index Maturity designated in the applicable Prospectus Supplement commencing on the second London Business Day immediately following the applicable Interest Determination Date that appears on the Designated LIBOR Page specified in the applicable Prospectus Supplement as of 11:00 a.m. London time, on the applicable Interest Determination Date. If "LIBOR Reuters" is specified in the applicable Prospectus Supplement, LIBOR will be the arithmetic mean of the offered rates for deposits in the Index Currency having the Index Maturity designated in the applicable Prospectus Supplement, commencing on the second London Business Day immediately following the applicable Interest Determination Date, that appear on the Designated LIBOR Page specified in the applicable Prospectus Supplement as of 11:00 a.m. London time on the applicable Interest Determination Date, if at least two offered rates appear 30 33 (except as provided in the following sentence). If the Designated LIBOR Page by its terms provides for only a single rate, then the single rate will be used. If "LIBOR Bloomberg" is specified in the applicable Prospectus Supplement, LIBOR will be the arithmetic mean of the offered rates (unless the specified Designated LIBOR Page by its terms provides only for a single rate, in which case that single rate shall be used) for deposits in the Index Currency having the Index Maturity designated in the applicable Prospectus Supplement, commencing on the second London Business Day immediately following that Interest Determination Date, that appear on the Designated LIBOR page specified in the applicable Prospectus Supplement as of 11:00 a.m. London time, on that Interest Determination Date, if at least two offered rates appear (unless, as described above, only a single rate is required) on that Designated LIBOR Page. 2. With respect to an Interest Determination Date on which fewer than two offered rates appear, or no rate appears, as the case may be, on the applicable Designated LIBOR Page as specified above, LIBOR for the applicable Interest Determination Date will be the rate calculated by the Calculation Agent as the arithmetic mean of at least two quotations obtained by the Calculation Agent after requesting the principal London offices of each of four major reference banks in the London interbank market, which may include the Calculation Agent and its affiliates, as selected by the Calculation Agent, to provide the Calculation Agent with its offered quotation for deposits in the Index Currency for the period of the Index Maturity designated in the applicable Prospectus Supplement, commencing on the second London Business Day immediately following the applicable Interest Determination Date, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on such Interest Determination Date and in a principal amount that is representative for a single transaction in the applicable Index Currency in that market at that time. If at least two such quotations are provided, LIBOR determined on the applicable Interest Determination Date will be the arithmetic mean of the quotations. If fewer than two quotations referred to in this paragraph are provided, LIBOR determined on the applicable Interest Determination Date will be the rate calculated by the Calculation Agent as the arithmetic mean of the rates quoted at approximately 11:00 a.m., or such other time specified in the applicable Prospectus Supplement, in the applicable Principal Financial Center, on the applicable Interest Determination Date by three major banks, which may include the Calculation Agent and its affiliates, in that Principal Financial Center selected by the Calculation Agent for loans in the Index Currency to leading European banks, having the Index Maturity designated in the applicable Prospectus Supplement and in a principal amount that is representative for a single transaction in the Index Currency in that market at that time. If the banks so selected by the Calculation Agent are not quoting as mentioned in this paragraph, LIBOR for the applicable Interest Determination Date will be LIBOR in effect on the applicable Interest Determination Date. "Index Currency" means the currency (including composite currencies) specified in the applicable Prospectus Supplement as the currency for which LIBOR shall be calculated. If no currency is specified in the applicable Prospectus Supplement, the Index Currency shall be U.S. dollars. "Designated LIBOR Page" means either: 1. If "LIBOR Telerate" is designated in the applicable Prospectus Supplement or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable Prospectus Supplement as the method for calculating LIBOR, the display on Bridge Telerate, Inc. or any successor service on the page designated in the applicable Prospectus Supplement or any page as may replace the designated page on that service or for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency; 2. If "LIBOR Reuters" is designated in the applicable Prospectus Supplement, the display on the Reuters Monitor Money Rates Service or any successor service on the page designated in the applicable Prospectus Supplement or any other page as may replace the designated page on that 31 34 service for the purpose of displaying the London interbank offered rates of major banks for the applicable Index Currency; or 3. If "LIBOR Bloomberg" is designated in the applicable Prospectus Supplement, the display on Bloomberg on the page designated in the applicable Prospectus Supplement (or another page that may replace that designated page on that service for the purpose of displaying London interbank rates of major banks) for the applicable Index Currency. "Principal Financial Center" means, unless otherwise specified in the applicable Prospectus Supplement, the capital city of the country to which the Index Currency relates, except that with respect to U.S. dollars, Deutsche marks, Canadian dollars, Portuguese eseudos, South African rand, Swiss francs and Dutch guilders, the Principal Financial Center shall be the City of New York, Frankfurt, Toronto, London, Johannesburg, Zurich and Amsterdam, respectively. TREASURY RATE SECURITIES. Each Treasury Rate Security will bear interest for each Interest Reset Period at an interest rate calculated with reference to the Treasury Rate and the Spread or Spread Multiplier, if any, specified in that Security and in the applicable Prospectus Supplement determined on the "Treasury Rate Determination Date" specified in that Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement, the "Treasury Rate" for each Interest Period will be the rate for the auction held on the Treasury Rate Determination Date of direct obligations of the United States ("Treasury bills") having the Index Maturity specified in the applicable Prospectus Supplement, as that rate shall be published in H.15(519) under the heading "U.S. Government Securities -- Treasury bills -- auction average (investment)" or, if that rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date pertaining to that Treasury Rate Determination Date, the auction average rate (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise announced by the United States Department of the Treasury. In the event that the results of the auction of Treasury bills having the specified Index Maturity are not published or reported as provided above by 3:00 p.m., New York City time, on that Calculation Date, or if that auction is not held in a particular week, then the "Treasury Rate" for that Interest Reset Period will be the rate published in H.15(510) under the heading "U.S. Government Securities -- Treasury Bills -- Secondary Market" (expressed as a bond equivalent yield on the basis of a 365 or 366 day year, as applicable, on a daily basis), or if not published by 3:00 p.m. New York City time, on the related Calculation Date, the Treasury Rate will be calculated by the Calculation Agent for that Treasury Rate Security and shall be the yield to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m., New York City time, on that Treasury Rate Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent for the issue of Treasury bills with a remaining maturity closest to the specified Index Maturity; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting bid rates as mentioned in this sentence, then the "Treasury Rate" for that Interest Reset Period will be the same as the Treasury Rate for the immediately preceding Interest Reset Period. The "Calculation Date" pertaining to any Treasury Rate Determination Date shall be the first to occur of (a) the tenth calendar day after that Treasury Rate Determination Date or, if that a day is not a Business Day, the next succeeding Business Day or (b) the second Business Day preceding the date any payment is required to be made for any period following the applicable Interest Reset Date. INDEXED SECURITIES To the extent specified in any Prospectus Supplement, any class of Securities of a given series may consist of Securities ("Indexed Securities") in which the principal amount payable on the final 32 35 Distribution Date for that class (the "Indexed Principal Amount") and/or the interest payable on any Distribution Date is determined by reference to a measure (the "Index") which will be related to the exchange rates of one or more currencies or composite currencies (the "Index Currencies"); the price or prices of specified commodities; or specified stocks, which may be based on U.S. or foreign stocks, on specified dates specified in the applicable Prospectus Supplement, or another price, interest rate, exchange rate or other financial index or indices as are described in the applicable Prospectus Supplement. Holders of Indexed Securities may receive a principal amount on the related final Distribution Date that is greater than or less than the face amount of the Indexed Securities depending upon the relative value on the related final Distribution Date of the specified indexed item. The applicable Prospectus Supplement will also contain information as to the method for determining the principal amount payable on the related final Distribution Date, if any, and, where applicable, historical information with respect to the specific indexed item or items and special tax considerations associated with investment in Indexed Securities. Notwithstanding anything to the contrary in this Prospectus, for purposes of determining the rights of a holder of a Security indexed as to principal in respect of voting for or against amendments to the related Trust Agreement, Indenture, or other related agreements, as the case may be, and modifications and the waiver of rights under those agreements, the principal amount of that Indexed Security shall be deemed to be the face amount thereof upon issuance less any payments allocated to principal of that Indexed Security. If the determination of the Indexed Principal Amount of an Indexed Security is based on an Index calculated or announced by a third party and that third party either suspends the calculation or announcement of that Index or changes the basis upon which that Index is calculated (other than changes consistent with policies in effect at the time that Indexed Security was issued and permitted changes described in the applicable Prospectus Supplement), then that Index shall be calculated for purposes of that Indexed Security by an independent calculation agent named in the applicable Prospectus Supplement on the same basis, and subject to the same conditions and controls, as applied to the original third party. If for any reason that Index cannot be calculated on the same basis and subject to the same conditions and controls as applied to the original third party, then the Indexed Principal Amount of that Indexed Security shall be calculated in the manner set forth in the applicable Prospectus Supplement. Any determination of that independent calculation agent shall, in the absence of manifest error, be binding on all parties. The applicable Prospectus Supplement will describe whether the principal amount of the related Indexed Security, if any, that would be payable upon redemption or repayment prior to the applicable final scheduled Distribution Date will be the face amount of that Indexed Security, the Indexed Principal Amount of that Indexed Security at the time of redemption or repayment or another amount described in that Prospectus Supplement. BOOK-ENTRY REGISTRATION Each class of Securities offered by this Prospectus will be represented by one or more certificates registered in the name of Cede, as nominee of the Depository Trust Company ("DTC"). Securityholders may hold beneficial interests in Securities through the DTC (in the United States) or Clearstream Banking societe anonyme ("Clearstream Banking") or the Euroclear System ("Euroclear") (in Europe or Asia) directly if they are participants of those systems, or indirectly through organizations which are participants in those systems. No Securityholder will be entitled to receive a certificate representing that person's interest in the Securities, except as set forth below. Unless and until Securities of a class are issued in fully registered certificated form ("Definitive Securities") under the limited circumstances described below, all references in this Prospectus to actions by Noteholders, Certificateholders or Securityholders shall refer to actions taken by DTC upon instructions from DTC Participants, and all references in this Prospectus to distributions, notices, reports and statements to Noteholders, Certificateholders or Securityholders shall refer to distributions, notices, reports and statements to Cede, as the registered holder of the Securities, for distribution to Securityholders in accordance with DTC procedures. Therefore, it is anticipated that the 33 36 only Noteholder, Certificateholder or Securityholder will be Cede, as nominee of DTC. Securityholders will not be recognized by the related Trustee as Noteholders, Certificateholders or Securityholders as those terms will be used in the relevant agreements, and Securityholders will only be permitted to exercise the rights of holders of Securities of the related class indirectly through DTC and DTC Participants, as further described below. Clearstream Banking and Euroclear will hold omnibus positions on behalf of their participants through customers' securities accounts in their respective names on the books of their respective depositaries (collectively, the "Depositaries") which in turn will hold those positions in customers' securities accounts in the Depositaries' names on the books of DTC. Transfers between DTC Participants will occur in accordance with DTC rules. Transfers between Clearstream Banking Participants and Euroclear Participants will occur in accordance with their applicable rules and operating procedures. Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Clearstream Banking or Euroclear Participants, on the other, will be effected in DTC in accordance with DTC rules on behalf of the relevant European international clearing system by its Depositary. However, each of these cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in that system in accordance with its rules and procedures and within its established deadlines. The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its Depositary to take action to effect final settlement on its behalf by delivering or receiving securities in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream Banking Participants and Euroclear Participants may not deliver instructions directly to the Depositaries. Because of time-zone differences, credits of securities received in Clearstream Banking or Euroclear as a result of a transaction with a DTC Participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. Those credits or any transactions in those securities settled during that processing will be reported to the relevant Euroclear or Clearstream Banking participant on that business day. Cash received in Clearstream Banking or Euroclear as a result of sales of Securities by or through a Clearstream Banking Participant or a Euroclear Participant to a DTC Participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream Banking or Euroclear cash account only as of the business day following settlement in DTC. DTC is a limited purpose trust company organized under the laws of the State of New York, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to Section 17A of the Exchange Act. DTC was created to hold securities for its participating members ("DTC Participants") and to facilitate the clearance and settlement of securities transactions between DTC Participants through electronic book-entries, thereby eliminating the need for physical movement of certificates. DTC Participants include securities brokers and dealers, banks, trust companies and clearing corporations which may include underwriters, agents or dealers with respect to the Securities of any class or series. Indirect access to the DTC system also is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (the "Indirect DTC Participants"). The rules applicable to DTC and DTC Participants are on file with the SEC. Securityholders that are not DTC Participants or Indirect DTC Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests in, Securities may do so only through DTC Participants and Indirect DTC Participants. DTC Participants will receive a credit for the Securities on DTC's records. The ownership interest of each Securityholder will in turn be recorded on respective records of the DTC Participants and Indirect DTC Participants. Securityholders will not receive written confirmation from DTC of their purchase, but Securityholders are expected to receive written 34 37 confirmations providing details of the transaction, as well as periodic statements of their holdings, from the DTC Participant or Indirect DTC Participant through which the Securityholder entered into the transaction. Transfers of ownership interests in the Securities of any class will be accomplished by entries made on the books of DTC Participants acting on behalf of Securityholders. To facilitate subsequent transfers, all Securities deposited by DTC Participants with DTC will be registered in the name of Cede, a nominee of DTC. The deposit of Securities with DTC and their registration in the name of Cede will effect no change in beneficial ownership. DTC will have no knowledge of the actual Securityholders and its records will reflect only the identity of the DTC Participants to whose accounts those Securities are credited, which may or may not be the Securityholders. DTC Participants and Indirect DTC Participants will remain responsible for keeping account of their holdings on behalf of their customers. While the Securities of a series are held in book-entry form, Securityholders will not have access to the list of Securityholders of that series, which may impede the ability of Securityholders to communicate with each other. Conveyance of notices and other communications by DTC to DTC Participants, by DTC Participants to Indirect DTC Participants and by DTC Participants and Indirect DTC Participants to Securityholders will be governed by arrangements among them, subject to any statutory or regulatory requirements that may be in effect from time to time. Under the rules, regulations and procedures creating and affecting DTC and its operations, DTC is required to make book-entry transfers among DTC Participants on whose behalf it acts with respect to the Securities and is required to receive and transmit payments of principal of and interest on the Securities. DTC Participants and Indirect DTC Participants with which Securityholders have accounts with respect to the Securities similarly are required to make book-entry transfers and receive and transmit those payments on behalf of their respective Securityholders. DTC's practice is to credit DTC Participants' accounts on each Distribution Date in accordance with their respective holdings shown on its records, unless DTC has reason to believe that it will not receive payment on that Distribution Date. Payments by DTC Participants and Indirect DTC Participants to Securityholders will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of that DTC Participant and not of DTC, the related Indenture Trustee or Trustee (or any paying agent appointed by the Indenture Trustee or Trustee), the Seller or the Servicer, subject to any statutory or regulatory requirements that may be in effect from time to time. Payment of principal of and interest on each class of Securities to DTC will be the responsibility of the related Indenture Trustee or Trustee (or any paying agent), disbursement of those payments to DTC Participants will be the responsibility of DTC and disbursement of those payments to the related Securityholders will be the responsibility of DTC Participants and Indirect DTC Participants. DTC will forward those payments to its DTC Participants which thereafter will forward them to Indirect DTC Participants or Securityholders. Because DTC can only act on behalf of DTC Participants, who in turn act on behalf of Indirect DTC Participants and some other banks, a Securityholder may be limited in its ability to pledge Securities to persons or entities that do not participate in the DTC system, or otherwise take actions with respect to those Securities due to the lack of a physical certificate for those Securities. DTC has advised the Seller that it will take any action permitted to be taken by a Securityholder only at the direction of one or more DTC Participants to whose account with DTC the Securities are credited. Additionally, DTC has advised the Seller that it will take those actions with respect to specified percentages of the Securityholders' interest only at the direction of and on behalf of DTC Participants whose holdings include undivided interests that satisfy those specified percentages. DTC may take conflicting actions with respect to other undivided interests to the extent that those actions are taken on behalf of DTC Participants whose holdings include those undivided interests. Neither DTC nor Cede will consent or vote with respect to the Securities. Under its usual procedures, DTC will mail an "Omnibus Proxy" to the related Indenture Trustee or Trustee as soon as possible after 35 38 any applicable record date for that consent or vote. The Omnibus Proxy will assign Cede's consenting or voting rights to those DTC Participants to whose accounts the related Securities are credited on that record date (which record date will be identified in a listing attached to the Omnibus Proxy). Clearstream Banking is incorporated under the laws of Luxembourg as a professional depository. Clearstream Banking holds securities for its participating organizations ("Clearstream Banking Participants") and facilitates the clearance and settlement of securities transactions between Clearstream Banking Participants through electronic book-entry changes in accounts of Clearstream Banking Participants, thereby eliminating the need for physical movement of certificates. Transactions may be settled in Clearstream Banking in any of 28 currencies, including United States dollars. Clearstream Banking provides to Clearstream Banking Participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream Banking interfaces with domestic markets in several countries. As a professional depository, Clearstream Banking is subject to regulation by the Luxembourg Monetary Institute. Clearstream Banking Participants are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and other organizations and may include any underwriters, agents or dealers with respect to any class or series of Securities offered by this Prospectus. Indirect access to Clearstream Banking is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Clearstream Banking Participant, either directly or indirectly. Euroclear was created in 1968 to hold securities for participants of the Euroclear System ("Euroclear Participants") and to clear and settle transactions between Euroclear Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Transactions may now be settled in any of 27 currencies, including United States dollars. The Euroclear System includes various other services, including securities lending and borrowing, and interfaces with domestic markets in several countries generally similar to the arrangements for cross-market transfers with DTC described above. The Euroclear System is operated by Morgan Guaranty Trust Company of New York, Brussels, Belgium office (the "Euroclear Operator" or "Euroclear"), under contract with Euroclear Clearance System S.C., a Belgian cooperative corporation (the "Cooperative"). All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Cooperative. The Cooperative establishes policy for the Euroclear System on behalf of Euroclear Participants. Euroclear Participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include any underwriters, agents or dealers with respect to any class or series of Securities offered by this Prospectus. Indirect access to the Euroclear System is also available to other firms that clear through or maintain a custodial relationship with a Euroclear Participant, either directly or indirectly. The Euroclear Operator is the Belgian branch of a New York banking corporation which is a member bank of the Federal Reserve System. Therefore, it is regulated and examined by the Board of Governors of the Federal Reserve System and the New York State Banking Department, as well as the Belgian Banking Commission. Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System and applicable Belgian law (collectively, the "Terms and Conditions"). The Terms and Conditions govern transfers of securities and cash within the Euroclear System, withdrawals of securities and cash from the Euroclear System and receipts of payments with respect to securities in the Euroclear System. All securities in the Euroclear System are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf of Euroclear Participants, and has no record of or relationship with persons holding through Euroclear Participants. 36 39 Payments with respect to Securities held through Clearstream Banking or Euroclear will be credited to the cash accounts of Clearstream Banking Participants or Euroclear Participants in accordance with the relevant system's rules and procedures, to the extent received by its Depositary. Those payments will be subject to tax withholding in accordance with relevant United States tax laws and regulations. See "Material Income Tax Consequences." Clearstream Banking or the Euroclear Operator, as the case may be, will take any other action permitted to be taken by a Securityholder on behalf of a Clearstream Banking Participant or Euroclear Participant only in accordance with its relevant rules and procedures and subject to its Depositary's ability to effect those actions on its behalf through DTC. Although DTC, Clearstream Banking and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of Securities among participants of DTC, Clearstream Banking and Euroclear, they are under no obligation to perform or continue to perform those procedures and those procedures may be discontinued at any time. DEFINITIVE SECURITIES The Notes, if any, and the Certificates of a given series will be issued in fully registered, certificated form ("Definitive Notes" and "Definitive Certificates", respectively, and collectively referred to in this Prospectus as "Definitive Securities") to Noteholders or Certificateholders or their respective nominees, rather than to DTC or its nominee, only if: 1. DTC is no longer willing or able to discharge properly its responsibilities as depository with respect to those Securities and the Seller, the Administrator or the Trustee is unable to locate a qualified successor (and if it is the Seller or the Administrator that has made that determination, the Seller or that Administrator so notifies the applicable Trustee in writing); 2. the Seller or the Administrator or the Trustee, as applicable, at its option, elects to terminate the book-entry system through DTC; or 3. after the occurrence of an Event of Default or a Servicer Default with respect to those Securities, holders representing at least a majority of the outstanding principal amount of the Notes or the Certificates, as the case may be, of that series, acting together as a single class, advise the applicable Trustee through DTC in writing that the continuation of a book-entry system through DTC (or a successor thereto) with respect to those Notes or Certificates is no longer in the best interests of the holders of those Securities. Upon the occurrence of any event described in the immediately preceding paragraph, the applicable Trustee or Indenture Trustee will be required to notify all applicable Securityholders of a given series through DTC Participants of the availability of Definitive Securities. Upon surrender by DTC of the definitive certificates representing the corresponding Securities and receipt of instructions for re-registration, the applicable Trustee or Indenture Trustee will reissue those Securities as Definitive Securities to those Securityholders. Payments of principal of, and interest on, the Definitive Securities will thereafter be made by the applicable Trustee or Indenture Trustee in accordance with the procedures set forth in the related Indenture or the related Trust Agreement or Pooling and Servicing Agreement, as applicable, directly to holders of Definitive Securities in whose names the Definitive Securities were registered at the close of business on the applicable record date specified for those Securities in the applicable Prospectus Supplement. Those payments will be made by check mailed to the address of that holder as it appears on the register maintained by the applicable Trustee or Indenture Trustee. The final payment on any Definitive Security, however, will be made only upon presentation and surrender of that Definitive Security at the office or agency specified in the notice of final payment to the applicable Securityholders. The applicable Trustee or the Indenture Trustee will provide that notice to the applicable Securityholders not less than 15 nor more than 30 days prior to the date on which the final payment is expected to occur. Definitive Securities will be transferable and exchangeable at the offices of the applicable Trustee or of a registrar named in a notice delivered to holders of Definitive Securities. No service charge will be 37 40 imposed for any registration of transfer or exchange, but the applicable Trustee may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith. DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS The following summary describes material terms of each Sale and Servicing Agreement or Pooling and Servicing Agreement pursuant to which a Trust will purchase Receivables from the Seller and the Servicer will agree to service those Receivables, each Trust Agreement (or in the case of a grantor trust, the Pooling and Servicing Agreement) pursuant to which a Trust will be created and Certificates will be issued and each Administration Agreement pursuant to which NMAC will undertake specified administrative duties with respect to a Trust that issues Notes (collectively, the "Transfer and Servicing Agreements"). Forms of the Transfer and Servicing Agreements have been filed as exhibits to the Registration Statement of which this Prospectus forms a part. The provisions of any of the Transfer and Servicing Agreements may differ from those described in this Prospectus and, if so, will be described in the applicable Prospectus Supplement. This summary does not purport to be complete and is subject to, and qualified in its entirety by reference to, all the provisions of the Transfer and Servicing Agreements. SALE AND ASSIGNMENT OF RECEIVABLES On or prior to the Closing Date specified with respect to any given Trust in the applicable Prospectus Supplement (the "Closing Date"), NMAC will sell and assign to the Seller, without recourse, pursuant to a Purchase Agreement (the "Purchase Agreement"), its entire interest in the Receivables comprising the related Receivables Pool, including the security interests in the Financed Vehicles. On the Closing Date, the Seller will transfer and assign to the applicable Trustee on behalf of the Trust, without recourse, pursuant to a Sale and Servicing Agreement or a Pooling and Servicing Agreement, as applicable, its entire interest in the Receivables comprising the related Receivables Pool, including its security interests in the related Financed Vehicles. Each Receivable will be identified in a schedule appearing as an exhibit to the related Sale and Servicing Agreement or Pooling and Servicing Agreement (a "Schedule of Receivables"), but the existence and characteristics of the related Receivables will not be verified by the related Trustee. The applicable Trustee will, concurrently with the transfer and assignment, on behalf of the Trust, execute and deliver the related Notes and/or Certificates. The net proceeds received from the sale of the Certificates and the Notes of a given series will be applied to the purchase of the related Receivables from the Seller and, to the extent specified in the applicable Prospectus Supplement, to make any required initial deposit into the Reserve Account and the Yield Supplement Account, if any. The Seller will initially retain the most subordinated class of Security of the related series. NMAC, pursuant to a Purchase Agreement, and the Seller, pursuant to a Sale and Servicing Agreement or a Pooling and Servicing Agreement, will represent and warrant, among other things, that: 1. the information provided in the related Schedule of Receivables is true and correct in all material respects; 2. the related Obligor on each Receivable is required to maintain physical damage insurance covering the Financed Vehicle in accordance with NMAC's normal requirements; 3. as of the Closing Date, each of those Receivables is or will be secured by a first priority perfected security interest in favor of NMAC in the Financed Vehicle; 4. as of the Closing Date, the related Receivables are free and clear of all security interests, liens, charges and encumbrances and no offsets, defenses or counterclaims have been asserted or threatened; 5. each related Receivable, at the time it was originated, complied and, as of the Closing Date, complies in all material respects with applicable federal and state laws, including, consumer credit, truth-in-lending, equal credit opportunity and disclosure laws; and 38 41 6. any other representations and warranties that may be set forth in the applicable Prospectus Supplement. As of the last day of the second (or, if the Seller so elects, the first) Collection Period following the discovery by or notice to the Seller of a breach of any representation or warranty of the Seller that materially and adversely affects the interests of the related Securityholders in any Receivable (the initial determination of a material adverse effect generally being made by the Servicer), the Seller, unless the breach is cured, will repurchase that Receivable (a "Warranty Receivable") from that Trust and, pursuant to the related Purchase Agreement, NMAC will purchase that Warranty Receivable from the Seller, at a price equal to the Warranty Purchase Payment for that Receivable. The "Warranty Purchase Payment" will be equal to the amount required to be paid by the related Obligor to prepay the Receivable (including interest accrued on that Receivable through the due date for the Obligor's payment in the related Collection Period at the applicable APR), after giving effect to the receipt of any monies collected (from whatever source) on that Receivable, if any. This repurchase obligation will constitute the sole remedy available to the Securityholders or the Trust for any uncured breach by the Seller of those representations and warranties (other than remedies that may be available under federal securities laws or other laws). The obligation of the Seller to repurchase a Receivable will not be conditioned on performance by NMAC of its obligation to purchase that Receivable from the Seller pursuant to the related Purchase Agreement. Pursuant to each Sale and Servicing Agreement or Pooling and Servicing Agreement, the Seller and each Trust will designate the Servicer as custodian to maintain possession as that Trust's agent of the related installment sale contracts and any other documents relating to the Receivables. To assure uniform quality in servicing both the Receivables and the Servicer's own portfolio of automobile and light-duty truck installment sales contracts, as well as to facilitate servicing and reduce administrative costs, the documents evidencing the Receivables will not be physically segregated from other automobile and light-duty truck installment sales contracts of the Servicer, or those which the Servicer services for others, or marked to reflect the transfer to the related Trust as long as NMAC is servicing the Receivables. However, Uniform Commercial Code ("UCC") financing statements reflecting the sale and assignment of the Receivables by NMAC to the Seller and by the Seller to the applicable Trust will be filed, and the respective accounting records and computer files of NMAC and the Seller will reflect that sale and assignment. Because the Receivables will remain in the Servicer's possession and will not be stamped or otherwise marked to reflect the assignment to the Trustee, if a subsequent purchaser were able to take physical possession of the Receivables without knowledge of the assignment, the Trust's interest in the Receivables could be defeated. In addition, in some cases, the Trustee's security interest in collections that have been received by the Servicer but not yet remitted to the related Collection Account could be defeated. See "Material Legal Aspects of the Receivables -- Security Interests" in this Prospectus. ACCOUNTS With respect to each Trust that issues Notes, the Servicer will establish and maintain with the related Trustee or the Indenture Trustee one or more accounts (each, a "Collection Account"), in the name of the related Trustee or the Indenture Trustee on behalf of the related Securityholders, into which payments made on or with respect to the related Receivables and amounts released from any Yield Supplement Account, Reserve Account or other form of credit enhancement will be deposited for payment to the related Securityholders. With respect to each Trust that does not issue Notes, the Servicer will also establish and maintain a Collection Account and any other Account in the name of the related Trustee on behalf of the related Certificateholders. Any other accounts to be established with respect to a Trust, including any Yield Supplement Account or any Reserve Account, will be described in the applicable Prospectus Supplement. For any series of Securities, funds in the related Collection Account, any Yield Supplement Account, the Reserve Account and other accounts that may be identified in the applicable Prospectus Supplement (collectively, the "Accounts") will be invested as provided in the related Sale and Servicing Agreement or Pooling and Servicing Agreement in Eligible Investments. "Eligible Investments" are generally limited to investments acceptable to the rating agencies rating those Securities as being consistent with the rating of 39 42 those Securities (including obligations of the Servicer and its affiliates, to the extent consistent with that rating). Except as described below, Eligible Investments are limited to obligations or securities that mature on or before the next Distribution Date for that series. However, to the extent permitted by the rating agencies, funds in any Account (other than the Collection Account) may be invested in obligations or securities that will not mature prior to the date of the next payment with respect to those Certificates or Notes and will not be sold to meet any shortfalls. Thus, the amount of cash in any Reserve Account or the Yield Supplement Account at any time may be less than the balance of the Reserve Account or the Yield Supplement Account, as the case may be. If the amount required to be withdrawn from any Reserve Account or the Yield Supplement Account to cover shortfalls in collections on the related Receivables (as provided in the applicable Prospectus Supplement) exceeds the amount of cash in the Reserve Account or the Yield Supplement Account, as the case may be, a temporary shortfall in the amounts paid to the related Noteholders or Certificateholders could result, which could, in turn, increase the average life of the Notes or the Certificates of that series. Investment earnings on funds deposited in the Accounts, net of losses and investment expenses, shall be released to the Servicer or the Seller on each Distribution Date and shall be the property of the Servicer or the Seller, as the case may be. For each Trust, the Accounts will be maintained with the related Indenture Trustee or the Trustee so long as: 1. the Indenture Trustee's or the Trustee's short-term unsecured debt obligations have a rating of "P-1" by Moody's Investors Service, Inc. and a rating of "A-1+" by Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. and for any account in which deposits in excess of 30 days are to be made, the Indenture Trustee's or the Trustee's long-term unsecured debt obligations have a rating of at least "AA-" by Standard & Poor's Ratings Services (the "Required Deposit Rating"); or 2. each of those accounts is maintained in a segregated trust account in the trust department of the Indenture Trustee or the Trustee, as the case may be. If the short-term unsecured debt obligations of the related Indenture Trustee or the Trustee, as the case may be, do not have the Required Deposit Rating, then the Servicer shall, with the assistance of the Indenture Trustee or the Trustee as may be necessary, cause each Account to be moved to (1) a bank whose short-term unsecured debt obligations have the Required Deposit Rating or (2) the trust department of the related Indenture Trustee or the Trustee. SERVICING PROCEDURES The Servicer will make reasonable efforts to collect all payments due with respect to the Receivables held by any Trust and will, consistent with the related Sale and Servicing Agreement or Pooling and Servicing Agreement, follow the collection procedures it follows with respect to comparable retail installment sale contracts it services for itself. The Servicer shall not: 1. change the amount of a Receivable; 2. reschedule the due date of any scheduled payment of a Receivable; 3. change the APR of a Receivable; 4. extend the due date for any payment on a Receivable; or 5. change the material terms of a Receivable. However, if a default, breach, violation, delinquency or event permitting acceleration under the terms of any Receivable has occurred or, in the judgment of the Servicer, is imminent, the Servicer may do the following: 1. extend the due date for any payment on that Receivable for credit related reasons that would be acceptable to the Servicer for comparable retail installment sale contracts that it services for itself, but only if (a) the final scheduled distribution date of that Receivable, as extended, would not be later than the Collection Period preceding the final scheduled distribution date set forth in the 40 43 applicable Prospectus Supplement, and (b) the rescheduling or extension would not modify the terms of that Receivable in a manner which would constitute a cancellation of that Receivable and the creation of a new receivable for federal income tax purposes; or 2. reduce an Obligor's monthly payment amount in the event of a prepayment resulting from refunds of credit life and disability insurance premiums and service contracts and make similar adjustments in payment terms for that Receivable to the extent required by law. In addition, the Servicer will covenant that, except as otherwise contemplated in the related agreement (including the provisions in the immediately two preceding paragraphs): 1. it will not release any Financed Vehicle from the security interest granted in the related Receivable; 2. it will do nothing to impair the rights of the Securityholders in the Receivables; 3. it will not alter the APR of any Receivable; 4. it will not modify the number of payments under a Receivable; 5. it will not increase the amount financed under a Receivable; and 6. it will not extend the due date for any payment on or forgive payments on a Receivable. The Servicer or the Trustee shall inform the other party and the Indenture Trustee promptly upon the discovery of any breach by the Servicer of the above obligations that would materially and adversely affect any Receivable. Unless the breach is cured by the last day of the second Collection Period following the discovery (or, if the Servicer so elects, the last day of the first Collection Period following the discovery), the Servicer is required to purchase any Receivable materially and adversely affected by the breach (an "Administrative Receivable") from the Trust at a price equal to the Administrative Purchase Payment for that Receivable. The "Administrative Purchase Payment" for a Receivable will be equal to its unpaid Principal Balance as of the beginning of that Collection Period, plus interest accrued through the due date for the Obligor's payment in that Collection Period at the related APR, after giving effect to the receipt of monies collected (from whatever source other than the Advances) on that Administrative Receivable, if any, in that Collection Period. Upon the purchase of any Administrative Receivable, the Servicer will for all purposes of the related Sale and Servicing Agreement or the Pooling Agreement, as applicable, be deemed to have released all claims for the reimbursement of outstanding Advances made in respect of that Administrative Receivable. This purchase obligation will constitute the sole remedy available to the Certificateholders or the Trustee for any uncured breach by the Servicer. If the Servicer determines that eventual payment in full of a Receivable is unlikely, the Servicer will follow its normal practices and procedures to recover all amounts due upon that Receivable, including repossessing and disposing of the related Financed Vehicle at a public or private sale, or taking any other action permitted by applicable law. See "Material Legal Aspects of the Receivables." INSURANCE ON FINANCED VEHICLES Each Receivable requires the related Obligor to maintain specific levels and types of insurance coverage to protect the Financed Vehicle against loss. NMAC requires evidence of insurance coverage by the Obligors at the time of origination of the Receivables, but performs no verification of continued coverage after origination. NMAC will not be obligated to make payments to the Trust for any loss as to which third party insurance has not been maintained, except to the extent of its obligations under the related Purchase Agreement. COLLECTIONS With respect to each Trust, the Servicer will deposit all payments on Receivables received from Obligors and all proceeds of Receivables collected during the collection period specified in the applicable Prospectus Supplement (each, a "Collection Period") into the Collection Account not later than the 41 44 Business Day after receipt. However, so long as NMAC is the servicer, if each condition to making monthly deposits as may be required by the related Sale and Servicing Agreement or Pooling and Servicing Agreement (including, the satisfaction of specified ratings criteria by NMAC and the absence of any Servicer Default) is satisfied, the Servicer may retain such amounts until the related Distribution Date. The Servicer will be entitled to withhold, or to be reimbursed from amounts otherwise payable into or on deposit in the Collection Account, amounts previously deposited in the Collection Account but later determined to have resulted from mistaken deposits or postings. Except in certain circumstances described in the related Sale and Servicing Agreement or Pooling and Servicing Agreement, pending deposit into the Collection Account, collections may be employed by the Servicer at its own risk and for its own benefit and will not be segregated from its own funds. The Servicer or the Seller, as the case may be, will remit the aggregate Warranty Purchase Payments and Administrative Purchase Payments of Receivables to be purchased from the Trust to the Collection Account on the Business Day immediately preceding the related Distribution Date. If the Servicer were unable to remit the funds as described above, Securityholders might incur a loss. To the extent set forth in the applicable Prospectus Supplement, the Servicer may, in order to satisfy the requirements described above, obtain a letter of credit or other security for the benefit of the related Trust to secure timely remittances of collections on the related Receivables and payment of the aggregate Warranty Purchase Payments and Administrative Purchase Payments with respect to Receivables required to be repurchased by the Seller or the Servicer, as applicable. For purposes of the related Sale and Servicing Agreement or Pooling and Servicing Agreement, collections on a Receivable made during a Collection Period (including Warranty Purchase Payments and Administrative Purchase Payments) will be applied first to interest accrued to date, second to principal until the principal balance is brought current, third to reduce the unpaid late charges as provided in the Receivable and finally to prepay principal on the Receivable. ADVANCES If payment on a Receivable (other than an Administrative Receivable or a Warranty Receivable) is not received in full by the end of the month in which it is due, the Servicer shall, subject to the limitations set forth below, advance to the Trust an amount with respect to that Receivable equal to the product of the Principal Balance of that Receivable as of the first day of the related Collection Period and one-twelfth of its APR minus the amount of interest actually received on that Receivable during the related Collection Period (each, an "Advance"). If that calculation results in a negative number, an amount equal to that negative amount shall be paid to the Servicer in reimbursement of outstanding Advances. In addition, if a Defaulted Receivable is liquidated (a "Liquidated Receivable"), the amount of accrued and unpaid interest on that Liquidated Receivable (but not including interest for the current Collection Period) will, up to the amount of all outstanding Advances in respect thereof, be withdrawn from the related Collection Account and paid to the Servicer in reimbursement of the outstanding Advances. A "Defaulted Receivable" will be a Receivable (other than a Receivable as to which as Warranty Purchase Payment or an Administrative Purchase Payment has been made) which, by its terms, is delinquent 120 or more days or, with respect to a Receivable that is delinquent less than 120 days, the Servicer has (a) determined, in accordance with its customary servicing procedures, that eventual payment is unlikely, or (b) repossessed the Financed Vehicle. No advances of principal will be made with respect to Receivables. The Servicer will not be obligated to make an Advance (other than in respect of an interest shortfall arising from the prepayment of a Receivable) to the extent that it determines, in its sole discretion, that that Advance will not be recovered from subsequent collections or recoveries. The Servicer will make all Advances by depositing into the related Collection Account an amount equal to the aggregate of the Advances due in respect of a Collection Period on the Business Day immediately preceding the related Distribution Date. SERVICING COMPENSATION The Servicer will be entitled to receive a basic servicing fee for each Collection Period in an amount equal to a specified percent per annum (as set forth in the applicable Prospectus Supplement, the "Servicing Rate") of the Pool Balance as of the first day of the related Collection Period (the "Base Servicing Fee"). The Base Servicing Fee (together with any portion of the Base Servicing Fee that 42 45 remains unpaid from prior Distribution Dates) will be paid solely to the extent of amounts available for that purpose as set forth in the applicable Prospectus Supplement. However, the Base Servicing Fee will be paid prior to the payment of available amounts to the Noteholders or the Certificateholders of the given series. The Servicer will also be entitled to collect and retain any late fees, prepayment charges and other administrative fees or similar charges allowed by applicable law with respect to the related Receivables and any interest earned during a Collection Period from the investment of monies in the Collection Account as additional servicing compensation (the "Supplemental Servicing Fee" and, together with the Base Servicing Fee, the "Total Servicing Fee"). Payments by or on behalf of Obligors will be allocated to scheduled payments and late fees and other charges in accordance with the Servicer's normal practices and procedures. In addition, the Servicer will be entitled to reimbursement from any given Trust for specified liabilities. The Servicer will be paid the Base Servicing Fee for each Collection Period on the Distribution Date related to that Collection Period prior to the payment of interest on any class of Notes or Certificates. However, if each rating agency for a series of Notes or Certificates confirms that it will not reduce the rating of any class of Notes or Certificates in that series, as the case may be, the Base Servicing Fee in respect of a Collection Period (together with any portion of the Base Servicing Fee that remains unpaid from the prior Distribution Dates) will be paid at the beginning of that Collection Period out of collections of interest on the related Receivables. The Total Servicing Fee will compensate the Servicer for performing the functions of a third party servicer of motor vehicle receivables as an agent for the beneficial owner of those receivables, including collecting and posting all payments, responding to inquiries of Obligors on the Receivables, investigating delinquencies, sending payment statements to Obligors, reporting tax information to Obligors, paying costs of collections and policing the collateral. The Total Servicing Fee also will compensate the Servicer for administering the particular Receivables Pool, including making Advances, accounting for collections and furnishing monthly statements to the related Trustee and Indenture Trustee with respect to payments. The Total Servicing Fee also will reimburse the Servicer for specified taxes, the fees of the related Trustee and Indenture Trustee, if any, accounting fees, outside auditor fees, data processing costs and other costs incurred in connection with administering the applicable Receivables Pool. The "Pool Balance" as of the close of business on the last day of a Collection Period will equal the aggregate Principal Balance of the Receivables (excluding Administrative Receivables, Warranty Receivables and Defaulted Receivables) as of the close of business on such day; provided, however, that where the Pool Balance is relevant in determining whether the requisite percentage of Certificateholders or Noteholders (or relevant class or classes of Certificates or Notes, as the case may be) necessary to effect any consent, waiver, request or demand shall have been obtained, the Pool Balance shall be deemed to be reduced by the amount equal to the portion of the Pool Balance (before giving effect to this provision) represented by the interests evidenced by any applicable Certificate or Note registered in the name of the Seller, the Servicer or any person actually known to a trust officer of the 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, the Seller or any of their affiliates. The "Principal Balance" of a Receivable as of any date will equal the original principal balance of that Receivable minus the sum of: 1. that portion of all payments actually received on or prior to that date allocable to principal; 2. any Warranty Purchase Payment or Administrative Purchase Payment with respect to that Receivable allocable to principal (to the extent not included in clause (1) above); and 3. any prepayments or other payments applied to reduce the unpaid principal balance of that Receivable (to the extent not included in clauses (1) and (2) above). YIELD SUPPLEMENT ACCOUNT; YIELD SUPPLEMENT AGREEMENT YIELD SUPPLEMENT ACCOUNT. A "Yield Supplement Account" may be established with respect to any class or series of Securities. The terms relating to any Yield Supplement Account will be set forth in the applicable Prospectus Supplement. Each Yield Supplement Account will be designed to hold funds or other receivables or assets (including vehicle lease contracts), not already a part of the relevant Trust. Such funds or amounts collected under the receivables or assets (including vehicle lease contracts) will be applied by the related Trustee or, if that Trust issues Notes, the related Indenture Trustee, to provide payments to Securityholders in respect of Receivables that have APRs less than the sum of the Pass Through Rate or Interest Rate specified in the applicable Prospectus Supplement plus the Servicing Rate specified in the applicable Prospectus Supplement (the "Required Rate"). Each Yield Supplement Account will be maintained with the same entity with which the related Collection Account is maintained and will be created on the related Closing Date with an initial cash deposit and/or a pledge of other 43 46 receivables or assets (including vehicle lease contracts) and by the Seller or other person specified in the applicable Prospectus Supplement. On each Distribution Date, the related Trustee or Indenture Trustee will transfer to the Collection Account from monies on deposit in the Yield Supplement Account an amount specified in the applicable Prospectus Supplement (the "Yield Supplement Deposit") in respect of the Receivables having APRs less than the Required Rate for that Distribution Date. Amounts on deposit on any Distribution Date in the Yield Supplement Account in excess of the "Required Yield Supplement Amount" specified in the applicable Prospectus Supplement, after giving effect to all payments to be made on that Distribution Date, will be released to the Seller. Unless otherwise in the applicable Prospectus Supplement, the Seller or other person specified in the applicable Prospectus Supplement will not have any obligation after the related Closing Date to deposit any cash amounts and/or receivables or assets (including vehicle lease contracts) into the Yield Supplement Account after the related Closing Date even if the amount and the total balance of any receivables and the value of those assets on deposit in that account is less than the Required Yield Supplement Amount for any Distribution Date. Monies on deposit in the Yield Supplement Account may be invested in Eligible Investments under the circumstances and in the manner described in the related Pooling and Servicing Agreement or Trust Agreement. Earnings on investment of funds in the Yield Supplement Account in Eligible Investments will be deposited into the Collection Account as a component of the Yield Supplement Deposit on each Distribution Date. Any monies remaining on deposit in the Yield Supplement Account upon the termination of the Trust also will be released to the Seller. YIELD SUPPLEMENT AGREEMENT. If a Yield Supplement Account is to be established with respect to a series of Securities, on or prior to the related Closing Date, the Seller will enter into a "Yield Supplement Agreement" with the Servicer, the Trust, and the entity with which the account is maintained. DISTRIBUTIONS ON THE SECURITIES With respect to each series of Securities, beginning on the Distribution Date specified in the applicable Prospectus Supplement, payments of principal and interest (or, where applicable, of principal or interest only) on each class of those Securities entitled thereto will be made by the applicable Indenture Trustee to the Noteholders and by the applicable Trustee to the Certificateholders of that series. The timing, calculation, allocation, order, source, priorities of and requirements for all payments to each class of Noteholders and all payments to each class of Certificateholders of that series will be set forth in the applicable Prospectus Supplement. With respect to each Trust, on each Distribution Date, collections on the related Receivables will be withdrawn from the related Collection Account and will be paid to the Noteholders and/or Certificateholders to the extent provided in the applicable Prospectus Supplement. Credit enhancement, such as a Reserve Account, will be available to cover any shortfalls in the amount available for payment to the Securityholders on that date to the extent specified in the applicable Prospectus Supplement. As more fully described in the applicable Prospectus Supplement, 1. payments of principal of a class of Securities of a given series will be subordinate to payments of interest on that class; 2. payments in respect of one or more classes of Certificates of that series may be subordinate to payments in respect of Notes, if any, of that series or other classes of Certificates of that series; and 3. payments in respect of one or more classes of Notes of that series may be subordinate to payments in respect of other classes of Notes of that series. CREDIT AND CASH FLOW ENHANCEMENT The amounts and types of credit and cash flow enhancement arrangements and the provider thereof, if applicable, with respect to each class of Securities of a given series, if any, will be set forth in the 44 47 applicable Prospectus Supplement. If and to the extent provided in the applicable Prospectus Supplement, credit and cash flow enhancement may be in the form of subordination of one or more classes of Securities, Reserve Accounts, over-collateralization, letters of credit, credit or liquidity facilities, surety bonds, guaranteed investment contracts or other interest rate protection agreements, repurchase obligations, yield supplement agreements, other agreements with respect to third party payments or other support, cash deposits or other arrangements that may be described in the applicable Prospectus Supplement or any combination of the foregoing. If specified in the applicable Prospectus Supplement, credit or cash flow enhancement for a class of Securities may cover one or more other classes of Securities of the same series, and credit or cash flow enhancement for a series of Securities may cover one or more other series of Securities. The presence of a Reserve Account and other forms of credit enhancement for the benefit of any class or series of Securities is intended to enhance the likelihood of receipt by the Securityholders of that class or series of the full amount of principal and interest due on those Securities and to decrease the likelihood that Securityholders will experience losses. The credit enhancement for a class or series of Securities will not provide protection against all risks of loss and will not guarantee repayment of the entire principal of and interest on those Securities. If losses occur which exceed the amount covered by any credit enhancement or which are not covered by any credit enhancement, Securityholders of any class or series will bear their allocable share of deficiencies, as described in the applicable Prospectus Supplement. In addition, if a form of credit enhancement covers more than one class or series of Securities, Securityholders of any of that class or series will be subject to the risk that that credit enhancement will be exhausted by the claims of Securityholders of other classes or series. RESERVE ACCOUNT. If provided in the applicable Prospectus Supplement, pursuant to the related Sale and Servicing Agreement or Pooling and Servicing Agreement, the Seller or a third party will establish for a series or class of Securities an account, as specified in the applicable Prospectus Supplement, which may be designated as a "Reserve Account" or a "Subordination Spread Account" (for the purposes of this Prospectus, the "Reserve Account"), that will be maintained with the related Trustee or Indenture Trustee, as applicable. The Reserve Account will be funded by an initial deposit by the Seller or a third party on the Closing Date in the amount set forth in the applicable Prospectus Supplement (the "Reserve Account Initial Deposit"). To the extent provided in the applicable Prospectus Supplement, the amount on deposit in the Reserve Account will be increased on each Distribution Date thereafter up to the Specified Reserve Account Balance (as defined in the applicable Prospectus Supplement) by the deposit in the Reserve Account of the amount of collections on the related Receivables remaining on each Distribution Date after all specified payments on that date are made. The applicable Prospectus Supplement will describe the circumstances and manner under which payments may be made out of the Reserve Account, either to holders of the Securities covered by that Prospectus Supplement or to the Seller or a third party. Monies on deposit in the Reserve Account may be invested in Eligible Investments under the circumstances and in the manner described in the related Sale and Servicing Agreement or the Pooling and Servicing Agreement. Earnings on investment of funds in the Reserve Account in Eligible Investments will be paid to the Seller on each Distribution Date. Any monies remaining on deposit in the Reserve Account upon the termination of the Trust also will be released to the Seller. NET DEPOSITS As an administrative convenience, as long as specified conditions are satisfied, the Servicer will be permitted to make the deposit of collections, aggregate Advances and Administrative Purchase Payments for any Trust for or with respect to the related Collection Period net of payments to be made to the Servicer with respect to that Collection Period. The Servicer may cause to be made a single, net transfer from the Collection Account. The Servicer, however, will account to the Trustee, any Indenture Trustee, the Noteholders, if any, and the Certificateholders with respect to each Trust as if all deposits, payments and transfers were made individually. With respect to any Trust that issues both Certificates and Notes, if the related Distribution Dates are not the same for all classes of Securities, all distributions, deposits or other remittances made on a Distribution Date will be treated as having been distributed, deposited or 45 48 remitted on the same Distribution Date for the applicable Collection Period for purposes of determining other amounts required to be distributed, deposited or otherwise remitted on a Distribution Date. STATEMENTS TO TRUSTEES AND TRUST On a Business Day in each month that precedes each Distribution Date (each, a "Determination Date" to be specified in the applicable Prospectus Supplement), the Servicer will provide to the applicable Indenture Trustee, if any, and the applicable Trustee a statement setting forth with respect to a series of Securities substantially the same information that is required to be provided in the periodic reports provided to Securityholders of that series described under "-- Statements to Securityholders" below. STATEMENTS TO SECURITYHOLDERS With respect to each series of Securities that includes Notes, on or prior to each Distribution Date, the Servicer will prepare and provide to the related Indenture Trustee a statement to be delivered to the related Noteholders on that Distribution Date. In addition, on or prior to each Distribution Date, the Servicer will prepare and provide to the related Trustee of each Trust, a statement to be delivered to the Certificateholders. Each statement to be delivered to Securityholders will include (to the extent applicable) the following information (and any other information so specified in the applicable Prospectus Supplement) as to the Notes of that series and as to the Certificates of that series with respect to that Distribution Date: 1. the amount of the payment allocable to the principal amount of each class of those Notes and to the Certificate Balance of each class of those Certificates; 2. the amount of the payment allocable to interest on each class of Securities of that series; 3. the amount of the distribution allocable to the Yield Supplement Deposit, if any; 4. the Pool Balance as of the close of business on the last day of the related Collection Period; 5. the amount of the Base Servicing Fee paid to the Servicer with respect to the related Collection Period, the amount of any unpaid Base Servicing Fees and the change in that amount from that of the prior Distribution Date and the amount of any additional servicing compensation paid to the Servicer with respect to the related Collection Period; 6. the Interest Rate or Pass Through Rate for the Interest Period relating to the succeeding Distribution Date for any class of Notes or Certificates of that series with variable or adjustable rates; 7. the Noteholders' Interest Carryover Shortfall, the Noteholders' Principal Carryover Shortfall, the Certificateholders' Interest Carryover Shortfall and the Certificateholders' Principal Carryover Shortfall (each as defined in the applicable Prospectus Supplement), if any, in each case as applicable to each class of Securities, and the change in those amounts from the preceding statement; 8. the amount, if any, otherwise distributable to one or more subordinated classes of Notes or Certificates that has instead been distributed to more senior classes of Notes or Certificates on that Distribution Date; 9. the aggregate outstanding principal amount, the Note Factor and the Note Pool Factor for each class of those Notes, and the Certificate Balance, the Certificate Factor and the Certificate Pool Factor for each class of those Certificates, each after giving effect to all payments reported under clause (1) above on that date; 10. the amount of Advances made in respect of the related Receivables and the related Collection Period and the amount of unreimbursed Advances on that Distribution Date; and 46 49 11. the balance of any related Reserve Account, Yield Supplement Account or other credit or liquidity enhancement on that date, after giving effect to changes thereto on that date and the amount of those changes. Each amount set forth in subclauses (1), (2), (5) and (7) above will be expressed in the aggregate and as a dollar amount per $1,000 of the original principal amount of each class of Notes or the Original Certificate Balance of each class of Certificates, as the case may be. Copies of the statements may be obtained by the Securityholders by delivering a request in writing addressed to the applicable Trustee at its address set forth in the applicable Prospectus Supplement. Within the prescribed period of time for tax reporting purposes after the end of each calendar year during the term of each Trust, the applicable Trustee will mail to each person who at any time during that calendar year has been a Securityholder with respect to that Trust and received any payment, a statement containing information for the purposes of that Securityholder's preparation of federal income tax returns. See "Material Income Tax Consequences." EVIDENCE AS TO COMPLIANCE Each Sale and Servicing Agreement and Pooling and Servicing Agreement will provide that a firm of independent public accountants will furnish to the related Trust and Indenture Trustee or Trustee, as applicable, annually a statement as to compliance in all material respects by the Servicer during the preceding twelve months (or, in the case of the first statement, from the applicable Closing Date, which may be longer than twelve months) with specified standards relating to the servicing of the applicable Receivables. Each Sale and Servicing Agreement and Pooling and Servicing Agreement will also provide for delivery to the related Trust and Indenture Trustee or Trustee, as applicable, substantially simultaneously with the delivery of those accountants' statement referred to above, of a certificate signed by an officer of the Servicer stating that the Servicer has fulfilled its obligations under the Sale and Servicing Agreement or Pooling and Servicing Agreement, as applicable, throughout the preceding twelve months (or, in the case of the first certificate, from the Closing Date) in all material respects or, if there has been a default in the fulfillment of any obligation, describing each default. The Servicer has agreed to give each Indenture Trustee and each Trustee notice of specified Servicer Defaults under the related Sale and Servicing Agreement or Pooling and Servicing Agreement, as applicable. Copies of the statements and certificates may be obtained by Securityholders by a request in writing addressed to the applicable Trustee. MATERIAL MATTERS REGARDING THE SERVICER Each Sale and Servicing Agreement and Pooling and Servicing Agreement will provide that NMAC may not resign from its obligations and duties as Servicer under that document, except upon NMAC's determination that its performance of those duties is no longer permissible under applicable law. No resignation will become effective until the related Indenture Trustee or Trustee, as applicable, or a successor servicer has assumed NMAC's servicing obligations and duties under the related Sale and Servicing Agreement or Pooling and Servicing Agreement. Each Sale and Servicing Agreement and Pooling and Servicing Agreement will further provide that neither the Servicer nor any of its directors, officers, employees or agents will be under any liability to the related Trust or the related Noteholders or Certificateholders for taking any action or for refraining from taking any action pursuant to the related Sale and Servicing Agreement or Pooling and Servicing Agreement or for errors in judgment; except that neither the Servicer nor any person will be protected against any liability that would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in the performance of the Servicer's duties under that document or by reason of reckless disregard of its obligations and duties under that document. In addition, each Sale and Servicing Agreement and Pooling and Servicing Agreement will provide that the Servicer is not obligated to appear 47 50 in, prosecute or defend any legal action that is not incidental to the Servicer's servicing responsibilities under the related Sale and Servicing Agreement or Pooling and Servicing Agreement and that, in its opinion, may cause it to incur any expense or liability. The Servicer may, however, undertake any reasonable action that it may deem necessary or desirable in respect of the related Sale and Servicing Agreement or Pooling and Servicing Agreement, the rights and duties of the parties thereto and the interests of the Securityholders under the applicable agreement. In that event, the legal expenses and costs of that action and any liability resulting therefrom will be expenses, costs and liabilities of the Servicer, and the Servicer will not be entitled to be reimbursed therefor. Any entity into which the Servicer or the Seller may be merged or consolidated, or any entity resulting from any merger, conversion or consolidation to which the Servicer or the Seller, as applicable, is a party, or any entity succeeding to the business of the Servicer or the Seller, as applicable, or any corporation, more than 50% of the voting stock of which is owned, directly or indirectly, by Nissan, which assumes the obligations of the Servicer or the Seller, as applicable, will be the successor of the Servicer or the Seller, as applicable, under each Sale and Servicing Agreement and Pooling and Servicing Agreement. For as long as NMAC is the Servicer, it may at any time subcontract substantially all of its duties as servicer under any Sale and Servicing Agreement or Pooling and Servicing Agreement to any corporation more than 50% of the voting stock of which is owned, directly or indirectly, by Nissan, and the Servicer may at any time perform specific duties as servicer through other subcontractors. SERVICER DEFAULT "Servicer Default" under each Sale and Servicing Agreement and Pooling and Servicing Agreement will consist of the following: 1. any failure by the Servicer (or the Seller, so long as NMAC is the Servicer) to deliver to the applicable Trustee or Indenture Trustee for deposit in any related Account any required payment or to direct the applicable Trustee or Indenture Trustee to make any required distributions from that Account, and that failure continues unremedied for three Business Days after (a) receipt by the Servicer (or the Seller, so long as NMAC is the Servicer) of written notice of the failure given by the applicable Trustee or Indenture Trustee, (b) receipt by the Servicer (or the Seller, so long as NMAC is the Servicer) and the applicable Trustee or Indenture Trustee of written notice of the failure given by the holders of Notes or Certificates evidencing not less than 25% in principal amount of those outstanding Notes and the Certificates, acting together as a single class; or (b) discovery of that failure by any officer of the Servicer; 2. any failure by the Servicer (or the Seller, as long as NMAC is the Servicer) to duly observe or perform in any material respect any other covenants or agreements of the Servicer (or the Seller, as long as NMAC is the Servicer) set forth in the related Sale and Servicing Agreement or Pooling and Servicing Agreement, and that failure materially and adversely affects the rights of the Noteholders or the Certificateholders of the related series, and that failure continues unremedied for 90 days after the giving of written notice of the failure to (a) the Servicer (or the Seller, so long as NMAC is the Servicer) by the applicable Trustee or Indenture Trustee, or (b) the Servicer (or the Seller, so long as NMAC is the Servicer) and the applicable Trustee and Indenture Trustee by the holders of Notes or Certificates of the related series evidencing not less than 25% in principal amount of those outstanding Notes or Certificates, acting together as a single class; and 3. the occurrence of events of insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings with respect to the Servicer indicating its insolvency, reorganization pursuant to bankruptcy proceedings or inability to pay its obligations (any of these events with respect to any person being an "Insolvency Event"). 48 51 RIGHTS UPON SERVICER DEFAULT In the case of any Trust that has issued Notes, as long as a Servicer Default under a Sale and Servicing Agreement remains unremedied, the related Indenture Trustee or holders of Notes of the related series evidencing a majority of the principal amount of those Notes then outstanding (or relevant class or classes of Notes of such series), acting together as a single class, may terminate all the rights and obligations of the Servicer under that Sale and Servicing Agreement. When this happens, the Indenture Trustee or a successor servicer appointed by that Indenture Trustee will succeed to all the responsibilities, duties and liabilities of the Servicer under that Sale and Servicing Agreement and will be entitled to similar compensation arrangements. In the case of any Trust that has not issued Notes, as long as a Servicer Default under the related Pooling and Servicing Agreement remains unremedied, the related Trustee or holders of Certificates of the related series evidencing a majority of the aggregate Certificate Balance of those Certificates then outstanding (or relevant class or classes of Certificates, but excluding for purposes of the calculation and action all Certificates held by the Seller, the Servicer or any of their affiliates), acting together as a single class, may terminate all the rights and obligations of the Servicer under the related Pooling and Servicing Agreement. When this happens, the Trustee or a successor servicer appointed by that Trustee will succeed to all the responsibilities, duties and liabilities of the Servicer under the related Pooling and Servicing Agreement and will be entitled to similar compensation arrangements. However, if a bankruptcy trustee or similar official has been appointed for the Servicer, and no Servicer Default other than the appointment of a bankruptcy trustee or similar official has occurred, that bankruptcy trustee or official may have the power to prevent that Indenture Trustee, those Noteholders, that Trustee or those Certificateholders, as applicable, from effecting a transfer of servicing as described above. If that Indenture Trustee or Trustee is unwilling or unable to so act, it may appoint, or petition a court of competent jurisdiction for the appointment of, a successor servicer with a net worth of at least $100,000,000 and whose regular business includes the servicing of automobile receivables. The related Indenture Trustee or the Trustee, or any person appointed as successor servicer, will be the successor in all respects to the predecessor Servicer under the related Sale and Servicing Agreement or Pooling and Servicing Agreement and all references in the related Sale and Servicing Agreement or Pooling and Servicing Agreement to the Servicer shall apply to that successor servicer. The related Indenture Trustee or Trustee may make arrangements for compensation to be paid, but the compensation for the successor servicer may not be greater than the Base Servicing Fee under the related Sale and Servicing Agreement or Pooling and Servicing Agreement. Notwithstanding termination, the Servicer will be entitled to payment of specified amounts payable to it prior to the termination for services it rendered prior to the termination. WAIVER OF PAST DEFAULTS With respect to each Trust that has issued Notes, (1) the holders of Notes of the related series evidencing a majority of the principal amount of the then outstanding Notes of the related series (or relevant class or classes of Notes of such series) or (2) in the case of any Servicer Default that does not adversely affect the related Indenture Trustee or the related Noteholders, the holders of Certificates of that series (or relevant class or classes of Certificates of such series) evidencing a majority of the aggregate Certificate Balance of those Certificates then outstanding (but excluding for purposes of calculation and action all Certificates held by the Seller, the Servicer or any of their affiliates), may, on behalf of all those Noteholders or Certificateholders, waive any default by the Servicer in the performance of its obligations under the related Sale and Servicing Agreement and its consequences, except a Servicer Default in making any required deposits to the related Collection Account in accordance with that Sale and Servicing Agreement. With respect to each Trust that has not issued Notes, holders of Certificates of that series evidencing a majority of the aggregate Certificate Balance of those Certificates then outstanding (or relevant class or classes of Certificates but excluding for purposes of calculation and action all Certificates held by the Seller, the Servicer or any of their affiliates), may, on behalf of all those Certificateholders, waive any default by the Servicer in the performance of its obligations under the related Pooling and Servicing Agreement, except a Servicer Default in making any required deposits to the related Collection 49 52 Account in accordance with the related Pooling and Servicing Agreement. No waiver will impair those Noteholders' or Certificateholders' rights with respect to subsequent defaults. AMENDMENT A Transfer and Servicing Agreement may be amended by the parties thereto, without the consent of the related Noteholders or Certificateholders: 1. to cure any ambiguity, correct or supplement any provision in the related Transfer and Servicing Agreement that may be inconsistent with any other provision in that agreement, or make any other provisions with respect to matters or questions arising under that agreement that are not inconsistent with the provisions of that agreement; provided that the amendment will not materially and adversely affect the interest of any Noteholder or Certificateholder; and 2. to change the formula for determining the required amount for the related Reserve Account, if any, upon confirmation from the rating agencies rating the Securities as described in the applicable Prospectus Supplement. An amendment will be deemed not to materially and adversely affect the interests of any Noteholder or Certificateholder of any class if (a) the amendment does not adversely affect the Trust's status as a grantor trust or a partnership, as applicable, for federal income tax purposes, (b) each rating agency then rating the related Certificates or Notes confirms that that amendment will not result in a reduction or withdrawal of its rating on the Certificates or Notes of that class, and (c) the Servicer shall have delivered an officer's certificate stating that such amendment will not materially and adversely affect the interest of any Noteholder or Certificateholder. A Transfer and Servicing Agreement may also be amended by the parties thereto with the consent of: 1. the holders of Notes evidencing a majority of the principal amount of the then outstanding Notes, if any, of the related series (or relevant class or classes of Notes of such series); or 2. in the case of any amendment that does not adversely affect the related Indenture Trustee or the related Noteholders, the holders of the Certificates of that series evidencing a majority of the outstanding Certificate Balance (or relevant class or classes of Certificates of such series, but excluding for purposes of calculation and action all Certificates held by the Seller, the Servicer or any of their affiliates), for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Transfer and Servicing Agreement or of modifying in any manner the rights of those Noteholders or Certificateholders. No amendment, however, shall: (x) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on the related Receivables or distributions that are required to be made for the benefit of those Noteholders or Certificateholders or change the Interest Rate or the Pass Through Rate or the required amount in the related Reserve Account (except as described above under clause (2) of the immediately preceding sentence) without the consent of each of the "adversely affected" Noteholder or Certificateholder; or (y) reduce the aforesaid percentage of the principal amount of the then outstanding Notes or Certificates of that series which is required to consent to any amendment, without the consent of the holders of all the then outstanding Notes or Certificates of each affected class. An amendment referred to in clause (x) above will be deemed not to "adversely affect" a Certificateholder or Noteholder of any class only if each rating agency then rating the related Certificates or Notes confirms that that amendment will not result in a reduction or withdrawal of its rating on the Certificates or Notes of that class. In connection with any amendment referred to in clause (x) above, the Servicer shall deliver an officer's certificate to the Indenture Trustee and the Trustee stating that the 50 53 Noteholders and the Certificateholders whose consents were not obtained were not adversely affected by the amendment. LIST OF SECURITYHOLDERS Three or more holders of the Notes of any class in a series or one or more holders of those Notes of that class evidencing not less than 25% of the aggregate principal amount of those Notes then outstanding may, by written request to the related Indenture Trustee, obtain access to the list of all Noteholders maintained by that Indenture Trustee for the purpose of communicating with other Noteholders with respect to their rights under the related Indenture or under those Notes. If stated in the applicable Prospectus Supplement, an Indenture Trustee may elect not to afford the requesting Noteholders access to the list of Noteholders if it agrees to mail the desired communication or proxy, on behalf of and at the expense of the requesting Noteholders, to all Noteholders of that series. Three or more holders of the Certificates of any class in a series or one or more holders of those Certificates of that class evidencing not less than 25% of the Certificate Balance of those Certificates may, by written request to the related Trustee, obtain access to the list of all Certificateholders maintained by that Trustee for the purpose of communicating with other Certificateholders with respect to their rights under the related Trust Agreement or Pooling and Servicing Agreement or under those Certificates. The Indenture Trustee or the Trustee, as the case may be, will provide to the Servicer within 15 days after receipt of a written request from the Servicer, a list of the names of all Noteholders or Certificateholders, as the case may be, of record as of the most recent applicable record date. No Transfer and Servicing Agreement will provide for the holding of annual or other meetings of Securityholders. INSOLVENCY EVENT Each Trust Agreement will provide that the related Trustee does not have the power to commence a voluntary proceeding in bankruptcy with respect to the related Trust without the unanimous prior approval of all Certificateholders (including the Seller) of that Trust and the delivery to that Trustee by each Certificateholder (including the Seller) of a certificate certifying that that Certificateholder reasonably believes that that Trust is insolvent. PAYMENT OF NOTES Upon the payment in full of all outstanding Notes of a given series and the satisfaction and discharge of the related Indenture, the related Trustee will succeed to all the rights of the Indenture Trustee, and the Certificateholders of that series will succeed to all the rights of the Noteholders of that series, under the related Sale and Servicing Agreement, except as otherwise provided in the Sale and Servicing Agreement. SELLER LIABILITY Under each Trust Agreement, the Seller will agree to be liable directly to an injured party for the entire amount of any losses, claims, damages or liabilities (other than those incurred by a Noteholder or a Certificateholder in the capacity of an investor with respect to that Trust) arising out of or based on the arrangement created by that Trust Agreement as though that arrangement created a partnership under the Delaware Revised Uniform Limited Partnership Act in which the Seller was a general partner. TERMINATION The respective obligations of the Seller, the Servicer, NMAC (so long as NMAC has rights or obligations under the related Transfer and Servicing Agreement), the related Trustee and the related 51 54 Indenture Trustee, as the case may be, pursuant to a Transfer and Servicing Agreement will terminate upon: 1. the maturity or other liquidation of the last Receivable and the disposition of any amounts received upon liquidation of any remaining Receivables; 2. the payment to Securityholders of all amounts required to be paid to them pursuant to the related agreement; or 3. the election by the Servicer or the Seller to purchase the corpus of the Trust as described below. The Trustee will give written notice of termination to each Securityholder of record. The final distribution to any Securityholder will be made only upon surrender and cancellation of that holder's Security at any office or agency of the Trustee specified in the notice of termination. Any funds remaining in the Trust, after the Trustee has taken measures to locate a Securityholder set forth in the related Transfer and Servicing Agreement and those measures have failed, will be distributed, subject to applicable law, to the Children's Hospital Los Angeles. In order to avoid excessive administrative expense, the Servicer will have the option to purchase from each Trust, as of the end of any applicable Collection Period, if the then outstanding Pool Balance with respect to the Receivables held by that Trust is 10% or less of the Pool Balance as of the related Cut-off Date, the corpus of the Trust at a price equal to the aggregate Administrative Purchase Payments for the Receivables (including Receivables that became Defaulted Receivables in the Collection Period preceding the Distribution Date on which that purchase is effected) plus the appraised value of any other property held as part of the Trust (less liquidation expenses); provided, however, that the price will be equal to or greater than the sum of the unpaid principal amount of the Notes plus accrued and unpaid interest on those Notes and the Certificate Balance for the Certificates plus accrued and unpaid interest on those Certificates. The related Trustee and related Indenture Trustee, if any, will give written notice of termination to each Securityholder. Upon termination of any Trust, the assets of that Trust will be liquidated and the proceeds therefrom (and amounts held in related Accounts) will be applied to pay the Notes and the Certificates of the related series in full, to the extent of amounts available. As more fully described in the applicable Prospectus Supplement, any outstanding Notes of the related series will be redeemed concurrently with any of the events specified above and the subsequent payment to the related Certificateholders of all amounts required to be paid to them pursuant to the applicable Trust Agreement or Pooling and Servicing Agreement will effect early retirement of the Certificates of that series. ADMINISTRATION AGREEMENT NMAC, in its capacity as administrator (the "Administrator"), will enter into an agreement (as amended and supplemented from time to time, an "Administration Agreement") with each Trust that issues Notes and the related Indenture Trustee pursuant to which the Administrator will agree, to the extent provided in that Administration Agreement, to provide the notices and to perform other administrative obligations required by the related Indenture. As compensation for the performance of the Administrator's obligations under the applicable Administration Agreement and as reimbursement for its expenses related thereto, the Administrator will be entitled to a monthly administration fee in an amount that may be set forth in the applicable Prospectus Supplement (the "Administration Fee"), which fee will be paid by the Servicer. 52 55 THE SWAP AGREEMENT The following summary describes certain terms of a swap agreement that a Trust may enter into in order to reduce its exposure to currency and/or interest rate risks. The provisions of any particular swap agreement may differ from those described in this section and will be more fully described in the related Prospectus Supplement. In addition, this summary does not purport to be complete and is subject to, and qualified in its entirety by reference to, the provisions of any swap agreement that is entered into by the related trust. PAYMENTS UNDER THE SWAP AGREEMENT As specified in the related Prospectus Supplement, on the Closing Date a Trust may enter into a 1992 International Swaps and Derivatives Association, Inc. ("ISDA") Master Agreement (Multi Currency-Cross Border) (such agreement, the "1992 Master Agreement") with NMAC or an unaffiliated third party (the "Swap Counterparty"), as modified to reflect the transactions described below (the 1992 Master Agreement, as so modified, the "Swap Agreement"). The Swap Agreement will incorporate certain relevant standard definitions published by ISDA. Under the Swap Agreement, the Trust will generally pay to the Swap Counterparty amounts in respect of interest and principal, as applicable, due on each Distribution Date under the Swap Agreement and the Swap Counterparty will generally pay to the Trust amounts equal to the interest or principal payable on the relevant Securities. If the Trust is unable to make any payment due to be made by it to the Swap Counterparty under the Swap Agreement, the Swap Counterparty generally will not be obligated to make its corresponding payment to the Trust under the Swap Agreement. If so specified in the related Prospectus Supplement, if on any specified payment date under the Swap Agreement the amount of funds from collections and other sources available to the Trust to make any payment owed to the Swap Counterparty is less than the amount due to the Swap Counterparty, the obligation of the Swap Counterparty to pay an amount equal to the interest or principal otherwise due on the relevant Securities on that date may be reduced in the same proportion as the proportion that the shortfall in the amount owed to the Swap Counterparty represents of the total amount due. Under such circumstances, if on a subsequent specified payment date, amounts are available and are paid by the Trust to the Swap Counterparty to reimburse all or any part of the shortfall, then the obligation of the Swap Counterparty to pay an amount equal to the interest or principal otherwise due on the Securities on that date will be increased in the same proportion as the proportion that the amount of the reimbursement represents of the amount otherwise owed by the Swap Counterparty on that date. The Trust generally will not be obligated to pay interest to the Swap Counterparty on any shortfalls in payments, and, correspondingly, Certificateholders generally will not be entitled to receive interest on any amounts not paid as a result of the proportional reduction described above. Unless the Swap Agreement is terminated early as described under "-- Early Termination Of Swap Agreement," the Swap Agreement will terminate on the earlier of (i) the scheduled maturity date of the Securities and (ii) the date on which all amounts due in respect of the Swap Agreement have been paid. CONDITIONS PRECEDENT The respective obligations of the Swap Counterparty and the Trust to pay certain amounts due under the Swap Agreement will be subject to the following conditions precedent: (i) no Swap Event of Default (as defined below under "-- Defaults Under Swap Agreement") or event that with the giving of notice or lapse of time or both would become an Event of Default shall have occurred and be continuing and (ii) no Early Termination Date (as defined below under "-- Early Termination Of Swap Agreement") shall have occurred or been effectively designated. 53 56 DEFAULTS UNDER SWAP AGREEMENT Events of default under the Swap Agreement (each, a "Swap Event of Default") generally will be limited to: (i) the failure of the Trust or the Swap Counterparty to pay any amount when due under the Swap Agreement after giving effect to the applicable grace period, if any; (ii) the occurrence of certain events of insolvency or bankruptcy of the Trust or the Swap Counterparty and (iii) certain other standard events of default under the 1992 Master Agreement including "Breach of Agreement," "Misrepresentation" (generally not applicable to the Trust) and "Merger without Assumption," as described in Sections 5(a)(ii), 5(a)(iv) and 5(a)(viii) of the 1992 Master Agreement. TERMINATION EVENTS Termination events under the Swap Agreement (each, a "Swap Termination Event") will consist of the following: (i) the Trust or the Seller becomes subject to registration as an "investment company" under the Investment Company Act of 1940; and (ii) certain standard termination events under the 1992 Master Agreement including "Illegality" (which generally relates to changes in law causing it to become unlawful for either of the parties to perform its obligations under the Swap Agreement), "Tax Event" (which generally relates to either party to the Swap Agreement receiving payments thereunder from which an amount has been deducted or withheld for or on account of certain taxes) and "Tax Event Upon Merger" (which generally relates to a party to the Swap Agreement receiving a payment under the Swap Agreement from which an amount has been deducted or withheld for or on account of certain taxes as a result of a party merging with another entity), each as more fully described in Sections 5(b)(i), 5(b)(ii) and 5(b)(iii) of the 1992 Master Agreement; provided, however, that the occurrence of a "Tax Event" or "Tax Event Upon Merger" generally will only constitute a Swap Termination Event if the requisite percentage of Securityholders specified in the related Prospectus Supplement directs the Trustee to terminate the Swap Agreement and liquidate the assets of the Trust. EARLY TERMINATION OF SWAP AGREEMENT Upon the occurrence of any Swap Event of Default under the Swap Agreement, the non-defaulting party will have the right to designate an Early Termination Date (as defined in the Swap Agreement) upon the occurrence and continuance of such Swap Event of Default. A Swap Agreement will terminate on an Early Termination Date. With respect to Termination Events, an Early Termination Date may be designated by one or both of the parties (as specified in the Swap Agreement with respect to each Termination Event) and will occur only upon notice and, in certain cases, after the party causing the Termination Event has used reasonable efforts to transfer its rights and obligations under such Swap Agreement to a related entity within a limited period after notice has been given of the Termination Event, all as set forth in the Swap Agreement. The occurrence of an Early Termination Date under the Swap Agreement will constitute a "Swap Termination." Upon any Swap Termination, the Trust or the Swap Counterparty may be liable to make a termination payment to the other (regardless, if applicable, of which of such parties may have caused such termination). Such termination payment will be calculated on the basis that the Trust is the Affected Party (as defined in the Swap Agreement), subject to certain exceptions. The amount of any such termination payment will be based on the market value of the Swap Agreement computed on the basis of market quotations of the cost of entering into swap transactions with the same terms and conditions that would have the effect of preserving the respective full payment obligations of the parties, in accordance with the procedures set forth in the Swap Agreement (assuming, for purposes of such calculation, that all outstanding amounts previously due but unpaid to the Swap Counterparty are due and payable on the first Payment Date that would have occurred after the Early Termination Date). Any such termination payment could, if interest or currency exchange rates have changed significantly, be substantial. The Prospectus Supplement will specify whether the defaulting party will not be entitled to any portion of the termination payment related to the market value of the Swap Agreement because of its default with respect to any particular Swap Event of Default or Swap Termination Event. 54 57 Generally, if a Swap Termination occurs, the principal of each class of Securities will become immediately payable and the Trustee will be obligated to liquidate the assets of the Trust. In any such event, the ability of the Trust to pay interest and/or principal on each class of Securities will depend on (a) the price at which the assets of the Trust are liquidated, (b) the amount of the swap termination payment, if any, which may be due to the Swap Counterparty from the Trust under the Swap Agreement and (c) the amount of the swap termination payment, if any, which may be due to the Trust from the Swap Counterparty under the Swap Agreement. In the event that the net proceeds of the liquidation of the assets of the Trust are not sufficient to make all payments due in respect of the Securities and for the Trust to meet its obligations, if any, in respect of the termination of the Swap Agreement, then such amounts will be allocated and applied in accordance with the priority of payments described in the related Prospectus Supplement and the claims of the Swap Counterparty in respect of such net proceeds will rank higher in priority than the claims of the relevant Securities. If a Swap Termination occurs and the Trust does not terminate, the Trust will not be protected from the interest rate and currency fluctuations hedged by the Swap Agreement, and payments to Noteholders and Certificateholders may be adversely affected. Generally, the applicable Pooling and Servicing Agreement or Sale and Servicing Agreement will provide that upon the occurrence of (i) any Swap Event of Default arising from any action taken, or failure to act, by the Swap Counterparty, or (ii) a Swap Termination Event (except as described in the following sentence) with respect to which the Swap Counterparty is an Affected Party, the Trustee may and will, at the direction of the requisite percentage of the Securityholders specified in such agreement, by notice to the Swap Counterparty, designate an Early Termination Date with respect to the Swap Agreement. If a Swap Termination Event occurs because the Trust or the Seller becomes subject to registration as an "investment company" under the Investment Company Act of 1940, the Trustee will be required by the terms of such agreement to terminate the Swap Agreement. TAXATION Neither the Trust nor the Swap Counterparty will be obligated under the Swap Agreement to gross up if withholding taxes are imposed on payments made under the Swap Agreement. In the event that any withholding or similar tax is imposed on payments by the Trust to the Swap Counterparty under the Swap Agreement, the Swap Counterparty will be entitled to deduct amounts in the same proportion (as calculated in accordance with the Swap Agreement) from subsequent payments due from it. In the event that the Swap Counterparty is required to withhold amounts from payments by the Swap Counterparty under the Swap Agreement, the payment obligations of the Swap Counterparty will be reduced by such amounts and the payment obligations of the Trust under the Swap Agreement will remain the same. In either such event, payments on the Securities may be subject to reduction in proportion to the amount so deducted or withheld. In either such event, a specified percentage of the Securityholders may direct the Trustee to terminate the Swap Agreement and liquidate the assets of the Trust, as described above under "-- Termination Events." ASSIGNMENT Except as provided below, neither the Trust nor the Swap Counterparty will be permitted to assign, novate or transfer as a whole or in part any of its rights, obligations or interests under the Swap Agreement. The Swap Counterparty may transfer the Swap Agreement to another party on ten Business Days' prior written notice, provided that (i) such notice will be accompanied by a guarantee of the Swap Counterparty of such transferee's obligations in form and substance reasonably satisfactory to the Trustee, (ii) the Swap Counterparty delivers an opinion of independent counsel of recognized standing in form and substance reasonably satisfactory to the Trustee confirming that as of the date of such transfer the transferee will not, as a result of such transfer, be required to withhold or deduct on account of tax under the Swap Agreement, (iii) a Swap Termination Event or Swap Event of Default does not occur under the Swap Agreement as a result of such transfer and (iv) the then current ratings of the Securities are not adversely affected as a result of such transfer. In addition, in the event the debt rating of the Swap Counterparty is reduced to a level below that specified in the related Prospectus Supplement, the Swap 55 58 Counterparty generally may assign the Swap Agreement to another party (or otherwise obtain a replacement swap agreement on substantially the same terms as the Swap Agreement) and thereby be released from its obligations under the Swap Agreement; provided that (i) the new swap counterparty, by a written instrument, accepts all of the obligations of the Swap Counterparty under the Swap Agreement to the reasonable satisfaction of the Trustee, (ii) the Swap Counterparty delivers an opinion of independent counsel of recognized standing in form and substance reasonably satisfactory to the Trustee confirming that as at the date of such transfer the new swap counterparty will not, as a result of such transfer or replacement, be required to withhold or deduct on account of tax under the Swap Agreement, (iii) a Swap Termination Event or Swap Event of Default does not occur under the Swap Agreement as a result of such transfer and (iv) the ratings assigned to the Securities after such assignment and release will be at least equal to the ratings assigned by any applicable Rating Agency to the Securities at the time of such reduction of the rating of the Swap Counterparty's long-term debt. Any cost of such transfer or replacement will be borne by the Swap Counterparty or the new swap counterparty and not by the Trust; provided, however that the Swap Counterparty shall not be required to make any payment to the new swap counterparty to obtain an assignment or replacement swap. The Swap Counterparty shall have no obligation to assign the Swap Agreement or obtain a replacement swap agreement in the event of a ratings downgrade and neither the Trust nor the Securityholders will have any remedy against the Swap Counterparty if the Swap Counterparty fails to make such an assignment or obtain a replacement swap agreement. In the event that the Swap Counterparty does not elect to assign the Swap Agreement or obtain a replacement swap agreement, the Swap Counterparty may (but shall not be obligated to) establish any other arrangement satisfactory to the applicable Rating Agency, in each case such that the ratings of the Securities by the applicable Rating Agency will not be withdrawn or reduced. MODIFICATION AND AMENDMENT OF SWAP AGREEMENT The applicable Pooling and Servicing Agreement or Sale and Servicing Agreement will contain provisions permitting the Trustee to enter into any amendment of the Swap Agreement (i) to cure any ambiguity or mistake, (ii) to correct any defective provisions or to correct or supplement any provision therein which may be inconsistent with any other provision therein or with the Agreement or (iii) to add any other provisions with respect to matters or questions arising under the Swap Agreement; provided, in the case of clause (iii) that such amendment will not adversely affect in any material respect the interest of any specified Securityholder. Any such amendment shall be deemed not to adversely affect in any material respect the interests of any specified Securityholder if the Trustee receives written confirmation from each rating agency rating the Securities that such amendment will not cause such Rating Agency to reduce the then current rating thereof. THE SWAP COUNTERPARTY Where indicated by the context, as used herein "Swap Counterparty" includes any party that replaces the initial Swap Counterparty as described above under "-- Assignment." GOVERNING LAW The Swap Agreement will be governed by and construed in accordance with the laws of the State of New York. 56 59 MATERIAL LEGAL ASPECTS OF THE RECEIVABLES GENERAL The transfer of the Receivables to the applicable Trustee, the perfection of the security interests in the Receivables and the enforcement of rights to realize on the Financed Vehicles as collateral for the Receivables are subject to a number of federal and state laws, including the UCC as in effect in various states. The Servicer and the Seller will take the action described below to perfect the rights of the applicable Trustee in the Receivables. If another party purchases (including the taking of a security interest in) the Receivables for new value in the ordinary course of its business, without actual knowledge of the Trust's interest, and takes possession of the Receivables, that purchaser would acquire an interest in the Receivables superior to the interest of the Trust. SECURITY INTERESTS GENERAL. In states in which retail installment sale contracts such as the Receivables evidence the credit sale of automobiles or light-duty trucks by dealers to obligors, the contracts also constitute personal property security agreements and include grants of security interests in the vehicles under the applicable UCC. Perfection of security interests in financed automobiles and/or light-duty trucks is generally governed by the motor vehicle registration laws of the state in which the vehicle is located. In most states, a security interest in an automobile or light-duty truck is perfected by obtaining possession of the certificate of title to the vehicle or notation of the secured party's lien on the vehicle's certificate of title. All retail installment sales contracts acquired by NMAC from Dealers name NMAC as obligee or assignee and as the secured party. NMAC also takes all actions necessary under the laws of the state in which the related Financed Vehicle is located to perfect its security interest in that Financed Vehicle, including, where applicable, having a notation of its lien recorded on the related certificate of title and obtaining possession of that certificate of title. Because NMAC continues to service the contracts as Servicer under the Sale and Servicing Agreement or the Pooling and Servicing Agreement, as applicable, the Obligors on the contracts will not be notified of the sale from NMAC to the Seller or the sale from the Seller to the related Trust. PERFECTION. Pursuant to the related Purchase Agreement, NMAC will sell and assign its security interest in the Financed Vehicles to the Seller and, with respect to each Trust, pursuant to the related Sale and Servicing Agreement or Pooling and Servicing Agreement, as applicable, the Seller will assign its security interest in the Financed Vehicles to that Trust. However, because of the administrative burden and expense, none of NMAC, the Seller or the related Trustee will amend any certificate of title to identify that Trust as the new secured party on that certificate of title relating to a Financed Vehicle. However, UCC financing statements with respect to the transfer to the Seller of NMAC's security interest in the Financed Vehicles and the transfer to the Trustee of the Seller's security interest in the Financed Vehicles will be filed. In addition, the Servicer will continue to hold any certificates of title relating to the Financed Vehicles in its possession as custodian for that Trust pursuant to the related Sale and Servicing Agreement or Pooling and Servicing Agreement. See "Description of the Transfer and Servicing Agreements -- Sale and Assignment of Receivables." In most states, an assignment such as that under each Purchase Agreement or each Sale and Servicing Agreement or Pooling and Servicing Agreement is an effective conveyance of a security interest without amendment of any lien noted on a vehicle's certificate of title, and the assignee succeeds to the assignor's rights as secured party. Although re-registration of the vehicle is not necessary to convey a perfected security interest in the Financed Vehicles to the Trust, because the Trust will not be listed as lienholder on the certificates of title, the security interest of that Trust in the vehicle could be defeated through fraud or negligence. In those states, in the absence of fraud or forgery by the vehicle owner or the Servicer or administrative error by state or local agencies, the notation of NMAC's lien on the certificates of title will be sufficient to protect that Trust against the rights of subsequent purchasers of a Financed Vehicle or subsequent lenders who take a security interest in a Financed Vehicle. In each Purchase 57 60 Agreement, NMAC will represent and warrant, and in each Sale and Servicing Agreement or Pooling and Servicing Agreement, the Seller will represent and warrant, that it has taken all action necessary to obtain a perfected security interest in each Financed Vehicle. If there are any Financed Vehicles as to which NMAC failed to obtain and assign to the Seller a perfected security interest, the security interest of the Seller would be subordinate to, among others, subsequent purchasers of the Financed Vehicles and holders of perfected security interests in the Financed Vehicles. To the extent that failure has a material and adverse effect on the Trust's interest in the related Receivables, however, it would constitute a breach of the warranties of NMAC under the related Purchase Agreement or the Seller under the related Sale and Servicing Agreement or Pooling and Servicing Agreement. Accordingly, pursuant to the related Sale and Servicing Agreement or Pooling and Servicing Agreement, the Seller would be required to repurchase the related Receivable from the Trust and, pursuant to the related Purchase Agreement, NMAC would be required to purchase that Receivable from the Seller, in each case unless the breach was cured. Pursuant to each Sale and Servicing Agreement and Pooling and Servicing Agreement, the Seller will assign to the related Trust its rights to cause NMAC to purchase that Receivable under the related Purchase Agreement. See "Description of the Transfer and Servicing Agreements -- Sale and Assignment of Receivables" and "Risk Factors -- Interests of other persons in the receivables and financed vehicles could be superior to the trust's interest, which may result in reduced payments on your securities." CONTINUITY OF PERFECTION. Under the laws of most states, the perfected security interest in a vehicle would continue for four months after the vehicle is moved to a state that is different from the one in which it is initially registered and thereafter until the owner thereof re-registers the vehicle in the new state. A majority of states generally require surrender of a certificate of title to re-register a vehicle. In those states (such as California) that require a secured party to hold possession of the certificate of title to maintain perfection of the security interest, the secured party would learn of the re-registration through the request from the obligor under the related installment sales contract to surrender possession of the certificate of title. In the case of vehicles registered in states providing for the notation of a lien on the certificate of title but not possession by the secured party (such as Texas), the secured party would receive notice of surrender from the state of re-registration if the security interest is noted on the certificate of title. Thus, the secured party would have the opportunity to re-perfect its security interest in the vehicle in the state of relocation. However, these procedural safeguards will not protect the secured party if through fraud, forgery or administrative error, the debtor somehow procures a new certificate of title that does not list the secured party's lien. Additionally, in states that do not require a certificate of title for registration of a motor vehicle, re-registration could defeat perfection. In the ordinary course of servicing the Receivables, NMAC will take steps to effect re-perfection upon receipt of notice of re-registration or information from the Obligor as to relocation. Similarly, when an Obligor sells a Financed Vehicle, NMAC must surrender possession of the certificate of title or will receive notice as a result of its lien noted on the certificate of title and accordingly will have an opportunity to require satisfaction of the related Receivable before release of the lien. Under each Sale and Servicing Agreement and Pooling and Servicing Agreement, the Servicer will be obligated to take appropriate steps, at the Servicer's expense, to maintain perfection of security interests in the Financed Vehicles and will be obligated to purchase the related Receivable if it fails to do so and that failure has a material and adverse effect on the Trust's interest in the Receivable. PRIORITY OF LIENS ARISING BY OPERATION OF LAW. Under the laws of most states (including California), liens for repairs performed on a motor vehicle and liens for unpaid taxes take priority over even a perfected security interest in a financed vehicle. The Code also grants priority to specified federal tax liens over the lien of a secured party. The laws of some states and federal law permit the confiscation of vehicles by governmental authorities under some circumstances if used in unlawful activities, which may result in the loss of a secured party's perfected security interest in the confiscated vehicle. NMAC will represent and warrant to the Seller in each Purchase Agreement, and the Seller will represent and warrant to the Trust in each Sale and Servicing Agreement and Pooling and Servicing Agreement, that, as of the related Closing Date, each security interest in a Financed Vehicle is prior to all other present liens (other than tax liens and other liens that arise by operation of law) upon and security interests in that Financed Vehicle. However, liens for repairs or taxes could arise, or the confiscation of a Financed Vehicle could occur, at 58 61 any time during the term of a Receivable. No notice will be given to the Trustee, any Indenture Trustee, any Noteholders or any Certificateholders in respect of a given Trust if a lien arises or confiscation occurs that would not give rise to the Seller's repurchase obligation under the related Sale and Servicing Agreement or Pooling and Servicing Agreement or NMAC's repurchase obligation under the related Purchase Agreement. REPOSSESSION In the event of default by an obligor, the holder of the related retail installment sale contract has all the remedies of a secured party under the UCC, except where specifically limited by other state laws. Among the UCC remedies, the secured party has the right to perform repossession by self-help means, unless it would constitute a breach of the peace or is otherwise limited by applicable state law. Unless a vehicle financed by NMAC is voluntarily surrendered, self-help repossession is the method employed by NMAC in most states and is accomplished simply by retaking possession of the financed vehicle. In cases where an obligor objects or raises a defense to repossession, or if otherwise required by applicable state law, a court order must be obtained from the appropriate state court, and that vehicle must then be recovered in accordance with that order. In some jurisdictions, the secured party is required to notify that obligor of the default and the intent to repossess the collateral and to give that obligor a time period within which to cure the default prior to repossession. In some states, an obligor has the right to reinstate its contract and recover the collateral by paying the delinquent installments and other amounts due. NOTICE OF SALE; REDEMPTION RIGHTS In the event of default by an obligor under a retail installment sales contract, some jurisdictions require that the obligor be notified of the default and be given a time period within which to cure the default prior to repossession. Generally, this right of cure may only be exercised on a limited number of occasions during the term of the related contract. The UCC and other state laws require the secured party to provide an obligor with reasonable notice of the date, time and place of any public sale and/or the date after which any private sale of the collateral may be held. In most states, an obligor has the right to redeem the collateral prior to actual sale by paying the secured party the unpaid principal balance of the obligation, accrued interest on the obligation plus reasonable expenses for repossessing, holding and preparing the collateral for disposition and arranging for its sale, plus, in some jurisdictions, reasonable attorneys' fees. In some states, an obligor has the right to redeem the collateral prior to actual sale by payment of delinquent installments or the unpaid balance. DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS The proceeds of resale of the vehicles generally will be applied first to the expenses of resale and repossession and then to the satisfaction of the indebtedness. While some states impose prohibitions or limitations on deficiency judgments if the net proceeds from resale do not cover the full amount of the indebtedness, a deficiency judgment can be sought in those states that do not prohibit or limit those judgments. In addition to the notice requirement described above, the UCC requires that every aspect of the sale or other disposition, including the method, manner, time, place and terms, be "commercially reasonable." Generally, courts have held that when a sale is not "commercially reasonable," the secured party loses its right to a deficiency judgment. However, the deficiency judgment would be a personal judgment against the obligor for the shortfall, and a defaulting obligor can be expected to have very little capital or sources of income available following repossession. Therefore, in many cases, it may not be useful to seek a deficiency judgment or, if one is obtained, it may be settled at a significant discount or be uncollectible. In addition, the UCC permits the obligor or other interested party to recover for any loss caused by noncompliance with the provisions of the UCC. Also, prior to a sale, the UCC permits the obligor or other interested person to prohibit the secured party from disposing of the collateral if it is established that the secured party is not proceeding in accordance with the "default" provisions under the UCC. 59 62 Occasionally, after resale of a repossessed vehicle and payment of all expenses and indebtedness, there is a surplus of funds. In that case, the UCC requires the creditor to remit the surplus to any holder of a subordinate lien with respect to that vehicle or if no lienholder exists, the UCC requires the creditor to remit the surplus to the obligor. MATERIAL BANKRUPTCY CONSIDERATIONS In structuring the transactions contemplated by this Prospectus, the Seller has taken steps that are intended to make it unlikely that the voluntary or involuntary application for relief by NMAC or its parent, NNA, under the United States Bankruptcy Code or similar applicable state laws (collectively, "Insolvency Laws") will result in consolidation of the assets and liabilities of the Seller with those of NMAC or NNA. These steps include the creation of the Seller as a wholly-owned, limited purpose subsidiary pursuant to articles of incorporation and bylaws containing limitations (including restrictions on the nature of the Seller's business and on its ability to commence a voluntary case or proceeding under any Insolvency Law without the unanimous affirmative vote of all of its directors). However, delays in payments on the Securities and possible reductions in the amount of those payments could occur if: 1. a court were to conclude that the assets and liabilities of the Seller should be consolidated with those of NMAC or NNA in the event of the application of applicable Insolvency Laws to NMAC or NNA, as the case may be; 2. a filing were made under any Insolvency Law by or against the Seller; or 3. an attempt were to be made to litigate any of the foregoing issues. On the Closing Date, O'Melveny & Myers LLP will give an opinion to the effect that, based on a reasoned analysis of analogous case law (although there is no precedent based on directly similar facts), and, subject to facts, assumptions and qualifications specified in the opinion and applying the principles set forth in the opinion, in the event of a voluntary or involuntary bankruptcy case in respect of NMAC under Title 11 of the United States Bankruptcy Code at a time when NMAC was insolvent, the property of the Seller would not properly be substantively consolidated with the property of the estate of NMAC. Among other things, that opinion will assume that each of the Seller and NMAC will follow specified procedures in the conduct of its affairs, including maintaining records and books of account separate from those of the other, refraining from commingling its assets with those of the other, and refraining from holding itself out as having agreed to pay, or being liable for, the debts of the other. The Seller and NMAC intend to follow these and other procedures related to maintaining their separate corporate identities. However, there can be no assurance that a court would not conclude that the assets and liabilities of the Seller should be consolidated with those of NMAC. NMAC will warrant in each Purchase Agreement that the sale of the related Receivables by it to the Seller is a valid sale. Notwithstanding the foregoing, if NMAC were to become a debtor in a bankruptcy case, a court could take the position that the sale of Receivables to the Seller should instead be treated as a pledge of those Receivables to secure a borrowing of NMAC. In addition, if the transfer of Receivables to the Seller is treated as a pledge instead of a sale, a tax or government lien on the property of NMAC arising before the transfer of a Receivable to the Seller may have priority over the Seller's interest in that Receivable. In addition, while NMAC is the Servicer, cash collections on the Receivables may be commingled with the funds of NMAC and, in the event of that bankruptcy of NMAC, the Trust may not have a perfected interest in those collections. NMAC and the Seller will treat the transactions described in this Prospectus as a sale of the Receivables to the Seller, so that the automatic stay provisions of the United States Bankruptcy Code should not apply to the Receivables if NMAC were to become a debtor in a bankruptcy case. 60 63 CONSUMER PROTECTION LAWS Numerous federal and state consumer protection laws and related regulations impose substantial requirements upon lenders and servicers involved in consumer finance. These laws include the Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act of 1940, the Texas Consumer Credit Code, state adoptions of the National Consumer Act and of the Uniform Consumer Credit Code and state motor vehicle retail installment sales acts and other similar laws. Also, state laws impose finance charge ceilings and other restrictions on consumer transactions and require contract disclosures in addition to those required under federal law. These requirements impose specific statutory liabilities upon creditors who fail to comply with their provisions. In some cases, this liability could affect an assignee's ability to enforce consumer finance contracts such as the Receivables. The so-called "Holder-in-Due-Course" Rule of the Federal Trade Commission (the "FTC Rule"), the provisions of which are generally duplicated by the Uniform Consumer Credit Code, other statutes or the common law in some states, has the effect of subjecting a seller (and specified creditors and their assignees) in a consumer credit transaction to all claims and defenses that the obligor in the transaction could assert against the seller of the goods. Liability under the FTC Rule is limited to the amounts paid by the obligor under the contract, and the holder of the contract may also be unable to collect any balance remaining due under that contract from the obligor. Most of the Receivables will be subject to the requirements of the FTC Rule. Accordingly, each Trust, as holder of the related Receivables, will be subject to any claims or defenses that the purchaser of the applicable Financed Vehicle may assert against the seller of the related Financed Vehicle. As to each Obligor, these claims are limited to a maximum liability equal to the amounts paid by the Obligor on the related Receivable. Under most state motor vehicle dealer licensing laws, sellers of motor vehicles are required to be licensed to sell motor vehicles at retail sale. Furthermore, federal odometer regulations promulgated under the Motor Vehicle Information and Cost Savings Act require that all sellers of new and used vehicles furnish a written statement signed by the seller certifying the accuracy of the odometer reading. If the seller is not properly licensed or if a written odometer disclosure statement was not provided to the purchaser of the related Financed Vehicle, an obligor may be able to assert a defense against the seller of the vehicle. If an Obligor were successful in asserting any of those claims or defenses, that claim or defense would constitute a breach of the Seller's representations and warranties under the related Sale and Servicing Agreement or Pooling and Servicing Agreement and a breach of NMAC's warranties under the related Purchase Agreement and would, if the breach materially and adversely affects the Receivable or the interests of the Securityholders, create an obligation of the Seller and NMAC, respectively, to repurchase the Receivable unless the breach is cured. See "Description of the Transfer and Servicing Agreements -- Sale and Assignment of Receivables." Courts have applied general equitable principles to secured parties pursuing repossession and litigation involving deficiency balances. These equitable principles may have the effect of relieving an obligor from some or all of the legal consequences of a default. In several cases, consumers have asserted that the self-help remedies of secured parties under the UCC and related laws violate the due process protections provided under the 14th Amendment to the Constitution of the United States. Courts have generally upheld the notice provisions of the UCC and related laws as reasonable or have found that the repossession and resale by the creditor do not involve sufficient state action to afford constitutional protection to borrowers. NMAC and the Seller will represent and warrant under each Purchase Agreement and each Sale and Servicing Agreement and Pooling and Servicing Agreement, as applicable, that each Receivable complies with all requirements of law in all material respects. Accordingly, if an Obligor has a claim against a Trust for violation of any law and that claim materially and adversely affects that Trust's interest in a Receivable, that violation would constitute a breach of the representations and warranties of NMAC under the Purchase Agreement and the Seller under the related Sale and Servicing Agreement or Pooling and 61 64 Servicing Agreement and would create an obligation of NMAC and the Seller to repurchase the Receivable unless the breach is cured. See "Description of the Transfer and Servicing Agreements -- Sale and Assignment of Receivables." OTHER LIMITATIONS In addition to the laws limiting or prohibiting deficiency judgments, numerous other statutory provisions, including federal bankruptcy laws and related state laws, may interfere with or affect the ability of a secured party to realize upon collateral or to enforce a deficiency judgment. For example, in a Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a creditor from repossessing a vehicle and, as part of the rehabilitation plan, reduce the amount of the secured indebtedness to the market value of the vehicle at the time of bankruptcy (as determined by the court), leaving the creditor as a general unsecured creditor for the remainder of the indebtedness. A bankruptcy court may also reduce the monthly payments due under a contract or change the rate of interest and time of repayment of the indebtedness. Under the terms of the Soldiers' and Sailors' Relief Act of 1940 (the "Relief Act"), an Obligor who enters the military service after the origination of that Obligor's Receivable (including an Obligor who is a member of the National Guard or is in reserve status at the time of the origination of the Obligor's Receivable and is later called to active duty) may not be charged interest above an annual rate of 6% during the period of that Obligor's active duty status after a request for relief by the Obligor. The Relief Act provides for extension of payments during a period of service upon request of the Obligor. In addition, some states, including California, allow members of the National Guard to extend payments on any contract obligation if called into active service by the Governor for a period exceeding 7 days. It is possible that the foregoing could have an effect on the ability of the Servicer to collect the full amount of interest owing on some of the Receivables. In addition, the Relief Act and the laws of some states, including California, New York and New Jersey, impose limitations that would impair the ability of the Servicer to repossess the released Financed Vehicle during the Obligor's period of active duty status. Thus, if that Receivable goes into default, there may be delays and losses occasioned by the inability to exercise the Trust's rights with respect to the Receivable and the related Financed Vehicle in a timely fashion. Any shortfall pursuant to either of the two preceding paragraphs, to the extent not covered by amounts payable to the Securityholders from amounts on deposit in the related Reserve Account or from coverage provided under any other credit enhancement mechanism, could result in losses to the Securityholders. 62 65 MATERIAL INCOME TAX CONSEQUENCES The following general discussion of the anticipated material federal income and California income and franchise tax consequences of the purchase, ownership and disposition of the Notes and the Certificates of any series, to the extent it relates to matters of law or legal conclusions with respect thereto, represents the opinion of tax counsel to each Trust with respect to the related series on the material matters associated with those consequences, subject to the qualifications set forth in this Prospectus. "Tax Counsel" with respect to each Trust will be O'Melveny & Myers LLP. The summary does not purport to deal with federal income tax consequences applicable to all categories of investors, some of which may be subject to special rules. For example, it does not discuss the tax treatment of investors that are insurance companies, regulated investment companies or dealers in securities. Moreover, there are no cases or Internal Revenue Service ("IRS") rulings on similar transactions involving both debt and equity interests issued by a trust with terms similar to those of the Notes and the Certificates. As a result, the IRS may disagree with all or a part of the discussion below. It is suggested that prospective investors consult their own tax advisors in determining the federal, state, local, foreign and any other tax consequences to them of the purchase, ownership and disposition of the Notes and the Certificates. The following summary is based upon current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury regulations promulgated under the Code and judicial or ruling authority, all of which are subject to change, which change may be retroactive. Each Trust will be provided with an opinion of Tax Counsel regarding the federal income tax matters discussed below. An opinion of Tax Counsel, however, is not binding on the IRS or the courts. No ruling on any of the issues discussed below will be sought from the IRS. For purposes of the following summary, references to the Trust, the Notes, the Certificates and related terms, parties and documents shall be deemed to refer to each Trust and the Notes, Certificates and related terms, parties and documents applicable to that Trust. The federal income tax consequences to the beneficial owners of the Certificates (the "Certificate Owners") will vary depending on whether the Trust will be treated as a partnership or as a grantor trust under the Code. The Prospectus Supplement for each Series of Certificates will specify whether the Trust will be treated as a partnership (or other form of entity not subject to entity-level taxation) or as a grantor trust. TAX TREATMENT OF OWNER TRUSTS TAX CHARACTERIZATION OF THE TRUST. The following general discussion of the anticipated federal income tax consequences of the purchase, ownership and disposition of the Notes and the Certificates of a Trust nominally referred to as an "owner trust" in the applicable prospectus supplement (an "Owner Trust"), to the extent it relates to matters of law or legal conclusions with respect thereto, represents the opinion of Tax Counsel to each Owner Trust with respect to the related series on the material matters associated with those consequences, subject to the qualifications set forth in this Prospectus. In addition, Tax Counsel has prepared or reviewed the statements in this Prospectus under the heading "Material Income Tax Consequences -- Tax Treatment of Owner Trusts," and is of the opinion that those statements are correct in all material respects. Those statements are intended as an explanatory discussion of the related tax matters affecting investors generally, but do not purport to furnish information in the level of detail or with the attention to an investor's specific tax circumstances that would be provided by an investor's own tax advisor. Accordingly, it is suggested that each investor consult its own tax advisors with regard to the tax consequences to it of investing in Notes or Certificates. Tax Counsel will deliver its opinion that an Owner Trust will not be an association or publicly traded partnership taxable as a corporation for federal income tax purposes. This opinion will be based on the assumption that the terms of the Related Documents will be complied with, and on Tax Counsel's conclusion that the nature of the income of the Trust will exempt it from the rule that some publicly traded partnerships are taxable as corporations. If the Owner Trust were taxable as a corporation for federal income tax purposes, the Trust would be subject to corporate income tax on its taxable income. The Trust's taxable income would include all its income on the Receivables, possibly reduced by its interest expense on the Notes. Any corporate income 63 66 tax could materially reduce cash available to make payments on the Notes and the Certificates, and Certificate Owners could be liable for any tax of this type that is not paid by the Owner Trust. TAX CONSEQUENCES TO OWNERS OF THE NOTES TREATMENT OF THE NOTES AS INDEBTEDNESS. The Seller and any Noteholders will agree, and the beneficial owners of the Notes (the "Note Owners") will agree by their purchase of Notes, to treat the Notes as debt for federal income tax purposes. Tax Counsel will, except as otherwise provided in the related Prospectus Supplement, deliver its opinion that the Notes will be classified as debt for federal income tax purposes. The discussion below assumes this characterization of the Notes is correct. OID, INDEXED SECURITIES, ETC. The discussion below assumes that all payments on the Notes are denominated in U.S. dollars, and that the Notes are not Indexed Securities or Strip Notes. Moreover, the discussion assumes that the interest formula for the Notes meets the requirements for "qualified stated interest" under Treasury regulations (the "OID regulations") relating to original issue discount ("OID"), and that any OID on the Notes (i.e., any excess of the principal amount of the Notes over their issue price) does not exceed a de minimis amount (i.e., 1/4% of their principal amount multiplied by the number of full years included in determining their weighted average maturity), all within the meaning of the OID regulations. In determining whether any OID on the Notes is de minimis, the Seller expects to use a reasonable assumption regarding prepayments (a "Prepayment Assumption") to determine the weighted average maturity of the Notes. If these conditions are not satisfied with respect to any given series of Notes, additional tax considerations with respect to those Notes will be disclosed in the applicable Prospectus Supplement. INTEREST INCOME ON THE NOTES. Based on the above assumptions, except as discussed in the following paragraph, the Notes will not be considered issued with OID. The stated interest on the Notes will be taxable to a Note Owner as ordinary interest income when received or accrued in accordance with that Note Owner's method of tax accounting. Under the OID regulations, a Note Owner of a Note issued with a de minimis amount of OID must include that OID in income, on a pro rata basis, as principal payments are made on the Note. A purchaser who buys a Note for more or less than its principal amount will generally be subject, respectively, to the premium amortization or market discount rules of the Code. A Note Owner that has a fixed maturity date of not more than one year from the issue date of that Note (a "Short-Term Note") may be subject to special rules. An accrual basis Note Owner of a Short-Term Note (and some cash method Note Owners, including, but not limited to, regulated investment companies, as set forth in Section 1281 of the Code) generally would be required to report interest income as interest accrues on a straight-line basis or under a constant yield method over the term of each interest period. Other cash basis Note Owners of a Short-Term Note would, in general, be required to report interest income as interest is paid (or, if earlier, upon the taxable disposition of the Short-Term Note). However, a cash basis Note Owner of a Short-Term Note reporting interest income as it is paid may be required to defer a portion of any interest expense otherwise deductible on indebtedness incurred to purchase or carry the Short-Term Note until the taxable disposition of the Short-Term Note. A cash basis Note Owner that is not required to report interest income as it accrues under Section 1281 may elect to accrue interest income on all nongovernment debt obligations with a term of one year or less, in which case the Note Owner would not be subject to the interest expense deferral rule referred to in the preceding sentence. Special rules apply if a Short-Term Note is purchased for more or less than its principal amount. SALE OR OTHER DISPOSITION. If a Note Owner sells a Note, the Note Owner will recognize gain or loss in an amount equal to the difference between the amount realized on the sale and the Note Owner's adjusted tax basis in the Note. The adjusted tax basis of a Note to a particular Note Owner will equal the Note Owner's cost for the Note, increased by any market discount, acquisition discount, OID and gain previously included in income by that Note Owner with respect to the Note and decreased by the amount of bond premium, if any, previously amortized and by the amount of payments of principal and OID previously received by that Note Owner with respect to that Note. Any gain or loss, and any gain or loss recognized on a prepayment of the Notes, will be capital gain or loss if the Note was held as a capital 64 67 asset (except for gain representing accrued interest and income), and will be long-term or short-term depending on whether the Note has been owned for the long-term capital gain holding period (currently, more than one year). Capital losses generally may be used only to offset capital gains. FOREIGN OWNERS. Interest paid (or accrued) to a Note Owner who is not a U.S. Person (a "Foreign Owner") generally will be considered "portfolio interest," and generally will not be subject to United States federal income tax and withholding tax if the interest is not effectively connected with the conduct of a trade or business within the United States by the Foreign Owner and 1. the Foreign Owner is not actually or constructively a "10 percent shareholder" of the Trust or the Seller (including a holder of 10% of the outstanding Certificates) or a "controlled foreign corporation" with respect to which the Trust or the Seller is a "related person" within the meaning of the Code; 2. the Foreign Owner is not a bank receiving interest described in Section 881(c)(3)(A) of the Code; 3. the interest is not contingent interest described in Section 871(h)(4) of the Code; and 4. the Foreign Owner does not bear specified relationships to any Certificate Owner. To qualify for the exemption from taxation, the Foreign Owner must provide the applicable Trustee or other person who is otherwise required to withhold U.S. tax with respect to the Notes with an appropriate statement (on Form W-8BEN or a similar form), signed under penalties of perjury, certifying that the Note Owner is a Foreign Owner and providing the Foreign Owner's name and address. If a Note is held through a securities clearing organization or other financial institution, the organization or institution may provide the relevant signed statement to the withholding agent; in that case, however, the signed statement must be accompanied by a Form W-8BEN or substitute form provided by the Foreign Owner and the Foreign Owner must notify the financial institution acting on its behalf of any changes to the information on the Form W-8BEN (or substitute form) within 30 days of that change. If interest paid to a Foreign Owner is not considered portfolio interest, then it will be subject to United States federal income and withholding tax at a rate of 30 percent, unless reduced or eliminated pursuant to an applicable tax treaty. In order to claim the benefit of any applicable tax treaty, the Foreign Owner must provide the applicable Trustee or other person who is required to withhold U.S. tax with respect to the Notes with an appropriate statement (on Form W-8BEN or a similar form), signed under penalties of perjury, certifying that the Foreign Owner is entitled to benefits under the treaty. Any capital gain realized on the sale, redemption, retirement or other taxable disposition of a Note by a Foreign Owner will be exempt from United States federal income and withholding tax, provided that (1) that gain is not effectively connected with the conduct of a trade or business in the United States by the Foreign Owner and (2) in the case of an individual Foreign Owner, the Foreign Owner is not present in the United States for 183 days or more during the taxable year of disposition. As used in this Prospectus, a "U.S. Person" means: 1. a citizen or resident of the United States; 2. a corporation or a partnership organized in or under the laws of the United States or any political subdivision thereof; 3. an estate, the income of which from sources outside the United States is includible in gross income for federal income tax purposes regardless of its connection with the conduct of a trade or business within the United States; or 4. a trust if (a) a court within the U.S. is able to exercise primary supervision over the administration of the trust and one or more United States persons have authority to control all substantial decisions of the trust or (b) such trust is eligible to and has elected to be treated as a domestic trust pursuant to the Code, despite not meeting the requirements described in clause (2). 65 68 BACKUP WITHHOLDING. Each Note Owner (other than an exempt Note Owner such as a corporation, tax-exempt organization, qualified pension and profit-sharing trust, individual retirement account or nonresident alien who provides certification as to status as a nonresident) will be required to provide, under penalties of perjury, a certificate (on Form W-9) providing the Note Owner's name, address, correct federal taxpayer identification number and a statement that the Note Owner is not subject to backup withholding. Should a nonexempt Note Owner fail to provide the required certification, the Trust will be required to withhold 31 percent of the amount otherwise payable to the Note Owner, and remit the withheld amount to the IRS as a credit against the Note Owner's federal income tax liability. NEW WITHHOLDING REGULATIONS. The Treasury Department has issued new regulations (the "New Regulations") which make certain modifications to the withholding, backup withholding and information reporting rules described above. The New Regulations attempt to unify certification requirements and modify reliance standards. The New Regulations will generally be effective for payments made after December 31, 2000, subject to certain transition rules. It is suggested that prospective investors consult their own tax advisors regarding the New Regulations. POSSIBLE ALTERNATIVE TREATMENTS OF THE NOTES. If, contrary to the opinion of Tax Counsel, the IRS successfully asserted that one or more of the Notes did not represent debt for federal income tax purposes, the Notes might be treated as equity interests in the Trust. If so treated, the Trust might be taxable as a corporation with the adverse consequences described above (and the taxable corporation would not be able to reduce its taxable income by deductions for interest expense on Notes recharacterized as equity). Alternatively, and most likely in the view of Tax Counsel, the Trust might be treated as a publicly traded partnership that would not be taxable as a corporation because it would meet specified qualifying income tests. Nonetheless, treatment of the Notes as equity interests in a publicly traded partnership could have adverse tax consequences to some Note Owners. For example, income to some tax-exempt entities (including pension funds) may be "unrelated business taxable income," income to Foreign Owners may be subject to U.S. tax and cause Foreign Owners to be subject to U.S. tax return filing and withholding requirements, and individual Note Owners might be subject to some limitations on their ability to deduct their share of trust expenses. TAX CONSEQUENCES TO OWNERS OF THE CERTIFICATES TREATMENT OF THE TRUST AS A PARTNERSHIP. The Seller and the Servicer will agree, and the Certificate Owners will agree by their purchase of Certificates, to treat the Trust (i) as a partnership for purposes of federal and state income tax, franchise tax and any other tax measured in whole or in part by income. If the Trust is treated as a partnership, the assets of the partnership would be the assets held by the Trust, the partners of the partnership would be the Certificate Owners (including the Seller in its capacity as recipient of payments from the Reserve Account), and the Notes would be debt of the partnership or (ii) if there is a single Certificate Owner and none of the Notes are characterized as equity interest in the Trust; as a disregarding entity separate from the Certificate Owner for purposes of federal and state income tax and any other tax measured in whole or in part by income, with the assets of the Trust treated as assets of the Certificate Owner, and the Notes treated as indebtedness of the Certificate Owner. However, the proper characterization of the arrangement involving the Owner Trust, the Certificates, the Notes, the Seller and the Servicer is not clear because there is no authority on transactions closely comparable to that contemplated in this Prospectus. A variety of alternative characterizations are possible. For example, because the Certificates have features characteristic of debt, the Certificates might be considered debt of the Seller or the Trust. Any characterization of this type generally would not result in materially adverse tax consequences to Certificate Owners as compared to the consequences from treatment of the Certificates as equity in a partnership, described below. The following discussion assumes that the Certificates represent equity interests in a partnership. INDEXED SECURITIES, ETC. The following discussion assumes that all payments on the Certificates are denominated in U.S. dollars, none of the Certificates are Indexed Securities or Strip Certificates, and that 66 69 a series of Securities includes a single class of Certificates. If these conditions are not satisfied with respect to any given series of Certificates, additional tax considerations with respect to those Certificates will be disclosed in the applicable Prospectus Supplement. PARTNERSHIP TAXATION. As a partnership, the Owner Trust will not be subject to federal income tax. Rather, each Certificate Owner will be required to separately take into account that Certificate Owner's allocated share of income, gains, losses, deductions and credits of the Owner Trust. The Trust's income will consist primarily of interest and finance charges earned on the Receivables (including appropriate adjustments for market discount, OID and bond premium) and any gain upon collection or disposition of Receivables. The Trust's deductions will consist primarily of interest accruing with respect to the Notes, servicing and other fees, and losses or deductions upon collection or disposition of Receivables. The tax items of a partnership are allocable to the partners in accordance with the Code, Treasury regulations and the partnership agreement (here, the Trust Agreement and related documents). In the Trust Agreement, the Certificate Owners will agree that the yield on a Certificate is intended to qualify as a "guaranteed payment" and not as a distributive share of partnership income. A guaranteed payment would be treated by a Certificate Owner as ordinary income, but may well not be treated as interest income. The Trust Agreement will provide that, to the extent that the treatment of the yield on a Certificate as a guaranteed payment is not respected, the Certificate Owners of each class of Certificates will be allocated taxable income of the Trust for each month equal to the sum of: 1. the interest that accrues on the Certificates in accordance with their terms for that month, including interest accruing at the Pass Through Rate for that month and interest on amounts previously due on the Certificates but not yet paid; 2. any Trust income attributable to discount on the Receivables that corresponds to any excess of the principal amount of the Certificates over their initial issue price; 3. prepayment premium payable to the Certificate Owners for that month; and 4. any other amounts of income payable to the Certificate Owners for that month. That allocation will be reduced by any amortization by the Trust of premium on Receivables that corresponds to any excess of the issue price of Certificates over their principal amount. All remaining taxable income of the Trust will be allocated to the Seller. Except as provided below, losses and deductions generally will be allocated to the Certificate Owners only to the extent the Certificate Owners are reasonably expected to bear the economic burden of those losses or deductions. Any losses allocated to Certificate Owners could be characterized as capital losses, and the Certificate Owners generally would only be able to deduct those losses against capital gain, and deductions would be subject to the limitations set forth below. Accordingly, a Certificate Owner's taxable income from the Trust could exceed the cash it is entitled to receive from the Trust. Based on the economic arrangement of the parties, this approach for allocating Trust income and loss should be permissible under applicable Treasury regulations, although no assurance can be given that the IRS would not require a greater amount of income to be allocated to Certificate Owners. Moreover, even under the foregoing method of allocation, Certificate Owners may be allocated income equal to the entire Pass Through Rate plus the other items described above even though the Trust might not have sufficient cash to make current cash payments of that amount. Thus, cash basis Certificate Owners will in effect be required to report income from the Certificates on the accrual basis and Certificate Owners may become liable for taxes on Trust income even if they have not received cash from the Trust to pay those taxes. In addition, because tax allocations and tax reporting will be done on a uniform basis for all Certificate Owners but Certificate Owners may be purchasing Certificates at different times and at different prices, Certificate Owners may be required to report on their tax returns taxable income that is greater or less than the amount reported to them by the Trust. For each taxable year of the Certificate Owner, the Certificate Owner will be required to report items of income, loss and deduction allocated to them by the Trust for the Trust's taxable year that ends on or 67 70 before the last day of taxable year of the Certificate Owner. The Code prescribes rules for determining the taxable year of the Trust. It is likely that, under these rules, the taxable year of the Trust will be the calendar year. However, in the event that all of the Certificate Owners possessing a 5 percent or greater interest in the equity or profits of the Trust share a taxable year that is other than the calendar year, the Trust could be required to use that year as its taxable year. A significant portion of the taxable income allocated to a Certificate Owner that is a pension, profit sharing or employee benefit plan or other tax-exempt entity (including an individual retirement account) generally will constitute "unrelated business taxable income" taxable to that Certificate Owner under the Code. An individual taxpayer's share of expenses of the Trust (including fees to the Servicer but not interest expense) would be miscellaneous itemized deductions. Those deductions might be disallowed to the individual in whole or in part and might result in that Certificate Owner being taxed on an amount of income that exceeds the amount of cash actually paid to that Certificate Owner over the life of the Trust. The Trust intends to make all tax calculations relating to income and allocations to Certificate Owners on an aggregate basis. If the IRS were to require that those calculations be made separately for each Receivable, the Trust might be required to incur additional expense but it is believed that there would not be a material adverse effect on Certificate Owners. DISCOUNT AND PREMIUM. It is believed that the Receivables were not issued with OID, and, therefore, the Trust should not have OID income. However, the purchase price paid by the Trust for the Receivables may be greater or less than the remaining principal balance of the Receivables at the time of purchase. If so, the Receivables will have been acquired at a premium or discount, as the case may be. (As indicated above, the Trust will make this calculation on an aggregate basis, but might be required to recompute it on a Receivable-by-Receivable basis.) If the Trust acquires the Receivables at a market discount or premium, the Trust will elect to include that discount in income currently as it accrues over the life of the Receivables or to offset premium against interest income on the Receivables. As indicated above, a portion of the market discount income or premium deduction may be allocated to Certificate Owners. SECTION 708 TERMINATION. Under Section 708 of the Code, the Trust will be deemed to terminate for federal income tax purposes if 50% or more of the capital and profits interests in the Trust are sold or exchanged within a 12-month period. If that termination occurs, the Trust will be considered to transfer all of it assets and liabilities to a new partnership in exchange for an interest in the new partnership, after which the Trust would be deemed to distribute interests in the new partnership to Certificate Owners (including the purchasing partner who caused the termination) in liquidation of the terminated partnership. The Trust will not comply with technical requirements that might apply when a constructive termination occurs. As a result, the Trust may be subject to tax penalties and may incur additional expenses if it is required to comply with those requirements. Furthermore, the Trust might not be able to comply due to lack of data. DISPOSITION OF CERTIFICATES. Generally, capital gain or loss will be recognized on a sale of Certificates in an amount equal to the difference between the amount realized and the seller's tax basis in the Certificates sold. A Certificate Owner's tax basis in a Certificate will generally equal the Certificate Owner's cost increased by the Certificate Owner's allocable share of Trust income (includible in income) and decreased by any payments received with respect to that Certificate. In addition, both the tax basis in the Certificates and the amount realized on a sale of a Certificate would include the Certificate Owner's share of the Notes and other liabilities of the Trust. A Certificate Owner acquiring Certificates at different prices may be required to maintain a single aggregate adjusted tax basis in those Certificates, and, upon sale or other disposition of some of the Certificates, allocate a portion of that aggregate tax basis to the Certificates sold (rather than maintaining a separate tax basis in each Certificate for purposes of computing gain or loss on a sale of that Certificate). 68 71 Any gain on the sale of a Certificate attributable to the holder's share of unrecognized accrued market discount on the Receivables would generally be treated as ordinary income to the holder and would give rise to special tax reporting requirements. The Trust does not expect to have any other assets that would give rise to those special reporting requirements. Thus, to avoid those special reporting requirements, the Trust will elect to include market discount in income as it accrues. If a Certificate Owner is required to recognize an aggregate amount of income (not including income attributable to disallowed itemized deductions described above) over the life of the Certificates that exceeds the aggregate cash payments with respect thereto, the excess will generally give rise to a capital loss upon the retirement of the Certificates. ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES. In general, the Trust's taxable income and losses will be determined monthly and the tax items for a particular calendar month will be apportioned among the Certificate Owners in proportion to the principal amount of Certificates owned by them as of the close of the last day of that month. As a result, a Certificate Owner purchasing Certificates may be allocated tax items (which will affect its tax liability and tax basis) attributable to periods before the Certificate Owner actually owned the Certificates. The use of a monthly convention may not be permitted by existing regulations. If a monthly convention is not allowed (or only applies to transfers of less than all of the partner's interest), taxable income or losses of the Trust might be reallocated among the Certificate Owners. The Seller is authorized to revise the Trust's method of allocation between transferors and transferees to conform to a method permitted by future regulations. SECTION 754 ELECTION. In the event that a Certificate Owner sells its Certificates at a profit (loss), the purchasing Certificate Owner will have a higher (or lower) basis in the Certificates than the selling Certificate Owner had. The tax basis of the Trust's assets will not be adjusted to reflect that higher (or lower) basis unless the Trust were to file an election under Section 754 of the Code. In order to avoid the administrative complexities that would be involved in keeping accurate accounting records, as well as potentially onerous information reporting requirements, the Trust will not make that election. As a result, Certificate Owners might be allocated a greater or lesser amount of Trust income than would be appropriate based on their own purchase price for Certificates. ADMINISTRATIVE MATTERS. The Trustee is required to keep or have kept complete and accurate books of the Trust. These books will be maintained for financial reporting and tax purposes on an accrual basis and the fiscal year of the Trust will be set forth in the applicable Prospectus Supplement. The Trustee will file a partnership information return (IRS Form 1065) with the IRS for each taxable year of the Trust during which the Trust is treated as a partnership for federal income tax purposes and for each such taxable year will report each Certificate Owner's allocable share of items of Trust income and expense to the Certificate Owners and the IRS on Schedule K-1. The Trust will provide the Schedule K-1 information to nominees that fail to provide the Trust with the information statement described below and those nominees will be required to forward that information to the Certificate Owner. Generally, Certificate Owners must file tax returns that are consistent with the information return filed by the Trust or be subject to penalties unless the Certificate Owner notifies the IRS of all those inconsistencies. Under Section 6031 of the Code, any person that holds Certificates as a nominee at any time during a calendar year is required to furnish the Trust with a statement containing specified information on the nominee, the Certificate Owners and the Certificates so held. The information includes (1) the name, address and taxpayer identification number of the nominee and (2) as to each Certificate Owner (x) the name, address and identification number of that person, (y) whether that person is a United States person, a tax-exempt entity or a foreign government, an international organization, or any wholly-owned agency or instrumentality of any of the foregoing, and (z) specified information on Certificates that were held, bought or sold on behalf of that person throughout the year. In addition, brokers and financial institutions that hold Certificates through a nominee are required to furnish directly to the Trust information as to themselves and their ownership of Certificates. A clearing agency registered under Section 17A of the Exchange Act is not required to furnish any information statement of this type to the Trust. The 69 72 information referred to above for any calendar year must be furnished to the Trust on or before the following January 31. Nominees, brokers and financial institutions that fail to provide the Trust with the information described above may be subject to penalties. The Seller will be designated as the tax matters partner in the related Trust Agreement, and as such is designated to receive notice on behalf of, and to provide notice to those Certificate Owners not receiving notice from, the IRS, and to represent the Certificate Owners in certain disputes with the IRS. The Code provides for administrative examination of a partnership as if the partnership were a separate and distinct taxpayer. Generally, the statute of limitations for partnership items does not expire before three years after the date on which the partnership information return is filed. Any adverse determination following an audit of the return of the Trust by the appropriate taxing authorities could result in an adjustment of the returns of the Certificate Owners, and, under some circumstances, a Certificate Owner may be precluded from separately litigating a proposed adjustment to the items of the Trust. As the tax matters partner, the Seller may enter into a binding settlement on behalf of all Certificate Owners with a less than 1 percent interest in the Trust (except for any group of those Certificate Owners with an aggregate interest of 5 percent or more in Trust profits that elects to form a "notice group" or Certificate Owners who otherwise notify the IRS that the Seller is not authorized to settle on their behalf). In the absence of a proceeding at the Trust level, a Certificate Owner under some circumstances may pursue a claim for credit or refund on his own behalf by filing a request for administrative adjustment of a Trust item. It is suggested that each Certificate Owner consult its own tax advisor with respect to the impact of these procedures on its particular case. An adjustment could also result in an audit of a Certificate Owner's returns and adjustments of items not related to the income and losses of the Trust. TAX CONSEQUENCES TO FOREIGN CERTIFICATE OWNERS. It is not clear whether the Trust would be considered to be engaged in a trade or business in the United States for purposes of federal withholding taxes with respect to a Certificate Owner who is not a U.S. Person (a "Foreign Certificate Owner") because there is no clear authority dealing with that issue under facts substantially similar to those described in this Prospectus. Although it is not expected that the Trust would be engaged in a trade or business in the United States for those purposes, the Trust will withhold as if it were so engaged in order to protect the Trust from possible adverse consequences of a failure to withhold. The Trust expects to withhold on the portion of its taxable income that is allocable to Foreign Certificate Owners pursuant to Section 1446 of the Code, as if that income were effectively connected to a U.S. trade or business, at a rate of 35% for Foreign Certificate Owners that are taxable as corporations and 39.6% for all other Foreign Certificate Owners. Subsequent adoption of Treasury regulations or the issuance of other administrative pronouncements may require the Trust to change its withholding procedures. In determining a Certificate Owner's withholding status, the Trust may rely on IRS Form W-8BEN, IRS Form W-9 or the Certificate Owner's certification of nonforeign status signed under penalties of perjury. Each Foreign Certificate Owner might be required to file a U.S. individual or corporate income tax return (including, in the case of a corporation, the branch profits tax) on its share of the Trust's income. Each Foreign Certificate Owner must obtain a taxpayer identification number from the IRS and submit that number to the Trust on Form W-8BEN in order to assure appropriate crediting of the taxes withheld. A Foreign Certificate Owner generally would be entitled to file with the IRS a claim for refund with respect to taxes withheld by the Trust, taking the position that no taxes were due because the Trust was not engaged in a U.S. trade or business. However, interest payments made (or accrued) to a Foreign Certificate Owner generally will be considered guaranteed payments to the extent those payments are determined without regard to the income of the Trust. If these interest payments are properly characterized as guaranteed payments, then the interest will not be considered "portfolio interest," in which case Certificate Owners would be subject to United States federal income tax and withholding tax at a rate of 30 percent, unless reduced or eliminated pursuant to an applicable treaty. In that case, a Foreign Certificate Owner would only be entitled to claim a refund for that portion of the taxes, if any, in excess of the taxes that should be withheld with respect to the guaranteed payments. BACKUP WITHHOLDING. Payments made on the Certificates and proceeds from the sale of the Certificates will be subject to a "backup" withholding tax of 31% if, in general, the Certificate Owner fails 70 73 to comply with specified identification procedures, unless the holder is an exempt recipient under applicable provisions of the Code. See "-- Tax Consequences to Owners of the Notes -- Backup Withholding." TAX TREATMENT OF GRANTOR TRUSTS TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST. The following general discussion of the anticipated federal income tax consequences of the purchase, ownership and disposition of the Certificates of a Trust nominally referred to as a "grantor trust" in the applicable prospectus supplement (a "Grantor Trust"), to the extent it relates to matters of law or legal conclusions with respect thereto, represents the opinion of Tax Counsel to each Grantor Trust with respect to the related series on the material matters associated with those consequences, subject to the qualifications set forth in this Prospectus. In addition, Tax Counsel has prepared or reviewed the statements in this Prospectus under the heading "Material Income Tax Consequences -- Tax Treatment of Grantor Trusts," and is of the opinion that those statements are correct in all material respects. Those statements are intended as an explanatory discussion of the possible effects of the classification of any Trust as a grantor trust for federal income tax purposes on investors generally and of related tax matters affecting investors generally, but do not purport to furnish information in the level of detail or with the attention to an investor's specific tax circumstances that would be provided by an investor's own tax advisor. Accordingly, it is suggested that each investor consult its own tax advisors with regard to the tax consequences to it of investing in Certificates. Tax Counsel will deliver its opinion that the Trust will not be classified as an association taxable as a corporation and that the Trust will be classified as a grantor trust under subpart E, Part I of subchapter J of Chapter 1 of Subtitle A of the Code and the applicable provisions of the California Revenue and Taxation Code. In this case, beneficial owners of the Certificates of a Grantor Trust ("Grantor Trust Certificates;" and the beneficial owners thereof, "Grantor Trust Certificate Owners") could be considered to own either (1) an undivided interest in a single debt obligation held by the Trust and having a principal amount equal to the total stated principal amount of the Receivables and an interest rate equal to the relevant Pass Through Rate or (2) an interest in each of the Receivables and any other Trust property. The determination of whether the economic substance of a property transfer is a sale or a loan secured by the transferred property has been made by the IRS and the courts on the basis of numerous factors designed to determine whether the transferor has relinquished (and the transferee has obtained) substantial incidents of ownership in the property. Among those factors, the primary factors examined are whether the transferee has the opportunity to gain if the property increases in value, and has the risk of loss if the property decreases in value. The relevant pooling and servicing agreement will express the intent of the Seller to sell, and the Grantor Trust Certificate Owners to purchase, the Receivables, and the Seller and each Grantor Trust Certificate Owner, by accepting a beneficial interest in a Grantor Trust Certificate Owner, will agree to treat the Grantor Trust Certificates as ownership interests in the Receivables and any other Trust property. TREATMENT AS DEBT OBLIGATION. If a Grantor Trust Certificate Owner was considered to own an undivided interest in a single debt obligation, the principles described under "-- Tax Treatment of Owner Trusts -- Tax Consequences to Owners of the Notes" would apply. Each Grantor Trust Certificateholder, rather than reporting its share of the interest accrued on each Receivable, would, in general, be required to include in income interest accrued or received on the principal amount of the Certificates at the relevant Pass Through Rate in accordance with its usual method of accounting. The Grantor Trust Certificates would be subject to the OID rules, described below under "-- Stripped Bonds and Stripped Coupons" and "-- Original Issue Discount." In determining whether any OID on the Grantor Trust Certificates is de minimis, the Seller expects to use a reasonable Prepayment Assumption to determine the weighted average life of the Grantor Trust Certificates. OID includible in income for any accrual period (generally, the period between payment dates) would generally be calculated using a Prepayment Assumption and an anticipated yield established as of the date of initial sale of the Grantor Trust Certificates, and would increase or decrease to reflect 71 74 prepayments at a faster or slower rate than anticipated. The Certificates would also be subject to the market discount provisions of the Code to the extent that a Grantor Trust Certificate Owner purchased those Certificates at a discount from the initial issue price (as adjusted to reflect prior accruals of OID). The remainder of the discussion in this Prospectus assumes that a Grantor Trust Certificate Owner will be treated as owning an interest in each Receivable (and the proceeds therefrom), any right to receive Yield Supplement Deposits and any other Trust property, although for administrative convenience, the Servicer will report information on an aggregate basis (as though all of the Receivables and the Yield Supplement Agreement were a single obligation). The amount and, in some instances, character, of the income reported to a Grantor Trust Certificate Owner may differ under this method for a particular period from that which would be reported if income were reported on a precise asset-by-asset basis. CHARACTERIZATION. Each Grantor Trust Certificate Owner will be treated as the owner of a pro rata undivided interest in the interest and principal portions of the Trust represented by the Grantor Trust Certificates and will be considered the equitable owner of a pro rata undivided interest in each of the Receivables in the Grantor Trust, any right to receive Yield Supplement Deposits, and any other Trust property. Any amounts received by a Grantor Trust Certificate Owner in lieu of amounts due with respect to any Receivable because of a default or delinquency in payment will be treated for federal income tax purposes as having the same character as the payments they replace. For federal income tax purposes, the Seller will be treated as having retained a fixed portion of the interest due on each Receivable having an annual percentage rate in excess of the sum of the applicable Pass Through Rate and the Servicing Rate (each, a "High Yield Receivable") equal to the difference between (1) the annual percentage rate of the Receivable and (2) the sum of the applicable Pass Through Rate and the Servicing Rate (the "Retained Yield"). The Retained Yield will be treated as "stripped coupons" within the meaning of Section 1286 of the Code, and the Stripped Receivables will be treated as "stripped bonds." See "-- Stripped Bonds and Stripped Coupons." Accordingly, each Grantor Trust Certificate Owner will be treated as owning its pro rata percentage interest in (1) payments received under any Yield Supplement Agreement, and (2) the principal of, and interest payable on, each Receivable (minus the Retained Yield on the High Yield Receivables). Those Receivables that bear interest at a rate which is less than or equal to the sum of the applicable Pass Through Rate and the Servicing Rate (the "Low Yield Receivables") will not be treated as stripped bonds. Instead, Yield Supplement Deposits will be payable to eliminate the difference between the actual yield on each Low Yield Receivable and the yield such Receivable would have had if its interest rate had equaled the sum of the applicable Pass Through Rate and the Servicing Rate. See "-- Yield Supplement Deposits." Each Grantor Trust Certificate Owner will be required to report on its federal income tax return in accordance with that Grantor Trust Certificate Owner's method of accounting its pro rata share of the entire income from the Receivables in the Trust represented by Grantor Trust Certificates, including interest, OID, if any, prepayment fees, assumption fees, any gain recognized upon an assumption, late payment charges received by the Servicer and any gain reorganized upon collection or disposition of the Receivables (but not including any portion of the Retained Yield). A Grantor Trust Certificate Owner will also be required to report under its usual method of accounting any payments received under any Yield Supplement Agreement to the extent that these payments are treated as income. Under Sections 162 or 212, each Grantor Trust Certificate Owner will be entitled to deduct its pro rata share of Base Servicing Fees, prepayment fees, assumption fees, any loss recognized upon an assumption and late payment charges retained by the Servicer, provided that those amounts are reasonable compensation for services rendered to the Trust. Grantor Trust Certificate Owners that are individuals, estates or trusts will be entitled to deduct their share of expenses only to the extent those expenses plus all other Section 212 expenses exceed two percent of its adjusted gross income. In addition, Grantor Trust Certificate Owners who are individuals may be subject to additional deduction limitations based on adjusted gross income. A Grantor Trust Certificate Owner using the cash method of accounting must take into account its pro rata share of income and deductions as and when collected by or paid to the Servicer. A Grantor Trust 72 75 Certificate Owner using an accrual method of accounting must take into account its pro rata share of income and deductions as they become due or are paid to the Servicer, whichever is earlier. Because (1) interest accrues on the Receivables over differing monthly periods and is paid in arrears and (2) interest collected on a Receivable generally is paid to Certificate Owners in the following month, the amount of interest accruing to a Grantor Trust Certificate Owner during any calendar month will not equal the interest distributed in that month. The actual amount of discount on a Receivable will be includible in income as principal payments are received on the Receivables. If the Base Servicing Fees paid to the Servicer are deemed to exceed reasonable servicing compensation, the amount of that excess could be considered as an ownership interest retained by the Servicer (or any person to whom the Servicer assigned for value all or a portion of the Base Servicing Fees) in a portion of the interest payments on the Receivables. The Receivables would then be subject to the "stripped bond" and "stripped coupons" rules of the Code discussed below. DISCOUNT AND PREMIUM. In determining whether a Grantor Trust Certificate Owner has purchased its interest in the Receivables (or any Receivable) held by the related Trust at a discount or premium and whether such Receivables (or any Receivable) have OID, market discount, or amortizable premium, a portion of the purchase price of a Certificate should be allocated to the Grantor Trust Certificate Owner's undivided interest in accrued but unpaid interest, amounts collected at the time of purchase but not distributed, and rights to receive Yield Supplement Deposits. As a result, the portion of the purchase price allocable to a Grantor Trust Certificate Owner's undivided interest in the Receivables (or any Receivable) will be increased or decreased, as applicable, and the potential OID, market discount, or amortizable premium on the Receivables (or any Receivable) could be increased or decreased accordingly. PREMIUM. A Grantor Trust Certificate Owner that acquires an interest in Receivables at a premium over the "stated redemption price at maturity" of the Receivables may elect to amortize that premium under a constant interest method. Amortizable bond premium will be treated as an offset to interest income on that Grantor Trust Certificate. The basis for that Grantor Trust Certificate will be reduced to the extent that amortizable premium is applied to offset interest payments. It is not clear whether a reasonable prepayment assumption should be used in computing amortization of premium allowable under Section 171. With some exceptions, a Grantor Trust Certificate Owner that makes this election for a Grantor Trust Certificate that is acquired at a premium will be deemed to have made an election to amortize bond premium with respect to all debt instruments having amortizable bond premium that that Grantor Trust Certificate Owner holds during the year of the election or thereafter. Absent on election to amortize bond premium, the premium will be deductible as an ordinary loss upon disposition of the Certificate or pro rata as principal is paid on the Receivables. If a premium is not subject to amortization using a reasonable prepayment assumption, the beneficial owner of a Grantor Trust Certificate acquired at a premium should recognize a loss if a Receivable prepays in full, equal to the difference between the portion of the prepaid principal amount of that Receivable that is allocable to the Grantor Trust Certificate and the portion of the adjusted basis of the Grantor Trust Certificate that is allocable to that Receivable. If a reasonable prepayment assumption is used to amortize that premium, it appears that that loss would be available, if at all, only if prepayments have occurred at a rate faster than the reasonable assumed prepayment rate. It is not clear whether any other adjustments would be required to reflect differences between an assumed prepayment rate and the actual rate of prepayments. STRIPPED BONDS AND STRIPPED COUPONS. Although the tax treatment of stripped bonds is not entirely clear, based on recent guidance from the IRS, each purchaser of a Grantor Trust Certificate will be treated as the purchaser of a stripped bond (to the extent that the Receivables consist of High Yield Receivables) which generally should be treated as a single debt instrument issued on the day it is purchased for purposes of calculating any OID. Generally, under applicable Treasury regulations (the "Section 1286 Treasury Regulations"), if the discount on a stripped bond is larger than a de minimis amount (as calculated for purposes of the OID rules of the Code), that stripped bond will be considered to have been issued with OID. See "-- Original Issue Discount." Based on the preamble to the Section 1286 Treasury Regulations, Tax Counsel is of the opinion that, although the matter is not entirely 73 76 clear, the interest income on the Certificates at the sum of the Pass Through Rate and the portion of the Servicing Rate that does not constitute excess servicing will be treated as "qualified stated interest" within the meaning of the Section 1286 Treasury Regulations, and that income will be so treated in the Trustee's tax information reporting. In this case, the amount of OID on a High Yield Receivable will equal the amount by which the purchase price of a High Yield Receivable is less than the portion of the remaining principal balance of the Receivable allocable to the interest acquired. ORIGINAL ISSUE DISCOUNT. The IRS has stated in published rulings that, in circumstances similar to those described in this Prospectus, the special rules of the Code relating to OID will be applicable to a Grantor Trust Certificate Owner's interest in those Receivables meeting the conditions necessary for these rules to apply. Generally, a Grantor Trust Certificate Owner that acquires an undivided interest in a Receivable issued or acquired with OID must include in gross income the sum of the "daily portions," as defined below, of the OID on that Receivable for each day on which it owns a Certificate, including the date of purchase but excluding the date of disposition. In the case of an original Grantor Trust Certificate Owner, the daily portions of OID with respect to a Receivable generally would be determined as follows. A calculation will be made of the portion of OID that accrues on the Receivable during each successive monthly accrual period (or shorter period in respect of the date of original issue or the final Distribution Date). This will be done, in the case of each full monthly accrual period, by adding (1) the present value of all remaining payments to be received on the Receivable under the Prepayment Assumption used in respect of the Receivables and (2) any payments received during that accrual period, and subtracting from that total the "adjusted issue price" of the Receivable at the beginning of that accrual period. No representation is made that the Receivables will prepay at any prepayment assumption. The "adjusted issue price" of a Receivable at the beginning of the first accrual period is the amount of the purchase price paid by the Grantor Trust Certificate Owner for the Certificate that is allocable to the Receivable, and the "adjusted issue price" of a Receivable at the beginning of a subsequent accrual period is the "adjusted issue price" at the beginning of the immediately preceding accrual period plus the amount of OID allocable to that accrual period and reduced by the amount of any payment on the Receivable (other than "qualified stated interest") made at the end of or during that accrual period. The OID accruing during that accrual period will then be divided by the number of days in the period to determine the daily portion of OID for each day in the period. With respect to an initial accrual period shorter than a full monthly accrual period, the daily portions of OID must be determined according to a reasonable method, provided that that method is consistent with the method used to determine the yield to maturity of the Receivables. If the amount of OID is de minimis under the rule set forth above, a High Yield Receivable would not be treated as having OID. The actual amount of discount on a High Yield Receivable would be includible in income as principal payments are received on the Receivable, in the proportion that each principal payment bears to the total principal amount of the Receivable. With respect to the Receivables, the method of calculating OID as described above will cause the accrual of OID to either increase or decrease (but never below zero) in any given accrual period to reflect the fact that prepayments are occurring at a faster or slower rate than the prepayment assumption used in respect of the Receivables. Subsequent purchasers that purchase Receivables at more than a de minimis discount should consult their tax advisors with respect to the proper method to accrue that OID. YIELD SUPPLEMENT DEPOSITS. The proper Federal income tax characterization of the Yield Supplement Deposits is not clear. Moreover, the sum of the income and deductions properly reportable by a Grantor Trust Certificate Owner in any taxable year may not equal the amounts that would be reportable if a Grantor Trust Certificate Owner held instead of an interest in the Receivables and in the Yield Supplement Agreement either (1) a debt instrument bearing interest at the applicable Pass Through Rate or (2) an interest in a trust holding Receivables each of which bears interest at a rate at least equal to the sum of the Pass Through Rate plus the Servicing Rate. It is likely that the right to receive Yield Supplement Deposits will be treated as a separate asset purchased by each Grantor Trust Certificate Owner, in which case a portion of each Grantor Trust Certificate Owner's purchase price or other tax basis in the Certificate equal to the fair market value of the right to receive such Yield Supplement Deposits should be allocated to the right to receive payments of Yield Supplement Deposits. The right to receive 74 77 Yield Supplement Deposits may be treated as a loan made by a Grantor Trust Certificate Owner to the Seller in an amount equal to the present value, discounted at a rate equal to the sum of the applicable Pass Through Rate and the Servicing Rate, of the projected Yield Supplement Deposits. In that event, a portion of the Yield Supplement Deposits generally representing a yield equal to the applicable Pass Through Rate plus the Servicing Rate on such discounted value should be treated as interest includible in income as accrued or received, and the remainder should be treated as a return of the principal amount of the deemed loan. Alternatively, it is possible that the entire amount of each Yield Supplement Deposit should be included in income as accrued or received, in which event a Grantor Trust Certificate Owner should also be entitled to amortize the portion of its purchase price allocable to its right to receive Yield Supplement Deposits. The method of calculating such amortization is unclear, and could result in the inclusion of greater amounts of income than a Grantor Trust Certificate Owner's actual yield on a Receivable. Alternatively, it is possible that the Yield Supplement Deposits could be treated as payments adjusting the purchase price of the Low Yield Receivables, rather than as a separate asset. In that event, a Grantor Trust Certificate Owner could be treated as having purchased each Low Yield Receivable at a discount (which may consist of imputed interest, market discount, or both) that, combined with the actual coupon rate of such Receivable, produces a yield equal to the sum of the applicable Pass Through Rate and the Servicing Rate. It is not clear whether, and to what extent, the amounts includible in income or amortizable under any of these methods would be adjusted to take account of prepayments on the Receivables. Moreover, it is possible that the IRS might contend that none of the above methods is appropriate, and that income with respect to the Yield Supplement Agreement should be reported by a Grantor Trust Certificate Owner in some other manner. In addition, to the extent that the amounts payable pursuant to Yield Supplement Agreement decline during any period by reason of prepayments on the Receivables, it is possible that a portion of the amount amortizable by the Grantor Trust Certificate Owner during such period would be treated as a capital loss (which would not offset ordinary income), rather than as an ordinary deduction. It is suggested that Grantor Trust Certificate Owner consult their tax advisors regarding the appropriate method of accounting for income attributable to the Yield Supplement Agreement. MARKET DISCOUNT. A Grantor Trust Certificate Owner that acquires an undivided interest in Receivables may be subject to the market discount rules of Sections 1276 through 1278 to the extent an undivided interest in a Receivable is considered to have been purchased at a "market discount." Generally, the amount of market discount is equal to the excess of the portion of the principal amount of that Receivable allocable to that holder's undivided interest in the Receivable over that holder's tax basis in that interest. Market discount with respect to a Receivable will be considered to be zero if the amount allocable to the Receivable is less than 0.25% of the Receivable's stated redemption price at maturity multiplied by the weighted average maturity remaining after the date of purchase. Treasury regulations implementing the market discount rules have not yet been issued; therefore, it is suggested that investors consult their own tax advisors regarding the application of these rules and the advisability of making any of the elections allowed under Code Sections 1276 through 1278. The Code provides that any principal payment (whether a scheduled payment or a prepayment) or any gain on disposition of a market discount bond shall be treated as ordinary income to the extent that it does not exceed the accrued market discount at the time of that payment. The amount of accrued market discount for purposes of determining the tax treatment of subsequent principal payments or dispositions of the market discount bond is to be reduced by the amount so treated as ordinary income. The Code also grants the Treasury Department authority to issue regulations providing for the computation of accrued market discount on debt instruments, the principal of which is payable in more than one installment. While the Treasury Department has not yet issued regulations, rules described in the relevant legislative history will apply. Under those rules, the holder of a market discount bond may elect to accrue market discount either on the basis of a constant interest rate or according to one of the following methods. If a Grantor Trust Certificate is issued with respect to which there is OID, the amount of market discount that accrues during any accrual period would be equal to the product of (1) the total remaining market discount and (2) a fraction, the numerator of which is the OID accruing during the 75 78 period and the denominator of which is the total remaining OID at the beginning of the accrual period. If a Grantor Trust Certificate is issued with respect to which there is no OID, the amount of market discount that accrues during a period is equal to the product of (1) the total remaining market discount and (2) a fraction, the numerator of which is the amount of stated interest paid during the accrual period and the denominator of which is the total amount of stated interest remaining to be paid at the beginning of the accrual period. For purposes of calculating market discount under any of the above methods in the case of instruments (such as the Grantor Trust Certificates) that provide for payments that may be accelerated by reason of prepayments of other obligations securing those instruments, the same prepayment assumption applicable to calculating the accrual of OID will apply. Because the regulations described above have not been issued, it is impossible to predict what effect those regulations might have on the tax treatment of a Grantor Trust Certificate purchased at a discount or premium in the secondary market. A holder who acquired a Grantor Trust Certificate at a market discount also may be required to defer a portion of its interest deductions for the taxable year attributable to any indebtedness incurred or continued to purchase or carry that Grantor Trust Certificate purchased with market discount. For these purposes, the de minimis rule referred to above applies. Any deferred interest expense would not exceed the market discount that accrues during that taxable year and is, in general, allowed as a deduction not later than the year in which the market discount is includible in income. If that holder elects to include market discount in income currently as it accrues on all market discount instruments acquired by such holder in that taxable year or thereafter, the interest deferral rule described above will not apply. ELECTION TO TREAT ALL INTEREST AS OID. The OID regulations permit a Grantor Trust Certificate Owner to elect to accrue all interest, discount (including de minimis market or original issue discount) and premium in income as interest, based on a constant yield method. If that election were to be made with respect to a Grantor Trust Certificate with market discount, the Grantor Trust Certificate Owner would be deemed to have made an election to include in income currently market discount with respect to all other debt instruments having market discount that that Grantor Trust Certificate Owner acquires during the year of the election or thereafter. Similarly, a Grantor Trust Certificate Owner that makes this election for a Grantor Trust Certificate that is acquired at a premium will be deemed to have made an election to amortize bond premium with respect to all debt instruments having amortizable bond premium that that Grantor Trust Certificate Owner owns or acquires. See "-- Premium" in this Prospectus. The election to accrue interest, discount and premium on a constant yield method with respect to a Grantor Trust Certificate is irrevocable except with the approval of the IRS. SALE OR EXCHANGE OF A GRANTOR TRUST CERTIFICATE. Sale or exchange of a Grantor Trust Certificate prior to its maturity will result in gain or loss equal to the difference, if any, between the amount received and the Grantor Trust Certificate Owner's adjusted basis in the Grantor Trust Certificate. The adjusted basis generally will equal the Grantor Trust Certificate Owner's purchase price for the Grantor Trust Certificate, increased by any market discount, OID and gain previously included in the Grantor Trust Certificate Owner's gross income with respect to the Grantor Trust Certificate, and reduced by the amount of any premium, if any, previously amortized and by the amount of any payments of principal and OID on the Grantor Trust Certificate previously received by the seller. That gain or loss will be capital gain or loss to an owner for which a Grantor Trust Certificate is a "capital asset" within the meaning of Section 1221, and will be long-term or short-term depending on whether the Grantor Trust Certificate has been owned for the long-term capital gain holding period (currently more than one year). A Grantor Trust Certificate will be an "evidence of indebtedness" within the meaning of Section 582(c)(1), so that gain or loss recognized from the sale of a Grantor Trust Certificate by a bank or a thrift institution to which that section applies will be treated as ordinary income or loss. FOREIGN PERSONS. Generally, interest or OID paid by the person required to withhold tax under Section 1441 or 1442 to (1) a Grantor Trust Certificate Owner that is not a U.S. Person (as defined under "-- Tax Treatment of Owner Trusts -- Tax Consequences to Owners of the Notes-Foreign Owners") (a "Foreign Grantor Trust Certificate Owner ") or (2) a person holding on behalf of a Foreign Grantor Trust Certificate Owner, as well as accrued OID recognized by the Foreign Grantor Trust 76 79 Certificate Owner on the sale or exchange of that Grantor Trust Certificate, will not be subject to withholding to the extent that a Grantor Trust Certificate evidences ownership in Receivables issued after July 18, 1984 by natural persons if that Foreign Grantor Trust Certificate Owner complies with specified identification requirements (including delivery of a statement, signed by the Foreign Grantor Trust Certificate Owner under penalties of perjury, certifying that that Foreign Grantor Trust Certificate Owner is not a U.S. Person and providing the name and address of that Foreign Grantor Trust Certificate Owner). Additional restrictions apply to Receivables where the obligor is not a natural person in order to qualify for the exemption from withholding. Although it is not entirely clear, it is likely that amounts received by a Foreign Grantor Trust Certificateholder that are attributable to payments of Yield Supplement Deposits received pursuant to any Yield Supplement Agreement generally would not be subject to withholding tax. Although the Trust does not intend to withhold on such amounts, no assurance can be given that the IRS will not require the Trust to withhold on such amounts. It is suggested that Foreign Grantor Trust Certificateholders consult their tax advisors regarding the withholding tax consequences of amounts received on the Grantor Trust Certificates that are attributable to payments of Yield Supplement Deposits received pursuant to any Yield Supplement Agreement. INFORMATION REPORTING AND BACKUP WITHHOLDING. The Servicer will furnish or make available, within a reasonable time after the end of each calendar year, to each person who was a Grantor Trust Certificate Owner at any time during that year, that information as may be deemed necessary or desirable to assist Grantor Trust Certificate Owners in preparing their federal income tax returns, or to enable holders to make that information available to Certificate Owners or financial intermediaries that hold Grantor Trust Certificates as nominees on behalf of Certificate Owners. If a Certificate Owner, financial intermediary or other recipient of a payment on behalf of a beneficial owner fails to supply a certified taxpayer identification number or if the Secretary of the Treasury determines that that Grantor Trust Certificate Owner has not reported all interest and dividend income required to be shown on its federal income tax return, 31% backup withholding may be required with respect to any payments. Any amounts deducted and withheld from a payment to a recipient would be allowed as a credit against that Certificate Owner's federal income tax liability. MATERIAL STATE TAX CONSEQUENCES WITH RESPECT TO OWNER TRUSTS The activities to be undertaken by the Servicer in servicing and collecting the Receivables will take place in California. The State of California imposes a state individual income tax and a corporate franchise tax on corporations, partnerships and other entities doing business in the State of California. This discussion relates only to Owner Trusts, and is based upon present provisions of California statutes and the regulations promulgated under those statutes, and applicable judicial or ruling authority, all of which are subject to change, which change may be retroactive. Because of the variation in each state's tax laws based in whole or in part upon income, it is impossible to predict tax consequences to Note Owners and Certificate Owners in all of the state taxing jurisdictions in which they are already subject to tax. It is suggested that Note Owners and Certificate Owners consult their own tax advisors with respect to state tax consequences arising out of the purchase, ownership and disposition of Notes and Certificates. For purposes of the following summary, references to the Trust, the Notes, the Certificates and related terms, parties and documents shall be deemed to refer to each Owner Trust and the Notes, Certificates and related terms, parties and documents applicable to that Trust. TAX TREATMENT OF THE TRUST. Based on regulations issued by the Franchise Tax Board with respect to the California tax characterization of an Owner Trust as a partnership and not as an association taxable as a corporation or other taxable entity, Tax Counsel will opine that an Owner Trust will not be an association (or publicly traded partnership) treated as a corporation for California tax purposes. In such case, the resulting constructive partnership should not be treated as doing business in California but rather should be viewed as a passive holder of investments and, as a result, should not be subject to the 77 80 California franchise tax (which, if applicable, could possibly result in reduced payments to Certificate Owners). TAX CONSEQUENCES WITH RESPECT TO THE NOTES. It is expected that Tax Counsel will advise each Owner Trust that issues Notes that, assuming the Notes will be treated as debt for federal income tax purposes, the Notes will be treated as debt for California income and franchise tax purposes. Accordingly, Note Owners not otherwise subject to taxation in California would not become subject to taxation in California solely because of a holder's ownership of Notes. However, a Note Owner already subject to California's income tax or franchise tax could be required to pay additional California tax as a result of the Note Owner's ownership or disposition of Notes. TAX CONSEQUENCES WITH RESPECT TO THE CERTIFICATES ISSUED BY AN OWNER TRUST. Under current law, Certificate Owners that are nonresidents of California and are not otherwise subject to California income tax may be subject to California income tax on the income from the constructive partnership. In any event, classification of the arrangement as a "partnership" would not cause a Certificate Owner not otherwise subject to taxation in California to pay California tax on income beyond that derived from the Certificates. It is not clear whether the Trust would be considered to be engaged in a trade or business in the United States for purposes of California withholding taxes with respect to Foreign Owners because there is no clear authority dealing with that issue under facts substantially similar to those described in this Prospectus. Although it is not expected that the Trust would be engaged in a trade or business in the United States for those purposes, the Trust will withhold on amounts paid to Certificate Owners who are Foreign Owners as if it were so engaged in order to protect the Trust from possible adverse consequences of a failure to withhold. The Trust expects to withhold on the portion of its taxable income from California sources that is allocable to Certificate Owners who are Foreign Owners pursuant to Section 18666 of California's Revenue and Taxation Code, as if that income were effectively connected to a U.S. trade or business, at the maximum appropriate rate. If the Certificates are instead treated as ownership interests in an association taxable as a corporation or a "publicly traded partnership" taxable as a corporation, then the hypothetical entity should not be subject to the California franchise tax (which, if applicable, could result in reduced payments to Certificate Owners). A Certificate Owner not otherwise subject to tax in California would not become subject to California tax as a result of its mere ownership of that interest. MATERIAL STATE TAX CONSEQUENCES WITH RESPECT TO GRANTOR TRUSTS It is expected that Tax Counsel will advise each Grantor Trust that the Trust will be treated as a grantor trust for California tax purposes, and that, for California tax purposes, Grantor Trust Certificate Owners could be considered to own either (1) an undivided interest in a single debt obligation held by the Trust and having a principal amount equal to the total stated principal amount of the Receivables and an interest rate equal to the related Pass Through Rate or (2) an interest in each of the Receivables and any other Trust assets. It is suggested that Grantor Trust Certificate Owners consult their tax advisors regarding the state tax consequences associated with the purchase, ownership and disposition of the Grantor Trust Certificates. THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON YOUR PARTICULAR TAX SITUATION. IT IS SUGGESTED THAT YOU CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES AND CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS. 78 81 ERISA CONSIDERATIONS Section 406 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and Section 4975 of the Code prohibit a pension, profit-sharing or other employee benefit plan, as well as individual retirement accounts and some types of Keogh Plans (each a "Benefit Plan"), from engaging in transactions involving "plan assets" with persons that are "parties in interest" under ERISA or "disqualified persons" under the Code with respect to that Benefit Plan. ERISA also imposes duties on persons who are fiduciaries of Benefit Plans subject to ERISA and prohibits specified transactions between a Benefit Plan and parties in interest with respect to those Benefit Plans. Under ERISA, any person who exercises any authority or control with respect to the management or disposition of the assets of a Benefit Plan is considered to be a fiduciary of that Benefit Plan (subject to exceptions not here relevant). A violation of these "prohibited transaction" rules may result in an excise tax or other penalties and liabilities under ERISA and the Code for those persons. Certain exemptions from the prohibited transaction rules could be applicable to the purchase and holding of Securities by a Benefit Plan depending on the type and circumstances of the plan fiduciary making the decision to acquire such Securities. Potentially available exemptions would include, without limitation, Prohibited Transaction Class Exemption ("PTCE") 90-1, which exempts certain transactions involving insurance company pooled separate accounts; PTCE 95-60, which exempts certain transactions involving insurance company general accounts; PTCE 91-38, which exempts certain transactions involving bank collective investment funds; PTCE 84-14, which exempts certain transactions effected on behalf of a plan by a "qualified professional asset manager;" and PTCE 96-23, which exempts certain transactions effected on behalf of a plan by an "in-house asset manager." Insurance company general accounts should also discuss with their legal counsel the availability of exemptive relief under Section 401(c) of ERISA. A purchaser of Securities should be aware, however, that even if the conditions specified in one or more exemptions are met, the scope of the relief provided by the applicable exemption or exemptions might not cover all acts that might be construed as prohibited transactions. Some transactions involving a Trust might be deemed to constitute prohibited transactions under ERISA and the Code with respect to a Benefit Plan that purchased Notes or Certificates if assets of the Trust were deemed to be assets of the Benefit Plan. Under a regulation issued by the United States Department of Labor (the "Plan Assets Regulation"), the assets of a Trust would be treated as plan assets of a Benefit Plan for the purposes of ERISA and the Code only if the Benefit Plan acquired an "equity interest" in the Trust and none of the exceptions contained in the Plan Assets Regulation was applicable. An equity interest is defined under the Plan Assets Regulation as an interest other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features. The likely treatment in this context of Notes and Certificates of a given series will be discussed in the applicable Prospectus Supplement. Employee benefit plans that are governmental plans (as defined in Section 3(32) of ERISA) and some church plans (as defined in Section 3(33) of ERISA) are not subject to ERISA requirements nor to Section 4975 of the Code. However, governmental plans may be subject to state or local laws that impose similar requirements. In addition, governmental plans and church plans that are "qualified" under Section 401(a) of the Code are subject to restrictions with respect to prohibited transactions under Section 503(a)(1)(B) of the Code, the sanction for violation being loss of "qualified" status. Due to the complexities of the "prohibited transaction" rules and the penalties imposed upon persons involved in prohibited transactions, it is important that the fiduciary of any Benefit Plan considering the purchase of Securities consult with its tax and/or legal advisors regarding whether the assets of the related Trust would be considered plan assets, the possibility of exemptive relief from the prohibited transaction rules and other issues and their potential consequences. 79 82 UNDERWRITING On the terms and conditions set forth in an underwriting agreement with respect to the Notes, if any, of a given series and an underwriting agreement with respect to the Certificates of that series (collectively, the "Underwriting Agreements"), the Seller will agree to cause the related Trust to sell to the underwriters named in the Underwriting Agreements and in the applicable Prospectus Supplement, and each of those underwriters will severally agree to purchase, the principal amount of each class of Notes and Certificates, as the case may be, of the related series set forth in the Underwriting Agreements and in the applicable Prospectus Supplement. In each of the Underwriting Agreements with respect to any given series of Securities, the several underwriters will agree, subject to the terms and conditions set forth in the Underwriting Agreements, to purchase all the Notes and Certificates, as the case may be, described in the Underwriting Agreements which are offered by this Prospectus and by the applicable Prospectus Supplement if any of those Notes and Certificates, as the case may be, are purchased. Each Prospectus Supplement will either (1) set forth the price at which each class of Notes and Certificates, as the case may be, being offered by that Prospectus Supplement will be offered to the public and any concessions that may be offered to some dealers participating in the offering of those Notes and Certificates or (2) specify that the related Notes and Certificates, as the case may be, are to be resold by the underwriters in negotiated transactions at varying prices to be determined at the time of that sale. After the initial public offering of those Notes and Certificates, those public offering prices and those concessions may be changed. Each Underwriting Agreement will provide that NMAC and the Seller will indemnify the underwriters against specified civil liabilities, including liabilities under the Securities Act, or contribute to payments the several underwriters may be required to make in respect thereof. Each Trust may, from time to time, invest the funds in its Accounts in Eligible Investments acquired from the underwriters or from the Seller. Pursuant to each Underwriting Agreement with respect to a given series of Securities, the closing of the sale of any class of Securities subject to that Underwriting Agreement will be conditioned on the closing of the sale of all other classes of Securities of that series. The place and time of delivery for the Securities in respect of which this Prospectus is delivered will be set forth in the applicable Prospectus Supplement. LEGAL OPINIONS Certain legal matters relating to the Securities of any series will be passed upon for the related Trust, the Seller and the Servicer by the general counsel of the Servicer and O'Melveny & Myers LLP. In addition, certain United States federal and California state tax and other matters will be passed upon for the related Trust by O'Melveny & Myers LLP. 80 83 INDEX OF TERMS 10 percent shareholder..................... 65 30/360..................................... 27 Accounts................................... 39 Actual/360................................. 27 Actual/Actual.............................. 27 adjusted issue price....................... 74 Administration Agreement................... 52 Administration Fee......................... 52 Administrative Purchase Payment............ 41 Administrative Receivable.................. 41 Administrator.............................. 52 Advance.................................... 42 adversely affected......................... 50 APR........................................ 15 backup..................................... 70 banking organization....................... 34 Base Rate.................................. 26 Base Servicing Fee......................... 42 Benefit Plan............................... 79 Business Day............................... 27 Calculation Agent.......................... 28 Calculation Date........................... 29, 30, 32 capital asset.............................. 76 CD Rate.................................... 28 CD Rate Determination Date................. 28 CD Rate Security........................... 26 Cede....................................... 17 Certificate Balance........................ 19 Certificate Factor......................... 18 Certificate Owners......................... 63 Certificate Pool Factor.................... 19 Certificateholder.......................... 25 Certificates............................... 14 Class...................................... 20, 25 clearing agency............................ 34 clearing corporation....................... 34 Clearstream Banking Participants........... 36 Closing Date............................... 14, 38 Code....................................... 63 Collection Account......................... 39 Collection Period.......................... 41 Commercial Paper Rate...................... 29 Commercial Paper Rate Determination Date... 29 Commercial Paper Rate Security............. 26 commercially reasonable.................... 59 controlled foreign corporation............. 65 Cooperative................................ 36 Cut-off Date................................ 14 daily portions............................. 74 Dealer Agreements.......................... 14 Dealer Recourse............................ 14 Dealers.................................... 14 default.................................... 59 Defaulted Receivable....................... 42 Definitive Certificates.................... 37 Definitive Notes........................... 37 Definitive Securities...................... 33, 37 demonstration.............................. 14 Depositaries............................... 34 Designated LIBOR Page...................... 31 Determination Date......................... 46 disqualified persons....................... 79 Distribution Date.......................... 25 DTC........................................ 33 DTC Participants........................... 20, 34 Eligible Investments....................... 39 equity interest............................ 79 ERISA...................................... 79 Euroclear.................................. 33, 36 Euroclear Operator......................... 36 Euroclear Participants..................... 36 Events of Default.......................... 22 evidence of indebtedness................... 76 Federal Funds Rate......................... 30 Federal Funds Rate Determination Date...... 30 Federal Funds Rate Security................ 26 Financed Vehicles.......................... 14 Fixed Rate Securities...................... 26 Floating Rate Securities................... 26 Foreign Certificate Owner.................. 70 Foreign Grantor Trust Certificateholder.... 76 Foreign Owner.............................. 65 FTC Rule................................... 61 Grantor Trust.............................. 71 Grantor Trust Certificate Owners........... 71 Grantor Trust Certificates................. 71 guaranteed payment......................... 67 H.15(519).................................. 29 High Yield Receivable...................... 72 Holder-in-Due-Course....................... 61 Indenture.................................. 20 Indenture Trustee.......................... 16 Index...................................... 33 Index Currencies........................... 33 Index Currency............................. 31 Index Maturity............................. 29 Indexed Principal Amount................... 33 Indexed Securities......................... 32 Indirect DTC Participants.................. 34 in-house asset manager..................... 79 Insolvency Event........................... 48 Insolvency Laws............................ 60 Interest Period............................ 28 Interest Rate.............................. 20 Interest Reset Date........................ 27 Interest Reset Period...................... 26 IRS........................................ 63 Issuer..................................... 14 LIBOR...................................... 12, 30 LIBOR Bloomberg............................ 31, 32 LIBOR Security............................. 26 LIBOR Telerate............................. 30, 31 LIBOR REUTERS.............................. 30 Liquidated Receivable...................... 42 London Business Day........................ 27 Low Yield Receivables...................... 72 market discount............................ 75 Money Market Yield......................... 29 NARC....................................... 17 NARC II.................................... 17 Near-new................................... 14
81 84 New........................................ 14 New Regulations............................ 66 Nissan..................................... 17 NMAC....................................... 14, 17 NNA........................................ 17 Note Factor................................ 18 Note Owners................................ 64 Note Pool Factor........................... 19 Noteholder................................. 20 Notes...................................... 14 Obligors................................... 14 OID........................................ 64, 71 OID regulations............................ 64 Omnibus Proxy.............................. 35 Original Certificate Balance............... 19 Owner Trust................................ 63 parties in interest........................ 79 partnership................................ 78 Pass Through Rate.......................... 25 plan assets................................ 79 Plan Assets Regulation..................... 79 Pool Balance............................... 43 Pooling and Servicing Agreement............ 14 portfolio interest......................... 65, 70 Prepayment Assumption...................... 64 prepayments................................ 18 Principal Balance.......................... 43 Principal Financial Center................. 32 prohibited transaction..................... 79 Prospectus Supplement...................... 14 PTCE....................................... 79 publicly traded partnership................ 78 Purchase Agreement......................... 38 qualified.................................. 79 qualified professional asset manager....... 79 qualified stated interest.................. 74 Receivables................................ 14 Receivables Pool........................... 14 Registration Statement..................... 17 Related Documents.......................... 24 related person............................. 65 Relief Act................................. 62 Required Deposit Rating.................... 40 Required Rate.............................. 43 Required Yield Supplement Amount........... 44 Reserve Account............................ 45 Reserve Account Initial Deposit............ 45 Retained Yield............................. 72 Sale and Servicing Agreement............... 14 Schedule of Receivables.................... 38 SEC........................................ 17 Section 1286 Treasury Regulations.......... 73 Securities................................. 14 Securities Act............................. 17 Securityholders............................ 17 Seller..................................... 14 Servicer................................... 17 Servicer Default........................... 48 Servicing Rate............................. 42 Short-Term Note............................ 64 Spread..................................... 26 Spread Multiplier.......................... 26 stated redemption price at maturity........ 73 street name................................ 35 Strip Certificates......................... 25 Strip Notes................................ 20 stripped bonds............................. 72 stripped coupons........................... 72 Subordination Spread Account............... 45 Supplemental Servicing Fee................. 43 Swap Agreement............................. 53 TARGET system.............................. 27 Tax Counsel................................ 63 Terms and Conditions....................... 36 Total Servicing Fee........................ 43 Transfer and Servicing Agreements.......... 38 Treasury bills............................. 32 Treasury Rate.............................. 32 Treasury Rate Determination Date........... 32 Treasury Rate Security..................... 26 Trust...................................... 14 Trust Agreement............................ 14 Trustee.................................... 16 U.S. Person................................ 65 UCC........................................ 39 Underwriting Agreements.................... 80 unrelated business taxable income.......... 66, 68 Warranty Purchase Payment.................. 39 Warranty Receivable........................ 39 weighted average life...................... 18 Yield Supplement Account................... 43 Yield Supplement Agreement................. 44 Yield Supplement Deposit................... 44
82 85 PROSPECTUS SUPPLEMENT To Prospectus Dated January 11, 2001 NISSAN AUTO RECEIVABLES - OWNER TRUST [NISSAN AUTO RECEIVABLES CORPORATION] [NISSAN AUTO RECEIVABLES CORPORATION II], Seller NISSAN MOTOR ACCEPTANCE CORPORATION, Servicer $ ASSET BACKED NOTES $ ASSET BACKED CERTIFICATES YOU SHOULD REVIEW CAREFULLY THE FACTORS SET FORTH UNDER "RISK FACTORS" BEGINNING ON PAGE S-12 OF THIS PROSPECTUS SUPPLEMENT AND PAGE 8 IN THE ACCOMPANYING PROSPECTUS. The securities are asset backed securities issued by the trust. The securities are not obligations of Nissan Motor Acceptance Corporation, [Nissan Auto Receivables Corporation] [Nissan Auto Receivables Corporation II], Nissan North America, Inc. or any of their respective affiliates. Neither the securities nor the receivables are insured or guaranteed by any governmental agency. This prospectus supplement may be used to offer and sell the securities only if it is accompanied by the prospectus dated January 11, 2001.
CLASS A NOTES -------------------------------------- A-1 NOTES A-2 NOTES A-3 NOTES CLASS B NOTES CLASS C CERTIFICATES ---------- ---------- ---------- --------------- -------------------- Principal Amount............. $ $ $ $ $ Interest Rate................ % % % % % Final Scheduled Distribution Date........................ , , , , , Price to Public(1)........... % % % % % Underwriting Discount(1)..... % % % % % Proceeds to Seller(1)........ $ $ $ $ $ ------------------
(1) Total price to the public is $[ ], total underwriting discount is $[ ] and total proceeds to the Seller are [ ]. - - The trust will issue six classes of securities. - - Only the securities described on the following table are being offered by this prospectus supplement and the prospectus. - - The securities accrue interest from , . CREDIT ENHANCEMENT - - Reserve account, with an initial deposit of $[ ]. - - The Class B Notes are subordinated to the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes, and the certificates are subordinated to the notes to the extent described herein. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE SECURITIES OR DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. [The trust has applied to list the securities on the Luxembourg Stock Exchange and for listing and permission to deal in the securities in the Stock Exchange of Hong Kong Limited.] [UNDERWRITERS] The date of this prospectus supplement is . 86 IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS Information about the securities is provided in two separate documents that progressively provide varying levels of detail: (1) the accompanying prospectus, which provides general information, some of which may not apply to a particular class of securities, including your class; and (2) this prospectus supplement, which describes the specific terms of your class of securities. IF THE DESCRIPTION OF THE TERMS OF YOUR SECURITIES VARIES BETWEEN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT. Cross-references are included in this prospectus supplement and in the accompanying prospectus which direct you to more detailed descriptions of a particular topic. You can also find references to key topics in the Table of Contents on the back cover of this prospectus supplement. You can find a listing of the pages where capitalized terms used in this prospectus supplement are defined under the caption "Index of Terms" beginning on page S-48 in this prospectus supplement and under the caption "Index of Terms" beginning on page 81 in the accompanying prospectus. You should rely on the information contained in or incorporated by reference into this prospectus supplement or accompanying prospectus. We have not authorized anyone to give you different information. We do not claim the accuracy of the information in this prospectus supplement or the accompanying prospectus as of any dates other than the dates stated on the respective cover pages. We are not offering the securities in any jurisdiction where it is not permitted. S-2 87 [GRAPHIC-SUMMARY OF TRANSACTION PARTIES] S-3 88 [GRAPHIC -- SUMMARY OF MONTHLY DEPOSITS TO AND WITHDRAWALS FROM ACCOUNTS] S-4 89 SUMMARY The following summary contains a brief description of the Notes and the Certificates. You will find a detailed description of the terms of the Offering of the Notes and the Certificates following this summary. You should read carefully this entire document and the accompanying Prospectus to understand all of the terms of the Offering of the Notes and the Certificates. You should consider both documents when making your investment decision. ISSUER Nissan Auto Receivables Owner Trust - . The trust will be established by a trust agreement dated as of , . SELLER [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II]. SERVICER Nissan Motor Acceptance Corporation. OWNER OF THE CERTIFICATES/EQUITY [ ]. INDENTURE TRUSTEE [ ]. OWNER TRUSTEE [ ]. OFFERED NOTES The offered notes consist of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class B Notes, as described on the cover page. OFFERED CERTIFICATES The offered certificates consist of the Class C Certificates, as described on the cover page. The trust will also issue $[ ] initial principal amount of the Class D Certificates. The trust is not offering the Class D Certificates. The certificates will represent fractional undivided interests in the trust. Payments of interest on and principal of the certificates are subordinated to the payments of interest on and principal of the notes as described herein. RECEIVABLES The trust's main source of funds for making payments on the notes and the certificates will be collections on its motor vehicle retail installment sale contracts, otherwise known as the receivables, that will be transferred by Nissan Motor Acceptance Corporation to the seller and then by the seller to the trust in exchange for the notes and the certificates. The principal balance of the receivables as of [ ], referred to as the "cut-off date," was $[ ]. As of the cut-off date, the receivables had the following characteristics: Number of Receivables.............................. Average Principal Balance.......................... Approximate Weighted Average Annual Percentage Rate............................................ Approximate Weighted Average Remaining Term to Maturity........................................ Approximate Weighted Average Original Term to Maturity........................................
You should refer to "The Receivables" in this Prospectus Supplement for more information on the Receivables. CLOSING DATE On or about [ ]. S-5 90 TERMS OF THE NOTES DISTRIBUTION DATES: Interest and principal will generally be payable on the 15th day of each month, unless the 15th day is not a business day, in which case the payment will be made on the following business day. The first payment will be on [ ]. PER ANNUM INTEREST RATES: The notes will have fixed rates of interest as follows:
CLASS INTEREST RATE ----- ------------- A-1............................... []% A-2............................... []% A-3............................... []% B................................. []%
INTEREST PERIODS: Interest on the notes will accrue in the following manner:
FROM TO DAY COUNT CLASS (INCLUDING) (EXCLUDING) CONVENTION ----- ----------- ----------- ---------- A-1.............. actual/360 A-2.............. 30/360 A-3.............. 30/360 B................ 30/360
PRINCIPAL: - AMOUNTS ALLOCATED TO THE NOTES: Principal of the notes will be payable on each distribution date in an amount equal to the excess, if any, of (x) the sum of the principal balances of the notes and the certificates as of the close of business on the prior distribution date over (y) the principal balance of the receivables as of the end of the related collection period (excluding certain non-collectible or defaulted receivables and receivables purchased by the servicer or repurchased by the seller due to certain breaches). Principal payments on the notes as described above will be made from all available amounts after the servicing fee has been paid, certain advances have been reimbursed and after payment of interest on the notes. - ORDER OF PAYMENT AMONG CLASSES: No principal payments will be made (1) on the Class A-2 Notes until the Class A-1 Notes have been paid in full; (2) on the Class A-3 Notes until the Class A-2 Notes have been paid in full; and (3) on the Class B Notes until the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes have been paid in full. However, after the occurrence of an event of default and an acceleration of the notes, available amounts (after the servicing fee has been paid and certain advances have been reimbursed) will be applied to pay interest and principal (1) first on the Class A-1 Notes, until the outstanding principal balance of the Class A-1 Notes has S-6 91 been paid in full, and (2) then on the Class A-2 Notes and the Class A-3 Notes on a pro rata basis (x) with respect to interest, based on the respective aggregate amounts of interest due to those classes of notes and (y) with respect to principal, based on the respective outstanding principal balances of those classes of notes, until the outstanding principal balances of those classes of notes have been paid in full. After the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes have been paid in full, 100% of the principal distributable amount will be applied to make principal payments on the Class B Notes until the Class B Notes have been paid in full. - FINAL SCHEDULED DISTRIBUTION DATES: The trust must pay the outstanding principal balance of each class of notes by its final scheduled distribution date as follows:
FINAL SCHEDULED CLASS DISTRIBUTION DATE ----- ----------------- A-1............................................ [ ] A-2............................................ [ ] A-3............................................ [ ] B.............................................. [ ]
YOU SHOULD REFER TO "THE NOTES -- PAYMENTS OF PRINCIPAL" AND "DISTRIBUTIONS ON THE NOTES AND THE CERTIFICATES -- CALCULATION OF AVAILABLE AMOUNTS" IN THIS PROSPECTUS SUPPLEMENT FOR MORE DETAILED INFORMATION REGARDING PAYMENTS OF PRINCIPAL. TERMS OF THE CERTIFICATES DISTRIBUTION DATES: Interest and principal will generally be payable on the 15th day of each month, unless the 15th day is not a business day, in which case the payment will be made on the following business day. The first payment will be on [ ]. PER ANNUM INTEREST RATES: The certificates will have the following pass through rates:
PASS CLASS THROUGH RATE ----- ------------ C................................ [ ]% D................................ [ ]%
INTEREST PERIODS: Interest on the certificates will accrue in the following manner:
FROM TO DAY COUNT CLASS (INCLUDING) (EXCLUDING) CONVENTION ----- ----------- ----------- ---------- C................ [30/360] D................ [30/360]
S-7 92 PRINCIPAL: - AMOUNTS ALLOCATED TO THE CERTIFICATES: Principal of the certificates will be payable generally in an amount equal to the certificateholders' percentage of the principal distributable amount. Principal payments on the certificates as described above will be made from all available amounts after the following amounts have been distributed: 1. the servicing fee and certain advances; 2. interest and principal on the notes; and 3. interest on the certificates. - ORDER OF PAYMENT AMONG CLASSES: No principal payments will be made on the Class D Certificates until the Class C Certificates have been paid in full. - FINAL SCHEDULED DISTRIBUTION DATES: The trust must pay the outstanding principal balance of each class of certificates by its final scheduled distribution date as follows:
FINAL SCHEDULED CLASS DISTRIBUTION DATE ----- ----------------- C.............................................. [] D.............................................. []
YOU SHOULD REFER TO "THE CERTIFICATES -- PAYMENTS OF PRINCIPAL" AND "DISTRIBUTIONS ON THE NOTES AND THE CERTIFICATES -- CALCULATION OF AVAILABLE AMOUNTS" IN THIS PROSPECTUS SUPPLEMENT FOR MORE DETAILED INFORMATION REGARDING PAYMENTS OF PRINCIPAL. OPTIONAL PURCHASE The notes and the certificates will be paid in full on any distribution date on which the servicer exercises its option to purchase the receivables. The servicer may purchase the receivables when the outstanding aggregate principal balance of the receivables declines to 10% or less of the original aggregate principal balance of the receivables on the cut-off date. CREDIT ENHANCEMENT The credit enhancement of the offered notes and the offered certificates will be the following: 1. CLASS A-1 NOTES, CLASS A-2 NOTES AND CLASS A-3 NOTES: the subordination of the Class B Notes and the certificates; 2. CLASS B NOTES: the subordination of the certificates; 3. CLASS C CERTIFICATES: the subordination of the Class D Certificates; and 4. ALL CLASSES OF NOTES AND THE CLASS C CERTIFICATES: the reserve account. The credit enhancement is intended to protect you against losses and delays in payments on your securities by absorbing losses on the receivables and other shortfalls in cash flows. The Class B Notes, which have an initial principal balance of $[ ] which represents [ ]% of the initial principal balance of all the notes, will S-8 93 not receive any principal distributions until the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes have been paid or any interest distributions until all interest owing to the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes have been paid. The certificates have an initial principal balance of $[ ] and represent [ ]% of the initial principal balance of all the notes and the certificates. The certificates will not receive any principal distributions until all of the notes have been paid in full. The certificates will not receive any interest payments until all required principal and interest payments have been made on the notes. RESERVE ACCOUNT On each distribution date, the trust will use funds in the reserve account for distribution to the noteholders and the holders of the Class C Certificates to cover any shortfalls in interest and principal required to be paid on the notes and the Class C Certificates. The reserve account will be pledged to the indenture trustee to secure the notes and the Class C Certificates but will not be an asset of the trust. If the principal balance of a class of notes or the Class C Certificates is not paid in full on the related final scheduled distribution date, the indenture trustee will withdraw amounts from the reserve account (if available) to pay that class in full. The sale and servicing agreement sets forth the specified reserve account balance, which is the amount that is required to be on deposit in the reserve account. On the closing date, the seller will deposit $[ ] into the reserve account, which is approximately [ ]% of the outstanding principal balance of the receivables as of the cut-off date. The amount required to be on deposit in the reserve account at the close of business on any distribution date will be $[ ]. If however, on any distribution date certain loss or delinquency ratios relating to the receivables (and described under "Subordination; Reserve Account") are exceeded, then the reserve account balance of such distribution date (and for each succeeding distribution date until the relevant percentage equivalent ratios have been achieved and maintained for the required period) will be the greater of (1) $[ ] and (2) [ ]% of the outstanding principal balance of the notes and the Class C Certificates as of the preceding distribution date (after giving effect to payments of principal made on such date). On each distribution date, after making required payments to the servicer and to the noteholders and holders of the Class C Certificates, the trust will make a deposit into the reserve account to fund and maintain the specified reserve account balance. YIELD SUPPLEMENT ACCOUNT On each distribution date, the trust will use funds on deposit in the yield supplement account to cover, for each receivable, the excess, if any, of (x) one month's interest that would accrue on the principal balance of that receivable at a rate equal to the sum of (1) [the interest rate on the Class B Notes] [weighted average interest rate of the securities offered pursuant to this prospectus supplement], and (2) the servicing fee rate of 1.00% over (y) one month's interest that accrued on that receivable at the interest rate on that receivable. S-9 94 On the closing date, the seller will [deposit] [make a capital contribution to the trust by depositing] $[ ] in cash into the yield supplement account. That amount is the amount that is estimated to be required to be withdrawn from the yield supplement account on subsequent distribution dates in accordance with the provisions of the preceding paragraph. [In addition, the seller will [pledge] [assign] other receivables or assets (including vehicle lease contracts) to the trust.] Neither the seller nor the servicer will make any other deposit to the yield supplement account on or after the closing date. The yield supplement account [will][will not] be an asset of the trust. TAX STATUS Subject to the important considerations described in this prospectus supplement and the prospectus, O'Melveny & Myers LLP, special tax counsel to the trust, will deliver its opinion that: 1. the Class A Notes will be characterized as debt for tax purposes; 2. the Class B Notes should be treated as debt for tax purposes; and 3. the trust will not be characterized as an association or a publicly traded partnership taxable as a corporation for federal income and California income and franchise tax purposes. If you purchase the notes, you will agree to treat the notes as debt. If you purchase the certificates, you will agree to treat the trust (1) as a partnership in which the certificateholders are partners or (2) if you are the sole beneficial owner of the certificates, as a "disregarded entity," for federal income and California income and franchise tax purposes. YOU SHOULD REFER TO "MATERIAL INCOME TAX CONSEQUENCES" IN THIS PROSPECTUS SUPPLEMENT AND "MATERIAL INCOME TAX CONSEQUENCES -- TAX TREATMENT OF OWNER TRUSTS" IN THE ACCOMPANYING PROSPECTUS. ERISA CONSIDERATIONS The notes are generally eligible for purchase by employee benefit plans and individual retirement accounts, subject to those considerations discussed under "ERISA Considerations" in this prospectus supplement and in the accompanying prospectus. The certificates may not be acquired by an employee benefit plan or by an individual retirement account. YOU SHOULD REFER TO "ERISA CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT AND IN THE ACCOMPANYING PROSPECTUS. IF YOU ARE A BENEFIT PLAN FIDUCIARY CONSIDERING PURCHASE OF THE SECURITIES YOU SHOULD, AMONG OTHER THINGS, CONSULT WITH YOUR COUNSEL IN DETERMINING WHETHER ALL REQUIRED CONDITIONS HAVE BEEN SATISFIED. ELIGIBILITY FOR PURCHASE BY The Class A-1 Notes will be eligible for purchase MONEY MARKET FUNDS by money market funds under Rule 2a-7 under the Investment money market funds under Rule 2a-7 under the Investment Company Act of 1940, as amended. A money market fund should consult its legal advisers regarding the eligibility of such notes under Rule 2a-7 and whether an investment in such notes satisfies such fund's investment policies and objectives. [LISTING The trust has applied to list the Class A-1 Notes on the Luxembourg Stock Exchange and The Stock Exchange of Hong Kong Limited. S-10 95 The trust has requested that the listings be made effective on or about .] MINIMUM DENOMINATIONS The securities will be issued only in denominations of $1,000 or more. Securities will be issued in multiples of $1 for amounts in excess of $1,000. REGISTRATION OF THE You will generally hold your interests in the SECURITIES securities through The Depository Trust Company in the United States, or Clearstream Banking societe anonyme or the Euroclear System in Europe or Asia. This is referred to as book-entry form. You will not receive a definitive certificate representing your securities except under limited circumstances. We expect the securities to be delivered through The Depository Trust Company, Clearstream Banking societe anonyme and the Euroclear System against payment in immediately available funds on or about . FOR MORE DETAILED INFORMATION, YOU SHOULD REFER TO "ANNEX A: GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES" IN THIS PROSPECTUS SUPPLEMENT AND "CERTAIN INFORMATION REGARDING THE SECURITIES -- BOOK-ENTRY REGISTRATION" IN THE ACCOMPANYING PROSPECTUS. RATINGS On the closing date, each class of offered securities will receive the following ratings from Standard & Poor's Ratings Group and Moody's Investors Service, Inc.:
STANDARD & CLASS POOR'S MOODY'S ----- ---------- -------- A-1.................................. [] [] A-2.................................. [] [] A-3.................................. [] [] B.................................... [] [] C.................................... [] []
S-11 96 RISK FACTORS YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS (AND THE FACTORS SET FORTH UNDER "RISK FACTORS" IN THE ACCOMPANYING PROSPECTUS) IN DECIDING WHETHER TO PURCHASE THE SECURITIES OF ANY CLASS. YOU MAY HAVE DIFFICULTY The trust will not list the securities on any SELLING YOUR SECURITIES securities exchange. Therefore, in order to sell AND/OR OBTAINING YOUR your securities, you must first locate a willing DESIRED PRICE DUE TO purchaser. In addition, currently, no secondary THE ABSENCE OF A market exists for the securities. We cannot assure SECONDARY MARKET. you that a secondary market will develop. The underwriter intends to make a secondary market for the securities by offering to buy the certificates from investors that wish to sell. However, the underwriter is not obligated to offer to buy the securities and it may stop making offers at any time. THE CLASS B NOTES AND THE If you buy the Class B Notes, you will bear a CLASS C CERTIFICATES ARE greater risk than the holders of the Class A-1 SUBJECT TO GREATER CREDIT Notes, the Class A-2 Notes and the Class A-3 Notes RISK BECAUSE THE CLASS B because payments of interest and principal on your NOTES ARE SUBORDINATE TO notes are subordinated to payments of interest and THE CLASS A-1 NOTES, THE principal on the Class A-1 Notes, the Class A-2 CLASS A-2 NOTES AND THE Notes and the Class A-3 Notes to the extent CLASS A-3 NOTES AND THE described below. CLASS C CERTIFICATES ARE SUBORDINATE TO THE NOTES. Interest payments on the Class B Notes on each distribution date will be subordinated to servicing fees and interest payments on the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes. Principal payments on the Class B Notes will be subordinated to principal payments on the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes. In other words, no interest will be paid on the Class B Notes unless interest owing to the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes has been paid in full, and no principal will be paid on the Class B Notes until principal of the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes has been paid in full. If you buy the Class C Certificates, you will bear a greater credit risk than the notes because payments of interest on and principal of your certificates are subordinated to payments of interest and principal on the notes. Interest payments on your certificates on each distribution date will be subordinated to servicing fees and interest and principal payments on the notes. In other words, no interest will be paid on your certificates on any distribution date until all required interest and principal payments on the notes on that date have been made. In addition, principal payments on your certificates will be subordinated to principal payments on the notes since no principal will be paid on your certificates until after all principal on the notes due has been paid in full. In addition, you will not receive any principal payments on any distribution date until all principal and interest on each class of notes on that date have been paid. S-12 97 GEOGRAPHIC CONCENTRATION OF As of , Nissan Motor Acceptance THE STATES OF ORIGINATION Corporation's records indicate that the addresses OF THE RECEIVABLES MAY of the originating dealers of the receivables were INCREASE THE RISK OF LOSS in the following states: ON YOUR INVESTMENT.
PERCENTAGE OF TOTAL PRINCIPAL BALANCE ------------------- ............................................. % ............................................. % ............................................. % ............................................. % ............................................. %
No other state, by the addresses of the originating dealers, constituted more than 5% of the balance of the receivables as of [ ]. Economic conditions or other factors affecting these states in particular could adversely affect the delinquency, credit loss or repossession experience of the trust. OCCURRENCE OF EVENTS OF Payment defaults or the insolvency or dissolution DEFAULT UNDER THE INDENTURE of the seller may result in prepayment of the notes MAY RESULT IN INSUFFICIENT and the certificates, which may result in losses FUNDS TO MAKE PAYMENTS ON under the securities. If the trust fails to pay YOUR CERTIFICATES. principal of the notes when due, or fails to pay interest on the notes within five days of the due date, the indenture trustee or the noteholders may declare the entire amount of the notes to be due immediately. If this happens, the holders of a majority in outstanding principal amount of the notes may direct the indenture trustee to sell the receivables and prepay the notes. After the trust pays the notes in full with the proceeds of the sale of the receivables, the trust will distribute any remaining trust assets to pay the certificates. There may not be sufficient funds to pay the certificates in full under these circumstances. The certificateholders will not have any right to direct the indenture trustee or to consent to any action until the notes are paid in full. See "The Notes -- The Indenture -- Events of Default; Rights Upon Event of Default" in the accompanying prospectus. A similar result will occur if the seller becomes insolvent or is dissolved. CERTIFICATEHOLDERS MAY NOT The trust will pledge the property of the trust to EXERCISE ANY RIGHTS WITH the indenture trustee as collateral for the payment RESPECT TO THE COLLATERAL of the notes. As a result, the indenture trustee, OR THE SERVICER UNTIL THE acting at the direction of the holders of a NOTES ARE PAID IN FULL. majority in outstanding principal amount of the notes, has the power to direct the trust to take specified actions in connection with the property of the trust. The holders of a majority of the notes, or the indenture trustee acting on behalf of the holders of notes, will also have the right under limited circumstances to terminate the servicer without considering how this will affect the certificateholders. If you buy the certificates, you will not be able to remove the servicer until the notes have been paid in full. In addition, the holders of at least a majority in outstanding principal amount of the notes will have the right to waive specified events of default involving the servicer, without considering how this will affect you as a certificateholder. See "Description of the Transfer and Servicing Agreements -- Rights Upon Servicer Default" and "-- Waiver of Past Defaults" in the accompanying prospectus. S-13 98 PAID-AHEAD SIMPLE INTEREST If an obligor on a simple interest contract makes a CONTRACTS MAY AFFECT THE payment on the contract ahead of schedule (for WEIGHTED AVERAGE LIFE OF example, because the obligor intends to go on THE CERTIFICATES. vacation), the weighted average life of the certificates could be affected. This is because the additional scheduled payments will be treated as a principal prepayment and applied to reduce the principal balance of the related contract and the obligor will generally not be required to make any scheduled payments during the period for which it was paid-ahead. During this paid-ahead period, interest will continue to accrue on the principal balance of the contract, as reduced by the application of the additional scheduled payments, but the obligor's contract would not be considered delinquent during this period. While the servicer may be required to make interest advances during this period, no principal advances will be made. Furthermore, when the obligor resumes his required payments, the payments so paid may be insufficient to cover the interest that has accrued since the last payment by the obligor. This situation will continue until the regularly scheduled payments are once again sufficient to cover all accrued interest and to reduce the principal balance of the contract. The payment by the trust of the paid-ahead principal amount on the notes will generally shorten the weighted average life of the certificates. However, depending on the length of time during which a paid-ahead simple interest contract is not amortizing as described above, the weighted average life of the certificates may be extended. In addition, to the extent the servicer makes advances on a paid-ahead simple interest contract which subsequently goes into default, the loss on this contract may be larger than would have been the case had advances not been made because liquidation proceeds for the contract will be applied first to reimburse the servicer its advances. NMAC's portfolio of retail installment sale contracts has historically included simple interest contracts which have been paid-ahead by one or more scheduled monthly payments. There can be no assurance as to the number of contracts in the trust which may become paid-ahead simple interest contracts as described above or the number or the principal amount of the scheduled payments which may be paid-ahead. BECAUSE THE SECURITIES ARE Because the securities will be issued in book-entry IN BOOK-ENTRY FORM, YOUR form, you will be required to hold your interest in RIGHTS CAN ONLY BE the certificates through The Depository Trust EXERCISED INDIRECTLY. Company in the United States, or Clearstream Banking societe anonyme or the Euroclear System in Europe or Asia. Transfers of interests in the securities within The Depository Trust Company, Clearstream Banking societe anonyme or the Euroclear System must be made in accordance with the usual rules and operating procedures of those systems. So long as the securities are in book-entry form, you will not be entitled to receive a definitive note or certificate representing your interest. The securities will remain in book-entry form except in the limited circumstances described under the caption "Certain Information Regarding the Securities -- Book-Entry Registration" in the accompanying prospectus. Unless and until the securities cease to be held in book-entry form, the indenture trustee will not recognize you as a "noteholder" and the owner trustee will not recognize you as a "Securityholder", as those terms are used S-14 99 in the trust agreement and sale and servicing agreement. As a result, you will only be able to exercise the rights of Securityholders indirectly through The Depository Trust Company (if in the United States) and its participating organizations, or Clearstream Banking societe anonyme and the Euroclear System (in Europe or Asia) and their participating organizations. Holding the securities in book-entry form could also limit your ability to pledge your securities to persons or entities that do not participate in The Depository Trust Company, Clearstream Banking societe anonyme or the Euroclear System and to take other actions that require a physical certificate representing the securities. Interest and principal on the securities will be paid by the trust to The Depository Trust Company as the record holder of the securities while they are held in book-entry form. The Depository Trust Company will credit payments received from the trust to the accounts of its participants which, in turn, will credit those amounts to securityholders either directly or indirectly through indirect participants. This process may delay your receipt of principal and interest payments from the trust. FACTORS AFFECTING OUR The success of your investment depends upon the INFORMATION MANAGEMENT ability of the servicer, Nissan Motor Acceptance SYSTEMS MAY INCREASE THE Corporation, to store, retrieve, process and manage RISK OF LOSS ON YOUR substantial amounts of information. If the servicer INVESTMENT. experiences any interruptions or loss in its information processing capabilities, its business, financial conditions and results of operations will suffer. S-15 100 THE TRUST GENERAL The Nissan Auto Receivables - Owner Trust (the "Trust") is a Delaware business trust to be formed pursuant to the trust agreement (the "Trust Agreement") between [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], as seller (the "Seller"), and , as owner trustee (the "Owner Trustee"). After its formation, the Trust will not engage in any activity other than: 1. acquiring, holding and managing the Receivables and the other assets of the Trust and proceeds therefrom; 2. issuing the Notes and the Certificates; 3. making payments on the Notes and the Certificates; and 4. engaging in other activities that are necessary, suitable or convenient to accomplish the foregoing or are incidental to or connected with those activities. The Trust will initially be capitalized through the issuance of the Notes and $[ ] aggregate principal amount of the certificates (the "Certificates"). The Trust will exchange the Notes and the Certificates for the Receivables and other assets including leases on vehicles from the Seller pursuant to the sale and servicing agreement among the Trust, the Servicer and the Seller (the "Sale and Servicing Agreement"). The Notes and the Class C Certificates that will be received by the Seller in exchange for the Receivables are being offered hereby. The Class D Certificates will be retained by the Seller. Nissan Motor Acceptance Corporation ("NMAC") will be appointed to act as the servicer of the Receivables (in that capacity, the "Servicer"). The Servicer will service the Receivables pursuant to the Sale and Servicing Agreement and will be compensated for those services as described under "Description of the Transfer and Servicing Agreements -- Servicing Compensation" in this Prospectus Supplement and "Description of the Transfer and Servicing Agreements -- Servicing Compensation" in the accompanying Prospectus. Pursuant to agreements between NMAC and the Dealers, each Dealer will repurchase from NMAC those contracts that do not meet specified representations and warranties made by the Dealer. These Dealer repurchase obligations are referred to this Prospectus Supplement as "Dealer Recourse." Those representations and warranties relate primarily to the origination of the contracts and the perfection of the security interests in the related financed vehicles, and do not relate to the creditworthiness of the related Obligors or the collectability of those contracts. The sales by the Dealers of installment sales contracts to NMAC do not generally provide for recourse against the Dealers for unpaid amounts in the event of a default by an Obligor, other than in connection with the breach of the foregoing representations and warranties. Each Certificate represents a fractional undivided ownership interest in the Trust. The Trust property includes the Receivables and monies due or received under the Receivables on or after the Cut-off Date and the Yield Supplement Account. The Reserve Account will be established with and maintained by the Indenture Trustee and pledged to the Indenture Trustee to secure payments on the Notes and Certificates for the benefit of the Noteholders and the Class C Certificateholders, but will not be part of the Trust. The Trust's principal offices are in , in care of , as Owner Trustee, at the address set forth below under "The Owner Trustee and the Indenture Trustee." S-16 101 CAPITALIZATION OF THE TRUST The following table illustrates the capitalization of the Trust as of the Closing Date, as if the issuance and sale of the Notes and the Certificates had taken place on that date: [TABLE] PAYING AGENTS [Under the Trust Agreement, the Owner Trustee will appoint paying agents in each jurisdiction in which Securities are listed on an exchange whose rules so require. For so long as any Securities are listed on the [exchange] or [exchange], the Owner Trustee will maintain paying agents in [jurisdiction] and [jurisdiction]. The Initial Paying Agents will be and . Definitive Certificates may be presented for purposes of payment, transfer or exchange at the offices of the paying agent in [jurisdiction] at , at the offices of the paying agent in [jurisdiction] at , or such other paying agents as may be specified in a written notice to the holders of Securities described below.] THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE is the Owner Trustee under the Trust Agreement. is a and its principal executive offices are located at . The Seller and its affiliates may maintain normal commercial banking relations with the Owner Trustee and its affiliates. is the trustee under the Indenture (the "Indenture Trustee"). is a and its principal executive offices are located at . The Seller and its affiliates may maintain normal commercial banking relations with the Indenture Trustee and its affiliates. THE RECEIVABLES The property of the Trust will consist of a pool of retail installment sale contracts (the "Receivables") originated on or after , between Nissan and Infiniti dealers (the "Dealers") and retail purchasers (the "Obligors"), [the Yield Supplement Account and the amounts on deposit in that account]. The Receivables were originated by Dealers in accordance with NMAC's requirements under agreements with Dealers governing the assignment of the Receivables to NMAC. The Receivables evidence the indirect financing made available by NMAC to the Obligors. The Receivables are secured by new, near-new and used Nissan and Infiniti automobiles and light-duty trucks (the "Financed Vehicles") and all principal and interest payments made on or after (the "Cut-off Date") and other property specified in the Receivables. NMAC purchased the Receivables from the Dealers in the ordinary course of business in accordance with NMAC's underwriting standards. On or before the date of the initial issuance of the Securities (the "Closing Date"), NMAC will sell the Receivables [and other assets] to the Seller. The Seller will, in turn, transfer the Receivables [and other assets] to the Trust on the Closing Date pursuant to the Sale and Servicing Agreement in exchange for the Notes and the Certificates. The Notes and the Class C Certificates that will be received by the Seller in exchange for the Receivables are being offered hereby. NMAC will continue to service the Receivables. The Receivables to be held by the Trust will be randomly S-17 102 selected from those automobile and/or light-duty truck retail installment sales contracts in NMAC's portfolio that meet several criteria. These criteria provide that each Receivable: 1. was originated in the United States; 2. has a contractual Annual Percentage Rate ("APR") that equals or exceeds [ ]%; 3. provides for level monthly payments which provide interest at the APR on a simple interest basis and fully amortize the amount financed over an original term to maturity no greater than [ ] months; 4. has a remaining term to maturity, as of the Cut-off Date, of not less than [ ] months and not greater than [ ] months; 5. had an original principal balance of not more than $[ ] and a remaining principal balance as of the Cut-off Date of not less than $[ ] nor more than $[ ]; 6. is not more than 29 days past due as of the Cut-off Date; 7. is attributable to the purchase of a new, near-new or used automobile or light-duty truck and is secured by that vehicle; 8. has been entered into by an Obligor that as of the Cut-off Date was not in bankruptcy proceedings (according to the records of NMAC); 9. is secured by a Financed Vehicle that as of the Cut-off Date has not been repossessed (according to the records of NMAC); 10. has not had forced-placed insurance premiums added to the amount financed; and 11. has not been extended by more than two months. No selection procedures believed to be adverse to the Securityholders will be utilized in selecting the Receivables from qualifying retail installment sale contracts. Except as described in item (2) above, the Receivables were not selected on the basis of their APRs. The composition, distribution by APR and geographic distribution of the Receivables as of the Cut-off Date are as set forth in the following tables. NMAC will not sell to the Seller, and the Seller will not transfer to the Trust, any Receivables originated in the State of Alabama [or Hawaii] for administrative reasons. S-18 103 COMPOSITION OF THE RECEIVABLES Aggregate Principal Balance.................. $______ Number of Receivables........................ ______ Average Principal Balance.................... $______ Range of Principal Balances................ $______ to $______ Average Original Amount Financed............. $______ Range of Original Amount Financed.......... $______ to $______ Weighted Average APR......................... _____% Range of APRs.............................. _____% to _____% Approximate Weighted Average Original Term to Maturity ............................... ___ months Range of Original Term to Maturity......... ___ to ___ months Approximate Weighted Average Remaining Term to Maturity ............................... ___ months Range of Remaining Term to Maturity........ ___ to ___ months Percentage by Principal Balance of Receivables of New, Near-New and Used Vehicles................................... ____% (New) ____% (Near-New) ____% (Used) Percentage by Principal Balance of Receivables Financed through Nissan and Infiniti Dealers........................... ____% (Nissan) ____% (Infiniti)
DISTRIBUTION BY APR OF THE RECEIVABLES (PERCENTAGES MAY NOT ADD TO 100.00% DUE TO ROUNDING)
PERCENTAGE OF PERCENTAGE OF NUMBER OF TOTAL NUMBER CUT-OFF DATE CUT-OFF DATE RANGE OF APRS(%) RECEIVABLES OF RECEIVABLES(%) PRINCIPAL BALANCE($) POOL BALANCE(%) - ---------------- ----------- ----------------- -------------------- --------------- 0.0 to 0.99......................................... 1.0 to 1.99......................................... 2.0 to 2.99......................................... 3.0 to 3.99......................................... 4.0 to 4.99......................................... 5.0 to 5.99......................................... 6.0 to 6.99......................................... 7.0 to 7.99......................................... 8.0 to 8.99......................................... 9.0 to 9.99......................................... 10.0 to 10.99....................................... 11.0 to 11.99....................................... 12.0 to 12.99....................................... 13.0 to 13.99....................................... 14.0 to 14.99....................................... 15.0 to 15.99....................................... 16.0 to 16.99....................................... 17.0 to 17.99....................................... 18.0 to 18.99....................................... 19.0 and above...................................... Totals............................................
S-19 104 GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES BASED ON THE ADDRESSES OF THE ORIGINATING DEALERS (PERCENTAGES MAY NOT ADD TO 100.00% DUE TO ROUNDING)
PERCENTAGE OF TOTAL CUT-OFF DATE PERCENTAGE OF NUMBER OF NUMBER OF PRINCIPAL CUT-OFF DATE STATE RECEIVABLES RECEIVABLES(%) BALANCE($) POOL BALANCE(%) - ----- ----------- -------------- ------------ --------------- Alaska...................................... Arizona..................................... Arkansas.................................... California.................................. Colorado.................................... Connecticut................................. Delaware.................................... Florida..................................... Georgia..................................... [Hawaii].................................... Idaho....................................... Illinois.................................... Indiana..................................... Iowa........................................ Kansas...................................... Kentucky.................................... Louisiana................................... Maine....................................... Maryland.................................... Massachusetts............................... Michigan.................................... Minnesota................................... Mississippi................................. Missouri.................................... Montana..................................... Nebraska.................................... Nevada...................................... New Hampshire............................... New Jersey.................................. New Mexico.................................. New York.................................... North Carolina.............................. North Dakota................................ Ohio........................................ Oklahoma.................................... Oregon...................................... Pennsylvania................................ Rhode Island................................ South Carolina.............................. South Dakota................................ Tennessee................................... Texas....................................... Utah........................................ Vermont..................................... Virginia.................................... Washington.................................. West Virginia............................... Wisconsin................................... Wyoming..................................... Total.....................................
S-20 105 MATURITY AND PREPAYMENT CONSIDERATIONS Information regarding maturity and prepayment considerations with respect to the Securities is set forth under "Weighted Average Life of the Securities" in the accompanying Prospectus and "Risk Factors -- You may experience reduced returns on your investment resulting from prepayments, repurchases or early termination of the trust" in the accompanying Prospectus. Except as otherwise provided in this Prospectus Supplement, no principal payments will be made on the Class A-2 Notes until the Class A-1 Notes have been paid in full; no principal payments will be made on the Class A-3 Notes until the Class A-2 Notes have been paid in full; and no principal payments will be made on the Class B Notes until the Class A-3 Notes have been paid in full; provided, however that, upon the acceleration of the notes following an event of default, the principal of the Class A-2 Notes and the Class A-3 Notes will be paid ratably according to the respective outstanding principal balances of those classes of notes. In addition, no principal payments will be made on the Class C Certificates until all of the Notes have been paid in full. See "The Notes -- Payments of Principal" and "The Certificates -- Payments of Principal" in this Prospectus Supplement. Because the rate of payment of principal of each class of Notes and the Certificates depends primarily on the rate of payment (including prepayments) of the principal balance of the Receivables, final payment of any class of Notes and the final payment in respect of the Certificates could occur later or significantly earlier than their respective final scheduled distribution dates set forth in "Summary -- Terms of the Notes -- Final Scheduled Distribution Dates" and "Summary -- Terms of the Certificates -- Principal -- Final Scheduled Distribution Dates" (each, a "Final Scheduled Distribution Date") in this Prospectus Supplement. Securityholders will bear the risk of being able to reinvest principal payments on the Securities at yields at least equal to the yield on their respective Securities. No prediction can be made as to the rate of prepayments on the Receivables in either stable or changing interest rate environments. The Certificates will provide limited protection against losses on the Receivables. Accordingly, the yield on the Certificates will be extremely sensitive to the loss experience of the Receivables and the timing of any of those losses. If the actual rate and amount of losses experienced by the Receivables exceed the rate and amount of those losses assumed by an investor, the yield to maturity on the Certificates may be lower than anticipated. Although the Receivables have different APRs, disproportionate rates of prepayments between Receivables with APRs greater than or less than the Required Rate will generally not affect the yield to the Securityholders. However, higher rates of prepayments of Receivables with higher APRs will decrease the amount available to cover delinquencies and defaults on the Receivables and may decrease the amounts available to be deposited in the Reserve Account. DELINQUENCIES, REPOSSESSIONS AND NET LOSSES The following tables set forth information concerning NMAC's experience with respect to its total portfolio of U.S. retail installment sale contracts for new, near-new and used automobiles and light-duty trucks. The portfolio consists of retail installment sale contracts in all fifty states, the District of Columbia[, Puerto Rico] and Guam. As of [ , ], approximately % of NMAC's total portfolio of U.S. retail installment sales contracts (excluding those with original maturities of 64 months or more) consisted of new, near-new and used automobiles and light-duty trucks financed through Nissan dealers, with the remaining approximate % financed through Infiniti dealers. S-21 106 There can be no assurance that the behavior of the Receivables included in the Trust will be comparable to NMAC's experience shown in the following tables. DELINQUENCY EXPERIENCE(1)
AT MARCH 31, --------------------------------------------------- 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- Number of Contracts Outstanding.......... 368,660 312,237 330,662 317,238 274,807 Delinquencies as a Percent of Contracts Outstanding(2) 30 - 59 Days........................... 1.54% 2.27% 2.55% 3.10% 2.40% 60 - 89 Days........................... 0.16% 0.27% 0.36% 0.49% 0.25% 90 Days or More........................ 0.02% 0.04% 0.06% 0.17% 0.05%
- ------------------------- (1) The information in the Delinquency Experience table includes retail installment sale contracts for new, near-new and used automobiles and light-duty trucks and includes receivables which NMAC has sold to third parties but continues to service. The information does not include receivables purchased by NMAC under certain special financing programs. The information in the tables relates only to receivables with original terms of 64 months or less. The Trust does not include receivables with original maturities in excess of [ ] months. In general, NMAC has experienced higher overall levels of losses with respect to receivables with original maturities of 64 to 72 months than with respect to receivables with shorter original maturities. (2) An account is considered delinquent if 20% or more of the scheduled payment is past due. NET CREDIT LOSS AND REPOSSESSION EXPERIENCE(1) (DOLLARS IN THOUSANDS)
AT OR FOR TWELVE MONTHS ENDED MARCH 31, ------------------------------------------------------------------ 2000 1999 1998 1997 1996 ---------- ---------- ---------- ---------- ---------- Principal Amount Outstanding................ $4,273,532 $3,126,219 $3,497,123 $3,276,423 $2,659,232 Average Principal Amount Outstanding................ $3,261,595 $3,463,840 $3,248,193 $3,181,569 $2,308,058 Number of Contracts Outstanding................ 368,660 312,237 330,662 317,238 274,807 Average Number of Contracts Outstanding................ 316,976 329,320 316,769 309,257 250,040 Number of Repossessions(2)... 7,467 9,782 14,164 17,569 9,841 Number of Repossessions as a Percent of the Average Number of Contracts Outstanding................ 2.36% 2.97% 4.47% 5.68% 3.94% Charge-Offs(3)............... $ 55,482 $ 92,005 $ 134,671 $ 158,969 $ 72,838 Recoveries(4)................ $ 39,125 $ 41,947 $ 39,997 $ 31,874 $ 20,489 Net Losses................... $ 16,357 $ 50,059 $ 94,674 $ 127,095 $ 52,349 Net Losses as a Percent of Principal Amount Outstanding(5)............. 0.38% 1.60% 2.71% 3.88% 1.97% Net Losses as a Percent of Average Principal Amount Outstanding(5)............. 0.50% 1.45% 2.91% 3.99% 2.27%
S-22 107 - ------------------------- (1) The information in the Net Credit Loss and Repossession Experience table includes retail installment sale contracts for new, near-new and used automobiles and light-duty trucks and includes receivables which NMAC has sold to third parties but continues to service. The information does not include receivables purchased by NMAC under certain special financing programs. The information in the tables relates only to receivables with original terms of 64 months or less. The Trust does not include receivables with original maturities in excess of [ ] months. In general, NMAC has experienced higher overall levels of losses with respect to receivables with original maturities of 64 to 72 months than with respect to receivables with shorter original maturities. All amounts and percentages, except as indicated, are based on the principal balances of the receivables including unearned interest. Averages are computed by taking a simple average of month end outstandings for each period presented. (2) The number of repossessions excludes accounts that have been subsequently reinstated. (3) Charge-offs represent the net principal balance of receivables determined to be uncollectible in the period less proceeds from disposition of related vehicles, other than recoveries described in Note (4). Charge-offs do not include expenses associated with collection, repossession or disposition of the vehicle. (4) Recoveries generally include amounts received on receivables following the time at which the receivable is charged off. Recoveries are net of expenses associated with collection. (5) Percentages have been annualized in order to facilitate year to year comparisons. NMAC's retail loss experience is dependent upon receivables levels, the number of repossessions, the amount outstanding at the time of repossession and the resale value of repossessed vehicles. The losses in the year ended March 31, 1997 were higher than in previous or subsequent years due to NMAC's effort to finance a broader credit range of customers to support the sale of Nissan and Infiniti vehicles and a general increase in personal bankruptcy filings. NMAC's management reacted to the negative trend in losses by initiating changes to its credit policy that tightened the range of available credit in order to originate an improved mix of business. These changes involved discontinuing the origination of 72-month term contracts in June 1996 and installing a new empirically derived credit score card in September 1996. In addition, NMAC tightened its credit policy by reducing advance rates for lower credit scores and implementing risked-based pricing. NMAC has recently resumed originating 72-month term contracts under certain financing programs. See "The Receivables -- Underwriting of Motor Vehicle Loans" in the accompanying Prospectus. WEIGHTED AVERAGE LIFE OF THE NOTES [Prepayments on automotive receivables can be measured relative to a prepayment standard or model. The model used in this Prospectus Supplement, the Absolute Prepayment Model ("ABS"), represents an assumed rate of prepayment each month relative to the original number of receivables in a pool of receivables. ABS further assumes that all the receivables are the same size and amortize at the same rate and that each receivable in each month of its life will either be paid as scheduled or be prepaid in full. For example, in a pool of receivables originally containing 10,000 receivables, a 1% ABS rate means that 100 receivables prepay each month. ABS does not purport to be an historical description of prepayment experience or a prediction of the anticipated rate of prepayment of any pool of receivables, including the Receivables. As the rate of payment of principal of each class of Notes will depend on the rate of payment (including prepayments) of the principal balance of the Receivables, final payment of any class of Notes could occur later or significantly earlier than the respective Final Scheduled Distribution Dates. Reinvestment risk associated with early payment of the Notes will be borne exclusively by the holders of such Notes. S-23 108 The table captioned "Percent of Initial Note Principal Amount at Various ABS Percentages" (the "ABS Table") has been prepared on the basis of the characteristics of the Receivables described above. The ABS Table assumes that (i) the Receivables prepay in full at the specified constant percentage of ABS monthly, with no defaults, losses or repurchases, (ii) each scheduled monthly payment on each Receivable is scheduled to be made and is made on the last day of each month and each month has 30 days, (iii) payments are made on the Notes on each Distribution Date (and each such date is assumed to be the fifteenth day of each applicable month), (iv) the balance in the Reserve Account on each Distribution Date is the required amount described in the summary under "Reserve Account" and (v) the Servicer does not exercise its option to purchase the Receivables. The hypothetical pools each have an assumed cut-off date of [ , ]. The ABS Table indicates the projected weighted average life of each class of Notes and sets forth the percent of the initial principal amount of each class of Notes that is projected to be outstanding after each of the Distribution Dates shown at various constant ABS percentages. The ABS Table also assumes that the Receivables have been aggregated into hypothetical pools with all of the Receivables within each such pool having the following characteristics and that the level scheduled monthly payment for each of the pools (which is based on its aggregate principal balance, APR, original term to maturity and remaining term to maturity as of the assumed cut-off date) will be such that each pool will be fully amortized by the end of its remaining term to maturity.
REMAINING TERM ORIGINAL TERM AGGREGATE TO MATURITY TO MATURITY POOL PRINCIPAL BALANCE APR (IN MONTHS) (IN MONTHS) - ---- ----------------- -------- -------------- ------------- 1.................................... 2.................................... 3.................................... 4.................................... 5....................................
The actual characteristics and performance of the Receivables will differ from the assumptions used in constructing the ABS Table. The assumptions used are hypothetical and have been provided only to give a general sense of how the principal cash flows might behave under varying prepayment scenarios. For example, it is very unlikely that the Receivables will prepay at a constant level of ABS until maturity or that all of the Receivables will prepay at the same level of ABS. Moreover, the diverse terms of Receivables within each of the hypothetical pools could produce slower or faster principal distributions than indicated in the ABS Table at the various constant percentages of ABS specified, even if the original and remaining terms to maturity of the Receivables are as assumed. Any difference between such assumptions and the actual characteristics and performance of the Receivables, or actual prepayment experience, will affect the percentages of initial amounts outstanding over time and the weighted average lives of each class of Notes.] [TABLES TO COME] S-24 109 NOTE FACTORS, CERTIFICATE FACTORS AND POOL FACTORS The "Note Factor" for any Distribution Date with respect to any class of Notes will be a seven-digit decimal indicating the principal amount of that class of Notes as of the close of business on the last day of the related Collection Period as a fraction of the respective principal amount thereof as of the Closing Date. The Servicer will compute the Note Factor each month for each class of Notes. Each Note Factor will initially be 1.0000000 and thereafter will decline to reflect reductions in the principal amount of each class of Notes. The portion of the principal amount of any class of Notes for a given month allocable to a Noteholder can be determined by multiplying the original denomination of the holder's Note by the related Note Factor for that month. The "Certificate Factor" with respect to any class of Certificates will be a seven-digit decimal indicating the Certificate Balance of that class of Certificates as of the close of business on the last day of the related Collection Period as a fraction of the Original Certificate Balance of that class. The Servicer will compute the Certificate Factor each month for each class of Certificates. Each Certificate Factor will initially be 1.0000000 and thereafter will decline to reflect reductions in the Certificate Balance. The portion of the Certificate Balance for any class of Certificates for a given month allocable to a Certificateholder can be determined by multiplying the original denomination of the holder's Certificate by the related Certificate Factor for that month. The "Pool Balance" as of the close of business on the last day of a Collection Period will equal the aggregate Principal Balance of the Receivables (excluding Administrative Receivables, Warranty Receivables and Defaulted Receivables) as of the close of business on such day; provided, however, that where the Pool Balance is relevant in determining whether the requisite percentage of Certificateholders or Noteholders (or relevant class or classes of Certificates or Notes, as the case may be) necessary to effect any consent, waiver, request or demand shall have been obtained, the Pool Balance shall be deemed to be reduced by the amount equal to the portion of the Pool Balance (before giving effect to this provision) represented by the interests evidenced by any applicable Certificate or Note registered in the name of the Seller, the Servicer or any person actually known to a trust officer of the Owner Trustee or the Indenture Trustee, as the case may be, to be an affiliate of the Seller or the Servicer, unless all of the Certificates or Notes, as the case may be, are held or beneficially owned by NMAC, the Seller or any of their affiliates. The "Pool Factor" for a particular class of Notes or the Certificates will be a seven-digit decimal indicating the principal amount of that class of Notes or the Certificate Balance as of the close of business on the last day of the related Collection Period as a fraction of the Pool Balance as of the Cut-off Date. The Servicer will compute the Pool Factor for each month for each class of Notes and Certificates. Pursuant to the Transfer and Servicing Agreements, the Securityholders will receive monthly reports concerning the payments received on the Receivables, the Pool Balance, the related Note Factors, Certificate Factors, Pool Factors and various other items of information pertaining to the Trust. Securityholders of record during each calendar year will be furnished information by the Indenture Trustee or the Owner Trustee, as appropriate, for tax reporting purposes not later than the latest date permitted by law. Copies of the reports may be obtained by the Noteholders and the Certificateholders by delivering a written request addressed to the at its address at , Attn: . See "Description of the Transfer and Servicing Agreements -- Statements to Securityholders" in the accompanying Prospectus. USE OF PROCEEDS The Seller will use the net proceeds from the sale of the Securities (approximately $ ) to purchase the Receivables from NMAC pursuant to the Purchase Agreement and to fund the Reserve Account and to make [the initial deposit into] [a capital contribution to the Trust to fund] the Yield Supplement Account. THE SELLER AND THE SERVICER Information regarding the Seller and the Servicer is set forth under the captions "The Seller" and "The Servicer" in the accompanying Prospectus. S-25 110 FINANCIAL CONDITION OF NISSAN MOTOR CO., LTD. NMAC is an indirect wholly-owned subsidiary of Nissan Motor Co., Ltd. ("Nissan"). Although Nissan is not guaranteeing the Trust's obligations under the Securities, Nissan's financial condition may affect NMAC's ability to service the Receivables. [Nissan reported a consolidated operating profit of 82.6 billion Yen (US$778.9 million) for fiscal year 1999 (ended at March 31, 2000), a decrease of 31.7% compared to the previous year, with net sales of 5,977.1 billion Yen (US$56.39 billion), a decrease of 9.2% compared to the previous year. The decline in operating income is attributable to the negative impact of the appreciation of the Yen and to lower unit sales, particularly in the Japanese market. (The average exchange rate for the dollar was 112 Yen in fiscal year 1999 compared to 128 Yen in fiscal year 1998.)] [On March 31, 2000, Nissan announced one-time extraordinary charges totaling 711.1 billion Yen (US$6.71 billion) leading to a consolidated net loss of 684.4 billion Yen (US$6.46 billion). The one-time extraordinary charges relate to changes in the accounting of pensions and retirement benefits in Japan, to plant closures and expenses related to the Nissan Revival Plan, and to new accounting methods, including the calculations of provisions relating to product warranties, adopted in order to bring the accounts in line with internationally accepted accounting practices.] [The March 31, 2000, year-end results close a year of transition for Nissan. After the conclusion of an alliance with Renault in March 1999, Nissan announced a comprehensive revival plan in October 1999. The Nissan Revival Plan is targeted to restore profitability, reduce debt and improve operating margins. Nissan is cooperating with Renault in the areas of purchasing, platform co-development and international growth.] THE NOTES GENERAL The notes (the "Notes") will be issued pursuant to the terms of the Indenture, a form of which has been filed as an exhibit to the Registration Statement. A copy of the final signed Indenture will be filed with the SEC [and the Luxembourg and Hong Kong Stock Exchanges] following the issuance of the Securities. The Notes will be issued as registered Notes in the minimum denomination of $1,000. The following summary describes material terms of the Notes and the Indenture. The summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Notes and the Indenture. Where particular provisions or terms used in the Indenture are referred to, the actual provisions (including definitions of terms) are incorporated by reference as part of the summary. The following summary supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the Notes of any given series and the related Indenture set forth in the accompanying Prospectus, to which description reference is hereby made. PAYMENTS OF INTEREST Each class of Notes will constitute Fixed Rate Securities, as that term is defined under "Material Information Regarding the Securities -- Fixed Rate Securities" in the accompanying Prospectus, except that the Class A-1 Notes will accrue interest on the basis of the actual number of days in the related Interest Period divided by 360. Interest on the principal balances of the classes of the Notes will accrue at the respective per annum interest rates set forth in "Summary -- Terms of the Notes -- Per Annum Interest Rates" in this Prospectus Supplement (each, an "Interest Rate") and will be payable to the Noteholders monthly on the fifteenth of each month (or, if that date is not a Business Day, on the next succeeding Business Day) (a "Distribution Date") commencing . A "Business Day" is any day except a Saturday, Sunday or a day on which banks in New York, New York, [Minneapolis, Minnesota,] Wilmington, Delaware or Los Angeles, California are authorized or obligated by law, regulation, executive order or governmental decree to be closed[; or for payments on the Securities made in Luxembourg or Hong Kong by a paying agent, a day on which banks in Luxembourg or Hong Kong are closed]. S-26 111 Interest on the outstanding principal amount of the Class A-1 Notes will accrue at the related Interest Rate from and including the most recent Distribution Date on which interest has been paid (or from and including the Closing Date with respect to the first Distribution Date) to but excluding the current Distribution Date (each, an "Interest Period" with respect to the Class A-1 Notes). Interest on the outstanding principal amount of the Class A-2 Notes, the Class A-3 Notes and the Class B Notes will accrue at the related Interest Rate from and including the 15th day of the preceding calendar month (or from and including the Closing Date with respect to the first Distribution Date) to but excluding the 15th day of the current calendar month (each, an "Interest Period" with respect to the Class A-2 Notes, the Class A-3 Notes and the Class B Notes). Interest on the Class A-1 Notes will be calculated on the basis of the actual number of days in the related Interest Period divided by 360, and interest on the Class A-2 Notes, the Class A-3 Notes and the Class B Notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Interest accrued but not paid on any Distribution Date will be due on the next Distribution Date, together with interest on that amount at the applicable Interest Rate (to the extent lawful). Interest payments on the Notes will generally be made from Available Amounts and from amounts on deposit in the Reserve Account, after the Total Servicing Fee and certain Advances have been paid, except upon an acceleration of the Notes. See "Subordination; Reserve Account -- Reserve Account" and "Distributions on the Notes and the Certificates" in this Prospectus Supplement. Interest payments to the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes (collectively, the "Class A Notes") will have the same priority unless the Notes are accelerated following the occurrence of an Event of Default, in which case, interest payments will be made first to the Class A-1 Notes and then ratably to the Class A-2 Notes and the Class A-3 Notes. Under specified circumstances, the amount available for interest payments could be less than the amount of interest payable on the Notes on any Distribution Date, in which case the holders of the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes will receive their ratable share (based upon the aggregate amount of interest due to that class) of the aggregate amount available to be distributed in respect of interest on the Notes. Interest payments to the Class B Noteholders will be subordinated to the interest payments on the Class A Notes. Interest on the Class B Notes will not be paid until all accrued and unpaid interest on the Class A Notes have been paid in full. PAYMENTS OF PRINCIPAL Until the Notes have been paid in full, principal payments to Noteholders will be made on each Distribution Date in the amount and order of priority described under "Distributions on the Notes and the Certificates -- Payment of Distributable Amounts" in this Prospectus Supplement. On each Distribution Date, principal of the Notes will be payable generally in an amount equal to the Noteholders' Percentage of the Principal Distributable Amount. However, after the occurrence of an Event of Default and an acceleration of the Notes, all principal will become due and payable. Principal payments on the Notes will be made from Available Amounts and from amounts on deposit in the Reserve Account, after the Total Servicing Fee and non-recoverable Advances have been paid and after the Noteholders' Interest Distributable Amount has been distributed, although after the occurrence of an Event of Default and an acceleration of the Notes, principal of and interest on the Class A-1 Notes will be paid prior to principal of or interest on the Class A-2 Notes, the Class A-3 Notes and the Class B Notes. The Noteholders' Percentage will equal 100% until the Notes have been paid in full. Principal payments will be allocated among the Notes so that no principal payments will be made on: 1. the Class A-2 Notes until the Class A-1 Notes have been paid in full; 2. the Class A-3 Notes until the Class A-1 Notes and Class A-2 Notes have been paid in full; and 3. the Class B Notes until the Class A Notes have been paid in full. S-27 112 Notwithstanding the foregoing, on each Distribution Date after the occurrence of an Event of Default and an acceleration of the Notes, available amounts (after the servicing fee has been paid and certain advances have been reimbursed) will be applied to pay principal (1) first, of the Class A-1 Notes until the outstanding principal balance of the Class A-2 Notes has been paid in full and (2) second, of each of the Class A-2 Notes and the Class A-3 Notes on a pro rata basis based on the respective outstanding principal balances of those classes of Notes until the outstanding principal balances of those classes of Notes have been paid in full, and (3) third, of the Class B Notes until the outstanding principal balance of the Class B Notes has been paid in full. The actual Distribution Date on which the outstanding principal amount of any class of Notes is paid may be later or significantly earlier than its Final Scheduled Distribution Date based on a variety of factors, including the factors described under "Weighted Average Life of the Securities" in this Prospectus Supplement and the accompanying Prospectus. If the principal amount of a class of Notes has not been paid in full on or prior to its Final Scheduled Distribution Date, the Noteholders' Principal Distributable Amount for that Distribution Date will, to the extent the remaining Available Amounts (plus amounts on deposit in the Reserve Account) are sufficient, include an amount sufficient to reduce the unpaid principal amount of that class of Notes to zero on that Distribution Date. See "Distributions on the Notes and the Certificates -- Payment of Distributable Amounts" in this Prospectus Supplement. EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT Subject to the following paragraph, upon an Event of Default, the Noteholders will have the rights set forth in the Prospectus under "The Notes -- The Indenture -- Events of Default; Rights Upon Event of Default." The Indenture Trustee may sell the Receivables subject to certain conditions set forth in the Indenture following an Event of Default, including a default in the payment of any principal of or a default for five days or more in the payment of any interest on any Note. In the case of an Event of Default not involving any such default in payment, the Indenture Trustee is prohibited from selling the Receivables unless one of the conditions set forth in the Prospectus under "The Notes -- The Indenture -- Events of Default; Rights Upon Event of Default" has been satisfied. NOTICES Noteholders will be notified in writing by the Indenture Trustee of any Event of Default, default by the Servicer under the Sale and Servicing Agreement (a "Servicer Default") or termination of, or appointment of a successor to, the Servicer promptly upon a Trust Officer (as defined in the Sale and Servicing Agreements) obtaining actual knowledge thereof. [If required by the Luxembourg Stock Exchange, for so long as any class of the Notes is listed on the Luxembourg Stock Exchange, notices to holders of such Notes will be given by publication in a leading daily newspaper of general circulation in Luxembourg or, if publication in Luxembourg is not practical, in Europe. Such publication is expected to be made in the Luxembourger Wort. If required by The Stock Exchange of Hong Kong Limited, for so long as any class of the Notes is listed on The Stock Exchange of Hong Kong Limited, notices to holders of such Notes will be given in a leading daily newspaper of general circulation in the English language in Hong Kong. Such publication is expected to be made in the South China Morning Post.] If Notes are issued other than in book-entry form, those notices will be mailed to the addresses of Noteholders as they appear in the register maintained by the Indenture Trustee prior to mailing. Those notices will be deemed to have been given on the date of that mailing. GOVERNING LAW [The Indenture and the Notes are governed by and shall be construed in accordance with the laws of the State of New York applicable to agreements made in and to be performed wholly within that jurisdiction.] S-28 113 THE CERTIFICATES GENERAL The certificates (the "Certificates") will be issued pursuant to the terms of the Trust Agreement, a form of which has been filed as an exhibit to the Registration Statement. A copy of the final signed Trust Agreement will be filed with the SEC following the issuance of the Securities. The Certificates will evidence undivided ownership interests in the Trust created pursuant to the Trust Agreement. The following summary describes material terms of the Certificates and the Trust Agreement. The summary does not purport to be complete and is subject to, and qualified in its entirety by reference to, all the provisions of the Certificates and the Trust Agreement. The following summary supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the Certificates of any given series and the related Trust Agreement set forth in the accompanying Prospectus, to which description reference is hereby made. PAYMENTS OF INTEREST Interest on the Certificate Balance will accrue during each Interest Period at the per annum pass through rate set forth in "Summary -- Terms of the Certificates -- Per Annum Pass Through Rates" in this Prospectus Supplement (the "Pass Through Rate") and will be payable to the holders of record of the Certificates (the "Certificateholders") on the related Distribution Date. The Certificates will constitute Fixed Rate Securities, as that term is defined under "Material Information Regarding the Securities -- Fixed Rate Securities" in the accompanying Prospectus. Interest due on a Distribution Date will accrue during the related Interest Period and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Interest distributions with respect to the Class C Certificates generally will be made from Available Amounts after: 1. payment of the Total Servicing Fee; 2. payment of non-recoverable Advances to the Servicer; and 3. distribution of the Noteholders' Distributable Amounts to the Noteholders. Interest distributions with respect to the Class D Certificates generally will be made from Available Amounts after payment of all of the foregoing and also after (1) distribution of interest and principal due and payable in respect of the Class C Certificates and (2) depositing of funds in the Reserve Account so that the amount on deposit in that account equals the Specified Reserve Account Balance. See "Distributions on the Notes and the Certificates -- Payment of Distributable Amounts" in this Prospectus Supplement. Interest payments due for any Distribution Date but not paid on that Distribution Date will be due on the next Distribution Date increased by an amount equal to interest on that amount at the Pass Through Rate (to the extent lawful). PAYMENTS OF PRINCIPAL No principal will be paid on the Certificates until the Distribution Date on which all of the Notes have been paid in full. On that Distribution Date and each Distribution Date thereafter, principal payments of the Certificates will be payable in an amount equal to the Certificateholders' Percentage of the Principal Distributable Amount. Principal payments on the Class C Certificates will be made from Available Amounts after: 1. payment of the Total Servicing Fee; 2. payment of non-recoverable Advances; and 3. distribution of the Noteholders' Distributable Amounts to the Noteholders. S-29 114 Principal payments will be allocated among the Certificates so that no principal payments will be made on the Class D Certificates until the Class C Certificates have been paid in full. Principal payments of the Class D Certificates will be made from Available Amounts after all payment of the foregoing and also after (1) distribution of interest and principal due and payable in respect of the Class C Certificates and (2) depositing of funds in the Reserve Account so that the amount on deposit in that account equals the Specified Reserve Account Balance. Notwithstanding the foregoing, on each Distribution Date after the acceleration of the Notes following an Event of Default, the Certificates will not receive any of the Principal Distributable Amount until the Notes have been paid in full. NOTICES Certificateholders will be notified in writing by the Owner Trustee of any Event of Default, Servicer Default or termination of, or appointment of a successor to, the Servicer promptly upon a Trust Officer obtaining actual knowledge thereof. Except for the monthly and annual reports to Certificateholders described this Prospectus Supplement, the Owner Trustee is not obligated under the Trust Agreement to forward any other notices to the Certificateholders. There are no provisions in the Trust Agreement for the regular or special meetings of Certificateholders. GOVERNING LAW [The Trust Agreement and the Certificates are governed by and shall be construed in accordance with the laws of the State of Delaware applicable to agreements made in and to be performed wholly within that jurisdiction.] DISTRIBUTIONS ON THE NOTES AND THE CERTIFICATES On or before the tenth calendar day of each month (or, if the tenth day is not a Business Day, the next succeeding Business Day (each a "Determination Date"), the Servicer will inform the Owner Trustee and the Indenture Trustee of, among other things, the amount of funds collected on or in respect of the Receivables, the amount of Advances to be made by and reimbursed to the Servicer and the Total Servicing Fee and other servicing compensation payable to the Servicer, in each case with respect to the immediately preceding Collection Period. On or prior to each Distribution Date, the Servicer will also determine the following: 1. Available Amounts; 2. Allocable Principal; 3. Noteholders' Distributable Amount; 4. Certificateholders' Distributable Amount; 5. Principal Distributable Amount; 6. Yield Supplement Deposit, if any; 7. based on the available funds and other amounts available for payment on the related Distribution Date as described below, the amount to be distributed to the Noteholders and Certificateholders; and 8. all other distributions, deposits and withdrawals to be made on the related Distribution Date. The Indenture Trustee will make payments to the Noteholders and Certificateholders out of the amounts on deposit in the Collection Account. The amounts to be distributed to the Noteholders and Certificateholders will be determined in the manner described below. "Allocable Principal" shall mean an amount equal to the excess, if any, of (x) the sum of the outstanding principal balances of the Notes and the Certificates as of the close of business on the prior Distribution Date over (y) the Pool Balances as of the end of the related Collection Period. S-30 115 CALCULATION OF AVAILABLE AMOUNTS The amount of funds available for distribution on a Distribution Date will generally equal the sum of Available Interest and Available Principal (collectively, "Available Amounts"). "Available Interest" for a Distribution Date will equal the sum of the following amounts received or allocated by the Servicer on or in respect of the Receivables during the related Collection Period: 1. that portion of all collections on or in respect of the Receivables allocable to interest; 2. all proceeds of the Liquidated Receivables, net of expenses incurred by the Servicer in accordance with its customary servicing procedures in connection with the liquidation, including amounts received in subsequent Collection Periods and any amounts required by law to be remitted to the Obligor ("Net Liquidation Proceeds") to the extent allocable to interest due on a Liquidated Receivable; 3. all Advances made by the Servicer; 4. all payments by the Seller during that Collection Period for breaches of representations and warranties that materially and adversely affect any Receivable ("Warranty Purchase Payments") to the extent attributable to interest; 5. all payments by the Servicer during that Collection Period for breaches of certain of its obligations under the Sale and Servicing Agreement that materially and adversely affect any Receivable ("Administrative Purchase Payments") to the extent attributable to interest; 6. any Yield Supplement Deposit, plus reinvestment income on the Yield Supplement Account; and 7. the excess, if any, in the Yield Supplement Account over the Required Yield Supplement Amount. "Available Principal" for a Distribution Date will equal the sum of the amounts described in clauses (1), (2), (4) and (5) above received or allocated by the Servicer in respect of principal on or in respect of the Receivables during the related Collection Period. Available Interest and Available Principal on any Distribution Date will exclude the following amounts: 1. amounts received on a particular Receivable (other than a Defaulted Receivable) to the extent that the Servicer has previously made an unreimbursed Advance in respect of that Receivable; 2. Net Liquidation Proceeds with respect to a particular Receivable to the extent of unreimbursed Advances in respect of that Receivable; and 3. recoveries from collections with respect to Advances that the Servicer has determined are unlikely to be repaid. A "Defaulted Receivable" will be a Receivable (other than a Receivable as to which a Warranty Purchase Payment or an Administrative Purchase Payment has been made) which, by its terms, is delinquent more than 120 days or, with respect to a Receivable that is delinquent less than 120 days, the Servicer has (a) determined, in accordance with its customary servicing procedures, that eventual payment in full is unlikely, or (b) repossessed the Financed Vehicle. A "Liquidated Receivable" will be a Defaulted Receivable for which the related Financed Vehicle has been liquidated by the Servicer. PAYMENT OF DISTRIBUTABLE AMOUNTS On each Distribution Date, the Servicer will allocate amounts on deposit in the Collection Account (after payment of the Supplemental Servicing Fee to the extent not previously retained by the Servicer) with respect to the related Collection Period as described below and will instruct the Indenture Trustee to make the following payments and distributions in the following amounts and order of priority: 1. to the Servicer, the amount of any payments in respect of Advances required to be reimbursed; 2. to the Servicer from Available Amounts, the Base Servicing Fee, including any unpaid Base Servicing Fees with respect to one or more prior Collection Periods; S-31 116 3. on a pro rata basis (based on the amounts distributable to each class) to the Noteholders, the Noteholders' Interest Distributable Amount, from Available Amounts (after giving effect to the reduction in Available Amounts described in clause (2) above); 4. to the Noteholders, the Noteholders' Principal Distributable Amount, from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (2) and (3) above); 5. to the holders of record of the Class C Certificates (the "Class C Certificateholders"), the Certificateholders' Interest Distributable Amount for the Class C Certificates, from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (2) through (4) above); 6. to the Class C Certificateholders, the Certificateholders' Principal Distributable Amount for the Class C Certificates, from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (2) through (5) above); 7. to the Reserve Account, from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (2) through (6) above and that amount being the "Excess Amount"), that amount until the amount on deposit in that account equals the Specified Reserve Account Balance; 8. to the holders of record of the Class D Certificates (the "Class D Certificateholders"), the Certificateholders' Interest Distributable Amount for the Class D Certificates, from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (2) through (7) above); 9. after the Class C Certificateholders have been paid in full, to the Class D Certificateholders, the Certificateholders' Principal Distributable Amount for the Class D Certificates, from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (2) through (8) above); and 10. any Available Amounts remaining after giving effect to the reduction in Available Amounts described in clauses (2) through (9) above, to the Seller. The Noteholders' Principal Distributable Amount will be allocated among the Notes so that no principal payments will be made on: 1. the Class A-2 Notes until the Class A-1 Notes have been paid in full; 2. the Class A-3 Notes until the Class A-1 Notes and the Class A-2 Notes have been paid in full; and 3. the Class B Notes until the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes have been paid in full. However, after the occurrence of an Event of Default and an acceleration of the Notes, Available Amounts (after the Base Servicing Fee has been paid and certain Advances have been reimbursed) will be applied to pay interest and principal (1) first, to the Class A-1 Notes, until the outstanding principal balance of and accrued interest on the Class A-1 Notes has been paid in full, (2) second, to the Class A-2 Notes and the Class A-3 Notes on a pro rata basis (x) with respect to interest, based on the respective aggregate amounts of interest due to those classes of Notes and (y) with respect to principal, based on the respective outstanding principal balances of those classes of Notes, until the outstanding principal balance of those classes of Notes have been paid in full, and (3) third, to the Class B Notes, until the outstanding principal balance of an accrued interest on the Class B Notes has been paid in full. Notwithstanding the foregoing, if amounts actually allocated to pay the Base Servicing Fee and the Noteholders on any Distribution Date are less than the Base Servicing Fee and the Noteholders' Distributable Amount, funds will be withdrawn from the Reserve Account so that an amount equal to the S-32 117 Base Servicing Fee and the Noteholders' Distributable Amount may be paid to the Servicer and allocated to the Noteholders, respectively. No principal payments on the Certificates will be made until all of the Notes have been paid in full. Thereafter, Certificateholders' Principal Distributable Amount will be allocated among the Certificates so that no principal payments will be made on the Class D Certificates until the Class C Certificates have been paid in full. Notwithstanding the foregoing, if amounts actually allocated to the Class C Certificateholders on any Distribution Date is less than the Certificateholders' Distributable Amount, funds will be withdrawn from the Reserve Account (after funds have been withdrawn for the benefit of the Noteholders) so that an amount equal to the Certificateholders' Distributable Amount may be allocated to the Class C Certificateholders. For the purposes of this Prospectus Supplement, the following terms will have the following meanings: The "Certificateholders' Distributable Amount" will mean, with respect to any Distribution Date, the sum of the Certificateholders' Interest Distributable Amount for all classes of Certificates plus the Certificateholders' Principal Distributable Amount for that Distribution Date for the most senior class of Certificates. The "Certificateholders' Interest Distributable Amount" will mean, with respect to any Distribution Date and a class of Certificates, the sum of the Certificateholders' Monthly Interest Distributable Amount for that class plus any outstanding Certificateholders' Interest Carryover Shortfall for that class as of the close of the immediately preceding Distribution Date. The "Certificateholders' Interest Carryover Shortfall" will mean, with respect to any Distribution Date and a class of Certificates, the excess, if any, of the sum of the Certificateholders' Monthly Interest Distributable Amount for that class for the preceding Distribution Date plus any outstanding Certificateholders' Interest Carryover Shortfall for that class on that preceding Distribution Date, over the amount of interest that is actually paid on the Certificates on that preceding Distribution Date, plus, to the extent permitted by applicable law, interest on the Certificateholders' Interest Carryover Shortfall at the related Pass Through Rate for the related Interest Period. The "Certificateholders' Monthly Interest Distributable Amount" will mean, with respect to any Distribution Date and a class of Certificates, interest accrued for the related Interest Period at the related Pass Through Rate for that class of Certificates on the Certificate Balance of that class on the immediately preceding Distribution Date, after giving effect to all payments of principal to Certificateholders of that class on or prior to that Distribution Date (or, in the case of the first Distribution Date, on the Original Certificate Balance of that class of Certificates). The "Original Certificate Balance" will equal $ for the Class C Certificates and $ for the Class D Certificates, and the "Certificate Balance," for any Distribution Date and a class of Certificates, will equal the Original Certificate Balance of that class, reduced by all amounts distributed on or prior to that Distribution Date on the Certificates of that class and allocable to principal. The "Certificateholders' Monthly Principal Distributable Amount" will mean, with respect to any Distribution Date, the Certificateholders' Percentage of the Allocable Principal for that Distribution Date. The "Certificateholders' Percentage" will mean the following: 1. for each Distribution Date until the Distribution Date on which the principal amount of all of the Notes has been paid in full, 0%; 2. for the Distribution Date on which the principal amount of all the Notes has been paid in full, the percentage of Allocable Principal remaining after the Notes have been paid in full; and 3. for each Distribution Date after the Distribution Date on which the principal amount of all of the Notes is reduced to zero, 100%. S-33 118 The "Certificateholders' Principal Carryover Shortfall" will mean, with respect to any Distribution Date and a class of Certificates, the excess, if any, of the Certificateholders' Monthly Principal Distributable Amount plus any outstanding Certificateholders' Principal Carryover Shortfall for that class for the preceding Distribution Date over the amount in respect of principal that is actually paid as principal on that class on that Distribution Date. The "Certificateholders' Principal Distributable Amount" will mean, with respect to any Distribution Date and a class of Certificates, the sum of: 1. the Certificateholders' Monthly Principal Distributable Amount for that Distribution Date; and 2. on the Final Scheduled Distribution Date for that class of Certificates, the amount necessary to reduce the outstanding principal amount of that class of Certificates to zero; provided, however, that the Certificateholders' Principal Distributable Amount with respect to a class of Certificates shall not exceed the Certificate Balance of that class of Certificates. The "Noteholders' Distributable Amount" will mean, with respect to any Distribution Date, the sum of the Noteholders' Interest Distributable Amount for all classes of Notes plus the Noteholders' Principal Distributable Amount for that Distribution Date for the most senior class of Notes. The "Noteholders' Interest Carryover Shortfall" will mean, with respect to any Distribution Date and a class of Notes, the excess, if any, of the sum of the Noteholders' Monthly Interest Distributable Amount for that class for the preceding Distribution Date plus any outstanding Noteholders' Interest Carryover Shortfall for that class on that preceding Distribution Date, over the amount in respect of interest that is actually paid on the Notes of that class on that preceding Distribution Date, plus, to the extent permitted by applicable law, interest on the Noteholders' Interest Carryover Shortfall at the related Interest Rate for the related Interest Period. The "Noteholders' Interest Distributable Amount" will mean, with respect to any Distribution Date, the sum of the Noteholders' Monthly Interest Distributable Amount for all classes of Notes and the Noteholders' Interest Carryover Shortfall for all classes of Notes with respect to that Distribution Date. The "Noteholders' Monthly Interest Distributable Amount" will mean, with respect to any Distribution Date and a class of Notes, interest accrued for the related Interest Period at the related Interest Rate for that class on the outstanding principal amount of that class on the immediately preceding Distribution Date, after giving effect to all payments of principal to Noteholders of that class on or prior to that Distribution Date (or, in the case of the first Distribution Date, on the original principal amount of that class). The "Noteholders' Monthly Principal Distributable Amount" will mean, with respect to any Distribution Date, the Noteholders' Percentage of Allocable Principal for that Distribution Date. The "Noteholders' Percentage" will mean: 1. for each Distribution Date until the Distribution Date on which the principal amounts of all of the Notes have been paid in full, 100%; 2. for the Distribution Date on which the Notes have been paid in full, the percentage of Allocable Principal needed to pay the Notes in full; and 3. thereafter, 0%. The "Noteholders' Principal Carryover Shortfall" will mean, with respect to any Distribution Date and a class of Notes, the excess, if any, of the Noteholders' Monthly Principal Distributable Amount for that class for the preceding Distribution Date over the amount in respect of principal that is actually paid as principal on that class on that Distribution Date. Noteholders' Principal Carryover Shortfall is not used to determine the amount of principal due on the Notes on any Distribution Date, but is used solely for reporting purposes. See S-34 119 "Description of the Transfer and Servicing Agreements -- Statements to Securityholders" in the accompanying Prospectus. The "Noteholders' Principal Distributable Amount" will mean, with respect to any Distribution Date and a class of Notes, the sum of: 1. the Noteholders' Monthly Principal Distributable Amount; and 2. on the Final Scheduled Distribution Date for that class of Notes, the amount necessary to reduce the outstanding principal amount of that class of Notes to zero; provided, however, that the Noteholders' Principal Distributable Amount with respect to a class of Notes shall not exceed the outstanding principal amount of that class. The "Principal Distributable Amount" will mean, with respect to any Distribution Date and the related Collection Period, the sum of the following amounts: 1. the principal portion of all payments actually received on the Receivables during that Collection Period; 2. the principal portion of all prepayments and partial prepayments received during that Collection Period (to the extent those amounts are not included in clause (1) above); and 3. the Principal Balance of each Receivable that the Servicer became obligated to purchase, the Seller became obligated to repurchase or that became a Defaulted Receivable during that Collection Period (to the extent those amounts are not included in clauses (1) or (2) above). SUBORDINATION; RESERVE ACCOUNT The rights of the Noteholders and the Certificateholders to receive payments with respect to the Receivables will be subordinated to the rights of the Servicer to receive the Total Servicing Fee, any additional servicing compensation described under "Description of the Transfer and Servicing Agreements -- Servicing Compensation" in this Prospectus Supplement and the reimbursement of outstanding Advances. SUBORDINATION In addition, the rights of the Noteholders to receive distributions on the Receivables will be subject to the priorities set forth under "Summary -- Terms of the Notes" and "Distributions on the Notes and the Certificates -- Payment of Distributable Amounts" in this Prospectus Supplement. The rights of the Certificateholders to receive payments on the Receivables will be subordinated to the rights of the Noteholders to the extent described herein. The rights of the Class D Certificateholders to receive payments on the Receivables will be further subordinated to the rights of the Class C Certificateholders and the maintenance of amounts on deposit in the Reserve Account at the Specified Reserve Account Balance, in each case to the extent described herein. RESERVE ACCOUNT The protection afforded to the Noteholders through subordination will be effected both by the preferential right of the Noteholders to receive, to the extent described in this Prospectus Supplement, current distributions on the Receivables and by the establishment and maintenance of a segregated trust account containing money and other property deposited therein pursuant to the Sale and Servicing Agreement (the "Reserve Account"). Although the Class C Certificates are subordinated to the rights of the Noteholders, the Class C Certificateholders have a preferential right to receive current distributions on the Receivables before the Class D Certificateholders to the extent described in this Prospectus Supplement and the establishment of the Reserve Account. The Reserve Account will be a segregated account in the name of the Indenture Trustee and pledged to the Indenture Trustee for the benefit of the Noteholders and Certificateholders. The Reserve Account will be created with an initial deposit by the S-35 120 Seller on the Closing Date of an amount equal to $ (the "Reserve Account Initial Deposit"). The Reserve Account will thereafter be funded by the deposit therein of all Excess Amounts, if any, for each Distribution Date to the extent necessary to restore or bring the amounts on deposit in the Reserve Account to the Specified Reserve Account Balance. Notwithstanding the foregoing, on each Distribution Date, to the extent that amounts deposited in the Collection Account during the related Collection Period are insufficient to fully reimburse the Servicer for Advances made by it which are required to be reimbursed under the Sale and Servicing Agreement, amounts then on deposit in the Reserve Account will be applied to reimburse the Servicer in full before any amounts therein are applied for the payments on the Notes or Certificates. Amounts held from time to time in the Reserve Account will continue to be held for the benefit of holders of the Notes and the Class C Certificateholders and may be invested in Eligible Investments. Income on such Eligible Investments (net of losses and expenses) will be paid to the Seller on each Distribution Date. If the amount on deposit in the Reserve Account on any Distribution Date (after giving effect to all deposits to and withdrawals from the Reserve Account on that Distribution Date) is greater than the Specified Reserve Account Balance for that Distribution Date, the Indenture Trustee will include the amount of the excess in the amounts to be distributed to Class D Certificateholders pursuant to clauses (8) and (9) in the first paragraph under "Distributions on the Notes and the Certificates -- Payment of Distributable Amounts" in this Prospectus Supplement. Upon any distribution to the Class D Certificateholders of amounts in excess of the Specified Reserve Account Balance, the Noteholders will not have any rights in, or claims to, those amounts. Any excess amounts remaining thereafter will be paid to the Seller. The "Specified Reserve Account Balance" will initially be [ ]. In the event, however, 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 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 [ ]%, 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 principal balance of the Notes and Certificates as of the preceding Distribution Date (after giving effect to payments of principal made on such Distribution Date). The Servicer may, from time to time after the date of this Prospectus Supplement, request each rating agency to approve a formula for determining the Specified Reserve Account Balance that is different from those described above or change the manner by which the Reserve Account is funded. If each rating agency delivers a letter to the Owner Trustee to the effect that the use of any new formula will not result in a qualification, reduction or withdrawal of its then-current rating of any class of the Notes or the Class C Certificates, then the Specified Reserve Account Balance will be determined in accordance with the new formula. The Sale and Servicing Agreement will accordingly be amended, without the consent of any Noteholder or Certificateholder, to reflect the new calculation. The Seller will not be required to refund any amounts properly distributed or paid to it, whether or not there are sufficient funds on any subsequent Distribution Date to make full distributions to the Securityholders. The Reserve Account and the subordination of the Certificates are intended to enhance the likelihood of receipt by Noteholders of the full amount of principal and interest due them and to decrease the likelihood that the Noteholders will experience losses. However, the Reserve Account could be depleted. If the amount required to be deposited into or required to be withdrawn from the Reserve Account to cover S-36 121 shortfalls in collections on the Receivables exceeds the amount of available cash in the Reserve Account, Noteholders could incur losses or suffer a temporary shortfall in the amounts distributed to the Noteholders. In that event, the Class C Certificateholders will first incur the losses, but the Class B Noteholders will be the second to incur those losses because payments of principal of and interest on the Class B Notes are subordinated to payments of principal of and interest on the Class A Notes. To a lesser extent, the Reserve Account and the subordination of the Class D Certificates are intended to enhance the likelihood of receipt by the Class C Certificateholders of the full amount of principal and interest due them and to decrease the likelihood that the Class C Certificateholders will experience losses. However, the right of the Class C Certificateholders to the amounts on deposit in the Reserve Account is subordinated to the similar right of the Noteholders and, in any event, the Reserve Account could be depleted. If the amount required to be deposited into or required to be withdrawn from the Reserve Account to cover shortfalls in collections on the Receivables exceeds the amount of available cash in the Reserve Account, the Class C Certificateholders could incur losses or suffer a temporary shortfall in the amounts distributed to the Certificateholders. DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS THE TRANSFER AND SERVICING AGREEMENTS The description of the terms of the Indenture, the Sale and Servicing Agreement, the Administration Agreement and the Trust Agreement (collectively, the "Transfer and Servicing Agreements") in this Prospectus Supplement does not purport to be complete and is subject to, and qualified in its entirety by reference to, all the provisions of the Transfer and Servicing Agreements. Forms of the Transfer and Servicing Agreements have been filed as exhibits to the Registration Statement. Copies of the final signed Transfer and Servicing Agreements will be filed with the SEC following the issuance of the Securities. Any description of the Transfer and Servicing Agreements in this Prospectus Supplement supplements, and to the extent inconsistent replaces, the description of the general terms and provisions of the Transfer and Servicing Agreements set forth in the accompanying Prospectus, to which description reference is hereby made. SALE AND ASSIGNMENT OF RECEIVABLES Information with respect to the conveyance of the Receivables from the Seller to the Trust on the Closing Date pursuant to the Sale and Servicing Agreement is set forth under "Description of the Transfer and Servicing Agreements -- Sale and Assignment of Receivables" in the accompanying Prospectus. ACCOUNTS In addition to the accounts referred to under "Description of the Transfer and Servicing Agreements -- Accounts" in the accompanying Prospectus, the Servicer will also establish with and pledge to the Indenture Trustee the Reserve Account. The Reserve Account will not be property of the Trust. The Yield Supplement Account established in the name of the Indenture Trustee [will] [will not] be property of the Trust. COLLECTIONS The Servicer will deposit all payments on Receivables received from Obligors and all proceeds of Receivables collected during each Collection Period into the Collection Account not later than the Business Day after receipt. However, so long as NMAC is the Servicer, if each condition to making monthly deposits as may be required by the Sale and Servicing Agreement (including the satisfaction of specified ratings criteria by NMAC and the absence of any Servicer Default) is satisfied, the Servicer may retain such amounts until the related Distribution Date. The Servicer or the Seller, as the case may be, will remit the aggregate Warranty Purchase Payments and Administrative Purchase Payments of Receivables to be purchased from the Trust to the Collection Account on the Business Day immediately S-37 122 preceding the Distribution Date. The Servicer will be entitled to withhold, or to be reimbursed from amounts otherwise payable into or on deposit in the Collection Account, amounts previously deposited in the Collection Account but later determined to have resulted from mistaken deposits or postings. Except in certain circumstances described in the Sale and Servicing Agreement, pending deposit into the Collection Account, collections may be employed by the Servicer at its own risk and for its own benefit and will not be segregated from its own funds. The Servicer, at its own risk and for its own benefit, may instruct the Owner Trustee to invest amounts held in the Collection Account in Eligible Investments from the time deposited until the related Distribution Date. See "Description of the Transfer and Servicing Agreements -- Collections" in the accompanying Prospectus. "Eligible Investments" will be specified in the Sale and Servicing Agreement and will be limited to investments which meet the criteria of each rating agency from time to time as being consistent with its then-current ratings of the Securities. Collections on or in respect of a Receivable made during a Collection Period (including Warranty Purchase Payments and Administrative Purchase Payments) will be applied first to interest accrued to date, second to principal until the principal balance is brought current, third to reduce the unpaid late charges as provided in the Receivable and finally to prepay principal of the Receivable. See "Description of the Transfer and Servicing Agreements -- Collections" in the accompanying Prospectus. ADVANCES On or before the Business Day prior to each Distribution Date, the Servicer will be obligated to make a payment into the Collection Account for each Receivable of an amount equal to the product of the principal balance of the Receivable as of the first day of the related Collection Period and one-twelfth of its APR minus the amount of interest actually received on the Receivable during the Collection Period (an "Advance"). If the calculation results in a negative number, an amount equal to the negative amount will be paid to the Servicer in reimbursement of outstanding Advances. In addition, if a Receivable becomes a Liquidated Receivable, the amount of accrued and unpaid interest on that Receivable (but not including interest for the current Collection Period) will, up to the amount of outstanding Advances in respect thereof, be withdrawn from the Collection Account and paid to the Servicer in reimbursement of the outstanding Advances. The Servicer will not be required to make any Advances (other than the Advance of an interest shortfall arising from a prepaid Receivable) to the extent that it does not expect to recoup the Advance from subsequent collections or recoveries. No advances of principal will be made with respect to the Receivables. See "Description of the Transfer and Servicing Agreements -- Advances" in the accompanying Prospectus. SERVICING COMPENSATION The base servicing fee for the calendar month immediately preceding any Distribution Date (a "Collection Period") will be one-twelfth of 1.00% (the "Servicing Rate") of the Pool Balance as of the last day of the preceding Collection Period or, in the case of the first Distribution Date, the Pool Balance as of the Cut-off Date (the "Base Servicing Fee"). The Base Servicing Fee, together with any previously unpaid Base Servicing Fee, will be paid on each Distribution Date solely to the extent of Available Amounts (and, if necessary, amounts available in the Reserve Account). The Servicer will be entitled to collect and retain as additional servicing compensation in respect of each Collection Period any late fees, prepayment charges and any other administrative fees and expenses or similar charges collected during that Collection Period, plus any investment earnings or interest earned during that Collection Period from the investment of monies on deposit in the Collection Account (the "Supplemental Servicing Fee"). See "Description of the Transfer and Servicing Agreements -- Collections" in this Prospectus Supplement and "Description of the Transfer and Servicing Agreements -- Servicing Compensation" in the accompanying Prospectus. The Servicer will be paid the Base Servicing Fee and the Supplemental Servicing Fee (collectively the "Total Servicing Fee") for each Collection Period on the following Distribution Date related to that Collection Period. However, if it is acceptable to each rating agency without a reduction in the rating of each class of Notes and the Class C Certificates, the Base Servicing Fee in respect of a S-38 123 Collection Period (together with any portion of the Base Servicing Fee that remains unpaid from prior Distribution Dates) will be paid at the beginning of that Collection Period out of collections of interest on the Receivables for that Collection Period. The Base Servicing Fee will be paid from Available Amounts (and, if necessary, amounts available in the Reserve Account) prior to the payment of the Noteholders' Distributable Amounts or Certificateholders' Distributable Amounts. YIELD SUPPLEMENT ACCOUNT AND YIELD SUPPLEMENT AGREEMENT Payments of the Yield Supplement Deposit will be made from funds on deposit in a segregated trust account (the "Yield Supplement Account") to be established by the [Seller who] [Trust in the name of the Indenture Trustee and the Trust which] will pledge the trust account to secure the Notes and the Class C Certificateholders. The Yield Supplement Account [will] [will not] be part of the Trust property and will be funded by the Seller with [[a capital contribution to the Trust by depositing an amount equal to $________] [a deposit of an amount equal to $________] [in cash]][, a transfer of retail installment sales contracts with an aggregate principal balance, as of the Cut-Off Date, of $________ to the Trust] [and a transfer of receivables or other assets (including vehicle lease contracts) in an amount, collectively, equal to $________ to the Trust] ([the] [collectively,] "Initial Yield Supplement Amount"). The "Yield Supplement Deposit" for each Distribution Date means an aggregate amount (if positive), calculated by the Servicer, by which (1) one month's interest on the principal balance as of the first day of the related Collection Period of each Yield Supplemented Receivable (other than a Defaulted Receivable, after the Collection Period in which that Receivable became a Defaulted Receivable) at a rate equal to the Required Rate exceeds (2) one month's interest on that principal balance at that Yield Supplemented Receivable's APR. "Yield Supplemented Receivables" are Receivables that have APRs which are less than the Required Rate. The "Required Rate" means, with respect to any Distribution Date, the sum of (1) the [interest rate on the Class B Notes] [weighted average Interest Rate of the securities offered pursuant to the prospectus supplement], and (2) the Servicing Rate of 1.00%. If the Yield Supplement Deposit for any Distribution Date exceeds the amount available for withdrawal from the Yield Supplement Account on that Distribution Date, the Seller will not have any further obligation under the Yield Supplement Agreement to deposit any further amounts into the Yield Supplement Account. The amount required to be on deposit in the Yield Supplement Account (the "Required Yield Supplement Amount") will be equal to the lesser of (A) the maximum aggregate Yield Supplement Deposits that will become due on future Distribution Dates, 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 (B) the Initial Yield Supplement Amount. The amount on deposit in the Yield Supplement Account may decline as a result of prepayments or repayments in full of the Receivables. To the extent that on any Distribution Date the amount on deposit in the Yield Supplement Account exceeds the Required Yield Supplement Amount on that Distribution Date, after giving effect to all distributions to be made on such Distribution Date, the excess will be deposited in the Collection Account for distribution in accordance with the Sale and Servicing Agreement. Simultaneously with the sale and assignment of the Receivables by NMAC to the Seller, the Seller will enter into the Yield Supplement Agreement with the Indenture Trustee, the Servicer, and the Trust. NET DEPOSITS As an administrative convenience and as long as specified conditions are satisfied, the Servicer will be permitted to make the deposit of collections, aggregate Advances and amounts deposited in respect of purchases of Receivables by the Seller or the Servicer for or with respect to the related Collection Period net of payments to be made to the Servicer with respect to that Collection Period. The Servicer, however, will account for the foregoing deposits and payments as if all of the foregoing deposits and payments were made individually. See "Description of the Transfer and Servicing Agreements -- Net Deposits" in the accompanying Prospectus. OPTIONAL PURCHASE The outstanding Notes and the Certificates will be paid in full on any Distribution Date on which the Servicer or any successor to the Servicer exercises its option to purchase the Receivables. The Servicer or S-39 124 any successor to the Servicer may purchase the Receivables when the Pool Balance shall have declined to 10% or less of the Pool Balance as of the Cut-off Date, for the price as described in the accompanying Prospectus under "Description of the Transfer and Servicing Agreements -- Termination." The "Redemption Price" for the outstanding Notes will be equal to the unpaid principal amount of the outstanding Notes plus accrued and unpaid interest on those Notes and for the Certificates will equal the Certificate Balance of the Class C Certificates and Class D Certificates on the date of the optional purchase plus accrued and unpaid interest on the Certificates. REMOVAL OF SERVICER The Indenture Trustee or Noteholders evidencing a majority of the voting interests of Notes (voting as a single class) may terminate the rights and obligations of the Servicer under the Sale and Servicing Agreement upon: 1. any failure by the Servicer (or the Seller, so long as NMAC is the Servicer) to deliver to the Owner Trustee or the Indenture Trustee, as applicable, for deposit in any account any required payment or to direct the Owner Trustee or the Indenture Trustee, as applicable, to make any required distributions from that account, and that failure continues unremedied for three Business Days after (a) receipt by the Servicer (or the Seller, so long as NMAC is the Servicer) of written notice of the failure from the Owner Trustee or the Indenture Trustee, as applicable, (b) receipt by the Servicer (or the Seller, so long as NMAC is the Servicer) and the Owner Trustee or the Indenture Trustee, as applicable, of written notice of the failure from the holders of Notes or Certificates evidencing not less than 25% in principal amount of the outstanding Notes and the Certificates, acting together as the single class, or (b) discovery of that failure by any officer of the Servicer; 2. any failure by the Servicer (or the Seller, as long as NMAC is the Servicer) to duly observe or perform in any material respect any other covenants or agreements of the Servicer (or the Seller, as long as NMAC is the Servicer) set forth in the Sale and Servicing Agreement, and that failure materially and adversely affects the rights of the Noteholders or the Certificateholders, and that failure continues unremedied for 90 days after the giving of written notice of the failure to (a) the Servicer (or the Seller, so long as NMAC is the Servicer) by the Owner Trustee or the Indenture Trustee, or (b) the Servicer (or the Seller, so long as NMAC is the Servicer) and the Owner Trustee or the Indenture Trustee, as applicable, by the holders of Notes evidencing not less than 25% in principal amount of those outstanding Notes or holders of Certificates evidencing not less than 25% of the balance attributable to the Certificates, each acting together as a single class; and 3. the occurrence of an insolvency event with respect to the Servicer. Under those circumstances, authority and power shall, without further action, pass to and be vested in the Indenture Trustee or a successor Servicer appointed under the Sale and Servicing Agreement. If, however, a bankruptcy trustee or similar official has been appointed for the Servicer, and no Servicer Default other than the appointment of a bankruptcy trustee or similar official has occurred, that trustee or official may have the power to prevent the Indenture Trustee or the Noteholders from effecting a transfer of servicing. Upon receipt of notice of the occurrence of a Servicer Default, the Indenture Trustee shall give notice thereof to the rating agencies. Upon payment in full of the principal and interest on the Notes, the Certificateholders will succeed to the rights of the Noteholders with respect to removal of the Servicer. SELLER LIABILITY Under the Trust Agreement and the Indenture, the Seller will be liable to injured parties only to the extent specified therein. S-40 125 TERMINATION OF THE SALE AND SERVICING AGREEMENT The respective obligations of the Seller, the Servicer, NMAC (so long as NMAC has rights or obligations thereunder), the Owner Trustee and the Indenture Trustee, as the case may be, pursuant to the Sale and Servicing Agreement will 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 and (ii) the election by the Servicer to purchase the corpus of the Trust as described in "Description of the Transfer and Servicing Agreements -- Optional Purchase" in this Prospectus Supplement 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. DUTIES OF THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE The Owner Trustee will make no representations as to the validity or sufficiency of the Trust Agreement, the Certificates (other than the authentication of the Certificates), the Notes or of any Receivables or related documents and is not accountable for the use or application by the Seller or the Servicer of any funds paid to the Seller or the Servicer in respect of the Notes, the Certificates or the Receivables, or the investment of any monies by the Servicer before those monies are deposited into the Collection Account. The Owner Trustee will not independently verify the Receivables. The Owner Trustee is required to perform only those duties specifically required of it under the Trust Agreement. In addition to making distributions to the Certificateholders, those duties generally are limited to the receipt of the various certificates, reports or other instruments required to be furnished to the Owner Trustee under the Trust Agreement, in which case it will only be required to examine them to determine whether they conform on their face to the requirements of the Trust Agreement. The Owner Trustee will be under no obligation to exercise any of the rights or powers vested in it by the Trust Agreement or to make any investigation of matters arising under the Trust Agreement or to institute, conduct or defend any litigation under the Trust Agreement or in relation thereto at the request, order or direction of any of the Certificateholders, unless those Certificateholders have offered to the Owner Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred by the Owner Trustee in connection with the exercise of those rights. No Certificateholder will have any right under the Trust Agreement to institute any proceeding with respect to the Trust Agreement, other than with respect to the failure by the Seller or the Servicer, as applicable, to remit payment, unless that Certificateholder has previously given to the Owner Trustee written notice of default and unless the holders of Certificates evidencing not less than 25% of the voting interests of the Certificates, acting together as a single class, have made written request upon the Owner Trustee to institute that proceeding in its own name as the Owner Trustee under the Trust Agreement and have offered to the Owner Trustee reasonable indemnity and the Owner Trustee for 30 days has neglected or refused to institute that proceeding. The Indenture Trustee will make no representations as to the validity or sufficiency of the Indenture, the Certificates, the Notes (other than authentication of the Notes) or of any Receivables or related documents, and is not accountable for the use or application by the Seller or the Servicer of any funds paid to the Seller or the Servicer in respect of the Notes, the Certificates or the Receivables, or the investment of any monies by the Servicer before those monies are deposited into the Collection Account. The Indenture Trustee will not independently verify the Receivables. The Indenture Trustee is required to perform only those duties specifically required of it under the Indenture. In addition to making distributions to the Noteholders, those duties generally are limited to the receipt of the various certificates, reports or other instruments required to be furnished to the Indenture Trustee under the Indenture, in which case it will only be required to examine them to determine whether they conform on their face to the requirements of the Indenture. The Indenture Trustee will be under no obligation to exercise any of the rights or powers vested in it by the Indenture or to make any investigation of matters arising under the Indenture or to institute, conduct or defend any litigation under the Indenture or in relation thereto at the request, order or direction S-41 126 of any of the Noteholders, unless those Noteholders have offered to the Indenture Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred by the Indenture Trustee in connection with the exercise of those rights. No Noteholder will have any right under the Indenture to institute any proceeding with respect to the Indenture, unless that Noteholder previously has given to the Indenture Trustee written notice of the Event of Default and (1) the Event of Default arises from the Servicer's failure to remit payments when due or (2) the holders of the Notes evidencing not less than 25% of the voting interests of the Notes, acting together as a single class, have made written request upon the Indenture Trustee to institute that proceeding in its own name as the Indenture Trustee under the Indenture and have offered to the Indenture Trustee reasonable indemnity and the Indenture Trustee for 60 days has neglected or refused to institute that proceeding. LIST OF NOTEHOLDERS Three or more Noteholders of any class in a series or one or more Noteholder of that class evidencing not less than 25% of the aggregate principal amount of those Notes then outstanding may, by written request to the Indenture Trustee, obtain access to the list of all Noteholders maintained by the Indenture Trustee for the purpose of communicating with other Noteholders with respect to their rights under the related Indenture or under those Notes. However, the Indenture Trustee may elect not to afford the requesting Noteholders access to the list of Noteholders if the Indenture Trustee agrees to mail the desired communication or proxy, on behalf of and at the expense of the requesting Noteholders, to all Noteholders. Three or more holders of the Certificates of any class in a series or one or more holders of those Certificates of that class evidencing not less than 25% of the Certificate Balance of those Certificates may, by written request to the Owner Trustee, obtain access to the list of all Certificateholders maintained by the Owner Trustee for the purpose of communicating with other Certificateholders with respect to their rights under the related Trust Agreement or Pooling and Servicing Agreement or under those Certificates. THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE [ ] will be the Owner Trustee under the Trust Agreement. As a matter of Delaware law, the Trust will be viewed as a separate legal entity, distinct from the Owner Trustee, and the Trust will be viewed as the issuer of the Certificates. [ ] will be the Indenture Trustee under the Indenture. The Owner Trustee, the Indenture Trustee and any of their respective affiliates may hold Certificates in their own names or as pledgees. For the purpose of meeting the legal requirements of some jurisdictions, the Servicer and the Owner Trustee or the Servicer and the Indenture Trustee, in each case acting jointly (or in some instances, the Owner Trustee or the Indenture Trustee acting alone), will have the power to appoint co-trustees or separate trustees of all or any part of the Trust. In the event of an appointment of co-trustees or separate trustees, all rights, powers, duties and obligations conferred or imposed upon the Owner Trustee by the Sale and Servicing Agreement and the Trust Agreement or the Indenture Trustee by the Indenture will be conferred or imposed upon the Owner Trustee or the Indenture Trustee and each of their respective separate trustees or co-trustees jointly, or, in any jurisdiction in which the Owner Trustee or the Indenture Trustee will be incompetent or unqualified to perform specified acts, singly upon that separate trustee or co-trustee who will exercise and perform those rights, powers, duties and obligations solely at the direction of the Owner Trustee or the Indenture Trustee. The Owner Trustee and the Indenture Trustee may resign at any time, in which event the Servicer will be obligated to appoint a successor thereto. The Administrator may also remove the Owner Trustee or the Indenture Trustee if either ceases to be eligible to continue as trustee under the Trust Agreement or the Indenture, as the case may be, becomes legally unable to act or becomes insolvent. In those circumstances, the Servicer will be obligated to appoint a successor Owner Trustee or Indenture Trustee, as applicable. Any resignation or removal of the Owner Trustee or the Indenture Trustee and appointment of a successor thereto will not become effective until acceptance of the appointment by the successor. S-42 127 The Trust Agreement will provide that the Servicer will pay the fees of the Owner Trustee and the Indenture Trustee in connection with their duties under the Trust Agreement and Indenture, respectively. The Trust Agreement and Indenture will further provide that the Owner Trustee and the Indenture Trustee will be entitled to indemnification by NMAC for, and will be held harmless against, any loss, liability, fee, disbursement or expense incurred by the Owner Trustee or the Indenture Trustee not resulting from its own willful misfeasance, bad faith or negligence (other than by reason of a breach of any of its representations or warranties set forth in the Trust Agreement or the Indenture, as the case may be). The Trust Agreement and the Indenture will further provide that the Servicer will indemnify the Owner Trustee and the Indenture Trustee for specified taxes that may be asserted in connection with the transaction. MATERIAL INCOME TAX CONSEQUENCES TAX CHARACTERIZATION OF THE TRUST In the opinion of O'Melveny & Myers LLP, tax counsel to the Trust, (i) the Class Notes will be characterized as debt for federal income tax purposes, (ii) although the matter is not free from doubt, the Class B Notes should be treated as debt for tax purposes, and (iii) the Trust will not be characterized as an association (or a publicly traded partnership) taxable as a corporation for federal income and California income and franchise tax purposes. For federal income tax and California income and franchise tax purposes, the Trust will be disregarded as an entity separate from the Seller. As a result, the Trust's assets will be treated as assets of the Seller, and all income, deductions, and other tax items therefrom will be treated as tax items of the Seller. See discussion under "Material Income Tax Consequences -- Tax Treatment of Owner Trusts" in the accompanying Prospectus. TREATMENT OF THE NOTES AS INDEBTEDNESS The Seller and each Certificate Owner will agree, and each beneficial owner of the Notes (each, a "Note Owner") will agree, to treat the Notes as debt for federal income tax purposes. The Seller and the Servicer will agree, and the Certificate Owners will agree by their purchase of the Certificates, to treat the Trust (i) as a partnership for purposes of federal and state income tax, franchise tax and any other tax measured in whole or in part by income, with the assets of the partnership being the assets held by the Trust, the partners of the partnership being the Certificate Owner, and the Notes being debt of the partnership, or (ii) if a single, respectively, owns all of the Certificates and none of the Notes are characterized as equity interests in the Trust, as an entity that is to be disregarded for purpose of federal and state income tax, franchise tax and any other tax measured in whole or in part by income, with the assets of the Trust and the Notes treated as assets and indebtedness of the Certificate Owner. However, the proper characterization of the arrangement involving the Trust, the Certificates, the Notes, the Seller and the Servicer is not clear because there is no authority on transactions closely comparable to the transaction described in this prospectus supplement. We refer you to the discussion under "Material Income Tax Consequences -- Tax Treatment of Owner Trusts" in the accompanying prospectus. S-43 128 ERISA CONSIDERATIONS THE NOTES The Notes may, in general, be purchased by or on behalf of Benefit Plans. Although no assurances can be given in this regard, the Notes should be treated as "debt" and not as "equity interests" for purposes of the Plan Assets Regulation because the Notes: 1. are expected to be treated as indebtedness under local law; and 2. should not be deemed to have any "substantial equity features." However, the acquisition and holding of Notes of any class by or on behalf of a Benefit Plan could be considered to give rise to a prohibited transaction under ERISA and Section 4975 of the Code if the Trust, the Owner Trustee, the Indenture Trustee, the Servicer, the Seller, any Certificateholder or any of their respective affiliates, is or becomes a "party in interest" or a "disqualified person" (as defined in ERISA and the Code, respectively) with respect to such Benefit Plan. In such case, certain exemptions from the prohibited transaction rules could be applicable to such acquisition and holding by a Benefit Plan depending on the type and circumstances of the Benefit Plan fiduciary making the decision to acquire a Note. In addition, a fiduciary of a Benefit Plan must determine that the purchase of a Note is consistent with its fiduciary duties under ERISA or any similar applicable law. For additional information regarding the treatment of the Notes under ERISA, see "ERISA Considerations" in the accompanying Prospectus. THE CERTIFICATES The Certificates may not be acquired by a Plan or any entity whose underlying assets include plan assets by reason of a plan's investment in the entity or which uses plan assets to acquire Certificates (a "Plan Investor"). By its acceptance of a Certificate, each Certificateholder will be deemed to have represented and warranted that it is not subject to the foregoing limitation. In addition, a purchaser of Certificates other than a Plan Investor should be aware that a prohibited Transaction could occur if a Certificateholder (or any of its affiliates) is or becomes a party in interest or a disqualified person with respect to a Plan Investor that purchases and holds any Notes unless covered by one or more applicable exemptions. S-44 129 UNDERWRITING Subject to the terms and conditions set forth in an Underwriting Agreement (the "Note Underwriting Agreement"), the Seller has agreed to sell to each of the Note Underwriters named below (collectively, the "Note Underwriters"), and each of the Note Underwriters has severally agreed to purchase, the principal amount of Notes set forth opposite its name below: [TABLE] In the Note Underwriting Agreement, the Note Underwriters have agreed, subject to the terms and conditions set forth in the Note Underwriting Agreement, to purchase all of the Notes if any of the Notes are purchased. This obligation of the Note Underwriters is subject to specified conditions precedent set forth in the Note Underwriting Agreement. The Seller has been advised by the Note Underwriters that they propose initially to offer the Notes to the public at the prices set forth on the cover of this Prospectus Supplement, and to specified dealers at that price less the initial concession not in excess of [ ]% of the denominations of the Notes per Class A-1 Note, [ ]% per Class A-2 Note, [ ]% per Class A-3 Note, and [ ]% per Class B Note. The Note Underwriters may allow, and those dealers may reallow, a concession not in excess of [ ]% per Class A-1 Note, [ ]% per Class A-2 Note, [ ]% per Class A-3 Note and [ ]% per Class B Note to some other dealers. After the initial public offering of the Notes, the public offering price and those concessions may be changed. Subject to the terms and conditions set forth in an Underwriting Agreement (the "Certificate Underwriting Agreement"), the Seller has agreed to cause the Trust to sell to each of the Certificate Underwriters named below (the "Certificate Underwriters" and, together with the Note Underwriters, the "Underwriters"), and each of the Certificate Underwriters has severally agreed to purchase, the principal amount of the Class C Certificates set forth opposite its name below: [TABLE] In the Certificate Underwriting Agreement, the Certificate Underwriters have agreed, subject to the terms and conditions set forth in the Certificate Underwriting Agreement, to purchase all of the Class C Certificates if any of the Class C Certificates are purchased. This obligation of the Certificate Underwriters is subject to specified conditions precedent set forth in the Certificate Underwriting Agreement. The Seller has been advised by the Certificate Underwriters that they propose initially to offer the Class C Certificates to the public at the price set forth on the cover of this Prospectus Supplement, and to some other dealers at that price less the initial concession not in excess of [ ]% per Class C Certificate. The Certificate Underwriters may allow, and those dealers may reallow, a concession not in excess of [ ]% per Class C Certificate to some other dealers. After the initial public offering of the Class C Certificates, the public offering price and those concessions may be changed. The Seller and NMAC have agreed to indemnify the Underwriters against specified liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments which the S-45 130 Underwriters may be required to make in respect thereof. However, in the opinion of the Securities and Exchange Commission, certain indemnification provisions for liability arising under the federal securities law are contrary to public policy and therefore unenforceable. In the ordinary course of their respective businesses, the Underwriters and their respective affiliates have engaged and may engage in investment banking and/or commercial banking transactions with Nissan and its affiliates. The Notes and the Certificates are new issues of securities with no established trading markets. The Seller has been advised by the Note Underwriters that they intend to make a market in the Notes of each class and has been advised by the Certificate Underwriters that they intend to make a market in the Certificates, in each case as permitted by applicable laws and regulations. The Underwriters are not obligated, however, to make a market in the Notes of any class or the Certificates, and that market-making may be discontinued at any time without notice at the sole discretion of the Underwriters. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Notes of any class or the Certificates. The Trust may, from time to time, invest funds in the Accounts in Eligible Investments acquired from the Underwriters. NMAC or its affiliates may apply all or any portion of the net proceeds of the sale of the Receivables to the Seller to the repayment of debt, including "warehouse" debt secured by Receivables and/or to repurchase Receivables sold into a receivables purchase facility. One or more of the Underwriters (or (i) their respective affiliates or (ii) entities for which their respective affiliates act as administrator and/or provide liquidity lines) may have acted as a "warehouse" lender or purchaser to NMAC or its affiliates, and may receive a portion of such proceeds as repayment of such "warehouse" debt or as repurchase proceeds. The Underwriters have advised the Seller that specified persons participating in this offering may engage in transactions over-allotment transactions, stabilizing transactions or syndicate covering transactions. Over-allotment transactions involve syndicate sales in excess of the offering size creating a syndicate short position. Stabilizing transactions permit bids to purchase the Notes so long as the stabilizing bids do not exceed a specified maximum. Syndicate covering transactions involve purchases of the Notes in the open market after the distribution has been completed in order to cover syndicate short positions. Such over-allotment transactions, stabilizing transactions cause prices of the Notes to be higher than they would otherwise be in the absence of such transactions. Neither the Seller nor the Underwriters makes any representation or prediction as to the direction or magnitude of any of that effect on the prices for the Securities. In addition, neither the Seller nor any of the Underwriters represent that the Underwriters that the Underwriters will engage in any such transactions nor that such transactions, one commenced, will not be discontinued without notice. Rule 15c-6 under the Securities Exchange Act of 1934, as amended, generally, requires trades in the secondary market to settle within three business days, unless the parties thereto expressly agree otherwise. Because delivery of Notes to purchasers hereunder will settle more than three business days after the date hereof, purchasers hereunder who wish to trade notes in the secondary market on the date hereof will be required to specify an alternative settlement cycle with their secondary purchasers to prevent a failed settlement of the secondary purchase. Purchasers hereunder who wish to make such secondary trades on the date hereof should consult their own advisors. Each Underwriter will represent that (i) it has not offered or sold and will not offer or sell, prior to the date six months after their date of issuance, any Securities to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted in and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with S-46 131 the issuance of the Securities to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1997 or is a person to whom the document can otherwise lawfully be issued or passed on. LEGAL OPINIONS In addition to the legal opinions described in the accompanying Prospectus, legal matters relating to the Notes and the Certificates and federal income tax and California state income tax and other matters will be passed upon for the Trust by O'Melveny & Myers LLP. S-47 132 INDEX OF TERMS
PAGE ---- ABS................................... S-23 ABS Table............................. S-24 Administrative Purchase Payments...... S-31 Advance............................... S-38 Allocable Principal................... S-30 APR................................... S-18 Available Amounts..................... S-31 Available Interest.................... S-31 Available Principal................... S-31 Base Servicing Fee.................... S-38 Business Day.......................... S-26 Certificate Balance................... S-33 Certificate Factor.................... S-25 Certificate Underwriters.............. S-45 Certificate Underwriting Agreement.... S-45 Certificateholders.................... S-29 Certificateholders' Distributable Amount.............................. S-33 Certificateholders' Interest Carryover Shortfall........................... S-33 Certificateholders' Interest Distributable Amount................ S-33 Certificateholders' Monthly Interest Distributable Amount................ S-33 Certificateholders' Monthly Principal Distributable Amount................ S-33 Certificateholders' Percentage........ S-33 Certificateholders' Principal Carryover Shortfall................. S-34 Certificateholders' Principal Distributable Amount................ S-34 Certificates.......................... S-29 Clearstream Banking Luxembourg........ A-1 Class A Notes......................... S-27 Class C Certificateholders............ S-32 Class D Certificateholders............ S-32 Closing Date.......................... S-17 Collection Period..................... S-38 Cut-off Date.......................... S-17 Dealer Recourse....................... S-16 Dealers............................... S-17 Defaulted Receivable.................. S-31 Determination Date.................... S-30 Distribution Date..................... S-26 Eligible Investments.................. S-38 Euroclear............................ A-1 Excess Amount......................... S-32 Final Scheduled Distribution Date..... S-21 Financed Vehicles..................... S-17 Global Securities..................... A-1 Indenture Trustee..................... S-17 Initial Yield Supplement Amount....... S-39 Interest Period....................... S-27 Interest Rate......................... S-26
PAGE ---- Liquidated Receivable................. S-31 Net Liquidation Proceeds.............. S-31 Nissan................................ S-26 NMAC.................................. S-16 Non-U.S. Person....................... A-4 Note Factor........................... S-25 Note Underwriters..................... S-45 Note Underwriting Agreement........... S-45 Noteholders' Distributable Amount..... S-34 Noteholders' Interest Carryover Shortfall........................... S-34 Noteholders' Interest Distributable Amount.............................. S-34 Noteholders' Monthly Interest Distributable Amount................ S-34 Noteholders' Monthly Principal Distributable Amount................ S-34 Noteholders' Percentage............... S-34 Noteholders' Principal Carryover Shortfall........................... S-34 Noteholders' Principal Distributable Amount.............................. S-35 Notes................................. S-26 Obligors.............................. S-17 Original Certificate Balance.......... S-33 Owner Trustee......................... S-16 Pass Through Rate..................... S-29 Plan Investor......................... S-44 Pool Balance.......................... S-25 Pool Factor........................... S-25 Principal Distributable Amount........ S-35 Receivables........................... S-17 Redemption Price...................... S-40 Required Rate......................... S-39 Required Yield Supplement Amount...... S-39 Reserve Account....................... S-35 Reserve Account Initial Deposit....... S-36 Sale and Servicing Agreement.......... S-16 Seller................................ S-16 Servicer.............................. S-16 Servicer Default...................... S-28 Servicing Rate........................ S-38 Specified Reserve Account Balance..... S-36 Supplemental Servicing Fee............ S-38 Total Servicing Fee................... S-38 Transfer and Servicing Agreements..... S-37 Trust................................. S-16 Trust Agreement....................... S-16 Underwriters.......................... S-45 Warranty Purchase Payments............ S-31 Yield Supplement Account.............. S-39 Yield Supplement Deposit.............. S-39 Yield Supplemented Receivables........ S-39
S-48 133 TABLE OF CONTENTS PROSPECTUS SUPPLEMENT
PAGE ---- Summary..................................................... S-5 Risk Factors................................................ S-12 The Trust................................................... S-16 Capitalization of the Trust................................. S-17 Paying Agents............................................... S-17 The Owner Trustee and the Indenture Trustee................. S-17 The Receivables............................................. S-17 Maturity and Prepayment Considerations...................... S-21 Delinquencies, Repossessions and Net Losses................. S-21 Weighted Average Life of the Notes.......................... S-23 Note Factors, Certificate Factors and Pool Factors.......... S-25 Use of Proceeds............................................. S-25 The Seller and the Servicer................................. S-25 Financial Condition of Nissan Motor Co., Ltd. .............. S-26 The Notes................................................... S-26 The Certificates............................................ S-29 Distributions on the Notes and the Certificates............. S-30 Subordination; Reserve Account.............................. S-35 Description of the Transfer and Servicing Agreements........ S-37 Material Income Tax Consequences............................ S-43 ERISA Considerations........................................ S-44 Underwriting................................................ S-45 Legal Opinions.............................................. S-47 Index of Terms.............................................. S-48 Annex A: Global Clearance, Settlement and Tax Documentation Procedures................................................ A-1
PROSPECTUS
PAGE ---- Summary of Terms............................................ 3 Risk Factors................................................ 8 Formation of the Trusts..................................... 14 Property of the Trusts...................................... 14 The Receivables............................................. 15 Use of Proceeds............................................. 16 The Trustee................................................. 16 The Seller.................................................. 17 The Servicer................................................ 17 Where You Can Find More Information About Your Securities... 17 Delinquencies, Repossessions and Net Losses................. 18 Weighted Average Life of the Securities..................... 18 Pool Factors and Trading Information........................ 18 The Notes................................................... 20 The Certificates............................................ 25 Material Information Regarding the Securities............... 26 Description of the Transfer and Servicing Agreements........ 38 The Swap Agreement.......................................... 53 Material Legal Aspects of the Receivables................... 57 Material Income Tax Consequences............................ 63 ERISA Considerations........................................ 79 Underwriting................................................ 80 Legal Opinions.............................................. 80 Index of Terms.............................................. 81
134 DEALER PROSPECTUS DELIVERY OBLIGATION. UNTIL [ , ], ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE NOTES, WHETHER OR NOT PARTICIPATING IN THE OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ $[ ] NISSAN AUTO RECEIVABLES [ ]-[ ] OWNER TRUST $[ ] ASSET BACKED NOTES, CLASS A-1 $[ ] ASSET BACKED NOTES, CLASS A-2 $[ ] ASSET BACKED NOTES, CLASS A-3 $[ ] ASSET BACKED NOTES, CLASS B $[ ] ASSET BACKED CERTIFICATES, CLASS C [NISSAN AUTO RECEIVABLES CORPORATION] [NISSAN AUTO RECEIVABLES CORPORATION II], SELLER NISSAN MOTOR ACCEPTANCE CORPORATION, SERVICER UNDERWRITERS [UNDERWRITERS] 135 ANNEX A GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES Except in specified circumstances, the globally offered Class A Certificates (the "Global Securities") will be available only in book-entry form. Investors in the Global Securities may hold those Global Securities through DTC, Clearstream Banking societe anonyme ("Clearstream Banking Luxembourg") or Euroclear System ("Euroclear"). The Global Securities will be tradable as home market instruments in both the European and U.S. domestic markets. Initial settlement and all secondary trades will settle in same-day funds. Secondary market trading between investors holding Global Securities through Clearstream Banking Luxembourg and Euroclear will be conducted in the ordinary way in accordance with their normal rules and operating procedures and in accordance with conventional eurobond practice (i.e., three calendar day settlement). Secondary market trading between investors holding Global Securities through DTC will be conducted according to the rules and procedure applicable to U.S. corporate debt obligations and prior asset-backed securities issues. Secondary cross-market trading between Clearstream Banking Luxembourg or Euroclear and DTC Participants holding securities will be effected on a delivery-against-payment basis through the depositaries of Clearstream Banking Luxembourg and Euroclear (in that capacity) and as DTC Participants. Non-U.S. holders (as described below) of Global Securities will be subject to U.S. withholding taxes unless those holders meet specified requirements and deliver appropriate U.S. tax documents to the securities clearing organizations or their participants. INITIAL SETTLEMENT All Global Securities will be held in book-entry form by DTC in the name of Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will be represented through financial institutions acting on their behalf as direct and indirect Participants in DTC. As a result, Clearstream Banking Luxembourg and Euroclear will hold positions on behalf of their participants through their depositaries, which in turn will hold those positions in accounts as DTC Participants. Investors electing to hold their Global Securities through DTC will follow DTC settlement practice. Investor securities custody accounts will be credited with their holdings against payment in same-day funds on the settlement date. Investors electing to hold their Global Securities through Clearstream Banking Luxembourg or Euroclear accounts will follow the settlement procedures applicable to conventional eurobonds, except that there will be no temporary global security and no "lock-up" or restricted period. Global Securities will be credited to securities custody accounts on the settlement date against payment in same-day funds. SECONDARY MARKET TRADING Since the purchaser determines the place of delivery, it is important to establish at the time of the trade where both the purchaser's and seller's accounts are located to ensure that settlement can be made on the desired value date. TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC Participants will be settled using the procedures applicable to prior asset-backed securities issues in same-day funds. TRADING BETWEEN CLEARSTREAM BANKING LUXEMBOURG AND/OR EUROCLEAR PARTICIPANTS. Secondary market trading between Clearstream Banking Luxembourg Participants or Euroclear Participants will be settled using the procedures applicable to conventional eurobonds in same-day funds. A-1 136 TRADING BETWEEN DTC SELLER AND CLEARSTREAM BANKING LUXEMBOURG OR EUROCLEAR PARTICIPANTS. When Global Securities are to be transferred from the account of a DTC Participant to the account of a Clearstream Banking Luxembourg Participant or a Euroclear Participant, the purchaser will send instructions to Clearstream Banking Luxembourg or Euroclear through a Clearstream Banking Luxembourg Participant or Euroclear Participant at least one business day prior to settlement. Clearstream Banking Luxembourg or Euroclear will instruct the respective Depositary, as the case may be, to receive the Global Securities against payment. Payment will include interest accrued on the Global Securities from and including the last coupon payment date to and excluding the settlement date, on the basis of the actual number of days in that accrual period and a year assumed to consist of 360 days. For transactions settling on the 31st of the month, payment will include interest accrued to and excluding the first day of the following month. Payment will then be made by the respective Depositary to the DTC Participant's account against delivery of the Global Securities. After settlement has been completed, the Global Securities will be credited to the respective clearing system and by the clearing system, in accordance with its usual procedures, to the Clearstream Banking Luxembourg Participant's or Euroclear Participant's account. The securities credit will appear the next day (European time) and the cash debt will be back-valued to, and the interest on the Global Securities will accrue from, the value date (which would be the preceding day when settlement occurred in New York). If settlement is not completed on the intended value date (i.e., the trade fails), the Clearstream Banking Luxembourg or Euroclear cash debt will be valued instead as of the actual settlement date. Clearstream Banking Luxembourg Participants and Euroclear Participants will need to make available to the respective clearing systems the funds necessary to process same-day funds settlement. The most direct means of doing so is to preposition funds for settlement, either from cash on hand or existing lines of credit, as they would for any settlement occurring within Clearstream Banking Luxembourg or Euroclear. Under this approach, they may take on credit exposure to Clearstream Banking Luxembourg or Euroclear until the Global Securities are credited to their accounts one day later. As an alternative, if Clearstream Banking Luxembourg or Euroclear has extended a line of credit to them, Clearstream Banking Luxembourg Participants or Euroclear Participants can elect not to preposition funds and allow that credit line to be drawn upon to finance settlement. Under this procedure, Clearstream Banking Luxembourg Participants or Euroclear Participants purchasing Global Securities would incur overdraft charges for one day, assuming they clear the overdraft when the Global Securities are credited to their accounts. However, interest on the Global Securities would accrue from the value date. Therefore, in many cases the investment income on the Global Securities earned during that one-day period may substantially reduce or offset the amount of those overdraft charges, although this result will depend on each Clearstream Banking Luxembourg Participant's or Euroclear Participant's particular cost of funds. Since the settlement is taking place during New York business hours, DTC Participants can employ their usual procedures for sending Global Securities to the respective European Depositary for the benefit of Clearstream Banking Luxembourg Participants or Euroclear Participants. The sale proceeds will be available to the DTC seller on the settlement date. Thus, to the DTC Participants a cross-market transaction will settle no differently than a trade between two DTC Participants. TRADING BETWEEN CLEARSTREAM BANKING LUXEMBOURG OR EUROCLEAR SELLER AND DTC PURCHASER. Due to time zone differences in their favor, Clearstream Banking Luxembourg Participants and Euroclear Participants may employ their customary procedures for transactions in which Global Securities are to be transferred by the respective clearing system, through the respective Depositary, to a DTC Participant. The seller will send instructions to Clearstream Banking Luxembourg or Euroclear through a Clearstream Banking Luxembourg Participant or Euroclear Participant at least one business day prior to settlement. In these cases, Clearstream Banking Luxembourg or Euroclear will instruct the Relevant Depositary, as appropriate, to deliver the Global Securities to the DTC Participant's account against payment. Payment will include interest accrued on the Global Securities from and including the last coupon payment to and excluding the settlement date on the basis of the actual number of days in that accrual period and a year A-2 137 assumed to consist of 360 days. For transactions settling on the 31st of the month, payment will include interest accrued to and excluding the first day of the following month. The payment will then be reflected in the account of the Clearstream Banking Luxembourg Participant or Euroclear Participant the following day, and receipt of the cash proceeds in the Clearstream Banking Luxembourg Participant's or Euroclear Participant's account would be back-valued to the value date (which would be the preceding day, when settlement occurred in New York). Should the Clearstream Banking Luxembourg Participant or Euroclear Participant have a line of credit with its respective clearing system and elect to be in debt in anticipation of receipt of the sale proceeds in its account, the back valuation will extinguish any overdraft incurred over that one-day period. If settlement is not completed on the intended value date (i.e., the trade fails), receipt of the cash proceeds in the Clearstream Banking Luxembourg Participant's or Euroclear Participant's account would instead be valued as of the actual settlement date. Finally, day traders that use Clearstream Banking Luxembourg or Euroclear and that purchase Global Securities from DTC Participants for delivery to Clearstream Banking Luxembourg Participants or Euroclear Participants should note that these trades would automatically fail on the sale side unless affirmative action were taken. At least three techniques should be readily available to eliminate this potential problem: 1. borrowing through Clearstream Banking Luxembourg or Euroclear for one day (until the purchase side of the day trade is reflected in their Clearstream Banking Luxembourg or Euroclear accounts) in accordance with the clearing system's customary procedures; 2. borrowing the Global Securities in the U.S. from a DTC Participant no later than one day prior to settlement, which would give the Global Securities sufficient time to be reflected in their Clearstream Banking Luxembourg or Euroclear account in order to settle the sale side of the trade; or 3. staggering the value dates for the buy and sell sides of the trade so that the value date for the purchase from the DTC Participant is at least one day prior to the value date for the sale to the Clearstream Banking Luxembourg Participant or Euroclear Participant. MATERIAL U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS A beneficial owner of Global Securities holding securities through Clearstream Banking Luxembourg or Euroclear (or through DTC if the holder has an address outside the U.S.) will be subject to the 30% U.S. withholding tax that generally applies to payments of interest (including original issue discount) on registered debt issued by U.S. Persons (as defined in the accompanying Prospectus), unless (1) each clearing system, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business in the chain of intermediaries between that beneficial owner and the U.S. entity required to withhold tax complies with applicable certification requirements and (2) that beneficial owner takes one of the following steps to obtain an exemption or reduced tax rate: EXEMPTION FOR NON-U.S. PERSONS (FORM W-8BEN). Beneficial owners of Global Securities that are Non-U.S. Persons can generally obtain a complete exemption from the withholding tax by filing a signed Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding). If the information shown on Form W-8 changes, a new Form W-8BEN must be filed within 30 days of that change. EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM W-8ECI). A Non-U.S. Person, including a non-U.S. corporation or bank with a U.S. branch, for which the interest income is effectively connected with its conduct of a trade or business in the United States, can obtain an exemption from the withholding tax by filing Form W-8ECI (Certificate of Foreign Person's Claim for Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States). EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES (FORM W-8BEN). Non-U.S. Persons residing in a country that has a tax treaty with the United States generally can obtain A-3 138 an exemption or reduced tax rate depending on the treaty terms) by filing Form W-8BEN (claiming treaty benefits). Form W-8BEN may be filed by the beneficial owners or their agents. EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a complete exemption from the withholding tax by filing Form W-9 (Payer's Request for Taxpayer Identification Number and Certification). U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The beneficial owner of a Global Security files by submitting the appropriate form to the person through whom it holds (the clearing agency, in the case of persons holding directly on the books of the clearing agency). A Form W-8BEN on which the beneficial owner of a Global Security provides a U.S. taxpayer identification number generally remains in effect until a change in circumstances causes any of the information on the form to be incorrect. A Form W-8ECI and a Form W-8BEN on which a U.S. taxpayer identification is not provided generally remain in effect for three calendar years, absent a change in circumstances causing any information on the form to be incorrect. The term "Non-U.S. Person" means any person who is not a U.S. Person (as defined in the accompanying Prospectus). This summary does not deal with all aspects of U.S. federal income tax withholding that may be relevant to foreign holders of Global Securities. It is suggested that investors consult their tax advisors for specific tax advice concerning their holding and disposing of Global Securities. You should rely only on the information contained in or incorporated by reference into this prospectus supplement or the prospectus. We have not authorized anyone to give you different information. We do not claim the accuracy of the information in this prospectus supplement or the prospectus as of any date other than the date stated on the cover page. We are not offering the notes in any jurisdiction where it is not permitted. A-4 139 PROSPECTUS SUPPLEMENT To Prospectus Dated January 11, 2001 NISSAN AUTO RECEIVABLES - OWNER TRUST [NISSAN AUTO RECEIVABLES CORPORATION] [NISSAN AUTO RECEIVABLES CORPORATION II], Seller NISSAN MOTOR ACCEPTANCE CORPORATION, Servicer $ ASSET BACKED NOTES $ ASSET BACKED CERTIFICATES YOU SHOULD REVIEW CAREFULLY THE FACTORS SET FORTH UNDER "RISK FACTORS" BEGINNING ON PAGE S-16 OF THIS PROSPECTUS SUPPLEMENT AND PAGE 8 IN THE ACCOMPANYING PROSPECTUS. The securities are asset backed securities issued by the trust. The securities are not obligations of Nissan Motor Acceptance Corporation, [Nissan Auto Receivables Corporation] [Nissan Auto Receivables Corporation II], Nissan North America, Inc. or any of their respective affiliates. Neither the securities nor the receivables are insured or guaranteed by any governmental agency. This prospectus supplement may be used to offer and sell the securities only if it is accompanied by the prospectus dated January 11, 2001. - - The trust will issue seven classes of securities. - - Only the securities described on the following table are being offered by this prospectus supplement and the prospectus. - - The securities accrue interest from , .
CLASS A NOTES ----------------------------------------- A-1 NOTES A-2 NOTES A-3 NOTES CLASS B NOTES CLASS C CERTIFICATES ----------- ----------- ----------- -------------- -------------------- Principal Amount........... $ $ $ $ $ Interest Rate.............. % % % % % Targeted Scheduled Distribution Date(1)................... N/A N/A Final Scheduled Distribution Date...................... Price to Public(2)......... % % % % % Underwriting Discount(2)... % % % % % Proceeds to Seller(2)...... $ $ $ $ $
- ---------------------- (1) The trust expects to pay principal on each subclass of Class A Notes on its targeted scheduled distribution date. The trust's ability to pay principal on the targeted final payment date on the Class A Notes is dependent on its ability to sell Variable Pay Term Notes in the future as described in this prospectus supplement. (2) Total price to the public is $[ ], total underwriting discount is $[ ] and total proceeds to the Seller are [ ]. CREDIT ENHANCEMENT - - Reserve account, with an initial deposit of $[ ]. - - The Class B Notes are subordinated to the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes, and the certificates are subordinated to the notes to the extent described herein. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE SECURITIES OR DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. [The trust has applied to list the securities on the Luxembourg Stock Exchange and for listing and permission to deal in the securities in the Stock Exchange of Hong Kong Limited.] [UNDERWRITERS] The date of this prospectus supplement is . 140 IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS Information about the securities is provided in two separate documents that progressively provide varying levels of detail: (1) the accompanying prospectus, which provides general information, some of which may not apply to a particular class of securities, including your class; and (2) this prospectus supplement, which describes the specific terms of your class of securities. IF THE DESCRIPTION OF THE TERMS OF YOUR SECURITIES VARIES BETWEEN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT. Cross-references are included in this prospectus supplement and in the accompanying prospectus which direct you to more detailed descriptions of a particular topic. You can also find references to key topics in the Table of Contents on the back cover of this prospectus supplement. You can find a listing of the pages where capitalized terms used in this prospectus supplement are defined under the caption "Index of Terms" beginning on page S-59 in this prospectus supplement and under the caption "Index of Terms" beginning on page 81 in the accompanying prospectus. You should rely on the information contained in or incorporated by reference into this prospectus supplement or accompanying prospectus. We have not authorized anyone to give you different information. We do not claim the accuracy of the information in this prospectus supplement or the accompanying prospectus as of any dates other than the dates stated on the respective cover pages. We are not offering the securities in any jurisdiction where it is not permitted. S-2 141 [GRAPHIC-SUMMARY OF TRANSACTION PARTIES] S-3 142 [GRAPHIC -- SUMMARY OF MONTHLY DEPOSITS TO AND WITHDRAWALS FROM ACCOUNTS] S-4 143 SUMMARY The following summary contains a brief description of the Notes and the Certificates. You will find a detailed description of the terms of the Offering of the Notes and the Certificates following this summary. You should read carefully this entire document and the accompanying Prospectus to understand all of the terms of the Offering of the Notes and the Certificates. You should consider both documents when making your investment decision. ISSUER Nissan Auto Receivables Owner Trust - . The trust will be established by a trust agreement dated as of , . SELLER [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II]. SERVICER Nissan Motor Acceptance Corporation. INDENTURE TRUSTEE [ ]. OWNER TRUSTEE [ ]. OFFERED NOTES The offered notes consist of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class B Notes, as described on the cover page. OFFERED CERTIFICATES The offered certificates consist of the Class C Certificates, as described on the cover page. The certificates will represent fractional undivided interests in the trust. Payments of interest on and principal of the certificates are subordinated to the payments of interest on and principal of the notes as described herein. OTHER SECURITIES On the closing date, the trust is also issuing a Variable Pay Term Note in a principal amount of $[ ] and the Class D Certificates in an aggregate principal amount of $[ ]. The trust expects to issue additional Variable Pay Term Notes, which are described below, on the targeted scheduled distribution date for each subclass of the Class A Notes. If issued, the proceeds from the additional Variable Pay Term Notes will be applied to principal payments on the subclass or subclasses of Class A Notes targeted for payment on that date. The Class D Certificates will initially be retained by the seller. The Class D Certificates and the Variable Pay Term Notes are not being offered by this prospectus supplement. RECEIVABLES The trust's main source of funds for making payments on the notes and the certificates will be collections on its motor vehicle retail installment sale contracts, otherwise known as the receivables, that will be transferred by Nissan Motor Acceptance Corporation to the seller and then by the seller to the trust in exchange for the notes and the certificates. S-5 144 The principal balance of the receivables as of [ ], referred to as the "cut-off date," was $[ ]. As of the cut-off date, the receivables had the following characteristics: Number of Receivables............................... Average Principal Balance........................... Approximate Weighted Average Annual Percentage Rate................................................ Approximate Weighted Average Remaining Term to Maturity............................................ Approximate Weighted Average Original Term to Maturity............................................
YOU SHOULD REFER TO "THE RECEIVABLES" IN THIS PROSPECTUS SUPPLEMENT FOR MORE INFORMATION ON THE RECEIVABLES. CLOSING DATE On or about [ ]. TERMS OF THE NOTES DISTRIBUTION DATES: Interest and principal will generally be payable on the 15th day of each month, unless the 15th day is not a business day, in which case the payment will be made on the following business day. The first payment will be on [ ]. PER ANNUM INTEREST RATES: The notes will have fixed rates of interest as follows:
CLASS INTEREST RATE ----- ------------- A-1................................. [ ]% A-2................................. [ ]% A-3................................. [ ]% B................................... [ ]%
INTEREST PERIODS: Interest on the notes will accrue in the following manner:
FROM TO DAY COUNT CLASS (INCLUDING) (EXCLUDING) CONVENTION ----- ----------- ----------- ---------- A-1..... [actual/360] [30/360] A-2..... 30/360 A-3..... 30/360 B....... 30/360
PRINCIPAL: - AMOUNTS ALLOCATED TO THE NOTES: For notes that receive payments of principal on each distribution date, the principal will be payable on each distribution date in an amount equal to the excess, if any, of (x) the sum of the principal balances of the notes and the certificates as of the close of business on the prior distribution date over (y) the principal balance of the receivables as of the end of the related collection period (excluding certain non-collectible or defaulted receivables and receivables purchased by the servicer or repurchased by the seller due to certain breaches). S-6 145 Principal payments on the notes as described above will be made from all available amounts after the servicing fee has been paid, certain advances have been reimbursed and after payment of interest on the notes. - ORDER OF PAYMENT AMONG CLASSES: The trust will allocate all payments of principal to the Variable Pay Term Note issued at closing until the earlier of payment in full and the first targeted scheduled distribution date. The trust will not make any payments of principal on any subclass of Class A Notes until its targeted scheduled distribution date. On the targeted scheduled distribution date for each subclass of Class A Notes, the trust will pay, to the extent of available funds, the entire outstanding principal balance of that subclass of Class A Notes. The trust expects to issue a new Variable Pay Term Note on each targeted scheduled distribution date in an amount sufficient to pay the related subclass of Class A Notes in full. If this occurs, the trust will pay principal sequentially to the Variable Pay Term Notes until paid in full and then sequentially to the Class B Notes, Class C Certificates and Class D Certificates until each such class is paid in full. - FAILURE TO MAKE PAYMENT ON TARGETED SCHEDULED DISTRIBUTION DATE: The failure of the trust to pay any subclass of Class A Notes in full on its targeted scheduled distribution date alone will not constitute an event of default. However, if any subclass of Class A Notes is not paid in full on its targeted scheduled distribution date, thereafter, amounts available to make principal payments on the notes will be allocated between the Class A Notes and the Variable Pay Term Notes pro rata based on the total principal amount of all Class A Notes outstanding and the total principal amount of all Variable Pay Term Notes outstanding. The Class A Note portion of such principal payments will be applied to the subclass of Class A Notes which was not paid on its targeted scheduled distribution date and the Variable Pay Term Note portion will be applied to the Variable Pay Term Notes, sequentially, according to their earliest date of issuance. If more than one subclass of Class A Notes are not paid in full on their respective targeted scheduled distribution dates or if the interest rate swap acquired in connection with the Variable Pay Term Notes is terminated, on each distribution date thereafter, amounts available to make principal payments on the notes will be allocated between the Class A Notes and the Variable Pay Term Notes pro rata based on the total principal amount of all Class A Notes outstanding and the total principal amount of all Variable Pay Term Notes outstanding. Among the Class A Notes, principal payments will be applied to the subclasses sequentially according to the lowest numerical designation, and among the Variable Pay Term Notes, principal payments will be applied sequentially according to the earliest date of issuance, until all the Class A Notes and the Variable Pay Term Notes are paid in full. S-7 146 - DISTRIBUTIONS UPON EVENT OF DEFAULT: After the occurrence of an event of default and an acceleration of the notes, available amounts (after the servicing fee has been paid and certain advances have been reimbursed) will be applied to pay interest and principal [(1) first, on the Class A-1 Notes and the Variable Pay Term Notes on a pro rata basis (x) with respect to interest, based on the respective aggregate amounts of interest due to those classes of notes and (y) with respect to principal, based on the respective outstanding principal balances of those classes of notes, until the outstanding principal balances of those classes of notes have been paid in full, (2) second, on the Class A-2 Notes and the Class A-3 Notes on a pro rata basis (x) with respect to interest, based on the respective aggregate amounts of interest due to those classes of notes and (y) with respect to principal, based on the respective outstanding principal balances of those classes of notes, until the outstanding principal balances of those classes of notes have been paid in full,] [(1) first, on each subclass of the Class A Notes and the Variable Pay Term Notes on a pro rata basis (x) with respect to interest, based on the respective aggregate amounts of interest due to those classes of notes and (y) with respect to principal, based on the respective outstanding principal balances of those classes of notes, until the outstanding principal balances of those notes have been paid in full,] [(3) third,][(2) second,] to the Class B Notes until payment in full of principal and interest on the Class B Notes, [(3) third,][(4) fourth,] to the Class C Certificates until payment in full of principal and interest on the Class C Certificates, and [(4) fourth,][(5) fifth,] to the Class D Certificates until payment in full of principal and interest on the Class D Certificates.. - TARGETED SCHEDULED DISTRIBUTION DATES: The targeted scheduled distribution date for each subclass of Class A Notes is listed on the cover page of this prospectus supplement, or if such day is not a business day, the next succeeding business day. The trust expects that no payments of principal will be made on any subclass of Class A Notes until its targeted scheduled distribution date. The trust expects that each subclass of Class A Notes will be paid in full on its targeted scheduled distribution date from the proceeds of issuance of a Variable Pay Term Note and other funds available. Failure to pay a subclass of Class A Notes in full on its targeted scheduled distribution date will not constitute an event of default under the indenture and in such event such subclass will receive monthly allocations of principal until paid in full. S-8 147 FINAL SCHEDULED DISTRIBUTION DATES: The trust must pay the outstanding principal balance of each class of notes by its final scheduled distribution date as follows:
FINAL SCHEDULED CLASS DISTRIBUTION DATE ----- ----------------- A-1......................................... [ ] A-2......................................... [ ] A-3......................................... [ ] B........................................... [ ]
You should refer to "The Notes -- Payments of Principal" and "Distributions on the Notes and the Certificates -- Calculation of Available Amounts" in this Prospectus Supplement for more detailed information regarding payments of principal. TERMS OF THE CERTIFICATES DISTRIBUTION DATES: Interest and principal will generally be payable on the 15th day of each month, unless the 15th day is not a business day, in which case the payment will be made on the following business day. The first payment will be on [ ]. PER ANNUM INTEREST RATES: The certificates will have the following pass through rates:
PASS CLASS THROUGH RATE ----- ------------ C.............................................. [ ]% D.............................................. [ ]%
INTEREST PERIODS: Interest on the certificates will accrue in the following manner:
FROM TO DAY COUNT CLASS (INCLUDING) (EXCLUDING) CONVENTION ----- ----------- ----------- ------------ C..................... [30/360] D..................... [30/360]
PRINCIPAL: AMOUNTS ALLOCATED TO THE CERTIFICATES: Principal of the certificates will be payable generally in an amount equal to the certificateholders' percentage of the principal distributable amount. Principal payments on the certificates as described above will be made from all available amounts after the following amounts have been distributed: 1. the servicing fee and certain advances; 2. swap payments; S-9 148 3. interest and principal on the notes; and 4. interest on the certificates. - ORDER OF PAYMENT AMONG CLASSES: No principal payments will be made on the Class D Certificates until the Class C Certificates have been paid in full. - FINAL SCHEDULED DISTRIBUTION DATES: The trust must pay the outstanding principal balance of each class of certificates by its final scheduled distribution date as follows:
FINAL SCHEDULED CLASS DISTRIBUTION DATE ----- ----------------- C......................................... [ ] D......................................... [ ]
YOU SHOULD REFER TO "THE CERTIFICATES -- PAYMENTS OF PRINCIPAL" AND "DISTRIBUTIONS ON THE NOTES AND THE CERTIFICATES -- CALCULATION OF AVAILABLE AMOUNTS" IN THIS PROSPECTUS SUPPLEMENT FOR MORE DETAILED INFORMATION REGARDING PAYMENTS OF PRINCIPAL. INTEREST RATE SWAPS On the closing date, the trust will enter into an interest rate swap with as the swap counterparty that will have an initial notional amount equal to the principal amount of the Variable Pay Term Note issued on the closing date. The notional amount will increase by the principal amount of any additional Variable Pay Term Notes issued on targeted scheduled distribution dates and will decrease by any principal payments on the Variable Pay Term Notes. Under the interest rate swap agreements, on each distribution date, the trust will be obligated to pay to the swap counterparty a fixed monthly payment on a notional amount equal to the aggregate outstanding balance of the Variable Pay Term Notes, and the swap counterparty will be obligated to pay floating rate monthly payments to the trust on the same notional amount. The net amount owed by the trust to the swap counterparty on a distribution date, if any, is the "Swap Payment," and the net amount owed by the swap counterparty to the trust, if any, is the "Swap Receipt." The obligations of the trust under the interest rate swap agreement are secured under the indenture and the obligations of the swap counterparty are unsecured. If the swap counterparty's long-term senior unsecured debt ceases to be rated at a level acceptable to Standard & Poor's Ratings Group and Moody's Investors Service, Inc., the swap counterparty will be obligated to post collateral or establish other arrangements satisfactory to those rating agencies to secure its obligations under the interest rate swap agreement or arrange for an eligible substitute swap counterparty satisfactory to the trust. YOU SHOULD REFER TO "THE NOTES -- INTEREST RATE SWAP" IN THIS PROSPECTUS SUPPLEMENT FOR MORE DETAILED INFORMATION REGARDING THE INTEREST RATE SWAP. S-10 149 OPTIONAL PURCHASE The notes and the certificates will be paid in full on any distribution date on which the servicer exercises its option to purchase the receivables. The servicer may purchase the receivables when the outstanding aggregate principal balance of the receivables declines to 10% or less of the original aggregate principal balance of the receivables on the cut-off date. CREDIT ENHANCEMENT The credit enhancement of the offered notes and the offered certificates will be the following: 1. CLASS A-1 NOTES, CLASS A-2 NOTES, CLASS A-3 NOTES AND VARIABLE PAY TERM NOTES: the subordination of the Class B Notes and the certificates; 2. CLASS B NOTES: the subordination of the certificates; 3. CLASS C CERTIFICATES: the subordination of the Class D Certificates; and 4. ALL CLASSES OF NOTES AND THE CLASS C CERTIFICATES: the reserve account. The credit enhancement is intended to protect you against losses and delays in payments on your securities by absorbing losses on the receivables and other shortfalls in cash flows. The Class B Notes, which have an initial principal balance of $[ ] which represents [ ]% of the initial principal balance of all the notes, will not receive any principal distributions until the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes have been paid or any interest distributions until all interest owing to the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes have been paid. The certificates have an initial principal balance of $[ ] and represent [ ]% of the initial principal balance of all the notes and the certificates. The certificates will not receive any principal distributions until all of the notes have been paid in full. The certificates will not receive any interest payments until all required principal and interest payments have been made on the notes. ACCUMULATION ACCOUNT If on any distribution date no Variable Pay Term Notes are outstanding and the Class A Notes remain outstanding but no Class A Notes are outstanding for which the targeted scheduled distribution date has occurred, amounts which would otherwise be allocable to principal payments shall instead be deposited into the accumulation account. No funds will be deposited in the accumulation account (i) on any distribution date after the notes have been accelerated following the occurrence of an event of default until all events of default have been cured or waived as provided in the indenture, (ii) on any distribution date after the Class A Notes and the Variable Pay Term Notes have been paid in full or (iii) if more than one subclass of Class A Notes have not been paid in full on their respective targeted scheduled distribution dates. S-11 150 The amounts on deposit in the accumulation account will be invested in permitted investments. If a deposit is made into the accumulation account, the required balance of the reserve account will be increased to compensate in part for any negative carry between the interest earned on the permitted investments and the interest payable on the notes and certificates and the base servicing fee. RESERVE ACCOUNT On each distribution date, the trust will use funds in the reserve account for distribution to the noteholders and the holders of the Class C Certificates to cover any shortfalls in interest and principal required to be paid on the notes and the Class C Certificates. The reserve account will be pledged to the indenture trustee to secure the notes and the Class C Certificates but will not be an asset of the trust. If the principal balance of a class of notes or the Class C Certificates is not paid in full on the related final scheduled distribution date, the indenture trustee will withdraw amounts from the reserve account (if available) to pay that class in full. Amounts on deposit in the reserve account will not be available, however, on the targeted scheduled distribution date for any subclass of Class A Notes to the extent that the proceeds, if any, from the sale of additional Variable Pay Term Notes together with collections on the receivables are insufficient to pay that subclass of Class A Notes in full. The sale and servicing agreement sets forth the specified reserve account balance, which is the amount that is required to be on deposit in the reserve account. On the closing date, the seller will deposit $[ ] into the reserve account, which is approximately [ ]% of the outstanding principal balance of the receivables as of the cut-off date. The amount required to be on deposit in the reserve account at the close of business on any distribution date will be $[ ]. If however, on any distribution date certain loss or delinquency ratios relating to the receivables (and described under "Subordination; Reserve Account") are exceeded, then the reserve account balance of such distribution date (and for each succeeding distribution date until the relevant percentage equivalent ratios have been achieved and maintained for the required period) will be the greater of (1) $[ ] and (2) [ ]% of the outstanding principal balance of the notes and the Class C Certificates as of the preceding distribution date (after giving effect to payments of principal made on such date). On each distribution date, after making required payments to the servicer and to the noteholders and holders of the Class C Certificates, the trust will make a deposit into the reserve account to fund and maintain the specified reserve account balance. In addition, if a deposit is to be made into the accumulation account on any distribution date or was made on any prior distribution date, the specified reserve account balance will be increased to compensate in part for any negative carry between the S-12 151 interest rates payable on the notes and certificates (and the base servicing fee) and the interest rate payable on permitted investments in the accumulation account in an amount equal to the product of (i) the amount remaining on deposit in the accumulation account after giving effect to any withdrawals or deposits on such distribution date, (ii) a fraction, the numerator of which is the number of distribution dates after such distribution date through and including the next distribution date that is a targeted scheduled distribution date for any subclass of the Class A Notes and the denominator of which is 12, and (iii) the weighted average interest rate of the securities offered pursuant to this prospectus supplement minus [2.50]%. YIELD SUPPLEMENT ACCOUNT On each distribution date, the trust will use funds on deposit in the yield supplement account to cover, for each receivable, the excess, if any, of (x) one month's interest that would accrue on the principal balance of that receivable at a rate equal to the sum of (1) the [interest rate on the Class B Notes] [weighted average interest rate of the securities offered pursuant to this prospectus supplement], and (2) the servicing fee rate of 1.00% over (y) one month's interest that accrued on that receivable at the interest rate on that receivable. On the closing date, the seller will [deposit] [make a capital contribution to the trust by depositing] $[ ] in cash into the yield supplement account. That amount is the amount that is estimated to be required to be withdrawn from the yield supplement account on subsequent distribution dates in accordance with the provisions of the preceding paragraph. [In addition, the seller will [pledge] [assign] other receivables or assets (including vehicle lease contracts) to the trust.] Neither the seller nor the servicer will make any other deposit to the yield supplement account on or after the closing date. The yield supplement account [will][will not] be an asset of the trust. TAX STATUS Subject to the important considerations described in this prospectus supplement and the prospectus, O'Melveny & Myers LLP, special tax counsel to the trust, will deliver its opinion that: 1. the Class A Notes will be characterized as debt for tax purposes; 2. the Class B Notes should be treated as debt for tax purposes; and 3. the trust will not be characterized as an association or a publicly traded partnership taxable as a corporation for federal income and California income and franchise tax purposes. If you purchase the notes, you will agree to treat the notes as debt. If you purchase the certificates, you will agree to treat the trust (1) as a partnership in which the certificateholders are partners or (2) if you are the sole beneficial owner of the certificates, as a "disregarded entity," for federal income and California income and franchise tax purposes. S-13 152 YOU SHOULD REFER TO "MATERIAL INCOME TAX CONSEQUENCES" IN THIS PROSPECTUS SUPPLEMENT AND "MATERIAL INCOME TAX CONSEQUENCES -- TAX TREATMENT OF OWNER TRUSTS" IN THE ACCOMPANYING PROSPECTUS. ERISA CONSIDERATIONS The notes are generally eligible for purchase by employee benefit plans and individual retirement accounts, subject to those considerations discussed under "ERISA Considerations" in this prospectus supplement and in the accompanying prospectus. The certificates may not be acquired by an employee benefit plan or by an individual retirement account. YOU SHOULD REFER TO "ERISA CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT AND IN THE ACCOMPANYING PROSPECTUS. IF YOU ARE A BENEFIT PLAN FIDUCIARY CONSIDERING PURCHASE OF THE SECURITIES YOU SHOULD, AMONG OTHER THINGS, CONSULT WITH YOUR COUNSEL IN DETERMINING WHETHER ALL REQUIRED CONDITIONS HAVE BEEN SATISFIED. [ELIGIBILITY FOR PURCHASE BY The Class A-1 Notes will be eligible for purchase MONEY by money market funds under Rule 2a-7 under the MARKET FUNDS Investment money market funds under Rule 2a-7 under the Investment Company Act of 1940, as amended. A money market fund should consult its legal advisers regarding the eligibility of such notes under Rule 2a-7 and whether an investment in such notes satisfies such fund's investment policies and objectives.] [LISTING The trust has applied to list the Class A-1 Notes on the Luxembourg Stock Exchange and The Stock Exchange of Hong Kong Limited. The trust has requested that the listings be made effective on or about .] MINIMUM DENOMINATIONS The securities will be issued only in denominations of $1,000 or more. Securities will be issued in multiples of $1 for amounts in excess of $1,000. REGISTRATION OF THE You will generally hold your interests in the SECURITIES securities through The Depository Trust Company in the United States, or Clearstream Banking societe anonyme or the Euroclear System in Europe or Asia. This is referred to as book-entry form. You will not receive a definitive certificate representing your securities except under limited circumstances. We expect the securities to be delivered through The Depository Trust Company, Clearstream Banking societe anonyme and the Euroclear System against payment in immediately available funds on or about . FOR MORE DETAILED INFORMATION, YOU SHOULD REFER TO "ANNEX A: GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES" IN THIS PROSPECTUS SUPPLEMENT AND "CERTAIN INFORMATION REGARDING THE SECURITIES -- BOOK-ENTRY REGISTRATION" IN THE ACCOMPANYING PROSPECTUS. S-14 153 RATINGS On the closing date, each class of offered securities will receive the following ratings from Standard & Poor's Ratings Group and Moody's Investors Service, Inc.:
CLASS STANDARD & POOR'S MOODY'S ----- ----------------- ------- A-1................................. [ ] [ ] A-2................................. [ ] [ ] A-3................................. [ ] [ ] B................................... [ ] [ ] C................................... [ ] [ ]
S-15 154 RISK FACTORS YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS (AND THE FACTORS SET FORTH UNDER "RISK FACTORS" IN THE ACCOMPANYING PROSPECTUS) IN DECIDING WHETHER TO PURCHASE THE SECURITIES OF ANY CLASS. THE FAILURE TO SELL ADDITIONAL The trust's ability to pay the full amount of VARIABLE PAY TERM NOTES WILL any subclass of Class A Notes on its targeted RESULT IN THE CLASS A NOTES scheduled distribution date will depend on NOT BEING PAID IN FULL ON whether the trust is able to sell a Variable Pay THEIR TARGETED SCHEDULED Term Note on that targeted scheduled DISTRIBUTION DATES. distribution date in the amount necessary, together with other funds available, to pay such subclass of Class A Notes in full. To the extent a Variable Pay Term Note is not issued by the trust on a targeted scheduled distribution date, it is highly unlikely that holders of any Class A Notes targeted for payment on that date will be paid in full on that date. The trust will not be able to issue a Variable Pay Term Note unless all of the conditions to issuance are met and a purchaser agrees to the purchase. Although NMAC, as the administrator, will use reasonable efforts to find purchasers, no person or entity is obligated to purchase a Variable Pay Term Note or any interest therein. Accordingly, there is no assurance that any Variable Pay Term Notes (other than the Variable Pay Term Note issued on the closing date) will be issued and sold or that the proceeds from sale of Variable Pay Term Notes on targeted scheduled distribution dates will be sufficient to pay a subclass of Class A Notes in full on its targeted scheduled distribution date. Although interest will continue to accrue on all outstanding subclasses of Class A Notes at their respective interest rates, holders of the Class A Notes may not receive the full principal payment on their respective targeted scheduled distribution dates and may lose the opportunity to reinvest such amounts at more favorable rates until the principal payments are received after their targeted scheduled distribution dates. THE ISSUANCE OF THE VARIABLE The Variable Pay Term Notes that are issued on PAY TERM NOTES MAY REDUCE targeted scheduled distribution dates will bear THE AMOUNT OF FUNDS AVAILABLE interest at floating rates with spreads to LIBOR FOR DISTRIBUTION TO OTHER that will be determined at the time of issuance. NOTES AND CERTIFICATES. Although such spreads cannot exceed % and an interest rate swap with a notional amount equal to the principal balance of such outstanding Variable Pay Term Notes must be in effect, the issuance of Variable Pay Term Notes at rates (after giving effect to the fixed rate payable by the trust under the interest rate swap) higher than the interest rates of the related subclasses of Class A Notes that are being repaid will increase the amount of interest payable by the trust. Since interest payments on the Variable Pay Term Notes are paid pro rata with interest payments on the Class A Notes and are senior to payments of interest and principal on the Class B Notes and the Class C Certificates, the issuance of additional Variable Pay Term Notes at rates higher than the interest rates of the related subclass of Class A Notes would reduce the amount of funds available for distribution to the other notes and certificates. This could result in a delay in or loss of payments on your notes or certificates or in a reduction of their ratings. S-16 155 RISKS ASSOCIATED WITH THE The trust will enter into an interest rate swap INTEREST RATE SWAP. because the receivables owned by the trust bear interest at a fixed rate while the Variable Pay Term Notes will bear interest at a floating rate based on one-month LIBOR. The trust will use payments made by the swap counterparty to help make interest payments on the Variable Pay Term Notes. During those periods in which the floating LIBOR-based rate payable by the swap counterparty is substantially greater than the fixed rate payable by the trust, the trust will be more dependent on receiving payments from the swap counterparty in order to make interest payments on the Variable Pay Term Notes without using amounts that would otherwise be paid as principal on the notes and certificates. If the swap counterparty fails to pay the net amount due, you may experience delays and/or reductions in the interest and principal payments on your notes and certificates. On the other hand, during those periods in which the floating rate payable by the swap counterparty is less than the fixed rate payable by the trust, the trust will be obligated to make payments to the swap counterparty. The swap counterparty will have a claim on the assets of the trust for the net amount due, if any, to the swap counterparty under the interest rate swap. The swap counterparty's claim for payments other than termination payments will be higher in priority than payments on the notes and the certificates and for termination payments will be pro rata with interest on the Class A Notes and the Variable Pay Term Notes. If there is shortage of funds available on any distribution date, you may experience delays and/or reductions in interest and principal payments on your notes and certificates. The interest rate swap generally may not be terminated except upon failure of either party to make payments when due, insolvency of either party, illegality, or a default due to failure of the counterparty to post collateral, assign to an eligible counterparty or take other remedial action if the counterparty's debt ratings drop below the levels acceptable to Standard & Poor's Ratings Group and Moody's Investors Service, Inc. Depending on the reason for the termination, a termination payment may be due to the trust or to the swap counterparty. The amount of any termination payment will be based on the market value of the interest rate swap. Any termination payment could, if market interest rates and other conditions have changed materially, be substantial. Any payment due to the interest rate swap counterparty would otherwise be available to make payments on the notes and the certificates and would be paid from available funds pari passu with payments of interest on the Class A Notes and the Variable Pay Term Notes. If the counterparty fails to make a termination payment owed to the trust, the trust may not be able to enter into a replacement interest rate swap agreement and to the extent the interest rates on the Variable Pay Term Notes exceed the fixed rate the trust had been required to pay the counterparty under the interest rate swap, the amount available to pay principal of and interest on the notes and certificates will be reduced. If the interest rate swap is terminated and no replacement S-17 156 is entered into, you may experience delays and/or reductions in interest and principal payments on your notes and certificates. YOU MAY HAVE DIFFICULTY The trust will not list the securities on any SELLING YOUR SECURITIES securities exchange. Therefore, in order to sell AND/OR OBTAINING YOUR your securities, you must first locate a willing DESIRED PRICE DUE TO THE purchaser. In addition, currently, no secondary ABSENCE OF A SECONDARY market exists for the securities. We cannot MARKET. assure you that a secondary market will develop. The underwriter intends to make a secondary market for the securities by offering to buy the certificates from investors that wish to sell. However, the underwriter is not obligated to offer to buy the securities and it may stop making offers at any time. THE CLASS B NOTES AND THE If you buy the Class B Notes, you will bear a CLASS C CERTIFICATES ARE greater risk than the holders of the Class A-1 SUBJECT TO GREATER CREDIT Notes, the Class A-2 Notes, the Class A-3 Notes RISK BECAUSE THE CLASS B and the Variable Pay Term Notes because payments NOTES ARE SUBORDINATE TO THE of interest and principal on your notes are CLASS A-1 NOTES, THE CLASS subordinated to payments of interest and A-2 NOTES, THE CLASS A-3 principal on the Class A-1 Notes, the Class A-2 NOTES AND THE VARIABLE PAY Notes, the Class A-3 Notes and the Variable Pay TERM NOTES AND THE CLASS C Term Notes to the extent described below. CERTIFICATES ARE SUBORDINATE TO THE NOTES. Interest payments on the Class B Notes on each distribution date will be subordinated to servicing fees, swap payments and termination payments payable to the swap counterparty, and interest payments on the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Variable Pay Term Notes. Principal payments on the Class B Notes will be subordinated to principal payments on the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Variable Pay Term Notes. In other words, no interest will be paid on the Class B Notes unless interest owing to the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Variable Pay Term Notes has been paid in full, and no principal will be paid on the Class B Notes until principal of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Variable Pay Term Notes has been paid in full. If you buy the Class C Certificates, you will bear a greater credit risk than the notes because payments of interest on and principal of your certificates are subordinated to payments of interest and principal on the notes. Interest payments on your certificates on each distribution date will be subordinated to servicing fees and interest and principal payments on the notes. In other words, no interest will be paid on your certificates on any distribution date until all required interest and principal payments on the notes on that date have been made. In addition, principal payments on your certificates will be subordinated to principal payments on the notes since no principal will be paid on your certificates until after all principal on the notes due has been paid in full. In addition, you will not receive any principal payments on any distribution date until all principal and interest on each class of notes on that date have been paid. S-18 157 GEOGRAPHIC CONCENTRATION OF As of , Nissan Motor Acceptance THE STATES OF ORIGINATION OF Corporation's records indicate that the addresses THE RECEIVABLES MAY INCREASE of the originating dealers of the receivables THE RISK OF LOSS ON YOUR were in the following states: INVESTMENT.
PERCENTAGE OF TOTAL PRINCIPAL BALANCE ------------------- ...................................... % ...................................... % ...................................... % ...................................... % ...................................... %
No other state, by the addresses of the originating dealers, constituted more than 5% of the balance of the receivables as of [ ]. Economic conditions or other factors affecting these states in particular could adversely affect the delinquency, credit loss or repossession experience of the trust. OCCURRENCE OF EVENTS OF Payment defaults or the insolvency or dissolution DEFAULT UNDER THE INDENTURE of the seller may result in prepayment of the MAY RESULT IN INSUFFICIENT notes and the certificates, which may result in FUNDS TO MAKE PAYMENTS ON losses under the securities. If the trust fails YOUR CERTIFICATES. to pay principal of the notes when due, or fails to pay interest on the notes within five days of the due date, the indenture trustee or the noteholders may declare the entire amount of the notes to be due immediately. If this happens, the holders of a majority in outstanding principal amount of the notes may direct the indenture trustee to sell the receivables and prepay the notes. After the trust pays the notes in full with the proceeds of the sale of the receivables, the trust will distribute any remaining trust assets to pay the certificates. There may not be sufficient funds to pay the certificates in full under these circumstances. The certificateholders will not have any right to direct the indenture trustee or to consent to any action until the notes are paid in full. See "The Notes -- The Indenture -- Events of Default; Rights Upon Event of Default" in the accompanying prospectus. A similar result will occur if the seller becomes insolvent or is dissolved. CERTIFICATEHOLDERS MAY NOT The trust will pledge the property of the trust EXERCISE ANY RIGHTS WITH to the indenture trustee as collateral for the RESPECT TO THE COLLATERAL payment of the notes. As a result, the indenture OR THE SERVICER UNTIL THE trustee, acting at the direction of the holders NOTES ARE PAID IN FULL. of a majority in outstanding principal amount of the notes, has the power to direct the trust to take specified actions in connection with the property of the trust. The holders of a majority of the notes, or the indenture trustee acting on behalf of the holders of notes, will also have the right under limited circumstances to terminate the servicer without considering how this will affect the certificateholders. If you buy the certificates, you will not be able to remove the servicer until the notes have been paid in full. In addition, the holders of at least a majority in outstanding principal amount of the notes will have the right to waive specified events of default involving the servicer, without considering how this will affect you as a certificateholder. See "Description of the Transfer and Servicing Agreements -- Rights Upon Servicer Default" and "-- Waiver of Past Defaults" in the accompanying prospectus. S-19 158 PAID-AHEAD SIMPLE INTEREST If an obligor on a simple interest contract makes CONTRACTS MAY AFFECT THE a payment on the contract ahead of schedule (for WEIGHTED AVERAGE LIFE OF example, because the obligor intends to go on THE CERTIFICATES. vacation), the weighted average life of the certificates could be affected. This is because the additional scheduled payments will be treated as a principal prepayment and applied to reduce the principal balance of the related contract and the obligor will generally not be required to make any scheduled payments during the period for which it was paid-ahead. During this paid-ahead period, interest will continue to accrue on the principal balance of the contract, as reduced by the application of the additional scheduled payments, but the obligor's contract would not be considered delinquent during this period. While the servicer may be required to make interest advances during this period, no principal advances will be made. Furthermore, when the obligor resumes his required payments, the payments so paid may be insufficient to cover the interest that has accrued since the last payment by the obligor. This situation will continue until the regularly scheduled payments are once again sufficient to cover all accrued interest and to reduce the principal balance of the contract. The payment by the trust of the paid-ahead principal amount on the notes will generally shorten the weighted average life of the certificates. However, depending on the length of time during which a paid-ahead simple interest contract is not amortizing as described above, the weighted average life of the certificates may be extended. In addition, to the extent the servicer makes advances on a paid-ahead simple interest contract which subsequently goes into default, the loss on this contract may be larger than would have been the case had advances not been made because liquidation proceeds for the contract will be applied first to reimburse the servicer its advances. NMAC's portfolio of retail installment sale contracts has historically included simple interest contracts which have been paid-ahead by one or more scheduled monthly payments. There can be no assurance as to the number of contracts in the trust which may become paid-ahead simple interest contracts as described above or the number or the principal amount of the scheduled payments which may be paid-ahead. BECAUSE THE SECURITIES ARE IN Because the securities will be issued in BOOK-ENTRY FORM, YOUR RIGHTS book-entry form, you will be required to hold CAN ONLY BE EXERCISED your interest in the certificates through The INDIRECTLY. Depository Trust Company in the United States, or Clearstream Banking societe anonyme or the Euroclear System in Europe or Asia. Transfers of interests in the securities within The Depository Trust Company, Clearstream Banking societe anonyme or the Euroclear System must be made in accordance with the usual rules and operating procedures of those systems. So long as the securities are in book-entry form, you will not be entitled to receive a definitive note or certificate representing your interest. The securities will remain in book-entry form except in the limited circumstances described under the caption "Certain Information Regarding the Securities -- Book-Entry Registration" in the S-20 159 accompanying prospectus. Unless and until the securities cease to be held in book-entry form, the indenture trustee will not recognize you as a "noteholder" and the owner trustee will not recognize you as a "Securityholder", as those terms are used in the trust agreement and sale and servicing agreement. As a result, you will only be able to exercise the rights of Securityholders indirectly through The Depository Trust Company (if in the United States) and its participating organizations, or Clearstream Banking societe anonyme and the Euroclear System (in Europe or Asia) and their participating organizations. Holding the securities in book-entry form could also limit your ability to pledge your securities to persons or entities that do not participate in The Depository Trust Company, Clearstream Banking societe anonyme or the Euroclear System and to take other actions that require a physical certificate representing the securities. Interest and principal on the securities will be paid by the trust to The Depository Trust Company as the record holder of the securities while they are held in book-entry form. The Depository Trust Company will credit payments received from the trust to the accounts of its participants which, in turn, will credit those amounts to securityholders either directly or indirectly through indirect participants. This process may delay your receipt of principal and interest payments from the trust. FACTORS AFFECTING OUR The success of your investment depends upon the INFORMATION MANAGEMENT ability of the servicer, Nissan Motor Acceptance SYSTEMS MAY INCREASE THE RISK Corporation, to store, retrieve, process and OF LOSS ON YOUR INVESTMENT. manage substantial amounts of information. If the servicer experiences any interruptions or loss in its information processing capabilities, its business, financial conditions and results of operations will suffer. S-21 160 THE TRUST GENERAL The Nissan Auto Receivables - Owner Trust (the "Trust") is a Delaware business trust to be formed pursuant to the trust agreement (the "Trust Agreement") between [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], as seller (the "Seller"), and , as owner trustee (the "Owner Trustee"). After its formation, the Trust will not engage in any activity other than: 1. acquiring, holding and managing the Receivables and the other assets of the Trust and proceeds therefrom; 2. issuing the Notes and the Certificates; 3. making payments on the Notes and the Certificates; and 4. engaging in other activities that are necessary, suitable or convenient to accomplish the foregoing or are incidental to or connected with those activities. The Trust will initially be capitalized through the issuance of the Notes and $[ ] aggregate principal amount of the certificates (the "Certificates"). The Trust will exchange the Notes and the Certificates for the Receivables and other assets including leases on vehicles from the Seller pursuant to the sale and servicing agreement among the Trust, the Servicer and the Seller (the "Sale and Servicing Agreement"). The Notes and the Class C Certificates that will be received by the Seller in exchange for the Receivables are being offered hereby. The Class D Certificates will be retained by the Seller. Nissan Motor Acceptance Corporation ("NMAC") will be appointed to act as the servicer of the Receivables (in that capacity, the "Servicer"). The Servicer will service the Receivables pursuant to the Sale and Servicing Agreement and will be compensated for those services as described under "Description of the Transfer and Servicing Agreements -- Servicing Compensation" in this Prospectus Supplement and "Description of the Transfer and Servicing Agreements -- Servicing Compensation" in the accompanying Prospectus. Pursuant to agreements between NMAC and the Dealers, each Dealer will repurchase from NMAC those contracts that do not meet specified representations and warranties made by the Dealer. These Dealer repurchase obligations are referred to this Prospectus Supplement as "Dealer Recourse." Those representations and warranties relate primarily to the origination of the contracts and the perfection of the security interests in the related financed vehicles, and do not relate to the creditworthiness of the related Obligors or the collectability of those contracts. The sales by the Dealers of installment sales contracts to NMAC do not generally provide for recourse against the Dealers for unpaid amounts in the event of a default by an Obligor, other than in connection with the breach of the foregoing representations and warranties. Each Certificate represents a fractional undivided ownership interest in the Trust. The Trust property includes the Receivables and monies due or received under the Receivables on or after the Cut-off Date and the Yield Supplement Account. The Reserve Account will be established with and maintained by the Indenture Trustee and pledged to the Indenture Trustee to secure payments on the Notes and Certificates for the benefit of the Noteholders and the Class C Certificateholders, but will not be part of the Trust. The Trust's principal offices are in , in care of , as Owner Trustee, at the address set forth below under "The Owner Trustee and the Indenture Trustee." S-22 161 CAPITALIZATION OF THE TRUST The following table illustrates the capitalization of the Trust as of the Closing Date, as if the issuance and sale of the Notes and the Certificates had taken place on that date: [TABLE] PAYING AGENTS [Under the Trust Agreement, the Owner Trustee will appoint paying agents in each jurisdiction in which Securities are listed on an exchange whose rules so require. For so long as any Securities are listed on the [exchange] or [exchange], the Owner Trustee will maintain paying agents in [jurisdiction] and [jurisdiction]. The Initial Paying Agents will be and . Definitive Certificates may be presented for purposes of payment, transfer or exchange at the offices of the paying agent in [jurisdiction] at , at the offices of the paying agent in [jurisdiction] at , or such other paying agents as may be specified in a written notice to the holders of Securities described below.] THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE is the Owner Trustee under the Trust Agreement. is a and its principal executive offices are located at . The Seller and its affiliates may maintain normal commercial banking relations with the Owner Trustee and its affiliates. is the trustee under the Indenture (the "Indenture Trustee"). is a and its principal executive offices are located at . The Seller and its affiliates may maintain normal commercial banking relations with the Indenture Trustee and its affiliates. THE RECEIVABLES The property of the Trust will consist of a pool of retail installment sale contracts (the "Receivables") originated on or after , between Nissan and Infiniti dealers (the "Dealers") and retail purchasers (the "Obligors")[, the Yield Supplement Account and the amounts on deposit in that account]. The Receivables were originated by Dealers in accordance with NMAC's requirements under agreements with Dealers governing the assignment of the Receivables to NMAC. The Receivables evidence the indirect financing made available by NMAC to the Obligors. The Receivables are secured by new, near-new and used Nissan and Infiniti automobiles and light-duty trucks (the "Financed Vehicles") and all principal and interest payments made on or after [ ] (the "Cut-off Date") and other property specified in the Receivables. NMAC purchased the Receivables from the Dealers in the ordinary course of business in accordance with NMAC's underwriting standards. On or before the date of the initial issuance of the Securities (the "Closing Date"), NMAC will sell the Receivables [and other assets] to the Seller. The Seller will, in turn, transfer the Receivables [and other assets] to the Trust on the Closing Date pursuant to the Sale and Servicing Agreement in exchange for the Notes and the Certificates. The Notes and the Class C Certificates that will be received by the Seller in exchange for the Receivables are being offered hereby. NMAC will continue to service the Receivables. The Receivables to be held by the Trust will be randomly S-23 162 selected from those automobile and/or light-duty truck retail installment sales contracts in NMAC's portfolio that meet several criteria. These criteria provide that each Receivable: 1. was originated in the United States; 2. has a contractual Annual Percentage Rate ("APR") that equals or exceeds [ ]%; 3. provides for level monthly payments which provide interest at the APR on a simple interest basis and fully amortize the amount financed over an original term to maturity no greater than [ ] months; 4. has a remaining term to maturity, as of the Cut-off Date, of not less than [ ] months and not greater than [ ] months; 5. had an original principal balance of not more than $[ ] and a remaining principal balance as of the Cut-off Date of not less than $[ ] nor more than $[ ]; 6. is not more than 29 days past due as of the Cut-off Date; 7. is attributable to the purchase of a new, near-new or used automobile or light-duty truck and is secured by that vehicle; 8. has been entered into by an Obligor that as of the Cut-off Date was not in bankruptcy proceedings (according to the records of NMAC); 9. is secured by a Financed Vehicle that as of the Cut-off Date has not been repossessed (according to the records of NMAC); 10. has not had forced-placed insurance premiums added to the amount financed; and 11. has not been extended by more than two months. No selection procedures believed to be adverse to the Securityholders will be utilized in selecting the Receivables from qualifying retail installment sale contracts. Except as described in item (2) above, the Receivables were not selected on the basis of their APRs. The composition, distribution by APR and geographic distribution of the Receivables as of the Cut-off Date are as set forth in the following tables. NMAC will not sell to the Seller, and the Seller will not transfer to the Trust, any Receivables originated in the State of Alabama [or Hawaii] for administrative reasons. S-24 163 COMPOSITION OF THE RECEIVABLES Aggregate Principal Balance................................. $________________ Number of Receivables....................................... ________________ Average Principal Balance................................... $________________ Range of Principal Balances............................... $________________to $________________ Average Original Amount Financed............................ $________________ Range of Original Amount Financed......................... $________________to $________________ Approximate Weighted Average APR............................ ______% Range of APRs............................................. ______% to ______% Approximate Weighted Average Original Term to Maturity...... ____ months Range of Original Term to Maturity........................ ____ to ____ months Approximate Weighted Average Remaining Term to Maturity..... ____ months Range of Remaining Term to Maturity....................... ____ to ____ months Percentage by Principal Balance of Receivables of New, Near-New and Used Vehicles................................ ____% (New) ____% (Near-New) ____% (Used) Percentage by Principal Balance of Receivables Financed through Nissan and Infiniti Dealers....................... ____% (Nissan) ____% (Infiniti)
S-25 164 DISTRIBUTION BY APR OF THE RECEIVABLES (PERCENTAGES MAY NOT ADD TO 100.00% DUE TO ROUNDING)
PERCENTAGE OF PERCENTAGE OF NUMBER OF TOTAL NUMBER OF CUT-OFF DATE CUT-OFF DATE RANGE OF APRS(%) RECEIVABLES RECEIVABLES(%) PRINCIPAL BALANCE($) POOL BALANCE(%) - ---------------- ----------- --------------- -------------------- --------------- 0.0 to 0.99......................... 1.0 to 1.99......................... 2.0 to 2.99......................... 3.0 to 3.99......................... 4.0 to 4.99......................... 5.0 to 5.99......................... 6.0 to 6.99......................... 7.0 to 7.99......................... 8.0 to 8.99......................... 9.0 to 9.99......................... 10.0 to 10.99....................... 11.0 to 11.99....................... 12.0 to 12.99....................... 13.0 to 13.99....................... 14.0 to 14.99....................... 15.0 to 15.99....................... 16.0 to 16.99....................... 17.0 to 17.99....................... 18.0 to 18.99....................... 19.0 and above...................... Totals............................
S-26 165 GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES BASED ON THE ADDRESSES OF THE ORIGINATING DEALERS (PERCENTAGES MAY NOT ADD TO 100.00% DUE TO ROUNDING)
PERCENTAGE OF TOTAL CUT-OFF DATE PERCENTAGE OF NUMBER OF NUMBER OF PRINCIPAL CUT-OFF DATE STATE RECEIVABLES RECEIVABLES(%) BALANCE($) POOL BALANCE(%) - ----- ----------- -------------- ------------ --------------- Alaska.............................................. Arizona............................................. Arkansas............................................ California.......................................... Colorado............................................ Connecticut......................................... Delaware............................................ Florida............................................. Georgia............................................. [Hawaii]............................................ Idaho............................................... Illinois............................................ Indiana............................................. Iowa................................................ Kansas.............................................. Kentucky............................................ Louisiana........................................... Maine............................................... Maryland............................................ Massachusetts....................................... Michigan............................................ Minnesota........................................... Mississippi......................................... Missouri............................................ Montana............................................. Nebraska............................................ Nevada.............................................. New Hampshire....................................... New Jersey.......................................... New Mexico.......................................... New York............................................ North Carolina...................................... North Dakota........................................ Ohio................................................ Oklahoma............................................ Oregon.............................................. Pennsylvania........................................ Rhode Island........................................ South Carolina...................................... South Dakota........................................ Tennessee........................................... Texas............................................... Utah................................................ Vermont............................................. Virginia............................................ Washington.......................................... West Virginia....................................... Wisconsin........................................... Wyoming............................................. Total.............................................
S-27 166 MATURITY AND PREPAYMENT CONSIDERATIONS Information regarding maturity and prepayment considerations with respect to the Securities is set forth under "Weighted Average Life of the Securities" in the accompanying Prospectus and "Risk Factors -- You may experience reduced returns on your investment resulting from prepayments, repurchases or early termination of the trust" in the accompanying Prospectus. The weighted average life of the Class A Notes will be dependent on whether the trust is able to issue Variable Pay Term Notes on each Targeted Scheduled Distribution Date in a sufficient amount to pay the related subclass of the Class A Notes in full. The weighted average life of the Class B Notes and the Class C Certificates (and the Class A Notes if the trust is not able to issue a Variable Pay Term Note on any Targeted Scheduled Distribution Date) will generally be influenced by the rate at which the principal balances of the related receivables are paid, which payment may be in the form of scheduled amortization or prepayments. See "The Notes -- Payments of Principal" and "The Certificates -- Payments of Principal" in this Prospectus Supplement. Because the rate of payment of principal of each class of Notes and the Certificates depends primarily on the rate of payment (including prepayments) of the principal balance of the Receivables, final payment of the Class B Notes and each subclass of the Class A Notes (to the extent insufficient funds are available at its respective Targeted Scheduled Distribution Date to make a payment in full of the principal of such Notes) and the final payment in respect of the Certificates could occur later or significantly earlier than their respective final scheduled distribution dates set forth in "Summary -- Terms of the Notes -- Final Scheduled Distribution Date" and "Summary -- Terms of the Certificates -- Principal -- Final Scheduled Distribution Dates" (each, a "Final Scheduled Distribution Dates") in this Prospectus Supplement. Securityholders will bear the risk of being able to reinvest principal payments on the Securities at yields at least equal to the yield on their respective Securities. No prediction can be made as to the rate of prepayments on the Receivables in either stable or changing interest rate environments. The Certificates will provide limited protection against losses on the Receivables. Accordingly, the yield on the Certificates will be extremely sensitive to the loss experience of the Receivables and the timing of any of those losses. If the actual rate and amount of losses experienced by the Receivables exceed the rate and amount of those losses assumed by an investor, the yield to maturity on the Certificates may be lower than anticipated. Although the Receivables have different APRs, disproportionate rates of prepayments between Receivables with APRs greater than or less than the Required Rate will generally not affect the yield to the Securityholders. However, higher rates of prepayments of Receivables with higher APRs will decrease the amount available to cover delinquencies and defaults on the Receivables and may decrease the amounts available to be deposited in the Reserve Account. DELINQUENCIES, REPOSSESSIONS AND NET LOSSES The following tables set forth information concerning NMAC's experience with respect to its total portfolio of U.S. retail installment sale contracts for new, near-new and used automobiles and light-duty trucks. The portfolio consists of retail installment sale contracts in all fifty states, the District of Columbia [ , Puerto Rico] and Guam. As of [ , ], approximately [ ]% of NMAC's total portfolio of U.S. retail installment sales contracts (excluding those with original maturities of 64 months or more) consisted of new, near-new and used automobiles and light-duty trucks financed through Nissan dealers, with the remaining approximate [ ]% financed through Infiniti dealers. S-28 167 There can be no assurance that the behavior of the Receivables included in the Trust will be comparable to NMAC's experience shown in the following tables. DELINQUENCY EXPERIENCE(1)
AT MARCH 31, ----------------------------------------------- 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- Number of Contracts Outstanding.................. 368,660 312,237 330,662 317,238 274,807 Delinquencies as a Percent of Contracts Outstanding(2) 30 - 59 Days................................... 1.54% 2.27% 2.55% 3.10% 2.40% 60 - 89 Days................................... 0.16% 0.27% 0.36% 0.49% 0.25% 90 Days or More................................ 0.02% 0.04% 0.06% 0.17% 0.05%
- ------------------------- (1) The information in the Delinquency Experience table includes retail installment sale contracts for new, near-new and used automobiles and light-duty trucks and includes receivables which NMAC has sold to third parties but continues to service. The information does not include receivables purchased by NMAC under certain special financing programs. The information in the tables relates only to receivables with original terms of 64 months or less. The Trust does not include receivables with original maturities in excess of [ ] months. In general, NMAC has experienced higher overall levels of losses with respect to receivables with original maturities of 64 to 72 months than with respect to receivables with shorter original maturities. (2) An account is considered delinquent if 20% or more of the scheduled payment is past due. NET CREDIT LOSS AND REPOSSESSION EXPERIENCE(1) (DOLLARS IN THOUSANDS)
AT OR FOR TWELVE MONTHS ENDED MARCH 31, -------------------------------------------------------------- 2000 1999 1998 1997 1996 ---------- ---------- ---------- ---------- ---------- Principal Amount Outstanding......... $4,273,532 $3,126,219 $3,497,123 $3,276,423 $2,659,232 Average Principal Amount Outstanding........................ $3,261,595 $3,463,840 $3,248,193 $3,181,569 $2,308,058 Number of Contracts Outstanding...... 368,660 312,237 330,662 317,238 274,807 Average Number of Contracts Outstanding........................ 316,976 329,320 316,769 309,257 250,040 Number of Repossessions(2)........... 7,467 9,782 14,164 17,569 9,841 Number of Repossessions as a Percent of the Average Number of Contracts Outstanding........................ 2.36% 2.97% 4.47% 5.68% 3.94% Charge-Offs(3)....................... $ 55,482 $ 92,005 $ 134,671 $ 158,969 $ 72,838 Recoveries(4)........................ $ 39,125 $ 41,947 $ 39,997 $ 31,874 $ 20,489 Net Losses........................... $ 16,357 $ 50,059 $ 94,674 $ 127,095 $ 52,349 Net Losses as a Percent of Principal Amount Outstanding(5).............. 0.38% 1.60% 2.71% 3.88% 1.97% Net Losses as a Percent of Average Principal Amount Outstanding(5).... 0.50% 1.45% 2.91% 3.99% 2.27%
- ------------------------- (1) The information in the Net Credit Loss and Repossession Experience table includes retail installment sale contracts for new, near-new and used automobiles and light-duty trucks and includes receivables which NMAC has sold to third parties but continues to service. The information does not include receivables purchased by NMAC under certain special financing programs. The information in the tables relates only to receivables with original terms of 64 months or less. The Trust does not include receivables with original maturities in excess of [ ] months. In general, NMAC has experienced higher overall levels of losses with respect to receivables with original maturities of 64 to S-29 168 72 months than with respect to receivables with shorter original maturities. All amounts and percentages, except as indicated, are based on the principal balances of the receivables including unearned interest. Averages are computed by taking a simple average of month end outstandings for each period presented. (2) The number of repossessions excludes accounts that have been subsequently reinstated. (3) Charge-offs represent the net principal balance of receivables determined to be uncollectible in the period less proceeds from disposition of related vehicles, other than recoveries described in Note (4). Charge-offs do not include expenses associated with collection, repossession or disposition of the vehicle. (4) Recoveries generally include amounts received on receivables following the time at which the receivable is charged off. Recoveries are net of expenses associated with collection. (5) Percentages have been annualized in order to facilitate year to year comparisons. NMAC's retail loss experience is dependent upon receivables levels, the number of repossessions, the amount outstanding at the time of repossession and the resale value of repossessed vehicles. The losses in the year ended March 31, 1997 were higher than in previous or subsequent years due to NMAC's effort to finance a broader credit range of customers to support the sale of Nissan and Infiniti vehicles and a general increase in personal bankruptcy filings. NMAC's management reacted to the negative trend in losses by initiating changes to its credit policy that tightened the range of available credit in order to originate an improved mix of business. These changes involved discontinuing the origination of 72-month term contracts in June 1996 and installing a new empirically derived credit score card in September 1996. In addition, NMAC tightened its credit policy by reducing advance rates for lower credit scores and implementing risked-based pricing. NMAC has recently resumed originating 72-month term contracts under certain financing programs. See "The Receivables -- Underwriting of Motor Vehicle Loans" in the accompanying Prospectus. WEIGHTED AVERAGE LIFE OF THE NOTES [Prepayments on automotive receivables can be measured relative to a prepayment standard or model. The model used in this Prospectus Supplement, the Absolute Prepayment Model ("ABS"), represents an assumed rate of prepayment each month relative to the original number of receivables in a pool of receivables. ABS further assumes that all the receivables are the same size and amortize at the same rate and that each receivable in each month of its life will either be paid as scheduled or be prepaid in full. For example, in a pool of receivables originally containing 10,000 receivables, a 1% ABS rate means that 100 receivables prepay each month. ABS does not purport to be an historical description of prepayment experience or a prediction of the anticipated rate of prepayment of any pool of receivables, including the Receivables. As the rate of payment of principal of each class of Notes will depend on the rate of payment (including prepayments) of the principal balance of the Receivables, final payment of any class of Notes could occur later or significantly earlier than the respective Final Scheduled Distribution Dates. Reinvestment risk associated with early payment of the Notes will be borne exclusively by the holders of such Notes. The table captioned "Percent of Initial Note Principal Amount at Various ABS Percentages" (the "ABS Table") has been prepared on the basis of the characteristics of the Receivables described above. The ABS Table assumes that (i) the Receivables prepay in full at the specified constant percentage of ABS monthly, with no defaults, losses or repurchases, (ii) each scheduled monthly payment on each Receivable is scheduled to be made and is made on the last day of each month and each month has 30 days, (iii) payments are made on the Notes on each Distribution Date (and each such date is assumed to be the fifteenth day of each applicable month), (iv) the balance in the Reserve Account on each Distribution Date is the required amount described in the summary under "Reserve Account" and (v) the S-30 169 Servicer does not exercise its option to purchase the Receivables. The hypothetical pools each have an assumed cut-off date of [ , ]. The ABS Table indicates the projected weighted average life of each class of Notes and sets forth the percent of the initial principal amount of each class of Notes that is projected to be outstanding after each of the Distribution Dates shown at various constant ABS percentages. The ABS Table also assumes that the Receivables have been aggregated into hypothetical pools with all of the Receivables within each such pool having the following characteristics and that the level scheduled monthly payment for each of the pools (which is based on its aggregate principal balance, APR, original term to maturity and remaining term to maturity as of the assumed cut-off date) will be such that each pool will be fully amortized by the end of its remaining term to maturity.
REMAINING TERM ORIGINAL TERM AGGREGATE TO MATURITY TO MATURITY POOL PRINCIPAL BALANCE APR (IN MONTHS) (IN MONTHS) - ---- ----------------- ------- -------------- ------------- 1........................................... 2........................................... 3........................................... 4........................................... 5...........................................
The actual characteristics and performance of the Receivables will differ from the assumptions used in constructing the ABS Table. The assumptions used are hypothetical and have been provided only to give a general sense of how the principal cash flows might behave under varying prepayment scenarios. For example, it is very unlikely that the Receivables will prepay at a constant level of ABS until maturity or that all of the Receivables will prepay at the same level of ABS. Moreover, the diverse terms of Receivables within each of the hypothetical pools could produce slower or faster principal distributions than indicated in the ABS Table at the various constant percentages of ABS specified, even if the original and remaining terms to maturity of the Receivables are as assumed. Any difference between such assumptions and the actual characteristics and performance of the Receivables, or actual prepayment experience, will affect the percentages of initial amounts outstanding over time and the weighted average lives of each class of Notes.] [TABLES TO COME] S-31 170 NOTE FACTORS, CERTIFICATE FACTORS AND POOL FACTORS The "Note Factor" for any Distribution Date with respect to any class of Notes will be a seven-digit decimal indicating the principal amount of that class of Notes as of the close of business on the last day of the related Collection Period as a fraction of the respective principal amount thereof as of the Closing Date. The Servicer will compute the Note Factor each month for each class of Notes. Each Note Factor will initially be 1.0000000 and thereafter will decline to reflect reductions in the principal amount of each class of Notes. The portion of the principal amount of any class of Notes for a given month allocable to a Noteholder can be determined by multiplying the original denomination of the holder's Note by the related Note Factor for that month. The "Certificate Factor" with respect to any class of Certificates will be a seven-digit decimal indicating the Certificate Balance of that class of Certificates as of the close of business on the last day of the related Collection Period as a fraction of the Original Certificate Balance of that class. The Servicer will compute the Certificate Factor each month for each class of Certificates. Each Certificate Factor will initially be 1.0000000 and thereafter will decline to reflect reductions in the Certificate Balance. The portion of the Certificate Balance for any class of Certificates for a given month allocable to a Certificateholder can be determined by multiplying the original denomination of the holder's Certificate by the related Certificate Factor for that month. The "Pool Balance" as of the close of business on the last day of a Collection Period will equal the aggregate Principal Balance of the Receivables (excluding Administrative Receivables, Warranty Receivables and Defaulted Receivables) as of the close of business on such day; provided, however, that where the Pool Balance is relevant in determining whether the requisite percentage of Certificateholders or Noteholders (or relevant class or classes of Certificates or Notes, as the case may be) necessary to effect any consent, waiver, request or demand shall have been obtained, the Pool Balance shall be deemed to be reduced by the amount equal to the portion of the Pool Balance (before giving effect to this provision) represented by the interests evidenced by any applicable Certificate or Note registered in the name of the Seller, the Servicer or any person actually known to a trust officer of the Owner Trustee or the Indenture Trustee, as the case may be, to be an affiliate of the Seller or the Servicer, unless all of the Certificates or Notes, as the case may be, are held or beneficially owned by NMAC, the Seller or any of their affiliates. The "Pool Factor" for a particular class of Notes or the Certificates will be a seven-digit decimal indicating the principal amount of that class of Notes or the Certificate Balance as of the close of business on the last day of the related Collection Period as a fraction of the Pool Balance as of the Cut-off Date. The Servicer will compute the Pool Factor for each month for each class of Notes and Certificates. Pursuant to the Transfer and Servicing Agreements, the Securityholders will receive monthly reports concerning the payments received on the Receivables, the Pool Balance, the related Note Factors, Certificate Factors, Pool Factors and various other items of information pertaining to the Trust. Securityholders of record during each calendar year will be furnished information by the Indenture Trustee or the Owner Trustee, as appropriate, for tax reporting purposes not later than the latest date permitted by law. Copies of the reports may be obtained by the Noteholders and the Certificateholders by delivering a written request addressed to at its address at , Attn: . See "Description of the Transfer and Servicing Agreements -- Statements to Securityholders" in the accompanying Prospectus. USE OF PROCEEDS The Seller will use the net proceeds from the sale of the Securities (approximately $ ) to purchase the Receivables from NMAC pursuant to the Purchase Agreement and to fund the Reserve Account and to make [the initial deposit into] [a capital contribution to the Trust to fund] the Yield Supplement Account. THE SELLER AND THE SERVICER Information regarding the Seller and the Servicer is set forth under the captions "The Seller" and "The Servicer" in the accompanying Prospectus. S-32 171 FINANCIAL CONDITION OF NISSAN MOTOR CO., LTD. NMAC is an indirect wholly-owned subsidiary of Nissan Motor Co., Ltd. ("Nissan"). Although Nissan is not guaranteeing the Trust's obligations under the Securities, Nissan's financial condition may affect NMAC's ability to service the Receivables. [Nissan reported a consolidated operating profit of 82.6 billion Yen (US$778.9 million) for fiscal year 1999 (ended at March 31, 2000), a decrease of 31.7% compared to the previous year, with net sales of 5,977.1 billion Yen (US$56.39 billion), a decrease of 9.2% compared to the previous year. The decline in operating income is attributable to the negative impact of the appreciation of the Yen and to lower unit sales, particularly in the Japanese market. (The average exchange rate for the dollar was 112 Yen in fiscal year 1999 compared to 128 Yen in fiscal year 1998.)] [On March 31, 2000, Nissan announced one-time extraordinary charges totaling 711.1 billion Yen (US$6.71 billion) leading to a consolidated net loss of 684.4 billion Yen (US$6.46 billion). The one-time extraordinary charges relate to changes in the accounting of pensions and retirement benefits in Japan, to plant closures and expenses related to the Nissan Revival Plan, and to new accounting methods, including the calculations of provisions relating to product warranties, adopted in order to bring the accounts in line with internationally accepted accounting practices.] [The March 31, 2000, year-end results close a year of transition for Nissan. After the conclusion of an alliance with Renault in March 1999, Nissan announced a comprehensive revival plan in October 1999. The Nissan Revival Plan is targeted to restore profitability, reduce debt and improve operating margins. Nissan is cooperating with Renault in the areas of purchasing, platform co-development and international growth.] THE NOTES GENERAL The trust will issue on the Closing Date $ aggregate initial principal amount of Class A-1 % Asset Backed Notes (the "Class A-1 Notes"), $ aggregate initial principal amount of Class A-2 % Asset Backed Notes (the "Class A-2 Notes"), $ aggregate initial principal amount of Class A-3 % Asset Backed Notes (the "Class A-3 Notes," and together with the Class A-1 Notes and the Class A-2 Notes, the "Class A Notes"), $ aggregate initial principal amount of Class B % Asset Backed Notes (the "Class B Notes"), and $ initial principal amount of a Variable Pay Term Note (together with any additional Variable Pay Term Notes that may be issued on Targeted Scheduled Distribution Date, the "Variable Pay Term Notes" and the Variable Pay Term Notes, together with the Class A Notes and the Class B Notes, the "Notes"). The Variable Pay Term Notes are not being offered hereby. The Notes will be issued pursuant to the terms of the Indenture, a form of which has been filed as an exhibit to the Registration Statement. A copy of the final signed Indenture will be filed with the SEC [and the Luxembourg and Hong Kong Stock Exchanges] following the issuance of the Securities. The Notes will be issued as registered Notes in the minimum denomination of $1,000. The following summary describes material terms of the Notes and the Indenture. The summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Notes and the Indenture. Where particular provisions or terms used in the Indenture are referred to, the actual provisions (including definitions of terms) are incorporated by reference as part of the summary. The following summary supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the Notes of any given series and the related Indenture set forth in the accompanying Prospectus, to which description reference is hereby made. PAYMENTS OF INTEREST Each of the Class A Notes and the Class B Notes will constitute Fixed Rate Securities, as that term is defined under "Material Information Regarding the Securities -- Fixed Rate Securities" in the S-33 172 accompanying Prospectus, except that the Class A-1 Notes will accrue interest on the basis of the actual number of days in the related Interest Period divided by 360. Interest on the principal balances of the classes of the Notes will accrue at the respective per annum interest rates set forth in "Summary -- Terms of the Notes -- Per Annum Interest Rates" in this Prospectus Supplement (each, an "Interest Rate") and will be payable to the Noteholders monthly on the fifteenth of each month (or, if that date is not a Business Day, on the next succeeding Business Day) (a "Distribution Date") commencing . The Variable Pay Term Note issued on the Closing Date will constitute a Floating Rate Security, as that term is defined under "Material Information Regarding the Securities -- Floating Rate Securities" in the accompanying Prospectus. A "Business Day" is any day except a Saturday, Sunday or a day on which banks in New York, New York, [Minneapolis, Minnesota,] Wilmington, Delaware or Los Angeles, California are authorized or obligated by law, regulation, executive order or governmental decree to be closed[; or for payments on the Securities made in Luxembourg or Hong Kong by a paying agent, a day on which banks in Luxembourg or Hong Kong are closed]. Interest on the outstanding principal amount of [the Class A-1 Notes and] the Variable Pay Term Notes will accrue at the related Interest Rate from and including the most recent Distribution Date on which interest has been paid (or from and including the Closing Date with respect to the first Distribution Date) to but excluding the current Distribution Date (each, an "Interest Period" with respect to the Class A-1 Notes and the Variable Pay Term Notes). Interest on the outstanding principal amount of [the Class A-1 Notes,] the Class A-2 Notes, the Class A-3 Notes and the Class B Notes will accrue at the related Interest Rate from and including the 15th day of the preceding calendar month (or from and including the Closing Date with respect to the first Distribution Date) to but excluding the 15th day of the current calendar month (each , an "Interest Period" with respect to [the Class A-1 Notes,] the Class A-2 Notes, the Class A-3 Notes and the Class B Notes). Interest on [the Class A-1 Notes and] the Variable Pay Term Notes will be calculated on the basis of the actual number of days in the related Interest Period divided by 360, and interest on [the Class A-1 Notes,] the Class A-2 Notes, the Class A-3 Notes and the Class B Notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Interest accrued but not paid on any Distribution Date will be due on the next Distribution Date, together with interest on that amount at the applicable Interest Rate (to the extent lawful). Interest payments on the Notes will generally be made from Available Amounts and from amounts on deposit in the Reserve Account, after the Total Servicing Fee and certain Advances have been paid, except upon an acceleration of the Notes. See "Subordination; Reserve Account -- Reserve Account" and "Distributions on the Notes and the Certificates" in this Prospectus Supplement. Interest payments to the Class A Notes and the Variable Pay Term Notes and termination payments under the Interest Rate Swap will have the same priority. Under specified circumstances, the amount available for interest payments could be less than the amount of interest payable on the Notes on any Distribution Date, in which case (i) the holders of the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes will receive their ratable share (based upon the aggregate amount of interest due to that class) of the aggregate amount available to be distributed in respect of interest on the Class A Notes, (ii) the holders of the Variable Pay Term Notes will receive their ratable share (based on the remaining principal balances of each Variable Pay Term Note) of the aggregate amount available to be distributed in respect of interest on the Variable Pay Term Notes, and (iii) the swap counterparty will receive its ratable share of the aggregate amount available to be distributed based on the amount of the swap termination payment, in any. Interest payments to the Class B Noteholders will be subordinated to the interest payments on the Class A Notes and the Variable Pay Term Notes. Interest on the Class B Notes will not be paid until all accrued and unpaid interest on the Class A Notes and the Variable Pay Term Notes have been paid in full. S-34 173 PAYMENTS OF PRINCIPAL In general, no payments will be made on any subclass of the Class A Notes until its Targeted Scheduled Distribution Date. On the Targeted Scheduled Distribution Date for each subclass of the Class A Notes, the trust will pay, to the extent of available funds, the entire outstanding principal balance of that subclass of the Class A Notes. Amounts available to pay principal of the Notes on each distribution date that is not a Targeted Scheduled Distribution Date will be applied to make principal payments on the Variable Pay Term Notes, until paid in full. If and to the extent the amount available to pay the principal of the Notes exceeds the outstanding principal balance of the Variable Pay Term Notes, this excess will be deposited into the "Accumulation Amount." Amounts on deposit in the Accumulation Account will be available on the next succeeding Targeted Scheduled Distribution Date to pay the principal of the Class A Notes. Payments of principal of the Class A Notes and the Variable Pay Term Notes will be senior to payments of principal of the Class B Notes. Upon payment in full of the Class A Notes and the Variable Pay Term Notes, the amounts available to pay principal of the Notes will be applied to make the principal payments on the Class B Notes. Payments allocable to principal among the Class A Notes, the Class B Notes and the Variable Pay Term Notes will be made pursuant to the priority of payments described under "Distributions on the Notes and the Certificates -- Payment of Distributable Amounts" in this Prospectus Supplement. If any subclass of the Class A Notes is not paid in full on its Targeted Scheduled Distribution Date, on each distribution date thereafter, until that subclass of the Class A Notes is paid in full, amounts available to make principal payments on the Notes will be allocated between the Class A Notes and the Variable Pay Term Notes pro rata, on the basis of the total principal amount of all Class A Notes outstanding and the total principal amount of all Variable Pay Term Notes outstanding, and the portion allocated to the Class A Notes will be applied to the subclass of the Class A Notes not paid in full on its Targeted Scheduled Distribution Date. If on the next Targeted Scheduled Distribution Date such subclass of Class A Notes has not been paid in full and the trust is able to issue a Variable Pay Term Note, such Variable Pay Term Note will be issued in an amount sufficient to pay in full both outstanding subclasses of Class A Notes that have reached or passed their Targeted Scheduled Distribution Dates. If both such subclasses of Class A Notes are paid in full on such Targeted Scheduled Distribution Date, on each Distribution Date thereafter, until the next Targeted Scheduled Distribution Date, amounts available to make principal payments will be applied to make payments of principal on the outstanding Variable Pay Term Notes. If, after application of all payments allocable to principal on a Targeted Scheduled Distribution Date, two subclasses of Class A Notes remain outstanding after their Targeted Scheduled Distribution Dates, the trust will be prohibited from issuing any additional Variable Pay Term Notes thereafter, and amounts available to make principal payments on the Notes will be applied to make payments of principal of the outstanding Class A Notes and the outstanding Variable Pay Term Notes, pro rata, on the basis of the total principal amount of Class A Notes outstanding and the total principal amount of Variable Pay Term Notes outstanding. Payments on the Class A Notes will be made sequentially, such that no principal payments will be made on any subclass of Class A Notes until all subclasses of Class A Notes with a lower numerical designation have been paid in full. Principal payments to be made on the Variable Pay Term Notes will be applied to the Variable Pay Term Notes in the order in which they were issued, such that the earliest issued Variable Pay Term Notes will be paid in full before any principal payments are made on any later issued Variable Pay Term Notes. If the trust is not able to generate sufficient proceeds from the sale of additional Variable Pay Term Notes on that Targeted Scheduled Distribution Date, it is unlikely that there will be sufficient funds to pay a subclass of Class A Notes on its Targeted Scheduled Distribution Date. Payments of principal of the Class B Notes are subordinate to payments of principal of the Class A Notes and the Variable Pay Term Notes. Noteholders of Class B Notes will be entitled to receive S-35 174 principal payments on each Distribution Date commencing with the Distribution Date on which the Class A Notes and the Variable Pay Term Notes have been paid in full. Upon an Event of Default and an acceleration of the Notes, all principal will become due and payable. Notwithstanding the foregoing, on each Distribution Date after the occurrence of an Event of Default and an acceleration of the Notes, available amounts (after the servicing fee has been paid and certain advances have been reimbursed) will be applied to pay principal [(1) first, to each of the Class A-1 Notes and the Variable Pay Term Notes on a pro rata basis based on the respective outstanding principal balances of those classes of Notes until the outstanding principal balances of those classes of Notes have been paid in full, (2) second, to the Class A-2 Notes and the Class A-3 Notes on a pro rata basis based on the respective outstanding principal balances of those classes of Notes until the outstanding principal balances of those classes of Notes have been paid in full,][(1) first, to each subclass of the Class A Notes and the Variable Pay Term Notes on a pro rata basis based on the respective outstanding principal balances of those classes of Notes until the outstanding balances of those classes of Notes have been paid in full,] and [(3) third,][(2) second,] to the Class B Notes until the outstanding principal balance of the Class B Notes has been paid in full. The actual Distribution Date on which the outstanding principal amount of any class of Notes is paid may be later or significantly earlier than its Final Scheduled Distribution Date based on a variety of factors, including the factors described under "Weighted Average Life of the Securities" in this Prospectus Supplement and the accompanying Prospectus. If the principal amount of a class of Notes has not been paid in full on or prior to its Final Scheduled Distribution Date, the Noteholders' Principal Distributable Amount for that Distribution Date will, to the extent the remaining Available Amounts (plus amounts on deposit in the Reserve Account) are sufficient, include an amount sufficient to reduce the unpaid principal amount of that class of Notes to zero on that Distribution Date. See "Distributions on the Notes and the Certificates -- Payment of Distributable Amounts" in this Prospectus Supplement. VARIABLE PAY TERM NOTES On the Closing Date, the trust will issue a Variable Pay Term Note in an initial principal amount of $ . The trust may issue additional Variable Pay Term Notes on the Targeted Scheduled Distribution Date for each subclass of the Class A Notes and use the proceeds to make payments of principal on that Targeted Scheduled Distribution Date. Additional Variable Pay Term Notes issued after the closing date will have an interest rate equal to LIBOR plus a spread; provided, however, that in no event will the spread over LIBOR exceed %, subject to adjustment to a fixed rate upon termination of the interest rate swap. The interest rate will be determined at the time of the issuance and will reflect then current market conditions. The Variable Pay Term Notes issued on each Targeted Scheduled Distribution Date will constitute a separate class of Variable Pay Term Notes. The trust may issue Variable Pay Term Notes on any Targeted Scheduled Distribution Date only if all of the following conditions are satisfied: - both before and after giving effect to the issuance of such Variable Pay Term Notes and all payments of principal on the Notes and payments with respect to the Certificate Balance on that Targeted Final Distribution Date, the aggregate principal balance of the receivables must be equal to or greater than the aggregate outstanding principal balance of the Class A Notes, the Variable Pay Term Notes, the Class B Notes and the Class C Certificates; - the Interest Rate Swap must be in full force and effect with a notional amount equal to the sum of the principal balances of such Variable Pay Term Notes and any other outstanding Variable Pay Term Notes; and - no event of default under the indenture shall have occurred and be continuing. S-36 175 The Variable Pay Term Notes are not being offered by this Prospectus Supplement and the Prospectus. A 100% participation interest in the initial Variable Pay Term Note will be sold in a private placement. NMAC, as administrator, has agreed to use reasonable efforts to locate a purchaser for each additional Variable Pay Term Note if the above conditions are met. If the conditions are met and a purchaser has agreed to purchase the Variable Pay Term Note, the trust will issue a Variable Pay Term Note on the Targeted Scheduled Distribution Date. No person or entity, however, is obligated to purchase any Variable Pay Term Notes or any interest therein (other than the Variable Pay Term Note issued on the Closing Date). As a result, there can be no assurance that any Variable Pay Term Notes will be sold on any Targeted Scheduled Distribution Date or that the proceeds from any sale of any such Variable Pay Term Notes will be sufficient to pay a subclass of the Class A Notes in full on its Targeted Scheduled Distribution Date. If, on a Targeted Scheduled Distribution Date of any subclass of the Class A Notes, the trust has a binding agreement with a purchaser for the purchase of a Variable Pay Term Note but the Servicer determines that the proceeds from that sale will not be received in time to make payment on the Class A Notes targeted for payment on that Targeted Scheduled Distribution Date, the Servicer may, in its sole discretion, make a liquidity advance (a "Servicer Liquidity Advance") to the trust in an amount equal to such proceeds if it determines, in its sole discretion, that it has received reasonable assurances from the purchaser of the Variable Pay Term Note to the effect that the full amount of the proceeds will be delivered to the trust later on that Targeted Scheduled Distribution Date or within two Business Days thereafter. If the Servicer makes a Servicer Liquidity Advance, it will be reimbursed for such amount upon receipt by the trust of the purchase price of the Variable Pay Term Note, and will be deemed to be the holder of the Variable Pay Term Note and will be entitled to all payments allocable to the Variable Pay Term Note, including interest, until the purchase price for the interest in the Variable Pay Term Note is received from the purchaser and paid to the Servicer. INTEREST RATE SWAP On the Closing Date, the trust will enter into an interest rate swap (the "Interest Rate Swap") with , as swap counterparty with an initial notional amount equal to the principal amount of the Variable Pay Term Note. As of the date hereof, the long-term debt obligations of the swap counterparty are rated "[AAA]" by Standard & Poor's Ratings Group and "[Aa1]" by Moody's Investor Service, Inc. The notional amount will increase by the principal amount of any additional Variable Pay Term Notes issued on Targeted Scheduled Distribution Dates and will decrease by any principal payments on the Variable Pay Term Notes. The trust will not be permitted to issue a Variable Pay Term Note after the Closing Date unless the trust has an interest rate swap in place with a notional amount equal to the principal balance of such Variable Pay Term Note and any outstanding Variable Pay Term Notes. Under the Interest Rate Swap, the trust will receive payments at a rate determined by reference to LIBOR, which is the basis for determining the amount of interest due on the Variable Pay Term Notes. Under the Interest Rate Swap, on each Distribution Date, (1) the trust will be obligated to pay to the swap counterparty a fixed monthly interest rate of % on a notional amount equal to the aggregate outstanding principal balance of the Variable Pay Term Notes and (2) the swap counterparty will be obligated to pay to the trust a floating interest rate of LIBOR plus % on a notional amount equal to the aggregate outstanding principal balance of the Variable Pay Term Notes. On each Distribution Date, the amount the trust is obligated to pay will be netted against the amount the swap counterparty is obligated to pay under the Interest Rate Swap. Only the net amount will be due from the trust or the swap counterparty, as applicable. Upon the occurrence of the events of default and termination events specified in the Interest Rate Swap, the non-defaulting party or non-affected party may elect to terminate the Interest Rate Swap. These events include failure to make payments due under the Interest Rate Swap, the occurrence of bankruptcy S-37 176 and insolvency events and other customary events. Under the terms of the Interest Rate Swap, the non-defaulting party is not obligated to make a termination payment to the defaulting party. If the Interest Rate Swap is terminated due to a termination event, a termination payment may be due (1) to the swap counterparty by the trust out of funds pari passu with payments of interest on the Class A Notes and the Variable Pay Term Notes or (2) to the trust by the swap counterparty. The amount of any such termination payment may be based on market quotations of the cost of entering into a similar swap transaction or such other method as may be required under the Interest Rate Swap, in each case in accordance with the procedures set forth in the Interest Rate Swap agreement. Any such termination payment could, if market interest rates or other conditions have changed materially, be substantial. If the interest rate swap terminates, the trust will not be permitted to issue any additional Variable Pay Term Notes. In addition, in that event, the interest rate on all outstanding Variable Pay Term Notes will automatically be adjusted to a fixed rate of %, which is the fixed rate payable by the trust under the Interest Rate Swap. EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT Subject to the following paragraph, upon an Event of Default, the Noteholders will have the rights set forth in the Prospectus under "The Notes -- The Indenture -- Events of Default; Rights Upon Event of Default." The Indenture Trustee may sell the Receivables subject to certain conditions set forth in the Indenture following an Event of Default, including a default in the payment of any principal of or a default for five days or more in the payment of any interest on any Note. In the case of an Event of Default not involving any such default in payment, the Indenture Trustee is prohibited from selling the Receivables unless one of the conditions set forth in the Prospectus under "The Notes -- The Indenture -- Events of Default; Rights Upon Event of Default" has been satisfied. NOTICES Noteholders will be notified in writing by the Indenture Trustee of any Event of Default, default by the Servicer under the Sale and Servicing Agreement (a "Servicer Default") or termination of, or appointment of a successor to, the Servicer promptly upon a Trust Officer (as defined in the Sale and Servicing Agreements) obtaining actual knowledge thereof. [If required by the Luxembourg Stock Exchange, for so long as any class of the Notes is listed on the Luxembourg Stock Exchange, notices to holders of such Notes will be given by publication in a leading daily newspaper of general circulation in Luxembourg or, if publication in Luxembourg is not practical, in Europe. Such publication is expected to be made in the Luxembourger Wort. If required by The Stock Exchange of Hong Kong Limited, for so long as any class of the Notes is listed on The Stock Exchange of Hong Kong Limited, notices to holders of such Notes will be given in a leading daily newspaper of general circulation in the English language in Hong Kong. Such publication is expected to be made in the South China Morning Post.] If Notes are issued other than in book-entry form, those notices will be mailed to the addresses of Noteholders as they appear in the register maintained by the Indenture Trustee prior to mailing. Those notices will be deemed to have been given on the date of that mailing. GOVERNING LAW [The Indenture and the Notes are governed by and shall be construed in accordance with the laws of the State of New York applicable to agreements made in and to be performed wholly within that jurisdiction.] THE CERTIFICATES GENERAL The certificates (the "Certificates") will be issued pursuant to the terms of the Trust Agreement, a form of which has been filed as an exhibit to the Registration Statement. A copy of the final signed Trust Agreement will be filed with the SEC following the issuance of the Securities. The Certificates will evidence undivided ownership interests in the Trust created pursuant to the Trust Agreement. S-38 177 The following summary describes material terms of the Certificates and the Trust Agreement. The summary does not purport to be complete and is subject to, and qualified in its entirety by reference to, all the provisions of the Certificates and the Trust Agreement. The following summary supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the Certificates of any given series and the related Trust Agreement set forth in the accompanying Prospectus, to which description reference is hereby made. PAYMENTS OF INTEREST Interest on the Certificate Balance will accrue during each Interest Period at the per annum pass through rate set forth in "Summary -- Terms of the Certificates -- Per Annum Pass Through Rates" in this Prospectus Supplement (the "Pass Through Rate") and will be payable to the holders of record of the Certificates (the "Certificateholders") on the related Distribution Date. The Certificates will constitute Fixed Rate Securities, as that term is defined under "Material Information Regarding the Securities -- Fixed Rate Securities" in the accompanying Prospectus. Interest due on a Distribution Date will accrue during the related Interest Period and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Interest distributions with respect to the Class C Certificates generally will be made from Available Amounts after: 1. payment of the Total Servicing Fee; 2. payment of non-recoverable Advances to the Servicer; and 3. distribution of the Noteholders' Distributable Amounts to the Noteholders. Interest distributions with respect to the Class D Certificates generally will be made from Available Amounts after payment of all of the foregoing and also after (1) distribution of interest and principal due and payable in respect of the Class C Certificates and (2) depositing of funds in the Reserve Account so that the amount on deposit in that account equals the Specified Reserve Account Balance. See "Distributions on the Notes and the Certificates -- Payment of Distributable Amounts" in this Prospectus Supplement. Interest payments due for any Distribution Date but not paid on that Distribution Date will be due on the next Distribution Date increased by an amount equal to interest on that amount at the Pass Through Rate (to the extent lawful). PAYMENTS OF PRINCIPAL No principal will be paid on the Certificates until the Distribution Date on which all of the Notes have been paid in full. On that Distribution Date and each Distribution Date thereafter, principal payments of the Certificates will be payable in an amount equal to the Certificateholders' Percentage of the Principal Distributable Amount. Principal payments on the Class C Certificates will be made from Available Amounts after: 1. payment of the Total Servicing Fee; 2. payment of non-recoverable Advances; and 3. distribution of the Noteholders' Distributable Amounts to the Noteholders. Principal payments will be allocated among the Certificates so that no principal payments will be made on the Class D Certificates until the Class C Certificates have been paid in full. Principal payments of the Class D Certificates will be made from Available Amounts after all payment of the foregoing and also after (1) distribution of interest and principal due and payable in respect of the Class C Certificates and (2) depositing of funds in the Reserve Account so that the amount on deposit in that account equals the Specified Reserve Account Balance. S-39 178 Notwithstanding the foregoing, on each Distribution Date after the acceleration of the Notes following an Event of Default, the Certificates will not receive any of the Principal Distributable Amount until the Notes have been paid in full. NOTICES Certificateholders will be notified in writing by the Owner Trustee of any Event of Default, Servicer Default or termination of, or appointment of a successor to, the Servicer promptly upon a Trust Officer obtaining actual knowledge thereof. Except for the monthly and annual reports to Certificateholders described this Prospectus Supplement, the Owner Trustee is not obligated under the Trust Agreement to forward any other notices to the Certificateholders. There are no provisions in the Trust Agreement for the regular or special meetings of Certificateholders. [If required by the Luxembourg Stock Exchange, for so long as any class of the Certificates is listed on the Luxembourg Stock Exchange, notices to holders of such Certificates will be given by publication in a leading daily newspaper of general circulation in Luxembourg or, if publication in Luxembourg is not practical, in Europe. Such publication is expected to be made in the Luxembourger Wort. If required by The Stock Exchange of Hong Kong Limited, for so long as any class of the Certificates is listed on The Stock Exchange of Hong Kong Limited, notices to holders of such Certificates will be given in a leading daily newspaper of general circulation in the English language in Hong Kong. Such publication is expected to be made in the South China Morning Post.] GOVERNING LAW [The Trust Agreement and the Certificates are governed by and shall be construed in accordance with the laws of the State of Delaware applicable to agreements made in and to be performed wholly within that jurisdiction.] DISTRIBUTIONS ON THE NOTES AND THE CERTIFICATES On or before the tenth calendar day of each month (or, if the tenth day is not a Business Day, the next succeeding Business Day (each a "Determination Date"), the Servicer will inform the Owner Trustee and the Indenture Trustee of, among other things, the amount of funds collected on or in respect of the Receivables, the amount of Advances to be made by and reimbursed to the Servicer and the Total Servicing Fee and other servicing compensation payable to the Servicer, in each case with respect to the immediately preceding Collection Period. On or prior to each Distribution Date, the Servicer will also determine the following: 1. Available Amounts; 2. Allocable Principal; 3. Swap Payment payable under the Interest Rate Swap; 4. Noteholders' Distributable Amount; 5. Certificateholders' Distributable Amount; 6. Principal Distributable Amount; 7. Yield Supplement Deposit, if any; 8. based on the available funds and other amounts available for payment on the related Distribution Date as described below, the amount to be distributed to the Noteholders and Certificateholders; 9. on the Targeted Scheduled Distribution Date for any subclass of the Class A Notes, the proceeds from issuance of Variable Pay Term Notes and the Accumulation Amount; and 10. all other distributions, deposits and withdrawals to be made on the related Distribution Date. The Indenture Trustee will make payments to the Noteholders and Certificateholders out of the amounts on deposit in the Collection Account. The amounts to be distributed to the Noteholders and Certificateholders will be determined in the manner described below. "Allocable Principal" shall mean an amount equal to the excess, if any, of (x) the sum of the outstanding principal balances of the Notes and S-40 179 the Certificates as of the close of business on the prior Distribution Date over (y) the Pool Balances as of the end of the related Collection Period. CALCULATION OF AVAILABLE AMOUNTS The amount of funds available for distribution on a Distribution Date will generally equal the sum of Available Interest and Available Principal (collectively, "Available Amounts"). "Available Interest" for a Distribution Date will equal the sum of the following amounts received or allocated by the Servicer on or in respect of the Receivables during the related Collection Period: 1. that portion of all collections on or in respect of the Receivables allocable to interest; 2. all proceeds of the Liquidated Receivables, net of expenses incurred by the Servicer in accordance with its customary servicing procedures in connection with the liquidation, including amounts received in subsequent Collection Periods and any amounts required by law to be remitted to the Obligor ("Net Liquidation Proceeds") to the extent allocable to interest on a Liquidated Receivable; 3. all Advances made by the Servicer; 4. all payments by the Seller during that Collection Period for breaches of representations and warranties that materially and adversely affect any Receivable ("Warranty Purchase Payments") to the extent attributable to interest; 5. all payments by the Servicer during that Collection Period for breaches of certain of its obligations under the Sale and Servicing Agreement that materially and adversely affect any Receivable ("Administrative Purchase Payments") to the extent attributable to interest; 6. any Yield Supplement Deposit, plus reinvestment income on the Yield Supplement Account; 7. the excess, if any, in the Yield Supplement Account over the Required Yield Supplement Amount; 8. any amounts in the Accumulation Account; and 9. any expected proceeds from the issuance of Variable Pay Term Notes. "Available Principal" for a Distribution Date will equal the sum of the amounts described in clauses (1), (2), (4) and (5) above received or allocated by the Servicer in respect of principal on or in respect of the Receivables during the related Collection Period. Available Interest and Available Principal on any Distribution Date will exclude the following amounts: 1. amounts received on a particular Receivable (other than a Defaulted Receivable) to the extent that the Servicer has previously made an unreimbursed Advance in respect of that Receivable; 2. Net Liquidation Proceeds with respect to a particular Receivable to the extent of unreimbursed Advances in respect of that Receivable; and 3. recoveries from collections with respect to Advances that the Servicer has determined are unlikely to be repaid. A "Defaulted Receivable" will be a Receivable (other than a Receivable as to which a Warranty Purchase Payment or an Administrative Purchase Payment has been made) which, by its terms, is delinquent more than 120 days or, with respect to a Receivable that is delinquent less than 120 days, the Servicer has (a) determined, in accordance with its customary servicing procedures, that eventual payment in full is unlikely, or (b) repossessed the Financed Vehicle. A "Liquidated Receivable" will be a Defaulted Receivable for which the related Financed Vehicle has been liquidated by the Servicer. PAYMENT OF DISTRIBUTABLE AMOUNTS On each Distribution Date, the Servicer will allocate amounts on deposit in the Collection Account (after payment of the Supplemental Servicing Fee to the extent not previously retained by the Servicer) S-41 180 with respect to the related Collection Period as described below and will instruct the Indenture Trustee to make the following payments and distributions in the following amounts and order of priority: 1. to the Servicer, the amount of any payments in respect of Advances required to be reimbursed; 2. to the Servicer from Available Amounts, the Base Servicing Fee, including any unpaid Base Servicing Fees with respect to one or more prior Collection Periods; 3. the net amount, if any, to be paid under the Interest Rate Swap to the swap counterparty; 4. on a pro rata basis (based on the amounts distributable to each class) to the Noteholders, the Noteholders' Interest Distributable Amount, from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (2) and (3) above); 5. to the Noteholders, the Noteholders' Principal Distributable Amount, from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (2) through (4) above); 6. to the holders of record of the Class C Certificates (the "Class C Certificateholders"), the Certificateholders' Interest Distributable Amount for the Class C Certificates, from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (2) through (5) above); 7. to the Class C Certificateholders, the Certificateholders' Principal Distributable Amount for the Class C Certificates, from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (2) through (6) above); 8. to the Reserve Account, from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (2) through (7) above and that amount being the "Excess Amount"), that amount until the amount on deposit in that account equals the Specified Reserve Account Balance; 9. to the holders of record of the Class D Certificates (the "Class D Certificateholders"), the Certificateholders' Interest Distributable Amount for the Class D Certificates, from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (2) through (8) above); 10. after the Class C Certificateholders have been paid in full, to the Class D Certificateholders, the Certificateholders' Principal Distributable Amount for the Class D Certificates, from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (2) through (9) above); and 11. any Available Amounts remaining after giving effect to the reduction in Available Amounts described in clauses (2) through (10) above, to the Seller. On each Distribution Date, the Noteholders' Principal Distributable Amount will be allocated among the Notes so that no principal payments will be made on the Class B Notes until the Variable Pay Term Notes have been paid in full. After the occurrence of an Event of Default and an acceleration of the Notes, Available Amounts (after the Base Servicing Fee has been paid and certain Advances have been reimbursed) will be applied to pay interest and principal (1) first, to the Class A-1 Notes and the Variable Pay Term Notes on a pro rata basis (x) with respect to interest, based on the respective aggregate amounts of interest due to those classes of notes and (y) with respect to principal, based on the respective outstanding principal balances of those classes of notes, until the outstanding principal balance of those classes of notes have been paid in full, (2) second, to the Class A-2 Notes, the Class A-3 Notes on a pro rata basis (x) with respect to interest, based on the respective aggregate amounts of interest due to those classes of notes and (y) with respect to principal, based on the respective outstanding principal balances of those classes of notes, until the outstanding principal balance of those classes of notes have been paid in full and (3) third, to the S-42 181 Class B Notes, until the outstanding principal balance of an accrued interest on the Class B Notes has been paid in full. Notwithstanding the foregoing, if amounts actually allocated to pay the Base Servicing Fee and the Noteholders on any Distribution Date are less than the Base Servicing Fee and the Noteholders' Distributable Amount, funds will be withdrawn from the Reserve Account so that an amount equal to the Base Servicing Fee and the Noteholders' Distributable Amount may be paid to the Servicer and allocated to the Noteholders, respectively. No principal payments on the Certificates will be made until all of the Notes have been paid in full. Thereafter, Certificateholders' Principal Distributable Amount will be allocated among the Certificates so that no principal payments will be made on the Class D Certificates until the Class C Certificates have been paid in full. Notwithstanding the foregoing, if amounts actually allocated to the Class C Certificateholders on any Distribution Date is less than the Certificateholders' Distributable Amount, funds will be withdrawn from the Reserve Account (after funds have been withdrawn for the benefit of the Noteholders) so that an amount equal to the Certificateholders' Distributable Amount may be allocated to the Class C Certificateholders. For the purposes of this Prospectus Supplement, the following terms will have the following meanings: The "Certificateholders' Distributable Amount" will mean, with respect to any Distribution Date, the sum of the Certificateholders' Interest Distributable Amount for all classes of Certificates plus the Certificateholders' Principal Distributable Amount for that Distribution Date for the most senior class of Certificates. The "Certificateholders' Interest Distributable Amount" will mean, with respect to any Distribution Date and a class of Certificates, the sum of the Certificateholders' Monthly Interest Distributable Amount for that class plus any outstanding Certificateholders' Interest Carryover Shortfall for that class as of the close of the immediately preceding Distribution Date. The "Certificateholders' Interest Carryover Shortfall" will mean, with respect to any Distribution Date and a class of Certificates, the excess, if any, of the sum of the Certificateholders' Monthly Interest Distributable Amount for that class for the preceding Distribution Date plus any outstanding Certificateholders' Interest Carryover Shortfall for that class on that preceding Distribution Date, over the amount of interest that is actually paid on the Certificates on that preceding Distribution Date, plus, to the extent permitted by applicable law, interest on the Certificateholders' Interest Carryover Shortfall at the related Pass Through Rate for the related Interest Period. The "Certificateholders' Monthly Interest Distributable Amount" will mean, with respect to any Distribution Date and a class of Certificates, interest accrued for the related Interest Period at the related Pass Through Rate for that class of Certificates on the Certificate Balance of that class on the immediately preceding Distribution Date, after giving effect to all payments of principal to Certificateholders of that class on or prior to that Distribution Date (or, in the case of the first Distribution Date, on the Original Certificate Balance of that class of Certificates). The "Original Certificate Balance" will equal $ for the Class C Certificates and $ for the Class D Certificates, and the "Certificate Balance," for any Distribution Date and a class of Certificates, will equal the Original Certificate Balance of that class, reduced by all amounts distributed on or prior to that Distribution Date on the Certificates of that class and allocable to principal. The "Certificateholders' Monthly Principal Distributable Amount" will mean, with respect to any Distribution Date, the Certificateholders' Percentage of the Allocable Principal for that Distribution Date. The "Certificateholders' Percentage" will mean the following: 1. for each Distribution Date until the Distribution Date on which the principal amount of all of the Notes has been paid in full, 0%; S-43 182 2. for the Distribution Date on which the principal amount of all the Notes has been paid in full, the percentage of Allocable Principal remaining after the Notes have been paid in full; and 3. for each Distribution Date after the Distribution Date on which the principal amount of all of the Notes is reduced to zero, 100%. The "Certificateholders' Principal Carryover Shortfall" will mean, with respect to any Distribution Date and a class of Certificates, the excess, if any, of the Certificateholders' Monthly Principal Distributable Amount plus any outstanding Certificateholders' Principal Carryover Shortfall for that class for the preceding Distribution Date over the amount in respect of principal that is actually paid as principal on that class on that Distribution Date. The "Certificateholders' Principal Distributable Amount" will mean, with respect to any Distribution Date and a class of Certificates, the sum of: 1. the Certificateholders' Monthly Principal Distributable Amount for that Distribution Date; and 2. on the Final Scheduled Distribution Date for that class of Certificates, the amount necessary to reduce the outstanding principal amount of that class of Certificates to zero; provided, however, that the Certificateholders' Principal Distributable Amount with respect to a class of Certificates shall not exceed the Certificate Balance of that class of Certificates. The "Noteholders' Distributable Amount" will mean, with respect to any Distribution Date, the sum of the Noteholders' Interest Distributable Amount for all classes of Notes plus the Noteholders' Principal Distributable Amount for that Distribution Date for the most senior class of Notes. The "Noteholders' Interest Carryover Shortfall" will mean, with respect to any Distribution Date and a class of Notes, the excess, if any, of the sum of the Noteholders' Monthly Interest Distributable Amount for that class for the preceding Distribution Date plus any outstanding Noteholders' Interest Carryover Shortfall for that class on that preceding Distribution Date, over the amount in respect of interest that is actually paid on the Notes of that class on that preceding Distribution Date, plus, to the extent permitted by applicable law, interest on the Noteholders' Interest Carryover Shortfall at the related Interest Rate for the related Interest Period. The "Noteholders' Interest Distributable Amount" will mean, with respect to any Distribution Date, the sum of the Noteholders' Monthly Interest Distributable Amount for all classes of Notes and the Noteholders' Interest Carryover Shortfall for all classes of Notes with respect to that Distribution Date. The "Noteholders' Monthly Interest Distributable Amount" will mean, with respect to any Distribution Date and a class of Notes, interest accrued for the related Interest Period at the related Interest Rate for that class on the outstanding principal amount of that class on the immediately preceding Distribution Date, after giving effect to all payments of principal to Noteholders of that class on or prior to that Distribution Date (or, in the case of the first Distribution Date, on the original principal amount of that class). The "Noteholders' Monthly Principal Distributable Amount" will mean, with respect to any Distribution Date, the Noteholders' Percentage of Allocable Principal for that Distribution Date. The "Noteholders' Percentage" will mean: 1. for each Distribution Date until the Distribution Date on which the principal amounts of all of the Notes have been paid in full, 100%; 2. for the Distribution Date on which the Notes have been paid in full, the percentage of Allocable Principal needed to pay the Notes in full; and 3. thereafter, 0%. The "Noteholders' Principal Carryover Shortfall" will mean, with respect to any Distribution Date and a class of Notes, the excess, if any, of the Noteholders' Monthly Principal Distributable Amount S-44 183 for that class for the preceding Distribution Date over the amount in respect of principal that is actually paid as principal on that class on that Distribution Date. Noteholders' Principal Carryover Shortfall is not used to determine the amount of principal due on the Notes on any Distribution Date, but is used solely for reporting purposes. See "Description of the Transfer and Servicing Agreements -- Statements to Securityholders" in the accompanying Prospectus. The "Noteholders' Principal Distributable Amount" will mean, with respect to any Distribution Date and a class of Notes, the sum of: 1. the Noteholders' Monthly Principal Distributable Amount; and 2. on the Final Scheduled Distribution Date for that class of Notes, the amount necessary to reduce the outstanding principal amount of that class of Notes to zero; provided, however, that the Noteholders' Principal Distributable Amount with respect to a class of Notes shall not exceed the outstanding principal amount of that class. The "Principal Distributable Amount" will mean, with respect to any Distribution Date and the related Collection Period, the sum of the following amounts: 1. the principal portion of all payments actually received on the Receivables during that Collection Period; 2. the principal portion of all prepayments and partial prepayments received during that Collection Period (to the extent those amounts are not included in clause (1) above); and 3. the Principal Balance of each Receivable that the Servicer became obligated to purchase, the Seller became obligated to repurchase or that became a Defaulted Receivable during that Collection Period (to the extent those amounts are not included in clauses (1) or (2) above). SUBORDINATION; ACCUMULATION ACCOUNT; VPTN PROCEEDS ACCOUNT; RESERVE ACCOUNT The rights of the Noteholders and the Certificateholders to receive payments with respect to the Receivables will be subordinated to the rights of the Servicer to receive the Total Servicing Fee, any additional servicing compensation described under "Description of the Transfer and Servicing Agreements -- Servicing Compensation" in this Prospectus Supplement and the reimbursement of outstanding Advances. SUBORDINATION In addition, the rights of the Noteholders to receive distributions on the Receivables will be subject to the priorities set forth under "Summary -- Terms of the Notes" and "Distributions on the Notes and the Certificates -- Payment of Distributable Amounts" in this Prospectus Supplement. The rights of the Certificateholders to receive payments on the Receivables will be subordinated to the rights of the Noteholders to the extent described herein. The rights of the Class D Certificateholders to receive payments on the Receivables will be further subordinated to the rights of the Class C Certificateholders and the maintenance of amounts on deposit in the Reserve Account at the Specified Reserve Account Balance, in each case to the extent described herein. ACCUMULATION ACCOUNT Pursuant to the Sale and Servicing Agreement, the Servicer will establish an account with the Indenture Trustee for the purpose of depositing certain amounts as described herein (the "Accumulation Account"). If on any Distribution Date no Variable Pay Term Notes are outstanding and the Class A Notes remain outstanding but no Class A Notes are outstanding for which the Targeted Scheduled S-45 184 Distribution Date has occurred, amounts which would otherwise be allocable to principal payments shall instead be deposited into the Accumulation Account. No funds will be deposited in the Accumulation Account (i) on any Distribution Date after the Notes have been accelerated following the occurrence of an Event of Default until all Events of Default have been cured or waived as provided in the Indenture, (ii) on any Distribution Date after the Class A Notes and the Variable Pay Term Notes have been paid in full or (iii) if more than one subclass of Class A Notes have not been paid in full on their respective Targeted Scheduled Distribution Dates. The amounts on deposit in the Accumulation Account will be invested in Eligible Investments. If a deposit is made into the Accumulation Account, the required balance of the Reserve Account will be increased to compensate in part for any negative carry between the interest earned on the Eligible Investments and the interest payable on the Notes and Certificates and the Base Servicing Fee. VPTN PROCEEDS ACCOUNT The Indenture Trustee will establish the VPTN Proceeds Account for the benefit of the holders of the Class A Notes. On each date of issuance of a Variable Pay Term Note, the Indenture Trustee will instruct the purchaser of a Variable Pay Term Note to deposit the purchase price in the VPTN Proceeds Account on or before the corresponding Targeted Scheduled Distribution Date. Amounts on deposit in the VPTN Proceeds Account shall be applied to the payment of principal on the related subclass or subclasses of the Class A Notes sequentially according to their lowest numerical designation until all Class A Notes are paid in full. RESERVE ACCOUNT The protection afforded to the Noteholders through subordination will be effected both by the preferential right of the Noteholders to receive, to the extent described in this Prospectus Supplement, current distributions on the Receivables and by the establishment and maintenance of a segregated trust account containing money and other property deposited therein pursuant to the Sale and Servicing Agreement (the "Reserve Account"). Although the Class C Certificates are subordinated to the rights of the Noteholders, the Class C Certificateholders have a preferential right to receive current distributions on the Receivables before the Class D Certificateholders to the extent described in this Prospectus Supplement and the establishment of the Reserve Account. The Reserve Account will be a segregated account in the name of the Indenture Trustee and pledged to the Indenture Trustee for the benefit of the Noteholders and Certificateholders. The Reserve Account will be created with an initial deposit by the Seller on the Closing Date of an amount equal to $ (the "Reserve Account Initial Deposit"). The Reserve Account will thereafter be funded by the deposit therein of all Excess Amounts, if any, for each Distribution Date to the extent necessary to restore or bring the amounts on deposit in the Reserve Account to the Specified Reserve Account Balance. Notwithstanding the foregoing, on each Distribution Date, to the extent that amounts deposited in the Collection Account during the related Collection Period are insufficient to fully reimburse the Servicer for Advances made by it which are required to be reimbursed under the Sale and Servicing Agreement, amounts then on deposit in the Reserve Account will be applied to reimburse the Servicer in full before any amounts therein are applied for the payments on the Notes or Certificates. Amounts held from time to time in the Reserve Account will continue to be held for the benefit of holders of the Notes and the Class C Certificateholders and may be invested in Eligible Investments. Income on such Eligible Investments (net of losses and expenses) will be paid to the Seller on each Distribution Date. If the amount on deposit in the Reserve Account on any Distribution Date (after giving effect to all deposits to and withdrawals from the Reserve Account on that Distribution Date) is greater than the Specified Reserve Account Balance for that Distribution Date, the Indenture Trustee will include the amount of the excess in the amounts to be distributed to Class D Certificateholders pursuant to clauses (9) and (10) in the first paragraph under "Distributions on the Notes and the Certificates -- Payment of Distributable Amounts" in this Prospectus Supplement. Upon any distribution to the Class D S-46 185 Certificateholders of amounts in excess of the Specified Reserve Account Balance, the Noteholders will not have any rights in, or claims to, those amounts. Any excess amounts remaining thereafter will be paid to the Seller. The "Specified Reserve Account Balance" will initially be [ ]. In the event, however, 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 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 [ ]%, 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 principal balance of the Notes and Certificates as of the preceding Distribution Date (after giving effect to payments of principal made on such Distribution Date). In addition, if a deposit is to be made into the Accumulation Account on any Distribution Date or was made on any prior Distribution Date, the Specified Reserve Account Balance will be increased to compensate in part for any negative carry between the Interest Rates payable on the Notes and Certificates (and the Base Servicing Fee) and the Interest Rate payable on Eligible Investments in the Accumulation Account in an amount equal to the product of (i) the amount remaining on deposit in the Accumulation Account after giving effect to any withdrawals or deposits on such Distribution Date, (ii) a fraction, the numerator of which is the number of Distribution Dates after such Distribution Date through and including the next Distribution Date that is a Targeted Scheduled Distribution Date for any subclass of the Class A Notes and the denominator of which is 12, and (iii) the weighted average interest rate of the securities offered pursuant to this Prospectus Supplement minus [2.50]%. The Servicer may, from time to time after the date of this Prospectus Supplement, request each rating agency to approve a formula for determining the Specified Reserve Account Balance that is different from those described above or change the manner by which the Reserve Account is funded. If each rating agency delivers a letter to the Owner Trustee to the effect that the use of any new formula will not result in a qualification, reduction or withdrawal of its then-current rating of any class of the Notes or the Class C Certificates, then the Specified Reserve Account Balance will be determined in accordance with the new formula. The Sale and Servicing Agreement will accordingly be amended, without the consent of any Noteholder or Certificateholder, to reflect the new calculation. The Seller will not be required to refund any amounts properly distributed or paid to it, whether or not there are sufficient funds on any subsequent Distribution Date to make full distributions to the Securityholders. The Reserve Account and the subordination of the Certificates are intended to enhance the likelihood of receipt by Noteholders of the full amount of principal and interest due them and to decrease the likelihood that the Noteholders will experience losses. However, the Reserve Account could be depleted. If the amount required to be deposited into or required to be withdrawn from the Reserve Account to cover shortfalls in collections on the Receivables exceeds the amount of available cash in the Reserve Account, Noteholders could incur losses or suffer a temporary shortfall in the amounts distributed to the Noteholders. In that event, the Class C Certificateholders will first incur the losses, but the Class B Noteholders will be the second to incur those losses because payments of principal of and interest on the Class B Notes are subordinated to payments of principal of and interest on the Class A Notes. To a lesser extent, the Reserve Account and the subordination of the Class D Certificates are intended to enhance the likelihood of receipt by the Class C Certificateholders of the full amount of principal and interest due them and to decrease the likelihood that the Class C Certificateholders will S-47 186 experience losses. However, the right of the Class C Certificateholders to the amounts on deposit in the Reserve Account is subordinated to the similar right of the Noteholders and, in any event, the Reserve Account could be depleted. If the amount required to be deposited into or required to be withdrawn from the Reserve Account to cover shortfalls in collections on the Receivables exceeds the amount of available cash in the Reserve Account, the Class C Certificateholders could incur losses or suffer a temporary shortfall in the amounts distributed to the Certificateholders. DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS THE TRANSFER AND SERVICING AGREEMENTS The description of the terms of the Indenture, the Sale and Servicing Agreement, the Administration Agreement and the Trust Agreement (collectively, the "Transfer and Servicing Agreements") in this Prospectus Supplement does not purport to be complete and is subject to, and qualified in its entirety by reference to, all the provisions of the Transfer and Servicing Agreements. Forms of the Transfer and Servicing Agreements have been filed as exhibits to the Registration Statement. Copies of the final signed Transfer and Servicing Agreements will be filed with the SEC following the issuance of the Securities. Any description of the Transfer and Servicing Agreements in this Prospectus Supplement supplements, and to the extent inconsistent replaces, the description of the general terms and provisions of the Transfer and Servicing Agreements set forth in the accompanying Prospectus, to which description reference is hereby made. SALE AND ASSIGNMENT OF RECEIVABLES Information with respect to the conveyance of the Receivables from the Seller to the Trust on the Closing Date pursuant to the Sale and Servicing Agreement is set forth under "Description of the Transfer and Servicing Agreements -- Sale and Assignment of Receivables" in the accompanying Prospectus. ACCOUNTS In addition to the accounts referred to under "Description of the Transfer and Servicing Agreements -- Accounts" in the accompanying Prospectus, the Servicer will also establish with and pledge to the Indenture Trustee the Reserve Account. The Reserve Account will not be property of the Trust. The Yield Supplement Account established in the name of the Indenture Trustee [will] [will not] be property of the Trust. COLLECTIONS The Servicer will deposit all payments on Receivables received from Obligors and all proceeds of Receivables collected during each Collection Period into the Collection Account not later than the Business Day after receipt. However, so long as NMAC is the Servicer, if each condition to making monthly deposits as may be required by the Sale and Servicing Agreement (including the satisfaction of specified ratings criteria by NMAC and the absence of any Servicer Default) is satisfied, the Servicer may retain such amounts until the related Distribution Date. The Servicer or the Seller, as the case may be, will remit the aggregate Warranty Purchase Payments and Administrative Purchase Payments of Receivables to be purchased from the Trust to the Collection Account on the Business Day immediately preceding the Distribution Date. The Servicer will be entitled to withhold, or to be reimbursed from amounts otherwise payable into or on deposit in the Collection Account, amounts previously deposited in the Collection Account but later determined to have resulted from mistaken deposits or postings. Except in certain circumstances described in the Sale and Servicing Agreement, pending deposit into the Collection Account, collections may be employed by the Servicer at its own risk and for its own benefit and will not be segregated from its own funds. The Servicer, at its own risk and for its own benefit, may instruct the Owner Trustee to invest amounts held in the Collection Account in Eligible Investments from the time S-48 187 deposited until the related Distribution Date. See "Description of the Transfer and Servicing Agreements -- Collections" in the accompanying Prospectus. "Eligible Investments" will be specified in the Sale and Servicing Agreement and will be limited to investments which meet the criteria of each rating agency from time to time as being consistent with its then-current ratings of the Securities. Collections on or in respect of a Receivable made during a Collection Period (including Warranty Purchase Payments and Administrative Purchase Payments) will be applied first to interest accrued to date, second to principal until the principal balance is brought current, third to reduce the unpaid late charges as provided in the Receivable and finally to prepay principal of the Receivable. See "Description of the Transfer and Servicing Agreements -- Collections" in the accompanying Prospectus. ADVANCES On or before the Business Day prior to each Distribution Date, the Servicer will be obligated to make a payment into the Collection Account for each Receivable of an amount equal to the product of the principal balance of the Receivable as of the first day of the related Collection Period and one-twelfth of its APR minus the amount of interest actually received on the Receivable during the Collection Period (an "Advance"). If the calculation results in a negative number, an amount equal to the negative amount will be paid to the Servicer in reimbursement of outstanding Advances. In addition, if a Receivable becomes a Liquidated Receivable, the amount of accrued and unpaid interest on that Receivable (but not including interest for the current Collection Period) will, up to the amount of outstanding Advances in respect thereof, be withdrawn from the Collection Account and paid to the Servicer in reimbursement of the outstanding Advances. The Servicer will not be required to make any Advances (other than the Advance of an interest shortfall arising from a prepaid Receivable) to the extent that it does not expect to recoup the Advance from subsequent collections or recoveries. No advances of principal will be made with respect to the Receivables. See "Description of the Transfer and Servicing Agreements -- Advances" in the accompanying Prospectus. SERVICING COMPENSATION The base servicing fee for the calendar month immediately preceding any Distribution Date (a "Collection Period") will be one-twelfth of 1.00% (the "Servicing Rate") of the Pool Balance as of the last day of the preceding Collection Period or, in the case of the first Distribution Date, the Pool Balance as of the Cut-off Date (the "Base Servicing Fee"). The Base Servicing Fee, together with any previously unpaid Base Servicing Fee, will be paid on each Distribution Date solely to the extent of Available Amounts (and, if necessary, amounts available in the Reserve Account). The Servicer will be entitled to collect and retain as additional servicing compensation in respect of each Collection Period any late fees, prepayment charges and any other administrative fees and expenses or similar charges collected during that Collection Period, plus any investment earnings or interest earned during that Collection Period from the investment of monies on deposit in the Collection Account (the "Supplemental Servicing Fee"). See "Description of the Transfer and Servicing Agreements -- Collections" in this Prospectus Supplement and "Description of the Transfer and Servicing Agreements -- Servicing Compensation" in the accompanying Prospectus. The Servicer will be paid the Base Servicing Fee and the Supplemental Servicing Fee (collectively the "Total Servicing Fee") for each Collection Period on the following Distribution Date related to that Collection Period. However, if it is acceptable to each rating agency without a reduction in the rating of each class of Notes and the Class C Certificates, the Base Servicing Fee in respect of a Collection Period (together with any portion of the Base Servicing Fee that remains unpaid from prior Distribution Dates) will be paid at the beginning of that Collection Period out of collections of interest on the Receivables for that Collection Period. The Base Servicing Fee will be paid from Available Amounts (and, if necessary, amounts available in the Reserve Account) prior to the payment of the Noteholders' Distributable Amounts or Certificateholders' Distributable Amounts. S-49 188 YIELD SUPPLEMENT ACCOUNT AND YIELD SUPPLEMENT AGREEMENT Payments of the Yield Supplement Deposit will be made from funds on deposit in a segregated trust account (the "Yield Supplement Account") to be established by the [Seller who] [Trust in the name of the Indenture Trustee and the Trust which] will pledge the trust account to secure the Notes and the Class C Certificateholders. The Yield Supplement Account [will][will not] be part of the Trust property and will be funded by the Seller with [[a capital contribution to the Trust by depositing an amount equal to $_______] [a deposit of an amount equal to $_________] [in cash]] [, a transfer of retail installment sales contracts with an aggregate principal balance, as of the Cut-Off Date, of $________ to the Trust] [and a transfer of receivables or other assets (including vehicle lease contracts) in an amount, collectively, equal to $________ to the Trust] ([the] [collectively,] "Initial Yield Supplement Amount"). The "Yield Supplement Deposit" for each Distribution Date means an aggregate amount (if positive), calculated by the Servicer, by which (1) one month's interest on the principal balance as of the first day of the related Collection Period of each Yield Supplemented Receivable (other than a Defaulted Receivable, after the Collection Period in which that Receivable became a Defaulted Receivable) at a rate equal to the Required Rate exceeds (2) one month's interest on that principal balance at that Yield Supplemented Receivable's APR. "Yield Supplemented Receivables" are Receivables that have APRs which are less than the Required Rate. The "Required Rate" means, with respect to any Distribution Date, the sum of (1) the [interest rate on the Class B Notes] [weighted average Interest Rate of the securities offered pursuant to the prospectus supplement] and (2) the Servicing Rate of 1.00%. If the Yield Supplement Deposit for any Distribution Date exceeds the amount available for withdrawal from the Yield Supplement Account on that Distribution Date, the Seller will not have any further obligation under the Yield Supplement Agreement to deposit any further amounts into the Yield Supplement Account. The amount required to be on deposit in the Yield Supplement Account (the "Required Yield Supplement Amount") will be equal to the lesser of (A) the maximum aggregate Yield Supplement Deposits that will become due on future Distribution Dates, 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 (B) the Initial Yield Supplement Amount. The amount on deposit in the Yield Supplement Account may decline as a result of prepayments or repayments in full of the Receivables. To the extent that on any Distribution Date the amount on deposit in the Yield Supplement Account exceeds the Required Yield Supplement Amount on that Distribution Date, after giving effect to all distributions to be made on such Distribution Date, the excess will be deposited in the Collection Account for distribution in accordance with the Sale and Servicing Agreement. Simultaneously with the sale and assignment of the Receivables by NMAC to the Seller, the Seller will enter into the Yield Supplement Agreement with the Indenture Trustee, the Servicer, and the Trust. NET DEPOSITS As an administrative convenience and as long as specified conditions are satisfied, the Servicer will be permitted to make the deposit of collections, aggregate Advances and amounts deposited in respect of purchases of Receivables by the Seller or the Servicer for or with respect to the related Collection Period net of payments to be made to the Servicer with respect to that Collection Period. The Servicer, however, will account for the foregoing deposits and payments as if all of the foregoing deposits and payments were made individually. See "Description of the Transfer and Servicing Agreements -- Net Deposits" in the accompanying Prospectus. OPTIONAL PURCHASE The outstanding Notes and the Certificates will be paid in full on any Distribution Date on which the Servicer or any successor to the Servicer exercises its option to purchase the Receivables. The Servicer or any successor to the Servicer may purchase the Receivables when the Pool Balance shall have declined to 10% or less of the Pool Balance as of the Cut-off Date, for the price as described in the accompanying Prospectus under "Description of the Transfer and Servicing Agreements -- Termination." The "Redemption Price" for the outstanding Notes will be equal to the unpaid principal amount of the outstanding Notes plus accrued and unpaid interest on those Notes and for the Certificates will equal the Certificate Balance of S-50 189 the Class C Certificates and Class D Certificates on the date of the optional purchase plus accrued and unpaid interest on the Certificates. REMOVAL OF SERVICER The Indenture Trustee or Noteholders evidencing a majority of the voting interests of Notes (voting as a single class) may terminate the rights and obligations of the Servicer under the Sale and Servicing Agreement upon: 1. any failure by the Servicer (or the Seller, so long as NMAC is the Servicer) to deliver to the Owner Trustee or the Indenture Trustee, as applicable, for deposit in any account any required payment or to direct the Owner Trustee or the Indenture Trustee, as applicable, to make any required distributions from that account, and that failure continues unremedied for three Business Days after (a) receipt by the Servicer (or the Seller, so long as NMAC is the Servicer) of written notice of the failure from the Owner Trustee or the Indenture Trustee, as applicable, (b) receipt by the Servicer (or the Seller, so long as NMAC is the Servicer) and the Owner Trustee or the Indenture Trustee, as applicable, of written notice of the failure from the holders of Notes or Certificates evidencing not less than 25% in principal amount of the outstanding Notes and the Certificates, acting together as the single class, or (b) discovery of that failure by any officer of the Servicer; 2. any failure by the Servicer (or the Seller, as long as NMAC is the Servicer) to duly observe or perform in any material respect any other covenants or agreements of the Servicer (or the Seller, as long as NMAC is the Servicer) set forth in the Sale and Servicing Agreement, and that failure materially and adversely affects the rights of the Noteholders or the Certificateholders, and that failure continues unremedied for 90 days after the giving of written notice of the failure to (a) the Servicer (or the Seller, so long as NMAC is the Servicer) by the Owner Trustee or the Indenture Trustee, or (b) the Servicer (or the Seller, so long as NMAC is the Servicer) and the Owner Trustee or the Indenture Trustee, as applicable, by the holders of Notes evidencing not less than 25% in principal amount of those outstanding Notes or holders of Certificates evidencing not less than 25% of the balance attributable to the Certificates, each acting together as a single class; and 3. the occurrence of an insolvency event with respect to the Servicer. Under those circumstances, authority and power shall, without further action, pass to and be vested in the Indenture Trustee or a successor Servicer appointed under the Sale and Servicing Agreement. If, however, a bankruptcy trustee or similar official has been appointed for the Servicer, and no Servicer Default other than the appointment of a bankruptcy trustee or similar official has occurred, that trustee or official may have the power to prevent the Indenture Trustee or the Noteholders from effecting a transfer of servicing. Upon receipt of notice of the occurrence of a Servicer Default, the Indenture Trustee shall give notice thereof to the rating agencies. Upon payment in full of the principal and interest on the Notes, the Certificateholders will succeed to the rights of the Noteholders with respect to removal of the Servicer. SELLER LIABILITY Under the Trust Agreement and the Indenture, the Seller will be liable to injured parties only to the extent specified therein. TERMINATION OF THE SALE AND SERVICING AGREEMENT The respective obligations of the Seller, the Servicer, NMAC (so long as NMAC has rights or obligations thereunder), the Owner Trustee and the Indenture Trustee, as the case may be, pursuant to the Sale and Servicing Agreement will 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 and (ii) the election by the Servicer to purchase the corpus of the Trust as described in S-51 190 "Description of the Transfer and Servicing Agreements -- Optional Purchase" in this Prospectus Supplement 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. DUTIES OF THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE The Owner Trustee will make no representations as to the validity or sufficiency of the Trust Agreement, the Certificates (other than the authentication of the Certificates), the Notes or of any Receivables or related documents and is not accountable for the use or application by the Seller or the Servicer of any funds paid to the Seller or the Servicer in respect of the Notes, the Certificates or the Receivables, or the investment of any monies by the Servicer before those monies are deposited into the Collection Account. The Owner Trustee will not independently verify the Receivables. The Owner Trustee is required to perform only those duties specifically required of it under the Trust Agreement. In addition to making distributions to the Certificateholders, those duties generally are limited to the receipt of the various certificates, reports or other instruments required to be furnished to the Owner Trustee under the Trust Agreement, in which case it will only be required to examine them to determine whether they conform on their face to the requirements of the Trust Agreement. The Owner Trustee will be under no obligation to exercise any of the rights or powers vested in it by the Trust Agreement or to make any investigation of matters arising under the Trust Agreement or to institute, conduct or defend any litigation under the Trust Agreement or in relation thereto at the request, order or direction of any of the Certificateholders, unless those Certificateholders have offered to the Owner Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred by the Owner Trustee in connection with the exercise of those rights. No Certificateholder will have any right under the Trust Agreement to institute any proceeding with respect to the Trust Agreement, other than with respect to the failure by the Seller or the Servicer, as applicable, to remit payment, unless that Certificateholder has previously given to the Owner Trustee written notice of default and unless the holders of Certificates evidencing not less than 25% of the voting interests of the Certificates, acting together as a single class, have made written request upon the Owner Trustee to institute that proceeding in its own name as the Owner Trustee under the Trust Agreement and have offered to the Owner Trustee reasonable indemnity and the Owner Trustee for 30 days has neglected or refused to institute that proceeding. The Indenture Trustee will make no representations as to the validity or sufficiency of the Indenture, the Certificates, the Notes (other than authentication of the Notes) or of any Receivables or related documents, and is not accountable for the use or application by the Seller or the Servicer of any funds paid to the Seller or the Servicer in respect of the Notes, the Certificates or the Receivables, or the investment of any monies by the Servicer before those monies are deposited into the Collection Account. The Indenture Trustee will not independently verify the Receivables. The Indenture Trustee is required to perform only those duties specifically required of it under the Indenture. In addition to making distributions to the Noteholders, those duties generally are limited to the receipt of the various certificates, reports or other instruments required to be furnished to the Indenture Trustee under the Indenture, in which case it will only be required to examine them to determine whether they conform on their face to the requirements of the Indenture. The Indenture Trustee will be under no obligation to exercise any of the rights or powers vested in it by the Indenture or to make any investigation of matters arising under the Indenture or to institute, conduct or defend any litigation under the Indenture or in relation thereto at the request, order or direction of any of the Noteholders, unless those Noteholders have offered to the Indenture Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred by the Indenture Trustee in connection with the exercise of those rights. No Noteholder will have any right under the Indenture to institute any proceeding with respect to the Indenture, unless that Noteholder previously has given to the Indenture Trustee written notice of the Event of Default and (1) the Event of Default arises from the Servicer's failure to remit payments when due or (2) the holders of the Notes evidencing not less than 25% of the voting interests of the Notes, acting together as a single class, have made written request S-52 191 upon the Indenture Trustee to institute that proceeding in its own name as the Indenture Trustee under the Indenture and have offered to the Indenture Trustee reasonable indemnity and the Indenture Trustee for 60 days has neglected or refused to institute that proceeding. LIST OF NOTEHOLDERS Three or more Noteholders of any class in a series or one or more Noteholder of that class evidencing not less that 25% of the aggregate principal amount of those Notes then outstanding may, by written request to the Indenture Trustee, obtain access to the list of all Noteholders maintained by the Indenture Trustee for the purpose of communicating with other Noteholders with respect to their rights under the related Indenture or under those Notes. However, the Indenture Trustee may elect not to afford the requesting Noteholders access to the list of Noteholders if the Indenture Trustee agrees to mail the desired communication or proxy, on behalf of and at the expense of the requesting Noteholders, to all Noteholders. Three or more holders of the Certificates of any class in a series or one or more holders of those Certificates of that class evidencing not less than 25% of the Certificate Balance of those Certificates may, by written request to the Owner Trustee, obtain access to the list of all Certificateholders maintained by the Owner Trustee for the purpose of communicating with other Certificateholders with respect to their rights under the related Trust Agreement or Pooling and Servicing Agreement or under those Certificates. THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE [ ] will be the Owner Trustee under the Trust Agreement. As a matter of Delaware law, the Trust will be viewed as a separate legal entity, distinct from the Owner Trustee, and the Trust will be viewed as the issuer of the Certificates. [ ] will be the Indenture Trustee under the Indenture. The Owner Trustee, the Indenture Trustee and any of their respective affiliates may hold Certificates in their own names or as pledgees. For the purpose of meeting the legal requirements of some jurisdictions, the Servicer and the Owner Trustee or the Servicer and the Indenture Trustee, in each case acting jointly (or in some instances, the Owner Trustee or the Indenture Trustee acting alone), will have the power to appoint co-trustees or separate trustees of all or any part of the Trust. In the event of an appointment of co-trustees or separate trustees, all rights, powers, duties and obligations conferred or imposed upon the Owner Trustee by the Sale and Servicing Agreement and the Trust Agreement or the Indenture Trustee by the Indenture will be conferred or imposed upon the Owner Trustee or the Indenture Trustee and each of their respective separate trustees or co-trustees jointly, or, in any jurisdiction in which the Owner Trustee or the Indenture Trustee will be incompetent or unqualified to perform specified acts, singly upon that separate trustee or co-trustee who will exercise and perform those rights, powers, duties and obligations solely at the direction of the Owner Trustee or the Indenture Trustee. The Owner Trustee and the Indenture Trustee may resign at any time, in which event the Servicer will be obligated to appoint a successor thereto. The Administrator may also remove the Owner Trustee or the Indenture Trustee if either ceases to be eligible to continue as trustee under the Trust Agreement or the Indenture, as the case may be, becomes legally unable to act or becomes insolvent. In those circumstances, the Servicer will be obligated to appoint a successor Owner Trustee or Indenture Trustee, as applicable. Any resignation or removal of the Owner Trustee or the Indenture Trustee and appointment of a successor thereto will not become effective until acceptance of the appointment by the successor. The Trust Agreement will provide that the Servicer will pay the fees of the Owner Trustee and the Indenture Trustee in connection with their duties under the Trust Agreement and Indenture, respectively. The Trust Agreement and Indenture will further provide that the Owner Trustee and the Indenture Trustee will be entitled to indemnification by NMAC for, and will be held harmless against, any loss, liability, fee, disbursement or expense incurred by the Owner Trustee or the Indenture Trustee not resulting from its own willful misfeasance, bad faith or negligence (other than by reason of a breach of any of its representations or warranties set forth in the Trust Agreement or the Indenture, as the case may be). S-53 192 The Trust Agreement and the Indenture will further provide that the Servicer will indemnify the Owner Trustee and the Indenture Trustee for specified taxes that may be asserted in connection with the transaction. MATERIAL INCOME TAX CONSEQUENCES TAX CHARACTERIZATION OF THE TRUST In the opinion of O'Melveny & Myers LLP, tax counsel to the Trust, (i) the Class Notes will be characterized as debt for federal income tax purposes, (ii) although the matter is not free from doubt, the Class B Notes should be treated as debt for tax purposes, and (iii) the Trust will not be characterized as an association (or a publicly traded partnership) taxable as a corporation for federal income and California income and franchise tax purposes. For federal income tax and California income and franchise tax purposes, the Trust will be disregarded as an entity separate from the Seller. As a result, the Trust's assets will be treated as assets of the Seller, and all income, deductions, and other tax items therefrom will be treated as tax items of the Seller. See discussion under "Material Income Tax Consequences -- Tax Treatment of Owner Trusts" in the accompanying Prospectus. TREATMENT OF THE NOTES AS INDEBTEDNESS The Seller and each Certificate Owner will agree, and each beneficial owner of the Notes (each, a "Note Owner") will agree, to treat the Notes as debt for federal income tax purposes. The Seller and the Servicer will agree, and the Certificate Owners will agree by their purchase of the Certificates, to treat the Trust (i) as a partnership for purposes of federal and state income tax, franchise tax and any other tax measured in whole or in part by income, with the assets of the partnership being the assets held by the Trust, the partners of the partnership being the Certificate Owner, and the Notes being debt of the partnership, or (ii) if a single, respectively, owns all of the Certificates and none of the notes are characterized as equity interests in the Trust, as an entity that is to be disregarded for purpose of federal and state income tax, franchise tax and any other tax measured in whole or in part by income, with the assets of the Trust and the Notes treated as assets and indebtedness of the Certificate Owner. However, the proper characterization of the arrangement involving the Trust, the Certificates, the Notes, the Seller and the Servicer is not clear because there is no authority on transactions closely comparable to the transaction described in this prospectus supplement. We refer you to the discussion under "Material Income Tax Consequences -- Tax Treatment of Owner Trusts" in the accompanying prospectus. ERISA CONSIDERATIONS THE NOTES The Notes may, in general, be purchased by or on behalf of Benefit Plans. Although no assurances can be given in this regard, the Notes should be treated as "debt" and not as "equity interests" for purposes of the Plan Assets Regulation because the Notes: 1. are expected to be treated as indebtedness under local law; and 2. should not be deemed to have any "substantial equity features." However, the acquisition and holding of Notes of any class by or on behalf of a Benefit Plan could be considered to give rise to a prohibited transaction under ERISA and Section 4975 of the Code if the Trust, the Owner Trustee, the Indenture Trustee, the Servicer, the Seller, any Certificateholder or any of S-54 193 their respective affiliates, is or becomes a "party in interest" or a "disqualified person" (as defined in ERISA and the Code, respectively) with respect to such Benefit Plan. In such case, certain exemptions from the prohibited transaction rules could be applicable to such acquisition and holding by a Benefit Plan depending on the type and circumstances of the Benefit Plan fiduciary making the decision to acquire a Note. In addition, a fiduciary of a Benefit Plan must determine that the purchase of a Note is consistent with its fiduciary duties under ERISA or any similar applicable law. For additional information regarding the treatment of the Notes under ERISA, see "ERISA Considerations" in the accompanying Prospectus. THE CERTIFICATES The Certificates may not be acquired by a Plan or any entity whose underlying assets include plan assets by reason of a plan's investment in the entity or which uses plan assets to acquire Certificates (a "Plan Investor"). By its acceptance of a Certificate, each Certificateholder will be deemed to have represented and warranted that it is not subject to the foregoing limitation. In addition, a purchaser of Certificates other than a Plan Investor should be aware that a prohibited Transaction could occur if a Certificateholder (or any of its affiliates) is or becomes a party in interest or a disqualified person with respect to a Plan Investor that purchases and holds any Notes unless covered by one or more applicable exemptions. S-55 194 UNDERWRITING Subject to the terms and conditions set forth in an Underwriting Agreement (the "Note Underwriting Agreement"), the Seller has agreed to sell to each of the Note Underwriters named below (collectively, the "Note Underwriters"), and each of the Note Underwriters has severally agreed to purchase, the principal amount of Notes set forth opposite its name below: [TABLE] In the Note Underwriting Agreement, the Note Underwriters have agreed, subject to the terms and conditions set forth in the Note Underwriting Agreement, to purchase all of the Notes if any of the Notes are purchased. This obligation of the Note Underwriters is subject to specified conditions precedent set forth in the Note Underwriting Agreement. The Seller has been advised by the Note Underwriters that they propose initially to offer the Notes to the public at the prices set forth on the cover of this Prospectus Supplement, and to specified dealers at that price less the initial concession not in excess of [ ]% of the denominations of the Notes per Class A-1 Note, [ ]% per Class A-2 Note, [ ]% per Class A-3 Note, and [ ]% per Class B Note. The Note Underwriters may allow, and those dealers may reallow, a concession not in excess of [ ]% per Class A-1 Note, [ ]% per Class A-2 Note, [ ]% per Class A-3 Note and [ ]% per Class B Note to some other dealers. After the initial public offering of the Notes, the public offering price and those concessions may be changed. Subject to the terms and conditions set forth in an Underwriting Agreement (the "Certificate Underwriting Agreement"), the Seller has agreed to cause the Trust to sell to each of the Certificate Underwriters named below (the "Certificate Underwriters" and, together with the Note Underwriters, the "Underwriters"), and each of the Certificate Underwriters has severally agreed to purchase, the principal amount of the Class C Certificates set forth opposite its name below: [TABLE] In the Certificate Underwriting Agreement, the Certificate Underwriters have agreed, subject to the terms and conditions set forth in the Certificate Underwriting Agreement, to purchase all of the Class C Certificates if any of the Class C Certificates are purchased. This obligation of the Certificate Underwriters is subject to specified conditions precedent set forth in the Certificate Underwriting Agreement. The Seller has been advised by the Certificate Underwriters that they propose initially to offer the Class C Certificates to the public at the price set forth on the cover of this Prospectus Supplement, and to some other dealers at that price less the initial concession not in excess of [ ]% per Class C Certificate. The Certificate Underwriters may allow, and those dealers may reallow, a concession not in excess of [ ]% per Class C Certificate to some other dealers. After the initial public offering of the Class C Certificates, the public offering price and those concessions may be changed. The Seller and NMAC have agreed to indemnify the Underwriters against specified liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments which the Underwriters may be required to make in respect thereof. However, in the opinion of the Securities and Exchange Commission, certain indemnification provisions for liability arising under the federal securities law are contrary to public policy and therefore unenforceable. In the ordinary course of their respective S-56 195 businesses, the Underwriters and their respective affiliates have engaged and may engage in investment banking and/or commercial banking transactions with Nissan and its affiliates. The Notes and the Certificates are new issues of securities with no established trading markets. The Seller has been advised by the Note Underwriters that they intend to make a market in the Notes of each class and has been advised by the Certificate Underwriters that they intend to make a market in the Certificates, in each case as permitted by applicable laws and regulations. The Underwriters are not obligated, however, to make a market in the Notes of any class or the Certificates, and that market-making may be discontinued at any time without notice at the sole discretion of the Underwriters. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Notes of any class or the Certificates. The Trust may, from time to time, invest funds in the Accounts in Eligible Investments acquired from the Underwriters. NMAC or its affiliates may apply all or any portion of the net proceeds of the sale of the Receivables to the Seller to the repayment of debt, including "warehouse" debt secured by Receivables and/or to repurchase Receivables sold into a receivables purchase facility. One or more of the Underwriters (or (i) their respective affiliates or (ii) entities for which their respective affiliates act as administrator and/or provide liquidity lines) may have acted as a "warehouse" lender or purchaser to NMAC or its affiliates, and may receive a portion of such proceeds as repayment of such "warehouse" debt or as repurchase proceeds. The Underwriters have advised the Seller that specified persons participating in this offering may engage in transactions over-allotment transactions, stabilizing transactions or syndicate covering transactions. Over-allotment transactions involve syndicate sales in excess of the offering size creating a syndicate short position. Stabilizing transactions permit bids to purchase the Notes so long as the stabilizing bids do not exceed a specified maximum. Syndicate covering transactions involve purchases of the Notes in the open market after the distribution has been completed in order to cover syndicate short positions. Such over-allotment transactions, stabilizing transactions cause prices of the Notes to be higher than they would otherwise be in the absence of such transactions. Neither the Seller nor the Underwriters makes any representation or prediction as to the direction or magnitude of any of that effect on the prices for the Securities. In addition, neither the Seller nor any of the Underwriters represent that the Underwriters that the Underwriters will engage in any such transactions nor that such transactions, one commenced, will not be discontinued without notice. Rule 15c-6 under the Securities Exchange Act of 1934, as amended, generally, requires trades in the secondary market to settle within three business days, unless the parties thereto expressly agree otherwise. Because delivery of Notes to purchasers hereunder will settle more than three business days after the date hereof, purchasers hereunder who wish to trade notes in the secondary market on the date hereof will be required to specify an alternative settlement cycle with their secondary purchasers to prevent a failed settlement of the secondary purchase. Purchasers hereunder who wish to make such secondary trades on the date hereof should consult their own advisors. Each Underwriter will represent that (i) it has not offered or sold and will not offer or sell, prior to the date six months after their date of issuance, any Securities to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted in and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of the Securities to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1997 or is a person to whom the document can otherwise lawfully be issued or passed on. S-57 196 LEGAL OPINIONS In addition to the legal opinions described in the accompanying Prospectus, legal matters relating to the Notes and the Certificates and federal income tax and California state income tax and other matters will be passed upon for the Trust by O'Melveny & Myers LLP. S-58 197 INDEX OF TERMS ABS................................... S-30 ABS Table............................. S-30 Accumulation Account.................. S-45 Administrative Purchase Payments...... S-41 Advance............................... S-49 Allocable Principal................... S-40 APR................................... S-24 Available Amounts..................... S-41 Available Interest.................... S-41 Available Principal................... S-41 Base Servicing Fee.................... S-49 Business Day.......................... S-34 Certificate Balance................... S-43 Certificate Factor.................... S-32 Certificate Underwriters.............. S-56 Certificate Underwriting Agreement.... S-56 Certificateholders.................... S-39 Certificateholders' Distributable Amount.............................. S-43 Certificateholders' Interest Carryover Shortfall........................... S-43 Certificateholders' Interest Distributable Amount................ S-43 Certificateholders' Monthly Interest Distributable Amount................ S-43 Certificateholders' Monthly Principal Distributable Amount................ S-43 Certificateholders' Percentage........ S-43 Certificateholders' Principal Carryover Shortfall................. S-44 Certificateholders' Principal Distributable Amount................ S-44 Certificates.......................... S-38 Class A Notes......................... S-33 Class A-1 Notes....................... S-33 Class A-2 Notes....................... S-33 Class A-3 Notes....................... S-33 Class B Notes......................... S-33 Class C Certificateholders............ S-42 Class D Certificateholders............ S-42 Clearstream Banking Luxembourg.......................... A-1 Closing Date.......................... S-23 Collection Period..................... S-49 Cut-off Date.......................... S-23 Dealer Recourse....................... S-22 Dealers............................... S-23 Defaulted Receivable.................. S-41 Determination Date.................... S-40 Distribution Date..................... S-34 Eligible Investments.................. S-49 Euroclear............................. A-1 Excess Amount......................... S-42 Final Scheduled Distribution Date..... S-28 Financed Vehicles..................... S-23 Global Securities..................... A-1 Indenture Trustee..................... S-23 Initial Yield Supplement Amount....... S-50 Interest Period....................... S-34 Interest Rate......................... S-34 Interest Rate Swap.................... S-37 Liquidated Receivables................ S-41 Net Liquidation Proceeds.............. S-41 Nissan................................ S-33 NMAC.................................. S-22 Non-U.S. Person....................... A-4 Note Factor........................... S-32 Note Underwriters..................... S-56 Note Underwriting Agreement........... S-56 Noteholders' Distributable Amount..... S-44 Noteholders' Interest Carryover Shortfall........................... S-44 Noteholders' Interest Distributable Amount.............................. S-44 Noteholders' Monthly Interest Distributable Amount................ S-44 Noteholders' Monthly Principal Distributable Amount................ S-44 Noteholders' Percentage............... S-44 Noteholders' Principal Carryover Shortfall........................... S-44 Noteholders' Principal Distributable Amount.............................. S-45 Notes................................. S-33 Obligors.............................. S-23 Original Certificate Balance.......... S-43 Owner Trustee......................... S-22 Pass Through Rate..................... S-39 Plan Investor......................... S-55 Pool Balance.......................... S-32 Pool Factor........................... S-32 Principal Distributable Amount........ S-45 Receivables........................... S-23 Redemption Price...................... S-50 Required Rate......................... S-50 Required Yield Supplement Amount...... S-50 Reserve Account....................... S-46 Reserve Account Initial Deposit....... S-46 Sale and Servicing Agreement.......... S-22 Seller................................ S-22 Servicer.............................. S-22 Servicer Default...................... S-38 Servicer Liquidity Advance............ S-37 Servicing Rate........................ S-49 Specified Reserve Account Balance..... S-47 Supplemental Servicing Fee............ S-49 Total Servicing Fee................... S-49 Transfer and Servicing Agreements..... S-48 Trust................................. S-22 Trust Agreement....................... S-22 Underwriters.......................... S-56 Variable Pay Term Notes............... S-33 Warranty Purchase Payments............ S-41 Yield Supplement Account.............. S-50 Yield Supplement Deposit.............. S-50 Yield Supplemented Receivables........ S-50
S-59 198 - ------------------------------------------------------ - ------------------------------------------------------ TABLE OF CONTENTS PROSPECTUS SUPPLEMENT
PAGE ---- Summary.................................... S-5 Risk Factors............................... S-16 The Trust.................................. S-22 Capitalization of the Trust................ S-23 Paying Agents.............................. S-23 The Owner Trustee and the Indenture Trustee.................................. S-23 The Receivables............................ S-23 Maturity and Prepayment Considerations..... S-28 Delinquencies, Repossessions and Net Losses................................... S-28 Weighted Average Life of the Notes......... S-30 Note Factors, Certificate Factors and Pool Factors.................................. S-32 Use of Proceeds............................ S-32 The Seller and the Servicer................ S-32 Financial Condition of Nissan Motor Co., Ltd................................. S-33 The Notes.................................. S-33 The Certificates........................... S-38 Distributions on the Notes and the Certificates............................. S-40 Subordination; Accumulation Account; VPTN Proceeds Account; Reserve Account........ S-45 Description of the Transfer and Servicing Agreements............................... S-48 Material Income Tax Consequences........... S-54 ERISA Considerations....................... S-54 Underwriting............................... S-56 Legal Opinions............................. S-58 Index of Terms............................. S-59 Annex A: Global Clearance, Settlement and Tax Documentation Procedures............. A-1
PROSPECTUS Summary of Terms........................... 3 Risk Factors............................... 8 Formation of the Trusts.................... 14 Property of the Trusts..................... 14 The Receivables............................ 15 Use of Proceeds............................ 16 The Trustee................................ 16 The Seller................................. 17 The Servicer............................... 17 Where You Can Find More Information About Your Securities.......................... 17 Delinquencies, Repossessions and Net Losses................................... 18 Weighted Average Life of the Securities.... 18 Pool Factors and Trading Information....... 18 The Notes.................................. 20 The Certificates........................... 25 Material Information Regarding the Securities............................... 26 Description of the Transfer and Servicing Agreements............................... 38 Material Legal Aspects of the Receivables.............................. 57 Material Income Tax Consequences........... 63 ERISA Considerations....................... 79 Underwriting............................... 80 Legal Opinions............................. 80 Index of Terms............................. 81
DEALER PROSPECTUS DELIVERY OBLIGATION. UNTIL [ , ], ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE NOTES, WHETHER OR NOT PARTICIPATING IN THE OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ 199 $[ ] NISSAN AUTO RECEIVABLES [ ]-[ ] OWNER TRUST $[ ] ASSET BACKED NOTES, CLASS A-1 $[ ] ASSET BACKED NOTES, CLASS A-2 $[ ] ASSET BACKED NOTES, CLASS A-3 $[ ] ASSET BACKED NOTES, CLASS B $[ ] ASSET BACKED CERTIFICATES, CLASS C [NISSAN AUTO RECEIVABLES CORPORATION] [NISSAN AUTO RECEIVABLES CORPORATION II], SELLER NISSAN MOTOR ACCEPTANCE CORPORATION, SERVICER UNDERWRITERS [UNDERWRITERS] - ------------------------------------------------------ - ------------------------------------------------------ 200 ANNEX A GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES Except in specified circumstances, the globally offered Class A Certificates (the "Global Securities") will be available only in book-entry form. Investors in the Global Securities may hold those Global Securities through DTC, Clearstream Banking societe anonyme ("Clearstream Banking Luxembourg") or Euroclear System ("Euroclear"). The Global Securities will be tradable as home market instruments in both the European and U.S. domestic markets. Initial settlement and all secondary trades will settle in same-day funds. Secondary market trading between investors holding Global Securities through Clearstream Banking Luxembourg and Euroclear will be conducted in the ordinary way in accordance with their normal rules and operating procedures and in accordance with conventional eurobond practice (i.e., three calendar day settlement). Secondary market trading between investors holding Global Securities through DTC will be conducted according to the rules and procedure applicable to U.S. corporate debt obligations and prior asset-backed securities issues. Secondary cross-market trading between Clearstream Banking Luxembourg or Euroclear and DTC Participants holding securities will be effected on a delivery-against-payment basis through the depositaries of Clearstream Banking Luxembourg and Euroclear (in that capacity) and as DTC Participants. Non-U.S. holders (as described below) of Global Securities will be subject to U.S. withholding taxes unless those holders meet specified requirements and deliver appropriate U.S. tax documents to the securities clearing organizations or their participants. INITIAL SETTLEMENT All Global Securities will be held in book-entry form by DTC in the name of Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will be represented through financial institutions acting on their behalf as direct and indirect Participants in DTC. As a result, Clearstream Banking Luxembourg and Euroclear will hold positions on behalf of their participants through their depositaries, which in turn will hold those positions in accounts as DTC Participants. Investors electing to hold their Global Securities through DTC will follow DTC settlement practice. Investor securities custody accounts will be credited with their holdings against payment in same-day funds on the settlement date. Investors electing to hold their Global Securities through Clearstream Banking Luxembourg or Euroclear accounts will follow the settlement procedures applicable to conventional eurobonds, except that there will be no temporary global security and no "lock-up" or restricted period. Global Securities will be credited to securities custody accounts on the settlement date against payment in same-day funds. SECONDARY MARKET TRADING Since the purchaser determines the place of delivery, it is important to establish at the time of the trade where both the purchaser's and seller's accounts are located to ensure that settlement can be made on the desired value date. TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC Participants will be settled using the procedures applicable to prior asset-backed securities issues in same-day funds. TRADING BETWEEN CLEARSTREAM BANKING LUXEMBOURG AND/OR EUROCLEAR PARTICIPANTS. Secondary market trading between Clearstream Banking Luxembourg Participants or Euroclear Participants will be settled using the procedures applicable to conventional eurobonds in same-day funds. A-1 201 TRADING BETWEEN DTC SELLER AND CLEARSTREAM BANKING LUXEMBOURG OR EUROCLEAR PARTICIPANTS. When Global Securities are to be transferred from the account of a DTC Participant to the account of a Clearstream Banking Luxembourg Participant or a Euroclear Participant, the purchaser will send instructions to Clearstream Banking Luxembourg or Euroclear through a Clearstream Banking Luxembourg Participant or Euroclear Participant at least one business day prior to settlement. Clearstream Banking Luxembourg or Euroclear will instruct the respective Depositary, as the case may be, to receive the Global Securities against payment. Payment will include interest accrued on the Global Securities from and including the last coupon payment date to and excluding the settlement date, on the basis of the actual number of days in that accrual period and a year assumed to consist of 360 days. For transactions settling on the 31st of the month, payment will include interest accrued to and excluding the first day of the following month. Payment will then be made by the respective Depositary to the DTC Participant's account against delivery of the Global Securities. After settlement has been completed, the Global Securities will be credited to the respective clearing system and by the clearing system, in accordance with its usual procedures, to the Clearstream Banking Luxembourg Participant's or Euroclear Participant's account. The securities credit will appear the next day (European time) and the cash debt will be back-valued to, and the interest on the Global Securities will accrue from, the value date (which would be the preceding day when settlement occurred in New York). If settlement is not completed on the intended value date (i.e., the trade fails), the Clearstream Banking Luxembourg or Euroclear cash debt will be valued instead as of the actual settlement date. Clearstream Banking Luxembourg Participants and Euroclear Participants will need to make available to the respective clearing systems the funds necessary to process same-day funds settlement. The most direct means of doing so is to preposition funds for settlement, either from cash on hand or existing lines of credit, as they would for any settlement occurring within Clearstream Banking Luxembourg or Euroclear. Under this approach, they may take on credit exposure to Clearstream Banking Luxembourg or Euroclear until the Global Securities are credited to their accounts one day later. As an alternative, if Clearstream Banking Luxembourg or Euroclear has extended a line of credit to them, Clearstream Banking Luxembourg Participants or Euroclear Participants can elect not to preposition funds and allow that credit line to be drawn upon to finance settlement. Under this procedure, Clearstream Banking Luxembourg Participants or Euroclear Participants purchasing Global Securities would incur overdraft charges for one day, assuming they clear the overdraft when the Global Securities are credited to their accounts. However, interest on the Global Securities would accrue from the value date. Therefore, in many cases the investment income on the Global Securities earned during that one-day period may substantially reduce or offset the amount of those overdraft charges, although this result will depend on each Clearstream Banking Luxembourg Participant's or Euroclear Participant's particular cost of funds. Since the settlement is taking place during New York business hours, DTC Participants can employ their usual procedures for sending Global Securities to the respective European Depositary for the benefit of Clearstream Banking Luxembourg Participants or Euroclear Participants. The sale proceeds will be available to the DTC seller on the settlement date. Thus, to the DTC Participants a cross-market transaction will settle no differently than a trade between two DTC Participants. TRADING BETWEEN CLEARSTREAM BANKING LUXEMBOURG OR EUROCLEAR SELLER AND DTC PURCHASER. Due to time zone differences in their favor, Clearstream Banking Luxembourg Participants and Euroclear Participants may employ their customary procedures for transactions in which Global Securities are to be transferred by the respective clearing system, through the respective Depositary, to a DTC Participant. The seller will send instructions to Clearstream Banking Luxembourg or Euroclear through a Clearstream Banking Luxembourg Participant or Euroclear Participant at least one business day prior to settlement. In these cases, Clearstream Banking Luxembourg or Euroclear will instruct the Relevant Depositary, as appropriate, to deliver the Global Securities to the DTC Participant's account against payment. Payment will include interest accrued on the Global Securities from and including the last coupon payment to and excluding the settlement date on the basis of the actual number of days in that accrual period and a year A-2 202 assumed to consist of 360 days. For transactions settling on the 31st of the month, payment will include interest accrued to and excluding the first day of the following month. The payment will then be reflected in the account of the Clearstream Banking Luxembourg Participant or Euroclear Participant the following day, and receipt of the cash proceeds in the Clearstream Banking Luxembourg Participant's or Euroclear Participant's account would be back-valued to the value date (which would be the preceding day, when settlement occurred in New York). Should the Clearstream Banking Luxembourg Participant or Euroclear Participant have a line of credit with its respective clearing system and elect to be in debt in anticipation of receipt of the sale proceeds in its account, the back valuation will extinguish any overdraft incurred over that one-day period. If settlement is not completed on the intended value date (i.e., the trade fails), receipt of the cash proceeds in the Clearstream Banking Luxembourg Participant's or Euroclear Participant's account would instead be valued as of the actual settlement date. Finally, day traders that use Clearstream Banking Luxembourg or Euroclear and that purchase Global Securities from DTC Participants for delivery to Clearstream Banking Luxembourg Participants or Euroclear Participants should note that these trades would automatically fail on the sale side unless affirmative action were taken. At least three techniques should be readily available to eliminate this potential problem: (1) borrowing through Clearstream Banking Luxembourg or Euroclear for one day (until the purchase side of the day trade is reflected in their Clearstream Banking Luxembourg or Euroclear accounts) in accordance with the clearing system's customary procedures; (2) borrowing the Global Securities in the U.S. from a DTC Participant no later than one day prior to settlement, which would give the Global Securities sufficient time to be reflected in their Clearstream Banking Luxembourg or Euroclear account in order to settle the sale side of the trade; or (3) staggering the value dates for the buy and sell sides of the trade so that the value date for the purchase from the DTC Participant is at least one day prior to the value date for the sale to the Clearstream Banking Luxembourg Participant or Euroclear Participant. MATERIAL U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS A beneficial owner of Global Securities holding securities through Clearstream Banking Luxembourg or Euroclear (or through DTC if the holder has an address outside the U.S.) will be subject to the 30% U.S. withholding tax that generally applies to payments of interest (including original issue discount) on registered debt issued by U.S. Persons (as defined in the accompanying Prospectus), unless (1) each clearing system, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business in the chain of intermediaries between that beneficial owner and the U.S. entity required to withhold tax complies with applicable certification requirements and (2) that beneficial owner takes one of the following steps to obtain an exemption or reduced tax rate: EXEMPTION FOR NON-U.S. PERSONS (FORM W-8BEN). Beneficial owners of Global Securities that are Non-U.S. Persons can generally obtain a complete exemption from the withholding tax by filing a signed Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding). If the information shown on Form W-8 changes, a new Form W-8BEN must be filed within 30 days of that change. EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM W-8ECI). A Non-U.S. Person, including a non-U.S. corporation or bank with a U.S. branch, for which the interest income is effectively connected with its conduct of a trade or business in the United States, can obtain an exemption from the withholding tax by filing Form W-8ECI (Certificate of Foreign Person's Claim for Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States). EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES (FORM W-8BEN). Non-U.S. Persons residing in a country that has a tax treaty with the United States generally can obtain A-3 203 an exemption or reduced tax rate depending on the treaty terms) by filing Form W-8BEN (claiming treaty benefits). Form W-8BEN may be filed by the beneficial owners or their agents. EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a complete exemption from the withholding tax by filing Form W-9 (Payer's Request for Taxpayer Identification Number and Certification). U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The beneficial owner of a Global Security files by submitting the appropriate form to the person through whom it holds (the clearing agency, in the case of persons holding directly on the books of the clearing agency). A Form W-8BEN on which the beneficial owner of a Global Security provides a U.S. taxpayer identification number generally remains in effect until a change in circumstances causes any of the information on the form to be incorrect. A Form W-8ECI and a Form W-8BEN on which a U.S. taxpayer identification is not provided generally remain in effect for three calendar years, absent a change in circumstances causing any information on the form to be incorrect. The term "Non-U.S. Person" means any person who is not a U.S. Person (as defined in the accompanying Prospectus). This summary does not deal with all aspects of U.S. federal income tax withholding that may be relevant to foreign holders of Global Securities. It is suggested that investors consult their tax advisors for specific tax advice concerning their holding and disposing of Global Securities. You should rely only on the information contained in or incorporated by reference into this prospectus supplement or the prospectus. We have not authorized anyone to give you different information. We do not claim the accuracy of the information in this prospectus supplement or the prospectus as of any date other than the date stated on the cover page. We are not offering the notes in any jurisdiction where it is not permitted. A-4 204 Prospectus Supplement To Prospectus Dated January 11, 2001 NISSAN AUTO RECEIVABLES - GRANTOR TRUST [NISSAN AUTO RECEIVABLES CORPORATION] [NISSAN AUTO RECEIVABLES CORPORATION II], Seller NISSAN MOTOR ACCEPTANCE CORPORATION, Servicer $ ASSET BACKED CERTIFICATES YOU SHOULD REVIEW CAREFULLY THE FACTORS SET FORTH UNDER "RISK FACTORS" BEGINNING ON PAGE S-11 OF THIS PROSPECTUS SUPPLEMENT AND PAGE 8 IN THE ACCOMPANYING PROSPECTUS. The securities are asset backed securities issued by the trust. The securities are not obligations of Nissan Motor Acceptance Corporation, Nissan North America, Inc. or any of their respective affiliates. Neither the securities nor the receivables are insured or guaranteed by any governmental agency. This prospectus supplement may be used to offer and sell the securities only if it is accompanied by the prospectus dated January 11, 2001. - - The trust will issue three classes of securities. - - Only the certificates described on the following table are being offered by this Prospectus Supplement and the Prospectus. - - The certificates accrue interest from , .
CLASS A CERTIFICATES CLASS B CERTIFICATES -------------------- -------------------- Principal Amount.... $ $ Pass Through Rate... % % Final Scheduled Distribution Date............... , , Price to Public(1).......... % % Underwriting Discount(1)........ % % Proceeds to Seller(1).......... $ $ - --------------- (1) Total price to the public is $[ ], total underwriting discount is $[ ] and total proceeds to the Seller are [ ].
CREDIT ENHANCEMENT - - Subordination Spread Account, with an initial deposit of $[ ]. - - The Class B Certificates are subordinated to the Class A Certificates, and the Class C Certificates (not offered hereby) are subordinated to the Class A Certificates and the Class B Certificates. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. [The trust has applied to list the certificates on the Luxembourg Stock Exchange and for listing and permission to deal in the certificates on The Stock Exchange of Hong Kong Limited.] [UNDERWRITERS] The date of this prospectus supplement is . 205 IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS Information about the certificates is provided in two separate documents that progressively provide varying levels of detail: (1) the accompanying prospectus, which provides general information, some of which may not apply to a particular class of certificates, including your class; and (2) this prospectus supplement, which describes the specific terms of your class of certificates. IF THE DESCRIPTION OF THE TERMS OF YOUR CERTIFICATES VARIES BETWEEN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT. Cross-references are included in this prospectus supplement and in the accompanying prospectus which direct you to more detailed descriptions of a particular topic. You can also find references to key topics in the Table of Contents on the back cover of this prospectus supplement. You can find a listing of the pages where capitalized terms used in this prospectus supplement are defined under the caption "Index of Terms" beginning on page S-43 in this prospectus supplement and under the caption "Index of Terms" beginning on page 81 in the accompanying prospectus. S-2 206 [INTENTIONALLY LEFT BLANK] S-3 207 [GRAPHIC -- SUMMARY OF TRANSACTION PARTIES] S-4 208 [GRAPHIC -- SUMMARY OF MONTHLY DEPOSITS TO AND WITHDRAWALS FROM ACCOUNTS] S-5 209 SUMMARY The following summary contains a brief description of the Certificates. You will find a detailed description of the terms of the Offering of the Certificates following this summary. You should read carefully this entire document and the accompanying Prospectus to understand all of the terms of the Offering of the Certificates. You should consider both documents when making your investment decision. ISSUER Nissan Auto Receivables Grantor Trust - . The trust will be established by a pooling and servicing agreement. SELLER [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II]. SERVICER Nissan Motor Acceptance Corporation. TRUSTEE [ ]. OFFERED CERTIFICATES The offered certificates consist of the Class A Certificates and the Class B Certificates as described on the cover page. The trust will also issue $[ ] initial principal balance of Class C Certificates, which are not being offered pursuant to this prospectus supplement. The Class A Certificates will evidence in the aggregate an undivided ownership interest of [ ]% of the trust (initially representing $[ ]) and the Class B Certificates will evidence in the aggregate an undivided ownership interest of [ ]% of the trust (initially representing $[ ]). RECEIVABLES The trust's main source of funds for making payments on the certificates will be collections on its motor vehicle retail installment sale contracts, otherwise referred to as the receivables. The principal balance of the receivables on [ ], referred to as the "cut-off date," was $[ ]. As of [ ], the receivables had the following characteristics: Number of Receivables............................ Average Principal Balance........................ Approximate Weighted Average Annual Percentage Rate........................................... Approximate Weighted Average Remaining Term to Maturity....................................... Approximate Weighted Average Original Term to Maturity....................................... You should refer to "The Receivables" in this Prospectus Supplement for more information on the receivables. CLOSING DATE On or about [ ]. TERMS OF THE CERTIFICATES PAYMENT DATE: Interest and principal will generally be payable on the 15th day of each month, unless the 15th day is not a business day, in which case the payment will be made on the following business day. The first payment will be on [ ]. S-6 210 PER ANNUM PASS THROUGH RATES: The certificates will have [fixed] rates of interest as follows:
CLASS PASS THROUGH RATE ----- ----------------- A......................... []% B......................... []% C......................... []%
INTEREST ACCRUAL PERIODS:
FROM TO DAY COUNT CLASS (INCLUDING) (INCLUDING) CONVENTION ----- ------------ ------------ ---------- A, B and C...... [prior [current [30/360] distribution distribution date] date]
PRINCIPAL: - FINAL SCHEDULED DISTRIBUTION DATES: The trust must pay the outstanding principal balance of each class of certificates by its final scheduled distribution date as follows:
FINAL SCHEDULED CLASS DISTRIBUTION DATE ----- ----------------- A.......................... [] B.......................... [] C.......................... []
- AMOUNT OF PRINCIPAL PAYABLE ON EACH DISTRIBUTION DATE: The trust will make principal payments on each class of certificates on each distribution date in an amount equal to the applicable class percentage of the following amounts: 1. principal collections on the receivables during the prior collection period; 2. prepayments on the receivables allocable to principal received during the prior collection period; 3. the principal balance of each receivable which the seller or the servicer became obligated to purchase; and 4. the principal balance of liquidated receivables. The class percentage for each class of certificates is detailed in "The Certificates -- General" in this prospectus supplement. YOU SHOULD REFER TO "DISTRIBUTIONS ON THE CERTIFICATES -- CALCULATION OF DISTRIBUTABLE AMOUNTS" AND "-- PAYMENTS OF PRINCIPAL" IN THIS PROSPECTUS SUPPLEMENT FOR MORE DETAILED INFORMATION REGARDING PAYMENTS OF PRINCIPAL. OPTIONAL PURCHASE The servicer or the seller may redeem all outstanding certificates when the outstanding aggregate principal balance of the receivables declines to 10% or less of the original aggregate principal balance of the receivables on the cut-off date. S-7 211 CREDIT ENHANCEMENT The credit enhancement of the offered certificates will be the following: 1. CLASS A CERTIFICATES: the subordination of the Class B Certificates and the Class C Certificates; 2. CLASS B CERTIFICATES: the subordination of the Class C Certificates; and 3. CLASS A CERTIFICATES AND CLASS B CERTIFICATES: the subordination spread account. SUBORDINATION OF INTEREST AND PRINCIPAL: 1. CLASS B CERTIFICATES: Interest and principal payments on the Class B Certificates will be subordinated to interest and principal payments on the Class A Certificates. 2. CLASS C CERTIFICATES: Interest and principal payments on the Class C Certificates will be subordinated to interest and principal payments on the Class A Certificates and the Class B Certificates. The credit enhancement is intended to protect you against losses and delays in payments on your certificates by absorbing losses on the receivables and other shortfalls in cash flows. SUBORDINATION SPREAD ACCOUNT On each distribution date, the trust will use funds in the subordination spread account to pay the following amounts in the following order if collections on the receivables are insufficient to pay those amounts: 1. amounts due to the servicer; and 2. interest and principal due on the certificates in the order of priority detailed in "Distributions on the Certificates -- Payment of Distributable Amounts." The pooling and servicing agreement specifies the amount that is required to be on deposit in the subordination spread account. On the closing date, the seller will deposit $[ ] into the subordination spread account, which is [ ]% of the initial principal balance of the offered certificates and which is less than the amount required to be maintained in the subordination spread account called the "specified subordination spread account balance." On each distribution date, after making payments to the servicer and to the holders of the Class A and Class B Certificates, the trust will make a deposit into the subordination spread account to fund and maintain the specified subordination spread account balance. YIELD SUPPLEMENT ACCOUNT On each distribution date, the trust will use funds on deposit in the yield supplement account to cover, for each receivable, the excess, if any, of (x) one month's interest that will accrue on the principal balance of that receivable at a rate equal to the sum of (1) the [interest rate on the Class B Certificates] [weighted average interest rate on the securities offered pursuant to this prospectus supplement], and (2) the servicing fee rate at 1.00% over (y) one month's interest that accrued on that receivable at the interest rate on that receivable. S-8 212 On the closing date, the seller will [deposit] [make a capital contribution to the trust by depositing] $[ ] in cash into the yield supplement account. That amount is the amount that is estimated to be required to be withdrawn from the yield supplement account on subsequent distribution dates in accordance with the provisions of the preceding paragraph. [In addition, the seller will pledge other receivables or assets (including vehicle lease contracts) to the trust.] Neither the seller nor the servicer will make any other deposit to the yield supplement account on or after the closing date. The yield supplement account [will][will not] be an asset of the trust. TAX STATUS Subject to the important considerations described in this prospectus supplement and the prospectus, O'Melveny & Myers LLP, special tax counsel to the trust, will deliver its opinion that: 1. the trust will be treated as a grantor trust for United States federal income and California franchise and income tax purposes; and 2. the trust will not be subject to federal income tax. If you purchase the certificates, you will be required to report your pro rata share of all income earned on the receivables (other than amounts, if any, treated as "stripped coupons"). In addition, if you are an individual, trust or estate, you may deduct your pro rata share of reasonable servicing and other fees, subject to limitations. The exact characterization for federal income tax purposes of the payments received with respect to the yield supplement agreement is not clear. YOU SHOULD REFER TO "MATERIAL INCOME TAX CONSEQUENCES -- TAX TREATMENT OF GRANTOR TRUSTS -- YIELD SUPPLEMENT DEPOSITS" IN THE ACCOMPANYING PROSPECTUS. YOU SHOULD REFER TO "MATERIAL INCOME TAX CONSEQUENCES -- TAX TREATMENT OF GRANTOR TRUSTS" IN THE ACCOMPANYING PROSPECTUS FOR ADDITIONAL INFORMATION CONCERNING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX LAWS TO THE TRUST AND THE CERTIFICATES. ERISA CONSIDERATIONS The Class A Certificates are generally eligible for purchase by employee benefit plans and individual retirement accounts, subject to considerations discussed under "ERISA Considerations" in this prospectus supplement and in the accompanying prospectus. The Class B Certificates, however, may not be acquired by any employee benefit plan or any individual retirement account. However, under limited circumstances, Class B Certificates may be purchased by persons using insurance company general accounts. YOU SHOULD REFER TO "ERISA CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT AND IN THE ACCOMPANYING PROSPECTUS. IF YOU ARE A BENEFIT PLAN FIDUCIARY CONSIDERING PURCHASE OF THE CERTIFICATES OF ANY CLASS YOU SHOULD, AMONG OTHER THINGS, CONSULT WITH YOUR COUNSEL TO DETERMINE WHETHER ALL REQUIRED CONDITIONS HAVE BEEN SATISFIED. [LISTING The trust has applied to list the Class A Certificates on the Luxembourg Stock Exchange and The Stock Exchange of Hong S-9 213 Kong Limited. The trust has requested that the listings be made effective on or about .] MINIMUM DENOMINATIONS Certificates will be issued only in denominations of $1,000 or more. Certificates will be issued in multiples of $1 for amounts in excess of $1,000. REGISTRATION OF THE You will generally hold your interests in the CERTIFICATES securities through The Depository Trust Company in the United States, or Clearstream Banking societe anonyme or the Euroclear System in Europe or Asia. This is referred to as book-entry form. You will not receive a definitive certificate representing your securities except under limited circumstances. We expect the securities to be delivered through The Depository Trust Company, Clearstream Banking societe anonyme and the Euroclear System against payment in immediately available funds on or about . FOR MORE DETAILED INFORMATION, YOU SHOULD REFER TO "ANNEX A: GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES" IN THIS PROSPECTUS SUPPLEMENT AND "CERTAIN INFORMATION REGARDING THE SECURITIES -- BOOK-ENTRY REGISTRATION" IN THE ACCOMPANYING PROSPECTUS. RATING OF THE OFFERED On the closing date, each class of offered CERTIFICATES certificates will receive the following ratings from Standard & Poor's Ratings Group and Moody's Investors Service, Inc.:
CLASS STANDARD & POOR'S MOODY'S ----- ----------------- ------- A................................. [ ] [ ] B................................. [ ] [ ]
S-10 214 RISK FACTORS YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS (AND THE FACTORS SET FORTH UNDER "RISK FACTORS" IN THE ACCOMPANYING PROSPECTUS) IN DECIDING WHETHER TO PURCHASE THE CERTIFICATES OF ANY CLASS. YOU MAY HAVE DIFFICULTY The trust will not list the certificates on any SELLING YOUR CERTIFICATES securities exchange. Therefore, in order to sell AND/OR OBTAINING YOUR your certificates, you must first locate a DESIRED PRICE DUE TO THE willing purchaser. In addition, currently, no ABSENCE OF A SECONDARY secondary market exists for the certificates. We MARKET. cannot assure you that a secondary market will develop. The underwriter intends to make a secondary market for the certificates by offering to buy the certificates from investors that wish to sell. However, the underwriter is not obligated to offer to buy the certificates and it may stop making offers at any time. GEOGRAPHIC CONCENTRATION OF As of [ ], Nissan Motor Acceptance THE STATES OF ORIGINATION Corporation's records indicate that the addresses OF THE RECEIVABLES MAY of the originating dealers of the receivables INCREASE THE RISK OF LOSS were in the following states: ON YOUR INVESTMENT.
PERCENTAGE OF TOTAL PRINCIPAL BALANCE ------------------- [ ].......................... []% [ ].......................... []% [ ].......................... []% [ ].......................... []% [ ].......................... []%
No other state, by the addresses of the originating dealers, constituted more than 5% of the balance of the receivables as of [ ]. Economic conditions or other factors affecting these states in particular could adversely affect the delinquency, credit loss or repossession experience of the trust. BECAUSE OF THE UNCERTAINTY Tax counsel is unable to opine as to the federal OF FEDERAL INCOME TAX income tax consequences of the Yield Supplement CONSEQUENCES OF THE YIELD Agreement. You should review "Material Income Tax SUPPLEMENT AGREEMENT, YOU Consequences -- Payments Under the Yield MAY EXPERIENCE UNEXPECTED Supplement Agreement" in this prospectus TAX CONSEQUENCES. supplement. FACTORS AFFECTING OUR The success of your investment depends upon the INFORMATION MANAGEMENT ability of the Servicer, Nissan Motor Acceptance SYSTEMS MAY INCREASE THE Corporation, to store, retrieve, process and RISK OF LOSS ON YOUR manage substantial amounts of . If INVESTMENT. the Servicer experiences any interruptions or loss in its processing capabilities, its business, financial conditions and results of operations will suffer. PAID-AHEAD SIMPLE INTEREST If an obligor on a simple interest contract makes CONTRACTS MAY AFFECT THE a payment on the contract ahead of schedule (for WEIGHTED AVERAGE LIFE OF example, because the obligor intends to go on THE CERTIFICATES. vacation), the weighted average life of the certificates could be affected. This is because the additional scheduled payments will be treated as a principal prepayment and applied to reduce the principal balance of the related contract and the obligor will generally not be required to make any scheduled payments during the period for which it was paid-ahead. During this paid-ahead period, interest will continue to accrue on the principal balance of the contract, as reduced by the application of S-11 215 the additional scheduled payments, but the obligor's contract would not be considered delinquent during this period. While the servicer may be required to make interest advances during this period, no principal advances will be made. Furthermore, when the obligor resumes his required payments, the payments so paid may be insufficient to cover the interest that has accrued since the last payment by the obligor. This situation will continue until the regularly scheduled payments are once again sufficient to cover all accrued interest and to reduce the principal balance of the contract. The payment by the trust of the paid-ahead principal amount on the notes will generally shorten the weighted average life of the certificates. However, depending on the length of time during which a paid-ahead simple interest contract is not amortizing as described above, the weighted average life of the certificates may be extended. In addition, to the extent the servicer makes advances on a paid-ahead simple interest contract which subsequently goes into default, the loss on this contract may be larger than would have been the case had advances not been made because liquidation proceeds for the contract will be applied first to reimburse the servicer its advances. NMAC's portfolio of retail installment sale contracts has historically included simple interest contracts which have been paid-ahead by one or more scheduled monthly payments. There can be no assurance as to the number of contracts in the trust which may become paid-ahead simple interest contracts as described above or the number or the principal amount of the scheduled payments which may be paid-ahead. BECAUSE THE CERTIFICATES Because the certificates will be issued in ARE IN BOOK-ENTRY FORM, book-entry form, you will be required to hold YOUR RIGHTS CAN ONLY BE your interest in the certificates through The EXERCISED INDIRECTLY. Depository Trust Company in the United States, or Clearstream Banking societe anonyme nor the Euroclear System in Europe or Asia. Transfers of interests in the certificates within The Depository Trust Company, Clearstream Banking societe anonyme or the Euroclear System must be made in accordance with the usual rules and operating procedures of those systems. So long as the certificates are in book-entry form, you will not be entitled to receive a Definitive Certificate representing your interest. The certificates will remain in book-entry form except in the limited circumstances described under the caption "Description of the Certificates -- Book-Entry Registration" in the accompanying prospectus. Unless and until the certificates cease to be held in book-entry form, the trustee will not recognize you as a "Certificateholder," as that term is used in the pooling and servicing agreement. As a result, you will only be able to exercise the rights of Certificateholders indirectly through The Depository Trust Company (if in the United States) and its participating organizations, or Clearstream Banking societe anonyme and the Euroclear System (in Europe or Asia) and their participating organizations. Holding the certificates in book-entry form could also limit your ability to pledge your certificates to persons or entities that do not participate in The Depository Trust Company, Clearstream Banking S-12 216 societe anonyme or the Euroclear System and to take other actions that require a physical certificate representing the certificates. Interest and principal on the certificates will be paid by the trust to The Depository Trust Company as the record holder of the certificates while they are held in book-entry form. The Depository Trust Company will credit payments received from the trust to the accounts of its participants which, in turn, will credit those amounts to certificateholders either directly or indirectly through indirect participants. This process may delay your receipt of principal and interest payments from the trust. S-13 217 THE TRUST GENERAL The Nissan Auto Receivables - Grantor Trust (the "Trust") will be formed by [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II] (the "Seller") pursuant to the Pooling and Servicing Agreement (the "Agreement") dated as of , among the Seller, Nissan Motor Acceptance Corporation ("NMAC"), as servicer (in that capacity, the "Servicer") and , as trustee (the "Trustee"). The Seller will establish the Trust by selling and assigning the assets of the Trust to the Trustee in exchange for the Certificates to be issued by the Trust. The Servicer will service the Receivables pursuant to the Agreement and will be compensated for acting as the Servicer. See "The Certificates -- Servicing Compensation" in this Prospectus Supplement. Pursuant to agreements between NMAC and the Dealers, each Dealer will repurchase from NMAC those retail installment sales contracts that do not meet specified representations and warranties made by that Dealer. These Dealers' repurchase obligations are referred to in this Prospectus Supplement as "Dealer Recourse." Those representations and warranties relate primarily to the origination of the contracts and the perfection of the security interests in the related financed vehicles, and do not relate to the creditworthiness of the related Obligors or the collectability of those contracts. Although the Dealer Agreements with respect to the Receivables will not be assigned to the Trustee, any recovery by NMAC pursuant to any Dealer Recourse will be deposited in the Collection Account to satisfy NMAC's repurchase obligations under the Agreement. The sales by the Dealers of installment sales contracts to NMAC do not generally provide for recourse against the Dealers for unpaid amounts in the event of a default by an Obligor, other than in connection with the breach of the foregoing representations and warranties. Each Certificate represents a fractional undivided ownership interest in the Trust. The Trust property includes the Receivables and monies due or received under the Receivables on or after the Cut-off Date. The Subordination Spread Account and the Yield Supplement Account will be maintained by the Trustee for the benefit of the Class A Certificateholders and the Class B Certificateholders, but [the Subordination Spread Account] will not be part of the Trust. The Trust's principal offices are in , in care of , as Trustee, at the address set forth below under "The Trustee." THE TRUSTEE is the Trustee under the Agreement. is a and its principal offices are located at . The Seller and its affiliates may maintain normal commercial banking relations with the Trustee and its affiliates. THE RECEIVABLES The property of the Trust will consist of a pool of retail installment sale contracts (the "Receivables") originated on or after , between Nissan and Infiniti dealers (the "Dealers") and retail purchasers (the "Obligors"). The Receivables were originated by Dealers in accordance with NMAC's requirements under agreements with Dealers governing the assignment of the Receivables to NMAC. The Receivables evidence the indirect financing made available by NMAC to the Obligors. The Receivables are secured by new, near-new and used Nissan and Infiniti automobiles and light-duty trucks (the "Financed Vehicles") and all principal and interest payments made on or after [ ] (the "Cut-off Date") and other property specified in the Receivables. NMAC purchased the Receivables from the Dealers in the ordinary course of business in accordance with NMAC's underwriting standards. On or before the date of the initial issuance of the Certificates (the "Closing Date"), NMAC will sell the Receivables [and other assets] to the Seller. The Seller will, in turn, S-14 218 sell the Receivables [and other assets] to the Trust pursuant to the Agreement. NMAC will continue to service the Receivables. The Receivables to be held by the Trust will be randomly selected from those automobile and/or light-duty truck retail installment sales contracts in NMAC's portfolio that meet several criteria. These criteria provide that each Receivable: 1. was originated in the United States; 2. has a contractual Annual Percentage Rate ("APR") that equals or exceeds [ ]%; 3. provides for level monthly payments which provide interest at the APR on a simple interest basis and fully amortize the amount financed over an original term to maturity no greater than [ ] months; 4. has a remaining term to maturity, as of the Cut-off Date, of not less than [ ] months and not greater than [ ] months; 5. had an original balance of not more than $[ ] and a remaining principal balance as of the Cut-off Date of not less than $[ ] nor more than $[ ]; 6. is not more than 29 days past due as of the Cut-off Date; 7. is attributable to the purchase of a new, near-new or used automobile or light-duty truck and is secured by that vehicle; 8. has been entered into by an Obligor that as of the Cut-off Date was not in bankruptcy proceedings (according to the records of NMAC); 9. is secured by a Financed Vehicle that as of the Cut-off Date has not been repossessed (according to the records of NMAC); 10. has not had forced-placed insurance premiums added to the amount financed; and 11. has not been extended by more than two months. No selection procedures believed to be adverse to the Certificateholders will be utilized in selecting the Receivables from qualifying retail installment sale contracts. Except as described in item (2) above, the Receivables were not selected on the basis of their APRs. S-15 219 The composition, distribution by APR and geographic distribution of the Receivables as of the Cut-off Date are as set forth in the following tables. NMAC will not sell to the Seller, and the Seller will not sell to the Trust, any Receivables originated in the State of Alabama [or Hawaii] for administrative reasons. COMPOSITION OF THE RECEIVABLES Aggregate Principal Balance.................. $______ Number of Receivables........................ ______ Average Principal Balance.................... $______ Range of Principal Balances................ $______ to $______ Average Original Amount Financed............. $______ Range of Original Amount Financed.......... $______ to $______ Weighted Average APR......................... _____% Range of APRs.............................. _____% to _____% Approximate Weighted Average Original Term to Maturity ............................... ___ months Range of Original Term to Maturity......... ___ to ___ months Approximate Weighted Average Remaining Term to Maturity ............................... ___ months Range of Remaining Term to Maturity........ ___ to ___ months Percentage by Principal Balance of Receivables of New, Near-New and Used Vehicles................................... ____% (New) ____% (Near-New) ____% (Used) Percentage by Principal Balance of Receivables Financed through Nissan and Infiniti Dealers........................... ____% (Nissan) ____% (Infiniti)
S-16 220 DISTRIBUTION BY APR OF THE RECEIVABLES (PERCENTAGES MAY NOT ADD TO 100.00% DUE TO ROUNDING)
NUMBER OF PERCENTAGE OF TOTAL CUT-OFF DATE PERCENTAGE OF CUT-OFF RANGE OF APRS(%) RECEIVABLES NUMBER OF RECEIVABLES(%) PRINCIPAL BALANCE($) DATE POOL BALANCE(%) - ---------------- ----------- ------------------------ -------------------- ---------------------- 0.0 to 0.99........................ 1.0 to 1.99........................ 2.9 to 2.99........................ 3.0 to 3.99........................ 4.0 to 4.99........................ 5.0 to 5.99........................ 6.0 to 6.99........................ 7.0 to 7.99........................ 8.0 to 8.99........................ 9.0 to 9.99........................ 10.0 to 10.99...................... 11.0 to 11.99...................... 12.0 to 12.99...................... 13.0 to 13.99...................... 14.0 to 14.99...................... 15.0 to 15.99...................... 16.0 to 16.99...................... 17.0 to 17.99...................... 18.0 to 18.99...................... 19.0 and above..................... Totals.............................
S-17 221 GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES BASED ON THE ADDRESSES OF THE ORIGINATING DEALERS (PERCENTAGES MAY NOT ADD TO 100.00% DUE TO ROUNDING)
PERCENTAGE OF TOTAL CUT-OFF DATE PERCENTAGE OF NUMBER OF NUMBER OF PRINCIPAL CUT-OFF DATE POOL STATE RECEIVABLES RECEIVABLES(%) BALANCE($) BALANCE(%) - ----- ----------- -------------- ------------ ----------------- Alaska...................................... Arizona..................................... Arkansas.................................... California.................................. Colorado.................................... Connecticut................................. Delaware.................................... Florida..................................... Georgia..................................... [Hawaii].................................... Idaho....................................... Illinois.................................... Indiana..................................... Iowa........................................ Kansas...................................... Kentucky.................................... Louisiana................................... Maine....................................... Maryland.................................... Massachusetts............................... Michigan.................................... Minnesota................................... Mississippi................................. Missouri.................................... Montana..................................... Nebraska.................................... Nevada...................................... New Hampshire............................... New Jersey.................................. New Mexico.................................. New York.................................... North Carolina.............................. North Dakota................................ Ohio........................................ Oklahoma.................................... Oregon...................................... Pennsylvania................................ Rhode Island................................ South Carolina.............................. South Dakota................................ Tennessee................................... Texas....................................... Utah........................................ Vermont..................................... Virginia.................................... Washington.................................. West Virginia............................... Wisconsin................................... Wyoming..................................... Total.....................................
S-18 222 MATURITY AND PREPAYMENT CONSIDERATIONS Information regarding maturity and prepayment considerations with respect to the Certificates is set forth under "Weighted Average Life of the Securities" in the accompanying Prospectus and "Risk Factors -- You may experience reduced returns on your investment resulting from prepayments, repurchases or early termination of the trust" in the accompanying Prospectus. Because the rate of payment of principal of each class of Certificates depends on the rate of payment (including prepayments and liquidations due to default) of the principal balance of the Receivables, the final payment in respect of the Certificates could occur significantly earlier than their respective final scheduled distribution date ("Final Scheduled Distribution Date") set forth in "Summary -- Terms of the Certificates -- Principal -- Final Scheduled Distribution Date" in this Prospectus Supplement. Certificateholders will bear the risk of being able to reinvest principal payments on the Certificates at yields at least equal to the yield on their respective Certificates. No prediction can be made as to the rate of prepayments on the Receivables in either stable or changing interest rate environments. Although the Receivables have different APRs, disproportionate rates of prepayments between Receivables with APRs greater than or less than the Required Rate will generally not affect the yield to the Certificateholders. However, higher rates of prepayments of Receivables with higher APRs will decrease the amount available to cover delinquencies and defaults on the Receivables and may decrease the amounts available to be deposited in the Subordination Spread Account. DELINQUENCIES, REPOSSESSIONS AND NET LOSSES The following tables set forth material information concerning NMAC's experience with respect to its total portfolio of U.S. retail installment sale contracts for new, near-new and used automobiles and light-duty trucks. The portfolio consists of retail installment sale contracts in all fifty states, the District of Columbia [, Puerto Rico] and Guam. As of [ ], approximately [ ]% of NMAC's total portfolio of U.S. retail installment sales contracts (excluding those with original maturities of 64 months or more) consisted of new, near-new and used automobiles and light-duty trucks financed through Nissan dealers, with the remaining approximate [ ]% financed through Infiniti dealers. There can be no assurance that the behavior of the Receivables included in the Trust will be comparable to NMAC's experience shown in the following tables. DELINQUENCY EXPERIENCE(1)
AT MARCH 31, --------------------------------------------------- 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- Number of Contracts Outstanding.......... 368,660 312,237 330,662 317,238 274,807 Delinquencies as a Percent of Contracts Outstanding(2) 30 - 59 Days........................... 1.54% 2.27% 2.55% 3.10% 2.40% 60 - 89 Days........................... 0.16% 0.27% 0.36% 0.49% 0.25% 90 Days or More........................ 0.02% 0.04% 0.06% 0.17% 0.05%
- ------------------------- (1) The information in the Delinquency Experience table includes retail installment sale contracts for new, near-new and used automobiles and light-duty trucks and includes receivables which NMAC has sold to third parties but continues to service. The information does not include receivables purchased by NMAC under certain special financing programs. The information in the tables relates only to receivables with original terms of 64 months or less. The Trust does not include receivables with original maturities in excess of [ ] months. In general, NMAC has experienced higher overall levels of losses with respect to receivables with original maturities of 64 to 72 months than with respect to receivables with shorter original maturities. (2) An account is considered delinquent if 20% or more of the scheduled payment is past due. S-19 223 NET CREDIT LOSS AND REPOSSESSION EXPERIENCE(1) (DOLLARS IN THOUSANDS)
AT OR FOR TWELVE MONTHS ENDED MARCH 31, -------------------------------------------------------------- 2000 1999 1998 1997 1996 ---------- ---------- ---------- ---------- ---------- Principal Amount Outstanding......... $4,273,532 $3,126,219 $3,497,123 $3,276,423 $2,659,232 Average Principal Amount Outstanding........................ $3,261,595 $3,463,840 $3,248,193 $3,181,569 $2,308,058 Number of Contracts Outstanding...... 368,660 312,237 330,662 317,238 274,807 Average Number of Contracts Outstanding........................ 316,976 329,320 316,769 309,257 250,040 Number of Repossessions(2)........... 7,467 9,782 14,164 17,569 9,841 Number of Repossessions as a Percent of the Average Number of Contracts Outstanding........................ 2.36% 2.97% 4.47% 5.68% 3.94% Charge-Offs(3)....................... $ 55,482 $ 92,005 $ 134,671 $ 158,969 $ 72,838 Recoveries(4)........................ $ 39,125 $ 41,947 $ 39,997 $ 31,874 $ 20,489 Net Losses........................... $ 16,357 $ 50,059 $ 94,674 $ 127,095 $ 52,349 Net Losses as a Percent of Principal Amount Outstanding(5).............. 0.38% 1.60% 2.71% 3.88% 1.97% Net Losses as a Percent of Average Principal Amount Outstanding(5).... 0.50% 1.45% 2.91% 3.99% 2.27%
- ------------------------- (1) The information in the Net Credit Loss and Repossession Experience table includes retail installment sale contracts for new, near-new and used automobiles and light-duty trucks and includes receivables which NMAC has sold to third parties but continues to service. The information does not include receivables purchased by NMAC under certain special financing programs. The information in the tables relates only to receivables with original terms of 64 months or less. The Trust does not include receivables with original maturities in excess of [ ] months. In general, NMAC has experienced higher overall levels of losses with respect to receivables with original maturities of 64 to 72 months than with respect to receivables with shorter original maturities. All amounts and percentages, except as indicated, are based on the principal balances of the receivables including unearned interest. Averages are computed by taking a simple average of month end outstandings for each period presented. (2) The number of repossessions excludes accounts that have been subsequently reinstated. (3) Charge-offs represent the net principal balance of receivables determined to be uncollectible in the period less proceeds from disposition of related vehicles, other than recoveries described in Note (4). Charge-offs do not include expenses associated with collection, repossession or disposition of the vehicle. (4) Recoveries generally include amounts received on receivables following the time at which the receivable is charged off. Recoveries are net of expenses associated with collection. (5) Percentages have been annualized in order to facilitate year to year comparisons. NMAC's retail loss experience is dependent upon receivables levels, the number of repossessions, the amount outstanding at the time of repossession and the resale value of repossessed vehicles. The losses in the year ended March 31, 1997 were higher than in previous or subsequent years due to NMAC's effort to finance a broader credit range of customers to support the sale of Nissan and Infiniti vehicles and a general increase in personal bankruptcy filings. NMAC's management reacted to the negative trend in losses by initiating changes to its credit policy that tightened the range of available credit in order to originate an improved mix of business. These changes involved discontinuing the origination of 72-month term contracts in June 1996 and installing a new empirically derived credit score card in September 1996. In addition, NMAC tightened its credit policy by reducing advance rates for lower credit scores and S-20 224 implementing risked-based pricing. NMAC has recently resumed originating 72-month term contracts under certain financing programs. See "The Receivables -- Underwriting of Motor Vehicle Loans" in the accompanying Prospectus. CERTIFICATE AND POOL FACTORS The "Class A Certificate Factor" will be a seven-digit decimal which the Servicer will compute each month indicating the Class A Certificate Balance as of the close of business on the last day of the related Collection Period as a fraction of the Original Class A Certificate Balance. The Class A Certificate Factor will be 1.0000000 as of the Cut-off Date. Class A Certificate Factor will decline thereafter to reflect reductions in the Class A Certificate Balance. Class A Certificate Balance will be computed by allocating payments in respect of the Receivables to principal and interest using the simple interest method. The amount of a Class A Certificateholder's pro rata share of the Class A Certificate Balance can be determined by multiplying the original denomination of the holder's Certificate by the Class A Certificate Factor as of the close of business on the most recent Distribution Date. The Class A Certificate Factor will be made available through the Trustee. The "Class B Certificate Factor" will be a seven-digit decimal which the Servicer will compute each month indicating the Class B Certificate Balance as of the close of business on the Distribution Date in that month as a fraction of the Original Class B Certificate Balance. The Class B Certificate Factor will be 1.0000000 as of the Cut-off Date. Class B Certificate Factor will decline thereafter to reflect reductions in the Class B Certificate Balance. The amount of a Class B Certificateholder's pro rata share of the Class B Certificate Balance can be determined by multiplying the original denomination of the holder's Certificate by the Class B Certificate Factor as of the close of business on the most recent Distribution Date. The Class B Certificate Factor will be made available through the Trustee. The "Pool Balance" as of the close of business on the last day of a Collection Period will equal the aggregate Principal Balance of the Receivables (excluding Administrative Receivables, Warranty Receivables and Defaulted Receivables) as of the close of business on such day; provided, however, that where the Pool Balance is relevant in determining whether the requisite percentage of Class A Certificateholders or Class B Certificateholders necessary to effect any consent, waiver, request or demand shall have been obtained, the Pool Balance shall be deemed to be reduced by the amount equal to the portion of the Pool Balance (before giving effect to this provision) represented by the interests evidenced by any Class A Certificate or Class B Certificate, as applicable, registered in the name of the Seller, the Servicer or any person actually known by a trustee officer to be an affiliate of the Seller or the Servicer. The "Class A Pool Factor" is a seven-digit decimal figure which the Servicer will compute each month and will be calculated by dividing the Class A Certificate Balance as of the last day of the related Collection Period by the Pool Balance as of the Cut-off Date. The "Class B Pool Factor" is a seven-digit decimal figure which the Servicer will compute each month and will be calculated by dividing the Class B Certificate Balance as of the last day of the related Collection Period by the Pool Balance as of the Cut-off Date. Pursuant to the Agreement, the Servicer provides the Trustee with monthly reports concerning the payments received on the Receivables, the Class A Certificate Balance, the Class A Certificate Factor, the Class A Pool Factor, the Class B Certificate Balance, the Class B Certificate Factor, the Class B Pool Factor and various other items of information. Class A Certificateowners and Class B Certificateowners may obtain copies of these monthly reports from the Trustee upon delivery of a written request to the Trustee. Class A Certificateowners and Class B Certificateowners during any calendar year will be furnished information by the Trustee for tax reporting purposes not later than the latest date permitted by law. See "Description of the Transfer and Servicing Agreements -- Statements to Securityholders" in the accompanying Prospectus. S-21 225 USE OF PROCEEDS The net proceeds to be received by the Seller from the sale of the Class A Certificates, the Class B Certificates (together with the Class A Certificates, "Offered Certificates") and the Class C Certificates (together with the Offered Certificates, the "Certificates") will be applied to purchase the Receivables from NMAC and to make the initial deposit into the Subordination Spread Account and [the initial deposit into] [a capital contribution to the Trust to fund] the Yield Supplement Account. THE SELLER AND THE SERVICER Information regarding the Seller and the Servicer is set forth under the captions "The Seller" and "The Servicer" in the accompanying Prospectus. FINANCIAL CONDITION OF NISSAN MOTOR CO., LTD. NMAC is an indirect wholly-owned subsidiary of Nissan Motor Co., Ltd. ("Nissan"). Although Nissan is not guaranteeing the Trust's obligations under the Certificates, Nissan's financial condition may affect NMAC's ability to service the Receivables. [Nissan reported a consolidated operating profit of 82.6 billion Yen (US$778.9 million) for fiscal year 1999 (ended at March 31, 2000), a decrease of 31.7% compared to the previous year, with net sales of 5,977.1 billion Yen (US$56.39 billion), a decrease of 9.2% compared to the previous year. The decline in operating income is attributable to the negative impact of the appreciation of the Yen and to lower unit sales, particularly in the Japanese market. (The average exchange rate for the dollar was 112 Yen in fiscal year 1999 compared to 128 Yen in fiscal year 1998.)] [At March 31, 2000, Nissan announced one-time extraordinary charges totaling 711.1 billion Yen (US$6.71 billion) leading to a consolidated net loss of 684.4 billion Yen (US$6.46 billion). The one-time extraordinary charges relate to changes in the accounting of pensions and retirement benefits in Japan, to plant closures and expenses related to the Nissan Revival Plan, and to new accounting methods, including the calculations of provisions relating to product warranties, adopted in order to bring the accounts in line with internationally accepted accounting practices.] [The March 31, 2000 year-end results close a year of transition for Nissan. After the conclusion of an alliance with Renault in March 1999, Nissan announced a comprehensive revival plan in October 1999. The Nissan Revival Plan is targeted to restore profitability, reduce debt and improve operating margins. Nissan is cooperating with Renault in the areas of purchasing, platform co-development and international growth.] THE CERTIFICATES The following summary describes specified terms of the Certificates and the Agreement. The summary does not purport to be complete and is subject to, and qualified in its entirety by reference to, all the provisions of the Certificates and the Agreement. The following summary supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the Certificates of any given series and the related Agreement set forth in the accompanying Prospectus, to which description reference is hereby made. GENERAL The Certificates will be issued pursuant to the terms of the Agreement, a form of which has been filed as an exhibit to the Registration Statement. A copy of the final signed Agreement will be filed with the SEC following the issuance of the Certificates. The Certificates will evidence undivided ownership interests in the Trust created pursuant to the Agreement. In general, and subject to the prior rights of any senior classes of Certificates, holders of record of the Class A Certificates (the "Class A Certificateholders") and the Class B Certificates (the "Class B Certificateholders," and together with the Class A Certificateholders, the "Certificateholders") will receive, on each Distribution Date, the related class S-22 226 Principal Distributable Amount and interest at the related pass through rate set forth in "Summary -- Terms of the Certificates -- Per Annum Pass Through Rates" (each, a "Pass Through Rate") on the Certificate Balance of that class. The "Certificate Balance" for any class of Certificates as of any Distribution Date will equal the original certificate balance of that class, reduced by all amounts distributed on or prior to that Distribution Date on that class of Certificates and allocable to principal. The "Original Class A Certificate Balance" means $[ ], the "Original Class B Certificate Balance" means $[ ], and the "Original Class C Certificate Balance" means $[ ]. The Class A Certificates will evidence in the aggregate an undivided ownership interest of [ ]% (the "Class A Percentage") of the Trust (initially representing $[ ]), the Class B Certificates will evidence in the aggregate an undivided ownership interest of [ ]% (the "Class B Percentage") of the Trust (initially representing $[ ]), and the Class C Certificates will evidence in the aggregate an undivided ownership interest of [ ]% (the "Class C Percentage" and each class percentage being "Class Percentage") of the Trust (initially representing $[ ]). SALE AND ASSIGNMENT OF RECEIVABLES Information with respect to the conveyance of the Receivables from the Seller to the Trust on the Closing Date pursuant to the Agreement is set forth under "Description of the Transfer and Servicing Agreements -- Sale and Assignment of Receivables" in the accompanying Prospectus. ACCOUNTS In addition to the Accounts referred to under "Description of the Transfer and Servicing Agreements -- Accounts" in the accompanying Prospectus, the Seller will establish and will maintain with the Trustee a Yield Supplement Account in the name of the Trustee on behalf of the Certificateholders that [will] [will not] be part of the Trust. COLLECTIONS The Servicer will deposit all payments on Receivables received from Obligors and all proceeds of Receivables collected during each Collection Period into the Collection Account not later than the Business Day after receipt. However, so long as NMAC is the Servicer, if each condition to making monthly deposits as may be required by the Pooling and Servicing Agreement (including the satisfaction of specified ratings criteria by NMAC and the absence of any Servicer Default) is satisfied, the Servicer may retain such amounts until the related Distribution Date. The Servicer or the Seller, as the case may be, will remit the aggregate Warranty Purchase Payments and Administrative Purchase Payments of Receivables to be purchased from the Trust to the Collection Account on the Business Day immediately preceding the Distribution Date. The Servicer will be entitled to withhold, or to be reimbursed from amounts otherwise payable into or on deposit in the Collection Account, amounts previously deposited in the Collection Account but later determined to have resulted from mistaken deposits or postings. Except in certain circumstances described in the Agreement, pending deposit into the Collection Account, collections may be employed by the Servicer at its own risk and for its own benefit and will not be segregated from its own funds. The Servicer, at its own risk and for its own benefit, may instruct the Owner Trustee to invest amounts held in the Collection Account in Eligible Investments from the time deposited until the related Distribution Date. See "Description of the Transfer and Servicing Agreements -- Collections" in the accompanying Prospectus. "Eligible Investments" will be specified in the Agreement and will be limited to investments which meet the criteria of each Rating Agency from time to time as being consistent with its then-current ratings of each class of the Certificates. Collections on or in respect of a Receivable made during a Collection Period (including Warranty Purchase Payments and Administrative Purchase Payments) will be applied first to interest accrued to date, second to principal until the principal balance is brought current, third to reduce the unpaid late S-23 227 charges as provided in the Receivable and finally to prepay principal on the Receivable. See "Description of the Transfer and Servicing Agreements -- Collections" in the accompanying Prospectus. ADVANCES On or before the Business Day prior to each Distribution Date, the Servicer will be obligated to make a payment into the Collection Account for each Receivable of an amount equal to the product of the principal balance of the Receivable as of the first day of the related Collection Period and one-twelfth of its APR minus the amount of interest actually received on the Receivable during the Collection Period (an "Advance"). If the calculation results in a negative number, an amount equal to that negative amount will be paid to the Servicer in reimbursement of outstanding Advances. In addition, if a Receivable becomes a Liquidated Receivable, the amount of accrued and unpaid interest on that Receivable (but not including interest for the current Collection Period) will, up to the amount of outstanding Advances in respect thereof, be withdrawn from the Collection Account and paid to the Servicer in reimbursement of the outstanding Advances. The Servicer will not be required to make any Advance (other than the Advance of an interest shortfall arising from a prepaid Receivable) to the extent that it does not expect to recoup the Advance from subsequent collections or recoveries. No advances of principal will be made with respect to the Receivables. See "Description of the Transfer and Servicing Agreements -- Advances" in the accompanying Prospectus. SERVICING COMPENSATION The base servicing fee for the calendar month immediately preceding any Distribution Date (a "Collection Period") will be one-twelfth of 1.00% (the "Servicing Rate") of the Pool Balance as of the last day of the preceding Collection Period or, in the case of the first Distribution Date, the Pool Balance as of the Cut-off Date (the "Base Servicing Fee"). The Base Servicing Fee, together with any previously unpaid Base Servicing Fee, will be paid on each Distribution Date solely to the extent of Available Amounts (and, if necessary, amounts available in the Reserve Account). The Servicer will be entitled to collect and retain as additional servicing compensation in respect of each Collection Period any late fees, prepayment charges and any other administrative fees and expenses or similar charges collected during that Collection Period, plus any investment earnings or interest earned during that Collection Period from the investment of monies on deposit in the Collection Account (the "Supplemental Servicing Fee"). See "Description of the Transfer and Servicing Agreements -- Collections" in this Prospectus Supplement and "Description of the Transfer and Servicing Agreements -- Servicing Compensation" in the accompanying Prospectus. The Servicer will be paid the Base Servicing Fee and the Supplemental Servicing Fee (collectively the "Total Servicing Fee") for each Collection Period on the following Distribution Date related to that Collection Period. However, if it is acceptable to each rating agency without a reduction in the rating of the Offered Certificates, the Base Servicing Fee in respect of a Collection Period (together with any portion of the Base Servicing Fee that remains unpaid from prior Distribution Dates) will be paid at the beginning of that Collection Period out of collections of interest on the Receivables for that Collection Period. The Base Servicing Fee will be paid from Available Amounts (and, if necessary, amounts available in the Reserve Account) prior to the payment of the Class Distributable Amounts for any class of Certificates. YIELD SUPPLEMENT ACCOUNT AND YIELD SUPPLEMENT AGREEMENT Payments of the Yield Supplement Deposit will be made from funds on deposit in a segregated trust account (the "Yield Supplement Account") to be established by the [Seller who] [Trust in the name of the Indenture Trustee and the Trust which] will pledge the trust account to secure the Offered Certificates. The Yield Supplement Account [will] [will not] be part of the Trust property and will be funded by the Seller with [a capital contribution to the Trust by depositing an amount equal to $______] [a deposit of an amount equal to $______] [in cash]][, a transfer of retail installment sales contracts with an aggregate principal balance, as of the Cut-Off Date, of $______ to the Trust] [and a transfer of receivables or other assets (including vehicle lease contracts) in an amount, collectively, equal to $_____ to the Trust] ([the][collectively,] "Initial Yield Supplement Amount"). The "Yield Supplement Deposit" for each Distribution Date means an aggregate amount (if positive), calculated by the Servicer, by which (1) one month's interest on the principal balance as of the first day S-24 228 of the related Collection Period of each Yield Supplemented Receivable (other than a Defaulted Receivable, after the Collection Period in which that Receivable became a Defaulted Receivable) at a rate equal to the Required Rate exceeds (2) one month's interest on that principal balance at that Yield Supplemented Receivable's APR. "Yield Supplemented Receivables" are Receivables that have APRs which are less than the Required Rate. The "Required Rate" means, with respect to any Distribution Date, the sum of the [Pass Through Rate on the Class B Certificates] [weighted average Pass Through Rate for the securities offered pursuant to this Prospectus Supplement] and 1.00%. If the Yield Supplement Amount for any Distribution Date exceed the amount available for withdrawal from the Yield Supplement Account on that Distribution Date, the Seller will not have any further obligation under the Yield Supplement Agreement to deposit any further amounts into the Yield Supplement Account. The amount required to be on deposit in the Yield Supplement Account (the "Required Yield Supplement Amount") will be equal to the lesser of (A) the maximum aggregate Yield Supplement Deposits that will become due on future Distribution Dates, 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 (B) the Initial Yield Supplement Amount. The amount on deposit in the Yield Supplement Account may decline as a result of prepayments or repayments in full of the Receivables. To the extent that on any Distribution Date the amount on deposit in the Yield Supplement Account exceeds the Required Yield Supplement Amount on that Distribution Date, after giving effect to all distributions to be made on such Distribution Date, the excess will be deposited in the Collection Account for distribution. The Yield Supplement Account [will][will not] be part of the Trust. Simultaneously with the sale and assignment of the Receivables by NMAC to the Seller, the Seller will enter into the Yield Supplement Agreement with the Trustee, the Servicer and the Trust. NET DEPOSITS As an administrative convenience and as long as specified conditions are satisfied, the Servicer will be permitted to make the deposit of collections, aggregate Advances and amounts deposited in respect of purchases of Receivables by the Seller or the Servicer for or with respect to the related Collection Period net of payments to be made to the Servicer with respect to that Collection Period. The Servicer, however, will account to the Trustee and to the Certificateholders as if all of the foregoing deposits and payments were made individually. See "Description of the Transfer and Servicing Agreements -- Net Deposits" in the accompanying Prospectus. OPTIONAL PURCHASE The outstanding Certificates will be redeemed in whole, but not in part, on any Distribution Date on which the Servicer or any successor to the Servicer exercises its option to purchase the Receivables. The Servicer or any successor to the Servicer may purchase the Receivables when the Pool Balance shall have declined to 10% or less of the Pool Balance as of the Cut-off Date, for the price as described in the accompanying Prospectus under "Description of the Transfer and Servicing Agreements -- Termination." The "Redemption Price" for the outstanding Certificates will equal the Certificate Balance on the date of the optional purchase plus accrued and unpaid interest on the Certificates. REMOVAL OF SERVICER The Trustee or Holders of Certificates evidencing a majority of the voting interests of the Certificates, voting together as a single class, may terminate the rights and obligations of the Servicer under the Agreement upon the: 1. any failure by the Servicer (or the Seller, so long as NMAC is the Servicer) to deliver to the Trustee for deposit in any account any required payment or to direct the Trustee to make any required distributions from that account, and that failure continues unremedied for three Business Days after (a) receipt by the Servicer (or the Seller, so long as NMAC is the Servicer) of written S-25 229 notice of the failure from the Trustee, (b) receipt by the Servicer (or the Seller, so long as NMAC is the Servicer) and the Trustee of written notice of the failure from the holders of Certificates evidencing not less than 25% in principal balance of the outstanding Certificates, acting together as the single class; or (b) discovery of that failure by any officer of the Servicer; 2. any failure by the Servicer (or the Seller, as long as NMAC is the Servicer) to duly observe or perform in any material respect any other covenants or agreements of the Servicer (or the Seller, as long as NMAC is the Servicer) set forth in the Agreement, and that failure materially and adversely affects the rights of the Certificateholders, and that failure continues unremedied for 90 days after the giving of written notice of the failure to (a) the Servicer (or the Seller, so long as NMAC is the Servicer) by the Trustee, or (b) the Servicer (or the Seller, so long as NMAC is the Servicer) and the Trustee by the holders of Certificates evidencing not less than 25% of the balance attributable to the Certificates, each acting together as a single class; and 3. the occurrence of an Insolvency Event of the Servicer. Under those circumstances, authority and power shall, without further action, pass to and be vested in the Trustee or a successor Servicer appointed under the Agreement. If, however, a bankruptcy trustee or similar official has been appointed for the Servicer, and no Servicer Default other than the appointment of a bankruptcy trustee or similar official has occurred, that trustee or official may have the power to prevent the Trustee or the Certificateholders from effecting a transfer of servicing. Upon receipt of notice of the occurrence of a Servicer Default, the Trustee shall give notice thereof to the rating agencies. DUTIES OF THE TRUSTEE The Trustee will make no representations as to the validity or sufficiency of the Agreement, the Certificates (other than the authentication of the Certificates), or any Receivables or related documents, and is not accountable for the use or application by the Seller or the Servicer of any funds paid to the Seller or the Servicer in respect of the Certificates or the Receivables, or the investment of any monies by the Servicer before those monies are deposited into the Collection Account. The Trustee will not independently verify the Receivables. In addition to making distributions to the Certificateholders, those duties generally are limited to the receipt of the various certificates, reports or other instruments required to be furnished to the Trustee under the Agreement, in which case it will only be required to examine them to determine whether they conform on their face to the requirements of the Agreement. The Trustee will be under no obligation to exercise any of the rights or powers vested in it by the Agreement or to make any investigation of matters arising under the Agreement or to institute, conduct or defend any litigation under the Agreement or in relation thereto at the request, order or direction of any of the Certificateholders, unless those Certificateholders have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred by the Trustee in connection with the exercise of those rights. No Certificateholder will have any right under the Agreement to institute any proceeding with respect to the Agreement, other than with respect to the failure by the Seller or Servicer, as applicable, to remit payments, unless that Certificateholder has previously given to the Trustee written notice of default and unless the holders of Certificates evidencing not less than 25% of the voting interests of the Certificates have made written request upon the Trustee to institute that proceeding in its own name as Trustee under the Agreement and have offered to the Trustee reasonable indemnity and the Trustee for 30 days has neglected or refused to institute that proceeding. THE TRUSTEE [ ] will be the Trustee under the Agreement. The Trustee, in its individual capacity or otherwise, may hold Certificates in its own name or as pledgee. For the purpose of meeting the legal requirements of some jurisdictions, the Servicer and the Trustee acting jointly (or in some instances, the Trustee acting alone) shall have the power to appoint co-trustees or separate trustees of all or any part of the Trust. In the event of appointment of co-trustees or separate trustees, all rights, powers, duties and obligations conferred or imposed upon the Trustee by the Agreement shall be conferred or imposed upon S-26 230 the Trustee and each separate trustee or co-trustee jointly, or, in any jurisdiction in which the Trustee shall be incompetent or unqualified to perform specified acts, singly upon that separate trustee or co-trustee who shall exercise and perform those rights, powers, duties and obligations solely at the direction of the Trustee. The Trustee may resign at any time, in which event the Servicer will be obligated to appoint a successor trustee. The Servicer may also remove the Trustee if the Trustee ceases to be eligible to continue as trustee under the Agreement, becomes legally unable to act, or becomes insolvent. In those circumstances, the Servicer will be obligated to appoint a successor trustee. Any resignation or removal of the Trustee and appointment of a successor trustee does not become effective until acceptance of the appointment by the successor trustee. The Agreement will provide that the Servicer will pay the Trustee's fees. The Agreement will further provide that the Trustee will be entitled to indemnification by the Seller and the Servicer for, and will be held harmless against, any loss, liability, fee, disbursement or expense incurred by the Trustee not resulting from the Trustee's own willful misfeasance, bad faith or negligence (other than by reason of a breach of any of its representations or warranties set forth in the Agreement). The Agreement will further provide that the Seller and the Servicer will indemnify the Trustee for specified taxes that may be asserted in connection with the transaction. NOTICES Certificateholders will be notified in writing by the Trustee of any Servicer Default or termination of, or appointment of a successor to, the Servicer promptly upon a Responsible Officer (as defined in the Agreement) obtaining actual knowledge thereof. Except with respect to the monthly and annual reports to Certificateholders described in this Prospectus Supplement, the Trustee is not obligated under the Agreement to forward any other notices to the Certificateholders. There are no provisions in the Agreement for the regular or special meetings of Certificateholders. [If required by the Luxembourg Stock Exchange, for so long as the Class A Certificates are listed on the Luxembourg Stock Exchange, notices to holders of the Class A Certificates will be given by publication in a leading daily newspaper of general circulation in Luxembourg or, if publication in Luxembourg is not practical, in Europe. Such publication is expected to be made in the Luxembourger Wort. If required by The Stock Exchange of Hong Kong Limited, for so long as the Class A Certificates are listed on The Stock Exchange of Hong Kong Limited, notices to holders of the Class A Certificates will be given in a leading daily newspaper of general circulation in the English language in Hong Kong. Such publication is expected to be made in the South China Morning Post. In addition, if Definitive Certificates are issued, such notices will be mailed to the addresses of holders of Definitive Certificates at the addresses therefor as they appear in the register maintained by the Trustee prior to such mailing. Such notices will be deemed to have been given on the date of such publication or mailing.] GOVERNING LAW [The Agreement and the Certificates are governed by and shall be construed in accordance with the laws of the State of New York applicable to agreements made in and to be performed wholly within that jurisdiction.] DISTRIBUTIONS ON THE CERTIFICATES GENERAL The Trust will pay interest and principal on the Certificates on the fifteenth day of each month. If the fifteenth day of the month is not a Business Day, payments on the Certificates will be made on the next Business Day. The date that any payment is made is called a "Distribution Date." The first distribution date will be . A "Business Day" is any day except a Saturday, Sunday, or a day on which banks S-27 231 in New York, New York, [Minneapolis, Minnesota,] or Los Angeles, California are authorized or obligated by law, regulation, executive order or decree to be closed. On or before the tenth calendar day of each month (or, if the tenth day is not a Business Day, the next succeeding Business Day (each, a "Determination Date")), the Servicer will inform the Trustee of, among other things, the amount of funds collected on or in respect of the Receivables, the amount of Advances to be made by and reimbursed to the Servicer and the aggregate Warranty Purchase Payments and Administrative Purchase Payments of Receivables to be purchased by the Seller or the Servicer, all with respect to the related Collection Period. On or prior to each Distribution Date, the Servicer will also determine the Total Available Amount, Available Interest, Available Principal, the Class A Distributable Amount, the Class B Distributable Amount, the Class C Distributable Amount and other distributions to be made on that Distribution Date, and as described below, the amount to be paid to Certificateholders of each class. The Trustee will make payments to the Certificateholders out of the amounts on deposit in the Collection Account. The amount to be paid to the Certificateholders will be determined in the manner described below. CALCULATION OF AVAILABLE AMOUNTS "Total Available Amount" for a Distribution Date (being the funds available for distribution to Certificateholders of each class with respect to that Distribution Date in accordance with the priorities described below) shall be the sum of Available Interest and Available Principal. "Available Interest" for a Distribution Date shall be the sum of the following amounts received or allocated by the Servicer on or in respect of the Receivables during the related Collection Period: 1. that portion of all collections on or in respect of the Receivables allocable to interest; 2. all proceeds of the Liquidated Receivables, net of expenses incurred by the Servicer in accordance with its customary servicing procedures in connection with the liquidation, including amounts received in subsequent Collection Periods and any and all amounts required by law to be remitted to the Obligor ("Net Liquidation Proceeds") to the extent allocable to interest due on a Liquidated Receivable; 3. all Advances made by the Servicer; 4. all payments by the Seller during that Collection Period for breaches of representations and warranties that materially and adversely affect any Receivable ("Warranty Purchase Payments") to the extent attributable to interest; 5. all payments by the Servicer during that Collection Period for breaches of certain of its obligations under the Pool and Servicing Agreement that materially and adversely affect any Receivable ("Administrative Purchase Payments") to the extent attributable to interest; and 6. any Yield Supplement Deposit, plus reinvestment income on the Yield Supplement Account. "Available Principal" for a Distribution Date shall be the sum of the amounts described in clauses (1), (2), (4) and (5) above received or allocated by the Servicer in respect of principal on or in respect of the Receivables during the related Collection Period. Available Interest and Available Principal on any Distribution Date will exclude the following amounts: 1. amounts received on a particular Receivable (other than a Defaulted Receivable) to the extent that the Servicer has previously made an unreimbursed Advance in respect of that Receivable; 2. Net Liquidation Proceeds with respect to a particular Receivable to the extent of unreimbursed Advances in respect of that Receivable; and 3. recoveries from collections with respect to Advances that the Servicer has determined are unlikely to be repaid. S-28 232 A "Defaulted Receivable" will be a Receivable (other than a Receivable as to which a Warranty Purchase Payment or an Administrative Purchase Payment has been made) which, by its terms, is delinquent more than 120 days or, with respect to a Receivable that is delinquent less than 120 days, the Servicer has (a) determined, in accordance with its customary servicing procedures, that eventual payment in full is unlikely, or (b) repossessed the Financed Vehicle. A "Liquidated Receivable" will be a Defaulted Receivable for which the related Financed Vehicle has been liquidated by the Servicer. CALCULATION OF DISTRIBUTABLE AMOUNTS The "Class Distributable Amount" for each class of Certificates with respect to a Distribution Date will equal the sum of (1) the Principal Distributable Amount for that class (each amount, the "Class A Principal Distributable Amount," "Class B Principal Distributable Amount" and "Class C Principal Distributable Amount"), and (2) the Interest Distributable Amount for that class (each amount, the "Class A Interest Distributable Amount," the "Class B Interest Distributable Amount" and "Class C Interest Distributable Amount"). The "Principal Distributable Amount" for a particular class consists of the related Class Percentage of the following items: 1. the principal portion of all payments actually received on the Receivables during that Collection Period; 2. the principal portion of all prepayments and partial prepayments, received during that Collection Period (to the extent those amounts are not included in clause (1) above); and 3. the Principal Balance of each Receivable that the Servicer became obligated to purchase, the Seller became obligated to repurchase or that became a Defaulted Receivable during that Collection Period (to the extent those amounts are not included in clauses (1) or (2) above). The "Interest Distributable Amount" for a particular class consists of 30 days' interest at the related Pass Through Rate on the related Certificate Balance as of close of business on the last day of the related Collection Period or, in the case of the first Distribution Date, the related Original Class Certificate Balance (each amount, the "Class A Interest Distributable Amount," the "Class B Interest Distributable Amount" and the "Class C Interest Distributable Amount"). The "Class A Certificate Balance" will initially equal the Original Class A Certificate Balance and, on any Distribution Date, will equal the Original Class A Certificate Balance reduced by all amounts allocable to principal paid on or prior to that Distribution Date on the Class A Certificates. In addition, on each Distribution Date from and including the Distribution Date on which the Class B Certificate Balance and the Class C Certificate Balance have been reduced to zero, the Class A Certificate Balance will be reduced by the amount, if any, necessary to cause it to equal the Pool Balance as of the last day of the related Collection Period after taking into account all payments, deposits and withdrawals to be made on that Distribution Date. The "Class B Certificate Balance" will initially equal the Original Class B Certificate Balance and, on any Distribution Date, will equal the Original Class B Certificate Balance reduced by all amounts allocable to principal paid on or prior to that Distribution Date on the Class B Certificates. In addition, on each Distribution Date from and including the Distribution Date on which the Class C Certificate Balance has been reduced to zero, the Class B Certificate Balance will be reduced by the amount, if any, necessary to cause it to equal to the excess, if any, of the Pool Balance as of the last day of the related Collection Period over the Class A Certificate Balance as of such date, after taking into account all payments, deposits and withdrawals to be made on that Distribution Date. The "Class C Certificate Balance" will initially equal the Original Class C Certificate Balance and, on any Distribution Date, will equal the amount by which the Pool Balance on the last day of the related Collection Period exceeds the sum of the Class A Certificate Balance and the Class B Certificate Balance S-29 233 on that date after taking into account all payments, deposits and withdrawals to be made on that Distribution Date. PAYMENTS OF INTEREST On each Distribution Date, commencing [ ], the Certificateholders will be entitled to interest payments in an amount up to the amount of interest that accrued on the related Certificate Balance for the related Interest Period at the related Pass Through Rate. The Certificates will constitute Fixed Rate Securities, as that term is defined under "Material Information Regarding the Securities -- Fixed Rate Securities" in the accompanying Prospectus. Interest on any class of Certificates in respect of a Distribution Date will accrue during the related Interest Period and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Interest payments due on any class of Certificates for any Distribution Date but not paid on that Distribution Date will be due on the next Distribution Date increased by an amount equal to interest on that amount at the related Pass Through Rate (to the extent lawful). Under some circumstances, amounts otherwise allocable to pay interest on a class of Certificates will be applied to cover shortfalls in amounts available to make payments of principal or interest on a more senior class of Certificates. In addition, interest amounts otherwise distributable to the Class C Certificateholders will be deposited by the Trustee in the Subordination Spread Account to cover any deficiency in that account before application of any Excess Amounts are deposited in that account. PAYMENTS OF PRINCIPAL On each Distribution Date, commencing [ ], each class of Certificates will be entitled to principal payments in an amount generally equal to the related Principal Distributable Amount for that class. Under some circumstances, amounts otherwise allocable to pay principal on a class of Certificates will be applied to cover shortfalls in amounts available to make payments of interest on a more senior class of Certificates. PAYMENT OF DISTRIBUTABLE AMOUNTS On each Distribution Date, the Servicer will allocate amounts on deposit in the Collection Account (after payment of the Supplemental Servicing Fee to the extent not previously retained by the Servicer) with respect to the related Collection Period as described below and will instruct the Trustee to make the following payments and distributions in the following amounts and order of priority: 1. to the Servicer, the amount of any payments in respect of Advances required to be reimbursed; 2. to the Servicer from Available Amounts, the Base Servicing Fee, including any unpaid Base Servicing Fees with respect to one or more prior Collection Periods; 3. to the Class A Certificateholders, an amount equal to the Class A Interest Distributable Amount and any unpaid Class A Interest Carryover Shortfall, that amount to be paid from Available Interest (after giving effect to any reduction in Available Interest described in clause (2) above); and if that Available Interest is insufficient, the Class A Certificateholders will be entitled to receive that amount first, from funds on deposit in the Subordination Spread Account, second, if those amounts are insufficient, from the Class C Percentage of Available Principal, and third, if those amounts are insufficient, from the Class B Percentage of Available Principal; 4. to the Class A Certificateholders, an amount equal to the Class A Principal Distributable Amount and any unpaid Class A Principal Carryover Shortfall, that amount to be paid from Available Principal (after giving effect to any reduction in Available Amounts described in clause (2) and (3) above); and if that Available Amounts is insufficient, the Class A Certificateholders will be entitled to receive that amount first, from funds on deposit in the Subordination Spread Account and second, if those amounts are insufficient, from Available Interest (after giving effect to any reduction in Available Interest described in clauses (2) and (3) above); S-30 234 5. to the Class B Certificateholders, an amount equal to the Class B Interest Distributable Amount and any unpaid Class B Interest Carryover Shortfall, that amount to be paid from Available Interest (after giving effect to any reduction in Available Interest described in clauses (2) through (4) above); and if that Available Interest is insufficient, the Class B Certificateholders will be entitled to receive that amount first, from funds on deposit in the Subordination Spread Account, and second, if those amounts are insufficient, from the Class C Percentage of Available Principal; 6. to the Class B Certificateholders, an amount equal to the Class B Principal Distributable Amount and any unpaid Class B Principal Carryover Shortfall, that amount to be paid from Available Principal (after giving effect to any reduction in Available Principal described in clauses (2) through (5) above); and if that Available Principal is insufficient, the Class B Certificateholders will be entitled to receive that amount first, from funds on deposit in the Subordination Spread Account and second, if those amounts are insufficient, from Available Interest (after giving effect to any reduction in Available Interest described in clauses (2) through (4) above); 7. to the Class C Certificateholders, an amount equal to the Class C Interest Distributable Amount and any unpaid Class C Interest Carryover Shortfall, that amount to be paid from Available Interest (after giving effect to any reduction in Available Interest described in clauses (2) through (6) above); 8. to the Class C Certificateholders, an amount equal to the Class C Principal Distributable Amount and any unpaid Class C Principal Carryover Shortfall, that amount to be paid from Available Principal (after giving effect to any reduction in Available Principal described in clauses (2) through (7) above); and if that Available Principal is insufficient, the Class C Certificateholders will be entitled to receive that amount from Available Interest (after giving effect to any reduction in Available Interest described in clauses (2) through (7) above); and 9. if necessary, to the Subordination Spread Account so that the funds on deposit in that account will be equal to the Specified Subordination Spread Account Balance; provided that if there is a deficiency in the Subordination Spread Account, amounts otherwise distributable to the Class C Certificateholders will first be deposited by the Trustee in the Subordination Spread Account to cover the deficiency. Notwithstanding the foregoing, no amount will be paid to the Class A Certificateholders or the Class B Certificateholders in respect of any Yield Supplement Deposit with respect to a Receivable, except to the extent of amounts withdrawn from the Yield Supplement Account, except that if the Yield Supplement Deposits exceed funds available in the Yield Supplement Account, the excess shall be withdrawn from the Subordination Spread Account. An "Interest Carryover Shortfall" with respect to any class of Certificates on any Distribution Date will equal the excess, if any, of (1) the related Interest Distributable Amount for that class on that Distribution Date and any outstanding related Interest Carryover Shortfall for that class from the immediately preceding Distribution Date plus interest on the outstanding Interest Carryover Shortfall, to the extent permitted by law, at the related Pass Through Rate from that immediately preceding Distribution Date through the current Distribution Date, over (2) the amount of interest paid to the related Certificateholders on that Distribution Date (each shortfall, the "Class A Interest Carryover Shortfall," "Class B Interest Carryover Shortfall" and "Class C Interest Carryover Shortfall," as applicable). A "Principal Carryover Shortfall" with respect to any class of Certificates on any Distribution Date will equal the excess, if any, of (1) the related Principal Distributable Amount for that class on that Distribution Date and any outstanding Principal Carryover Shortfall for that class from the immediately preceding Distribution Date over (2) the amount of principal actually paid to the related Certificateholders on that Distribution Date (each shortfall, the "Class A Principal Carryover Shortfall," "Class B Principal Carryover Shortfall" and "Class C Principal Carryover Shortfall," as applicable). S-31 235 Any amounts remaining after giving effect to the distributions described in clauses (1) through (9) of the fourth preceding paragraph on any Distribution Date ("Excess Amounts") will be distributed to the Seller. Notwithstanding the foregoing distribution priorities, if the Servicer fails to make an Advance, the portion of any shortfall attributable thereto shall be paid only from amounts available in the Subordination Spread Account. Even if the Certificate Balance of any class of Certificates is reduced to zero prior to the termination of the Trust and prior to the final payment in respect of amounts payable on the Certificates of all classes, any Interest or Principal Carryover Shortfalls with respect to that class will continue as obligations of the Trust payable from amounts on deposit in the Collection Account or Subordination Spread Account, including Excess Amounts, before any further deposit of Excess Amounts into the Subordination Spread Account or release of amounts in the Subordination Spread Account to the Seller. PAYMENTS UNDER THE YIELD SUPPLEMENT AGREEMENT Each Certificateholder of the Offered Certificates should allocate a portion of its purchase price or other tax basis in the related Offered Certificates, as the case may be, to its right to receive Yield Supplement Deposits. See "Material Income Tax Consequences -- Original Issue Discount, Imputed Interest and Market Discount" in this Prospectus Supplement. Tax counsel is unable to opine as to the federal income tax characterization of the right to receive Yield Supplement Deposits. Arguably, the arrangement is economically analogous to a loan made by the Certificateholder of the Offered Certificates to the Seller in an amount equal to the discounted present value of the Yield Supplement Deposits, if any, which are expected to be received, resulting in original issue discount ("OID") to that Certificateholder for the amount of the discount. In that case, each Certificateholder of the Offered Certificates will accrue income in respect of its interest in that discounted present value under the rules relating to OID under a method that takes account of the compounding of interest and the holder's expected yield to maturity. Alternatively, it is possible that the entire amount of Yield Supplement Deposits should be included in income as accrued or received and not treated as interest and that any Certificateholder of the Offered Certificates should also be entitled to amortize the portion of its purchase price allocable to its right to receive Yield Supplement Deposits, possibly on a straight-line basis over the term of the related Offered Certificates. In that case, the Yield Supplement Deposits also might be unrelated taxable income for a tax-exempt investor. Although the Seller believes that these two characterizations of the Yield Supplement Agreement are the most likely characterizations, no assurance can be given, however, that either of these two characterizations will be accepted by the IRS. SUBORDINATION; SUBORDINATION SPREAD ACCOUNT SUBORDINATION The rights of the Certificateholders to receive payments with respect to the Receivables will be subordinated to the rights of the Servicer to receive the Total Servicing Fee, any additional servicing compensation described under "The Certificates -- Servicing Compensation" in this Prospectus Supplement and the reimbursement of outstanding Advances. In addition, the rights of the Certificateholders of the Class B Certificates and the Class C Certificates to receive payments with respect to collections on the Receivables will be subordinated to the rights of the Class A Certificateholders to the extent described in this Prospectus Supplement. This subordination is intended to enhance the likelihood of timely receipt by the Class A Certificateholders, and, to a lesser extent, the Class B Certificateholders, of the full amount of interest and principal required to be paid to them, and to afford those Certificateholders limited protection against losses in respect of the Receivables. S-32 236 The Certificateholders of the Class B Certificates and the Class C Certificates will not receive any distributions of interest or principal with respect to a Distribution Date until the full amount of interest and principal relating to that Distribution Date has been distributed to the Class A Certificateholders. The Class C Certificateholders will not receive any distributions of interest or principal with respect to a Distribution Date until the full amount of interest and principal relating to that Distribution Date has been distributed to the Class A Certificateholders and the Class B Certificateholders. If on any Distribution Date the holders of the Class A Certificates do not receive the sum of the Class A Distributable Amount, the Class A Interest Carryover Shortfall and the Class A Principal Carryover Shortfall for that Distribution Date (after giving effect to any amounts withdrawn from the Subordination Spread Account, the Class B Distributable Amount and the Class C Distributable Amount and applied to that deficiency, as described above), the holders of the Class B Certificates and the Class C Certificates will not receive any portion of the Total Available Amount. If on any Distribution Date the holders of the Class B Certificates do not receive the sum of the Class B Distributable Amount, the Class B Interest Carryover Shortfall and the Class B Principal Carryover Shortfall for that Distribution Date (after giving effect to any amounts withdrawn from the Subordination Spread Account and the Class C Distributable Amount and applied to that deficiency, as described above), the holders of the Class C Certificates will not receive any portion of the Total Available Amount. SUBORDINATION SPREAD ACCOUNT The Class A Certificateholders and the Class B Certificateholders will also have the benefit of the Subordination Spread Account. The Subordination Spread Account will be a segregated trust account held by the Trustee and will not be an asset of the Trust. Any amounts held on deposit in the Subordination Spread Account are owned by the Seller and any investment earnings on the Subordination Spread Account will be taxable to the Seller for federal income tax purposes. The Subordination Spread Account will be created with an initial deposit by the Seller of an amount equal to $[ ] (the "Subordination Spread Account Initial Deposit"). If on any subsequent Distribution Date the amount on deposit in the Subordination Spread Account is less than the Specified Subordination Spread Account Balance, first, the Class C Distributable Amount, and if that amount is not sufficient, Excess Amounts will be deposited in the Subordination Spread Account until the monies in the Subordination Spread Account reach an amount equal to the Specified Subordination Spread Account Balance. The time necessary for the Subordination Spread Account to reach and maintain the Specified Subordination Spread Account Balance at any time after the date of issuance of the Certificates will be affected by the delinquency, credit loss and repossession and prepayment experience of the Receivables and, therefore, cannot be accurately predicted. The "Specified Subordination Spread Account Balance" with respect to any Distribution Date will be equal to $[ ], except that in the event that on any Distribution Date: 1. the annualized average for the preceding three Collection Periods of the percentage equivalents of the ratios of net losses (i.e., the net balances of all Receivables which are determined to be uncollectible in the Collection Period, less any Net Liquidation Proceeds with respect to those net balances from that or prior Collection Periods) to the Pool Balance as of the first day of each that Collection Period exceeds [ ]%, or 2. the average for the preceding three Collection Periods of the percentage equivalents of the ratios of the number of Receivables that are delinquent 60 days or more to the outstanding number of Receivables exceeds [ ]%, then the Specified Subordination Spread Account Balance for that Distribution Date (and for each succeeding Distribution Date until the relevant averages have not exceeded the specified percentages in clauses (1) and (2) above for three successive Distribution Dates) shall be a dollar amount equal to (x) [ ]% of the Pool Balance as of the first day of the related Collection Period minus (y) the excess S-33 237 of the Pool Balance over the sum of the Class A Certificate Balance and the Class B Certificate Balance as of the first day of that Collection Period, but in no event shall the Specified Subordination Spread Account Balance be more than $[ ], or less than $[ ]. On any Distribution Date on which the aggregate balance of the Offered Certificates is $[ ] or less, after giving effect to the distributions on that Distribution Date, the Specified Subordination Spread Account Balance shall be the greater of the balance described above or $[ ]. The Servicer may, from time to time after the date of this Prospectus Supplement, request each rating agency then rating the Offered Certificates to approve a different formula for determining the Specified Subordination Spread Account Balance or a change in the manner by which the Subordination Spread Account is funded, if the new formula or manner would not affect the then-current rating of the Offered Certificates. Amounts held from time to time in the Subordination Spread Account will continue to be held for the benefit of the holders of the Offered Certificates. Funds on deposit in the Subordination Spread Account may be invested in Eligible Investments. Investment income on monies on deposit in the Subordination Spread Account will not be available for payment to Certificateholders or otherwise subject to any claims or rights of the Certificateholders and will be paid to the Seller. Any loss on those investments will be charged to the Subordination Spread Account. If on any Distribution Date the Class C Certificate Balance equals zero and amounts on deposit in the Subordination Spread Account have been depleted as a result of losses in respect of the Receivables, the protection afforded to the Class A Certificateholders and the Class B Certificateholders by the subordination of the Class C Certificates and by the Subordination Spread Account will be exhausted and the Class B Certificateholders will bear directly the risks associated with ownership of the Receivables. From and after that date, all those losses realized during a Collection Period will be allocated first to the Class B Certificates, resulting in the reduction of the Class B Certificate Balance on the related Distribution Date and second, if the Class B Certificate Balance is reduced to zero, to the Class A Certificates. If on any Distribution Date the Class B Certificate Balance equals zero and amounts on deposit in the Subordination Spread Account have been depleted as a result of losses in respect of the Receivables, the protection afforded to the Class A Certificateholders by the subordination of the Class B Certificates, the Class C Certificates and by the Subordination Spread Account will be exhausted and the Class A Certificateholders will bear directly the risks associated with ownership of the Receivables. From and after that date, all those losses realized during a Collection Period will be allocated first to the Class A Certificates, resulting in the reduction of the Class A Certificate Balance on the related Distribution Date. MATERIAL INCOME TAX CONSEQUENCES CLASSIFICATION OF THE TRUST Under current law and assuming execution of, and compliance with, the Agreement, the Custody and Pledge Agreement and the Yield Supplement Agreement, the Trust will be classified for federal income tax purposes and California franchise and income tax purposes as a grantor trust and not as an association taxable as a corporation. For federal income tax purposes, each beneficial owner of an Offered Certificate (each a "Certificate Owner") will be considered to own an undivided interest in the Trust's assets, be required to include in its gross income, for federal income tax purposes, its share of the gross income of the Trust and be entitled to deduct (subject both to possible recharacterization of specified fees paid by the Trust to the Servicer and to any limitations generally applicable to that holder) its share of the expenses of the Trust allocable to it. Although each Certificate Owner will be considered, for federal income tax purposes, to own its pro rata share of the principal of the Receivables in the Trust and of the Yield Supplement Deposits, each S-34 238 holder's share of the right to interest on the Receivables, however, is not entirely certain. Each Certificate Owner's right to interest with respect to a particular Receivable should be limited to its pro rata share of the lesser of (1) the interest that accrues on the principal of that Receivable at the Pass Through Rate plus its pro rata share of the Servicing and Trustee fees allocable to it (which fees will be deemed to be paid over, on behalf of the holder, to the Servicer and the Trustee, respectively) and (2) the total interest payable on that Receivable. For administrative convenience, however, the Trustee may report information with respect to a Certificate Owner's investment in an Offered Certificate on an aggregate basis as though that Certificate Owner's investment in the Receivables and other assets were equal to that Certificate Owner's share of the initial Class Principal Balance and on which interest and Yield Supplement Deposits are payable at a combined rate equal to the sum of the Pass Through Rate and the Servicing Rate. If the IRS were to require reporting on an asset-by-asset basis, the amount of income reportable for a period could differ from the amount reportable on an aggregate basis. In particular, as described more fully below, High Yield Receivables (as defined in the accompanying Prospectus) are subject to the "stripped bond" rules of the Code, which could result in those Receivables having OID, and Low Yield Receivables (as defined in the accompanying Prospectus) may be subject to the market discount or imputed interest rules. PAYMENTS UNDER THE YIELD SUPPLEMENT AGREEMENT A Certificateholder of any Offered Certificate should allocate a portion of its purchase price or other tax basis in that Certificate to its right to receive Yield Supplement Deposits. See "-- Original Issue Discount, Imputed Interest and Market Discount -- Original Issue Discount; General." Tax counsel is unable to opine as to the federal income tax characterization of the right to receive Yield Supplement Deposits. The potential characterizations of the right to receive Yield Supplement Deposits are described in the accompanying Prospectus under "Material Income Tax Consequences -- Tax Treatment of Grantor Trusts -- Yield Supplement Deposits." ORIGINAL ISSUE DISCOUNT, IMPUTED INTEREST AND MARKET DISCOUNT ORIGINAL ISSUE DISCOUNT; GENERAL. The Receivables bear interest at varying rates. Because a Certificate Owner will be viewed as owning an interest in each of the Trust's assets and the right to receive Yield Supplement Deposits, a portion of the Certificate Owner's purchase price of an Offered Certificate (whether on initial sale or in a subsequent transaction) may be required to be allocated among each of the Trust's assets and the right to receive Yield Supplement Deposits, based on their respective fair market values. See discussion under "Material Income Tax Consequences -- Tax Treatment of Grantor Trusts -- Discount and Premium" in the accompanying Prospectus. Because the Seller will retain the right to receive interest at a rate equal to the excess of the APR of each Receivable over the sum of the Pass Through Rate and the Servicing Rate, the issuance of an Offered Certificate will result in the separation of ownership ("stripping") of a portion of the rights to interest payments on High Yield Receivables. See discussion under "Material Income Tax Consequences -- Tax Treatment of Grantor Trusts -- Characterization" in the accompanying Prospectus. PREMIUM. A Certificate Owner that purchases an Offered Certificate for an amount greater than its outstanding principal balance may elect under Section 171 of the Code to amortize premium in respect of the Receivables in order to accrue income based on the Certificate Owner's yield rather than at the Pass Through Rate. That election would apply to all of the taxable debt instruments held at or acquired after the first day of the Certificate Owner's first taxable year to which that election applies, and may be revoked only with the consent of the IRS. See discussion under "Material Income Tax Consequences -- Tax Treatment of Grantor Trusts -- Premium" in the accompanying Prospectus. IMPUTED INTEREST AND MARKET DISCOUNT. Some or all of the Low Yield Receivables may have imputed interest and/or market discount. If a Low Yield Receivable did not have "adequate stated interest" (as the term is defined in Section 483 of the Code) when originated, then that Receivable would be treated as S-35 239 having "imputed interest." Under the imputed interest rules of the Code, a portion of the Receivable's stated principal amount equal to that total unstated interest would be recharacterized as interest and the Receivable's principal amount would be correspondingly reduced. If the imputed interest rules applied, the total unstated interest would be included in the Certificate Owner's gross income over the term of the Receivable using a constant yield-to-maturity method. It is uncertain whether the imputed interest rules would apply to a Certificate Owner. If these rules do not apply, or with respect to Low Yield Receivables which had adequate stated interest when issued, the market discount rules instead may be applicable. In general, under the market discount provisions of the Code, principal payments received by the Trust, and all or a portion of the gain recognized upon a sale or other disposition of a Receivable or upon the sale or other disposition of an Offered Certificate by a Certificate Owner, will be treated as ordinary income to the extent of accrued market discount. Any gain recognized by a Certificate Owner upon a sale or other disposition of an Offered Certificate will be treated as capital gain to the extent the gain exceeds accrued market discount. The character of any gain from the sale of an Offered Certificate allocable to rights pursuant to the Yield Supplement Agreement as ordinary or capital gain, however, is uncertain. In addition, a portion of the interest deductions of an Offered Certificate Owner attributable to any indebtedness treated as incurred or continued to purchase or carry a Receivable may have to be deferred, unless a Certificate Owner makes an election to include market discount in income currently as it accrues (in lieu of including accrued market discount in income at the time principal payments are received or at the time of disposition). That election would apply to all debt instruments acquired by the taxpayer on or after the first day of the first taxable year to which that election applies, and may be revoked only with consent of the IRS. Taxpayers may, in general, elect to accrue market discount either (1) under a constant yield-to-maturity method or (2) in the proportion that the stated interest paid on the obligation for the current period bears to the total remaining interest on the obligation. See discussion under "Material Income Tax Consequences -- Tax Treatment of Grantor Trusts -- Market Discount" in the accompanying Prospectus. ACCRUING INCOME ON A SEPARATE ASSET BASIS. Although the matter is not entirely certain, it appears that, as a technical matter, each Certificate Owner should calculate income separately for its interest in each Receivable (by first allocating to each Receivable and to each other asset in the Trust a portion of the holder's basis in the Offered Certificate). Further, in the case of any "affected investor" (as defined below), in computing yield to maturity, all interest on the Receivables allocable to the Offered Certificates, including interest effectively paid over to the Servicer and the Trustee, is taken into account. For this purpose "affected investors" are individuals, persons, including estates and trusts, that compute taxable income in the same manner as an individual and some "pass through entities." If required to report income in respect of the Offered Certificates to the IRS and/or Certificate Owners, however, the Servicer and Trustee currently intend to accrue income on an aggregate basis, based on an assumed initial offering price of the Offered Certificates and based on the net amounts distributable on the Offered Certificates. This method of reporting on a net basis may not be permitted. Furthermore, subsequent purchasers of the Offered Certificates will have to adjust the amounts reported to them based upon their basis in the Offered Certificates. POSSIBLE ALTERNATIVE CHARACTERIZATION. Prospective investors should be aware that the IRS could take the position that, in accruing OID, and possibly market discount, a Receivable-by-Receivable or pool-wide prepayment assumption should be used to determine yield and time to maturity. If the Certificate Owner purchased its Offered Certificate at a yield higher than the Pass Through Rate on the Offered Certificates (that is, for an amount less than the principal amount of Receivables allocable to the Offered Certificate), that assumption could accelerate income on the Offered Certificate. Prospective investors should also be aware that, although the Seller believes that none of: 1. the Class A Certificateholders' right to be paid prior to payment being made on the Class B Certificates and the Class C Certificates; 2. the Class B Certificateholders' right to be paid prior to payment being made on the Class C Certificates; or S-36 240 3. the Class A and Class B Certificateholders' right to be paid out of the Subordination Spread Account; should be treated as an asset separate from the Class A and Class B Certificate Owners' rights in the Receivables, the IRS could take a contrary view. If any of those rights were characterized as a separate asset, a portion of that holder's basis in its Certificate could be required to be allocated to those rights or a Certificate Owner might be considered to own a greater percentage of the right to interest on the Receivables (and be deemed to pay over that additional interest as a guarantee or other fee as it is paid or accrued). SALE OR PREPAYMENT Upon the sale, exchange or retirement of an Offered Certificate, a Certificate Owner will recognize taxable gain or loss in respect of its undivided interest in each asset held by the Trust. Gain or loss with respect to each undivided interest in a Trust asset is equal to the difference between the allocable portion of the amount realized and the Certificate Owners' adjusted basis in that asset. See discussion under "Material Income Tax Consequences -- Trusts Treated as Grantor Trusts -- Sale or Exchange of a Grantor Trust Certificate" in the accompanying Prospectus. A disposition or retirement of an Offered Certificate for no net gain or loss may for tax purposes consist of a sale of one asset (e.g., an interest in some Receivables) for a gain and the disposition of another asset at a loss (e.g., an interest in other Receivables). Although those gains or losses generally should be treated as offsetting capital gains and losses (unless earned by a dealer), absent the making of an election to include market discount currently in income (as discussed above), gain realized on an interest in Receivables acquired with market discount may yield ordinary gain to the extent of accrued market discount, which (1) for a corporate taxpayer could not be offset by, and (2) for an individual taxpayer could only be offset by up to $3,000 of, any capital loss attributable to an interest in any other Receivables or Trust assets. See "-- Original Issue Discount, Imputed Interest and Market Discount -- Accruing Income on a Separate Asset Basis" above. The character of any gain realized allocable to the Certificate Owners' rights under the Yield Supplement Agreement as ordinary or capital also is uncertain. Any loss realized would be treated as a capital loss. In general, gain or loss on any sale, exchange or retirement of an Offered Certificate would be capital gain or loss. However, it is possible that the Servicer will take the position that, under the rules for accruing OID, gain on any prepayment of the Receivables will be ordinary income. FOREIGN CERTIFICATEHOLDERS Interest attributable to Receivables which is received by a Certificate Owner that is not a "U.S. person" (as defined in the accompanying Prospectus under "Material Income Tax Consequences -- Tax Treatment of Owner Trusts -- Tax Consequences to Owners of the Notes -- Foreign Owners," and has no connection with the United States other than owning the Offered Certificate would generally constitute "portfolio interest" and, accordingly, not be subject to the normal 30% withholding tax imposed with respect to those payments, provided that that Certificate Owner fulfills specified certification requirements. Although it is not entirely clear, it is likely that payments received out of the Yield Supplement Account or in respect of the Yield Supplement Agreement generally would not be subject to withholding tax. See discussion under "Material Income Tax Consequences -- Tax Treatment as Grantor Trusts -- Foreign Persons" in the accompanying Prospectus. MATERIAL STATE TAX CONSEQUENCES For California tax purposes, Certificate Owners could be considered to own either (1) an undivided interest in a single debt obligation held by the Trust and having a principal amount equal to the total stated principal amount of the Receivables and an interest rate equal to the related Pass Through Rate or (2) an interest in each of the Receivables and any other Trust assets. S-37 241 It is suggested that Certificate Owners consult their tax advisors regarding the state tax consequences associated with the purchase, ownership and disposition of the Offered Certificates. ERISA CONSIDERATIONS CLASS A CERTIFICATES Subject to the considerations set forth below and under "ERISA Considerations" in the accompanying Prospectus, the Class A Certificates may be purchased by an employee benefit plan or an individual retirement account (a "Benefit Plan") subject to ERISA or Section 4975 of the United States Internal Revenue Code of 1986, as amended (the "Code"). A fiduciary of a Benefit Plan must determine that the purchase of an Class A Certificate is consistent with its fiduciary duties under ERISA and does not result in a nonexempt prohibited transaction as defined in Section 406 of ERISA or Section 4975 of the Code. The United States Department of Labor (the "DOL") has granted to and administrative exemptions (Prohibited Transaction Exemptions and , as amended by Prohibited Transaction Exemption 97-34 (the "Exemptions")) from some of the prohibited transaction rules of ERISA with respect to the initial purchase, the holding and the subsequent resale by Benefit Plans of certificates representing interests in asset backed pass through trusts that consist of receivables, loans and other obligations that meet the conditions and requirements of the Exemptions. The receivables covered by the Exemptions include motor vehicle installment obligations such as the Receivables. The Exemptions also apply to transactions in connection with the servicing, management and operation of the Trust which might otherwise constitute prohibited transactions. Among the conditions that must be satisfied for either of the Exemptions to apply to the acquisition by a Benefit Plan of the Class A Certificates are the following: 1. The acquisition of the Class A Certificates by a Benefit Plan is on terms (including the price for that Class A Certificates) that are at least as favorable to the Benefit Plan as they would be in an arm's-length transaction with an unrelated party. 2. The rights and interests evidenced by the Class A Certificates acquired by the Benefit Plan are not subordinated to the rights and interests evidenced by other certificates of the Trust. 3. The Class A Certificates acquired by the Benefit Plan have received a rating at the time of the acquisition that is in one of the three highest generic rating categories from Standard & Poor's Structured Rating Group ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Duff & Phelps Credit Rating Co. or Fitch Investors Service, L.P. (together with S&P and Moody's, the "Rating Services"). 4. The Trustee is not an affiliate of any member of the Restricted Group (as defined below). 5. The sum of all payments made to and retained by the Underwriters in connection with the purchase of the Class A Certificates represents not more than reasonable compensation for underwriting the Class A Certificates. The sum of all payments made to and retained by the Seller pursuant to the sale of the Receivables to the Trust represents not more than the fair market value of those Receivables. The sum of all payments made to and retained by the Servicer represents not more than reasonable compensation for the Servicer's services under the Agreement and reimbursement of the Servicer's reasonable expenses in connection therewith. 6. The Benefit Plan investing in the Class A Certificates is an "accredited investor" as defined in Rule 501(a)(1) of Regulation D of the Commission under the Securities Act. The Trust must also meet the following requirements: 1. The corpus of the Trust must consist solely of assets of the type that have been included in other investment pools and permitted under the terms of the Exemptions. S-38 242 2. Certificates in other investment pools must have been rated in one of the three highest generic rating categories of any of the Rating Services for at least one year prior to the Benefit Plan's acquisition of certificates. 3. Certificates evidencing interests in other investment pools must have been purchased by investors other than Benefit Plans for at least one year prior to any Benefit Plan's acquisition of Class A Certificates. The Exemptions do not apply in all respects to Benefit Plans sponsored by the Seller, the Underwriters, the Trustee, the Servicer, any Obligor with respect to the Receivables included in the Trust constituting more than 5% of the aggregate unamortized principal balance of the assets in the Trust or any affiliate of those parties (the "Restricted Group"). As of the date hereof, no Obligor with respect to the Receivables included in the Trust constitutes more than 5% of the aggregate unamortized principal balance of the Trust (i.e., the initial principal amount of the Certificates). Moreover, each Exemption provides relief from specified self-dealing/conflict of interest prohibited transactions only if, among other requirements, 1. in the case of the acquisition of Class A Certificates in connection with the initial issuance, at least 50% of each class of Certificates in which Benefit Plans have invested is acquired by persons independent of the Restricted Group and at least 50% of the aggregate interest in the Trust is acquired by persons independent of the Restricted Group; 2. a Benefit Plan's investment in the Class A Certificates does not exceed 25% of all of the Class A Certificates outstanding at the time of the acquisition; and 3. immediately after the acquisition, no more than 25% of the assets of a Benefit Plan with respect to which a person has discretionary authority or renders investment advice are invested in certificates representing interests in trusts containing assets sold or serviced by the same entity. The Seller believes that the Exemptions will apply to the acquisition, holding and resale of the Class A Certificates by a Benefit Plan and that all conditions of the Exemptions other than those within the control of investors will be met. However, there can be no assurance that the DOL or the IRS will not take a contrary position, nor that that position will be sustained. One or more alternative exemptions may be available with respect to specified prohibited transactions to which the Exemptions are not applicable, depending in part upon the type of a Benefit Plan's fiduciary making the decision to acquire the Class A Certificates and the circumstances under which that decision is made. See "ERISA Considerations" in the accompanying Prospectus. Any Benefit Plan which acquires a beneficial ownership interest in a Class A Certificates will be deemed, by virtue of the acceptance and acquisition of that ownership interest, to have represented to the Seller and the Trustee that that Benefit Plan is an "accredited investor" for purposes of Rule 501(a)(1) of Regulation D under the Securities Act. CLASS B AND CLASS C CERTIFICATES Class B Certificates and Class C Certificates may not be acquired by an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA or Section 4975(e)(1) of the Code or any person acting on behalf of such a plan or using the assets of such a plan to acquire the Class B Certificates or Class C Certificates or any entity whose underlying assets include plan assets by reason of a plan's investment in the entity, except as provided below with respect to insurance company general accounts. By its acceptance of a Class B Certificate or Class C Certificate, each holder thereof will be deemed to have represented and warranted that it is not subject to the foregoing limitation. In 1995, the DOL issued PTCE 95-60. Section III of PTCE 95-60 exempts from the application of the prohibited transaction provisions of Sections 406(a), 406(b) and 407(a) of ERISA and Section 4975 of the Code transactions in connection with the servicing, management and operation of a trust (such as the Trust) in which an insurance company general account has an interest as a result of its acquisition of certificates issued by the trust, provided that certain conditions are satisfied. If these conditions are met, S-39 243 insurance company general accounts would be allowed to purchase classes of Certificates (such as the Class B Certificates or Class C Certificates) which do not meet the requirements of the Exemptions solely because they (i) are subordinated to other classes of Certificates in the Trust and/or (ii) have not received a rating at the time of the acquisition in one of the three generic highest rating categories from any of the Rating Services. All other conditions of the Exemptions would have to be satisfied in order for PTCE 95-60 to be available. Before purchasing Class B Certificates or Class C Certificates, an insurance company general account seeking to rely on Section III of PTCE 95-60 should itself confirm that all applicable conditions and other requirements have been satisfied. ALL CERTIFICATES A purchaser of the Certificates should be aware, however, that even if the conditions specified in one or more exemptions are met, the scope of the relief provided by the applicable exemption or exemptions might not cover all acts that might be construed as prohibited transactions. Prospective Benefit Plan investors should consult with their legal advisors concerning the impact of ERISA and the Code, the applicability of the Exemptions or any other exemptions, and the potential consequences of any purchase in their specific circumstances, prior to making an investment in a Certificate. A governmental plan as defined in Section 3(32) of ERISA is not subject to ERISA or Code Section 4975. However, that governmental plan may be subject to federal, state or local law which is to a material extent similar to the provisions of ERISA or Code Section 4975 ("Similar Law"). A fiduciary of a governmental plan should make its own determination as to the need for and availability of any exemptive relief under Similar Law. S-40 244 UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement relating to the Certificates (the "Underwriting Agreement"), the Seller has agreed to sell to each of the Underwriters named below, and each of the Underwriters has severally agreed to purchase, the principal amount of the Offered Certificates set forth opposite its name below:
PRINCIPAL AMOUNT OF CLASS A PRINCIPAL AMOUNT OF CLASS B UNDERWRITER CERTIFICATES CERTIFICATES - ----------- --------------------------- --------------------------- -------- -------- Total........................................... ======== ========
In the Underwriting Agreement, the Underwriters have agreed, subject to the terms and conditions set forth in the Underwriting Agreement, to purchase all of the Offered Certificates if any of the Offered Certificates is purchased. That obligation of the Underwriters is subject to specified conditions precedent set forth in the Underwriting Agreement. The Seller has been advised by the Underwriters that they propose to offer the Offered Certificates to the public at varying prices to be determined at the time of sale and to specified dealers at that price less a concession not in excess of [ ]% of the Class A Certificate denominations and [ ]% of the Class B Certificate denominations and that the Underwriters may allow and those dealers may reallow a discount not in excess of [ ]% of the Class A Certificate denominations and [ ]% of the Class B Certificate denominations to specified other dealers. After the initial public offering, the public offering prices and those concessions and discounts to dealers may be changed by the Underwriters. The Seller and NMAC have agreed to indemnify the Underwriters against specified liabilities, including liabilities under the Securities Act or to contribute to payments which the Underwriters may be required to make in respect thereof. However, in the opinion of the Commission, certain indemnification provisions for liability arising under the federal securities law are contrary to public policy and therefore unenforceable. In the ordinary course of their respective businesses, the Underwriters and their respective affiliates have engaged and may engage in investment banking and/or commercial banking transactions with Nissan and its affiliates. The Certificates are new issues of securities with no established trading markets. The Seller has been advised by the Underwriters that the Underwriters intend to make a market in the Offered Certificates, as permitted by applicable laws and regulations. The Underwriters are not obligated, however, to make a market in the Offered Certificates and that market-making may be discontinued at any time at the sole discretion of the Underwriters without notice. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Offered Certificates. The Trust may, from time to time, invest funds in the Accounts in Eligible Investments acquired from the Underwriters. The Underwriters have advised the Seller that, pursuant to Regulation M under the Securities Act, specified persons participating in this offering may engage in transactions, including stabilizing bids, syndicate covering transactions or the imposition of penalty bids, which may have the effect of stabilizing or maintaining the market price of the Offered Certificates at levels above those that might otherwise prevail in the open market. A "stabilizing bid" is a bid for or the purchase of the Offered Certificates on behalf of the Underwriters for the purpose of fixing or maintaining the price of those Offered Certificates. A "syndicate covering transaction" is the bid for or the purchase of those Offered Certificates on behalf of the Underwriters to reduce a short position incurred by the Underwriters in connection with this offering. A "penalty bid" is an arrangement permitting one of the Underwriters to reclaim the selling concession otherwise accruing to another Underwriter or syndicate member in connection with this offering if the Offered Certificates originally sold by the other Underwriter or syndicate member are purchased by the reclaiming Underwriter in a syndicate covering transaction and has therefore not been effectively placed by the other Underwriter or syndicate member. S-41 245 Stabilizing bids and syndicate covering transactions may have the effect of causing the price of the Offered Certificates to be higher than it might be in the absence thereof, and the imposition of penalty bids might also have an effect on the price of any Offered Certificate to the extent that it discourages resale of that Offered Certificate. Neither the Seller nor the Underwriters makes any representation or prediction as to the direction or magnitude of any of that type of effect on the prices for the Offered Certificates. Neither the Seller nor the Underwriters makes any representation that the Underwriters will engage in any of those transactions or that, once commenced, any of those transactions will not be discontinued without notice. Neither the Seller nor the Underwriters makes any representation or prediction as to the direction or magnitude of any effect that any of the transactions described above may have on the price of the Certificates. In addition, neither the Seller nor any of the Underwriters make any representation that the Underwriters will engage in such transactions or that such transactions, once commenced, will not be discontinued without notice. The Indenture Trustee may, from time to time, invest the funds in the Collection Account and the Reserve Account in investments acquired from or issued by the Underwriters. In the ordinary course of business, the Underwriters and their affiliates have engaged and may engage in investment banking and commercial banking transactions with the Servicer and its affiliates. It is expected that the delivery of the Certificates will be made against payment therefor on or about the Closing Date, which is expected to be the business day following the date hereof. Under Rule 15c-6 under the Exchange Act, trades in the secondary market generally are required to settle within three business days, unless the parties thereto expressly agree otherwise. Accordingly, purchasers who wish to trade the Certificates on the date hereof and for a period of days hereafter will be required, by virtue of the fact that the Certificates initially will settle business days after the date hereof, to specify an alternate settlement cycle at the time of any such trade to avoid a failed settlement. Each Underwriter will represent that (i) it has not offered or sold and will not offer or sell, prior to the date six months after their date of issuance, any Certificates to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted in and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Certificates in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of the Certificates to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1997 or is a person to whom the document can otherwise lawfully be issued or passed on. LEGAL OPINIONS In addition to the legal opinions described in the accompanying Prospectus, legal matters relating to the Certificates and federal income tax and other matters will be passed upon for the Trust by O'Melveny & Myers LLP. S-42 246 INDEX OF TERMS accredited investor......................................... S-38 adequate stated interest.................................... S-35 Administrative Purchase Payments............................ S-28 Advance..................................................... S-24 affected investors.......................................... S-36 Agreement................................................... S-14 APR......................................................... S-15 Available Interest.......................................... S-28 Available Principal......................................... S-28 Base Servicing Fee.......................................... S-24 Benefit Plan................................................ S-38 Business Day................................................ S-27 Certificate Balance......................................... S-23 Certificate Owner........................................... S-34 Certificateholders.......................................... S-22 Certificates................................................ S-22 Class A Certificate Balance................................. S-29 Class A Certificate Factor.................................. S-21 Class A Certificateholders.................................. S-22 Class A Interest Carryover Shortfall........................ S-31 Class A Interest Distributable Amount....................... S-29 Class A Percentage.......................................... S-23 Class A Pool Factor......................................... S-21 Class A Principal Carryover Shortfall....................... S-31 Class A Principal Distributable Amount...................... S-29 Class B Certificate Balance................................. S-29 Class B Certificate Factor.................................. S-21 Class B Certificateholders.................................. S-22 Class B Interest Carryover Shortfall........................ S-31 Class B Interest Distributable Amount....................... S-29 Class B Percentage.......................................... S-23 Class B Pool Factor......................................... S-21 Class B Principal Carryover Shortfall....................... S-31 Class B Principal Distributable Amount...................... S-29 Class C Certificate Balance................................. S-29 Class C Interest Carryover Shortfall........................ S-31 Class C Interest Distributable Amount....................... S-29 Class C Percentage.......................................... S-23 Class C Principal Carryover Shortfall....................... S-31 Class C Principal Distributable Amount...................... S-29 Class Distributable Amount.................................. S-29 Class Percentage............................................ S-23 Clearstream Banking......................................... A-1 Closing Date................................................ S-14 Code........................................................ S-38 Collection Period........................................... S-24 Cut-off Date................................................ S-14 Dealer Recourse............................................. S-14 Dealers..................................................... S-14 Defaulted Receivable........................................ S-29 Determination Date.......................................... S-28 Distribution Date........................................... S-27 DOL......................................................... S-38 Eligible Investments........................................ S-23 Euroclear................................................... A-1 Excess Amounts.............................................. S-32 Exemptions.................................................. S-38
S-43 247 Final Scheduled Distribution Date........................... S-19 Financed Vehicles........................................... S-14 Global Securities........................................... A-1 imputed interest............................................ S-36 Initial Yield Supplement Amount............................. S-24 Interest Carryover Shortfall................................ S-31 Interest Distributable Amount............................... S-29 Liquidated Receivable....................................... S-29 Moody's..................................................... S-38 Net Liquidation Proceeds.................................... S-28 Nissan...................................................... S-22 NMAC........................................................ S-14 Non-U.S. Person............................................. A-4 Obligors.................................................... S-14 Offered Certificates........................................ S-22 OID......................................................... S-32 Original Class A Certificate Balance........................ S-23 Original Class B Certificate Balance........................ S-23 Original Class C Certificate Balance........................ S-23 Pass Through Rate........................................... S-23 penalty bid................................................. S-41 Pool Balance................................................ S-21 portfolio interest.......................................... S-31 Principal Carryover Shortfall............................... S-31 Principal Distributable Amount.............................. S-29 Rating Services............................................. S-38 Receivables................................................. S-14 Redemption Price............................................ S-25 Required Rate............................................... S-25 Required Yield Supplement Amount............................ S-25 Restricted Group............................................ S-39 S&P......................................................... S-38 Seller...................................................... S-14 Servicer.................................................... S-14 Servicing Rate.............................................. S-24 Similar Law................................................. S-40 Specified Subordination Spread Account Balance.............. S-33 stabilizing bid............................................. S-41 stripping................................................... S-35 Subordination Spread Account Initial Deposit................ S-33 Supplemental Servicing Fee.................................. S-24 syndicate covering transaction.............................. S-41 Total Available Amount...................................... S-28 Total Servicing Fee......................................... S-24 Trust....................................................... S-14 Trustee..................................................... S-14 U.S. Person................................................. S-37 Underwriting Agreement...................................... S-41 Warranty Purchase Payments.................................. S-28 Yield Supplement Account.................................... S-24 Yield Supplement Deposit.................................... S-24 Yield Supplemented Receivables.............................. S-25
S-44 248
TABLE OF CONTENTS PROSPECTUS SUPPLEMENT PAGE ---- Summary.................................... S-6 Risk Factors............................... S-11 The Trust.................................. S-14 The Trustee................................ S-14 The Receivables............................ S-14 Maturity and Prepayment Considerations........................... S-19 Delinquencies, Repossessions and Net Losses................................... S-19 Certificate and Pool Factors............... S-21 Use of Proceeds............................ S-22 The Seller and the Servicer................ S-22 The Certificates........................... S-22 Distributions on the Certificates.......... S-27 Subordination; Subordination Spread Account.................................. S-32 Material Income Tax Consequences........... S-34 ERISA Considerations....................... S-38 Underwriting............................... S-41 Legal Opinions............................. S-42 Index of Terms............................. S-43 Annex A Global Clearance, Settlement and Tax Documentation Procedures......... A-1
PROSPECTUS Summary of Terms........................... 3 Risk Factors............................... 8 Formation of the Trusts.................... 14 Property of the Trusts..................... 14 The Receivables............................ 15 Use of Proceeds............................ 16 The Trustee................................ 16 The Seller................................. 17 The Servicer............................... 17 Where You Can Find More Information About Your Securities.......................... 17 Delinquencies, Repossessions and Net Losses................................... 18 Weighted Average Life of the Securities.... 18 Pool Factors and Trading Information....... 18 The Notes.................................. 20 The Certificates........................... 25 Material Information Regarding the Securities............................... 26 Description of the Transfer and Servicing Agreements............................... 38 Material Legal Aspects of the Receivables.............................. 57 Material Income Tax Consequences........... 63 ERISA Considerations....................... 79 Underwriting............................... 80 Legal Opinions............................. 80 Index of Terms............................. 81
DEALER PROSPECTUS DELIVERY OBLIGATION. UNTIL [ , ], ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE NOTES, WHETHER OR NOT PARTICIPATING IN THE OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. - ------------------------------------------------ - ------------------------------------------------ - ------------------------------------------------ - ------------------------------------------------ 249 $[ ] NISSAN AUTO RECEIVABLES [ ] - [ ] GRANTOR TRUST $[ ] ASSET BACKED CERTIFICATES, CLASS A $[ ] ASSET BACKED CERTIFICATES, CLASS B [NISSAN AUTO RECEIVABLES CORPORATION] [NISSAN AUTO RECEIVABLES CORPORATION II], SELLER NISSAN MOTOR ACCEPTANCE CORPORATION, SERVICER UNDERWRITERS [UNDERWRITERS] 250 ANNEX A GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES Except in limited circumstances, the globally offered Class A Certificates (the "Global Securities") will be available only in book-entry form. Investors in the Global Securities may hold those Global Securities through DTC, Clearstream Banking societe anonyme ("Clearstream Banking") or Euroclear System ("Euroclear"). The Global Securities will be tradable as home market instruments in both the European and U.S. domestic markets. Initial settlement and all secondary trades will settle in same-day funds. Secondary market trading between investors holding Global Securities through Clearstream Banking and Euroclear will be conducted in the ordinary way in accordance with their normal rules and operating procedures and in accordance with conventional eurobond practice (i.e., three calendar day settlement). Secondary market trading between investors holding Global Securities through DTC will be conducted according to the rules and procedure applicable to U.S. corporate debt obligations and prior asset-backed securities issues. Secondary cross-market trading between Clearstream Banking or Euroclear and DTC Participants holding securities will be effected on a delivery-against-payment basis through the depositaries of Clearstream Banking and Euroclear (in that capacity) and as DTC Participants. Non-U.S. holders (as described below) of Global Securities will be subject to U.S. withholding taxes unless those holders meet the requirements and deliver appropriate U.S. tax documents to the securities clearing organizations or their participants. INITIAL SETTLEMENT All Global Securities will be held in book-entry form by DTC in the name of Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will be represented through financial institutions acting on their behalf as direct and indirect Participants in DTC. As a result, Clearstream Banking and Euroclear will hold positions on behalf of their participants through their depositaries, which in turn will hold those positions in accounts as DTC Participants. Investors electing to hold their Global Securities through DTC will follow DTC settlement practice. Investor securities custody accounts will be credited with their holdings against payment in same-day funds on the settlement date. Investors electing to hold their Global Securities through Clearstream Banking or Euroclear accounts will follow the settlement procedures applicable to conventional eurobonds, except that there will be no temporary global security and no "lock-up" or restricted period. Global Securities will be credited to securities custody accounts on the settlement date against payment in same-day funds. SECONDARY MARKET TRADING Since the purchaser determines the place of delivery, it is important to establish at the time of the trade where both the purchaser's and seller's accounts are located to ensure that settlement can be made on the desired value date. TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC Participants will be settled using the procedures applicable to prior asset-backed securities issues in same-day funds. TRADING BETWEEN CLEARSTREAM BANKING AND/OR EUROCLEAR PARTICIPANTS. Secondary market trading between Clearstream Banking Participants or Euroclear Participants will be settled using the procedures applicable to conventional eurobonds in same-day funds. TRADING BETWEEN DTC SELLER AND CLEARSTREAM BANKING OR EUROCLEAR PARTICIPANTS. When Global Securities are to be transferred from the account of a DTC Participant to the account of a Clearstream Banking Participant or a Euroclear Participant, the purchaser will send instructions to Clearstream Banking or Euroclear through a Clearstream Banking Participant or Euroclear Participant at least one business day prior to settlement. Clearstream Banking or Euroclear will instruct the respective Depositary, A-1 251 as the case may be, to receive the Global Securities against payment. Payment will include interest accrued on the Global Securities from and including the last coupon payment date to and excluding the settlement date, on the basis of the actual number of days in that accrual period and a year assumed to consist of 360 days. For transactions settling on the 31st of the month, payment will include interest accrued to and excluding the first day of the following month. Payment will then be made by the respective Depositary to the DTC Participant's account against delivery of the Global Securities. After settlement has been completed, the Global Securities will be credited to the respective clearing system and by the clearing system, in accordance with its usual procedures, to the Clearstream Banking Participant's or Euroclear Participant's account. The securities credit will appear the next day (European time) and the cash debt will be back-valued to, and the interest on the Global Securities will accrue from, the value date (which would be the preceding day when settlement occurred in New York). If settlement is not completed on the intended value date (i.e., the trade fails), the Clearstream Banking or Euroclear cash debt will be valued instead as of the actual settlement date. Clearstream Banking Participants and Euroclear Participants will need to make available to the respective clearing systems the funds necessary to process same-day funds settlement. The most direct means of doing so is to preposition funds for settlement, either from cash on hand or existing lines of credit, as they would for any settlement occurring within Clearstream Banking or Euroclear. Under this approach, they may take on credit exposure to Clearstream Banking or Euroclear until the Global Securities are credited to their accounts one day later. As an alternative, if Clearstream Banking or Euroclear has extended a line of credit to them, Clearstream Banking Participants or Euroclear Participants can elect not to preposition funds and allow that credit line to be drawn upon to finance settlement. Under this procedure, Clearstream Banking Participants or Euroclear Participants purchasing Global Securities would incur overdraft charges for one day, assuming they clear the overdraft when the Global Securities are credited to their accounts. However, interest on the Global Securities would accrue from the value date. Therefore, in many cases the investment income on the Global Securities earned during that one-day period may substantially reduce or offset the amount of those overdraft charges, although this result will depend on each Clearstream Banking Participant's or Euroclear Participant's particular cost of funds. Since the settlement is taking place during New York business hours, DTC Participants can employ their usual procedures for sending Global Securities to the respective European Depositary for the benefit of Clearstream Banking Participants or Euroclear Participants. The sale proceeds will be available to the DTC seller on the settlement date. Thus, to the DTC Participants a cross-market transaction will settle no differently than a trade between two DTC Participants. TRADING BETWEEN CLEARSTREAM BANKING OR EUROCLEAR SELLER AND DTC PURCHASER. Due to time zone differences in their favor, Clearstream Banking Participants and Euroclear Participants may employ their customary procedures for transactions in which Global Securities are to be transferred by the respective clearing system, through the respective Depositary, to a DTC Participant. The seller will send instructions to Clearstream Banking or Euroclear through a Clearstream Banking Participant or Euroclear Participant at least one business day prior to settlement. In these cases, Clearstream Banking or Euroclear will instruct the Relevant Depositary, as appropriate, to deliver the Global Securities to the DTC Participant's account against payment. Payment will include interest accrued on the Global Securities from and including the last coupon payment to and excluding the settlement date on the basis of the actual number of days in that accrual period and a year assumed to consist of 360 days. For transactions settling on the 31st of the month, payment will include interest accrued to and excluding the first day of the following month. The payment will then be reflected in the account of the Clearstream Banking Participant or Euroclear Participant the following day, and receipt of the cash proceeds in the Clearstream Banking Participant's or Euroclear Participant's account would be back-valued to the value date (which would be the preceding day, when settlement occurred in New York). Should the Clearstream Banking Participant or Euroclear Participant have a line of credit with its respective clearing system and elect to be in debt in anticipation of receipt of the sale proceeds in its account, the back valuation will extinguish any overdraft incurred over that one-day period. If settlement is not completed on the intended value date (i.e., the trade fails), A-2 252 receipt of the cash proceeds in the Clearstream Banking Participant's or Euroclear Participant's account would instead be valued as of the actual settlement date. Finally, day traders that use Clearstream Banking or Euroclear and that purchase Global Securities from DTC Participants for delivery to Clearstream Banking Participants or Euroclear Participants should note that these trades would automatically fail on the sale side unless affirmative action were taken. At least three techniques should be readily available to eliminate this potential problem: 1. borrowing through Clearstream Banking or Euroclear for one day (until the purchase side of the day trade is reflected in their Clearstream Banking or Euroclear accounts) in accordance with the clearing system's customary procedures; 2. borrowing the Global Securities in the U.S. from a DTC Participant no later than one day prior to settlement, which would give the Global Securities sufficient time to be reflected in their Clearstream Banking or Euroclear account in order to settle the sale side of the trade; or 3. staggering the value dates for the buy and sell sides of the trade so that the value date for the purchase from the DTC Participant is at least one day prior to the value date for the sale to the Clearstream Banking Participant or Euroclear Participant. MATERIAL U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS A beneficial owner of Global Securities holding securities through Clearstream Banking or Euroclear (or through DTC if the holder has an address outside the U.S.) will be subject to the 30% U.S. withholding tax that generally applies to payments of interest (including original issue discount) on registered debt issued by U.S. Persons, generally unless (1) each clearing system, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business in the chain of intermediaries between that beneficial owner and the U.S. entity required to withhold tax complies with applicable certification requirements and (2) that beneficial owner takes one of the following steps to obtain an exemption or reduced tax rate: EXEMPTION FOR NON-U.S. PERSONS (FORM W-8BEN). Beneficial owners of Global Securities that are Non-U.S. Persons can obtain a complete exemption from the withholding tax by filing a signed Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding). If the information shown on Form W-8 changes, a new Form W-8BEN must be filed within 30 days of that change. EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM W-8ECI). A Non-U.S. Person, including a non-U.S. corporation or bank with a U.S. branch, for which the interest income is effectively connected with its conduct of a trade or business in the United States, generally can obtain an exemption from the withholding tax by filing Form W-8ECI (Certificate of Foreign Person's Claim for Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States). EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES (FORM W-8BEN). Non-U.S. Persons residing in a country that has a tax treaty with the United States generally can obtain an exemption or reduced tax rate depending on the treaty terms) by filing Form W-8BEN (claiming treaty benefits). Form W-8BEN may be filed by the beneficial owners or their agents. EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a complete exemption from the withholding tax by filing Form W-9 (Payer's Request for Taxpayer Identification Number and Certification). The beneficial owner of a Global Security files by submitting the appropriate form to the person though whom it holds (the clearing agency, in the case of persons holding directly on the books of the clearing agency). A Form W-8BEN on which the beneficial owner of a Global Security provides a U.S. taxpayer identification number generally remains in effect until a change in circumstances causes any of the information on the form to be incorrect. A Form W-8ECI and a Form W-8BEN on which a U.S. A-3 253 taxpayer identification number is not provided generally remain in effect for three calendar years, absent a change in circumstances causing any information on the form to be incorrect. As used in the foregoing discussion, the term "U.S. Person" means (i) a citizen or resident of the United States who is a natural person, (ii) a corporation or partnership (or an entity treated as a corporation or partnership) organized in or under the laws of the United States or any state thereof, including the District of Columbia (unless, in the case of a partnership, Treasury Regulations are adopted that provide otherwise), (iii) an estate, the income of which is subject to United States Federal income taxation, regardless of its source or (iv) a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons (as such term is defined in the Code and Treasury Regulations) have the authority to control all substantial decisions of the trust. Notwithstanding the preceding sentence, to the extent provided in Treasury Regulations, certain trusts in existence prior to August 20, 1996 which elected to be treated as United States persons prior to such date also shall be U.S. Persons. The term "Non-U.S. Person" means any person who is not a U.S. Person. This summary does not deal with all aspects of U.S. federal income tax withholding that may be relevant to foreign holders of Global Securities. Investors are advised to consult their tax advisors for specific tax advice concerning their holding and disposing of Global Securities. A-4 254 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following is an itemized list of the estimated expenses to be incurred in connection with the offering of the securities being offered hereunder other than underwriting discounts and commissions. Registration Fee............................................ $2,125,014.00 Blue Sky Fees and Expenses.................................. $ 15,000.00 Printing Expenses........................................... $ 50,000.00 Trustee Fees and Expenses................................... $ 15,000.00 Legal Fees and Expenses..................................... $ 250,000.00 Accounting Fees and Expenses................................ $ 50,000.00 Rating Agencies' Fees....................................... $ 241,000.00 Miscellaneous............................................... $ 20,000.00 ------------- Total..................................................... $2,766,014.00 =============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Set forth below are certain provisions of law and of the Certificates of Incorporation of Nissan Auto Receivables Corporation and Nissan Auto Receivables Corporation II. The general effect of such provisions is to provide indemnification to officers and directors of such corporation for actions taken in good faith. Section 145 of the General Corporation Law of Delaware provides as follows: 145. Indemnification of Officers, Directors, Employees and Agents; Insurance (a) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person's conduct was unlawful. (b) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and II-1 255 except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. (c) To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. (d) Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys' fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate. (f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office. (g) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section. (h) For purposes of this section, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. (i) For purposes of this section, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any II-2 256 employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interest of the corporation" as referred to in this section. (j) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (k) The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation's obligations to advance expenses including attorney's fees. Article Five of the Restated Certificate of Incorporation of Nissan Auto Receivables Corporation provides as follows: "(a) A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law is amended after approval by the stockholders of this Article Five to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation law, as so amended. (b) Any repeal or modification of paragraph (a) of this Article Five by the stockholders of the corporation shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or modification. (c)(i) Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative, investigative or otherwise (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director, officer or employee of the corporation or is or was serving at the request of the corporation as a director, officer or employee of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer or employee or in any other capacity while serving as a director, officer or employee, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), against all expense, liability and loss (including penalties, fines, judgments, attorneys' fees, amounts paid or to be paid in settlement and excise taxes imposed on fiduciaries with respect to (i) employee benefit plans, (ii) charitable organizations or (iii) similar matters) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer or employee and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that the corporation shall indemnify any such II-3 257 person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person (other than pursuant to subparagraph (c)(ii) of this Article Five) only if such proceeding (or part thereof) was authorized by the Board of Directors of the corporation. The right to indemnification conferred in this subparagraph (c)(i) of Article Five shall be a contract right and shall include the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding shall be made only upon delivery to the corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this subparagraph (c)(i) of Article Five or otherwise. (ii) If a claim which the corporation is obligated to pay under subparagraph (c)(i) of this Article Five is not paid in full by the corporation within 60 days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has not met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. (iii) The provisions of this paragraph (c) of Article Five shall cover claims, actions, suits and proceedings, civil or criminal, whether now pending or hereafter commenced, and shall be retroactive to cover acts or omissions or alleged acts or omissions which heretofore have taken place. If any part of this paragraph (c) of Article Five should be found to be invalid or ineffective in any proceeding, the validity and effect of the remaining provisions shall not be affected. (iv) The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this paragraph (c) of Article Five shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Restated Certificate of Incorporation, By-Law, agreement, vote of stockholders or disinterested directors or otherwise. (v) The corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. (vi) The corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification, and rights to be paid by the corporation the expenses incurred in defending any proceeding in advance of its final disposition, to any agent of the corporation to the fullest extent of the provisions of this paragraph (c) of Article Five with respect to the indemnification and advancement of expenses of directors, officers and employees of the corporation." II-4 258 Article Eight of the Amended and Restated Certificate of Incorporation of Nissan Auto Receivables Corporation II provides as follows: "Section 8.01. (a) A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability: (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the Delaware General Corporation Law; or (iv) for any transaction from which the director derived an improper personal benefit. (b) If the Delaware General Corporation Law is hereafter amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. (c) Any repeal or modification of this Article shall not adversely affect any right or protection of a director of the Corporation with respect to any act or omission occurring prior to such repeal or modification." (d) If the Corporation has outstanding any securities rated by any NRSRO, the Corporation's obligation to pay any amount as indemnification or as an advancement of expenses (other than amounts received from insurance policies) shall be fully subordinated to payment of amounts then due on the rated securities and, in any case, (x) nonrecourse to any of the Corporation's assets pledged to secure the rated securities, and (y) shall not constitute a claim against the Corporation to the extent funds are insufficient to pay such amounts." II-5 259 ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS a. Exhibits: 1.1 Form of Underwriting Agreement 1.2 Form of Underwriting Agreement 4.1 Form of Trust Agreement between the Registrant and the Owner Trustee 4.2 Form of Indenture between the Trust and the Indenture Trustee 4.3 Form of Sale and Servicing Agreement among the Registrant, the Servicer and the Owner Trust 4.4 Form of Pooling and Servicing Agreement among the Registrant, the Servicer and the Trustee 4.5 Form of Purchase Agreement between Nissan Acceptance Motor Corporation and the Registrant 4.6 Form of Administration Agreement among the Trust, the Administrator and the Indenture Trustee 4.7 Form of Yield Supplement Agreement among the Registrant, the Servicer and the Trust 5.1(a) Opinion of O'Melveny and Myers LLP regarding Notes 5.1(b) Opinion of O'Melveny and Myers LLP regarding Certificates 8.1 Opinion of O'Melveny and Myers LLP with respect to tax matters 23.1 Consent of O'Melveny and Myers LLP (included as part of Exhibits 5.1(a) and (b)) 23.2 Consent of O'Melveny and Myers LLP (included as part of Exhibit 8.1) 25.1 Statement of Eligibility on Form T-1 of Trustee under the Indenture
ITEM 17. UNDERTAKINGS (a) As to Rule 415: The undersigned registrants hereby undertake: (1) To file, during any period in which offers or sales are being made of the securities registered hereby, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended; (ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment hereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the change in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, as amended, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-6 260 (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) As to documents subsequently filed that are incorporated by reference: The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, as amended, each filing of the registrants' annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934), as amended, that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) As to indemnification: Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the registrants pursuant to the provisions described under Item 15 above, or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such issue. (d) As to Rule 430A: The undersigned registrants hereby undertake that: (1) For purposes of determining any liability under the Securities Act of 1933, as amended, the information omitted from the form of prospectus as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933, as amended, shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, as amended, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (e) As to qualifications of trust indentures under the Trust Indenture Act of 1939 for delayed offerings: The undersigned registrants hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act of 1939, as amended, in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act of 1939, as amended. II-7 261 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrants certify that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Torrance, State of California, on January 11, 2001. NISSAN AUTO RECEIVABLES TRUSTS By: Nissan Auto Receivables Corporation as originator of Nissan Auto Receivables Trusts By: /s/ Katsumi Ishii ----------------------------------- Katsumi Ishii President and Chairman of the Board NISSAN AUTO RECEIVABLES TRUSTS By: Nissan Auto Receivables Corporation II as originator of Nissan Auto Receivables Trusts By: /s/ Katsumi Ishii ----------------------------------- Katsumi Ishii President and Chairman of the Board Know all men by these presents, that each person whose signature appears below constitutes and appoints Ann M. Nishimura as his or her true and lawful attorney-in-fact and agent, with full powers of substitution, for him or her and his or her name, place and stead, in any and all capacities, to sign and to file any and all amendments, including post-effective amendments to this Registration Statement, with the Securities and Exchange Commission granting to said attorney-in-fact power and authority to perform any other act on behalf of the undersigned required to be done in connection therewith. Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
NAME TITLE (SAME FOR BOTH CORPORATIONS) DATE ---- ---------------------------------- ---- /s/ Katsumi Ishii Chairman of the Board, President, January 11, 2001 - ----------------------------------------------------- and Principal Executive Officer Katsumi Ishii /s/ Joji Tagawa Treasurer, Director, Principal January 11, 2001 - ----------------------------------------------------- Financial Officer and Principal Joji Tagawa Accounting Officer /s/ Joy Murakami Crose Director January 11, 2001 - ----------------------------------------------------- Joy Murakami Crose
II-8 262 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Torrance, State of California, on January 11, 2001. NISSAN AUTO RECEIVABLES CORPORATION By: /s/ Katsumi Ishii ------------------------------------- Katsumi Ishii President and Chairman of the Board Know all men by these presents, that each person whose signature appears below constitutes and appoints Ann M. Nishimura as his or her true and lawful attorney-in-fact and agent, with full powers of substitution, for him or her and his or her name, place and stead, in any and all capacities, to sign and to file any and all amendments, including post-effective amendments to this Registration Statement, with the Securities and Exchange Commission granting to said attorney-in-fact power and authority to perform any other act on behalf of the undersigned required to be done in connection therewith. Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
NAME TITLE DATE ---- ----- ---- /s/ Katsumi Ishii Chairman of the Board, January 11, 2001 - ----------------------------------------------------- President, and Principal Katsumi Ishii Executive Officer /s/ Joji Tagawa Treasurer, Director, January 11, 2001 - ----------------------------------------------------- Principal Financial Officer Joji Tagawa and Principal Accounting Officer /s/ Joy Murakami Crose Director January 11, 2001 - ----------------------------------------------------- Joy Murakami Crose
II-9 263 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Torrance, State of California, on January 11, 2001. NISSAN AUTO RECEIVABLES CORPORATION II By: /s/ Katsumi Ishii ------------------------------------- Katsumi Ishii President and Chairman of the Board Know all men by these presents, that each person whose signature appears below constitutes and appoints Ann M. Nishimura as his or her true and lawful attorney-in-fact and agent, with full powers of substitution, for him or her and his or her name, place and stead, in any and all capacities, to sign and to file any and all amendments, including post-effective amendments to this Registration Statement, with the Securities and Exchange Commission granting to said attorney-in-fact power and authority to perform any other act on behalf of the undersigned required to be done in connection therewith. Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
NAME TITLE DATE ---- ----- ---- /s/ Katsumi Ishii Chairman of the Board, January 11, 2001 - --------------------------------------------------- President, and Principal Katsumi Ishii Executive Officer /s/ Joji Tagawa Treasurer, Director, Principal January 11, 2001 - --------------------------------------------------- Financial Officer and Joji Tagawa Principal Accounting Officer /s/ Joy Murakami Crose Director January 11, 2001 - --------------------------------------------------- Joy Murakami Crose
II-10 EX-1.1 2 a67668a1ex1-1.txt EXHIBIT 1.1 1 EXHIBIT 1.1 FORM OF UNDERWRITING AGREEMENT FOR NOTES NISSAN AUTO RECEIVABLES ____-___ OWNER TRUST $[ ], ___% ASSET BACKED NOTES, CLASS A-1 $[ ], ___% ASSET BACKED NOTES, CLASS A-2 $[ ], ___% ASSET BACKED NOTES, CLASS A-3 $[ ], ___% ASSET BACKED NOTES, CLASS B $[ ], ___% ASSET BACKED CERTIFICATES, CLASS C NISSAN AUTO RECEIVABLES CORPORATION [II] (SELLER) [Date] [Names of Investment Banks] As Representative of the Several Underwriters, c/o [Address] Dear Sirs: 1. Introductory. Nissan Auto Receivables Corporation [II] (the "Seller"), a Delaware corporation and wholly owned subsidiary of Nissan Motor Acceptance Corporation, a California corporation (the "Servicer"), proposes to sell $[ ] principal amount of ___% Asset Backed Notes, Class A-1 (the "Class A-1 Notes"), $[ ] principal amount of ___% Asset Backed Notes, Class A-2 (the "Class A-2 Notes"), $[ ] principal amount of ___% Asset Backed Notes, Class A-3 (the "Class A-3 Notes"), and $[ ] principal amount of ____% Asset Backed Notes, Class B (the "Class B Notes" and, together with the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes, the "Notes") and $[ ] principal amount of ___% Asset Backed Certificates, Class C Certificates (the "Certificates," and together with the Notes, the "Securities"). The Securities will be issued by the Nissan Auto Receivables ____-__ Owner Trust (the "Trust"). The Notes will be issued pursuant to an indenture (the "Indenture"), to be dated as of _______, 200_, between the Trust and the Indenture Trustee (as defined therein) and will be governed by the terms of a Sale and Servicing Agreement (the "Sale and Servicing Agreement"), to be dated as of _________, 200_ among the Trust, the Seller and the Servicer. The Trust will also issue the Certificates which will represent fractional undivided interests in the Trust pursuant to a Trust Agreement to be dated as of _____, 200_ (the "Trust Agreement"). Capitalized terms used herein and not otherwise defined herein shall have the meanings given them in the Sale and Servicing Agreement. 1 2 2. Representations and Warranties of the Seller and the Servicer. Each of the Seller and the Servicer, jointly and severally, represents and warrants to and agrees with the several underwriters named in Schedule 1 hereto (the "Underwriters") that: (a) A registration statement [(No. 333-51224)] [(No. 333-51224-01)], including a form of prospectus supplement relating to the Securities and a form of base prospectus relating to each class of securities to be registered under such registration statement (the "Registered Securities"), has been filed with the Securities and Exchange Commission (the "Commission") and either (i) has been declared effective under the Securities Act of 1933, as amended (the "Act"), and is not proposed to be amended or (ii) is proposed to be amended by amendment or post-effective amendment. If such registration statement (the "initial registration statement") has been declared effective, either (i) any additional registration statement (the "additional registration statement") relating to the Securities has been filed with the Commission pursuant to rule 462(b) ("Rule 462(b)") under the Act and declared effective upon filing, and the Securities have been registered under the Act pursuant to the initial registration statement and such additional registration statement or (ii) any such additional registration statement proposed to be filed with the Commission pursuant to Rule 462(b) will become effective upon filing pursuant to Rule 462(b) and upon such filing the Securities will have been duly registered under the Act pursuant to the initial registration statement and such additional registration statement. If the Seller does not propose to amend the initial registration statement, any such additional registration statement or any post-effective amendment to either such registration statement filed with the Commission prior to the execution and delivery of this Agreement, then the most recent amendment (if any) to each such registration statement has been declared effective by the Commission or has become effective upon filing pursuant to Rule 462(c) under the Act ("Rule 462(c)") or Rule 462(b). For purposes of this Agreement, "Effective Time" with respect to the initial registration statement or, if filed prior to the execution and delivery of this Agreement, the additional registration statement means (A) if the Seller has advised the Representative that it does not propose to amend such registration statement, the date and time as of which such registration statement, or the most recent post-effective amendment thereto (if any) filed prior to the execution and delivery of this Agreement, was declared effective by the Commission or has become effective upon filing pursuant to Rule 462(c) or (B) if the Seller has advised the Representative that it proposes to file an amendment or post-effective amendment to such registration statement, the date and time as of which such registration statement as amended by such amendment or post-effective amendment, as the case may be, is declared effective by the Commission. If the Seller has advised the Representative that it proposes to file, but has not filed, an additional registration statement, "Effective Time" with respect to such additional registration statement means the date and time as of which such registration statement is filed and becomes effective pursuant to Rule 462(b). "Effective Date" with respect to the initial registration statement or the additional registration statement (if any) means the date of the Effective Time thereof. 2 3 The initial registration statement, as amended at its Effective Time, including all information (A) contained in the additional registration statement (if any), (B) deemed to be a part of the initial registration statement as of the Effective Time of the additional registration statement (if any) pursuant to the General Instructions of the Form on which it is filed and (C) deemed to be a part of the initial registration statement as of its Effective Time pursuant to Rule 430A(b) under the Act ("Rule 430A(b)"), is hereinafter referred to as the "Initial Registration Statement." The additional registration statement, as amended at its Effective Time, including the contents of the initial registration statement incorporated by reference therein and deemed to be a part of the additional registration statement as of its Effective Time pursuant to Rule 430A(b), is hereinafter referred to as the "Additional Registration Statement." The Initial Registration Statement and the Additional Registration Statement are hereinafter referred to collectively as the "Registration Statements" and individually as a "Registration Statement." The form of prospectus supplement relating to the Securities (the "Prospectus Supplement") and the form of prospectus (the "Base Prospectus") relating to the Registered Securities (including the Notes and Certificates), as first filed with the Commission in connection with the offering and sale of the Securities pursuant to and in accordance with Rule 424(b) under the Act ("Rule 424(b)") or, if no such filing is required, as included in a Registration Statement, including all material incorporated by reference in such prospectus, is hereinafter referred to as the "Prospectus." [The Seller filed the Term Sheet dated ________, 200_ relating to the Securities (the "Term Sheet") disseminated by the Underwriters on Form 8-K with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), within two business days of its delivery to the Underwriters.] [The Seller filed the Preliminary Prospectus dated _____, 200_ relating to the Securities (the "Preliminary Prospectus") disseminated by the Underwriters with the Commission pursuant to the Act.] (b) (A) On the Effective Date of any Registration Statement whose Effective Time is prior to the execution and delivery of this Agreement, each such Registration Statement conformed, (B) on the date of this Agreement, each such Registration Statement conforms and (C) on any related Effective Date subsequent to the date of this Agreement, each such Registration Statement will conform, in all respects to the requirements of the Act and the rules and regulations of the Commission (the "Rules and Regulations") and the Trust Indenture Act of 1939, as amended (the "1939 Act"), and at such times each such Registration Statement, as amended, did not and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. At the time of filing of the Prospectus pursuant to Rule 424(b) or, if no such filing is required, at the Effective Date of the Additional Registration Statement that includes the Prospectus, on the date of this Agreement and at the Closing Date, the Prospectus will conform, in all respects to the requirements of the Act and the Rules and Regulations, and does not include, and will not include, any untrue statement of a material fact, nor does the Prospectus omit, nor will it omit, to state any material fact required to be stated therein or necessary to make the statements therein not misleading. The two preceding sentences do not apply to statements in or omissions from the Registration Statement or Prospectus based upon written information furnished to the Seller by any Underwriter through the Representative specifically for use therein or to that part of the Registration Statement 3 4 which constitutes the Statement of Qualification under the 1939 Act on Form T-1 (the "Form T-1") of the Indenture Trustee. If the Effective Time of the Registration Statement is subsequent to the date of this Agreement, no Additional Registration Statement has been or will be filed. The Indenture has been qualified under the 1939 Act. (c) The Seller has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware with corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or the ownership of its property requires such qualification, except where the failure to be in good standing would not have a material adverse effect on the Seller's ability to perform its obligations under this Agreement, the Trust Agreement, the Purchase Agreement, the Assignment, the Sale and Servicing Agreement, the Yield Supplement Agreement or the Securities Account Control Agreement (collectively, the "Basic Documents"). (d) The Servicer has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of California with corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or the ownership of its property requires such qualification, except where the failure to be in good standing would not have a material adverse effect on the Servicer's ability to perform its obligations under the Basic Documents. (e) The consummation of the transactions contemplated by the Basic Documents, and the fulfillment of the terms thereof, will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation of any lien, charge, or encumbrance upon any of the property or assets of the Seller or the Servicer pursuant to the terms of, any indenture, mortgage, deed of trust, loan agreement, guarantee, lease financing agreement, or similar agreement or instrument under which the Seller or the Servicer is a debtor or guarantor, except where such conflict, breach, default or creation would not have a material adverse effect on the Seller's or the Servicer's respective ability to perform its obligations under the Basic Documents or the validity or enforceability thereof. (f) No consent, approval, authorization or order of, or filing with, any court or governmental agency or body is required to be obtained or made by the Seller or the Servicer for the consummation of the transactions contemplated by this Agreement except such as have been obtained and made under the Act, such as may be required under state securities laws and the filing of any financing statements required to perfect the Trust's interest in the Receivables. (g) Neither the Seller nor the Servicer is in violation of its certificate of incorporation or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any agreement or instrument to which it is a party or by which it or its properties are bound which would have a material adverse 4 5 effect on the transactions contemplated herein or on the Seller's or the Servicer's respective ability to perform its obligations under the Basic Documents. The execution, delivery and performance of the Basic Documents and the issuance and sale of the Securities and compliance with the terms and provisions thereof will not, subject to obtaining any consents or approvals as may be required under the securities or "blue sky" laws of various jurisdictions: (i) result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, rule, regulation or order of any governmental agency or body or any court having jurisdiction over the Seller or the Servicer or their respective properties or any agreement or instrument to which either is a party or by which either is bound or to which any of their respective properties are subject, except where such breach, violation, or default would not have a material adverse effect on the Seller's or the Servicer's respective ability to perform its obligations under the Basic Documents or the validity or enforceability thereof, or (ii) conflict with the Seller's or the Servicer's charter or by-laws, and each of the Seller and the Servicer has corporate power and authority to enter into the Basic Documents and to consummate the transactions contemplated hereby and thereby. (h) The Basic Documents have been duly authorized, executed and delivered by, and (assuming due authorization and delivery thereof by the other parties hereto and thereto) constitute valid and binding obligations of, the Seller and the Servicer, as applicable, enforceable against such party in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws relating to or affecting the enforcement of creditors' rights generally and by general equitable principles, regardless of whether such enforceability is considered in a proceeding in equity or at law. (i) The Securities have been duly authorized and, when executed and delivered in accordance with the Trust Agreement [and the Indenture] and delivered against payment therefor pursuant to this Agreement, will be valid and binding obligations of the Trust, enforceable against the Trust in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws relating to or affecting the enforcement of creditors' rights generally and by general equitable principles, regardless of whether such enforceability is considered in a proceeding in equity or at law. (j) There are no legal or governmental proceedings pending to which the Seller or the Servicer is a party or of which any property of the Seller or the Servicer is the subject, and to the Seller's knowledge no such proceedings are threatened or contemplated by governmental authorities or threatened by others, (A) that are required to be disclosed in the Registration Statement or (B)(1) asserting the invalidity of all or part of any Basic Document, (2) seeking to prevent the issuance of the Securities, (3) that would materially and adversely affect the Seller's or the Servicer's obligations under any Basic Document to which it is a party, or (4) seeking to affect adversely the federal or state income tax attributes of the Securities. (k) Any taxes, fees and other governmental charges that have been assessed and are known to the Seller to be due in connection with the execution, delivery 5 6 and issuance of the Basic Documents shall have been paid by the Seller or the Servicer at or prior to the Closing Date (as defined in Section 3(c) hereof). (l) Each of the Seller and the Servicer possesses all material licenses, certificates, authorizations or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies, the absence of which would have a material adverse effect on the ability of the Seller or the Servicer to perform its duties under the Sale and Servicing Agreement, and neither of the Seller or Servicer has received notice of proceedings relating to the revocation or modification of any such license, certificate, authorization or permit which, singly or in the aggregate, if the subject of any unfavorable decision, ruling or finding, would materially and adversely affect the ability of the Seller or the Servicer to perform its obligations under the Basic Documents. (m) As of the Closing Date, the Reserve Account and the Yield Supplement Account will be subject to a first-priority security interest in favor of the Indenture Trustee for the benefit of the Noteholders. (n) As of the Closing Date, the Trust (for the benefit of the holders of the Securities) will have good title, free and clear of all prior liens, charges and encumbrances, to the Receivables and such other items comprising the corpus of the Trust transferred to the Trust pursuant to the Sale and Servicing Agreement. (o) As of the Closing Date, the Indenture, the Securities and the Basic Documents will conform in all material respects to the description thereof contained in the Registration Statement and the Prospectus. (p) [ ] are independent public accountants with respect to the Seller within the meaning of the Act and the Rules and Regulations. (q) Neither the Trust nor the Seller is required to be registered as an "investment company" under the Investment Company Act of 1940, as amended. (r) The representations and warranties of the Seller and the Servicer in the Sale and Servicing Agreement are true and correct in all material respects. 3. Purchase, Sale and Delivery the Securities. (a) On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Seller agrees to sell to the Underwriters, and the Underwriters agree, severally and not jointly, to purchase from the Seller, the aggregate principal amounts of the Securities set forth opposite the names of the Underwriters in Schedule 1 hereto. (b) The Securities are to be purchased at a purchase price equal to (i) in the case of the Class A-1 Notes, ___% of the aggregate principal amount thereof, (ii) in the case of the Class A-2 Notes, ___% of the aggregate principal amount thereof, (iii) in the case of the Class A-3 Notes, ___% of the aggregate principal amount thereof, (iv) in 6 7 the case of the Class B Notes, ___% of the aggregate principal amount thereof, and (v) in the case of the Class C Certificates, ___% of the aggregate principal amount thereof. (c) Against payment of the purchase price by wire transfer of immediately available funds to the Seller, the Seller will deliver the Securities to the Representative, for the account of the Underwriters, at the office of O'Melveny & Myers LLP, at 400 South Hope Street, Los Angeles, California, on _______, 200_, at _______ a.m., Los Angeles time, or at such other time not later than seven full business days thereafter as the Representative and the Seller determine, such time being herein referred to as the "Closing Date." The Notes to be so delivered will be initially represented by one or more securities registered in the name of Cede & Co., the nominee of The Depository Trust Company ("DTC"). The Certificates to be so delivered will be initially represented by one or more securities registered in the name of Cede & Co., the nominee of DTC. The interests of beneficial owners of the Securities will be represented by book entries on the records of DTC and participating members thereof. Definitive securities will be available only under the limited circumstances set forth in the Indenture and the Trust Agreement. 4. Offering by Underwriters. It is understood that the several Underwriters propose to offer the Securities for sale to the public as set forth in the Prospectus. 5. Covenants of the Seller. The Seller covenants and agrees with the several Underwriters that: (a) If the Effective Time is prior to the execution and delivery of this Agreement, the Seller will file the Prospectus with the Commission pursuant to and in accordance with Rule 424(b) not later than the second business day following the execution and delivery of this Agreement. If the Effective Time of the Initial Registration Statement is prior to the execution and delivery of this Agreement and an Additional Registration Statement is necessary to register a portion of the Securities under the Act but the Effective Time thereof has not occurred as of such execution and delivery, the Seller will file the Additional Registration Statement or a post-effective amendment thereto, as the case may be, with the Commission pursuant to and in accordance with Rule 424(b). The Seller will advise the Representative promptly of any such filing pursuant to Rule 424(b). (b) The Seller will advise the Representative promptly of any proposal to amend or supplement the registration statement as filed or the related prospectus or the Registration Statement or the Prospectus, and will not effect such amendment or supplementation without the Representative's consent; and the Seller will also advise the Representative promptly of the effectiveness of the Registration Statement (if the Effective Time is subsequent to the execution and delivery of this Agreement) and of any amendment or supplementation of the Registration Statement or the Prospectus and of the institution by the Commission of any stop order proceedings in respect of the Registration Statement and will use its best efforts to prevent the issuance of any such stop order and to lift such stop order as soon as possible, if issued. 7 8 (c) The Seller will arrange for the qualification of the Securities for offering and sale under the securities laws of such jurisdictions in the United States as the Representative may reasonably designate and to continue such qualifications in effect so long as necessary under such laws for the distribution of such securities; provided that in connection therewith the Seller shall not be required to qualify as a foreign corporation to do business, or to file a general consent to service of process, in any jurisdiction. (d) If, at any time when the delivery of a prospectus shall be required by law in connection with sales of any Securities, either (i) any event shall have occurred as a result of which the Prospectus would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (ii) for any other reason it shall be necessary to amend or supplement the Prospectus, the Seller will promptly notify the Representative and will promptly prepare for review by the Representative and file with the Commission an amendment or a supplement to the Prospectus which will correct such statement or omission or effect such compliance. Neither the consent of the Underwriters to, nor the Underwriters' delivery of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6. (e) The Seller will cause the Trust to make generally available to Holders as soon as practicable, but not later than fourteen months after the Effective Date, an earnings statement of the Trust covering a period of at least twelve consecutive months beginning after such Effective Date and satisfying the provisions of Section 11(a) of the Act (including Rule 158 promulgated thereunder). (f) The Seller will furnish to the Underwriters copies of the Registration Statement (two of which will include all exhibits), the Form 8-K relating to [the Term Sheet,][each related preliminary prospectus,] the Prospectus and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Representative may from time to time reasonably request. (g) So long as any of the Securities are outstanding, the Seller will furnish to the Representative copies of all reports or other communications (financial or otherwise) furnished to Holders, and deliver to the Representative during such same period (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission and (ii) such additional information concerning the business and financial condition of the Seller and the Trust as the Representative may from time to time reasonably request. (h) The Seller will pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including (i) the printing (or otherwise reproducing) and filing of the Registration Statement as originally filed and of each amendment thereto; (ii) the preparation, issuance and delivery of the Securities to the Underwriters; (iii) the fees and disbursements of the Seller's and the Servicer's counsel and accountants; (iv) the fees of DTC in connection with the book-entry registration of the Securities; (v) the qualification of the Securities under state securities 8 9 law in accordance with the provisions of Section 5(c) hereof, including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of the blue sky survey, if required; (vi) the printing (or otherwise reproducing) and delivery to the Underwriters of copies of each preliminary prospectus and the Prospectus and any amendments or supplements thereto; (vii) the reproducing and delivery to the Underwriters of copies of the blue sky survey; and (viii) the fees charged by Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Services, a Division of the McGraw-Hill Companies, Inc. ("S&P"), for rating the Securities. The Underwriters shall not be responsible for the fees and disbursements of the Owner Trustee and its counsel. (i) Until the retirement of the Securities, or until such time as the Underwriters shall cease to maintain a secondary market in the Securities, whichever occurs first, the Seller will deliver to the Representative the annual statements of compliance and the annual independent certified public accountants' reports furnished to the Indenture Trustee and Owner Trustee pursuant to Article IV of the Sale and Servicing Agreement, as soon as such statements and reports are furnished to the Indenture Trustee and Owner Trustee. (j) On or promptly after the Closing Date, the Seller shall cause its and the Servicer's computer records relating to the Receivables to be marked to show the Trust's absolute ownership of the Receivables, and from and after the Closing Date neither the Seller nor the Servicer shall take any action inconsistent with the Trust's ownership of such Receivables, other than as permitted by the Sale and Servicing Agreement. (k) To the extent, if any, that the rating provided with respect to the Securities by Moody's or S&P is conditional upon the furnishing of documents or the taking of any other actions by the Seller, the Seller shall furnish, and shall cause the Servicer to furnish, such documents and take any such other actions. 6. Conditions of the Obligations of the Underwriters. The obligations of the several Underwriters to purchase and pay for the Securities will be subject to the accuracy of the representations and warranties on the part of the Seller and the Servicer herein on the date hereof and at the Closing Date, to the accuracy of the statements of officers of the Seller and the Servicer made pursuant to the provisions hereof, to the performance by the Seller and the Servicer of their respective obligations hereunder and to the following additional conditions precedent: (a) At the time this Agreement is executed and delivered by the Seller and at the Closing Date, [ ] shall have furnished to the Representative letters dated respectively as of the date of this Agreement and as of the Closing Date substantially in the forms of the drafts to which the Representative previously agreed. (b) If the Effective Time of the Initial Registration Statement is not prior to the execution and delivery of this Agreement, such Effective Time shall have occurred not later than [10:00 p.m., New York time,] on the date of this Agreement or such later 9 10 date as shall have been consented to by the Representative. If the Effective Time of the Initial Registration Statement is prior to the execution and delivery of this Agreement, the Prospectus shall have been filed with the Commission in accordance with the Rules and Regulations and Section 5(a) of this Agreement. If the Effective Time of the Additional Registration Statement (if any) is not prior to the execution and delivery of this Agreement, such Effective Time shall have occurred not later than [10:00 p.m., New York time,] on the date of this Agreement or, if earlier, the time the Prospectus is printed and distributed to any Underwriter, or shall have occurred at such later date as shall have been consented to by the Representative. Prior to the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Seller, shall be contemplated by the Commission. (c) The Underwriters shall have received an officers' certificate, dated the Closing Date, signed by the Chairman of the Board, the President or any Vice President and by a principal financial or accounting officer of the Seller representing and warranting that, to the best of such officers' knowledge after reasonable investigation, as of the Closing Date, the representations and warranties of the Seller in this Agreement are true and correct in all material respects, that the Seller has complied with all agreements and satisfied in all material respects all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date, that no stop order suspending the effectiveness of any Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the best of their knowledge, are contemplated by the Commission. (d) The Underwriters shall have received an officers' certificate, dated the Closing Date, signed by the Chairman of the Board, the President or any Vice President and by a principal financial or accounting officer of the Servicer representing and warranting that, to the best of such officers' knowledge after reasonable investigation, as of the Closing Date, the representations and warranties of the Servicer in this Agreement are true and correct in all material respects, that the Servicer has complied with all agreements and satisfied, in all material respects, all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date, that no stop order suspending the effectiveness of any Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the best of their knowledge, are contemplated by the Commission. (e) Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Seller, Nissan Motor Co. Ltd., Nissan North America, Inc. ("NNA") or the Servicer which, in the judgment of the Representative, materially impairs the investment quality of the Securities or makes it impractical or inadvisable to proceed with completion of the sale of and payment for the Securities; (ii) any downgrading in the rating of any debt securities of NNA or any of its direct or indirect subsidiaries by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act), or any public announcement that any such organization has under surveillance or review its rating of any such debt securities (other than an announcement with positive implications of a 10 11 possible upgrading, and no implication of a possible downgrading, of such rating); (iii) any suspension or limitation of trading in securities generally on the New York Stock Exchange or any setting of minimum prices for trading on such exchange; (iv) any banking moratorium declared by federal or New York authorities; or (v) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the judgment of the Representative, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the sale of and payment for the Securities. (f) [Joy Crose,] Esq., General Counsel of the Seller, or other counsel satisfactory to the Representative in its reasonable judgment, shall have furnished to the Representative such counsel's written opinion, dated the Closing Date, in substantially the form set forth below, with such changes therein as counsel for the Underwriters shall reasonably agree: (i) The Seller has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware with corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or the ownership of its property requires such qualification, except where the failure to be in good standing would not have a material adverse effect on the Seller's ability to perform its obligations under the Basic Documents. (ii) The Servicer has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of California with corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or the ownership of its property requires such qualification, except where the failure to be in good standing would not have a material adverse effect on the Servicer's ability to perform its obligations under the Basic Documents. (iii) The Basic Documents have been duly authorized, executed and delivered by each of the Seller and the Servicer, as applicable, and each of the Seller and the Servicer has the corporate power and authority to enter into and perform its respective obligations under the Basic Documents. (iv) The execution, delivery and performance of the Basic Documents by the Seller and the Servicer will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the respective properties or assets of the Seller or the Servicer, pursuant to the terms of the Securities or the charter or bylaws of the Seller or the Servicer, any statute, any rule, regulation or order of any governmental agency or body or any court having jurisdiction over the Seller or the Servicer or any of their respective 11 12 properties or any material agreement or instrument to which the Seller or the Servicer is a party or by which either the Seller or the Servicer or any of their respective properties is bound. (v) No authorization, approval or consent of any court or governmental agency or authority is necessary in connection with the execution, delivery and performance by the Seller or the Servicer of the Basic Documents to which it is a party, except such as may be required under the Act or the Rules and Regulations and state securities laws, and except for such authorizations, approvals or consents (specified in such opinion) as are in full force and effect as of the Effective Date and the Closing Date. (vi) Nothing has come to such counsel's attention that would cause it to believe that as of the Effective Date and at the Closing Date the Registration Statement and the Prospectus (other than the financial statements and the other accounting information contained therein or omitted therefrom, as to which such counsel need express no belief) contained or contain any untrue statement of a material fact or omitted or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or that the descriptions therein of statutes and governmental proceedings and contracts and other documents are inaccurate and do not fairly present the information required to be shown therein. (vii) Such counsel does not know of any contract or other document of a character required to be filed as an exhibit to the Registration Statement or required to be described in the Registration Statement or the Prospectus which is not filed or described as required. (viii) There are no legal or governmental proceedings pending to which the Seller or the Servicer is a party or of which any property of the Seller or the Servicer is the subject, and no such proceedings are known by such counsel to be threatened or contemplated by governmental authorities or threatened by others, (A) that are required to be disclosed in the Registration Statement or (B)(1) asserting the invalidity of all or part of any Basic Document, (2) seeking to prevent the issuance of the Securities, (3) that would materially and adversely affect the Seller's or the Servicer's obligations under any Basic Document to which it is a party, or (4) seeking to affect adversely the federal or state income tax attributes of the Securities. (ix) The Servicer has corporate power and authority to sell and assign the property to be sold and assigned to the Seller pursuant to the Purchase Agreement and has duly authorized such sale and assignment to the Seller by all necessary corporate action. (x) The Seller has corporate power and authority to sell and assign the property to be sold and assigned to and deposited with the Trust and 12 13 has duly authorized such sale and assignment to the Trust by all necessary corporate action. (xi) The Receivables are "chattel paper" as defined in the Uniform Commercial Code, as in effect in the State of California. (xii) Such counsel is familiar with the Servicer's standard operating procedures relating to the Servicer's acquisition of a perfected first priority security interest in the vehicles financed by the retail installment sale contracts purchased by the Servicer in the ordinary course of the Servicer's business and relating to the sale by the Servicer to the Seller of such contracts and such security interests in the Financed Vehicles in the ordinary course of the Servicer's and the Seller's business. Assuming that the Servicer's standard procedures are followed with respect to the perfection of security interests in the Financed Vehicles (and such counsel has no reason to believe that the Servicer has not or will not continue to follow its standard procedures in connection with the perfection of security interests in the Financed Vehicles), the Servicer has acquired or will acquire a perfected first priority security interest in the Financed Vehicles. (g) O'Melveny & Myers LLP, special counsel to the Seller, shall have furnished to the Representative their written opinion, dated as of the Closing Date, in substantially the form set forth below, with such changes therein as counsel for the Underwriters shall reasonably agree: (i) Each Basic Document to which the Seller or the Servicer is a party has been duly authorized by all necessary corporate action on the part of such Person and has been executed and delivered by such Person. (ii) Assuming the due authorization, execution and delivery thereof by the Owner Trustee and the Indenture Trustee, each Basic Document to which the Seller or the Servicer is a party constitutes a legally valid and binding obligation of the Seller or the Servicer, as the case may be, enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect, relating to or affecting creditors' rights generally and by the application of general principles of equity, including without limitation concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance, injunctive relief or any other equitable remedy (regardless of whether enforcement is considered in a proceeding at law or in equity). (iii) Assuming the Securities have been duly and validly authorized, when executed and authenticated by the Indenture Trustee (in the case of the Notes) as specified in the Indenture, and by the Owner Trustee (in case of the Certificates) as specified in the Trust Agreement and delivered against payment of the consideration specified in this Agreement, the Securities will be legally valid and binding obligations of the Trust, and entitled to the benefits of 13 14 the Indenture (in the case of the Notes) and the Trust Agreement (in the case of the Certificates) enforceable against the Trust in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect, relating to or affecting creditors' rights generally and by the application of general principles of equity, including without limitation concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance, injunctive relief or any other equitable remedy (regardless of whether enforcement is considered in a proceeding at law or in equity). (iv) Assuming the due authorization, execution and delivery thereof by the Trust and the Owner Trustee, the Sale and Servicing Agreement and the Indenture constitute valid and binding obligations of the Trust enforceable against the Trust in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect, relating to or affecting creditors' rights generally and by the application of general principles of equity, including without limitation concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance, injunctive relief or any other equitable remedy (regardless of whether enforcement is considered in a proceeding at law or in equity). (v) Neither the Seller nor the Trust is required to be registered under the Investment Company Act of 1940. (vi) With respect to Financed Vehicles in the State of California, no filing or other action other than (A) the filing of a UCC financing statement naming the Servicer as transferor and the Seller as the transferee and (B) the filing of a UCC financing statement naming the Seller as the transferor and the Trust as the transferee, is necessary to perfect the transfer and assignment of the Servicer's security interest in such Financed Vehicles to the Seller, and the Seller's security interest in such Financed Vehicles to the Trust, respectively, and as a result of such transfer and assignment and upon filing of such financing statements, the Trust has a first perfected security interest in such Financed Vehicles, except that so long as the Servicer is named as the legal owner and lien holder on a certificate of title, the Servicer has the ability to release the security interest in the Financed Vehicle or to assign it to another party. (vii) The Trust will not be classified as an association taxable as a corporation or as a publicly traded partnership for federal or California income and franchise tax purposes, and for such purposes the Securities will be characterized as debt. (viii) The statements in the Prospectus Supplement under "MATERIAL INCOME TAX CONSEQUENCES" and "ERISA CONSIDERATIONS," and in the Base Prospectus under the "MATERIAL INCOME TAX CONSEQUENCES," "ERISA CONSIDERATIONS" and 14 15 "MATERIAL LEGAL ASPECTS OF THE RECEIVABLES," to the extent that they constitute matters of law or legal conclusions relating to the federal laws of the United States or the laws of the States of California or New York with respect thereto, have been reviewed by such counsel and are correct in all material respects. (ix) This Agreement has been duly authorized by all necessary corporate action on the part of each of the Seller and the Servicer, and has been duly executed and delivered by each of the Seller and the Servicer. (x) No order, consent, permit or approval of any California, New York or federal governmental authority that such counsel has, in the exercise of customary professional diligence, recognized as applicable to the Servicer or the Seller, or to the transactions of the type contemplated by any Basic Document, including the issuance of the Securities, is required on the part of the Servicer or the Seller for the execution and delivery of, and the performance of its obligations under, any Basic Document to which it is a party, except for such as have been obtained or made and are in full force and effect as of the Closing Date; provided that such counsel expresses no opinion with respect to any orders, consents, permits, approvals, filings or licenses related to the authority to sell motor vehicles, originate retail installment sales contracts or service retail installment sales contracts or as may be required by any regional or local governmental authority or under any foreign or state securities laws. (xi) To such counsel's knowledge, there are no actions, proceedings or investigations pending or threatened, to which the Seller or the Servicer is a party or of which any property of the Seller or the Servicer is the subject, required to be disclosed in the Registration Statement, other than those disclosed therein, (A) asserting the invalidity of any Basic Document or the Securities, (B) seeking to prevent the issuance of the Securities or the consummation of any of the transactions contemplated by any Basic Document, or (C) seeking adversely to affect the federal income tax attributes of the Securities as described in the Base Prospectus under the heading "MATERIAL INCOME TAX CONSEQUENCES" or the California income tax attributes of the Securities. (xii) At the time of execution and delivery of (A) the Purchase Agreement, the Servicer had the corporate power and corporate authority to transfer the Receivables and such other property being transferred to the Seller pursuant to the Purchase Agreement and (B) the Sale and Servicing Agreement, the Seller had the corporate power and corporate authority to transfer the Receivables and such other property being transferred to the Trust pursuant to the Sale and Servicing Agreement and to cause the transfer of the Securities to the Underwriters. 15 16 (xiii) The Indenture, the Securities and the Basic Documents each conform in all material respects with the respective descriptions thereof contained in the Registration Statement and the Prospectus. (xiv) Neither the Trust Agreement nor the Sale and Servicing Agreement needs to be qualified under the 1939 Act. (xv) The Registration Statement filed with the Commission has been declared effective under the Act, and, to such counsel's knowledge upon due inquiry, no stop order suspending the effectiveness of the Registration Statement has been issued under the Act or proceedings therefor initiated or threatened by the Commission, and the Registration Statement and Prospectus, and each amendment or supplement thereto, as of its respective effective or issue date, appeared on its face to be appropriately responsive in all material respects to the applicable requirements of the Act and the Rules and Regulations, except that such counsel does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus except as contemplated by paragraphs (viii) and (xiii) of this Section to the extent set forth therein; such counsel does not opine as to any financial statements or other financial, numerical or statistical data contained or incorporated by reference therein; and such counsel does not opine as to the Form T-1. (xvi) The form of the Indenture has been qualified under the 1939 Act and no further action is required to qualify the Indenture under the 1939 Act. The Indenture complies as to form in all material respects with the 1939 Act and the rules and regulations of the Commission thereunder. (xvii) The Seller has duly authorized and executed the written order to the Owner Trustee to execute and deliver the issuer order to the Indenture Trustee to authenticate the Securities. In addition, such counsel shall state that such counsel has participated in conferences with the officers and other representatives of the Seller and the Servicer, representatives of their independent public accountants, and representatives of the Underwriters and their counsel, at which the contents of the Registration Statement and the Prospectus and related matters were discussed, but has not independently verified the accuracy, completeness or fairness of the statements contained or incorporated by reference therein, and accordingly such counsel is unable to assume, and does not assume, any responsibility for such accuracy, completeness or fairness. However, on the basis of such counsel's review and participation in conferences in connection with the preparation of the Registration Statement and the Prospectus, and relying as to its determination of materiality to an extent upon opinions of officers and other representatives of the Seller and the Servicer, such counsel shall state that it does not believe that any Registration Statement, at the related Effective Time, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, 16 17 at the date of the Prospectus Supplement (or any such amendment or supplement, as of its respective date) contained, or on the Closing Date contains any untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; it being understood that such counsel need express no opinion or belief as to the financial statements or other financial, numerical or statistical data contained or incorporated by reference in any Registration Statement, the Prospectus or the Form T-1. Such counsel's opinions as to enforceability shall be subject to the unenforceability under certain circumstances of: (i) waivers of rights granted by law where the waivers are against public policy or prohibited by law; (ii) waivers of vaguely or broadly stated rights or future rights; (iii) any indemnification provisions; (iv) any provisions that rights or remedies are not exclusive, that every right or remedy is cumulative and may be exercised in addition to or with any other right or remedy or that the election of some particular remedy or remedies does not preclude recourse to one or more other remedies; (v) choice of law provisions; and (vi) severability provisions; provided that such unenforceability will not, subject to the other exceptions, qualifications and limitations contained in such opinion, render the relevant agreements invalid as a whole or substantially interfere with the substantial realization of the principal benefits that such agreements purport to provide (except for the economic consequences of procedural or other delay). (h) O'Melveny & Myers LLP shall have furnished their written opinion, dated the Closing Date, with respect to the characterization of the transfer of the Receivables by the Servicer to the Seller and with respect to other bankruptcy and perfection of security interest matters, and such opinion shall be in substantially the form previously discussed with the Representative and its counsel and in any event satisfactory in form and in substance to the Representative and its counsel. (i) The Underwriters shall have received an opinion of [ ], dated the Closing Date, with respect to the validity of the Securities and such other related matters as the Representative shall require, and the Seller shall have furnished or caused to be furnished to such counsel such documents as they may reasonably request for the purpose of enabling them to pass upon such matters. (j) The Underwriters shall have received an opinion addressed to the Underwriters, the Seller and the Servicer of [ ], counsel to the Owner Trustee and the Trust, dated the Closing Date and satisfactory in form and substance to the Representative and its counsel, to the effect that: (i) The Owner Trustee is a banking corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware with power and authority (corporate and other) to own its properties and conduct its business, as presently conducted by it, and to enter into and perform its obligations under the Trust Agreement. 17 18 (ii) The Trust Agreement has been duly authorized, executed and delivered by the Owner Trustee, and, assuming that such agreement is a legally effective and enforceable obligation of each of the other parties thereto, constitutes the legal, valid and binding agreement of the Owner Trustee, enforceable against the Owner Trustee in accordance with its terms, except as the enforceability thereof may be (a) limited by bankruptcy, insolvency, reorganization, moratorium, liquidation or other similar laws affecting the enforceability of creditors' rights generally and (b) subject to general principles of equity (regardless of whether considered in proceedings in equity or at law) as well as concepts of reasonableness, good faith and fair dealing. (iii) The Notes have been duly authorized, executed and delivered by the Trust and the Certificates have been duly authorized, executed and delivered by the Owner Trustee in accordance with the terms of the Trust Agreement. (iv) Neither the execution nor delivery by the Owner Trustee of the Trust Agreement nor the consummation of any of the transactions by the Owner Trustee contemplated thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any governmental authority or agency under any existing federal or Delaware state law governing the banking or trust powers of the Owner Trustee. (v) The Trust has been duly formed and is validly existing as a statutory business trust and is in good standing under the laws of the state of Delaware, with full power and authority to execute, deliver and perform its obligations under the Indenture and the Basic Documents to which it is a party and the Securities. (vi) The execution and delivery by the Owner Trustee of the Trust Agreement and the performance by the Owner Trustee of its obligations thereunder, do not conflict with, result in a breach or violation of or constitute a default under the Articles of Association or Bylaws of the Owner Trustee. (k) The Underwriters shall have received an opinion of counsel to the Indenture Trustee, dated the Closing Date and satisfactory in form and substance to the Representative and its counsel, to the effect that: (i) The Indenture Trustee has been duly organized as a national banking association and is validly existing as a national banking association in good standing under the laws of the United States of America. (ii) The Indenture Trustee has the requisite power and authority to execute, deliver and perform its obligations under the Indenture and has taken all action necessary to authorize the execution, delivery and performance by it of the Indenture. 18 19 (iii) The Indenture has been duly executed and delivered by the Indenture Trustee and constitutes a legal, valid and binding obligation of the Indenture Trustee, enforceable against the Indenture Trustee in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws relating to or affecting the enforcement of creditors' rights generally and by general equitable principles, regardless of whether such enforceability is considered in a proceeding in equity or at law. (l) The Representative shall have received an officer's certificate dated the Closing Date of the Chairman of the Board, the President or any Vice President and by a principal financial or accounting officer of each of the Seller and the Servicer in which each such officer shall state that, to the best of such officer's knowledge after reasonable investigation, the representations and warranties of the Seller or the Servicer, as applicable, contained in the Sale and Servicing Agreement and the representations and warranties of the Servicer or the Seller, as applicable, contained in the Purchase Agreement are true and correct in all material respects and that the Seller or the Servicer, as applicable, has complied with all agreements and satisfied all conditions on its part to be performed or satisfied under such agreements at or prior to the Closing Date in all material respects. (m) The Securities shall have been rated in the highest rating category by Moody's and S&P. (n) On or prior to the Closing Date, the Seller shall have furnished to the Representative such further certificates and documents as the Representative shall reasonably have required. 7. Indemnification and Contribution. (a) The Seller and the Servicer shall, jointly and severally, indemnify and hold each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Act or Section 20 of the Securities Exchange Act of 1934, as amended (each a "Control Person"), harmless against any losses, claims, damages or liabilities, joint or several, to which such Underwriter or Control Person may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, [the Term Sheet] [Preliminary Prospectus], the Prospectus, or any amendment or supplement thereto, or any related preliminary prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter and Control Person for any legal or other expenses reasonably incurred by such Underwriter or Control Person in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that neither the Seller nor the Servicer will be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any 19 20 of such documents in reliance upon and in conformity with information furnished to the Seller or the Servicer by any Underwriter through the Representative specified in the last sentence of subsection (b) below specifically for use therein; provided, further, that neither the Seller nor the Servicer shall be liable under this subsection (a) to any Underwriter to the extent that such losses, claims, damages or liabilities arise out of or are based upon an untrue statement or omission made in the [Term Sheet] [Preliminary Prospectus] that is subsequently corrected in the Prospectus (or any amendment or supplement thereto) made available to such Underwriter, if the person asserting such loss, claim, damage or liability was not sent or given the Prospectus, as then amended or supplemented (excluding documents incorporated by reference therein), on or prior to the confirmation of the sale of the Securities; and provided, further, that neither the Seller nor the Servicer shall be liable to any Underwriter or any Control Person under the indemnity agreement in this subsection (a) with respect to any of such documents to the extent that any such loss, claim, damage or liability of such Underwriter or such Control Person results from the fact that such Underwriter sold Securities to a person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the Prospectus or of the Prospectus as then amended or supplemented (excluding documents incorporated by reference therein), whichever is most recent, if the Seller or the Servicer has previously furnished copies thereof to such Underwriter. (b) Each Underwriter shall, severally and not jointly, indemnify and hold harmless the Seller and the Servicer against any losses, claims, damages or liabilities to which the Seller or the Servicer may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus or any amendment or supplement thereto, or any related preliminary prospectus, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with information furnished to the Seller or the Servicer by such Underwriter through the Representative specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Seller or the Servicer in connection with investigating or defending any such action or claim as such expenses are incurred. The Seller and the Servicer acknowledge and agree that the only such information furnished to the Seller or the Servicer by any Underwriter through the Representative consists of the following: the statements in the second and fourth paragraphs (concerning initial offering prices, concessions and reallowances) and in the sixth and seventh paragraphs (concerning stabilizing and other activities) under the heading "Underwriting" in the Prospectus Supplement. (c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such person (the "Indemnified Party") shall promptly notify the person against whom such indemnity may be sought (the "Indemnifying Party") in 20 21 writing of the commencement thereof, but the omission to so notify the Indemnifying Party will not relieve it from any liability which it may have to any Indemnified Party otherwise than under such preceding paragraphs. In case any such action is brought against any Indemnified Party and it notifies the Indemnifying Party of the commencement thereof, the Indemnifying Party will be entitled to participate therein and, to the extent that it may wish, jointly with any other Indemnifying Party similarly notified, to assume the defense thereof, with counsel satisfactory to such Indemnified Party (who may be counsel to the Indemnifying Party) and after notice from the Indemnifying Party to such Indemnified Party of its election so to assume the defense thereof and after acceptance of counsel by the Indemnified Party, the Indemnifying Party will not be liable to such Indemnified Party under this Section for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the contrary, (ii) the Indemnified Party has reasonably concluded (based upon advice of counsel to the Indemnified Party) that there may be legal defenses available to it or other Indemnified Parties that are different from or in addition to those available to the Indemnifying Party, (iii) a conflict or potential conflict exists (based upon advice of counsel to the Indemnified Party) between the Indemnified Party and the Indemnifying Party (in which case the Indemnifying Party will not have the right to direct the defense of such action on behalf of the Indemnified Party) or (iv) the Indemnifying Party has elected to assume the defense of such proceeding but has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Party. The Indemnifying Party shall not, with respect to any action brought against any Indemnified Party, be liable for the fees and expenses of more than one firm (in addition to any local counsel) for all Indemnified Parties, and all such fees and expenses shall be reimbursed within a reasonable period of time as they are incurred. Any separate firm appointed for the Underwriters and any Control Person in accordance with this subsection (c) shall be designated in writing by the Representative, and any such separate firm appointed for the Seller or the Servicer, its respective directors, officers who sign the Registration Statement and Control Persons in accordance with this subsection (c) shall be designated in writing by the Seller or the Servicer, as the case may be. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent, with respect to an action of which the Indemnifying Party was notified and had the opportunity to participate in (whether or not it chose to so participate), the Indemnifying Party agrees to indemnify any Indemnified Party from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an Indemnified Party shall have requested an Indemnifying Party to reimburse the Indemnified Party for fees and expenses of counsel as contemplated by the fourth sentence of this paragraph, the Indemnifying Party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 60 days after receipt by such Indemnifying Party of the aforesaid request, and during such 60 day period the Indemnifying Party has not responded thereto, and (ii) such Indemnifying Party shall not have reimbursed the Indemnified Party in 21 22 accordance with such request prior to the date of such settlement. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such proceeding. (d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an Indemnified Party under subsection (a) or (b) above, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above in such proportion as is appropriate to reflect the relative benefits received by the Seller and the Servicer on the one hand and the Underwriters on the other from the offering of the Securities. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, then each Indemnifying Party shall contribute to such amount paid or payable by such Indemnified Party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Seller and the Servicer on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Seller and the Servicer on the one hand and the Underwriters on the other shall be deemed to be in the same proportion that the total net proceeds from the offering (before deducting expenses) received by the Seller and the Servicer bear to the total underwriting discounts and commissions received by the Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Seller or the Servicer or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Seller, the Servicer and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above in this subsection (d). The amount paid by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this subsection (d) to 22 23 contribute are several in proportion to their respective underwriting obligations and not joint. (e) The obligations of the Seller and the Servicer under this Section shall be in addition to any liability which the Seller or the Servicer may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each director of the Seller or the Servicer, to each officer of the Seller or Servicer who has signed the Registration Statement and to each person, if any, who controls the Seller or the Servicer within the meaning of the Act. 8. Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of the Seller, the Servicer or their respective officers and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation or statement as to the results thereof made by or on behalf of any Underwriter, the Seller or the Servicer or any of their respective representatives, officers or directors or any Control Person, and will survive delivery of and payment for the Securities. If this Agreement is terminated pursuant to Section 9 or if for any reason the purchase of the Securities by the Underwriters is not consummated, the Seller shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 5, and the respective obligations of the Seller and the Underwriters pursuant to Section 7 shall remain in effect. If the purchase of the Securities by the Underwriters is not consummated for any reason other than solely because of the termination of this Agreement pursuant to Section 9, the Seller will reimburse the Underwriters for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Securities. 9. Failure to Purchase the Securities. If any Underwriter or Underwriters default on their obligations to purchase Securities hereunder and the aggregate principal amount of Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total principal amount of such Securities, the Representative may make arrangements satisfactory to the Seller for the purchase of such Securities by other persons, including the nondefaulting Underwriter or Underwriters, but if no such arrangements are made by the Closing Date, the nondefaulting Underwriter or Underwriters shall be obligated, in proportion to their commitments hereunder, to purchase the Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase. If any Underwriter or Underwriters so default and the aggregate principal amount of Securities with respect to which such default or defaults occur exceeds 10% of the total principal amount of Securities, as applicable, and arrangements satisfactory to the nondefaulting Underwriter or Underwriters and the Seller for the purchase of such Securities by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any nondefaulting Underwriter or the Seller, except as provided in Section 8. 23 24 As used in this Agreement, the term "Underwriter" includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter or Underwriters from liability for its default. 10. Notices. All communications hereunder will be in writing and, if sent to the Representative or the Underwriters will be mailed, delivered or sent by facsimile transmission and confirmed to [ ]; and if sent to the Seller, will be mailed, delivered or sent by facsimile transmission and confirmed to it at Nissan Auto Receivables Corporation [II], 990 West 190th Street, Torrance, California 90502-10l9, attention of the Assistant Secretary (facsimile number (310) 324-2542). 11. No Bankruptcy Petition. Each Underwriter agrees that, prior to the date which is one year and one day after the payment in full of all securities issued by the Seller or by a trust for which the Seller was the depositor which securities were rated by any nationally recognized statistical rating organization, it will not institute against, or join any other person in instituting against, the Seller any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other proceedings under any federal or state bankruptcy or similar law. 12. Successors. This Agreement will inure to the benefit of and be binding upon the Underwriters and the Seller and their respective successors and the officers and directors and Control Persons referred to in Section 7, and no other person will have any right or obligations hereunder. 13. Representation of Underwriters. The Representative will act for the several Underwriters in connection with the transactions described in this Agreement, and any action taken by the Representative under this Agreement will be binding upon all the Underwriters. 14. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without reference to its conflict of law provisions (other than Section 5-1401 of the General Obligations Law of the State of New York). 15. Counterparts. This Agreement may be executed by each of the parties hereto in any number of counterparts, and by each of the parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 24 25 If the foregoing is in accordance with your understanding, please sign and return to us a counterpart hereof, whereupon it will become a binding agreement between the Seller and the several Underwriters in accordance with its terms. Very truly yours, NISSAN AUTO RECEIVABLES CORPORATION [II] By: /s/ ----------------------------------- Name: Title: NISSAN MOTOR ACCEPTANCE CORPORATION By: /s/ ----------------------------------- Name: Title: 1 26 The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written: [ ] By: /s/ ----------------------------- Name: Title: Acting on behalf of itself and as the Representative of the several Underwriters. 2 27 Schedule I
- ------------------------------------------------------------------------------------------------- Principal Principal Principal Principal Principal Amount of Amount of Amount of Amount of Amount of Class A-1 Class A-2 Class A-3 Class B Class C Underwriter Notes Notes Notes Notes Certificates - ------------------------------------------------------------------------------------------------- $ $ $ $ $ - ------------------------------------------------------------------------------------------------- $ $ $ $ $ - -------------------------------------------------------------------------------------------------
3 EX-1.2 3 a67668a1ex1-2.txt EXHIBIT 1.2 1 EXHIBIT 1.2 FORM OF UNDERWRITING AGREEMENT FOR CERTIFICATES NISSAN AUTO RECEIVABLES ____-___ GRANTOR TRUST $[ ], ___% ASSET BACKED CERTIFICATES, CLASS A $[ ], ___% ASSET BACKED CERTIFICATES, CLASS B NISSAN AUTO RECEIVABLES CORPORATION [II] (SELLER) [Date] [Names of Investment Banks] As Representative of the Several Underwriters, c/o [Address] Dear Sirs: 1. Introductory. Nissan Auto Receivables Corporation [II] (the "Seller"), a Delaware corporation and wholly owned subsidiary of Nissan Motor Acceptance Corporation, a California corporation (the "Servicer"), proposes to sell $[ ] principal amount of ___% Asset Backed Certificates, Class A (the "Class A Certificates") and $[ ] principal amount of ___% Asset Backed Certificates, Class B (the "Class B Certificates") (the "Certificates,") The Certificates will be issued by the Nissan Auto Receivables ____-__ Grantor Trust (the "Trust"). Each Certificate will represent fractional undivided interests in the Trust pursuant to a Trust Agreement to be dated as of _____, 200_ (the "Trust Agreement"). The Certificates will be issued pursuant to a Pooling and Servicing Agreement to be dated as of ____, 2000 (the "Pooling and Servicing Agreement"). Capitalized terms used herein and not otherwise defined herein shall have the meanings given them in the Pooling and Servicing Agreement. 2. Representations and Warranties of the Seller and the Servicer. Each of the Seller and the Servicer, jointly and severally, represents and warrants to and agrees with the several underwriters named in Schedule 1 hereto (the "Underwriters") that: (a) A registration statement [(No. 333-51224)] [(No. 333-51224-01)], including a form of prospectus supplement relating to the Certificates and a form of base prospectus relating to each class of to be registered under such registration statement (the "Registered Securities"), has been filed with the Securities and Exchange Commission (the "Commission") and either (i) has been declared effective under the Securities Act of 1933, as amended (the "Act"), and is not proposed to be amended or (ii) is proposed to be amended by amendment or post-effective amendment. If such registration statement (the 1 2 "initial registration statement") has been declared effective, either (i) any additional registration statement (the "additional registration statement") relating to the Certificates has been filed with the Commission pursuant to rule 462(b) ("Rule 462(b)") under the Act and declared effective upon filing, and the Certificates have been registered under the Act pursuant to the initial registration statement and such additional registration statement or (ii) any such additional registration statement proposed to be filed with the Commission pursuant to Rule 462(b) will become effective upon filing pursuant to Rule 462(b) and upon such filing the Certificates will have been duly registered under the Act pursuant to the initial registration statement and such additional registration statement. If the Seller does not propose to amend the initial registration statement, any such additional registration statement or any post-effective amendment to either such registration statement filed with the Commission prior to the execution and delivery of this Agreement, then the most recent amendment (if any) to each such registration statement has been declared effective by the Commission or has become effective upon filing pursuant to Rule 462(c) under the Act ("Rule 462(c)") or Rule 462(b). For purposes of this Agreement, "Effective Time" with respect to the initial registration statement or, if filed prior to the execution and delivery of this Agreement, the additional registration statement means (A) if the Seller has advised the Representative that it does not propose to amend such registration statement, the date and time as of which such registration statement, or the most recent post-effective amendment thereto (if any) filed prior to the execution and delivery of this Agreement, was declared effective by the Commission or has become effective upon filing pursuant to Rule 462(c) or (B) if the Seller has advised the Representative that it proposes to file an amendment or post-effective amendment to such registration statement, the date and time as of which such registration statement as amended by such amendment or post-effective amendment, as the case may be, is declared effective by the Commission. If the Seller has advised the Representative that it proposes to file, but has not filed, an additional registration statement, "Effective Time" with respect to such additional registration statement means the date and time as of which such registration statement is filed and becomes effective pursuant to Rule 462(b). "Effective Date" with respect to the initial registration statement or the additional registration statement (if any) means the date of the Effective Time thereof. The initial registration statement, as amended at its Effective Time, including all information (A) contained in the additional registration statement (if any), (B) deemed to be a part of the initial registration statement as of the Effective Time of the additional registration statement (if any) pursuant to the General Instructions of the Form on which it is filed and (C) deemed to be a part of the initial registration statement as of its Effective Time pursuant to Rule 430A(b) under the Act ("Rule 430A(b)"), is hereinafter referred to as the "Initial Registration Statement." The additional registration statement, as amended at its Effective Time, including the contents of the initial registration statement incorporated by reference therein and deemed to be a part of the additional registration statement as of its Effective Time pursuant to Rule 430A(b), is hereinafter referred to as the "Additional Registration Statement." The Initial Registration Statement and the Additional Registration Statement are hereinafter referred to collectively as the "Registration Statements" and individually as a "Registration Statement." The form of 2 3 prospectus supplement relating to the Certificates (the "Prospectus Supplement") and the form of prospectus (the "Base Prospectus") relating to the Registered Securities, as first filed with the Commission in connection with the offering and sale of the Certificates pursuant to and in accordance with Rule 424(b) under the Act ("Rule 424(b)") or, if no such filing is required, as included in a Registration Statement, including all material incorporated by reference in such prospectus, is hereinafter referred to as the "Prospectus." [The Seller filed the Term Sheet dated ________, 200_ relating to the Certificates (the "Term Sheet") disseminated by the Underwriters on Form 8-K with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), within two business days of its delivery to the Underwriters.] [The Seller filed the Preliminary Prospectus dated _____, 200_ relating to the Securities (the "Preliminary Prospectus") disseminated by the Underwriters with the Commission pursuant to the Act.] (b) (A) On the Effective Date of any Registration Statement whose Effective Time is prior to the execution and delivery of this Agreement, each such Registration Statement conformed, (B) on the date of this Agreement, each such Registration Statement conforms and (C) on any related Effective Date subsequent to the date of this Agreement, each such Registration Statement will conform, in all respects to the requirements of the Act and the rules and regulations of the Commission (the "Rules and Regulations"), and at such times each such Registration Statement, as amended, did not and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. At the time of filing of the Prospectus pursuant to Rule 424(b) or, if no such filing is required, at the Effective Date of the Additional Registration Statement that includes the Prospectus, on the date of this Agreement and at the Closing Date, the Prospectus will conform, in all respects to the requirements of the Act and the Rules and Regulations, and does not include, and will not include, any untrue statement of a material fact, nor does the Prospectus omit, nor will it omit, to state any material fact required to be stated therein or necessary to make the statements therein not misleading. The two preceding sentences do not apply to statements in or omissions from the Registration Statement or Prospectus based upon written information furnished to the Seller by any Underwriter through the Representative specifically for use therein. If the Effective Time of the Registration Statement is subsequent to the date of this Agreement, no Additional Registration Statement has been or will be filed. (c) The Seller has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware with corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or the ownership of its property requires such qualification, except where the failure to be in good standing would not have a material adverse effect on the Seller's ability to perform its obligations under this Agreement, the Trust Agreement, the Purchase Agreement, the Assignment, the Pooling and Servicing Agreement, [the Yield Supplement Agreement] or the Securities Account Control Agreement (collectively, the "Basic Documents"). 3 4 (d) The Servicer has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of California with corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or the ownership of its property requires such qualification, except where the failure to be in good standing would not have a material adverse effect on the Servicer's ability to perform its obligations under the Basic Documents. (e) The consummation of the transactions contemplated by the Basic Documents, and the fulfillment of the terms thereof, will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation of any lien, charge, or encumbrance upon any of the property or assets of the Seller or the Servicer pursuant to the terms of, any indenture, mortgage, deed of trust, loan agreement, guarantee, lease financing agreement, or similar agreement or instrument under which the Seller or the Servicer is a debtor or guarantor, except where such conflict, breach, default or creation would not have a material adverse effect on the Seller's or the Servicer's respective ability to perform its obligations under the Basic Documents or the validity or enforceability thereof. (f) No consent, approval, authorization or order of, or filing with, any court or governmental agency or body is required to be obtained or made by the Seller or the Servicer for the consummation of the transactions contemplated by this Agreement except such as have been obtained and made under the Act, such as may be required under state securities laws and the filing of any financing statements required to perfect the Trust's interest in the Receivables. (g) Neither the Seller nor the Servicer is in violation of its certificate of incorporation or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any agreement or instrument to which it is a party or by which it or its properties are bound which would have a material adverse effect on the transactions contemplated herein or on the Seller's or the Servicer's respective ability to perform its obligations under the Basic Documents. The execution, delivery and performance of the Basic Documents and the issuance and sale of the Certificates and compliance with the terms and provisions thereof will not, subject to obtaining any consents or approvals as may be required under the securities or "blue sky" laws of various jurisdictions: (i) result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, rule, regulation or order of any governmental agency or body or any court having jurisdiction over the Seller or the Servicer or their respective properties or any agreement or instrument to which either is a party or by which either is bound or to which any of their respective properties are subject, except where such breach, violation, or default would not have a material adverse effect on the Seller's or the Servicer's respective ability to perform its obligations under the Basic Documents or the validity or enforceability thereof, or (ii) conflict with the Seller's or the Servicer's charter or by-laws, and each of the Seller and the Servicer has corporate power and authority to enter into the Basic Documents and to consummate the transactions contemplated hereby and thereby. 4 5 (h) The Basic Documents have been duly authorized, executed and delivered by, and (assuming due authorization and delivery thereof by the other parties hereto and thereto) constitute valid and binding obligations of, the Seller and the Servicer, as applicable, enforceable against such party in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws relating to or affecting the enforcement of creditors' rights generally and by general equitable principles, regardless of whether such enforceability is considered in a proceeding in equity or at law. (i) The Certificates have been duly authorized and, when executed and delivered in accordance with the Pooling and Servicing Agreement and delivered against payment therefor pursuant to this Agreement, will be valid and binding obligations of the Trust, enforceable against the Trust in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws relating to or affecting the enforcement of creditors' rights generally and by general equitable principles, regardless of whether such enforceability is considered in a proceeding in equity or at law. (j) There are no legal or governmental proceedings pending to which the Seller or the Servicer is a party or of which any property of the Seller or the Servicer is the subject, and to the Seller's knowledge no such proceedings are threatened or contemplated by governmental authorities or threatened by others, (A) that are required to be disclosed in the Registration Statement or (B)(1) asserting the invalidity of all or part of any Basic Document, (2) seeking to prevent the issuance of the Certificates, (3) that would materially and adversely affect the Seller's or the Servicer's obligations under any Basic Document to which it is a party, or (4) seeking to affect adversely the federal or state income tax attributes of the Certificates. (k) Any taxes, fees and other governmental charges that have been assessed and are known to the Seller to be due in connection with the execution, delivery and issuance of the Basic Documents shall have been paid by the Seller or the Servicer at or prior to the Closing Date (as defined in Section 3(c) hereof). (l) Each of the Seller and the Servicer possesses all material licenses, certificates, authorizations or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies, the absence of which would have a material adverse effect on the ability of the Seller or the Servicer to perform its duties under the Pooling and Servicing Agreement, and neither of the Seller or Servicer has received notice of proceedings relating to the revocation or modification of any such license, certificate, authorization or permit which, singly or in the aggregate, if the subject of any unfavorable decision, ruling or finding, would materially and adversely affect the ability of the Seller or the Servicer to perform its obligations under the Basic Documents. (m) [As of the Closing Date, the [Subordination Spread Account][Yield Supplement Account] will be subject to a first priority security interest in favor of the Trustee for the benefit of the Certificateholders.] 5 6 (n) As of the Closing Date, the Trust (for the benefit of the holders of the Certificates) will have good title, free and clear of all prior liens, charges and encumbrances, to the Receivables and such other items comprising the corpus of the Trust transferred to the Trust pursuant to the Pooling and Servicing Agreement. (o) As of the Closing Date, the Certificates and the Basic Documents will conform in all material respects to the description thereof contained in the Registration Statement and the Prospectus. (p) [ ] are independent public accountants with respect to the Seller within the meaning of the Act and the Rules and Regulations. (q) Neither the Trust nor the Seller is required to be registered as an "investment company" under the Investment Company Act of 1940, as amended. (r) The representations and warranties of the Seller and the Servicer in the Pooling and Servicing Agreement are true and correct in all material respects. 3. Purchase, Sale and Delivery the Certificates. (a) On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Seller agrees to sell to the Underwriters, and the Underwriters agree, severally and not jointly, to purchase from the Seller, the aggregate principal amounts of the Certificates set forth opposite the names of the Underwriters in Schedule 1 hereto. (b) The Certificates are to be purchased at a purchase price equal to (i) in the case of the Class A Certificates, ___% of the aggregate principal amount thereof, and (ii) in the case of the Class B Certificates, ___% of the aggregate principal amount thereof. (c) Against payment of the purchase price by wire transfer of immediately available funds to the Seller, the Seller will deliver the Certificates to the Representative, for the account of the Underwriters, at the office of O'Melveny & Myers LLP, at 400 South Hope Street, Los Angeles, California, on _______, 200_, at _______ a.m., Los Angeles time, or at such other time not later than seven full business days thereafter as the Representative and the Seller determine, such time being herein referred to as the "Closing Date." The Certificates to be so delivered will be initially represented by one or more securities registered in the name of Cede & Co., the nominee of The Depository Trust Company ("DTC"). The interests of beneficial owners of the Certificates will be represented by book entries on the records of DTC and participating members thereof. Definitive securities will be available only under the limited circumstances set forth in the Trust Agreement. 4. Offering by Underwriters. It is understood that the several Underwriters propose to offer the Certificates for sale to the public as set forth in the Prospectus. 6 7 5. Covenants of the Seller. The Seller covenants and agrees with the several Underwriters that: (a) If the Effective Time is prior to the execution and delivery of this Agreement, the Seller will file the Prospectus with the Commission pursuant to and in accordance with Rule 424(b) not later than the second business day following the execution and delivery of this Agreement. If the Effective Time of the Initial Registration Statement is prior to the execution and delivery of this Agreement and an Additional Registration Statement is necessary to register a portion of the Certificates under the Act but the Effective Time thereof has not occurred as of such execution and delivery, the Seller will file the Additional Registration Statement or a post-effective amendment thereto, as the case may be, with the Commission pursuant to and in accordance with Rule 424(b). The Seller will advise the Representative promptly of any such filing pursuant to Rule 424(b). (b) The Seller will advise the Representative promptly of any proposal to amend or supplement the registration statement as filed or the related prospectus or the Registration Statement or the Prospectus, and will not effect such amendment or supplementation without the Representative's consent; and the Seller will also advise the Representative promptly of the effectiveness of the Registration Statement (if the Effective Time is subsequent to the execution and delivery of this Agreement) and of any amendment or supplementation of the Registration Statement or the Prospectus and of the institution by the Commission of any stop order proceedings in respect of the Registration Statement and will use its best efforts to prevent the issuance of any such stop order and to lift such stop order as soon as possible, if issued. (c) The Seller will arrange for the qualification of the Certificates for offering and sale under the securities laws of such jurisdictions in the United States as the Representative may reasonably designate and to continue such qualifications in effect so long as necessary under such laws for the distribution of such securities; provided that in connection therewith the Seller shall not be required to qualify as a foreign corporation to do business, or to file a general consent to service of process, in any jurisdiction. (d) If, at any time when the delivery of a prospectus shall be required by law in connection with sales of any Certificates, either (i) any event shall have occurred as a result of which the Prospectus would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (ii) for any other reason it shall be necessary to amend or supplement the Prospectus, the Seller will promptly notify the Representative and will promptly prepare for review by the Representative and file with the Commission an amendment or a supplement to the Prospectus which will correct such statement or omission or effect such compliance. Neither the consent of the Underwriters to, nor the Underwriters' delivery of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6. 7 8 (e) The Seller will cause the Trust to make generally available to Certificateholders as soon as practicable, but not later than fourteen months after the Effective Date, an earnings statement of the Trust covering a period of at least twelve consecutive months beginning after such Effective Date and satisfying the provisions of Section 11(a) of the Act (including Rule 158 promulgated thereunder). (f) The Seller will furnish to the Underwriters copies of the Registration Statement (two of which will include all exhibits), the Form 8-K relating to [the Term Sheet,][each related preliminary prospectus,] the Prospectus and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Representative may from time to time reasonably request. (g) So long as any of the Certificates are outstanding, the Seller will furnish to the Representative copies of all reports or other communications (financial or otherwise) furnished to Certificateholders, and deliver to the Representative during such same period (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission and (ii) such additional information concerning the business and financial condition of the Seller and the Trust as the Representative may from time to time reasonably request. (h) The Seller will pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including (i) the printing (or otherwise reproducing) and filing of the Registration Statement as originally filed and of each amendment thereto; (ii) the preparation, issuance and delivery of the Certificates to the Underwriters; (iii) the fees and disbursements of the Seller's and the Servicer's counsel and accountants; (iv) the fees of DTC in connection with the book-entry registration of the Certificates; (v) the qualification of the Certificates under state securities law in accordance with the provisions of Section 5(c) hereof, including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of the blue sky survey, if required; (vi) the printing (or otherwise reproducing) and delivery to the Underwriters of copies of each preliminary prospectus and the Prospectus and any amendments or supplements thereto; (vii) the reproducing and delivery to the Underwriters of copies of the blue sky survey; and (viii) the fees charged by Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Services, a Division of the McGraw-Hill Companies, Inc. ("S&P"), for rating the Certificates. The Underwriters shall not be responsible for the fees and disbursements of the Trustee and its counsel. (i) Until the retirement of the Certificates, or until such time as the Underwriters shall cease to maintain a secondary market in the Certificates, whichever occurs first, the Seller will deliver to the Representative the annual statements of compliance and the annual independent certified public accountants' reports furnished to the Trustee pursuant to Article IV of the Pooling and Servicing Agreement, as soon as such statements and reports are furnished to the Trustee. (j) On or promptly after the Closing Date, the Seller shall cause its and the Servicer's computer records relating to the Receivables to be marked to show the 8 9 Trust's absolute ownership of the Receivables, and from and after the Closing Date neither the Seller nor the Servicer shall take any action inconsistent with the Trust's ownership of such Receivables, other than as permitted by the Pooling and Servicing Agreement. (k) To the extent, if any, that the rating provided with respect to the Certificates by Moody's or S&P is conditional upon the furnishing of documents or the taking of any other actions by the Seller, the Seller shall furnish, and shall cause the Servicer to furnish, such documents and take any such other actions. 6. Conditions of the Obligations of the Underwriters. The obligations of the several Underwriters to purchase and pay for the Certificates will be subject to the accuracy of the representations and warranties on the part of the Seller and the Servicer herein on the date hereof and at the Closing Date, to the accuracy of the statements of officers of the Seller and the Servicer made pursuant to the provisions hereof, to the performance by the Seller and the Servicer of their respective obligations hereunder and to the following additional conditions precedent: (a) At the time this Agreement is executed and delivered by the Seller and at the Closing Date, [ ] shall have furnished to the Representative letters dated respectively as of the date of this Agreement and as of the Closing Date substantially in the forms of the drafts to which the Representative previously agreed. (b) If the Effective Time of the Initial Registration Statement is not prior to the execution and delivery of this Agreement, such Effective Time shall have occurred not later than [10:00 p.m., New York time,] on the date of this Agreement or such later date as shall have been consented to by the Representative. If the Effective Time of the Initial Registration Statement is prior to the execution and delivery of this Agreement, the Prospectus shall have been filed with the Commission in accordance with the Rules and Regulations and Section 5(a) of this Agreement. If the Effective Time of the Additional Registration Statement (if any) is not prior to the execution and delivery of this Agreement, such Effective Time shall have occurred not later than [10:00 p.m., New York time,] on the date of this Agreement or, if earlier, the time the Prospectus is printed and distributed to any Underwriter, or shall have occurred at such later date as shall have been consented to by the Representative. Prior to the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Seller, shall be contemplated by the Commission. (c) The Underwriters shall have received an officers' certificate, dated the Closing Date, signed by the Chairman of the Board, the President or any Vice President and by a principal financial or accounting officer of the Seller representing and warranting that, to the best of such officers' knowledge after reasonable investigation, as of the Closing Date, the representations and warranties of the Seller in this Agreement are true and correct in all material respects, that the Seller has complied with all agreements and satisfied in all material respects all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date, that no stop order suspending the effectiveness 9 10 of any Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the best of their knowledge, are contemplated by the Commission. (d) The Underwriters shall have received an officers' certificate, dated the Closing Date, signed by the Chairman of the Board, the President or any Vice President and by a principal financial or accounting officer of the Servicer representing and warranting that, to the best of such officers' knowledge after reasonable investigation, as of the Closing Date, the representations and warranties of the Servicer in this Agreement are true and correct in all material respects, that the Servicer has complied with all agreements and satisfied, in all material respects, all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date, that no stop order suspending the effectiveness of any Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the best of their knowledge, are contemplated by the Commission. (e) Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Seller, Nissan Motor Co. Ltd., Nissan North America, Inc. ("NNA") or the Servicer which, in the judgment of the Representative, materially impairs the investment quality of the Certificates or makes it impractical or inadvisable to proceed with completion of the sale of and payment for the Certificates; (ii) any downgrading in the rating of any debt securities of NNA or any of its direct or indirect subsidiaries by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act), or any public announcement that any such organization has under surveillance or review its rating of any such debt securities (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (iii) any suspension or limitation of trading in securities generally on the New York Stock Exchange or any setting of minimum prices for trading on such exchange; (iv) any banking moratorium declared by federal or New York authorities; or (v) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the judgment of the Representative, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the sale of and payment for the Certificates. (f) [Joy Crose,] Esq., General Counsel of the Seller, or other counsel satisfactory to the Representative in its reasonable judgment, shall have furnished to the Representative such counsel's written opinion, dated the Closing Date, in substantially the form set forth below, with such changes therein as counsel for the Underwriters shall reasonably agree: (i) The Seller has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware with corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or the 10 11 ownership of its property requires such qualification, except where the failure to be in good standing would not have a material adverse effect on the Seller's ability to perform its obligations under the Basic Documents. (ii) The Servicer has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of California with corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or the ownership of its property requires such qualification, except where the failure to be in good standing would not have a material adverse effect on the Servicer's ability to perform its obligations under the Basic Documents. (iii) The Basic Documents have been duly authorized, executed and delivered by each of the Seller and the Servicer, as applicable, and each of the Seller and the Servicer has the corporate power and authority to enter into and perform its respective obligations under the Basic Documents. (iv) The execution, delivery and performance of the Basic Documents by the Seller and the Servicer will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the respective properties or assets of the Seller or the Servicer, pursuant to the terms of the Certificates or the charter or bylaws of the Seller or the Servicer, any statute, any rule, regulation or order of any governmental agency or body or any court having jurisdiction over the Seller or the Servicer or any of their respective properties or any material agreement or instrument to which the Seller or the Servicer is a party or by which either the Seller or the Servicer or any of their respective properties is bound. (v) No authorization, approval or consent of any court or governmental agency or authority is necessary in connection with the execution, delivery and performance by the Seller or the Servicer of the Basic Documents to which it is a party, except such as may be required under the Act or the Rules and Regulations and state securities laws, and except for such authorizations, approvals or consents (specified in such opinion) as are in full force and effect as of the Effective Date and the Closing Date. (vi) Nothing has come to such counsel's attention that would cause it to believe that as of the Effective Date and at the Closing Date the Registration Statement and the Prospectus (other than the financial statements and the other accounting information contained therein or omitted therefrom, as to which such counsel need express no belief) contained or contain any untrue statement of a material fact or omitted or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or that the descriptions therein of statutes and governmental proceedings and contracts and 11 12 other documents are inaccurate and do not fairly present the information required to be shown therein. (vii) Such counsel does not know of any contract or other document of a character required to be filed as an exhibit to the Registration Statement or required to be described in the Registration Statement or the Prospectus which is not filed or described as required. (viii) There are no legal or governmental proceedings pending to which the Seller or the Servicer is a party or of which any property of the Seller or the Servicer is the subject, and no such proceedings are known by such counsel to be threatened or contemplated by governmental authorities or threatened by others, (A) that are required to be disclosed in the Registration Statement or (B)(1) asserting the invalidity of all or part of any Basic Document, (2) seeking to prevent the issuance of the Certificates, (3) that would materially and adversely affect the Seller's or the Servicer's obligations under any Basic Document to which it is a party, or (4) seeking to affect adversely the federal or state income tax attributes of the Certificates. (ix) The Servicer has corporate power and authority to sell and assign the property to be sold and assigned to the Seller pursuant to the Purchase Agreement and has duly authorized such sale and assignment to the Seller by all necessary corporate action. (x) The Seller has corporate power and authority to sell and assign the property to be sold and assigned to and deposited with the Trust and has duly authorized such sale and assignment to the Trust by all necessary corporate action. (xi) The Receivables are "chattel paper" as defined in the Uniform Commercial Code, as in effect in the State of California. (xii) Such counsel is familiar with the Servicer's standard operating procedures relating to the Servicer's acquisition of a perfected first priority security interest in the vehicles financed by the retail installment sale contracts purchased by the Servicer in the ordinary course of the Servicer's business and relating to the sale by the Servicer to the Seller of such contracts and such security interests in the Financed Vehicles in the ordinary course of the Servicer's and the Seller's business. Assuming that the Servicer's standard procedures are followed with respect to the perfection of security interests in the Financed Vehicles (and such counsel has no reason to believe that the Servicer has not or will not continue to follow its standard procedures in connection with the perfection of security interests in the Financed Vehicles), the Servicer has acquired or will acquire a perfected first priority security interest in the Financed Vehicles. 12 13 (g) O'Melveny & Myers LLP, special counsel to the Seller, shall have furnished to the Representative their written opinion, dated as of the Closing Date, in substantially the form set forth below, with such changes therein as counsel for the Underwriters shall reasonably agree: (i) Each Basic Document to which the Seller or the Servicer is a party has been duly authorized by all necessary corporate action on the part of such Person and has been executed and delivered by such Person. (ii) Assuming the due authorization, execution and delivery thereof by the Trustee, each Basic Document to which the Seller or the Servicer is a party constitutes a legally valid and binding obligation of the Seller or the Servicer, as the case may be, enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect, relating to or affecting creditors' rights generally and by the application of general principles of equity, including without limitation concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance, injunctive relief or any other equitable remedy (regardless of whether enforcement is considered in a proceeding at law or in equity). (iii) Assuming the Certificates have been duly and validly authorized, when executed and authenticated by the Trustee and delivered against payment of the consideration specified in this Agreement, the Certificates will be legally valid and binding obligations of the Trust, and entitled to the benefits of the Trust Agreement enforceable against the Trust in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect, relating to or affecting creditors' rights generally and by the application of general principles of equity, including without limitation concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance, injunctive relief or any other equitable remedy (regardless of whether enforcement is considered in a proceeding at law or in equity). (iv) Assuming the due authorization, execution and delivery thereof by the Trustee, the Pooling and Servicing Agreement constitutes the valid and binding obligation of the Trust enforceable against the Trust in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect, relating to or affecting creditors' rights generally and by the application of general principles of equity, including without limitation concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance, injunctive relief or any other equitable remedy (regardless of whether enforcement is considered in a proceeding at law or in equity). (v) Neither the Seller nor the Trust is required to be registered under the Investment Company Act of 1940. 13 14 (vi) With respect to Financed Vehicles in the State of California, no filing or other action other than (A) the filing of a UCC financing statement naming the Servicer as transferor and the Seller as the transferee and (B) the filing of a UCC financing statement naming the Seller as the transferor and the Trust as the transferee, is necessary to perfect the transfer and assignment of the Servicer's security interest in such Financed Vehicles to the Seller, and the Seller's security interest in such Financed Vehicles to the Trust, respectively, and as a result of such transfer and assignment and upon filing of such financing statements, the Trust has a first perfected security interest in such Financed Vehicles, except that so long as the Servicer is named as the legal owner and lien holder on a certificate of title, the Servicer has the ability to release the security interest in the Financed Vehicle or to assign it to another party. (vii) The Trust will not be classified as an association taxable as a corporation or as a publicly traded partnership for federal or California income and franchise tax purposes, and for such purposes the Certificates will be characterized as debt. (viii) The statements in the Prospectus Supplement under "MATERIAL INCOME TAX CONSEQUENCES" and "ERISA CONSIDERATIONS," and in the Base Prospectus under the "MATERIAL INCOME TAX CONSEQUENCES," "ERISA CONSIDERATIONS" and "MATERIAL LEGAL ASPECTS OF THE RECEIVABLES," to the extent that they constitute matters of law or legal conclusions relating to the federal laws of the United States or the laws of the States of California or New York with respect thereto, have been reviewed by such counsel and are correct in all material respects. (ix) This Agreement has been duly authorized by all necessary corporate action on the part of each of the Seller and the Servicer, and has been duly executed and delivered by each of the Seller and the Servicer. (x) No order, consent, permit or approval of any California, New York or federal governmental authority that such counsel has, in the exercise of customary professional diligence, recognized as applicable to the Servicer or the Seller, or to the transactions of the type contemplated by any Basic Document, including the issuance of the Certificates, is required on the part of the Servicer or the Seller for the execution and delivery of, and the performance of its obligations under, any Basic Document to which it is a party, except for such as have been obtained or made and are in full force and effect as of the Closing Date; provided that such counsel expresses no opinion with respect to any orders, consents, permits, approvals, filings or licenses related to the authority to sell motor vehicles, originate retail installment sales contracts or service retail installment sales contracts or as may be required by any regional or local governmental authority or under any foreign or state securities laws. 14 15 (xi) To such counsel's knowledge, there are no actions, proceedings or investigations pending or threatened, to which the Seller or the Servicer is a party or of which any property of the Seller or the Servicer is the subject, required to be disclosed in the Registration Statement, other than those disclosed therein, (A) asserting the invalidity of any Basic Document or the Certificates, (B) seeking to prevent the issuance of the Certificates or the consummation of any of the transactions contemplated by any Basic Document, or (C) seeking adversely to affect the federal income tax attributes of the Certificates as described in the Base Prospectus under the heading "MATERIAL INCOME TAX CONSEQUENCES" or the California income tax attributes of the Certificates. (xii) At the time of execution and delivery of (A) the Purchase Agreement, the Servicer had the corporate power and corporate authority to transfer the Receivables and such other property being transferred to the Seller pursuant to the Purchase Agreement and (B) the Pooling and Servicing Agreement, the Seller had the corporate power and corporate authority to transfer the Receivables and such other property being transferred to the Trust pursuant to the Pooling and Servicing Agreement and to cause the transfer of the Certificates to the Underwriters. (xiii) The Certificates and the Basic Documents each conform in all material respects with the respective descriptions thereof contained in the Registration Statement and the Prospectus. (xiv) Neither the Trust Agreement nor the Pooling and Servicing Agreement need to be qualified under the 1939 Act. (xv) The Registration Statement filed with the Commission has been declared effective under the Act, and, to such counsel's knowledge upon due inquiry, no stop order suspending the effectiveness of the Registration Statement has been issued under the Act or proceedings therefor initiated or threatened by the Commission, and the Registration Statement and Prospectus, and each amendment or supplement thereto, as of its respective effective or issue date, appeared on its face to be appropriately responsive in all material respects to the applicable requirements of the Act and the Rules and Regulations, except that such counsel does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus except as contemplated by paragraphs (viii) and (xiii) of this Section to the extent set forth therein; such counsel does not opine as to any financial statements or other financial, numerical or statistical data contained or incorporated by reference therein; and such counsel does not opine as to the Form T-1. (xvi) The Seller has duly authorized, executed and delivered the written order to the Trustee to authenticate the Certificates. 15 16 In addition, such counsel shall state that such counsel has participated in conferences with the officers and other representatives of the Seller and the Servicer, representatives of their independent public accountants, and representatives of the Underwriters and their counsel, at which the contents of the Registration Statement and the Prospectus and related matters were discussed, but has not independently verified the accuracy, completeness or fairness of the statements contained or incorporated by reference therein, and accordingly such counsel is unable to assume, and does not assume, any responsibility for such accuracy, completeness or fairness. However, on the basis of such counsel's review and participation in conferences in connection with the preparation of the Registration Statement and the Prospectus, and relying as to its determination of materiality to an extent upon opinions of officers and other representatives of the Seller and the Servicer, such counsel shall state that it does not believe that any Registration Statement, at the related Effective Time, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, at the date of the Prospectus Supplement (or any such amendment or supplement, as of its respective date) contained, or on the Closing Date contains any untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; it being understood that such counsel need express no opinion or belief as to the financial statements or other financial, numerical or statistical data contained or incorporated by reference in any Registration Statement, the Prospectus or the Form T-1. Such counsel's opinions as to enforceability shall be subject to the unenforceability under certain circumstances of: (i) waivers of rights granted by law where the waivers are against public policy or prohibited by law; (ii) waivers of vaguely or broadly stated rights or future rights; (iii) any indemnification provisions; (iv) any provisions that rights or remedies are not exclusive, that every right or remedy is cumulative and may be exercised in addition to or with any other right or remedy or that the election of some particular remedy or remedies does not preclude recourse to one or more other remedies; (v) choice of law provisions; and (vi) severability provisions; provided that such unenforceability will not, subject to the other exceptions, qualifications and limitations contained in such opinion, render the relevant agreements invalid as a whole or substantially interfere with the substantial realization of the principal benefits that such agreements purport to provide (except for the economic consequences of procedural or other delay). (h) O'Melveny & Myers LLP shall have furnished their written opinion, dated the Closing Date, with respect to the characterization of the transfer of the Receivables by the Servicer to the Seller and with respect to other bankruptcy and perfection of security interest matters, and such opinion shall be in substantially the form previously discussed with the Representative and its counsel and in any event satisfactory in form and in substance to the Representative and its counsel. (i) The Underwriters shall have received an opinion of [ ], dated the Closing Date, with respect to the validity of the Certificates and such other related matters as the Representative shall require, and the Seller shall have 16 17 furnished or caused to be furnished to such counsel such documents as they may reasonably request for the purpose of enabling them to pass upon such matters. (j) The Underwriters shall have received an opinion addressed to the Underwriters, the Seller and the Servicer of [ ], counsel to the Trustee, dated the Closing Date and satisfactory in form and substance to the Representative and its counsel, to the effect that: (i) The Trustee is a banking corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware with power and authority (corporate and other) to own its properties and conduct its business, as presently conducted by it, and to enter into and perform its obligations under the Trust Agreement. (ii) The Trust Agreement has been duly authorized, executed and delivered by the Trustee, and, assuming that such agreement is a legally effective and enforceable obligation of each of the other parties thereto, constitutes the legal, valid and binding agreement of the Trustee, enforceable against the Trustee in accordance with its terms, except as the enforceability thereof may be (a) limited by bankruptcy, insolvency, reorganization, moratorium, liquidation or other similar laws affecting the enforceability of creditors' rights generally and (b) subject to general principles of equity (regardless of whether considered in proceedings in equity or at law) as well as concepts of reasonableness, good faith and fair dealing. (iii) The Certificates have been duly authorized, executed and delivered by the Trustee in accordance with the terms of the Pooling and Servicing Agreement. (iv) Neither the execution nor delivery by the Trustee of the Trust Agreement nor the consummation of any of the transactions by the Trustee contemplated thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any governmental authority or agency under any existing federal or Delaware state law governing the banking or trust powers of the Trustee. (v) The Trust has been duly formed and is validly existing as a statutory business trust and is in good standing under the laws of the state of Delaware, with full power and authority to execute, deliver and perform its obligations under the Basic Documents to which it is a party and the Certificates. (vi) The execution and delivery by the Trustee of the Trust Agreement and the performance by the Trustee of its obligations thereunder, do not conflict with, result in a breach or violation of or constitute a default under the Articles of Association or Bylaws of the Trustee. (k) The Representative shall have received an officer's certificate dated the Closing Date of the Chairman of the Board, the President or any Vice President 17 18 and by a principal financial or accounting officer of each of the Seller and the Servicer in which each such officer shall state that, to the best of such officer's knowledge after reasonable investigation, the representations and warranties of the Seller or the Servicer, as applicable, contained in the Pooling and Servicing Agreement and the representations and warranties of the Servicer or the Seller, as applicable, contained in the Purchase Agreement are true and correct in all material respects and that the Seller or the Servicer, as applicable, has complied with all agreements and satisfied all conditions on its part to be performed or satisfied under such agreements at or prior to the Closing Date in all material respects. (l) The Certificates shall have been rated in the highest rating category by Moody's and S&P. (m) On or prior to the Closing Date, the Seller shall have furnished to the Representative such further certificates and documents as the Representative shall reasonably have required. 7. Indemnification and Contribution. (a) The Seller and the Servicer shall, jointly and severally, indemnify and hold each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Act or Section 20 of the Securities Exchange Act of 1934, as amended (each a "Control Person"), harmless against any losses, claims, damages or liabilities, joint or several, to which such Underwriter or Control Person may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, [the Term Sheet] [the Preliminary Prospectus], the Prospectus, or any amendment or supplement thereto, or any related preliminary prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter and Control Person for any legal or other expenses reasonably incurred by such Underwriter or Control Person in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that neither the Seller nor the Servicer will be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with information furnished to the Seller or the Servicer by any Underwriter through the Representative specified in the last sentence of subsection (b) below specifically for use therein; provided, further, that neither the Seller nor the Servicer shall be liable under this subsection (a) to any Underwriter to the extent that such losses, claims, damages or liabilities arise out of or are based upon an untrue statement or omission made in the [Term Sheet] [Preliminary Prospectus] that is subsequently corrected in the Prospectus (or any amendment or supplement thereto) made available to such Underwriter, if the person asserting such loss, claim, damage or liability was not sent or given the Prospectus, as then amended or supplemented (excluding documents incorporated by 18 19 reference therein), on or prior to the confirmation of the sale of the Certificates; and provided, further, that neither the Seller nor the Servicer shall be liable to any Underwriter or any Control Person under the indemnity agreement in this subsection (a) with respect to any of such documents to the extent that any such loss, claim, damage or liability of such Underwriter or such Control Person results from the fact that such Underwriter sold Certificates to a person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the Prospectus or of the Prospectus as then amended or supplemented (excluding documents incorporated by reference therein), whichever is most recent, if the Seller or the Servicer has previously furnished copies thereof to such Underwriter. (b) Each Underwriter shall, severally and not jointly, indemnify and hold harmless the Seller and the Servicer against any losses, claims, damages or liabilities to which the Seller or the Servicer may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus or any amendment or supplement thereto, or any related preliminary prospectus, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with information furnished to the Seller or the Servicer by such Underwriter through the Representative specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Seller or the Servicer in connection with investigating or defending any such action or claim as such expenses are incurred. The Seller and the Servicer acknowledge and agree that the only such information furnished to the Seller or the Servicer by any Underwriter through the Representative consists of the following: the statements in the second and fourth paragraphs (concerning initial offering prices, concessions and reallowances) and in the sixth and seventh paragraphs (concerning stabilizing and other activities) under the heading "Underwriting" in the Prospectus Supplement. (c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such person (the "Indemnified Party") shall promptly notify the person against whom such indemnity may be sought (the "Indemnifying Party") in writing of the commencement thereof, but the omission to so notify the Indemnifying Party will not relieve it from any liability which it may have to any Indemnified Party otherwise than under such preceding paragraphs. In case any such action is brought against any Indemnified Party and it notifies the Indemnifying Party of the commencement thereof, the Indemnifying Party will be entitled to participate therein and, to the extent that it may wish, jointly with any other Indemnifying Party similarly notified, to assume the defense thereof, with counsel satisfactory to such Indemnified Party (who may be counsel to the Indemnifying Party) and after notice from the Indemnifying Party to such Indemnified Party of its election so to assume the defense 19 20 thereof and after acceptance of counsel by the Indemnified Party, the Indemnifying Party will not be liable to such Indemnified Party under this Section for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the contrary, (ii) the Indemnified Party has reasonably concluded (based upon advice of counsel to the Indemnified Party) that there may be legal defenses available to it or other Indemnified Parties that are different from or in addition to those available to the Indemnifying Party, (iii) a conflict or potential conflict exists (based upon advice of counsel to the Indemnified Party) between the Indemnified Party and the Indemnifying Party (in which case the Indemnifying Party will not have the right to direct the defense of such action on behalf of the Indemnified Party) or (iv) the Indemnifying Party has elected to assume the defense of such proceeding but has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Party. The Indemnifying Party shall not, with respect to any action brought against any Indemnified Party, be liable for the fees and expenses of more than one firm (in addition to any local counsel) for all Indemnified Parties, and all such fees and expenses shall be reimbursed within a reasonable period of time as they are incurred. Any separate firm appointed for the Underwriters and any Control Person in accordance with this subsection (c) shall be designated in writing by the Representative, and any such separate firm appointed for the Seller or the Servicer, its respective directors, officers who sign the Registration Statement and Control Persons in accordance with this subsection (c) shall be designated in writing by the Seller or the Servicer, as the case may be. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent, with respect to an action of which the Indemnifying Party was notified and had the opportunity to participate in (whether or not it chose to so participate), the Indemnifying Party agrees to indemnify any Indemnified Party from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an Indemnified Party shall have requested an Indemnifying Party to reimburse the Indemnified Party for fees and expenses of counsel as contemplated by the fourth sentence of this paragraph, the Indemnifying Party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 60 days after receipt by such Indemnifying Party of the aforesaid request, and during such 60 day period the Indemnifying Party has not responded thereto, and (ii) such Indemnifying Party shall not have reimbursed the Indemnified Party in accordance with such request prior to the date of such settlement. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such proceeding. (d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an Indemnified Party under subsection (a) or (b) above, then 20 21 each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above in such proportion as is appropriate to reflect the relative benefits received by the Seller and the Servicer on the one hand and the Underwriters on the other from the offering of the Certificates. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, then each Indemnifying Party shall contribute to such amount paid or payable by such Indemnified Party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Seller and the Servicer on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Seller and the Servicer on the one hand and the Underwriters on the other shall be deemed to be in the same proportion that the total net proceeds from the offering (before deducting expenses) received by the Seller and the Servicer bear to the total underwriting discounts and commissions received by the Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Seller or the Servicer or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Seller, the Servicer and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above in this subsection (d). The amount paid by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Certificates underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint. (e) The obligations of the Seller and the Servicer under this Section shall be in addition to any liability which the Seller or the Servicer may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each director of the Seller or the Servicer, to each officer of the Seller or Servicer who 21 22 has signed the Registration Statement and to each person, if any, who controls the Seller or the Servicer within the meaning of the Act. 8. Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of the Seller, the Servicer or their respective officers and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation or statement as to the results thereof made by or on behalf of any Underwriter, the Seller or the Servicer or any of their respective representatives, officers or directors or any Control Person, and will survive delivery of and payment for the Certificates. If this Agreement is terminated pursuant to Section 9 or if for any reason the purchase of the Certificates by the Underwriters is not consummated, the Seller shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 5, and the respective obligations of the Seller and the Underwriters pursuant to Section 7 shall remain in effect. If the purchase of the Certificates by the Underwriters is not consummated for any reason other than solely because of the termination of this Agreement pursuant to Section 9, the Seller will reimburse the Underwriters for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Certificates. 9. Failure to Purchase the Certificates. If any Underwriter or Underwriters default on their obligations to purchase Certificates hereunder and the aggregate principal amount of Certificates that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total principal amount of such Certificates, the Representative may make arrangements satisfactory to the Seller for the purchase of such Certificates by other persons, including the nondefaulting Underwriter or Underwriters, but if no such arrangements are made by the Closing Date, the nondefaulting Underwriter or Underwriters shall be obligated, in proportion to their commitments hereunder, to purchase the Certificates that such defaulting Underwriter or Underwriters agreed but failed to purchase. If any Underwriter or Underwriters so default and the aggregate principal amount of Certificates with respect to which such default or defaults occur exceeds 10% of the total principal amount of Certificates, as applicable, and arrangements satisfactory to the nondefaulting Underwriter or Underwriters and the Seller for the purchase of such Certificates by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any nondefaulting Underwriter or the Seller, except as provided in Section 8. As used in this Agreement, the term "Underwriter" includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter or Underwriters from liability for its default. 10. Notices. All communications hereunder will be in writing and, if sent to the Representative or the Underwriters will be mailed, delivered or sent by facsimile transmission and confirmed to [ ]; and if sent to the Seller, will be mailed, delivered or sent by facsimile transmission and confirmed to it at Nissan Auto Receivables Corporation [II], 990 West 190th Street, Torrance, California 90502-10l9, attention of the Assistant Secretary (facsimile number (310) 324-2542). 22 23 11. No Bankruptcy Petition. Each Underwriter agrees that, prior to the date which is one year and one day after the payment in full of all securities issued by the Seller or by a trust for which the Seller was the depositor which securities were rated by any nationally recognized statistical rating organization, it will not institute against, or join any other person in instituting against, the Seller any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other proceedings under any federal or state bankruptcy or similar law. 12. Successors. This Agreement will inure to the benefit of and be binding upon the Underwriters and the Seller and their respective successors and the officers and directors and Control Persons referred to in Section 7, and no other person will have any right or obligations hereunder. 13. Representation of Underwriters. The Representative will act for the several Underwriters in connection with the transactions described in this Agreement, and any action taken by the Representative under this Agreement will be binding upon all the Underwriters. 14. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without reference to its conflict of law provisions (other than Section 5-1401 of the General Obligations Law of the State of New York). 15. Counterparts. This Agreement may be executed by each of the parties hereto in any number of counterparts, and by each of the parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 23 24 If the foregoing is in accordance with your understanding, please sign and return to us a counterpart hereof, whereupon it will become a binding agreement between the Seller and the several Underwriters in accordance with its terms. Very truly yours, NISSAN AUTO RECEIVABLES CORPORATION [II] By: /s/ ------------------------------------ Name: Title: NISSAN MOTOR ACCEPTANCE CORPORATION By: /s/ ------------------------------------ Name: Title: 1 25 The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written: [ ] By: /s/ --------------------------------------- Name: Title: Acting on behalf of itself and as the Representative of the several Underwriters. 2 26 Schedule I
- ------------------------------------------------------ Principal Principal Amount of Amount of Class A Class B Underwriter Certificates Certificates - ------------------------------------------------------ $ $ - ------------------------------------------------------ $ $ - ------------------------------------------------------
3 EX-4.1 4 a67668a1ex4-1.txt EXHIBIT 4.1 1 EXHIBIT 4.1 NISSAN AUTO RECEIVABLES ____-_ OWNER TRUST (a Delaware Business Trust) AMENDED AND RESTATED TRUST AGREEMENT between [NISSAN AUTO RECEIVABLES CORPORATION] [NISSAN AUTO RECEIVABLES CORPORATION II], as Depositor, and [______________], as Owner Trustee Dated as of [______________] 2 TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS SECTION 1.01 Definitions...............................................................................................1 SECTION 1.02 Usage of Terms............................................................................................4 ARTICLE II CREATION OF TRUST SECTION 2.01 Creation of Trust.........................................................................................5 SECTION 2.02 Office....................................................................................................5 SECTION 2.03 Purposes and Powers.......................................................................................5 SECTION 2.04 Power of Attorney.........................................................................................6 SECTION 2.05 Declaration of Trust......................................................................................6 SECTION 2.06 Liability of the Certificateholders.......................................................................7 SECTION 2.07 Title to Trust Property...................................................................................7 SECTION 2.08 Situs of Trust............................................................................................7 SECTION 2.09 Representations and Warranties of the Depositor...........................................................7 SECTION 2.10 Federal Income Tax Allocations............................................................................8 ARTICLE III CERTIFICATES AND TRANSFER OF INTERESTS SECTION 3.01 The Certificates..........................................................................................9 SECTION 3.02 Authentication of Certificates............................................................................9 SECTION 3.03 Registration of Transfer and Exchange of Certificates....................................................10 SECTION 3.04 Mutilated, Destroyed, Lost or Stolen Certificates........................................................11 SECTION 3.05 Persons Deemed Certificateholders........................................................................11 SECTION 3.06 Access to List of Certificateholders' Names and Addresses................................................12 SECTION 3.07 Maintenance of Office or Agency..........................................................................12 SECTION 3.08 Appointment of Paying Agent..............................................................................12 SECTION 3.09 Ownership by the Depositor of Certificates...............................................................13 SECTION 3.10 Book-Entry Certificates..................................................................................13 SECTION 3.11 Notices to Clearing Agency...............................................................................14 SECTION 3.12 Definitive Certificates..................................................................................14 SECTION 3.13 Temporary Certificates...................................................................................15 ARTICLE IV ACTIONS BY OWNER TRUSTEE OR CERTIFICATEHOLDERS SECTION 4.01 Prior Notice to Certificateholders with Respect to Certain Matters.......................................15 SECTION 4.02 Action by Certificateholders with Respect to Certain Matters.............................................16
i 3 TABLE OF CONTENTS (CONTINUED)
PAGE SECTION 4.03 Action with Respect to Bankruptcy........................................................................16 SECTION 4.04 Restrictions on Certificateholders' Power................................................................16 SECTION 4.05 Majority of the Controlling Class of Certificates Control................................................16 ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES SECTION 5.01 Establishment of the Accounts............................................................................16 SECTION 5.02 Application of Amounts in Trust Accounts.................................................................18 SECTION 5.03 Method of Payment........................................................................................18 SECTION 5.04 Accounting and Reports to the Noteholders, Certificateholders, the Internal Revenue Service and Others...19 SECTION 5.05 Signature on Returns; Tax Matter Partner.................................................................19 ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE SECTION 6.01 General Authority........................................................................................19 SECTION 6.02 General Duties...........................................................................................20 SECTION 6.03 Duties of the Owner Trustee..............................................................................20 SECTION 6.04 No Duties Except as Specified in this Agreement or in Instructions.......................................21 SECTION 6.05 No Action Except Under Specified Documents or Instructions...............................................22 SECTION 6.06 Restrictions.............................................................................................22 ARTICLE VII CONCERNING THE OWNER TRUSTEE SECTION 7.01 Rights of the Owner Trustee..............................................................................22 SECTION 7.02 Furnishing of Documents..................................................................................23 SECTION 7.03 Representations and Warranties...........................................................................23 SECTION 7.04 Reliance; Advice of Counsel..............................................................................24 SECTION 7.05 Not Acting in Individual Capacity........................................................................24 SECTION 7.06 Owner Trustee Not Liable for Certificates or Receivables.................................................25 SECTION 7.07 Owner Trustee May Own Certificates and Notes.............................................................25 [SECTION 7.08 Sales Finance Licenses]..................................................................................25 ARTICLE VIII COMPENSATION OF OWNER TRUSTEE SECTION 8.01 Owner Trustee's Fees and Expenses........................................................................26
ii 4 TABLE OF CONTENTS (CONTINUED)
PAGE SECTION 8.02 Indemnification..........................................................................................26 SECTION 8.03 Payments to the Owner Trustee............................................................................26 ARTICLE IX TERMINATION OF TRUST AGREEMENT SECTION 9.01 Termination of Trust Agreement...........................................................................26 ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES SECTION 10.01 Eligibility Requirements for Owner Trustee...............................................................28 SECTION 10.02 Resignation or Removal of Owner Trustee..................................................................28 SECTION 10.03 Successor Owner Trustee..................................................................................29 SECTION 10.04 Merger or Consolidation of Owner Trustee.................................................................29 SECTION 10.05 Appointment of Co-Trustee or Separate Trustee............................................................29 ARTICLE XI MISCELLANEOUS SECTION 11.01 Supplements and Amendments...............................................................................31 SECTION 11.02 No Legal Title to Owner Trust Estate in Certificateholders...............................................32 SECTION 11.03 Limitations on Rights of Others..........................................................................32 SECTION 11.04 Notices..................................................................................................32 SECTION 11.05 Severability.............................................................................................33 SECTION 11.06 Counterparts.............................................................................................33 SECTION 11.07 Successors and Assigns...................................................................................33 SECTION 11.08 No Petition..............................................................................................33 SECTION 11.09 No Recourse..............................................................................................33 SECTION 11.10 Headings.................................................................................................33 SECTION 11.11 GOVERNING LAW............................................................................................33 SECTION 11.12 NMAC Payment Obligation..................................................................................34 Exhibit A Form of Certificates Exhibit B Form of Transferee Representation Letter Exhibit C Form of Transferor Representation Letter
iii 5 AMENDED AND RESTATED TRUST AGREEMENT, dated as of [_________________], between NISSAN AUTO RECEIVABLES CORPORATION, a Delaware corporation, as depositor, and [_________________], a [_________________], not in its individual capacity but solely as Owner Trustee, amending and restating in its entirety the Trust Agreement, dated as of [_________________] (the "Original Trust Agreement"), between the same parties, and herein referred to as the "Trust Agreement" or this "Agreement." IN CONSIDERATION of the mutual agreements herein contained, and of other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: ARTICLE I Definitions SECTION 1.01 Definitions. Except as otherwise specified herein or if the context may otherwise require, capitalized terms used but not otherwise defined herein have the meanings assigned to such terms in the Sale and Servicing Agreement and the Indenture for all purposes of this Agreement. Except as otherwise provided in this Agreement, whenever used herein the following words and phrases, unless the context otherwise requires, shall have the following meanings: "Administration Agreement" means the Administration Agreement dated as of [_______] by and among the Trust, as issuer, NMAC, as Administrator, [and] the Indenture Trustee [and the Owner Trustee] pursuant to which NMAC undertakes to perform certain of the duties and obligations of the Trust [and the Owner Trustee] hereunder, under the Sale and Servicing Agreement and under the Indenture. "Administrator" means NMAC acting in its capacity as Administrator under the Administration Agreement. "Agreement" means this Amended and Restated Trust Agreement, which amends and restates the Original Trust Agreement. "Basic Documents" means the Purchase Agreement, this Agreement, the Certificate of Trust, the Sale and Servicing Agreement, the Indenture, the Yield Supplement Agreement, the Administration Agreement, the Note Depository Agreement, the Certificate Depository Agreement, the Securities Account Control Agreement and the other documents and certificates delivered in connection herewith and therewith. "Book-Entry Certificate" means a beneficial interest in the Certificates of any Class, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 3.10. "Business Trust Statute" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code Section 3801 et seq. 1 6 "Certificate" means a Class C Certificate or a Class D Certificate. "Certificate Depository Agreement" means the agreement entitled "Letter of Representations" dated on or before the Closing Date among the Clearing Agency, the Trust and the Owner Trustee with respect to certain matters relating to the duties thereof with respect to the Book-Entry Certificates. "Certificate of Trust" means the Certificate of Trust filed with respect to the formation of the Trust pursuant to Section 3810(a) of the Business Trust Statute. "Certificate Owner" means, with respect to a Book-Entry Certificate, the Person who is the beneficial owner of such Book-Entry Certificate, as reflected on the books and records of the Clearing Agency, or on the books and records of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, in each case in accordance with the rules of such Clearing Agency) and shall mean, with respect to a Definitive Certificate, the related Certificateholder. "Certificate Register" means the register maintained pursuant to Section 3.03. "Certificateholder" or "Holder" means a Person in whose name a Certificate is registered in the Certificate Register, except that, solely for the purposes of giving certain consents, waivers, requests or demands pursuant to this Agreement, the interest evidenced by any Certificate registered in the name of [NARC] [NARC II] or NMAC, or any Person actually known to a Trust Officer of the Owner Trustee to be controlling, controlled by or under common control with [NARC] [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 at such time all Certificates are then owned by [NARC][NARC II], NMAC and their Affiliates. "Certificate Registrar" means the Owner Trustee unless and until a successor thereto is appointed pursuant to Section 3.03. The Certificate Registrar initially designates its offices at [______________], as its offices for purposes of Section 3.03. "Class C Certificate" means any of the [__%] Certificates, Class C, executed by the Trust and authenticated by the Owner Trustee, evidencing a beneficial ownership interest in the Trust, substantially in the form set forth in Exhibit A hereto. "Class C Pass-Through Rate" means [_______] % per annum. "Class D Certificate" means any of the [__%] Certificates, Class D, executed by the Trust and authenticated by the Owner Trustee, evidencing a beneficial ownership interest in the Trust, substantially in the form set forth in Exhibit A hereto. "Class D Pass-Through Rate" means [_______]% per annum. "Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act. 2 7 "Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. "Code" means the Internal Revenue Code of 1986. "Corporate Trust Office" means, with respect to the Owner Trustee, the principal corporate trust office of the Owner Trustee located at [______________]; or at such other address as the Owner Trustee may designate by notice to the Certificateholders, or the principal corporate trust office of any successor Owner Trustee (the address of which the successor Owner Trustee will notify the Certificateholders). "Definitive Certificates" shall have the meaning assigned to such term in Section 3.12. "Depositor" means [NARC] [NARC II] in its capacity as depositor hereunder. "ERISA" shall have the meaning assigned to such term in Section 3.03(c). "Expenses" shall have the meaning assigned to such term in Section 8.01. "Indenture" means the Indenture dated as of [______________] entered into between the Trust and the Indenture Trustee named therein pursuant to which a series of Notes are issued. "NMAC" means Nissan Motor Acceptance Corporation, a California corporation. ["NARC" means Nissan Auto Receivables Corporation, a Delaware corporation.] ["NARC II" means Nissan Auto Receivables Corporation II, a Delaware corporation.] "Non-U.S. Person" means any Person who is not (i) a citizen or resident of the United States who is a natural person, (ii) a corporation or partnership (or an entity treated as a corporation or partnership) created or organized in or under the laws of the United States or any state thereof, including the District of Columbia (unless, in the case of a partnership, Treasury Regulations are adopted that provide otherwise), (iii) an estate, the income of which is subject to United States Federal income taxation, regardless of its source, (iv) a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons (as defined in the Code and Treasury Regulations) have the authority to control all substantial decisions of the trust; or (v) a trust that was in existence prior to August 20, 1996 and that, under Treasury Regulations, is eligible to elect, and does validly elect, to be treated as a United States person (as defined in the Code and Treasury Regulations) despite not meeting the requirements of clause (iv). "Notes" means the notes issued by the Trust pursuant to the Indenture, having the payment and other terms set forth in the Indenture. "Original Certificate Balance" means, with respect to the Class C Certificates, $[________], and with respect to the Class D Certificates, $[________]. 3 8 "Original Trust Agreement" shall have the meaning assigned to such term in the introductory paragraph to this Agreement. "Owner Trust Estate" means all right, title and interest of the Trust in and to the property and rights assigned to the Trust pursuant to Article II of the Sale and Servicing Agreement, all funds on deposit from time to time in the [account] [accounts] created pursuant to Sections 5.01 [and 5.08] of the Sale and Servicing Agreement (excluding any net investment income with respect to amounts held in such accounts) and all other property of the Trust from time to time, including any rights of the Owner Trustee and the Trust pursuant to the Sale and Servicing Agreement [, the Yield Supplement Agreement] and the Administration Agreement, and as assignee of the rights and interests of the Depositor under the Purchase Agreement. "Owner Trustee" means [______________], a [________________], not in its individual capacity but solely as owner trustee under this Agreement, and any successor Owner Trustee hereunder. "Paying Agent" means any paying agent or co-paying agent appointed pursuant to Section 3.08, and shall initially be [______________]. "Plan" shall have the meaning assigned to such term in Section 3.03(c)(1)(ii). "Sale and Servicing Agreement" means the Sale and Servicing Agreement, dated as of the date hereof, among the Trust, [NARC] [NARC II], as seller, and NMAC, as servicer. "Secretary of State" means the Secretary of State of the State of Delaware. "Securities Account Control Agreement" shall have the meaning assigned to such term in the Sale and Servicing Agreement. "Securityholders" means the Certificateholders and the Noteholders. "Treasury Regulations" means regulations, including proposed or temporary regulations, promulgated under the Code. References herein to specific provisions of proposed or temporary regulations shall include analogous provisions of final Treasury Regulations or other successor Treasury Regulations. "Trust" means the Nissan Auto Receivables ____-_ Owner Trust, formed as a Delaware business trust pursuant to this Agreement and the filing of the Certificate of Trust. "Trust Collection Account" shall have the meaning assigned to such term in Section 5.01(a). "Yield Supplement Agreement" means the Yield Supplement Agreement dated as of the date hereof among NMAC, the Depositor, the Indenture Trustee, and the Trust. SECTION 1.02 Usage of Terms. With respect to all terms in this Agreement, the singular includes the plural and the plural the singular; words importing any gender include the other genders; references to "writing" include printing, typing, lithography and other means of 4 9 reproducing words in a visible form; references to agreements and other contractual instruments include all subsequent amendments, amendments and restatements and supplements thereto or changes therein entered into in accordance with their respective terms and not prohibited by this Agreement; references to Persons include their permitted successors and assigns; references to laws include their amendments and supplements, the rules and regulations thereunder and any successors thereto; and the term "including" means "including without limitation." ARTICLE II Creation of Trust SECTION 2.01 Creation of Trust. A Delaware business trust known as "Nissan Auto Receivables ____-_ Owner Trust" was formed in accordance with the provisions of the Business Trust Statute pursuant to the Original Trust Agreement. Under the Original Trust Agreement, the Owner Trustee was authorized and vested with the power and authority to make and execute contracts, instruments, certificates, agreements and other writings on behalf of the Trust as set forth herein and to sue and be sued on behalf of the Trust. The Owner Trustee accepted under the Original Trust Agreement, and does hereby confirm its acceptance and agreement to hold in trust, for the benefit of the Certificateholders and such other Persons as may become beneficiaries hereunder from time to time, all of the Owner Trust Estate conveyed or to be conveyed to the Trust, and all monies and proceeds that may be received with respect thereto, subject to the terms of this Agreement. SECTION 2.02 Office. The principal place of business of the Trust for purposes of Delaware law shall be in care of the Owner Trustee at the Corporate Trust Office or at such other address in Delaware as the Owner Trustee may designate by written notice to the Certificateholders and the Servicer. The Trust may establish additional offices located at such place or places inside or outside of the State of Delaware as the Owner Trustee may designate by written notice to the Certificateholders and the Servicer. SECTION 2.03 Purposes and Powers. (a) The purpose of the Trust is, and the Trust shall have the power and authority and is authorized, to engage in the following activities: (i) to issue Notes pursuant to the Indenture and Certificates pursuant to this Agreement; (ii) [to enter into and perform its obligations under any interest rate protection agreement or agreements between the Trust and a counterparty, including any confirmations evidencing the transactions thereunder, which is an interest rate swap, an interest rate cap, an obligation to enter into any of the foregoing, or any combination of any of the foregoing;] 5 10 (iii) to acquire the Owner Trust Estate (including the Receivables and related property) from the Depositor in exchange for the Notes and Certificates pursuant to the Sale and Servicing Agreement; (iv) to assign, grant, transfer, pledge, mortgage and convey the Owner Trust Estate pursuant to, and on the terms and conditions set forth in, the Indenture and to hold, manage and distribute to the Certificateholders pursuant to the terms of the Sale and Servicing Agreement any portion of the Owner Trust Estate released from the Lien of, and remitted to the Trust pursuant to, the Indenture as set forth therein and in the Sale and Servicing Agreement; (v) to enter into and perform its obligations under the Basic Documents to which it is to be a party; (vi) to engage in those activities, including entering into agreements, that are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto or connected therewith; and (vii) subject to compliance with the Basic Documents, to engage in such other activities as may be required in connection with conservation of the Owner Trust Estate and the making of distributions to the Certificateholders and the Noteholders and in respect of amounts to be released to the Depositor, the Servicer, the Administrator and third parties, if any. The Trust shall not engage in any activity other than in connection with the foregoing and as required or authorized by the terms of the Basic Documents. SECTION 2.04 Power of Attorney. Pursuant to the Administration Agreement, the Owner Trustee has authorized the Administrator to perform certain of its administrative duties hereunder, including duties with respect to the management of the Owner Trust Estate, and in connection therewith hereby grants the Administrator its revocable power of attorney. Each Certificateholder by such Holder's acceptance of any Certificate or beneficial interest therein, as the case may be, shall be deemed to have granted power of attorney to the Administrator for purposes of actions taken or to be taken with respect to the Certificates. SECTION 2.05 Declaration of Trust. The Owner Trustee hereby declares that it will hold the Owner Trust Estate in trust upon and subject to the conditions set forth herein for the use and benefit of the Certificateholders, subject to the obligations of the Trust under the Basic Documents. It is the intention of the parties hereto that the Trust constitute a business trust under the Business Trust Statute and that this Agreement constitute the governing instrument of such business trust. It is the intention of the parties hereto that, solely for income and franchise tax purposes, the Trust shall be treated as a division or branch of the Person holding the beneficial ownership interests in the Trust for any period during which the beneficial ownership interests in the Trust are held by one Person, and shall be treated as a partnership for any period during which the beneficial ownership interests in the Trust are held by more than one Person, with the assets of the partnership being the Receivables[, the Trust's rights under the Interest Rate Swap Agreement] and other assets held by the Trust, and the Notes being debt of the partnership. The 6 11 parties agree that for any such period, unless otherwise required by appropriate tax authorities, the Trust will file or cause to be filed annual or other necessary returns, reports and other forms consistent with the characterization of the Trust as a partnership for such tax purposes. Effective as of the date hereof, the Owner Trustee shall have all rights, powers and duties set forth herein and in the Business Trust Statute with respect to accomplishing the purposes of the Trust. At the direction of the Depositor, the Owner Trustee caused to be filed the Certificate of Trust pursuant to the Business Trust Statute, and the Owner Trustee shall file or cause to be filed such amendments thereto as shall be necessary or appropriate to satisfy the purposes of this Agreement and as shall be consistent with the provisions hereof. SECTION 2.06 Liability of the Certificateholders. No Certificateholder shall have any personal liability for any liability or obligation of the Trust, solely by reason of it being a Certificateholder. SECTION 2.07 Title to Trust Property. Legal title to all of the Owner Trust Estate shall be vested at all times in the Trust as a separate legal entity except where applicable law in any jurisdiction requires title to any part of the Owner Trust Estate to be vested in a trustee or trustees, in which case title shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a separate trustee, as the case may be. SECTION 2.08 Situs of Trust. The Trust will be located in Delaware and administered in the state of [__________]. All bank accounts maintained by the Owner Trustee on behalf of the Trust shall be located in the State of Delaware or the State of New York [or ___________]. The Trust shall not have any employees in any state other than Delaware; provided, however, that nothing herein shall restrict or prohibit the Owner Trustee from having employees within or without the State of Delaware. Payments will be received by the Trust only in Delaware or New York [or__________], and payments will be made by the Trust only from Delaware or New York [or__________]. The principal office of the Trust will be at the Corporate Trust Office in Delaware. SECTION 2.09 Representations and Warranties of the Depositor. The Depositor hereby represents and warrants to the Owner Trustee that as of the Closing Date: (a) Organization and Good Standing. The Depositor has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted, and had at all relevant times, and has, corporate power, authority and legal right to acquire and own the Receivables. (b) Due Qualification. The Depositor is duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business shall require such qualifications, and where the failure to so qualify would have a material adverse effect on the ability of the Depositor to perform its obligations under this Agreement. (c) Power and Authority. The Depositor has the corporate power and authority to execute and deliver this Agreement and to carry out its terms. The Depositor has full power and 7 12 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 Depositor by all necessary corporate action. (d) Binding Obligations. This Agreement is a legal, valid and binding obligation of the Depositor enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general equitable principles. (e) No Violation. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time) a default under, the certificate of incorporation or by-laws of the Depositor, or any indenture, agreement or other instrument to which the Depositor is a party or by which it shall be bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than the Basic Documents); nor violate any law or, to the best of the Depositor's knowledge, any order, rule or regulation applicable to the Depositor of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Depositor or its properties; which breach, default, conflict, Lien or violation in any case would have a material adverse effect on the ability of the Depositor to perform its obligations under this Agreement. (f) No Proceedings. There are no proceedings or investigations pending, or, to the best of the Depositor's knowledge, threatened, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Depositor or its properties: (i) asserting the invalidity of this Agreement; (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement; (iii) seeking any determination or ruling that would materially and adversely affect the performance by the Depositor of its obligations under, or the validity or enforceability of, this Agreement; or (iv) relating to the Depositor and that would adversely affect the federal or any state income tax attributes of the Trust, the Certificates or the Notes. SECTION 2.10 Federal Income Tax Allocations. Net income of the Trust for any month as determined for federal income tax purposes (and each item of income, gain, loss and deduction entering into the computation thereof) during which the beneficial ownership interests in the Trust are held by more than one Person shall be allocated: (a) in an amount equal to any amount distributed to the Certificateholders pursuant to the Sale and Servicing Agreement (to the extent not previously allocated pursuant to this clause); and (b) to the Depositor, to the extent of any remaining net income. If the net income of the Trust for any month is insufficient for the allocations described in clause (a) above, subsequent net income shall first be allocated to make up such shortfall before being allocated as provided in the preceding sentence. Net losses of the Trust, if any, for any month as 8 13 determined for federal income tax purposes (and each item of income, gain, loss and deduction entering into the computation thereof) shall be allocated to the Depositor to the extent the Depositor has agreed hereunder and under the Sale and Servicing Agreement and the Indenture to bear the economic burden of such net losses, and any remaining net losses shall be allocated among the Certificateholders as of the first Distribution Date following the end of such month in proportion to their ownership of principal amount of Certificates as of the close of business on such Distribution Date. The Depositor is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Depositor or to the Certificateholders, or as otherwise required by the Code. ARTICLE III Certificates and Transfer of Interests SECTION 3.01 The Certificates. The Certificates shall be issued in minimum denominations of $[_____] and in integral multiples of $[______] in excess thereof, provided that one Class D Certificate issued to the Depositor pursuant to Section 3.09 may be issued in an irregular denomination that includes any residual amount. The Certificates shall be executed on behalf of the Trust by manual or facsimile signature of a Trust Officer of the Owner Trustee and authenticated on behalf of the Owner Trustee by the manual or facsimile signature of a Trust Officer. Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be validly issued and entitled to the benefits of this Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such offices at the date of authentication and delivery of such Certificates. The Certificates may be printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination in the form of Exhibit A hereto. A transferee of a Certificate shall become a Certificateholder, and shall be entitled to the rights and subject to the obligations of a Certificateholder hereunder, upon such transferee's acceptance of a Certificate duly registered in such transferee's name pursuant to Section 3.03. SECTION 3.02 Authentication of Certificates. Concurrently with the initial transfer of the Receivables to the Trust pursuant to the Sale and Servicing Agreement, the Owner Trustee shall cause to be executed, authenticated and delivered on behalf of the Trust to the Depositor, Certificates in an aggregate principal amount equal to the Original Certificate Balance and evidencing the entire ownership of the Trust. No Certificate shall entitle its holder to any benefit under this Agreement or be valid for any purpose, unless there shall appear on such Certificate a certificate of authentication substantially in the form set forth in Exhibit A, executed by the Owner Trustee or the Owner Trustee's authenticating agent, by manual or facsimile signature of a Trust Officer, and such authentication shall constitute conclusive evidence, and the only evidence, that such Certificate shall have been duly authenticated and delivered hereunder. All Certificates shall be dated the date of their authentication. [[ ] shall be the initial 9 14 authenticating agent of the Owner Trustee hereunder, and all references herein to authentication by the Owner Trustee shall be deemed to include the authenticating agent.] SECTION 3.03 Registration of Transfer and Exchange of Certificates. (a) The Certificate Registrar shall keep or cause to be kept, at the office or agency maintained pursuant to Section 3.07, a Certificate Register in which, subject to such reasonable regulations as it may prescribe, the Owner Trustee shall provide for the registration of Certificates and of transfers and exchanges of Certificates as herein provided. [ ] shall be the initial Certificate Registrar. In the event that the Certificate Registrar shall for any reason become unable to act as Certificate Registrar, the Certificate Registrar shall promptly give written notice to such effect to the Depositor, the Owner Trustee and the Servicer. Upon receipt of such notice, the Servicer shall appoint another bank or trust company, having an office or agency located in the Borough of Manhattan, The City of New York, and that shall agree to act in accordance with the provisions of this Agreement applicable to it, and otherwise acceptable to the Owner Trustee, to act as successor Certificate Registrar under this Agreement. (b) Upon surrender for registration of transfer of any Certificate at the office or agency maintained pursuant to Section 3.07, the Owner Trustee shall execute, authenticate and deliver (or shall cause its authenticating agent to authenticate and deliver), in the name of the designated transferee or transferees, one or more new Certificates in authorized denominations of a like aggregate amount dated the date of authentication by the Owner Trustee or any authenticating agent. At the option of a Holder, Certificates may be exchanged for other Certificates of the same Class of authorized denominations of a like aggregate amount upon surrender of the Certificates to be exchanged at the office or agency maintained pursuant to Section 3.07. The preceding provisions of this Section notwithstanding, the Owner Trustee shall not make and the Certificate Registrar shall not register transfer or exchanges of Certificates for a period of 15 days preceding the due date for any payment with respect to the Certificates. (c) Every Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Owner Trustee and the Certificate Registrar duly executed by the Holder or his attorney duly authorized in writing. Each Certificate surrendered for registration of transfer or exchange shall be cancelled and disposed of by the Owner Trustee in accordance with its customary practice. No transfer of a Certificate shall be made unless the Owner Trustee shall have received: (1) a representation from the transferee of such Certificate substantially in the form of Exhibit B to the effect that: (i) such transferee is not a Non-U.S. Person; and (ii) such transferee is not an employee benefit plan or arrangement subject to Section 406 of Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or a plan subject to Section 4975 of the Code (a "Plan"), nor a person acting on behalf of a Plan nor using the assets of a Plan to effect such transfer; (2) a representation from the transferor of such Certificate substantially in the form of 10 15 Exhibit C; and (3) an opinion of counsel to the Owner Trustee that the transfer of such Certificate is being made pursuant to an effective registration under the Securities Act or is exempt from the registration requirements of the Securities Act. For purposes of the preceding sentence, with respect to a Certificate that is a Book-Entry Certificate, if the transferee's certificate referred to above is not furnished, the representations contained in clause (1) above shall be deemed to have been made to the Owner Trustee by the transferee's (including an initial acquiror's) acceptance of such Certificate. Notwithstanding anything else to the contrary herein, any purported transfer of a Certificate to or on behalf of a Plan or utilizing the assets of a Plan shall be void and of no effect. To the extent permitted under applicable law (including, but not limited to, ERISA), the Owner Trustee shall be under no liability to any Person for any registration of transfer of any Certificate that is in fact not permitted by this Section 3.03(c) or for making any payments due on such Certificate to the Certificateholder thereof or taking any other action with respect to such Holder under the provisions of this Trust Agreement or the Sale and Servicing Agreement so long as the transfer was registered by the Certificate Registrar or the Owner Trustee in accordance with the foregoing requirements. (d) No service charge shall be made for any registration of transfer or exchange of Certificates, but the Owner Trustee or the Certificate Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Certificates. SECTION 3.04 Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any mutilated Certificate shall be surrendered to the Certificate Registrar, or if the Certificate Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Certificate and (b) there shall be delivered to the Certificate Registrar and the Owner Trustee such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Certificate shall have been acquired by a protected purchaser, the Owner Trustee on behalf of the Trust shall execute and the Owner Trustee, or the Owner Trustee's authenticating agent, shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of the same class and like tenor and denomination. In connection with the issuance of any new Certificate under this Section, the Owner Trustee or the Certificate Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to this Section shall constitute conclusive evidence of ownership in the Trust, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time. SECTION 3.05 Persons Deemed Certificateholders. Prior to due presentation of a Certificate for registration of transfer, the Owner Trustee or the Certificate Registrar may treat the Person in whose name any Certificate shall be registered in the Certificate Register as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 5.02 and 11 16 for all other purposes whatsoever, and neither the Owner Trustee nor the Certificate Registrar shall be bound by any notice to the contrary. SECTION 3.06 Access to List of Certificateholders' Names and Addresses. The Certificate Registrar shall furnish or cause to be furnished to the Owner Trustee, the Servicer or the Depositor, as the case may be, within 15 days after its receipt of a request therefor from the Owner Trustee, the Servicer or the Depositor in writing, a list, in such form as the Owner Trustee, the Servicer or the Depositor may reasonably require, of the names and addresses of the Certificateholders as of the most recent Record Date. If three or more Certificateholders of any Class or one or more Holders of Certificates of any Class evidencing, in the aggregate, not less than 25% of the Certificate Balance of such Class apply in writing to the Owner Trustee, and such application states that the applicants desire to communicate with other Certificateholders with respect to their rights under this Agreement or under the Certificates and such application is accompanied by a copy of the communication that such applicants propose to transmit, then the Owner Trustee shall, within five Business Days after the receipt of such application, afford such applicants access during normal business hours to the current list of Certificateholders. Each Holder, by receiving and holding a Certificate, shall be deemed to have agreed not to hold any of the Depositor, the Servicer, the Certificate Registrar or the Owner Trustee accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived. SECTION 3.07 Maintenance of Office or Agency. The Owner Trustee shall maintain an office or offices or agency or agencies where Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Owner Trustee in respect of the Certificates and the Basic Documents may be served. The Owner Trustee initially designates [______________], [______________], as its principal corporate trust office for such purposes. The Owner Trustee shall give prompt written notice to the Depositor and to the Certificateholders of any change in the location of the Certificate Register or any such office or agency. SECTION 3.08 Appointment of Paying Agent. Except during any period when the Indenture Trustee is authorized and directed to do so under the Indenture (i.e. prior to the termination of the Indenture), the Paying Agent shall make distributions to Certificateholders from the Collection Account pursuant to Section 5.02 and shall report the amounts of such distributions to the Owner Trustee. Any Paying Agent shall have the revocable power to withdraw funds from the Collection Account for the purpose of making the distributions referred to above. The Owner Trustee may revoke such power and remove the Paying Agent if the Owner Trustee determines in its sole discretion that the Paying Agent shall have failed to perform its obligations under this Agreement in any material respect. The Paying Agent shall initially be the Owner Trustee, and any co-paying agent chosen by the Owner Trustee, and acceptable to the Owner Trustee. The Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written notice to the Indenture Trustee and, if the Paying Agent is not the Owner Trustee, to the Owner Trustee. In the event that the Owner Trustee shall no longer be the Paying Agent, the Owner Trustee shall appoint a successor to act as Paying Agent (which shall be a bank or trust company). The Owner Trustee shall cause such successor Paying Agent or any additional Paying Agent appointed by the Owner Trustee to execute and deliver to the Owner Trustee an instrument in which such successor Paying Agent or additional Paying Agent shall 12 17 agree with the Owner Trustee that as Paying Agent, such successor Paying Agent or additional Paying Agent will hold all sums, if any, held by it for payment to the Certificateholders in trust for the benefit of the Certificateholders entitled thereto until such sums shall be paid to such Certificateholders. The Paying Agent shall return all unclaimed funds to the Owner Trustee and upon removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Owner Trustee. The provisions of Sections 7.01, 7.03, 7.04, 8.01 and 8.02 shall apply to the Owner Trustee also in its role as Paying Agent, for so long as the Owner Trustee shall act as Paying Agent and, to the extent applicable, to any other Paying Agent appointed hereunder. Any reference in this Agreement to the Paying Agent shall include any co-paying agent unless the context requires otherwise. SECTION 3.09 Ownership by the Depositor of Certificates. The Depositor shall on the Closing Date receive in accordance with Section 3.02, and shall thereafter retain beneficial and record ownership of, Certificates representing at least [___]% of the Certificate Balance of the Class D Certificates. Any attempted transfer of any Certificate that would reduce such interest of the Depositor below [___]% of the Certificate Balance of the Class D Certificates shall be void. The Owner Trustee shall cause at least one Class D Certificate issued to the Depositor (representing at least [___]% of the Certificate Balance of such Class) to bear a legend stating "THIS CERTIFICATE IS NON-TRANSFERABLE". SECTION 3.10 Book-Entry Certificates. The Certificates, upon original issuance, will be issued in the form of a typewritten Certificate or Certificates representing Book-Entry Certificates, to be delivered to The Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the Trust; provided, however, that Definitive Certificate may be issued to the Depositor pursuant to Section 3.12. Such Certificate or Certificates shall initially be registered on the Certificate Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Certificate Owner will receive a Definitive Certificate representing such Certificate Owner's interest in such Certificate, except as provided in Section 3.12. Unless and until definitive, fully registered Certificates (the "Definitive Certificates") have been issued to Certificate Owners pursuant Section 3.12: (a) the provisions of this Section shall be in full force and effect; (b) the Depositor, the Servicer, the Administrator, Certificate Registrar and the Owner Trustee shall be entitled to deal with the Clearing Agency for all purposes of this Agreement (including the payment of principal of and interest on the Certificates and the giving of instructions or directions hereunder) as the authorized representative of the Certificate Owners; (c) to the extent that the provisions of this section conflict with any other provisions of this Agreement, the provisions of this Section shall control; (d) the rights of Certificate Owners shall be exercised only through the Clearing Agency (or through procedures established by the Clearing Agency) and shall be limited to those established by law and the agreements between the Depositor, the Owner Trustee or such Certificate Owners and the Clearing Agency and/or the Clearing Agency Participants. Unless and until Definitive Certificates are issued pursuant to Section 3.12, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit 13 18 payments of principal of and interest on the Certificates to such Clearing Agency Participants; and (e) whenever this Agreement requires or permits actions to be taken based upon instructions or directions of Holders of Certificates of any Class evidencing a specified percentage of the Certificate Balance of such Class, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from Certificate Owners and/or Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Certificates and has delivered such instructions to the Owner Trustee. SECTION 3.11 Notices to Clearing Agency. Whenever a notice or other communication to the Certificateholders is required under this Agreement, unless and until Definitive Certificates shall have been issued to Certificate Owners pursuant to Section 3.12, the Owner Trustee shall give all such notices and communications specified herein to be given to Certificateholders to the Clearing Agency, and shall have no obligations to the Certificate Owners. SECTION 3.12 Definitive Certificates. If (i) the Depositor or the Administrator advises the Owner Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities with respect to the Certificates, and the Depositor, the Owner Trustee or the Administrator is unable to locate a qualified successor (and if the Administrator has made such determination, the Administrator has given written notice thereof to the Owner Trustee), (ii) the Depositor, the Owner Trustee or the Administrator at its option advises each such other party in writing that it elects to terminate the book-entry system through the Clearing Agency or (iii) after the occurrence of an Event of Default or a Servicer Default, Certificate Owners representing beneficial interests aggregating a majority of the Certificate Balance (voting as a single class) advise the Clearing Agency and the Owner Trustee through the Clearing Agency in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interest of the Certificate Owners, then the Clearing Agency shall notify all Certificate Owners and the Owner Trustee of the occurrence of any such event and of the availability of the Definitive Certificates to Certificate Owners requesting the same. Upon surrender to the Owner Trustee of the typewritten Certificate or Certificates representing the Book-Entry Certificates by the Clearing Agency accompanied by registration instructions, the Owner Trustee shall execute and authenticate the related temporary Certificates or Definitive Certificates in accordance with the instructions of the Clearing Agency. Neither the Certificate Registrar nor the Owner Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Certificates, Depositor, the Servicer, the Administrator and the Owner Trustee shall recognize the Holders of the Definitive Certificates as Certificateholders. The Definitive Certificates shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Owner Trustee, as evidenced by its execution thereof. The Owner Trustee and Administrator shall have no liability if they are unable to locate a qualified successor Clearing Agency. From and after the date of issuance of Definitive Certificates, all notices to be given to Certificateholders will be mailed thereto at their addresses of record in the Certificate Register as of the relevant Record Date. Such notices will be deemed to have been given as of the date of mailing. 14 19 SECTION 3.13 Temporary Certificates. Pending the preparation of Definitive Certificates, the Owner Trustee, on behalf of the Trust, may execute, authenticate and deliver, temporary Certificates, printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the Definitive Certificates in lieu of which they are issued. If temporary Certificates are issued, the Depositor will cause Definitive Certificates to be prepared without unreasonable delay. After the preparation of Definitive Certificates, the temporary Certificates shall be exchangeable for Definitive Certificates upon surrender thereof at the office or agency to be maintained as provided in Section 3.07 without charge to the Holder. Upon surrender for cancellation of any one or more temporary Certificates, the Owner Trustee on behalf of the Trust shall execute, authenticate and deliver in exchange therefor a like principal amount of Definitive Certificates in authorized denominations. Until so exchanged, the temporary Certificates shall in all respects be entitled to the same benefits under this Agreement as the related Definitive Certificates. ARTICLE IV Actions By Owner Trustee or Certificateholders SECTION 4.01 Prior Notice to Certificateholders with Respect to Certain Matters. With respect to the following matters, the Owner Trustee shall not take action unless at least 30 days before the taking of such action (or such shorter period as shall be agreed to in writing by all Certificateholders), the Owner Trustee shall have notified the Certificateholders in writing of the proposed action and none of the Certificateholders shall have notified the Owner Trustee in writing prior to the 30th day (or such agreed upon shorter period) after such notice is given that such Certificateholders have withheld consent or provided alternative direction: (a) the initiation of any claim or lawsuit by the Trust (except claims or lawsuits brought in connection with the collection of the Receivables) and the compromise of any action, claim or lawsuit brought by or against the Trust (except with respect to the aforementioned claims or lawsuits for collection of the Receivables); (b) the election by the Trust to file an amendment to the Certificate of Trust (unless such amendment is required to be filed under the Business Trust Statute); (c) the amendment of the Indenture, whether or not by a Supplemental Indenture, in circumstances where the consent of any Noteholder is required; (d) the amendment of the Indenture, whether or not by a Supplemental Indenture, in circumstances where the consent of any Noteholder is not required but such amendment materially adversely affects the interest of the Certificateholders; (e) the amendment, change or modification of the Administration Agreement, other than to cure any ambiguity or to amend or supplement any provision in a manner or add any provision that would not materially adversely affect the interests of the Certificateholders; (f) the appointment (i) pursuant to the Indenture of a successor Note Registrar or Paying Agent, (ii) pursuant to this Agreement of a successor Certificate Registrar or (iii) any consent by 15 20 the Note Registrar, Paying Agent or Indenture Trustee or Certificate Registrar to the assignment of its respective obligations under the Indenture or this Agreement, as applicable; or (g) the amendment of the Sale and Servicing Agreement in circumstances where the consent of any Noteholder is required. SECTION 4.02 Action by Certificateholders with Respect to Certain Matters. The Owner Trustee shall not have the power, except upon the direction of the Certificateholders, to (a) remove the Administrator pursuant to Section 8 of the Administration Agreement, (b) appoint a successor Administrator pursuant to Section 8 of the Administration Agreement, (c) remove the Servicer pursuant to Section 8.01 of the Sale and Servicing Agreement or (d) except as expressly provided in the Basic Documents, sell the Receivables after the termination of the Indenture. The Owner Trustee shall take the actions referred to in the preceding sentence only upon written instructions signed by the authorized representative of 100% of the Certificateholders. SECTION 4.03 Action with Respect to Bankruptcy. The Owner Trustee shall not have the power to commence a voluntary proceeding in bankruptcy relating to the Trust without the unanimous prior approval of all Certificateholders (including the Board of Directors (including the Independent Directors, as such term is defined in the Depositor's Certificate of Incorporation) of the Depositor) and the delivery to the Owner Trustee of a written certification by each Certificateholder that such Certificateholder reasonably believes that the Trust is insolvent. SECTION 4.04 Restrictions on Certificateholders' Power. The Certificateholders shall not direct the Owner Trustee to take or refrain from taking any action if such action or inaction would be contrary to any obligations of the Trust or of the Owner Trustee under any of the Basic Documents or would be contrary to Section 2.03 nor shall the Owner Trustee be obligated to follow any such direction, if given. SECTION 4.05 Majority of the Controlling Class of Certificates Control. Except as otherwise expressly provided herein, any action that may be taken by the Certificateholders under this Agreement may be taken by the Holders of the Controlling Class of Certificates evidencing not less than a majority of the Certificate Balance of such Class. Except as expressly provided herein, any written notice of the Certificateholders delivered pursuant to this Agreement shall be effective if signed by Holders of the Controlling Class of Certificates evidencing not less than a majority of the Certificate Balance of such Class at the time of the delivery of such notice. ARTICLE V Application of Trust Funds; Certain Duties SECTION 5.01 Establishment of the Accounts. (a) On or prior to the Distribution Date on which the Notes of all Classes have been paid in full (or substantially all of the Trust Estate is otherwise released from the lien of the Indenture), the Owner Trustee, for the benefit of the Certificateholders, shall establish and 16 21 maintain, or shall cause to be established and maintained, in the name of the Trust (or in such other name as shall be specified in the Sale and Servicing Agreement), the trust collection account (the "Trust Collection Account"). The Trust Collection Account shall be established and maintained as an Eligible Deposit Account, and, subject to provisions of the Sale and Servicing Agreement, bearing a designation clearly indicating that, subject to Section 5.01(b), the funds deposited therein are held by the Trust for the benefit of the Certificateholders, in each case in accordance with Section 5.01 of the Sale and Servicing Agreement. Subject to Section 5.01(b), the Owner Trustee shall possess all right, title and interest in all funds on deposit from time to time in the Trust Collection Account and in all proceeds thereof (other than any net investment earnings on Eligible Investments held therein). Except as otherwise expressly provided herein, the Trust Collection Account shall be under the sole dominion and control of the Owner Trustee for the benefit of the Certificateholders. If, at any time, the Trust Collection Account ceases to be an Eligible Deposit Account, the Owner Trustee (or the Administrator on behalf of the Owner Trustee, if the Trust Collection Account is not then held by the Owner Trustee or an affiliate thereof) shall within 10 Business Days establish a new equivalent Eligible Deposit Account and shall transfer any cash and/or any investments to such new account. (b) Concurrently with the execution and delivery of the Indenture, the Servicer will establish and maintain, or shall cause to be established and maintained, at the direction of the Depositor, the Collection Account in the name of and under the control of the Indenture Trustee for the benefit of the Securityholders in accordance with Section 5.01 of the Sale and Servicing Agreement. The Indenture Trustee will be obligated to transfer back to the Trust Collection Account all funds or investments held in the Collection Account established pursuant to the Sale and Servicing Agreement on the Distribution Date on which the Notes of all Classes have been paid in full or the Indenture is otherwise terminated (excluding any amounts to be retained for distribution in respect of Notes that are not promptly delivered for payment on such Distribution Date), and to take all necessary or appropriate actions to transfer all right, title and interest of the Indenture Trustee in such funds or investments and all proceeds thereof to the Owner Trustee for the benefit of the Certificateholders. (c) Concurrently with the execution and delivery of the Indenture, the Owner Trustee shall establish and maintain the Yield Supplement Account in the name of and under the control of the Indenture Trustee for the benefit of the Noteholders in accordance with paragraph 2 of the Yield Supplement Agreement, Section 5.08 of the Sale and Servicing Agreement, and Section 8.02(a) of the Indenture. On each Distribution Date, the Indenture Trustee will be obligated to apply amounts on deposit in the Yield Supplement Account in accordance with the terms of the Sale and Servicing Agreement and the Indenture. The Indenture Trustee will be obligated to transfer back to the Owner Trustee, for the benefit of the Certificateholders, all funds or investments held in the Yield Supplement Account on the Distribution Date on which the Notes of all Classes have been paid in full or the Indenture is otherwise terminated (excluding any amounts to be retained for distribution in respect of Notes that are not promptly delivered for payment on such Distribution Date), and to take all necessary or appropriate actions to transfer all right, title and interest of the Indenture Trustee in such funds[, certain retail installment sales contracts][, receivables or assets (including vehicle lease contracts)] or investments and all 17 22 proceeds thereof to the Owner Trustee for the benefit of the Certificateholders, which amounts the Owner Trustee shall deposit into the Trust Collection Account. SECTION 5.02 Application of Amounts in Trust Accounts. (a) For so long as any Notes are outstanding, on each Distribution Date, the Indenture Trustee will distribute to Certificateholders, on a pro rata basis, the amounts distributable thereto pursuant to Section 5.06 of the Sale and Servicing Agreement and Section 3.01 of the Indenture. From and after the date on which the Notes of all Classes have been paid in full, on each Distribution Date, the Owner Trustee shall distribute to the Certificateholders amounts on deposit in the Trust Collection Account that are distributable to the Certificateholders in accordance with the instructions of the Servicer pursuant to Section 5.06 of the Sale and Servicing Agreement. Upon the release from the Lien of the Indenture of amounts on deposit in the Collection Account or any other portion of the Owner Trust Estate, the Owner Trustee will cause such property to be properly deposited into the Trust Collection Account under the control of the Owner Trustee pursuant to Section 5.01(a) or distributed to the Certificateholders in accordance with the provisions of this Agreement, as the case may be. (b) On each Distribution Date, the Owner Trustee shall send to each Certificateholder the statement provided to the Owner Trustee by the Servicer pursuant to Section 5.09 of the Sale and Servicing Agreement with respect to such Distribution Date. (c) In the event that any withholding tax is imposed on the Trust's payment (or allocations of income) to a Certificateholder, such tax shall reduce the amount otherwise distributable to the Certificateholder in accordance with this Section. The Owner Trustee is hereby authorized and directed to retain from amounts otherwise distributable to the Certificateholders sufficient funds for the payment of any tax that is legally owed by the Trust (but such authorization shall not prevent the Owner Trustee from contesting any such tax in appropriate proceedings, and withholding payment of such tax, if permitted by law, pending the outcome of such proceedings). The amount of any withholding tax imposed with respect to a Certificateholder shall be treated as cash distributed to such Certificateholder at the time it is withheld by the Trust and remitted to the appropriate taxing authority. If there is a possibility that withholding tax is payable with respect to any distribution (such as any distribution to a Non-U.S. Person), the Owner Trustee may in its sole discretion withhold such amounts in accordance with this paragraph (c). In the event that a Certificateholder wishes to apply for a refund of any such withholding tax, the Owner Trustee shall reasonably cooperate with such Certificateholder in making such claim so long as such Certificateholder agrees to reimburse the Owner Trustee for any out-of-pocket expenses incurred. SECTION 5.03 Method of Payment. Subject to Section 9.01(c), distributions required to be made to Certificateholders on any Distribution Date shall be made to each Certificateholder of record on the related Record Date either by check mailed to such Certificateholder at the address of such holder appearing in the Certificate Register or by wire transfer, in immediately available funds, to the account of any Certificateholder at a bank or other entity having appropriate facilities therefor, if such Certificateholder shall have provided to the Certificate Registrar appropriate written instructions at least five Business Days prior to such Distribution Date. 18 23 SECTION 5.04 Accounting and Reports to the Noteholders, Certificateholders, the Internal Revenue Service and Others. The Administrator on behalf of the Trust shall (a) maintain (or cause to be maintained) the books of the Trust on a fiscal year basis (with a March 31 year end) or a calendar basis on the accrual method of accounting, (b) deliver to each Certificateholder, as may be required by the Code and applicable Treasury Regulations, such information as may be required (excluding Schedule K-1) to enable each Certificateholder to prepare its federal and state income tax returns, (c) file any tax and information returns, and fulfill any other reporting requirements, relating to the Trust, as may be required by the Code and applicable Treasury Regulations (including Treasury Regulation Section 1.6049-7), (d) for any period during which the beneficial ownership interests in the Trust are held by more than one Person, make such elections as may from time to time be required or appropriate under any applicable state or federal statute or rule or regulation thereunder so as to maintain the Trust's characterization as a partnership for federal income tax purposes, (e) cause such tax returns to be signed in the manner required by law, and (f) collect or cause to be collected any withholding tax as described in and in accordance with Section 5.02(c) with respect to income or distributions to Certificateholders. The Administrator on behalf of the Trust shall elect under Section 1278 of the Code to include in income currently any market discount that accrues with respect to the Receivables. The Administrator on behalf of the Trust shall not make the election provided under Section 754 of the Code. Notwithstanding anything to the contrary stated herein, the Owner Trustee shall be exclusively responsible for the mailing of the Schedule K-1's necessary to enable each Certificateholder to prepare its federal and state income returns. SECTION 5.05 Signature on Returns; Tax Matter Partner. (a) The Administrator on behalf of the Trust shall sign on behalf of the Trust the tax returns of the Trust, unless applicable law requires a Certificateholder to sign such documents, in which case such documents shall be signed by the Administrator, pursuant to the power-of-attorney granted thereto pursuant to Section 2.04. (b) For any period during which the beneficial ownership interests of the Trust are held by more than one Person, the Certificateholder holding the Class D Certificates evidencing the largest portion of the Original Certificate Balance of such Class shall be designated the "tax matters partner" of the Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury Regulations, but hereby delegates its powers and duties as such to the Administrator pursuant to the power-of-attorney granted thereto pursuant to Section 2.04. ARTICLE VI Authority and Duties of Owner Trustee SECTION 6.01 General Authority. The Owner Trustee is authorized and directed to execute and deliver the Basic Documents to which the Trust is to be a party and each certificate or other document attached as an exhibit to or contemplated by the Basic Documents to which the Trust is to be a party and any amendment thereto, and, on behalf of the Trust, to direct the Indenture Trustee to authenticate and deliver Class A-1 Notes in the aggregate principal amount of $[______________], Class A-2 Notes in the aggregate principal amount of 19 24 $[______________], Class A-3 Notes in the aggregate principal amount of $[______________], [Variable Pay Term Notes in the aggregate principal amount of $_______________ on the Closing Date and in such other amounts as may be issued on Targeted Scheduled Distribution Dates to pay the aggregate amount of a subclass of the Class A Notes pursuant to the Indenture,] and Class B Notes in the aggregate principal amount of $[______________]. In addition to the foregoing, the Owner Trustee is authorized, but shall not be obligated, to take all actions required of the Trust, pursuant to the Basic Documents. SECTION 6.02 General Duties. It shall be the duty of the Owner Trustee to discharge (or cause to be discharged) all of its responsibilities pursuant to the terms of this Agreement and the Basic Documents to which the Trust is a party and to administer the Trust in accordance with the provisions hereof and of the Basic Documents and in the interest of the Certificateholders. Notwithstanding the foregoing, the Owner Trustee shall be deemed to have discharged its duties and responsibilities hereunder and under the Basic Documents to the extent the Administrator has agreed in the Administration Agreement to perform any act or to discharge any duty of the Owner Trustee hereunder or under any Basic Document, and the Owner Trustee shall not be held liable for the default or failure of the Administrator to carry out such obligations or fulfill such duties under the Administration Agreement. SECTION 6.03 Duties of the Owner Trustee. (a) Subject to Article IV and in accordance with the terms of the Basic Documents, the Certificateholders may by written instruction direct the Owner Trustee in the management of the Trust. Such direction may be exercised at any time by written instruction of the Certificateholders pursuant to Article IV. The Owner Trustee, accepts the trusts hereby created and agrees to perform its duties hereunder with respect to such trusts but only upon the terms of this Agreement. The Owner Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Owner Trustee that shall be specifically required to be furnished pursuant to any provision of this Agreement, shall examine them to determine whether they conform on their face to the requirements of this Agreement. (b) No provision of this Agreement shall be construed to relieve the Owner Trustee from liability for its own negligent action, its own negligent failure to act, its own bad faith or its own willful misfeasance; provided, however, that: (i) the duties and obligations of the Owner Trustee shall be determined solely by the express provisions of this Agreement, the Owner Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Agreement, no implied covenants or obligations shall be read into this Agreement against the Owner Trustee, the permissive right of the Owner Trustee to do things enumerated in this Agreement shall not be construed as a duty and, in the absence of bad faith on the part of the Owner Trustee, the Owner Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Owner Trustee and conforming on their face to the requirements of this Agreement; 20 25 (ii) the Owner Trustee shall not be personally liable for an error of judgment made in good faith by a Trust Officer, unless it shall be proved that the Owner Trustee was negligent in performing its duties in accordance with the terms of this Agreement; and (iii) the Owner Trustee shall not be personally liable with respect to any action taken, suffered or omitted to be taken in good faith in accordance with the direction of the Holders of the Controlling Class of Certificates representing at least a majority of the Certificate Balance of such Class (or such larger or smaller percentage of any other Class or Classes as may be required by any other provision of this Agreement or the other Basic Documents), the Servicer, the Administrator or the Indenture Trustee. (c) The Owner Trustee shall not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties under this Agreement, or in the exercise of any of its rights or powers, if there shall be reasonable grounds for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) All information obtained by the Owner Trustee regarding the Obligors and the Receivables contained in the Trust, whether upon the exercise of its rights under this Agreement or otherwise, shall be maintained by the Owner Trustee in confidence and shall not be disclosed to any other Person, unless such disclosure is required by any applicable law or regulation or pursuant to subpoena or is required to be made to regulators, auditors or other governmental authorities. (e) Pursuant to Section 3.02 of the Sale and Servicing Agreement, in the event that the Owner Trustee discovers that a representation or warranty made by the Seller pursuant to Section 3.01 or 6.01 of the Sale and Servicing Agreement with respect to a Receivable was incorrect as of the time specified with respect to such representation and warranty and such incorrectness materially and adversely affects the interests of any Securityholder in such Receivable, the Owner Trustee shall give prompt written notice to the Servicer, the Depositor and the Indenture Trustee of such incorrectness. Pursuant to Section 4.06 of the Sale and Servicing Agreement, in the event that the Owner Trustee discovers that any covenant of the Servicer set forth in the second sentence of Section 4.01 or Section 4.02 or 4.05 of the Sale and Servicing Agreement has been breached by the Servicer, the Owner Trustee shall give prompt written notice to the Servicer, the Depositor and the Indenture Trustee of such breach. SECTION 6.04 No Duties Except as Specified in this Agreement or in Instructions. The Owner Trustee shall not have any duty or obligation to manage, make any payment with respect to, register, record, sell, dispose of, or otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with, any Basic Document to which the Owner Trustee is a party or otherwise contemplated hereby, except as expressly provided by the terms of this Agreement, any Basic Document to which the Trust is a party or in any document or written instruction received by the Owner Trustee pursuant to Section 6.03. No implied duties or obligations shall be read into this Agreement or any Basic Document against the Owner Trustee. The Owner Trustee shall have no responsibility for filing any financing or continuation statement in any public office at any time or otherwise to perfect or 21 26 maintain the perfection of any security interest or lien granted to it hereunder or to prepare or file any Securities and Exchange Commission filing for the Trust or to record this Agreement or any Basic Document. The Owner Trustee nevertheless agrees that it will, at its own cost and expense, promptly take all action as may be necessary to discharge any liens on any part of the Owner Trust Estate that result from actions by, or claims against, the Owner Trustee that are not related to the ownership or the administration of the Owner Trust Estate. SECTION 6.05 No Action Except Under Specified Documents or Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise deal with any part of the Owner Trust Estate except (i) in accordance with the powers granted to and the authority conferred upon the Owner Trustee pursuant to this Agreement, (ii) in accordance with the Basic Documents and (iii) in accordance with any document or instruction delivered to the Owner Trustee pursuant to Section 6.03. SECTION 6.06 Restrictions. The Owner Trustee shall not take any action (a) that is inconsistent with the purposes of the Trust set forth in Section 2.03 or (b) that, to the actual knowledge of a Trust Officer of the Owner Trustee, would result in the Trust's becoming taxable as a corporation for federal income tax purposes. The Certificateholders shall not have the authority to and, by acceptance of an ownership interest in any Certificate shall thereby be deemed to have covenanted not to, direct the Owner Trustee to take action that would violate the provisions of this Section. ARTICLE VII Concerning the Owner Trustee SECTION 7.01 Rights of the Owner Trustee . Except as otherwise provided in Article VI: (a) in accordance with Section 7.04, the Owner Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officer's Certificate, certificate of an authorized signatory, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) the Owner Trustee shall not be liable with respect to any action taken or omitted to be taken by it in accordance with the instructions of the Administrator, as provided in the Administration Agreement, the Servicer or the Indenture Trustee, or the Certificateholders, as provided herein; (c) the Owner Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or the Sale and Servicing Agreement, or to institute, conduct or defend any litigation under this Agreement, or in relation to this Agreement or the Sale and Servicing Agreement, at the request, order or direction of any of the Securityholders pursuant to the provisions of this Agreement or the Sale and Servicing Agreement, unless such Securityholders shall have offered to the Owner Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby; 22 27 (d) under no circumstances shall the Owner Trustee be liable for indebtedness evidenced by or arising under any of the Basic Documents, including the principal of and interest on the Notes; (e) the Owner Trustee shall not be bound to recalculate, reverify, or make any investigation into the facts of matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document, unless requested in writing to do so by Holders of the Controlling Class of Certificates representing not less than 25% of the Certificate Balance of such Class; provided, however, that if the payment within a reasonable time to the Owner Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Owner Trustee, not reasonably assured to the Owner Trustee by the security afforded to it by the terms of this Agreement, the Owner Trustee may require reasonable indemnity against such cost, expense or liability as a condition to so proceeding; the reasonable expense of every such examination shall be paid by the Administrator or, if paid by the Owner Trustee, shall be reimbursed by the Administrator upon demand; and nothing in this clause shall derogate from the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Obligors; and (f) the Owner Trustee shall not be liable for the default or misconduct of the Administrator, the Servicer, the Depositor or the Indenture Trustee under any of the Basic Documents or otherwise, and the Owner Trustee shall have no obligation or liability to perform the obligations of the Trust or any other Person (including the Owner Trustee) under the Basic Documents that are required to be performed by the Administrator under the Administration Agreement, the Indenture Trustee under the Indenture or the Servicer under the Sale and Servicing Agreement. SECTION 7.02 Furnishing of Documents. The Owner Trustee shall furnish to the Certificateholders promptly upon receipt of a written request therefor, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and any other instruments furnished to the Owner Trustee under the Basic Documents. SECTION 7.03 Representations and Warranties. The Owner Trustee hereby represents and warrants to the Depositor and for the benefit of the Certificateholders, that: (a) It is a [_____________] duly organized and validly existing in good standing under the laws of [_____________]. It has full power, right and authority to execute, deliver and perform its obligations under this Agreement and each other Basic Document. (b) It has taken all corporate action necessary to authorize the execution and delivery of this Agreement and each other Basic Document, and this Agreement and each other Basic Document has been executed and delivered by one of its officers duly authorized to execute and deliver this Agreement and each other Basic Document on its behalf. (c) This Agreement constitutes the legal, valid and binding obligation of the Owner Trustee, enforceable against it in accordance with its terms except as the enforceability thereof 23 28 may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity. (d) It is authorized to exercise trust powers in the State of Delaware as and to the extent contemplated herein or has appointed a Delaware trustee that is so authorized and it has a principal place of business in the State of Delaware or has appointed a Delaware trustee that has such a principal place of business. (e) Neither the execution nor the delivery by it of this Agreement nor the consummation by the Owner Trustee of the transactions contemplated hereby or thereby nor compliance by it with any of the terms or provisions hereof or thereof will contravene any federal or Delaware law, governmental rule or regulation governing the [banking or trust] powers of the Owner Trustee or any judgment or order binding on it, or constitute any default under its charter documents or by-laws or any indenture, mortgage, contract, agreement or instrument to which it is a party or by which any of its properties may be bound. SECTION 7.04 Reliance; Advice of Counsel. (a) The Owner Trustee shall incur no liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond, or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee may accept a certified copy of a resolution of the board of directors or other governing body of any corporate party as conclusive evidence that such resolution has been duly adopted by such body and that the same is in full force and effect. As to any fact or matter the method of the determination of which is not specifically prescribed herein, the Owner Trustee may for all purposes hereof rely on a certificate, signed by the president or any vice president or by the treasurer or other authorized officers or agents of the relevant party, as to such fact or matter and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. (b) In the exercise or administration of the trusts hereunder and in the performance of its duties and obligations under the Basic Documents, the Owner Trustee (i) may act directly or through its agents or attorneys pursuant to agreements entered into with any of them, and the Owner Trustee shall not be liable for the conduct or misconduct of such agents or attorneys if such agents or attorneys shall have been selected by the Owner Trustee with reasonable care, and (ii) may consult with counsel, accountants and other skilled persons to be selected with reasonable care and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the opinion or advice of any such counsel, accountants or other such persons and not, to the actual knowledge of the Owner Trustee, contrary to this Agreement or any Basic Document. SECTION 7.05 Not Acting in Individual Capacity. In accepting the trusts hereby created, [_____________________] acts solely as Owner Trustee hereunder and not in its individual capacity. Except with respect to a claim based on the Owner Trustee's willful misconduct, bad faith or negligence, no recourse shall be had for any claim based on any provision of this Agreement, the Notes or Certificates, or based on rights obtained through the assignment of any of the foregoing, against the institution serving as the Owner Trustee in its individual capacity. 24 29 The Owner Trustee shall not have any personal obligation, liability or duty whatsoever to any Securityholder or any other Person with respect to any such claim, and any such claim shall be asserted solely against the Trust or any indemnitor who shall furnish indemnity as provided in this Indenture. SECTION 7.06 Owner Trustee Not Liable for Certificates or Receivables. The Owner Trustee makes no representations as to the validity or sufficiency of this Agreement or of the Certificates or of the Notes (other than the execution by the Owner Trustee on behalf of the Trust of, and the certificate of authentication on, the Certificates). The Owner Trustee shall have no obligation to perform any of the duties of the Servicer or Administrator. The Owner Trustee shall at no time have any responsibility or liability for or with respect to the legality, validity and enforceability of the Certificates, the Notes or any Receivable, any ownership interest in any Financed Vehicle, or the maintenance of any such ownership interest, or for or with respect to the efficacy of the Trust or its ability to generate the payments to be distributed to Securityholders under this Agreement and the Indenture, including without limitation the validity of the assignment of the Receivables to the Trust or of any intervening assignment; the existence, condition, location and ownership of any Receivable or Financed Vehicle; the existence and enforceability of any physical damage or credit life or credit disability insurance; the existence and contents of any retail installment sales contract or any computer or other record thereof; the completeness of any retail installment sales contract; the performance or enforcement of any retail installment sales contract; the compliance by the Trust with any covenant or the breach by the Trust of any warranty or representation made under this Agreement or in any related document and the accuracy of any such warranty or representation prior to the Owner Trustee's receipt of notice or other discovery of any noncompliance therewith or any breach thereof; the acts or omissions of the Trust or the Servicer; or any action by the Owner Trustee taken at the instruction of the Certificateholders, provided, however, that the foregoing shall not relieve the Owner Trustee of its obligation to perform its duties under this Agreement. The Owner Trustee shall not be accountable for the use or application by the Issuer of any of the Certificates or of the proceeds of such Certificates, of any of the Notes or of the proceeds of such Notes, or for the use or application of any funds paid to the Servicer in respect of the Certificates. SECTION 7.07 Owner Trustee May Own Certificates and Notes. The Owner Trustee in its individual or any other capacity may become the owner or pledgee of Certificates or Notes and may deal with the Depositor, the Administrator, the Indenture Trustee and the Servicer in banking or other transactions with the same rights as it would have if it were not Owner Trustee. SECTION 7.08 [Sales Finance Licenses. The Owner Trustee shall cause the Trust to use its best efforts to maintain the effectiveness of all licenses required under the (a) Pennsylvania Motor Vehicle Sales Finance Act, (b) the Maryland Financial Institutions Code and (c) all other similar applicable state laws (other than those of Alabama and Hawaii) in connection with this Agreement and the Basic Documents and the transactions contemplated hereby and thereby until such time as the Trust shall terminate in accordance with the terms hereof.] 25 30 ARTICLE VIII Compensation of Owner Trustee SECTION 8.01 Owner Trustee's Fees and Expenses. The Depositor shall pay or shall cause the Servicer to pay to the Owner Trustee from time to time compensation for its services as have been separately agreed upon before the date hereof. The Depositor shall reimburse the Owner Trustee for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Owner Trustee's agents, counsel, accountants and experts directly related to its services hereunder ("Expenses"). SECTION 8.02 Indemnification. The Depositor shall cause the Servicer or the Administrator to indemnify the Owner Trustee against any and all loss, liability, claim, tort, penalty or Expense (including reasonable attorneys' fees) of any kind or nature whatsoever incurred by it in connection with the administration of the Trust and the performance of its duties hereunder. The Owner Trustee shall notify the Administrator and the Servicer promptly of any claim for which it may seek indemnity. Failure by the Owner Trustee to so notify the Administrator and the Servicer shall not relieve the Depositor or the Administrator or the Servicer of its obligations hereunder, except to the extent such failure shall adversely affect the Depositor's or the Administrator's or the Servicer's defenses in respect thereof. In case any such action is brought against the Owner Trustee under this Section 8.02 and it notifies the Administrator of the commencement thereof, the Administrator will assume the defense thereof, with counsel reasonably satisfactory to the Owner Trustee (who may, unless there is, as evidenced by an opinion of counsel to the Owner Trustee stating that there is a conflict of interest, be counsel to the Administrator), and the Administrator will not be liable to the Owner Trustee under this Section for any legal or other expenses subsequently incurred by the Owner Trustee in connection with the defense thereof, other than reasonable costs of investigation. Neither the Depositor, the Administrator nor the Servicer need reimburse any expense or indemnify against any loss, liability or expense incurred by the Owner Trustee through the Owner Trustee's own willful misconduct, negligence or bad faith. The Owner Trustee's rights under this Article VIII shall survive the termination of this Agreement or the resignation or removal of the Owner Trustee. SECTION 8.03 Payments to the Owner Trustee. Any amounts paid to the Owner Trustee pursuant to this Article VIII from assets in the Owner Trust Estate shall be deemed not to be a part of the Owner Trust Estate immediately after such payment. ARTICLE IX Termination of Trust Agreement SECTION 9.01 Termination of Trust Agreement. (a) This Agreement (other than Article VIII) shall terminate and the Trust shall dissolve and be wound up in accordance with Section 3808 of the Business Trust Statute, upon the 26 31 earliest of (i) the maturity or other liquidation of the last Receivable (or other asset) in the Owner Trust Estate and the final distribution of all moneys or other property or proceeds of the Owner Trust Estate in accordance with the terms of this Agreement, the Indenture and the Sale and Servicing Agreement (including, but not limited to, any property and proceeds to be deposited in the Collection Account pursuant to the terms of the Sale and Servicing Agreement or to be released by the Indenture Trustee from the Lien of the Indenture pursuant to the terms of the Indenture), or (ii) the election by the Servicer to purchase the corpus of the Trust pursuant to Section 9.01 of the Sale and Servicing Agreement and the payment or distribution to all Securityholders of all amounts required to be paid to them under the Indenture or this Agreement. The bankruptcy, liquidation, dissolution, death or incapacity of any Certificateholder shall not (x) operate to terminate this Agreement or the Trust, nor (y) entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or proceeding in any court for a partition or winding up of all or any part of the Trust or Owner Trust Estate, nor (z) otherwise affect the rights, obligations and liabilities of the parties hereto. (b) Except as provided in Section 9.01(a), neither the Depositor nor any Certificateholder shall be entitled to revoke or terminate the Trust. (c) Notice of any termination of the Trust, specifying the Distribution Date upon which the Certificateholders shall surrender their Certificates to the Paying Agent for payment of the final distributions and cancellation, shall be given by the Owner Trustee to the Certificateholders mailed within five Business Days of receipt of notice of such termination from the Servicer given pursuant to Section 10.03 of the Sale and Servicing Agreement, stating (i) the Distribution Date upon or with respect to which final payment of the Certificates shall be made upon presentation and surrender of the Certificates at the office of the Paying Agent therein designated, (ii) the amount of any such final payment and (iii) that payment to be made on such Distribution Date will be made only upon presentation and surrender of the Certificates at the office of the Paying Agent therein specified. The Owner Trustee shall give such notice to the Certificate Registrar (if other than the Owner Trustee) and the Paying Agent (if other than the Owner Trustee) at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Paying Agent shall cause to be distributed to Certificateholders amounts distributable on such Distribution Date pursuant to Section 5.02. In the event that one or more of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Owner Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. If within one year after the second notice all the Certificates shall not have been surrendered for cancellation, the Owner Trustee may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining Certificateholders concerning surrender of their Certificates, and the cost thereof shall be paid out of the funds and other assets that shall remain subject to this Agreement. Any funds remaining in the Trust after exhaustion of such remedies shall be distributed by the Owner Trustee to the Depositor. 27 32 (d) Upon the winding up of the Trust and its termination, the Owner Trustee shall cause the Certificate of Trust to be cancelled by filing a certificate of cancellation with the Secretary of State in accordance with the provisions of Section 3810 of the Business Trust Statute. ARTICLE X Successor Owner Trustees and Additional Owner Trustees SECTION 10.01 Eligibility Requirements for Owner Trustee. The Owner Trustee shall at all times be an entity having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal or state authorities. If such entity shall publish reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purpose of this Section 10.01, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Owner Trustee shall cease to be eligible in accordance with the provisions of this Section, the Owner Trustee shall resign immediately in the manner and with the effect specified in Section 10.02. SECTION 10.02 Resignation or Removal of Owner Trustee. The Owner Trustee may at any time resign and be discharged from the trusts hereby created by giving written notice thereof to the Depositor, the Servicer and the Indenture Trustee. [If for any reason, [ ] or any of its Affiliates should assume the duties of the Indenture Trustee, then from that time forward [ ], in its capacity as Owner Trustee, shall resign as Owner Trustee hereunder if any Event of Default under the Indenture occurs and is necessary to eliminate any conflict of interest under the TIA with the Indenture Trustee or any other trustee under the Indenture.] Upon receiving such notice of resignation, the Servicer shall promptly appoint a successor Owner Trustee by written instrument, in duplicate, one copy of which shall be delivered to each of the resigning Owner Trustee and the successor Owner Trustee. If no successor Owner Trustee shall have been so appointed or shall not have accepted such appointment within 30 days after the giving of such notice of resignation, the resigning Owner Trustee may petition any court of competent jurisdiction for the appointment of a successor Owner Trustee. If at any time the Owner Trustee shall cease to be eligible in accordance with the provisions of Section 10.01 and shall fail to resign promptly, or if at any time the Owner Trustee shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a receiver of the Owner Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Owner Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then the Administrator may remove the Owner Trustee by written instrument to such effect delivered to the Owner Trustee, the Depositor and the Indenture Trustee. If the Administrator shall remove the Owner Trustee under the authority of the immediately preceding sentence, the Servicer shall promptly appoint a successor Owner Trustee by written instrument in duplicate, one copy of which instrument shall be delivered to each of the outgoing Owner Trustee so removed and the successor Owner Trustee, and pay all fees, expenses and other compensation owed to the outgoing Owner Trustee. Any resignation or removal of the Owner Trustee and appointment of a successor Owner 28 33 Trustee pursuant to any of the provisions of this Section shall not become effective until acceptance of appointment by the successor Owner Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to the outgoing Owner Trustee. The Administrator shall provide notice of such resignation or removal of the Owner Trustee to each of the Rating Agencies. SECTION 10.03 Successor Owner Trustee. Any successor Owner Trustee appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to the Administrator and to its predecessor Owner Trustee an instrument accepting such appointment under this Agreement, and thereupon the resignation or removal of the predecessor Owner Trustee shall become effective and such successor Owner Trustee, without any further act, deed or conveyance, shall become fully vested with all the rights, powers, duties, and obligations of its predecessor under this Agreement, with like effect as if originally named as Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees and expenses deliver to the successor Owner Trustee all documents and statements and monies held by it under this Agreement; and the Administrator and the predecessor Owner Trustee shall execute and deliver such instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor Owner Trustee all such rights, powers, duties, and obligations. No successor Owner Trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor Owner Trustee shall meet the criteria for eligibility set forth in Section 10.01. Upon acceptance of appointment by a successor Owner Trustee pursuant to this Section, the Administrator shall mail notice of the successor of the Owner Trustee to all Certificateholders, the Indenture Trustee, all Noteholders and the Rating Agencies. If the Administrator fails to mail such notice within 10 days after acceptance of appointment by the successor Owner Trustee, the successor Owner Trustee shall cause such notice to be mailed at the expense of the Administrator. SECTION 10.04 Merger or Consolidation of Owner Trustee. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided such corporation shall be eligible pursuant to Section 10.01, without the execution or filing of any instrument or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided, further, that the Owner Trustee shall mail notice of such merger or consolidation to the Rating Agencies. SECTION 10.05 Appointment of Co-Trustee or Separate Trustee. Notwithstanding any other provisions of this Agreement, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Owner Trust Estate or any Financed Vehicle may at the time be located, the Administrator and the Owner Trustee acting jointly shall have the power and shall execute and deliver all instruments to appoint one or more Persons approved by the Owner Trustee to act as co-trustee, jointly with the Owner Trustee, or separate trustee or separate trustees, of all or any part of the Owner Trust Estate, and to vest in such 29 34 Person, in such capacity, such title to the Trust, or any part thereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Administrator and the Owner Trustee may consider necessary or desirable. If the Administrator shall not have joined in such appointment within 25 days after the receipt by it of a request so to do, the Owner Trustee alone shall have the power to make such appointment. No co-trustee or separate trustee under this Agreement shall be required to meet the terms of eligibility as a trustee pursuant to Section 10.01 and no notice of the appointment of any co-trustee or separate trustee shall be required pursuant to Section 10.03. Each separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provision and conditions: (i) all rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred upon and exercised or performed by the Owner Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Owner Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties, and obligations (including the holding of title to the Trust or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Owner Trustee; (ii) no trustee under this Agreement shall be personally liable by reason of any act or omission of any other trustee under this Agreement; and (iii) the Administrator and the Owner Trustee acting jointly may at any time accept the resignation of or remove any separate trustee or co-trustee. Any notice, request or other writing given to the Owner Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as if given to each of them. Each separate trustee and co-trustee, upon its acceptance of the powers and duties conferred thereto under this Agreement, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Owner Trustee or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a copy thereof given to the Administrator. Any separate trustee or co-trustee may at any time appoint the Owner Trustee as its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect, of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Owner Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. 30 35 ARTICLE XI Miscellaneous SECTION 11.01 Supplements and Amendments. This Agreement may be amended by the Depositor and the Owner Trustee, with prior written notice to the Rating Agencies, without the consent of any of the Noteholders or the Certificateholders [or the Swap Counterparty], to cure any ambiguity, to correct or supplement any provisions in this Agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in this Agreement or of modifying in any manner the rights of the Noteholders or the Certificateholders; provided, however, that such action shall not, [as evidenced by an Opinion of Counsel satisfactory to the Owner Trustee and the Indenture Trustee, adversely affect the rights or obligations of the Swap Counterparty under the Interest Rate Swap Agreement or impair the ability of the Trust to fully perform any of its obligations under the Interest Rate Swap Agreement or shall not,] as evidenced by an Opinion of Counsel satisfactory to the Owner Trustee and the Indenture Trustee, adversely affect in any material respect the interests of any Noteholder or Certificateholder. This Agreement may also be amended from time to time by the Depositor and the Owner Trustee, with prior written notice to the Rating Agencies, with the consent of the Holders of the Controlling Class of Notes evidencing not less than a majority of the Outstanding Amount of such Class (excluding for such purpose any Notes of such Class owned by [NARC] [NARC II], NMAC or any of their Affiliates unless at such time all Notes of such Class are then owned by NARC, NMAC and their Affiliates) [and the Swap Counterparty to the extent such amendment adversely affects the rights or obligations of the Swap Counterparty or modifies or impairs the ability of the Trust to fully perform any of its obligations under the Interest Rate Swap Agreement] or if all of the Notes have been paid in full, the Holders of the Controlling Class of Certificates evidencing not less than a majority of the Certificate Balance of such Class (excluding for such purpose Certificates owned by [NARC] [NARC II], NMAC or any of their Affiliates unless at such a time all Certificates are then owned by [NARC] [NARC II], NMAC and their Affiliates) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Noteholders[, the Swap Counterparty] or the Certificateholders; provided, however, that no such amendment shall (a) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on Receivables or distributions that shall be required to be made for the benefit of the Noteholders or the Certificateholders or (b) reduce the aforesaid percentage of the Outstanding Amount of the Notes and the Certificate Balance required to consent to any such amendment, without the consent of the Holders of all the affected Notes and Certificates. Promptly after the execution of any such amendment or consent, the Owner Trustee shall furnish written notification of the substance of such amendment or consent to each Certificateholder, the Indenture Trustee and each of the Rating Agencies. It shall not be necessary for the consent of Certificateholders, the Noteholders or the Indenture Trustee pursuant to this Section to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance 31 36 thereof. The manner of obtaining such consents (and any other consents of Certificateholders provided for in this Agreement or in any other Basic Document) and of evidencing the authorization of the execution thereof by Certificateholders shall be subject to such reasonable requirements as the Owner Trustee may prescribe. Promptly after the execution of any amendment to the Certificate of Trust, the Owner Trustee shall cause the filing of such amendment with the Secretary of State. Prior to the execution of any amendment to this Agreement or the Certificate of Trust, the Owner Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement. The Owner Trustee may, but shall not be obligated to, enter into any such amendment which affects the Owner Trustee's own rights, duties or immunities under this Agreement or otherwise. SECTION 11.02 No Legal Title to Owner Trust Estate in Certificateholders. The Certificateholders shall not have legal title to any part of the Owner Trust Estate. The Certificateholders shall be entitled to receive distributions with respect to their undivided ownership interest therein only in accordance with Articles V and IX. No transfer, by operation of law or otherwise, of any right, title or interest of the Certificateholders to and in their ownership interest in the Owner Trust Estate shall operate to terminate this Agreement or the trusts hereunder or entitle any transferee to an accounting or to the transfer to it of legal title to any part of the Owner Trust Estate. SECTION 11.03 Limitations on Rights of Others. Except for Section 2.06, the provisions of this Agreement are solely for the benefit of the Owner Trustee, the Depositor, NMAC, the Certificateholders, the Administrator and, to the extent expressly provided herein the Indenture Trustee and the Noteholders, and nothing in this Agreement (other than Section 2.06), whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Owner Trust Estate or under or in respect of this Agreement or any covenants, conditions or provisions contained herein. SECTION 11.04 Notices. (a) Unless otherwise expressly specified or permitted by the terms hereof, all notices shall be in writing and shall be deemed given upon receipt by the intended recipient or three Business Days after mailing if mailed by certified mail, postage prepaid (except that notice to the Owner Trustee shall be deemed given only upon actual receipt by the Owner Trustee), if to the Owner Trustee, addressed to the Corporate Trust Office; if to the Depositor, addressed to [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], 990 West 190th Street, Torrance, California 90502, Attention of Secretary; if, to the Trust, addressed to Nissan Auto Receivables [_____-_] Owner Trust, c/o [____________], Attention: [__________], with a copy to Nissan Motor Acceptance Corporation, 990 West 190th Street, Torrance, California 90502, Attention: Secretary; or, as to each party, at such other address as shall be designated by such party in a written notice to each other party. (b) Any notice required or permitted to be given a Certificateholder shall be given by first-class mail, postage prepaid, at the address of such Holder as shown in the Certificate 32 37 Register. Any notice so mailed within the time prescribed in this Agreement shall be conclusively presumed to have been duly given, whether or not the Certificateholder receives such notice. SECTION 11.05 Severability. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid or unenforceable in any jurisdiction, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or of the Certificates or the rights of the Holders thereof. SECTION 11.06 Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and all of which shall constitute but one and the same instrument. SECTION 11.07 Successors and Assigns. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Depositor, the Owner Trustee and its successors and each Certificateholder and its successors and permitted assigns, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by a Certificateholder shall bind the successors and assigns of such Certificateholder. SECTION 11.08 No Petition. The Owner Trustee (not in its individual capacity but solely as Owner Trustee), by entering into this Agreement, hereby covenants and agrees, and each Certificateholder, by accepting a Certificate, and the Indenture Trustee and any Noteholder by accepting the benefits of this Agreement, are thereby deemed to covenant and agree that they will not at any time institute against the Depositor or the Trust, or join in any institution against the Depositor or the Trust of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any federal or state bankruptcy or similar law. This Section 11.08 shall survive the termination of this Agreement or the termination of the Owner Trustee under this Agreement. SECTION 11.09 No Recourse. Each Certificateholder by accepting an interest in a Certificate acknowledges that such Certificates represent beneficial interests in the Trust only and do not represent interests in or obligations of the Depositor, NMAC (in any capacity), the Administrator, the Owner Trustee, the Indenture Trustee or any Affiliate thereof and no recourse may be had against such parties or their assets, except as may be expressly set forth or contemplated in the Certificates or the Basic Documents. SECTION 11.10 Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. 33 38 SECTION 11.12 NMAC Payment Obligation. The parties hereto acknowledge and agree that, pursuant to the Sale and Servicing Agreement, the Servicer shall be responsible for payment of the Administrator's fees under the Administration Agreement and shall reimburse the Administrator for all expenses and liabilities of the Administrator incurred thereunder. In addition, the parties hereto acknowledge and agree that, pursuant to the Sale and Servicing Agreement, the Servicer shall be responsible for the payment of all fees and expenses of the Trust, the Owner Trustee (to the extent not paid by the Depositor or the Administrator and the Indenture Trustee paid by any of them in connection with any of their obligations under the Basic Documents to obtain or maintain any required license under the Pennsylvania Motor Vehicle Sales Finance Act, the Maryland Financial Institutions Article, and all other similar applicable state laws other than those of Alabama [and Hawaii]. 34 39 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers hereunto duly authorized, as of the day and year first above written. [NISSAN AUTO RECEIVABLES CORPORATION][ NISSAN AUTO RECEIVABLES CORPORATION II], Depositor By: --------------------------------- Name: Title: [_________________________________], not in its individual capacity but solely as Owner Trustee By: --------------------------------- Name: Title: 35 40 ------------ EXHIBIT A ------------ (FORM OF [CLASS C] [CLASS D] CERTIFICATE) UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN. THIS CERTIFICATE DOES NOT CONSTITUTE AN OBLIGATION OF OR AN INTEREST IN THE DEPOSITOR, THE OWNER TRUSTEE, THE SERVICER, THE ADMINISTRATOR, NMAC, [NARC] [NARC II], NISSAN NORTH AMERICA, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES, AND WILL NOT BE INSURED OR GUARANTEED BY ANY SUCH ENTITY OR BY ANY GOVERNMENTAL AGENCY. [THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON THAT THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE 1933 ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE 1933 ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (4) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D OF THE 1933 ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION.] A-1 41 NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE OWNER TRUSTEE SHALL HAVE RECEIVED A REPRESENTATION FROM THE TRANSFEREE HEREOF IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER TRUSTEE TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR ARRANGEMENT SUBJECT TO SECTION 406 OF ERISA OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE (A "PLAN"), NOR A PERSON ACTING ON BEHALF OF A PLAN NOR USING THE ASSETS OF A PLAN TO EFFECT SUCH TRANSFER. IF THIS CERTIFICATE IS A BOOK-ENTRY CERTIFICATE, THE REPRESENTATIONS ABOVE SHALL BE DEEMED TO HAVE BEEN MADE TO THE OWNER TRUSTEE BY THE TRANSFEREE'S (INCLUDING AN INITIAL ACQUIROR'S) ACCEPTANCE OF THIS CERTIFICATE. NUMBER $____________ R-_____ CUSIP NO. _________ NISSAN AUTO RECEIVABLES ____-_ OWNER TRUST [_______]% ASSET BACKED [CLASS C] [CLASS D] CERTIFICATE evidencing a fractional undivided interest in the Trust, as defined below, the property of which includes a pool of retail installment sale contracts secured by new, near-new and used automobiles and light-duty trucks and sold to the Trust by Nissan Auto Receivables Corporation ("NARC"). [The property of the Trust has been pledged to the Indenture Trustee pursuant to the Indenture to secure the payment of the Notes issued thereunder and the payments to the Swap Counterparty under the Interest Rate Swap Agreement.] (This Certificate does not represent an interest in or obligation of [NARC] [NARC II], Nissan Motor Acceptance Corporation ("NMAC"), Nissan North America, Inc. or any of their respective affiliates, except to the extent described below.) THIS CERTIFIES THAT ________________________________________ is the registered owner of _________________________ DOLLARS nonassessable, fully-paid, fractional undivided interest in Nissan Auto Receivables ____-_ Owner Trust (the "Trust") formed by [NARC] [NARC II]. The Trust was created pursuant to a Trust Agreement, dated as of [_______] (as amended and supplemented from time to time, including the Amended and Restated Trust Agreement, dated as of [_____________], the "Trust Agreement"), between [NARC] [NARC II], as depositor (the "Depositor"), and [______________], as owner trustee (the "Owner Trustee"), a summary of certain of the pertinent provisions of which is set forth below. Capitalized terms used herein and not otherwise defined have the meanings assigned to such terms in the Trust Agreement, the Indenture, dated as of [______________] (the "Indenture"), between the Trust and [______________], as indenture trustee (the "Indenture Trustee"), or in the Sale and Servicing Agreement, dated as of [______________] (the "Sale and Servicing Agreement"), among the Trust, the Depositor and NMAC, as servicer (the "Servicer"), as applicable. A-2 42 This Certificate is one of the duly authorized Certificates designated as "Asset Backed Certificates, [Class C] [Class D]" (the "[Class C] [Class D] Certificates") issued pursuant to the Trust Agreement. Certain debt instruments evidencing obligations of the Trust have been issued under the Indenture, consisting of four classes of Notes designated as "Class A-1 [______]% Asset Backed Notes", "Class A-2 [______]% Asset Backed Notes," "Class A-3 [______]% Asset Backed Notes" ["Floating Rate Asset Backed Variable Pay Term Notes" issued from time to time] and "Class B [______]% Asset Backed Notes" (collectively, the "Notes"). This Certificate is issued under and is subject to the terms, provisions and conditions of the Trust Agreement to which Trust Agreement the holder of this Certificate by virtue of the acceptance hereof assents and by which such holder is bound. The property of the Trust includes a pool of retail installment sale contracts secured by new, near-new and used automobiles and light-duty trucks (the "Receivables"), all monies received after the Cutoff Date, security interests in the vehicles financed thereby, certain bank accounts and the proceeds thereof, proceeds from claims on certain insurance policies and certain other rights under the Trust Agreement and the Sale and Servicing Agreement and all proceeds of the foregoing. Under the Trust Agreement, there will be distributed on the 15th day of each month or, if such 15th day is not a Business Day, the next Business Day, (each, a "Distribution Date"), commencing on [______], to the person in whose name this Certificate is registered at the close of business on the related Record Date, such Certificateholder's pro rata portion of the amounts to be distributed to Holders of the [Class C] [Class D] Certificates on such Distribution Date in respect of amounts distributable to the Certificateholders of the [Class C] [Class D] Certificates pursuant to Section 5.06 of the Sale and Servicing Agreement. The holder of this Certificate acknowledges and agrees that its rights to receive distributions in respect of this Certificate are subordinated to the rights of the Noteholders [and the Swap Counterparty] as described in the Sale and Servicing Agreement and the Indenture [and the rights of the Holders of the Class C Certificates as described in the Trust Agreement and the Sale and Servicing Agreement]. It is the intent of the Depositor, NMAC and the Certificateholders that, for purposes of federal income tax, state and local income tax, any state single business tax and any other income taxes, the Trust will be treated as a division or branch of the Person holding the beneficial ownership interests in the Trust for any period during which the beneficial ownership interests in the Trust are held by one person, and will be treated as a partnership, and the Certificateholders will be treated as partners in that partnership, for any period during which the beneficial ownership interests in the Trust are held by more than one person. For any such period during which the beneficial ownership interests in the Trust are held by more than one person, each Certificateholder, by acceptance of a Certificate or any beneficial interest on a Certificate, agrees to treat, and to take no action inconsistent with the treatment of, the Certificates as partnership interests in the Trust for such tax purposes. Each Certificateholder or Certificate Owner, by its acceptance of a Certificate or any beneficial interest in a Certificate, covenants and agrees that such Certificateholder or Certificate Owner, as the case may be, will not at any time institute against the Depositor or the Trust, or join in any institution against the Depositor or the Trust of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United A-3 43 States, federal or state bankruptcy or similar law in connection with any obligations relating to the Certificates, the Notes, the Trust Agreement or any of the Basic Documents. Distributions on this Certificate will be made as provided in the Trust Agreement by the Paying Agent by wire transfer or check mailed to each Certificateholder of record without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Trust Agreement and notwithstanding the above, the final distribution on this Certificate will be made after due notice by the Owner Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Paying Agent maintained for the purpose by the Owner Trustee in the Borough of Manhattan, The City of New York. Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon shall have been executed by an authorized officer of the Owner Trustee or an authenticating agent, by manual signature, this Certificate shall not entitle the holder hereof to any benefit under the Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose. THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. A-4 44 IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in its individual capacity, has caused this Certificate to be duly executed. NISSAN AUTO RECEIVABLES ____-_ OWNER TRUST By: [NAME OF OWNER TRUSTEE], not in its individual capacity but solely an Owner Trustee Dated: By: --------------------------------- Authorized Signatory A-5 45 OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Certificates referred to in the within-mentioned Trust Agreement. [_____________________], as Owner Trustee By: --------------------------------- Authorized Signatory A-6 46 (REVERSE OF CERTIFICATE) The Certificates do not represent an obligation of, or an interest in, the Owner Trustee, NMAC, [NARC] [NARC II], Nissan North America, Inc. or any of their Affiliates and no recourse may be had against such parties or their assets, except as may be expressly set forth or contemplated herein or in the Trust Agreement or the Basic Documents. In addition, this Certificate is not guaranteed by any governmental agency or instrumentality and is limited in right of payment to certain collections with respect to the Receivables (and certain other amounts), all as more specifically set forth in the Trust Agreement and in the Sale and Servicing Agreement. A copy of each of the Sale and Servicing Agreement and the Trust Agreement may be examined during normal business hours at the principal office of the Depositor, and at such other places, if any, designated by the Depositor, by any Certificateholder upon written request. The Trust Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Depositor and the rights of the Certificateholders under the Trust Agreement at any time by the Depositor and the Owner Trustee, with the consent of the Holders of the Controlling Class of the Notes representing a majority of the Outstanding Amount of such Class, or, if all of the Notes have been paid in full, with the consent of the Holders of the Controlling Class of Certificates representing a majority of the Certificate Balance of such Class (excluding, in each case, Securities held by [NARC] [NARC II], NMAC or any of their Affiliates unless at such time all Notes or Certificates, as the case may be, are then owned by [NARC] [NARC II], NMAC and their Affiliates). Any such consent by the holder of this Certificate shall be conclusive and binding on such holder and on all future holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate or such replacement certificate. The Trust Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of the Certificates or the Notes. As provided in the Trust Agreement, and subject to certain limitations therein set forth, the transfer of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies of the Certificate Registrar maintained by the Owner Trustee in the Borough of Manhattan in The City of New York, accompanied by a written instrument of transfer in form satisfactory to the Owner Trustee and the Certificate Registrar duly executed by the holder hereof or such holder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate interest in the Trust will be issued to the designated transferee or transferees. The initial Certificate Registrar appointed under the Trust Agreement is [______], [City, State]. The Certificates are issuable only as registered Certificates without coupons in denominations of $[___] and in integral multiples of $[___] in excess thereof. As provided in the Trust Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of the same Class of authorized denominations evidencing the same aggregate denomination, as requested by the holder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Owner Trustee or A-7 47 the Certificate Registrar may require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Owner Trustee, the Certificate Registrar and any agent of the Owner Trustee or the Certificate Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes and none of the Owner Trustee, the Certificate Registrar or any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Trust Agreement and the Trust created thereby shall terminate upon the payment to Certificateholders of all amounts required to be paid to them pursuant to the Trust Agreement and the Sale and Servicing Agreement [and the disposition of all property held as part of the Owner Trust Estate]. NMAC, as servicer of the Receivables under the Sale and Servicing Agreement, or any successor servicer, may at its option purchase the corpus of the Trust at a price specified in the Sale and Servicing Agreement, and any such purchase of the Receivables and other property of the Trust will effect early retirement of the Certificates; however, such right of purchase is exercisable only after the last day of the Collection Period as of which the Pool Balance is less than or equal to 10% of the Original Pool Balance. A-8 48 ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - -------------------------------------------------------------------------------- (Please print or type name and address, including postal zip code, of assignee) - -------------------------------------------------------------------------------- the within Certificate, and all rights thereunder, hereby irrevocably constituting and appointing _________________________________________________________________ Attorney to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated: --------------------------------- */ ------------------------------------ Signature Guaranteed: */ ------------------------------------ - ---------- */ NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. A-9 49 EXHIBIT B FORM OF TRANSFEREE REPRESENTATION LETTER Nissan Auto Receivables [___-__] Owner Trust [NAME OF OWNER TRUSTEE], not in its individual capacity but solely as Owner Trustee [ADDRESS] [NAME OF CERTIFICATE REGISTRAR] [ADDRESS] Attention: Corporate Trust Services -- Nissan Auto Receivables [____-__] Owner Trust Re: Transfer of Nissan Auto Receivables [____-__] Owner Trust Certificate, Class [C][D] Ladies and Gentlemen: This letter is delivered pursuant to Section 3.03 of the Amended and Restated Trust Agreement, dated as of [____________] (the "Trust Agreement"), between Nissan Auto Receivables Corporation, as Depositor, and [_____________], as Owner Trustee (the "Owner Trustee"), in connection with the transfer by _______________________________________ (the "Seller") to the undersigned (the "Purchaser") of $__________________________ balance of the Class [C][D] Certificates (the "Certificates"). Capitalized terms used and not otherwise defined herein have the meanings assigned to such terms in the Trust Agreement. In connection with such transfer, the undersigned hereby represents and warrants to you and the addressees hereof as follows: [ ] I am not a Non-U.S. Person as defined in the Trust Agreement; and [ ] I am not (i) an employee benefit plan subject to the fiduciary responsibility provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), or a governmental plan (as defined in Section 3(32) of ERISA) subject to any federal, state or local law ("Similar Law") which is, to a material extent, similar to the foregoing provisions of ERISA or the Code (each a "Plan") or (ii) a person acting on behalf of or using the assets of any such Plan (including an entity whose underlying assets include Plan assets by reason of investment in the entity by such Plan and the application of Department of Labor Regulation Section 2510.3-101). [Signature appears on next page] B-1 50 IN WITNESS WHEREOF, the Purchaser hereby executes this Transferee Representation Letter on the ___ day of _______________, _____. Very truly yours, ------------------------------------ The Purchaser By: --------------------------------- Name: Title: B-2 51 EXHIBIT C FORM OF TRANSFEROR REPRESENTATION LETTER Nissan Auto Receivables [___-__]Owner Trust [NAME OF OWNER TRUSTEE], not in its individual capacity but solely as Owner Trustee [ADDRESS] [NAME OF CERTIFICATE REGISTRAR] [ADDRESS] Attention: Corporate Trust Services -- Nissan Auto Receivables [____-__] Owner Trust Re: Transfer of Nissan Auto Receivables [____-__] Owner Trust Certificate, Class [C][D] Ladies and Gentlemen: This letter is delivered pursuant to Section 3.03 of the Amended and Restated Trust Agreement, dated as of [__________] (the "Trust Agreement"), between Nissan Auto Receivables Corporation, as Depositor, and (________________], as Owner Trustee (the "Owner Trustee"), in connection with the transfer by _______________________________________ (the "Purchaser") to the undersigned (the "Seller") of $__________________________ balance of Class [C][D] Certificates (the "Certificates"). Capitalized terms used and not otherwise defined herein have the meanings ascribed thereto in the Trust Agreement. The Transferor hereby certifies, represents and warrants to you, as Certificate Registrar, that: 1. The Transferor is the lawful owner of the Transferred Certificates with the full right to transfer such Certificates free from any and all claims and encumbrances whatsoever. 2. Neither the Transferor nor anyone acting on its behalf has (a) offered, transferred, pledged, sold or otherwise disposed of any Transferred Certificate, any interest in any Transferred Certificate or any other similar security to any person in any manner, (b) solicited any offer to buy or accept a transfer, pledge or other disposition of any Transferred Certificate, any interest in any Transferred Certificate or any other similar security from any person in any manner, (c) otherwise approached or negotiated with respect to any Transferred Certificate, any interest in any Transferred Certificate or any other similar security with any person in any manner, (d) made any general solicitation by means of general advertising or in any other manner, or (e) taken any other action, which (in the case of any of the acts described in clauses (a) through (e) hereof) would constitute a distribution of any Transferred Certificate under the Securities Act of C-1 52 1933, as amended (the "Securities Act"), or would render the disposition of any Transferred Certificate a violation of Section 5 of the Securities Act or any state securities laws, or would require registration or qualification of any Transferred Certificate pursuant to the Securities Act or any state securities laws. Very truly yours, ------------------------------------ (Transferor) By: --------------------------------- Name: ------------------------------- Title: ------------------------------ C-2 EX-4.2 5 a67668a1ex4-2.txt EXHIBIT 4.2 1 EXHIBIT 4.2 INDENTURE NISSAN AUTO RECEIVABLES _____-_ OWNER TRUST as Issuer and [__________________], as Indenture Trustee and Securities Intermediary Dated as of [__________________] 2 TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE ........................... 2 SECTION 1.01. Definitions ............................................ 2 SECTION 1.02. Usage of Terms ......................................... 10 SECTION 1.03. Incorporation by Reference of Trust Indenture Act ...... 10 ARTICLE II THE NOTES ........................................................... 10 SECTION 2.01. Form ................................................... 10 SECTION 2.02. Execution, Authentication and Delivery ................. 11 SECTION 2.03. Temporary Notes ........................................ 13 SECTION 2.04. Registration; Registration of Transfer and Exchange .... 13 SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes ............. 14 SECTION 2.06. Persons Deemed Owners .................................. 15 SECTION 2.07. Payments of Principal and Interest ..................... 15 SECTION 2.08. Cancellation ........................................... 15 SECTION 2.09. Release of Collateral .................................. 16 SECTION 2.10. Book-Entry Notes ....................................... 16 SECTION 2.11. Notices to Clearing Agency ............................. 17 SECTION 2.12. Definitive Notes ....................................... 17 SECTION 2.13. Tax Treatment .......................................... 17 ARTICLE III COVENANTS .......................................................... 18 SECTION 3.01. Payment of Principal and Interest ...................... 18 SECTION 3.02. Maintenance of Office or Agency ........................ 18 SECTION 3.03. Money for Payments To Be Held in Trust ................. 18 SECTION 3.04. Existence .............................................. 20 SECTION 3.05. Protection of Trust Estate ............................. 20 SECTION 3.06. Opinions as to Trust Estate ............................ 21 SECTION 3.07. Performance of Obligations; Servicing of Receivables ... 21 SECTION 3.08. Negative Covenants ..................................... 23 SECTION 3.09. Annual Statement as to Compliance ...................... 24 SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms .... 24 SECTION 3.11. Successor or Transferee ................................ 26 SECTION 3.12. No Other Business ...................................... 26 SECTION 3.13. No Borrowing ........................................... 26 SECTION 3.14. Servicer's Notice Obligations .......................... 26 SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities ...... 26 SECTION 3.16. Capital Expenditures ................................... 27 SECTION 3.17. Removal of Administrator ............................... 27 SECTION 3.18. Restricted Payments .................................... 27 SECTION 3.19. Notice of Events of Default ............................ 27 SECTION 3.20. Further Instruments and Actions ........................ 27 SECTION 3.21. Calculation Agent ...................................... 27
-i- 3 TABLE OF CONTENTS (CONTINUED)
PAGE ARTICLE IV SATISFACTION AND DISCHARGE ............................................... 28 SECTION 4.01. Satisfaction and Discharge of Indenture ..................... 28 SECTION 4.02. Application of Trust Money .................................. 29 SECTION 4.03. Repayment of Moneys Held by Paying Agent .................... 29 ARTICLE V REMEDIES .................................................................. 29 SECTION 5.01. Events of Default ........................................... 30 SECTION 5.02. Acceleration of Maturity; Rescission and Annulment .......... 31 SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee ........................................... 32 SECTION 5.04. Remedies; Priorities ........................................ 34 SECTION 5.05. Optional Preservation of the Receivables .................... 35 SECTION 5.06. Limitation of Suits ......................................... 36 SECTION 5.07. Unconditional Rights of Noteholders To Receive Principal and Interest ...................................... 37 SECTION 5.08. Restoration of Rights and Remedies .......................... 37 SECTION 5.09. Rights and Remedies Cumulative .............................. 37 SECTION 5.10. Delay or Omission Not a Waiver .............................. 37 SECTION 5.11. Control by Noteholders ...................................... 37 SECTION 5.12. Waiver of Past Defaults ..................................... 38 SECTION 5.13. Undertaking for Costs ....................................... 38 SECTION 5.14. Waiver of Stay or Extension Laws ............................ 39 SECTION 5.15. Action on Notes ............................................. 39 SECTION 5.16. Performance and Enforcement of Certain Obligations .......... 39 ARTICLE VI THE INDENTURE TRUSTEE .................................................... 40 SECTION 6.01. Duties of Indenture Trustee ................................. 40 SECTION 6.02. Rights of Indenture Trustee ................................. 42 SECTION 6.03. Individual Rights of Indenture Trustee ...................... 43 SECTION 6.04. Indenture Trustee's Disclaimer .............................. 43 SECTION 6.05. Notice of Defaults .......................................... 44 SECTION 6.06. Reports by Indenture Trustee to Holders ..................... 44 SECTION 6.07. Compensation and Indemnity .................................. 44 SECTION 6.08. Replacement of Indenture Trustee ............................ 45 SECTION 6.09. Successor Indenture Trustee by Merger ....................... 45 SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee ........................................... 46 SECTION 6.11. Eligibility; Disqualification ............................... 47 SECTION 6.12. Preferential Collection of Claims Against Issuer ............ 47 SECTION 6.13. Acknowledgement by Indenture Trustee of its Obligations Under the Sale and Servicing Agreement ...................... 47 SECTION 6.14. Interest Rate Swap Provisions ............................... 47
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PAGE ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS ..................................... 49 SECTION 7.01. Note Registrar To Furnish Names and Addresses of Noteholders ......................................... 49 SECTION 7.02. Preservation of Information; Communications to Noteholders ............................................ 50 SECTION 7.03. Reports by Issuer ...................................... 50 SECTION 7.04. Reports by Indenture Trustee ........................... 51 ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES .............................. 51 SECTION 8.01. Collection of Money .................................... 51 SECTION 8.02. Accounts ............................................... 51 SECTION 8.03. General Provisions Regarding Accounts .................. 52 SECTION 8.04. Release of Trust Estate ................................ 54 SECTION 8.05. Release of Receivables Upon Purchase by the Seller or the Servicer ................................. 54 SECTION 8.06. Opinion of Counsel ..................................... 54 ARTICLE IX SUPPLEMENTAL INDENTURES ............................................. 55 SECTION 9.01. Supplemental Indentures Without Consent of Noteholders ............................................ 55 SECTION 9.02. Supplemental Indentures with Consent of Noteholders ............................................ 56 SECTION 9.03. Execution of Supplemental Indentures ................... 57 SECTION 9.04. Effect of Supplemental Indenture ....................... 58 SECTION 9.05. Conformity with Trust Indenture Act .................... 58 SECTION 9.06. Reference in Notes to Supplemental Indentures .......... 58 ARTICLE X RELEASE .............................................................. 58 SECTION 10.01. Optional Purchase of All Receivables ................... 58 ARTICLE XI MISCELLANEOUS ....................................................... 59 SECTION 11.01. Compliance Certificates and Opinions, etc. ............. 59 SECTION 11.02. Form of Documents Delivered to Indenture Trustee ....... 60 SECTION 11.03. Acts of Noteholders .................................... 61 SECTION 11.04. Notices, to Indenture Trustee, Issuer and Rating Agencies ........................................ 61 SECTION 11.05. Notices to Noteholders; Waiver ......................... 62 SECTION 11.06. Alternate Payment and Notice Provisions ................ 62 SECTION 11.07. Conflict with Trust Indenture Act ...................... 63 SECTION 11.08. Effect of Headings and Table of Contents ............... 63 SECTION 11.09. Successors and Assigns ................................. 63 SECTION 11.10. Severability ........................................... 63 SECTION 11.11. Benefits of Indenture .................................. 63 SECTION 11.12. Governing Law .......................................... 63 SECTION 11.13. Counterparts ........................................... 63 SECTION 11.14. Recording of Indenture ................................. 63 SECTION 11.15. Trust Obligation ....................................... 64
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PAGE SECTION 11.16. No Petition ..................................................... 64 SECTION 11.17. Inspection ...................................................... 64
EXHIBIT A-1 - Form of Class A-1 Note, Class A-2 Note, Class A-3 Note and Class B Note EXHIBIT A-2 - Form of VPTN -iv- 6 CROSS-REFERENCE TABLE (not a part of this Indenture)
TIA Indenture Section Section (Section)310(a)(1)......................................................... 6.11 (a)(2)............................................................... 6.11 (a)(3)......................................................... 6.10(b)(i) (a)(4)............................................................... N.A. (a)(5)............................................................... 6.11 (b) ................................................................. 5.04 6.08 6.11 11.04 (c) ................................................................. N.A. (Section)311(a) ........................................................... 6.12 (b) ................................................................. 6.12 (c) ................................................................. N.A. (Section)312(a) ........................................................... 7.01 (b) ................................................................. 7.01 .............................................................. 7.01(b) (c) .............................................................. 7.02(c) (Section)313(a) ........................................................... 7.04 (b)(1)............................................................... N.A. (b)(2)............................................................... 7.04 (c) ................................................................. 7.04 11.04 (d) ................................................................. 7.04 (Section)314(a) ..................................................... 3.09, 7.03 7.04 11.04 (b) ................................................................. 3.06 7.04 11.14 (c)(1) .............................................................. 6.02 8.05(b) 6.02 11.01 (c)(2)............................................................... 3.06 3.10 6.02 8.05(b) 8.06 11.01 (c)(3).............................................................. 11.01 (d) ............................................................. 11.01(c) (e) ................................................................ 11.01 (f) ................................................................. N.A. (Section)315(a) ........................................................... 6.01 (b) ................................................................. 6.05 (c) ................................................................. N.A. (d) .............................................................. 6.01(c) (e) ................................................................. 5.13
-v- 7
TIA Indenture Section Section (Section)316(a)(1)(A).................................................. 6.01(c) 5.11 (a)(1)(B)........................................................... 5.12 (a)(2).............................................................. N.A. (b) ................................................................ 5.07 5.04(b) (c) ................................................................ 2.06 (Section)317(a)(1) ....................................................... 5.04 (a)(2) .......................................................... 5.03(c) 5.03(d) 5.04 (b) ................................................................ 3.03 (Section)318(a) .......................................................... 11.07
- --------- N.A. means not applicable -vi- 8 INDENTURE, dated as of [__________________], between NISSAN AUTO RECEIVABLES ____-_ OWNER TRUST, a Delaware business trust (the "Issuer"), and [__________________], a [____________________], as trustee and not in its individual capacity (the "Indenture Trustee"). Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of (i) the Holders of the Issuer's [__]% Asset Backed Notes, Class A-1 (the "Class A-1 Notes"), [__]% Asset Backed Notes, Class A-2 (the "Class A-2 Notes"), [__]% Asset Backed Notes, Class A-3 (the "Class A-3 Notes" and, together with the Class A-1 and the Class A-2 Notes, the "Class A Notes"), and [__]% Asset Backed Notes, Class B (the "Class B Notes" and, together with the Class A Notes, the "Notes") and (ii) for the purposes of the Granting Clause below, the Certificateholders: GRANTING CLAUSE The Issuer hereby Grants to the Indenture Trustee at the Closing Date, as Indenture Trustee for the benefit of the Holders of the Notes and Certificates [and the Swap Counterparty], the following: (i) all right, title and interest of the Issuer in and to the Receivables (including all related Receivable Files) and all monies due thereon or paid thereunder or in respect thereof (including proceeds of the repurchase of Receivables by the Seller pursuant to Section 3.02 of the Sale and Servicing Agreement or the purchase of Receivables by the Servicer pursuant to Section 4.06 or 9.01 of the Sale and Servicing Agreement) after the Cutoff Date; (ii) amounts on deposit in the Collection Account [and the Yield Supplement Account]; (iii) the right of the Issuer in the security interests in the Financed Vehicles granted by the Obligors pursuant to the Receivables and any related property; (iv) the right of the Issuer in any proceeds from claims on any physical damage, credit life, credit disability or other insurance policies covering the Financed Vehicles or the Obligors; (v) the right of the Issuer (through the Seller and NMAC) to receive payments in respect of any Dealer Recourse with respect to the Receivables; (vi) the rights of the Issuer under the Sale and Servicing Agreement, and, through the Seller, under the Purchase Agreement and the Assignment; [(vii) the rights of the Issuer under the Yield Supplement Agreement;] (viii) the right of the Issuer to realize upon any property (including the right to receive future Net Liquidation Proceeds) that shall have secured a Receivable; 9 (ix) the right of the Issuer in rebates of premiums and other amounts relating to insurance policies and other items financed under the Receivables in effect as of the Cutoff Date; (x) all other assets comprising the Owner Trust Estate; and (xi) all proceeds of the foregoing. The foregoing Grant is made in trust to secure the payment of principal of and interest on, and any other amounts owing in respect of, the Notes, equally and ratably without prejudice, priority or distinction, and to secure compliance with the provisions of this Indenture, and subject to the subordinate claims thereon of the Holders of the Certificates, all as provided in this Indenture [and payment of amounts payable to the Swap Counterparty under the Interest Rate Swap Agreement]. The Indenture Trustee, as Indenture Trustee on behalf of the Holders of the Notes and for the benefit of the Certificateholders [and the Swap Counterparty], acknowledges such Grant, accepts the trusts under this Indenture in accordance with the provisions of this Indenture and agrees to perform its duties required in this Indenture to the best of its ability to the end that the interests of the Holders of the Notes may be adequately and effectively protected and the rights of the Certificateholders [and the Swap Counterparty] secured. ARTICLE I Definitions and Incorporation by Reference SECTION 1.01. Definitions. Except as otherwise specified herein or if the context may otherwise require, capitalized terms used but not otherwise defined herein have the meanings ascribed thereto in the Trust Agreement, the Sale and Servicing Agreement and the Securities Account Control Agreement, as the case may be, for all purposes of this Indenture. Except as otherwise provided in this Indenture, whenever used herein the following words and phrases, unless the context otherwise requires, shall have the following meanings: "Action" has the meaning specified in Section 11.03(a). "Administration Agreement" means the Administration Agreement, dated as of [___________], among the Administrator, the Issuer and the Indenture Trustee. "Administrator" means NMAC or any successor Administrator under the Administration Agreement. "Applicant" has the meaning specified in Section 7.01. "Authorized Officer" means with respect to the Issuer, any officer of the Owner Trustee who is authorized to act for the Owner Trustee in matters relating to the Issuer identified as such on any list of Authorized Officers delivered by the Owner Trustee to the Indenture Trustee. 2 10 "Book-Entry Notes" means a beneficial interest in the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class B Notes, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.10. "Business Day" means any day except a Saturday, a Sunday or a day on which banks in New York, New York, Los Angeles, California or [________,________] are authorized or obligated by law, regulation, executive order or governmental decree to be closed. ["Calculation Agent" means the calculation agent appointed to calculate interest rates and interest amounts on the VPTNs and to perform other duties pursuant to Section 3.21 and shall initially be [________________].] "Certificates" means the Class C Certificates and the Class D Certificates. "Class" means any one of the classes of the Notes. "Class A-1 Rate" means [____]% per annum (computed on the basis of [actual number of days in the related Interest Period and a 360-day year] [a 360-day year consisting of twelve 30-day months]). "Class A-1 Notes" means the [____]% Asset Backed Notes, Class A-1, substantially in the form attached hereto as Exhibit A-1. "Class A-2 Rate" means [____]% per annum (computed on the basis of a 360-day year consisting of twelve 30-day months). "Class A-2 Notes" means the ____% Asset Backed Notes, Class A-2, substantially in the form attached hereto as Exhibit A-1. "Class A-3 Rate" means [____]% per annum (computed on the basis of a 360-day year consisting of twelve 30-day months). "Class A-3 Notes" means the ____% Asset Backed Notes, Class A-3, substantially in the form attached hereto as Exhibit A-1. "Class B Rate" means [____]% per annum (computed on the basis of a 360-day year consisting of twelve 30-day months). "Class B Notes" means the ____% Asset Backed Notes, Class B, substantially in the form attached hereto as Exhibit A-1. "Class C Certificates" means the [____]% Certificates of the Issuer, Class C, issued under the Trust Agreement. "Class D Certificates" means the [____]% Certificates of the Issuer, Class D, issued under the Trust Agreement. 3 11 "Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act. "Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. "Closing Date" means __________, _____. "Code" means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder. "Collateral" means the property of the Issuer subject to the Granting Clause hereof, the Reserve Account, all amounts held from time to time in the Reserve Account and all investments therein. "Corporate Trust Office" means the principal office of the Indenture Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of execution of this Agreement is located at [_______________]; Attention: [_______________], or at such other address as the Indenture Trustee may designate from time to time by notice to the Noteholders, the Issuer and the Administrator, or the principal corporate trust office of any successor Indenture Trustee at the address designated by such successor Indenture Trustee by notice to the Noteholders, the Issuer and the Administrator. "Default" means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default. "Definitive Notes" has the meaning specified in Section 2.10. "Event of Default" has the meaning specified in Section 5.01. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Executive Officer" means, with respect to any corporation, the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, President, Executive Vice President, any Vice President, the Secretary or the Treasurer of such corporation; and with respect to any partnership, any general partner thereof. ["Extended Sequential Amortization Commencement Date" means the Targeted Scheduled Distribution Date on which two subclasses of Class A Notes which have reached or passed their Targeted Scheduled Distribution Dates have not been paid in full after giving effect to all payments allocable to principal on such Targeted Scheduled Distribution Date.] ["Extended Sequential Amortization Period" means the period commencing on an Extended Sequential Amortization Commencement Date and ending on the Distribution Date on which the Class A-3 Notes and the VPTNs are paid in full.] 4 12 "Grant" means mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, assign, transfer, create, and grant a lien upon and a security interest in and right of set-off against, deposit, set over and confirm pursuant to this Indenture. A Grant of the Collateral or of any other agreement or instrument shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for principal and interest payments in respect of the Collateral and all other moneys payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the granting party or otherwise, and generally to do and receive anything that the granting party is or may be entitled to do or receive thereunder or with respect thereto. "Holder" or "Noteholder" means the Person in whose name a Note is registered on the Note Register. "Indenture Trustee" means [_______________], a [____________________________], as Indenture Trustee under this Indenture, or any successor Indenture Trustee under this Indenture. "Independent" means, when used with respect to any specified Person, that the Person is in fact independent of the Seller, the Servicer, the Administrator, the Issuer or any other obligor on the Notes or any Affiliate of any of the foregoing Persons because, among other things, such Person (a) is not an employee, officer or director or otherwise controlled thereby or under common control therewith, (b) does not have any direct financial interest or any material indirect financial interest therein (whether as holder of securities thereof or party to contract therewith or otherwise), and (c) is not and has not within the preceding twelve months been a promoter, underwriter, trustee, partner, director or person performing similar functions therefor or otherwise had legal, contractual or fiduciary or other duties to act on behalf of or for the benefit thereof. "Independent Certificate" means a certificate or opinion to be delivered to the Indenture Trustee, made by an Independent appraiser or other expert appointed by an Issuer Order and approved by the Indenture Trustee in the exercise of reasonable care, and such opinion or certificate shall state that the signer has read the definition of "Independent" in this Indenture and that the signer is Independent within the meaning thereof. "Interest Period" means, with respect to 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 and the Class B Notes, the period from (and including) the 15th day of the preceding calendar month to (but excluding) the 15th day of the month in which such Distribution Date occurs, except that the initial Interest Period will be from (and including) the Closing Date to (but excluding) [__________]. "Interest Rate" means the Class A-1 Rate, the Class A-2 Rate, the Class A-3 Rate or the Class B Rate, as indicated by the context. 5 13 ["Interest Rate Swap Agreement" shall mean the interest rate swap agreement dated _________________, including all schedules and confirmations thereto, between the Issuer and the Swap Counterparty, as the same may be amended, supplemented, renewed, extended or replaced from time to time.] ["Interest Reset Date" means, with respect to the VPTNs, the first day of the applicable Interest Period.] "Issuer" means Nissan Auto Receivables ____-_ Owner Trust unless and until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the Notes. "Issuer Order" and "Issuer Request" mean a written order or request signed in the name of the Issuer by any one of its Authorized Officers and delivered to the Indenture Trustee. ["LIBOR Determination Date" means the second London Banking Day prior to the Interest Reset Date for the related Interest Period.] ["London Banking Day" means any day other than a Saturday, Sunday or any other day on which banks in London are required or authorized to be closed.] "NMAC" means Nissan Motor Acceptance Corporation, in its individual capacity and not as Servicer. "Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3 Note or a Class B Note. "Note Depository Agreement" means the agreement entitled "Letter of Representations" dated on or before the Closing Date among the Clearing Agency, the Issuer and the Indenture Trustee with respect to certain matters relating to the duties thereof with respect to the Book-Entry Notes. "Note Owner" means, with respect to a Book-Entry Note, any Person who is the beneficial owner of such Book-Entry Note, as reflected on the books of the Clearing Agency or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, in each case in accordance with the rules of such Clearing Agency). "Note Register" means the Register of Noteholders' information maintained by the Note Registrar pursuant to Section 2.04. "Note Registrar" means the Indenture Trustee unless and until a successor Note Registrar shall have been appointed pursuant to Section 2.04. "Officer's Certificate" means a certificate signed by any Authorized Officer of the Issuer, under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.01, and delivered to the Indenture Trustee. 6 14 "Opinion of Counsel" means one or more written opinions of counsel who may, except as otherwise expressly provided in this Indenture, be an employee of or counsel to the Issuer, the Seller or the Servicer and which counsel shall be reasonably satisfactory to the Owner Trustee, the Indenture Trustee or the Rating Agencies, as the case may be. "Outstanding" means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture except: (a) Notes theretofore canceled by the Note Registrar or delivered to the Note Registrar for cancellation; (b) Notes or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the Indenture Trustee or any Paying Agent in trust for the Holders of such Notes; and (c) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture unless proof satisfactory to the Indenture Trustee is presented that any such Notes are held by a protected purchaser; provided, that in determining whether the Holders of the requisite percentage of the Outstanding Amount of the Notes, or any Class of Notes, have given any request, demand, authorization, direction, notice, consent, or waiver hereunder or under any Basic Document, Notes owned by the Issuer, any other obligor upon the Notes, the Seller or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, or waiver, only Notes that the Indenture Trustee knows to be so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee the pledgee's right so to act with respect to such Notes and that the pledgee is not the Issuer, any other obligor upon the Notes, the Seller or any Affiliate of any of the foregoing Persons. "Outstanding Amount" means the aggregate principal amount of all Notes, or, if indicated by the context, all Notes of any Class, Outstanding at the date of determination. "Owner Trustee" means [_______________], not in its individual capacity but solely as Owner Trustee under the Trust Agreement, or any successor Owner Trustee under the Trust Agreement. "Paying Agent" means the Indenture Trustee or any other Person that meets the eligibility standards for the Indenture Trustee specified in Section 6.11 that has been authorized by the Issuer to make payments to and distributions from the Collection Account, including payment of principal of or interest on the Notes on behalf of the Issuer. "Predecessor Note" means, with respect to any particular Note, every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purpose of this definition, any Note authenticated and delivered under Section 2.05 in lieu of 7 15 a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note. "Proceeding" means any suit in equity, action at law or other judicial or administrative proceeding. "Registered Holder" means the Person in whose name a Note is registered on the Note Register on the applicable Record Date. "Responsible Officer" means, with respect to the Indenture Trustee, any officer within the Corporate Trust Office of the Indenture Trustee, including any Vice President, Assistant Vice President, Assistant Treasurer, Assistant Secretary or any other officer of the Indenture Trustee customarily performing functions similar to those performed by any of the above designated officers and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. "Sale and Servicing Agreement" means the Sale and Servicing Agreement, dated as of [_______________], among the Issuer, [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], as Seller, and Nissan Motor Acceptance Corporation, as Servicer, and as to which the Indenture Trustee is a third party beneficiary of certain provisions. "Securities Act" means the Securities Act of 1933, as amended. "Securities Account Control Agreement" shall have the meaning assigned to such term in the Sale and Servicing Agreement. "Seller" shall mean [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], in its capacity as seller under the Sale and Servicing Agreement, and its successor in interest. "Servicer" shall mean Nissan Motor Acceptance Corporation, in its capacity as servicer under the Sale and Servicing Agreement, and any Successor Servicer thereunder. ["Spread" means with respect to any VPTN, the percentage over LIBOR as determined at the time of issuance as set forth in such VPTN, which percentage shall not exceed [____]%.] "Successor Servicer" has the meaning specified in Section 3.07. ["Swap Counterparty" shall mean __________, as swap counterparty under the Interest Rate Swap Agreement, or any successor or replacement swap counterparty from time to time under the Interest Rate Swap Agreement. Each Swap Counterparty (or the institution guaranteeing such Swap Counterparty's obligations) must have ratings at least equal to "[____]" by Standard & Poor's Ratings Group and "[____]" by Moody's Investor Service, Inc. at the time of entry into the Interest Rate Swap Agreement.] ["Swap Payment" means on any Distribution Date the net amount, if any, then payable by the Issuer to the Swap Counterparty, excluding any Swap Termination Payments.] 8 16 ["Swap Receipt" means on any Distribution Date the net amount, if any, then payable by a Swap Counterparty to the Issuer, excluding any Swap Termination Payments.] ["Swap Termination Payment" means any termination payment payable by the Issuer to the Swap Counterparty or by the Swap Counterparty to the Issuer under the Interest Rate Swap Agreement.] ["Targeted Scheduled Distribution Date" means as set forth below for each subclass of the Class A Note: Targeted Scheduled Subclass Distribution Date Class A-1 Notes ______________, ________ Class A-2 Notes ______________, ________ Class A-3 Notes ______________, ________] "Trust Estate" means all money, instruments, rights and other property that are subject or intended to be subject to the lien and security interest of this Indenture for the benefit of the Noteholders (including, without limitation, all property and interests Granted to the Indenture Trustee pursuant to the Granting Clause), including all proceeds thereof. "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in force on the date hereof, unless otherwise specifically provided. "UCC" means, unless the context otherwise requires, the Uniform Commercial Code, as in effect in the relevant jurisdiction at the relevant time. ["VTPN" means the Floating Rate Asset Backed Variable Pay Term Notes issued from time to time by the Trust pursuant to this Indenture, substantially in the form attached hereto as Exhibit A-2.] ["VPTN Issuance Amount" means, for any Targeted Scheduled Distribution Date, the amount the Issuer is able to issue pursuant to Section 2.02 of this Indenture, not to exceed an amount equal to (i) the aggregate outstanding principal balance of the related subclass of the Class A Notes and the aggregate outstanding balance of all the Class A Notes which were not paid in full on their Targeted Schedule Distribution Dates over (ii) sum of the amount on deposit in the Accumulation Account and the amount on deposit in the Collection Account, if any, which is allocable to the subclass or subclasses of the Class A Notes in (i) above.] ["VPTN Rate" means, with respect to each VPTN, or any Distribution Date, the rate equal to one-month LIBOR on the related LIBOR Determination Date plus a fixed percentage spread for such VPTN determined at the time of issuance based on market conditions; provided that such interest rate shall not exceed one-month LIBOR plus [____%]. Interest with respect to 9 17 any VPTN shall be computed on the basis of actual days elapsed and a 360 day year for all purposes of the Basic Documents.] SECTION 1.02. Usage of Terms. With respect to all terms in this Indenture, the singular includes the plural and the plural the singular; words importing any gender include the other genders; references to "writing" include printing, typing, lithography and other means of reproducing words in a visible form; references to agreements and other contractual instruments include all subsequent amendments, amendments and restatements and supplements thereto or changes therein entered into in accordance with their respective terms and not prohibited by this Indenture; references to Persons include their permitted successors and assigns; references to laws include their amendments and supplements, the rules and regulations thereunder and any successors thereto; and the term "including" means "including without limitation." SECTION 1.03. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the Securities and Exchange Commission. "indenture securities" means the Notes. "indenture security holder" means a Noteholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Indenture Trustee. "obligor" on the indenture securities means the Issuer and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined in the TIA, defined in the TIA by reference to another statute or defined by Commission rule have the meanings so assigned to them. ARTICLE II The Notes SECTION 2.01. Form. The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes[, the VPTN] and the Class B Notes, in each case together with the Indenture Trustee's certificate of authentication, shall be in substantially the form set forth in Exhibit A, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution thereof. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. 10 18 The Definitive Notes shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the officers executing such Notes, as evidenced by their execution of such Notes. Each Note shall be dated the date of its authentication. The terms of the Notes set forth in Exhibit A are part of the terms of this Indenture. SECTION 2.02. Execution, Authentication and Delivery. The Notes shall be executed on behalf of the Issuer by any of its Authorized Officers. The signature of any such Authorized Officer on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signature of individuals who were at any time Authorized Officers of the Issuer shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes. The Indenture Trustee shall upon Issuer Order authenticate and deliver the Class A-1 Notes for original issue in an aggregate principal amount of $[_______________], the Class A-2 Notes for original issue in an aggregate principal amount of $[_______________], the Class A-3 Notes for original issue in an aggregate principal amount of $[_______________], [the VPTN for original issue in an aggregate principal amount of $[______________],] and the Class B Notes for original issue in an aggregate principal amount of $[_______________]. The aggregate principal amount of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class B Notes outstanding at any time may not exceed such respective amounts except as provided in Section 2.05. The Notes shall be issuable as registered Notes in denominations of $1,000 and any integral multiple thereof. Each Note shall be dated the date of its authentication. [On the Targeted Scheduled Distribution Date for each subclass of the Class A Notes, a VPTN may be issued in an amount equal to the VPTN Issuance Amount. The Issuer shall execute the VPTN, and upon receipt of the Issuer Order, the Indenture Trustee shall cause such VPTN to be authenticated and delivered. Each such order shall set forth: (i) the issuance date and Spread of the VPTN; (ii) the aggregate principal amount of the VPTN to be authenticated and delivered on such issuance date, (iii) the VPTN Rate for such VPTN; and (iv) any other terms or provisions of such VPTN which shall not be inconsistent with the provisions of this Indenture. The Indenture Trustee shall not, however, cause to be authenticated and deliver any VPTN on a Targeted Scheduled Distribution Date unless the Issuer has: (i) delivered to the Indenture Trustee an Officer's Certificate certifying that the following conditions have been satisfied: (A) both before and after giving effect to the issuance of the VPTN and to the application of such proceeds and any amounts on deposit in the Accumulation Account and in the Collection Account, the aggregate principal 11 19 balance of the receivables must be equal to or greater than the aggregate outstanding balance of the Class A Notes, the VPTNs, the Class B Notes and the Class C Certificates; (B) an Extended Sequential Amortization Period must not have occurred; (C) the VPTN must be rated "AAA" and "Aaa" by S&P and Moody's, respectively; (D) the Interest Rate Swap Agreement must be in full force and effect with a notional amount equal to the sum of the principal balances of such VPTN and any other outstanding VPTNs; (E) no Servicer Default shall have occurred and be continuing; (F) no Event of Default shall have occurred and be continuing; (G) the purchase price of the VPTN must be equal to par; and (H) the interest rate on the VPTN must not exceed one-month LIBOR plus [____]%. (ii) delivered to the Indenture Trustee an Opinion of Counsel, which shall also be addressed to the purchaser of such VPTN and the Rating Agencies and shall be dated the related Targeted Scheduled Distribution Date, substantially to the effect that: (A) the Issuer has been duly formed and is validly existing as a business trust under the Delaware Business Trust Act (the "Delaware Act"), and has the power and authority under the Trust Agreement and the Delaware Act to execute, deliver and perform its obligations under the Trust Agreement, the Indenture, the Sale and Servicing Agreement, the Administration Agreement, the Interest Rate Swap Agreement, the Certificates and the Notes; (B) the Issuer has full power and authority to issue and sell the VPTN to be sold to the purchaser on such Targeted Scheduled Distribution Date, pursuant to a VPTN purchase agreement, and the Issuer has duly authorized such sale to the purchaser by all necessary action; (C) registration of the VPTN under the Securities Act is not required in connection with the purchase and sale of the VPTN pursuant to the VPTN purchase agreement; and (D) the issuance and sale of the VPTN has been duly authorized by the Trust, and the VPTN, when duly executed by the Trust and authenticated by the Indenture Trustee in accordance with the Indenture and delivered to and paid for by the purchaser thereof in accordance with the Indenture, will be validly issued and outstanding and entitled to the benefits of the Indenture.] 12 20 No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form included in Exhibit A, executed by the Indenture Trustee by the manual or facsimile signature of one of its authorized signatories, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. SECTION 2.03. Temporary Notes. Pending the preparation of Definitive Notes, the Issuer may execute, and upon receipt of an Issuer Order the Indenture Trustee shall authenticate and deliver, temporary Notes that are printed, lithographed, typewritten, mimeographed or otherwise produced, of the tenor of the Definitive Notes in lieu of which they are issued and with such variations not inconsistent with the terms of this Indenture as the officers executing such Notes may determine, as evidenced by their execution of such Notes. If temporary Notes are issued, the Issuer will cause Definitive Notes to be prepared without unreasonable delay. After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon surrender of the temporary Notes at the office or agency of the Issuer to be maintained as provided in Section 3.02, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes of any Class, the Issuer shall execute, and the Indenture Trustee shall authenticate and deliver in exchange therefor, a like principal amount of Definitive Notes of such Class of authorized denominations. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as Definitive Notes. SECTION 2.04. Registration; Registration of Transfer and Exchange. (a) The Note Registrar shall maintain a Note Register in which, subject to such reasonable regulations as it may prescribe, the Note Registrar shall provide for the registration of Notes and transfers and exchanges of Notes as provided in this Indenture. The Indenture Trustee is hereby initially appointed Note Registrar for the purpose of registering Notes and transfers and exchanges of Notes as provided in this Indenture. In the event that, subsequent to the Closing Date, the Indenture Trustee notifies the Issuer that it is unable to act as Note Registrar, the Issuer shall appoint another bank or trust company, having an office or agency located in the Borough of Manhattan, The City of New York, agreeing to act in accordance with the provisions of this Indenture applicable to it, and otherwise acceptable to the Indenture Trustee, to act as successor Note Registrar under this Indenture. If a Person other than the Indenture Trustee is appointed by the Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt written notice of the appointment of such Note Registrar and of the location, and any change in the location, of the Note Register, and the Indenture Trustee shall have the right to inspect the Note Register at all reasonable times and to obtain copies thereof, and the Indenture Trustee shall have the right to rely upon a certificate executed on behalf of the Note Registrar by an Executive Officer thereof as to the names and addresses of the Holders of the Notes and the principal amounts and number of such Notes. (b) Upon the proper surrender for registration of transfer of any Note at the office or agency of the Issuer to be maintained as provided in Section 3.02, the Issuer shall execute, and the Indenture Trustee shall authenticate in the name of the designated transferee or transferees, 13 21 one or more new Notes of the same Class in authorized denominations of a like aggregate principal amount. (c) At the option of the Holder, Notes may be exchanged for other Notes of the same Class in any authorized denominations, of a like aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, the Issuer shall execute, and the Indenture Trustee shall authenticate and the Noteholder shall obtain from the Indenture Trustee, the Notes which the Noteholder making the exchange is entitled to receive. Every Note presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee and the Note Registrar duly executed by the Holder thereof or his attorney duly authorized in writing. (d) No service charge shall be made for any registration of transfer or exchange of Notes, but the Indenture Trustee may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Notes. (e) All Notes surrendered for registration of transfer or exchange shall be canceled and subsequently destroyed by the Indenture Trustee. SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (ii) there is delivered to the Indenture Trustee such security or indemnity as may be required by it to hold the Issuer and the Indenture Trustee harmless, then, in the absence of notice to the Issuer, the Note Registrar or the Indenture Trustee that such Note has been acquired by a protected purchaser, the Issuer shall execute, and upon its request the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement Note of the same Class. In connection with the issuance of any new Note under this Section 2.05, the Issuer may require payment by the Holder of such Note of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. If, after the delivery of such replacement Note or payment of a destroyed, lost or stolen Note, a protected purchaser of the original Note in lieu of which such replacement Note was issued presents for payment such original Note, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Note (or such payment) from the Person to whom it was delivered or any Person taking such replacement Note from such Person to whom such replacement Note was delivered or any assignee of such Person, except a protected purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in connection therewith. Every replacement Note issued pursuant to this Section 2.05 in replacement of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes of the same Class duly issued hereunder. 14 22 The provisions of this Section 2.05 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. SECTION 2.06. Persons Deemed Owners. Prior to due presentment for registration of transfer of any Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name any Note is registered (as of the day of determination) as the owner of such Note for the purpose of receiving payments of principal of and interest, if any, on such Note and for all other purposes whatsoever, and none of the Issuer, the Indenture Trustee or any agent of the Issuer or the Indenture Trustee shall be affected by notice to the contrary. SECTION 2.07. Payments of Principal and Interest. (a) The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class B Notes shall accrue interest during each Interest Period at the Class A-1 Rate, the Class A-2 Rate, the Class A-3 Rate and the Class B Rate, respectively, and such interest shall be payable on each related Distribution Date as specified in the applicable Note by applying amounts available pursuant to Section 5.06 of the Sale and Servicing Agreement and to Section 3.01 of this Indenture. Any installment of interest or principal payable on any Note that is punctually paid or duly provided for by the Issuer on the applicable Distribution Date shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered on the Record Date by wire transfer in immediately available funds to the account designated by such nominee, except for the final installment of principal payable with respect to such Note on a Distribution Date or on the applicable Final Scheduled Distribution Date, which shall be payable as provided below. (b) The principal of each Note shall be payable in installments on each Distribution Date by applying amounts available pursuant to Section 5.06 of the Sale and Servicing Agreement. Notwithstanding the foregoing, the entire unpaid principal amount of the Notes shall be due and payable, if not previously paid, from and after the date on which the Indenture Trustee or the Holders of the Controlling Class of Notes representing not less than a majority of the Outstanding Amount of such Class (excluding for such purpose the outstanding principal amount of any Notes held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates unless at such time all of the Notes of such Class are held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates) have declared the Notes to be immediately due and payable in the manner provided in Section 5.02 in connection with an Event of Default. All principal payments on each Class of Notes shall be made pro rata to the Noteholders of such Class entitled thereto. The Indenture Trustee shall notify the Person in whose name a Note is registered at the close of business on the Record Date preceding the Distribution Date on which the final installment of principal of and interest on such Note will be paid. Such notice shall be mailed or transmitted by facsimile not less than 15 nor more than 30 days prior to such final Distribution Date, shall specify that such final installment will be payable only upon presentation and surrender of such Note and shall specify the place where such Note may be presented and surrendered for payment of such installment. SECTION 2.08. Cancellation. All Notes surrendered for payment, registration of transfer or exchange shall, if surrendered to any Person other than the Indenture Trustee, be 15 23 delivered to the Indenture Trustee and shall be promptly canceled by the Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Notes may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time unless the Issuer shall direct by an Issuer Order that they be destroyed or returned to it; provided, that such Issuer Order is timely and the Notes have not been previously disposed of by the Indenture Trustee. SECTION 2.09. Release of Collateral. Subject to Sections 8.05 and 11.01 and the terms of the Basic Documents, the Indenture Trustee shall release property from the lien of this Indenture only upon receipt of an Issuer Request accompanied by an Officer's Certificate, an Opinion of Counsel and Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(l) or an Opinion of Counsel in lieu of such Independent Certificates to the effect that the TIA does not require any such Independent Certificates. SECTION 2.10. Book-Entry Notes. The Notes, upon original issuance, will be issued in the form of typewritten Notes representing the Book-Entry Notes, to be delivered to The Depository Trust Company, the initial Clearing Agency, or a custodian therefor, by, or on behalf of, the Issuer. The Book-Entry Notes shall be registered initially on the Note Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Note Owner thereof will receive a Definitive Note representing such Note Owner's interest in such Note, except as provided in Section 2.12. Unless and until definitive, fully registered Notes (the "Definitive Notes") have been issued to such Note Owners pursuant to Section 2.12: (a) the provisions of this Section shall be in full force and effect; (b) the Note Registrar and the Indenture Trustee shall be entitled to deal with the Clearing Agency for all purposes of this Indenture (including the payment of principal of and interest on the Notes and the giving of instructions or directions hereunder) as the authorized representative of the Note Owners; (c) to the extent that the provisions of this Section conflict with any other provisions of this Indenture, the provisions of this Section shall control; (d) the rights of Note Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Note Owners and the Clearing Agency and/or the Clearing Agency Participants pursuant to the Note Depository Agreement. Unless and until Definitive Notes are issued pursuant to Section 2.12, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit payments of principal of and interest on the Notes to such Clearing Agency Participants; and (e) whenever this Indenture requires or permits actions to be taken based upon instructions or directions of Holders of Notes evidencing a specified percentage of the 16 24 Outstanding Amount of the Notes or of the Notes of any Class, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from Note Owners and/or Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Notes and has delivered such instructions to the Indenture Trustee. SECTION 2.11. Notices to Clearing Agency. Whenever a notice or other communication to the Noteholders is required under this Indenture, unless and until Definitive Notes shall have been issued to such Note Owners pursuant to Section 2.12, the Indenture Trustee shall give all such notices and communications specified herein to be given to Holders of the Notes to the Clearing Agency and shall be deemed to have been given as of the date of delivery to the Clearing Agency. SECTION 2.12. Definitive Notes. If (i) the Seller, the Owner Trustee or the Administrator advises the Indenture Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities with respect to the Book-Entry Notes and the Seller, the Owner Trustee and the Administrator are unable to locate a qualified successor (and if the Administrator has made such determination, the Administrator has given written notice thereof to the Indenture Trustee), (ii) the Seller, the Indenture Trustee or the Administrator at its option advises each other such party in writing that it elects to terminate the book-entry system through the Clearing Agency, or (iii) after the occurrence of an Event of Default or a Servicer Default, Note Owners representing beneficial interests aggregating a majority of the Outstanding Amount of the Notes of all Classes advise the Indenture Trustee and the Clearing Agency in writing that the continuation of a book-entry system through the Clearing Agency or a successor thereto is no longer in the best interests of the Note Owners acting together as a single Class, then the Clearing Agency shall notify all Note Owners and the Indenture Trustee of the occurrence of such event and of the availability of Definitive Notes to Note Owners requesting the same. Upon surrender to the Indenture Trustee of the typewritten Notes representing the Book-Entry Notes by the Clearing Agency, accompanied by registration instructions, the Issuer shall execute and the Indenture Trustee shall authenticate the Definitive Notes in accordance with the instructions of the Clearing Agency. None of the Issuer, the Note Registrar or the Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes as Noteholders. The Indenture Trustee, Issuer and Administrator shall not be liable for any inability to locate a qualified successor Clearing Agency. From and after the date of issuance of Definitive Notes, all notices to be given to Noteholders will be mailed thereto at their addresses of record in the Note Register as of the relevant Record Date. Such notices will be deemed to have been given as of the date of mailing. SECTION 2.13. Tax Treatment. The Issuer has entered into this Indenture, and the Notes will be issued, with the intention that, for federal, state and local income, single business and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer secured by the Trust Estate or, for periods during which there is a single beneficial owner of the Certificates, indebtedness of the Certificateholder issued by the Trust Estate. The Issuer, by entering into this Indenture, and each Noteholder, by its acceptance of a Note (and each Note Owner by its 17 25 acceptance of an interest in the applicable Book-Entry Note), agree to treat the Notes for federal, state and local income, single business and franchise tax purposes as indebtedness of the Issuer. ARTICLE III Covenants SECTION 3.01. Payment of Principal and Interest. In accordance with the terms of this Indenture, the Issuer will duly and punctually (i) pay the principal of and interest, if any, on the Notes in accordance with the terms of the Notes and (ii) cause the Servicer to direct the Indenture Trustee to release from the Collection Account all other amounts distributable or payable from the Owner Trust Estate under the Trust Agreement, the Sale and Servicing Agreement and the Administration Agreement. Without limiting the foregoing and in order to fulfill such obligations, pursuant to Sections 8.02 and 8.03 hereof, the Issuer will cause the Servicer to direct the Indenture Trustee to apply all amounts on deposit in the Collection Account, the Reserve Account and the Yield Supplement Account on a Distribution Date deposited therein pursuant to the Sale and Servicing Agreement (i) (a) for the benefit of the Class A-1 Notes, to the Class A-1 Noteholders, (b) for the benefit of the Class A-2 Notes, to the Class A-2 Noteholders, (c) for the benefit of the Class A-3 Notes, to the Class A-3 Noteholders, and (d) for the benefit of the Class B Notes, to the Class B Noteholders, and (ii) for the benefit of the Certificateholders, to or as directed by the Owner Trustee or the Administrator, as set forth in Section 5.06, 5.07 and 5.08 of the Sale and Servicing Agreement. Amounts properly withheld under the Code by any Person from a payment to any Noteholder or Certificateholder of interest and/or principal shall be considered as having been paid by the Issuer to such Noteholder or Certificateholder for all purposes of this Indenture. SECTION 3.02. Maintenance of Office or Agency. The Issuer will maintain in the Borough of Manhattan, The City of New York, an office or agency where Notes may be surrendered for registration of transfer or exchange, and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served. The Issuer hereby initially appoints [_____________] to serve as its agent for the foregoing purposes. The Issuer will give prompt written notice to the Indenture Trustee of the location, and of any change in the location, of any such office or agency. If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent to receive all such surrenders, notices and demands. SECTION 3.03. Money for Payments To Be Held in Trust. As provided in Sections 8.02 and 8.03, all payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the Collection Account, [the Accumulation Account,] the Reserve Account or the Yield Supplement Account pursuant to Sections 8.02 and 8.03 shall be made on behalf of the Issuer by the Indenture Trustee or by the Paying Agent, and no amounts so withdrawn from such accounts for payments of Notes shall be paid over to the Issuer, the Owner Trustee or the Administrator except as provided in this Section. On or before each Distribution Date, the Issuer shall deposit in the Collection Account or, in accordance with the Sale and Servicing Agreement, cause to be deposited (including the 18 26 provision of instructions to the Indenture Trustee to make any required withdrawals from the Reserve Account or the Yield Supplement Account and to deposit such amounts in the Collection Account), an aggregate sum sufficient to pay the amounts then becoming due under the Notes[, the Interest Rate Swap Agreement] and the Certificates, such sum to be held in trust for the benefit of the Persons entitled thereto, and (unless the Paying Agent is the Indenture Trustee) shall promptly notify the Indenture Trustee of its action or failure so to act. The Indenture Trustee, as Paying Agent, hereby agrees with the Issuer that it will, and the Issuer will cause each Paying Agent other than the Indenture Trustee, as a condition to its acceptance of its appointment as Paying Agent, to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee, subject to the provisions of this Section, that such Paying Agent will: (a) hold all sums held by it for the payment of amounts due with respect to the Notes or Certificates or for release to the Issuer for payment on the Certificates in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay or release such sums to such Persons as herein provided; (b) give the Indenture Trustee notice of any default by the Issuer (or any other obligor upon the Notes) of which it has actual knowledge in the making of any payment required to be made with respect to the Notes or the release of any amounts to the Issuer to be paid to the Certificateholders; (c) at any time during the continuance of any such default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent; (d) immediately resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of Notes (or for release to the Issuer) if at any time it ceases to meet the standards required to be met by a Paying Agent at the time of its appointment; and (e) comply with all requirements of the Code with respect to the withholding from any payments made by it on any Notes or Certificates (or assisting the Issuer to withhold from payment to the Certificateholders) of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith. The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, by Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money. Subject to applicable laws with respect to escheat of funds, any money held by the Indenture Trustee or any Paying Agent in trust for the payment of any amount due with respect to any Note and remaining unclaimed after such amount has become due and payable and after the Indenture Trustee has taken the steps described in this paragraph shall be discharged from 19 27 such trust and be paid to Children's Hospital Los Angeles upon presentation thereto of an Issuer Request; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof, and all liability of the Indenture Trustee or such Paying Agent with respect to such trust money shall thereupon cease. In the event that any Noteholder shall not surrender its Notes for retirement within six months after the date specified in the written notice of final payment described in Section 2.07, the Indenture Trustee will give a second written notice to the registered Noteholders that have not surrendered their Notes for final payment and retirement. If within one year after such second notice any Notes have not been surrendered, the Indenture Trustee shall, at the expense and direction of the Issuer, cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be paid to Children's Hospital Los Angeles. The Indenture Trustee shall also adopt and employ, at the expense and direction of the Issuer, any other reasonable means of notification of such repayment specified by the Issuer or the Administrator. SECTION 3.04. Existence. The Issuer will keep in full effect its existence, rights and franchises as a business trust under the laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes, organized under the laws of any other State or of the United States of America, in which case the Issuer will keep in full effect its existence, rights and franchises under the laws of such other jurisdiction) and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the Notes, the Collateral and each other instrument or agreement included in the Trust Estate or the Owner Trust Estate. SECTION 3.05. Protection of Trust Estate. The Issuer will from time to time execute and deliver all such supplements and amendments hereto and all such financing statements, continuation statements, instruments of further assurance and other instruments, and will take such other action necessary or advisable to: (a) maintain or preserve the lien and security interest (and the priority thereof) of this Indenture or carry out more effectively the purposes hereof; (b) perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture; (c) enforce any of the Collateral; or (d) preserve and defend title to the Trust Estate and the rights of the Indenture Trustee[, the Swap Counterparty] and the Noteholders in such Trust Estate against the claims of all persons and parties. The Issuer hereby designates the Indenture Trustee its agent and attorney-in-fact to execute any financing statement, continuation statement or other instrument required to be executed pursuant to this Section 3.05. 20 28 SECTION 3.06. Opinions as to Trust Estate. (a) On the Closing Date, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken with respect to the execution, recording and filing of this Indenture, any indentures supplemental hereto, any requisite financing statements and continuation statements and any other requisite documents necessary to perfect and make effective the lien and security interest of this Indenture or stating that, in the opinion of such counsel, no such action is necessary to make such lien and security interest effective. (b) As and when specified in Section 10.02(h) of the Sale and Servicing Agreement, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken with respect to the execution, recording, filing or re-recording and refiling of this Indenture, any indentures supplemental hereto, any financing statements and continuation statements and any other requisite documents necessary to maintain the lien and security interest created by this Indenture or stating that in the opinion of such counsel no such action is necessary to maintain such lien and security interest. Such Opinion of Counsel shall also describe the execution, recording, filing or re-recording and refiling of this Indenture, any indentures supplemental hereto, any financing statements and continuation statements and any other documents that will, in the opinion of such counsel, be required to maintain the lien and security interest of this Indenture until the date in the following calendar year on which such Opinion of Counsel must again be delivered. SECTION 3.07. Performance of Obligations; Servicing of Receivables. (a) The Issuer will not take any action and will use its best efforts not to permit any action to be taken by others that would release any Person from any of such Person's material covenants or obligations under any instrument or agreement included in the Trust Estate or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except as expressly provided in the Basic Documents. (b) The Issuer may contract with other Persons to assist it in performing its duties under this Indenture, and any performance of such duties by a Person identified to the Indenture Trustee in an Officer's Certificate of the Issuer shall be deemed to be action taken by the Issuer. Initially, the Issuer has contracted with the Servicer and the Administrator to assist the Issuer in performing its duties under this Indenture. (c) The Issuer will punctually perform and observe all of its obligations and agreements contained in the Basic Documents and in the instruments and agreements included in the Trust Estate, including but not limited to filing or causing to be filed all UCC financing statements and continuation statements required to be filed by the terms of the Trust Agreement, this Indenture and the Sale and Servicing Agreement in accordance with and within the time periods provided for herein and therein. (d) If an Authorized Officer of the Issuer shall have knowledge of the occurrence of a Servicer Default under the Sale and Servicing Agreement, the Issuer shall promptly notify 21 29 the Indenture Trustee and the Rating Agencies thereof, and shall specify in such notice the action, if any, the Issuer is taking with respect of such default. If a Servicer Default shall arise from the failure of the Servicer to perform any of its duties or obligations under the Sale and Servicing Agreement with respect to the Receivables, the Issuer shall take all reasonable steps available to it to remedy such failure. (e) As promptly as possible after the giving of notice of termination to the Servicer of the Servicer's rights and powers pursuant to Section 8.01 of the Sale and Servicing Agreement, the Indenture Trustee shall appoint a successor servicer (the "Successor Servicer"), and such Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the Indenture Trustee. In the event that a Successor Servicer has not been appointed and accepted its appointment as set forth in Section 8.02 of the Sale and Servicing Agreement, the Indenture Trustee without further action shall automatically be appointed the Successor Servicer and shall thereafter be entitled to the Total Servicing Fee. Notwithstanding the above, the Indenture Trustee shall, if it shall be legally unable so to act, appoint or petition a court of competent jurisdiction to appoint, and the predecessor Servicer, if no successor Servicer has been appointed at the time the predecessor Servicer has ceased to act, may petition a court of competent jurisdiction to appoint, any established institution having a net worth of not less than $100,000,000 and whose regular business shall include the servicing of automobile and/or light-duty truck receivables, as the successor to the Servicer under the Sale and Servicing Agreement. Upon such appointment, the Indenture Trustee will be released from the duties and obligations of acting as Successor Servicer, such release effective upon the effective date of the servicing agreement entered into between the Successor Servicer and the Issuer. In connection with any such appointment, the Indenture Trustee may make such arrangements for the compensation of such successor as it and such Successor Servicer shall agree, subject to the limitations set forth below and in the Sale and Servicing Agreement, and in accordance with Section 8.02 of the Sale and Servicing Agreement, the Issuer shall enter into an agreement with such Successor Servicer for the servicing of the Receivables (such agreement to be in form and substance satisfactory to the Indenture Trustee). If the Indenture Trustee shall succeed to the Servicer's duties as servicer of the Receivables as provided herein, it shall do so in its individual capacity and not in its capacity as Indenture Trustee and, accordingly, the provisions of Article VI hereof shall be inapplicable to the Indenture Trustee in its duties as Successor Servicer and the servicing of the Receivables. In case the Indenture Trustee shall become the Successor Servicer, the Indenture Trustee shall be entitled to appoint as a subservicer any one of its affiliates, provided that the Indenture Trustee, in its capacity as Successor Servicer, shall remain fully liable for the actions and omissions of such Affiliate. (f) Upon any termination of the Servicer's rights and powers pursuant to the Sale and Servicing Agreement, the Issuer shall promptly notify the Indenture Trustee. As soon as a Successor Servicer is appointed, the Issuer shall notify the Indenture Trustee of such appointment, specifying in such notice the name and address of such Successor Servicer. (g) Without derogating from the absolute nature of the assignment granted to the Indenture Trustee under this Indenture or the rights of the Indenture Trustee hereunder, the Issuer agrees (i) that it will not, without the prior written consent of the Indenture Trustee and the Holders of the Controlling Class of Notes representing a majority in Outstanding Amount of 22 30 such Class (excluding for such purposes the outstanding principal amount of any Notes held of record or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates, unless at such time, all of the Notes of such Class are held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates), amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, waiver, supplement, termination or surrender of, the terms of any Collateral (except to the extent otherwise provided in the Sale and Servicing Agreement) or the Basic Documents, or waive timely performance or observance by the Servicer or the Seller under the Sale and Servicing Agreement; and (ii) that any such amendment shall not (A) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on the Receivables or distributions that are required to be made for the benefit of the Noteholders or change the Interest Rate or the Specified Reserve Account Balance (except as otherwise provided in the Basic Documents), in each case without the consent of each of the "adversely affected" Noteholders, or (B) reduce the aforesaid percentage of the Notes that is required to consent to any such amendment, without the consent of the Holders of all the outstanding Notes. If any such amendment, modification, supplement or waiver shall be so consented to by the Indenture Trustee or such Holders, the Issuer agrees, promptly following a request by the Indenture Trustee to agree to such amendment and to execute and deliver, in its own name and at its own expense, such agreements, instruments, consents and other documents as the Indenture Trustee may deem necessary or appropriate in the circumstances to implement such amendment and to cause the relevant Basic Documents, as amended, to be enforceable against the Issuer. For the purposes of clause (ii) above, an amendment will be deemed not to "adversely affect" a Noteholder of any Class only if each Rating Agency confirms that such amendment will not result in a reduction or withdrawal of its rating on such Class of Notes. SECTION 3.08. Negative Covenants. So long as any Notes are Outstanding, the Issuer shall not: (a) except as expressly permitted by Basic Documents, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the Issuer, including those included in the Trust Estate, unless directed to do so by the Indenture Trustee; (b) claim any credit on, or make any deduction from the principal or interest payable in respect of, the Notes (other than amounts properly withheld from such payments under the Code) or assert any claim against any present or former Noteholder by reason of the payment of the taxes levied or assessed upon any part of the Trust Estate; (c) except as may be expressly permitted hereby, (A) permit the validity or effectiveness of this Indenture to be impaired, or permit the lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Notes under this Indenture, (B) permit any lien, charge, excise, claim, security interest, mortgage or other encumbrance (other than the lien of this Indenture) to be created on or extend to or otherwise arise upon or burden the Trust Estate or any part thereof or any interest therein or the proceeds thereof (other than tax liens, mechanics' liens and other liens that arise by operation of law, in each case on any of the Financed Vehicles and arising solely as a result of an action or omission of the related Obligor), (C) permit the lien of this Indenture not to constitute a valid first priority (other than with respect to any such tax, 23 31 mechanics' or other lien) security interest in the Trust Estate, or (D) dissolve or liquidate in whole or in part; or (d) assume or incur any indebtedness other than the Notes or as expressly contemplated by this Indenture (in connection with the obligation to reimburse Advances from the Trust Estate, or to pay expenses from the Trust Estate) or by the Basic Documents as in effect on the date hereof. SECTION 3.09. Annual Statement as to Compliance. The Issuer will cause the Servicer to deliver to the Indenture Trustee concurrently with its delivery thereof to the Issuer the annual statement of compliance described in Section 4.09 of the Sale and Servicing Agreement. In addition, on the same date annually upon which such annual statement of compliance is to be delivered by the Servicer, the Issuer shall deliver to the Indenture Trustee an Officer's Certificate stating, as to the Authorized Officer signing such Officer's Certificate, that: (a) a review of the activities of the Issuer during such year and of its performance under this Indenture has been made under such Authorized Officer's supervision; and (b) to the best of such Authorized Officer's knowledge, based on such review, the Issuer has complied with all conditions and covenants under this Indenture throughout such year, or, if there has been a default in its compliance with any such condition or covenant, specifying each such default known to such Authorized Officer and the nature and status thereof. SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms. (a) The Issuer shall not consolidate or merge with or into any other Person, unless: (i) the Person (if other than the Issuer) formed by or surviving such consolidation or merger shall be a Person organized and existing under the laws of the United States of America or any State or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form satisfactory to the Indenture Trustee, the duty to make due and punctual payment of the principal of and interest on all Notes and the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein; (ii) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; (iii) no Rating Agency shall have notified the Indenture Trustee and the Owner Trustee that such transaction might or would result in the removal or reduction of the rating then assigned thereby to any Class of Notes; (iv) the Issuer shall have received an Opinion of Counsel (and shall have delivered copies thereof to the Indenture Trustee) to the effect that such transaction will not have any material adverse tax consequence to the Issuer, [the Swap Counterparty,] any Noteholder or any Certificateholder; 24 32 (v) any action that is necessary to maintain each lien and security interest created by the Trust Agreement, the Sale and Servicing Agreement or this Indenture shall have been taken; and (vi) the Issuer shall have delivered to the Indenture Trustee an Officer's Certificate and an Opinion of Counsel each stating that such consolidation or merger and any related supplemental indenture complies with this Article III and that all conditions precedent provided in this Indenture relating to such transaction have been complied with (including any filing required by the Exchange Act). (b) The Issuer shall not convey or transfer any of its properties or assets, including those included in the Trust Estate, to any Person, unless: (i) the Person that acquires by conveyance or transfer such properties and assets of the Issuer shall (A) be a United States citizen or a Person organized and existing under the laws of the United States of America or any state or the District of Columbia, (B) expressly assume, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form satisfactory to the Indenture Trustee, the duty to make due and punctual payment of the principal of and interest on all Notes [and all obligations under the Interest Rate Swap Agreement] and the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein, (C) expressly agrees by means of such supplemental indenture that all right, title and interest so conveyed or transferred shall be subject and subordinate to the rights of Holders of the Notes [and the Swap Counterparty], (D) unless otherwise provided in such supplemental indenture, expressly agrees to indemnify, defend and hold harmless the Issuer, the Owner Trustee and the Indenture Trustee against and from any loss, liability or expense arising under or related to this Indenture and the Notes, and (E) expressly agrees by means of such supplemental indenture that such Person (or if a group of Persons, then one specified Person) shall make all filings that counsel satisfactory to such purchaser or transferee and the Indenture Trustee determines must be made with (1) the Commission (and any other appropriate Person) required by the Exchange Act or the appropriate authorities in any state in which the Notes have been sold pursuant to any qualification or exemption under the securities or "blue sky" laws of such state, in connection with the Notes or (2) the Internal Revenue Service or the relevant state or local taxing authorities of any jurisdiction; (ii) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; (iii) no Rating Agency shall have notified the Indenture Trustee and the Owner Trustee that such transaction might or would result in the removal or reduction of the rating then assigned thereby to any Class of Notes; (iv) the Issuer shall have received an Opinion of Counsel (and shall have delivered copies thereof to the Indenture Trustee) to the effect that such transaction will not have any material adverse tax consequence to the Issuer, [the Swap Counterparty,] any Noteholder or any Certificateholder; 25 33 (v) any action that is necessary to maintain each lien and security interest created by the Trust Agreement, the Sale and Servicing Agreement or this Indenture shall have been taken; and (vi) the Issuer shall have delivered to the Indenture Trustee an Officer's Certificate and an Opinion of Counsel each stating that such conveyance or transfer and such supplemental indenture comply with this Article III and that all conditions precedent herein provided for relating to such transaction have been complied with (including any filing required by the Exchange Act). SECTION 3.11. Successor or Transferee. (a) Upon any consolidation or merger of the Issuer in accordance with Section 3.10(a), the Person formed by or surviving such consolidation or merger (if other than the Issuer) shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such Person had been named as the Issuer herein. (b) Upon a conveyance or transfer of all the assets and properties of the Issuer pursuant to Section 3.10(b), Nissan Auto Receivables [____-_] Owner Trust will be released from every covenant and agreement of this Indenture to be observed or performed on the part of the Issuer with respect to the Notes and the Certificates immediately upon the delivery of written notice to the Indenture Trustee stating that Nissan Auto Receivables [____-_] Owner Trust is to be so released. SECTION 3.12. No Other Business. Unless and until the Issuer shall have been released from its duties and obligations hereunder, the Issuer shall not engage in any business other than financing, purchasing, owning, selling and managing the Receivables in the manner contemplated by the Basic Documents and activities incidental thereto SECTION 3.13. No Borrowing. Unless and until the Issuer shall have been released from its duties and obligations hereunder, the Issuer shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness except for the Notes or other obligations permitted hereunder (including the obligation to reimburse Advances or certain expenses of the Servicer) or under another Basic Document (including indemnification expenses of the Issuer and certain fees and expenses of the Administrator). SECTION 3.14. Servicer's Notice Obligations. The Issuer shall cause the Servicer to comply with all of its duties and obligations with respect to the preparation of reports, the delivery of Officer's Certificates and Opinions of Counsel and the giving of instructions and notices under the Sale and Servicing Agreement (including, but not limited to, under Sections 4.08, 4.09, 4.11, 4.13, 5.09 and Article IX thereof). SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities. Unless and until the Issuer shall have been released from its duties and obligations hereunder, except as contemplated by the Sale and Servicing Agreement or this Indenture, the Issuer shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so 26 34 doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person. SECTION 3.16. Capital Expenditures. Unless and until the Issuer shall have been released from its duties and obligations hereunder, the Issuer shall not make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty). SECTION 3.17. Removal of Administrator. So long as any Notes are Outstanding, the Issuer shall not remove the Administrator without cause unless so instructed by the Owner Trustee or the Indenture Trustee and unless each Rating Agency shall have received 10 days' written notice thereof and shall not have notified the Indenture Trustee, the Administrator or the Owner Trustee that such removal might or would result in the removal or reduction of the rating then assigned thereby to any Class of Notes or the Certificates. SECTION 3.18. Restricted Payments. The Issuer shall not, directly or indirectly, (i) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to the Servicer, the Owner Trustee or any Certificateholder or otherwise with respect to any ownership or equity interest or security in or of the Issuer, (ii) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or security or (iii) set aside or otherwise segregate any amounts for any such purpose; provided, however, that the Issuer may make, or cause to be made, (x) distributions to the Servicer, the Owner Trustee, [the Swap Counterparty,] the Noteholders and the Certificateholders as contemplated by, and to the extent funds are available for such purpose under, the Sale and Servicing Agreement or the Trust Agreement, and (y) payments to the Owner Trustee or the Indenture Trustee pursuant to the Administration Agreement. The Issuer will not, directly or indirectly, make payments to or distributions from the Collection Account except in accordance with the Basic Documents. SECTION 3.19. Notice of Events of Default. The Issuer shall give the Indenture Trustee and each Rating Agency prompt written notice of each Event of Default hereunder, each default on the part of the Servicer or the Seller of its obligations under the Sale and Servicing Agreement (including any Servicer Defaults) and each default on the part of NMAC of its obligations under the Purchase Agreement. The Indenture Trustee shall notify each Noteholder of record in writing of any Event of Default promptly upon a Responsible Officer obtaining actual knowledge thereof. Such notices will be provided in accordance with Section 2.11. SECTION 3.20. Further Instruments and Actions. Upon request of the Indenture Trustee, the Issuer will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. [ SECTION 3.21. Calculation Agent. (i) The Issuer agrees that for so long as any of the VPTNs are Outstanding, there shall at all times be an agent appointed to calculate LIBOR in 27 35 respect of each Interest Period (the "Calculation Agent"). The Issuer has initially appointed [____________________________] as Calculation Agent for purposes of determining LIBOR for each Interest Period. The Calculation Agent may be removed by the Issuer at any time. If the Calculation Agent is unable or unwilling to act as such or is removed by the Issuer, the Issuer shall promptly appoint as a replacement Calculation Agent a lending bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market and which does not control or is not controlled by or under common control with the Issuer or its Affiliates. The Calculation Agent may not resign its duties without a successor having been duly appointed. (ii) The Calculation Agent shall be required to agree that, as soon as possible after [___] (London time) on each LIBOR Determination Date, but in no event later than [___] (London Time) on the Business Day immediately following each LIBOR Determination Date, the Calculation Agent shall calculate the interest rate for each VPTN for the related Interest Period and the amount of interest payable (rounded to the nearest cent, with half a cent being rounded upwards) on the related Distribution Date, and shall communicate such rates and amounts to the Administrator, the Indenture Trustee and the Servicer. The Calculation Agent shall also specify to the Administrator and the Indenture Trustee the quotations upon which the interest rates have been calculated and in any event the Calculation Agent shall notify the Indenture Trustee and the Servicer before [___] (London time) on each LIBOR Determination Date that either: (A) it has determined or is in the process of determining the interest rates for the VPTNs and the amount of interest due on such Notes, or (ii) it has not determined and is not in the process of determining the interest rates for the VPTNs and the amount of interest due on such Notes, together with its reasons therefore. The determination of the interest rates and interest amounts by the Calculation Agent shall (in the absence of manifest error) be final and binding upon all parties. ] ARTICLE IV Satisfaction and Discharge SECTION 4.01. Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect with respect to the Notes except as to (i) rights of registration of transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.05, 3.08, 3.10, 3.12 and 3.13, (v) the rights, obligations and immunities of the Indenture Trustee hereunder (including the rights of the Indenture Trustee under Section 6.07 and the obligations of the Indenture Trustee under Sections 3.03 and 4.02), and (vi) the rights of the Noteholders and the Certificateholders as beneficiaries hereof with respect to the property so deposited with the Indenture Trustee payable to all or any of them, and the Indenture Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Notes, when: (a) either (1) all Notes theretofore authenticated and delivered (other than Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in 28 36 Section 2.05 and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 3.03) have been delivered to the Indenture Trustee for cancellation or (2) all Notes not theretofore delivered to the Indenture Trustee for cancellation have become due and payable or will become due and payable within one year (either because the Final Scheduled Distribution Date for the Class B Notes is within one year or because the Indenture Trustee has received notice of the exercise of the option granted pursuant to Section 9.01 of the Sale and Servicing Agreement) and the Issuer has irrevocably deposited or caused to be irrevocably deposited with the Indenture Trustee cash or direct obligations of or obligations guaranteed by the United States of America (which will mature prior to the date such amounts are payable), in trust for such purpose, in an amount sufficient to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Indenture Trustee for cancellation when due; (b) the Issuer has paid or caused to be paid all other sums payable hereunder [and under the Interest Rate Swap Agreement] by the Issuer; and (c) the Issuer has delivered to the Indenture Trustee an Officer's Certificate, an Opinion of Counsel and (if required by the TIA or the Indenture Trustee) an Independent Certificate from a firm of certified public accountants, each meeting the applicable requirements of Section 11.01 and, subject to Section 11.02, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. SECTION 4.02. Application of Trust Money. All moneys deposited with the Indenture Trustee pursuant to Section 4.01 hereof shall be held in trust and (a) applied by it in accordance with the provisions of the Notes and this Indenture to the payment, either directly or through any Paying Agent, as the Indenture Trustee may determine, to the Holders of the particular Notes for the payment of which such moneys have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal and interest or (b) released to the Owner Trustee for distribution to the Certificateholders or application pursuant to the Trust Agreement or the Sale and Servicing Agreement [and for payment to the Swap Counterparty of all sums, if any, due or to become due to the Swap Counterparty under and in accordance with this Indenture]; but such moneys need not be segregated from other funds except to the extent required herein or in the Sale and Servicing Agreement or required by law. SECTION 4.03. Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to the Notes, all moneys then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture with respect to such Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held and applied according to Section 3.03 or 4.02 and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. 29 37 ARTICLE V Remedies SECTION 5.01. Events of Default. "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) default in the payment of any interest on any Class A Note when the same becomes due and payable, and such default shall continue for a period of five days (so long as any Class A Notes are Outstanding, each Holder of any Class B Note or the Note Owner of any such Note by such Holder's acceptance of such Note or beneficial interest therein, as the case may be, shall be deemed to have consented to the delay in payment of interest on such Class of Notes and to have waived its right to institute suit for enforcement of any such payment); (b) after the Class A Notes have been paid in full, default in the payment of any interest on any Class B Note when the same becomes due and payable, and such default shall continue for a period of five days (so long as the Class B Notes are Outstanding); (c) default in the payment of the principal of or any installment of the principal of any Note when the same becomes due and payable; (d) default in the observance or performance of any covenant or agreement of the Issuer made in this Indenture (other than a covenant or agreement, a default in the observance or performance of which is elsewhere in this Section specifically dealt with) which shall continue or not be cured for a period of 90 days after there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least 25% of the Outstanding Amount of the Notes, acting together as a single class, a written notice specifying such default or incorrect representation or warranty and requiring it to be remedied and stating that such notice is a notice of Default hereunder; (e) any representation or warranty of the Issuer made in this Indenture or in any certificate or other writing delivered pursuant hereto or in connection herewith shall prove to have been incorrect in any material respect as of the time when the same shall have been made, and such default shall continue or not be cured, or the circumstance or condition in respect of which such misrepresentation or warranty was incorrect shall not have been eliminated or otherwise cured, for a period of 30 days after there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least 25% of the Outstanding Amount of the Notes, acting together as a single Class, a written notice specifying such default or incorrect representation or warranty and requiring it to be remedied and stating that such notice is a notice of Default hereunder; (f) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer or any substantial part of the Trust Estate in an involuntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or 30 38 hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Trust Estate, or ordering the winding-up or liquidation of the Issuer's affairs, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or (g) the commencement by the Issuer of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuer to the entry of an order for relief in an involuntary case under any such law, or the consent by the Issuer to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Trust Estate, or the making by the Issuer of any general assignment for the benefit of creditors, or the failure by the Issuer generally to pay its debts as such debts become due, or the taking of any action by the Issuer in furtherance of any of the foregoing. The Issuer shall deliver to the Indenture Trustee, within five Business Days after the occurrence thereof, written notice in the form of an Officer's Certificate of any Default which with the giving of notice or the lapse of time would become an Event of Default under clause (d), the status of such Default and any action the Issuer is taking or proposes to take with respect thereto. SECTION 5.02. Acceleration of Maturity; Rescission and Annulment. If an Event of Default should occur and be continuing, then and in every such case the Indenture Trustee or the Holders of the Controlling Class of Notes representing not less than a majority of the Outstanding Amount of such Class (excluding for such purposes the outstanding principal amount of any Notes held of record or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates, unless at such time all of the Notes of such Class are held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates) may declare all the Notes to be immediately due and payable, by a notice in writing to the Issuer (and to the Indenture Trustee if given by Noteholders), and upon any such declaration the unpaid principal amount of such Notes, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable. [In the event of such declaration or automatic acceleration, the Indenture Trustee shall give prompt written notice to the Swap Counterparty.] At any time after such declaration of acceleration of maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as hereinafter in this Article V provided, the Holders of the Controlling Class of Notes representing a majority of the Outstanding Amount of such Class (excluding for such purposes the outstanding principal amount of any Notes held of record or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates, unless at such time all of the Notes of such Class are held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates), by written notice to the Issuer and the Indenture Trustee, may rescind and annul such declaration and its consequences if: 31 39 (a) the Issuer has paid or deposited with the Indenture Trustee a sum sufficient to pay: (i) all payments of principal of and interest on the respective Classes of Notes and all other amounts that would then be due hereunder or upon such Notes [and pursuant to the Interest Rate Swap Agreement] if the Event of Default giving rise to such acceleration had not occurred; and (ii) all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel; and (b) all Events of Default, other than the nonpayment of the principal of the Notes that has become due solely by such acceleration, have been cured or waived as provided in Section 5.12. No such rescission shall affect any subsequent default or impair any right consequent thereto. SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee. (a) The Issuer covenants that if (i) default is made (A) in the payment of any interest on any Class A Note, so long as any amounts remain unpaid with respect to the Class A Notes, or (B) in the payment of any interest on any Class B Note, after the Class A Notes have been paid in full, when the same becomes due and payable, and such default continues for a period of five days, or (ii) default is made in the payment of the principal of or any installment of the principal of any Note when the same becomes due and payable, the Issuer will, upon demand of the Indenture Trustee, pay to the Indenture Trustee, for the benefit of the Holders of the Notes, the whole amount then due and payable on such Class of Notes for principal and interest, with interest upon the overdue principal and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue installments of interest at the rate borne by the Notes and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel. (b) In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Indenture Trustee, in its own name and as trustee of an express trust, may institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and may enforce the same against the Issuer or other obligor upon such Notes and collect in the manner provided by law out of the property of the Issuer or other obligor upon such Notes, wherever situated, the moneys adjudged or decreed to be payable. (c) If an Event of Default occurs and is continuing, the Indenture Trustee may, as more particularly provided in Section 5.04, in its discretion, proceed to protect and enforce its rights and the rights of the Noteholders[, the Swap Counterparty] and, incidentally thereto, the Certificateholders, by such appropriate Proceedings as the Indenture Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any 32 40 covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture or by law. (d) In case there shall be pending, relative to the Issuer or any other obligor upon the Notes or any Person having or claiming an ownership interest in the Trust Estate, Proceedings under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor or Person, or in case of any other comparable judicial Proceedings relative to the Issuer or other obligor upon the Notes, or to the creditors or property of the Issuer or such other obligor, then, irrespective of whether the principal of any Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section, the Indenture Trustee shall be entitled and empowered, by intervention in such Proceedings or otherwise: (i) to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Notes and the Certificates, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence or bad faith)[, the Swap Counterparty] and of the Noteholders or the Certificateholders allowed in such Proceedings; (ii) unless prohibited by applicable law and regulations, to vote on behalf of the Holders of Notes [and the Swap Counterparty] in any election of a trustee, a standby trustee or Person performing similar functions in any such Proceedings; (iii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Noteholders[, the Swap Counterparty] or the Certificateholders and of the Indenture Trustee on their behalf; and (iv) to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee[, the Swap Counterparty] or the Holders of Notes allowed in any judicial proceedings relative to the Issuer, its creditors and its property; and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Noteholders [and by the Swap Counterparty] to make payments to the Indenture Trustee and, in the event that the Indenture Trustee shall consent to the making of payments directly to such Noteholders [or to the Swap Counterparty], to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor 33 41 Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or bad faith. (e) Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Noteholder [or the Swap Counterparty] any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof [or the Swap Counterparty] or to authorize the Indenture Trustee to vote in respect of the claim of any Noteholder [or the Swap Counterparty] in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person. (f) All rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Indenture Trustee without the possession of any of the Notes or the production thereof in any trial or other Proceedings relative thereto, and any such action or Proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Notes[, the Swap Counterparty] and, incidentally thereto, for the benefit of the Certificateholders. (g) In any Proceedings brought by the Indenture Trustee (and also any Proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Noteholders [and the Swap Counterparty], and it shall not be necessary to make any Noteholder [or the Swap Counterparty] a party to any such Proceedings. SECTION 5.04. Remedies; Priorities. (a) If an Event of Default shall have occurred and be continuing and result in the acceleration of the Notes, the Indenture Trustee shall make payments on the Notes and to the Owner Trustee as set forth in Section 5.06(d) of the Sale and Servicing Agreement, rather than pursuant to Section 5.06(c) thereof. (b) If the Indenture Trustee, in compliance with Section 5.04(a), is deemed to have a conflict of interest under the TIA and is required to resign as Indenture Trustee hereunder, the Issuer shall, pursuant to Section 6.08, cause the Servicer to appoint a successor Indenture Trustee: (i) so long as any amounts remain unpaid with respect to the Class A Notes, only the Indenture Trustee for the Class A Noteholders shall be entitled to exercise any remedies under this Indenture; and (ii) after the Class A Notes have been paid in full, only the Indenture Trustee for the Class B Noteholders shall be entitled to exercise any remedies under this Indenture. 34 42 (c) In accordance with Section 5.04(b), if an Event of Default shall have occurred and be continuing, the Indenture Trustee may do one or more of the following (subject to Section 5.05): (i) institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable on the Notes or under this Indenture with respect thereto, whether by declaration or otherwise, enforce any judgment obtained, and collect from the Issuer and any other obligor upon such Notes moneys adjudged due; (ii) institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Trust Estate; (iii) exercise any remedies of a secured party under the UCC and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Noteholders; and (iv) sell the Trust Estate or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law; provided, however, that the Indenture Trustee may not sell or otherwise liquidate the Trust Estate following an Event of Default, other than an Event of Default described in Section 5.01(a) or (b), unless (A) the Holders of 100% of the Outstanding Amount of the Controlling Class of Notes consent thereto (but excluding for purposes of such vote all Notes held or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates, unless at such time all of the Notes of such Class are held or beneficially owned by NMAC, [NARC][NARC II] and their Affiliates), or (B) the proceeds of such sale or liquidation distributable to the Noteholders are sufficient to discharge in full all amounts then due and unpaid upon such Notes for principal and interest, or (C) the Indenture Trustee determines that the Trust Estate may not continue to provide sufficient funds on an ongoing basis to make all payments of principal of and interest on the Notes as they would have become due if the Notes had not been declared due and payable, and the Indenture Trustee obtains the consent of Holders of a 66 2/3% of the Outstanding Amount of the Controlling Class of Notes (but excluding for purposes of such vote any Notes held or beneficially owned by NMAC, [NARC][NARC II] and their Affiliates, unless at such time all of the Notes of such Class are held or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates). In determining such sufficiency or insufficiency with respect to clause (B) and (C), the Indenture Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate for such purpose. (d) The Indenture Trustee may fix a record date and payment date for any payment to Noteholders pursuant to this Section. At least 15 days before such record date, the Issuer shall mail to each Noteholder and the Indenture Trustee a notice that states the related record date, payment date and amount to be paid. SECTION 5.05. Optional Preservation of the Receivables. If the Notes have been declared to be due and payable under Section 5.02 following an Event of Default and such 35 43 declaration and its consequences have not been rescinded and annulled, the Indenture Trustee may, unless otherwise directed by the Holders of the Controlling Class of Notes representing at least a majority of the Outstanding Amount such Notes (excluding from such action and calculation any Notes held by NMAC, [NARC][NARC II] or any of their Affiliates unless at such time all of the Notes of such Class are held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates), but need not, elect to maintain possession of the Trust Estate and direct the Issuer, Servicer and Administrator not to take steps to liquidate the Receivables. It is the desire of the parties hereto and the Noteholders that there be at all times sufficient funds for the payment of principal of and interest on the Notes, and the Indenture Trustee shall take such desire into account when determining whether or not to maintain possession of the Trust Estate. In determining whether to maintain possession of the Trust Estate, the Indenture Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate for such purpose. SECTION 5.06. Limitation of Suits. No Holder of any Note shall have any right to institute any Proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder unless such Holder has previously given written notice to the Indenture Trustee of a continuing Event of Default, and: (a) the Event of Default arises from the Servicer's failure to remit payments when due; or (b) the Holders of the Controlling Class of Notes representing not less than 25% of the Outstanding Amount of such Class (excluding for such purpose the outstanding principal amount of any Notes held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates unless at such time all of the Notes of such Class are held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates) have made written request to the Indenture Trustee to institute such Proceeding in respect of such Event of Default in its own name as Indenture Trustee hereunder and have offered to the Indenture Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in complying with such request, the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute such Proceedings, and no direction inconsistent with that written request has been given to the Indenture Trustee during the 60-day period by the holders of a majority in principal amount of those outstanding Notes (or relevant class or classes of Notes). It is understood and intended that no one or more Holders of Notes shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Notes or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided. In the event the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Holders of Notes, each representing less than a majority of the Outstanding Amount of the Notes, the Indenture Trustee in its sole discretion may 36 44 determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture. SECTION 5.07. Unconditional Rights of Noteholders To Receive Principal and Interest. Notwithstanding any other provisions in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest, if any, on such Note on or after the respective due dates thereof expressed in such Note and in this Indenture (in each case with reference to the calculations to be made pursuant to the Sale and Servicing Agreement) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder, provided that each Holder or Note Owner of a Class B Note will be deemed to have consented to any delay in the payment thereto of any interest due thereon that is in accordance with the payment of amounts pursuant to Section 5.06 of the Sale and Servicing Agreement for so long as any Class A Note is Outstanding. SECTION 5.08. Restoration of Rights and Remedies. If the Indenture Trustee or any Noteholder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Indenture Trustee or to such Noteholder, then and in every such case the Issuer, the Indenture Trustee and the Noteholders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Noteholders shall continue as though no such Proceeding had been instituted. SECTION 5.09. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Indenture Trustee or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 5.10. Delay or Omission Not a Waiver. No delay or omission of the Indenture Trustee or any Holder of any Note to exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default or Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Indenture Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Noteholders, as the case may be. SECTION 5.11. Control by Noteholders. The Holders of the Controlling Class of Notes representing a majority of the Outstanding Amount of such Class (excluding for such purpose the outstanding principal amount of any Notes held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates, unless of such time all of the Notes of such Class are held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates), shall have the right to direct the time, method and place of conducting any 37 45 Proceeding for any remedy available to the Indenture Trustee with respect to the Notes or exercising any trust or power conferred on the Indenture Trustee; provided that: (a) such direction shall not be in conflict with any rule of law or with this Indenture; and (b) any direction to the Indenture Trustee to sell or liquidate the Trust Estate shall be by Holders of Notes representing not less than the applicable percentage of the Outstanding Amount of the relevant Class set forth in Section 5.04(c)(iv); and (c) the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction. Notwithstanding the rights of Noteholders set forth in this Section, subject to Section 6.01, the Indenture Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any Noteholders not consenting to such action. SECTION 5.12. Waiver of Past Defaults. Prior to the declaration of the acceleration of the maturity of the Notes as provided in Section 5.02 or the liquidation or sale of the Trust Estate pursuant to Section 5.04, the Holders of the Controlling Class of Notes representing a majority of the Outstanding Amount of such Class (excluding for such purposes the outstanding principal amount of any Notes held of record or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates unless at such time all of the Notes are held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates) may waive any past Default or Event of Default and its consequences except a Default or Event of Default in (a) the deposit of collections or other required amounts, (b) any required payment from amounts held in Accounts in respect of amounts due on the Notes, (c) payment of principal or interest on the Notes, or (d) an Event of Default in respect of a covenant or provision hereof that cannot be modified or amended without the consent of the Holder of each Note. In the case of any such waiver, the Issuer, the Indenture Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder, respectively. Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto. SECTION 5.13. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Note or Note Owner by such Holder's acceptance of such Note or beneficial interest therein, as the case may be, shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits 38 46 and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by any Noteholder of the Controlling Class of Notes, or a group of Noteholders of such Class, in each case holding in the aggregate more than 10% of the Outstanding Amount of such Class, (c) any suit instituted by any Noteholder for the enforcement of the payment of principal of or interest on any Note on or after the respective due dates expressed in such Note and in this Indenture. SECTION 5.14. Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. SECTION 5.15. Action on Notes. The Indenture Trustee's right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Noteholders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Trust Estate or upon any of the assets of the Issuer. Any money or property collected by the Indenture Trustee shall be applied in accordance with Section 5.04(a). SECTION 5.16. Performance and Enforcement of Certain Obligations. (a) Promptly following a request from the Indenture Trustee to do so and at the Administrator's expense, the Issuer shall take all such lawful action as the Indenture Trustee may request to compel or secure the performance and observance by the Seller and the Servicer, as applicable, of each of their obligations to the Issuer or to each other under or in connection with the Sale and Servicing Agreement or by the Seller of its remedies under or in connection with the Purchase Agreement, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Sale and Servicing Agreement or the Purchase Agreement to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of default on the part of the Seller or the Servicer thereunder and the institution of legal or administrative actions or proceedings to compel or secure performance by the Seller or the Servicer of each of their respective obligations under the Sale and Servicing Agreement or the Purchase Agreement. [In addition, promptly following a request from the Indenture Trustee to do so, and at the Administrator's expense, the Issuer shall take all such lawful action as the Indenture Trustee may request to compel or secure the performance and observance by the Swap Counterparty in accordance with the Interest Rate Swap Agreement and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Interest Rate Swap Agreement to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of default thereunder and 39 47 the institution of legal or administrative actions or proceedings to compel or secure performance by the Swap Counterparty of its obligations under the Interest Rate Swap Agreement.] (b) If an Event of Default has occurred and is continuing, the Indenture Trustee may, and at the direction (which direction shall be in writing or by telephone, confirmed in writing promptly thereafter) of the Holders of the Controlling Class of Notes representing a majority of the Outstanding Amount of such Class (excluding for such purposes the outstanding principal amount of any Notes held of record or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates unless of such time all of the Notes of such Class are held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates) shall, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller or the Servicer under or in connection with the Sale and Servicing Agreement or the Purchase Agreement, or against the Administrator under the Administration Agreement, including the right or power to take any action to compel or secure performance or observance by the Seller, the Servicer or the Administrator, of each of their obligations to the Issuer thereunder and to give any consent, request, notice, direction, approval, extension, or waiver thereunder and any right of the Issuer to take such action shall be suspended. [In addition, if an Event of Default has occurred and is continuing, the Indenture Trustee may, and at the direction (which direction shall be in writing or by telephone, confirmed in writing promptly thereafter) of the Holders of the Notes evidencing not less than 66-2/3% of the principal amount of the Controlling Class of Notes shall, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Swap Counterparty including the right or power to take any action to compel or secure performance or observance by the Swap Counterparty of its obligations to the Issuer under the Interest Rate Swap Agreement and to give any consent, request, notice, direction, approval, extension, or waiver under the Interest Rate Swap Agreement and any right of the Issuer to take such action shall be suspended.] ARTICLE VI The Indenture Trustee SECTION 6.01. Duties of Indenture Trustee. The Indenture Trustee, both prior to and after the occurrence of a Servicer Default under the Sale and Servicing Agreement, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. (a) The Indenture Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Indenture Trustee that shall be specifically required to be furnished pursuant to any provision of this Indenture, shall examine them to determine whether they conform on their face to the requirements of this Indenture. (b) No provision of this Indenture shall be construed to relieve the Indenture Trustee from liability for its own negligent action, its own negligent failure to act, its own bad faith or its own willful misfeasance; provided, however, that: 40 48 (i) the duties and obligations of the Indenture Trustee shall be determined solely by the express provisions of this Indenture, the Indenture Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, no implied covenants or obligations shall be read into this Indenture against the Indenture Trustee, the permissive right of the Indenture Trustee to do things enumerated in this Indenture shall not be construed as a duty and, in the absence of bad faith on the part of the Indenture Trustee, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Indenture Trustee and conforming on their face to the requirements of this Indenture; (ii) the Indenture Trustee shall not be personally liable for an error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Indenture Trustee was negligent in performing its duties in accordance with the terms of this Indenture; and (iii) the Indenture Trustee shall not be personally liable with respect to any action taken, suffered or omitted to be taken in good faith in accordance with the direction of (i) the Holders of at least a majority of the Outstanding Amount of the Controlling Class of Notes (excluding for such purposes the outstanding principal amount of any Notes held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates, unless at such time all of the Notes of such Class are held of record or beneficially owned by [NARC], [NARC II], NMAC or any of their Affiliates), relating to the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising any trust or power conferred upon the Indenture Trustee under this Indenture. (c) The Indenture Trustee shall not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties under this Indenture, or in the exercise of any of its rights or powers, if there shall be reasonable grounds for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) All information obtained by the Indenture Trustee regarding the Obligors and the Receivables contained in the Trust, whether upon the exercise of its rights under this Indenture or otherwise, shall be maintained by the Indenture Trustee in confidence and shall not be disclosed to any other Person, unless such disclosure is required by any applicable law or regulation or pursuant to subpoena. (e) If (i) pursuant to Section 3.02 of the Sale and Servicing Agreement, a Responsible Officer of the Indenture Trustee discovers that a representation or warranty with respect to a Receivable was incorrect as of the time specified with respect to such representation and warranty and such incorrectness materially and adversely affects such Receivable, or (ii) pursuant to Section 4.06 of the Sale and Servicing Agreement, a Responsible Officer of the Indenture Trustee discovers that a covenant of the Servicer has been breached with respect to a Receivable that would materially and adversely affect such Receivable, the Indenture Trustee shall give prompt written notice to the Servicer and the Owner Trustee of such incorrectness. 41 49 SECTION 6.02. Rights of Indenture Trustee. (a) Except as otherwise provided in Section 6.01: (i) the Indenture Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officer's Certificate, certificate of an authorized signatory, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (ii) the Indenture Trustee may consult with counsel and any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it under this Indenture in good faith and in accordance with such Opinion of Counsel; (iii) the Indenture Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture or the Sale and Servicing Agreement, or to institute, conduct or defend any litigation under this Indenture, or in relation to this Indenture or the Sale and Servicing Agreement, at the request, order or direction of any of the Noteholders pursuant to the provisions of this Indenture or the Sale and Servicing Agreement, unless such Noteholders shall have offered to the Indenture Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby; (iv) the Indenture Trustee shall not be personally liable for any action taken, suffered or omitted by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; (v) the Indenture Trustee shall not be bound to recalculate, reverify, or make any investigation into the facts of matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document, unless requested in writing to do so by Holders of Notes evidencing not less than 25% of the aggregate Outstanding Amount of the (1) Class A Notes, so long as any Class A Notes remain Outstanding (acting together as a single class) or (2) Class B Notes, after the Class A Notes have been paid in full, or (3) Class C Notes, after the Class B Notes have been paid in full; provided, however, that if the payment within a reasonable time to the Indenture Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Indenture Trustee, not reasonably assured to the Indenture Trustee by the security afforded to it by the terms of this Indenture, the Indenture Trustee may require reasonable indemnity against such cost, expense or liability as a condition to so proceeding; the reasonable expense of every such examination shall be paid by the Administrator or, if paid by the Indenture Trustee, shall be reimbursed by the Administrator upon demand; and nothing in this clause shall derogate from the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Obligors; and 42 50 (vi) the Indenture Trustee may execute any of the trusts or powers under this Indenture or perform any duties under this Indenture either directly or by or through agents or attorneys or a custodian. (b) No Noteholder will have any right to institute any proceeding with respect to this Indenture except upon satisfying the conditions set forth in Section 5.06. SECTION 6.03. Individual Rights of Indenture Trustee. The Indenture Trustee in its individual or any other capacity may become the Holder, beneficial owner or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Indenture Trustee. Any Paying Agent, Note Registrar, co-registrar or co-paying agent may do the same with like rights. However, in so doing the Indenture Trustee must comply with Sections 6.11 and 6.12. SECTION 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes (other than the execution by the Indenture Trustee on behalf of the Trust of, and the certificate of authentication on, the Notes), or of the Certificates. The Indenture Trustee shall have no obligation to perform any of the duties of the Servicer or the Administrator unless explicitly set forth in this Indenture. The Indenture Trustee shall at no time have any responsibility or liability for or with respect to the legality, validity and enforceability of the Notes or any Receivable, any ownership interest in any Financed Vehicle, or the maintenance of any such ownership interest, or for or with respect to the efficacy of the Trust or its ability to generate the payments to be distributed to Noteholders under this Indenture, including without limitation the validity of the assignment of the Receivables to the Trust or of any intervening assignment; the existence, condition, location and ownership of any Receivable or Financed Vehicle; the existence and enforceability of any physical damage or credit life or credit disability insurance; the existence and contents of any retail installment sales contract or any computer or other record thereof; the completeness of any retail installment sales contract; the performance or enforcement of any retail installment sales contract; the compliance by the Issuer with any covenant or the breach by the Issuer, Seller or Servicer of any warranty or representation made under this Indenture or in any Basic Document or other related document and the accuracy of any such warranty or representation prior to the Indenture Trustee's receipt of notice or other discovery of any noncompliance therewith or any breach thereof; the acts or omissions of the Issuer, Seller or the Servicer; or any action by the Indenture Trustee taken at the instruction of the Servicer, provided, however, that the foregoing shall not relieve the Indenture Trustee of its obligation to perform its duties under this Indenture. Except with respect to a claim based on the failure of the Indenture Trustee to perform its duties under this Indenture or based on the Indenture Trustee's willful misconduct, bad faith or negligence, no recourse shall be had for any claim based on any provision of this Indenture, the Notes or Certificates or assignment thereof against the institution serving as the Indenture Trustee in its individual capacity. The Indenture Trustee shall not have any personal obligation, liability or duty whatsoever to any Noteholder or any other Person with respect to any such claim, and any such claim shall be asserted solely against the Trust or any indemnitor who shall furnish indemnity as provided in this Indenture. The Indenture Trustee shall not be accountable for the use or application by the Issuer of any of the Notes or of the proceeds of such Notes, or for the use or application of any funds paid to the Servicer in respect of the Notes. 43 51 SECTION 6.05. Notice of Defaults. If a Responsible Officer of the Indenture Trustee knows that a Default has occurred and is continuing, the Indenture Trustee shall mail to each Noteholder notice of such Default within 10 days of the occurrence thereof. Except in the case of a Default in payment of principal of or interest on any Note, the Indenture Trustee may withhold such notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Noteholders. SECTION 6.06. Reports by Indenture Trustee to Holders. The Indenture Trustee shall deliver or cause to be delivered annually to each Noteholder of record such information as may be required to enable such holder to prepare its federal and state income tax returns. The Indenture Trustee shall also deliver or cause to be delivered annually to each Noteholder of record a report relating to its eligibility and qualification to continue as Indenture Trustee under this Indenture, any amounts advanced by it under this Indenture, the amount, interest rate and maturity date of certain indebtedness owed by the Trust to such Indenture Trustee, in its individual capacity, the property and funds physically held by such Indenture Trustee in its capacity as such, and any action taken by it that materially affects the Notes and that has not been previously reported. SECTION 6.07. Compensation and Indemnity. The Issuer shall cause the Servicer to pay to the Indenture Trustee from time to time reasonable compensation for its services. The Indenture Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall cause the Servicer to reimburse the Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Indenture Trustee's agents, counsel, accountants and experts. The Administrator shall indemnify or shall cause the Servicer to indemnify the Indenture Trustee against any and all loss, liability or expense (including reasonable attorneys' fees) incurred by it in connection with the administration of this trust and the performance of its duties hereunder. The Indenture Trustee shall notify the Administrator and the Servicer promptly of any claim for which it may seek indemnity. Failure by the Indenture Trustee to so notify the Administrator and the Servicer shall not relieve the Administrator or the Servicer of its obligations hereunder. The Administrator shall defend or shall cause the Servicer to defend any such claim, and the Indenture Trustee may have separate counsel and the Administrator shall pay or shall cause the Servicer to pay the fees and expenses of such counsel. Neither the Administrator nor the Servicer need reimburse any expense or indemnify against any loss, liability or expense incurred by the Indenture Trustee through the Indenture Trustee's own willful misconduct, negligence or bad faith. The Administrator's payment obligations to the Indenture Trustee pursuant to this Section shall survive the discharge of this Indenture. When the Indenture Trustee incurs expenses after the occurrence of a Default specified in Section 5.01(f) or (g) with respect to the Issuer, the expenses are intended to constitute expenses of administration under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or similar law. 44 52 SECTION 6.08. Replacement of Indenture Trustee. The Indenture Trustee may resign at any time by providing written notice of its resignation to the Issuer. The Administrator may remove the Indenture Trustee if: (a) the Indenture Trustee fails to comply with Section 6.11; (b) the Indenture Trustee is adjudged a bankrupt or insolvent; (c) a receiver or other public officer takes charge of the Indenture Trustee or its property; or (d) the Indenture Trustee otherwise becomes legally or practically incapable of fulfilling its duties hereunder. If the Indenture Trustee resigns or is removed or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Servicer shall promptly appoint a successor Indenture Trustee. No resignation or removal of the Indenture Trustee and no appointment of a successor Indenture Trustee shall become effective until the acceptance of appointment by the successor Indenture Trustee pursuant to this Section 6.08. A successor Indenture Trustee shall deliver a written acceptance of its appointment to the retiring Indenture Trustee, to the Servicer and to the Administrator. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the Indenture Trustee under this Indenture. The successor Indenture Trustee shall mail a notice of its succession to Noteholders. The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee to the successor Indenture Trustee. If a successor Indenture Trustee does not take office within 30 days after the retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Administrator or the Holders of a majority in Outstanding Amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee. If the Indenture Trustee fails to comply with Section 6.11, any Noteholder may at any time thereafter petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee. Notwithstanding the replacement of the Indenture Trustee pursuant to this Section, the Issuer's and the Administrator's obligations under Section 6.07 shall continue for the benefit of the retiring Indenture Trustee. SECTION 6.09. Successor Indenture Trustee by Merger. If the Indenture Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another Person, the resulting, surviving or transferee corporation without any further act shall be the successor Indenture Trustee if such surviving Person or transferee corporation or banking shall be otherwise qualified and eligible under Section 6.11. The 45 53 Indenture Trustee shall provide the Issuer, the Servicer and the Rating Agencies reasonable prior written notice of any such transaction. In case at the time such successor or successors by merger, conversion or consolidation to the Indenture Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Indenture Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Indenture Trustee shall have. SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee. (a) Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Trust Estate may at the time be located, the Indenture Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the Trust, and to vest in such Person or Persons, in such capacity and for the benefit of the Noteholders, such title to the Trust Estate, or any part hereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a trustee under Section 6.11 and no notice to Noteholders of the appointment of any co-trustee or separate trustee shall be required under Section 6.08 hereof. (b) Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred or imposed upon such separate trustee or co-trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in and/or directing such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Estate or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee; (ii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and 46 54 (iii) the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee. (c) Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Agreement and the conditions of this Article VI. Each separate trustee and co-trustee, upon its acceptance of the trusts thereupon conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture Trustee. (d) Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. SECTION 6.11. Eligibility; Disqualification. The Indenture Trustee shall at all times satisfy the requirements of TIA Section 310(a). The Indenture Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition and it or its parent shall have a long-term debt rating of "Baa3" or better by Moody's or shall otherwise be acceptable to Moody's. The Indenture Trustee shall comply with TIA Section 310(b), including the optional provision permitted by the second sentence of TIA Section 310(b)(9); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities of the Issuer are outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met. SECTION 6.12. Preferential Collection of Claims Against Issuer. The Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. SECTION 6.13. Acknowledgement by Indenture Trustee of its Obligations Under the Sale and Servicing Agreement. The Indenture Trustee hereby agrees and consents to the provisions of the Sale and Servicing Agreement applicable to it (including, without limitation, Sections 5.06, 5.07, 5.09 thereof) and agrees to be bound by such provisions. [ SECTION 6.14. Interest Rate Swap Provisions. (i) The Issuer has entered into an Interest Rate Swap Agreement, in a form satisfactory to the Rating Agencies, to hedge the 47 55 floating rate interest expense on the VPTNs. The Issuer may, from time to time, enter into one or more replacement Interest Rate Swap Agreements in the event that any Interest Rate Swap Agreement is terminated prior to its scheduled expiration pursuant to an Event of Default or a Termination Event (each such term as defined in the Interest Rate Swap Agreement). Swap Payments (other than any Swap Termination Payments) will rank senior to interest payments on the Class A Notes and VPTNs, and Swap Termination Payments will rank pari passu with interest payments on the Class A Notes and the VPTNs, all as set forth in the Sale and Servicing Agreement. (ii) The Indenture Trustee will be responsible for remitting Swap Payments and any Swap Termination Payments payable to the Swap Counterparty and for collecting Swap Receipts and any Swap Termination Payments payable to the Issuer. (iii) In the event that the Swap Counterparty is required to collateralize any Interest Rate Swap transaction pursuant to the terms of the Interest Rate Swap Agreement, the Indenture Trustee, upon written request of the Administrator, shall establish individual collateral accounts and will hold any securities deposited therein in trust and will invest any cash amounts in accordance with the provisions of the Interest Rate Swap Agreement. (iv) The notional amounts under the Interest Rate Swap Agreement will be increased by the principal balance of any VPTNs issued after the Closing Date and reduced from time to time by amounts paid as principal on the VPTNs pursuant to the information provided each month in the Servicer Certificate. The Administrator shall calculate and provide written notification to the Swap Counterparty and to the Indenture Trustee of the notional amount of the Interest Rate Swap as of each Distribution Date on or before the twelfth day of the month of the related Distribution Date. The Administrator shall also obtain the calculation of LIBOR from the Calculation Agent under this Agreement and shall calculate the amount of all Swap Payments, Swap Receipts and Swap Termination Payments payable on each Distribution Date, and shall provide written notification of such amounts to the Swap Counterparty and to the Indenture Trustee prior to such Distribution Date. At least five days before the effective date of any proposed amendment or supplement to an Interest Rate Swap Agreement, the Administrator shall provide the Rating Agencies with a copy of such amendment or supplement. Unless the amendment or supplement clarifies any term or provision, corrects any inconsistency, cures any ambiguity, or corrects any typographical error in the Interest Rate Swap Agreement, an amendment or supplement to the Interest Rate Swap Agreement will be effective only after satisfaction of any Rating Agency condition. (v) Promptly following the early termination of an Interest Rate Swap Agreement due to an Event of Default or Termination Event (as each such term is defined in the Interest Rate Swap Agreement), the Issuer will use reasonable efforts to cause the Issuer to enter into a replacement Interest Rate Swap Agreement. (vi) The Interest Rate Swap Agreement shall provide that if the rating of the Swap Counterparty is downgraded below a rating of "[____]" by Standard & Poor's Ratings Group and "[____]" by Moody's Investor Service, Inc. or is suspended or withdrawn by any such Rating Agency, within 30 days of such downgrade, suspension or withdrawal, the Swap Counterparty must either (1) post collateral acceptable to the Issuer in amounts sufficient to 48 56 secure its obligations under the Interest Rate Swap Agreement, (2) assign its rights and obligations under the Interest Rate Swap Agreement to a replacement counterparty acceptable to the Issuer or (3) establish other arrangements necessary, if any, in each case so that the Rating Agencies confirm the ratings of the Class A Notes and the VPTN that were in effect immediately prior to such downgrade, suspension or withdrawal. If the Swap Counterparty is required to collateralize any Interest Rate Swap transaction, the Administrator shall send written instructions to the Indenture Trustee to establish individual collateral accounts and to hold any securities deposited therein in trust and invest any cash amounts therein in accordance with the provisions of the Interest Rate Swap Agreement. (vii) The Administrator shall notify the Swap Counterparty of any proposed amendment or supplement to any of the Basic Documents. If such proposed amendment or supplement would adversely affect any of the Swap Counterparty's rights or obligations under the Interest Rate Swap Agreement or modify the obligations of, or impair the ability of the Issuer to fully perform any of its obligations under the Interest Rate Swap Agreement, the Administrator shall obtain the consent of the Swap Counterparty prior to the adoption of such amendment of supplement, provided, the Swap Counterparty's consent to any such amendment or supplement shall not be unreasonably withheld, and provided further, the Swap Counterparty's consent will be deemed to have been given if the Swap Counterparty does not object in writing within ten Business Days of receipt of a written request for such consent.] ARTICLE VII Noteholders' Lists and Reports SECTION 7.01. Note Registrar To Furnish Names and Addresses of Noteholders. The Note Registrar shall furnish or cause to be furnished to the Indenture Trustee, the Owner Trustee, the Servicer or the Administrator, within 15 days after receipt by the Note Registrar of a written request therefrom, a list of the names and addresses of the Noteholders of any Class as of the most recent Record Date. If three or more Noteholders of any Class, or one or more Holders of such Class evidencing not less than 25% of the Outstanding Amount of such Class (hereinafter referred to as "Applicants"), apply in writing to the Indenture Trustee, and such application states that the Applicants desire to communicate with other Noteholders with respect to their rights under this Indenture or under the Notes and such application is accompanied by a copy of the communication that such Applicants propose to transmit, then the Indenture Trustee shall, within five Business Days after the receipt of such application, afford such Applicants access, during normal business hours, to the current list of Noteholders. Such Indenture Trustee may elect not to afford the requesting Noteholders access to the list of Noteholders if it agrees to mail the desired communication by proxy, on behalf of and at the expense of the requesting Noteholders, to all Noteholders of such series. Every Noteholder, by receiving and holding a Note, agrees with the Indenture Trustee and the Issuer that none of the Indenture Trustee, the Owner Trustee, the Issuer, the Servicer or the Administrator shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Noteholders under this Indenture, regardless of the source from which such information was derived. 49 57 If the Indenture Trustee shall cease to be the Note Registrar, then thereafter the Administrator will furnish or cause to be furnished to the Indenture Trustee not more than five days after the most recent Record Date or at such other times as the Indenture Trustee reasonably may request in writing, a list, in such form as the Indenture Trustee reasonably may require, of the names and addresses of the Holders of Notes as of such Record Date. SECTION 7.02. Preservation of Information; Communications to Noteholders. (a) The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders of Notes contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.01 and the names and addresses of Holders of Notes received by the Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any list furnished to it as provided in such Section 7.01 upon receipt of a new list so furnished. (b) Noteholders may communicate pursuant to TIA Section 312(b) with other Noteholders with respect to their rights under this Indenture or under the Notes. (c) The Issuer, the Indenture Trustee and the Note Registrar shall have the protection of TIA Section 3.12(c). SECTION 7.03. Reports by Issuer. (a) The Issuer shall: (i) file with the Indenture Trustee, within 15 days after the Issuer is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) that the Issuer may be required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act; (ii) file with the Indenture Trustee and the Commission in accordance with the rules and regulations prescribed from time to time by the Commission such additional information, documents and reports with respect to compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (iii) supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to all Noteholders described in TIA Section 313(c)) such summaries of any information, documents and reports required to be filed by the Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a) and by rules and regulations prescribed from time to time by the Commission. (b) Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on [March 31] of each year. 50 58 SECTION 7.04. Reports by Indenture Trustee. If required by TIA Section 313(a), within 60 days after each [_______________] beginning with [_______________], the Indenture Trustee shall mail to each Noteholder as required by TIA Section 313(c) a brief report dated as of such date that complies with TIA Section 313(a). The Indenture Trustee also shall comply with TIA Section 313(b). A copy of each report at the time of its mailing to Noteholders shall be filed by the Indenture Trustee with the Commission and each stock exchange, if any, on which the Notes are listed. The Issuer shall notify the Indenture Trustee if and when the Notes are listed on any stock exchange. ARTICLE VIII Accounts, Disbursements and Releases SECTION 8.01. Collection of Money. Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply all such money received by it as provided in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Trust Estate, the Indenture Trustee may take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate Proceedings. Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture and any right to proceed thereafter as provided in Article V. SECTION 8.02. Accounts. (a) On or prior to the Closing Date, (i) the Issuer shall cause the Servicer to establish and maintain, in the name of the Indenture Trustee, for the benefit of the Noteholders and, to the extent set forth herein, the Certificateholders, the Collection Account as provided in Section 5.01 of the Sale and Servicing Agreement and (ii) the Issuer will establish and maintain with the Securities Intermediary and pledge to the Indenture Trustee for the benefit of the Noteholders the Yield Supplement Account in the name of the Indenture Trustee pursuant to the Yield Supplement Agreement as provided in Section 5.08 of the Sale and Servicing Agreement and the Securities Account Control Agreement. (b) On or prior to the Closing Date, the Issuer will cause the Seller to, pursuant to the Securities Account Control Agreement, establish and maintain with the Indenture Trustee, for the benefit of the Noteholders, the Reserve Account as provided in Section 5.07, of the Sale and Servicing Agreement. (c) The Indenture Trustee shall transfer all amounts remaining on deposit in the Collection Account on the Distribution Date on which the Notes of all Classes have been paid in full (or substantially all of the Trust Estate is otherwise released from the lien of this Indenture) to the Trust Collection Account and shall take all necessary or appropriate actions to transfer all 51 59 of its right, title and interest in the Collection Account, all funds or investments held therein and all proceeds thereof, whether or not on behalf of the Securityholders, to the Owner Trustee for the benefit of the Certificateholders, subject to the limitations set forth herein with respect to amounts held for payment to Noteholders that do not promptly deliver a Note for payment on such Distribution Date. (d) The Indenture Trustee shall transfer all amounts remaining on deposit in the Yield Supplement Account on the Distribution Date on which the Notes of all Classes have been paid in full (or substantially all of the Trust Estate is otherwise released from the lien of this Indenture) to the Owner Trustee for the benefit of the Certificateholders and shall take all necessary or appropriate actions to transfer all of its right, title and interest in the Yield Supplement 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, which amounts the Owner Trustee shall deposit into the Trust Collection Account, subject to the limitations set forth herein with respect to amounts held for payment to Noteholders that do not promptly deliver a Note for payment on such Distribution Date. SECTION 8.03. General Provisions Regarding Accounts. (a) So long as no Default or Event of Default shall have occurred and be continuing, all or a portion of the funds in the Collection Account shall be invested in Eligible Investments and reinvested by the Indenture Trustee at the written direction of the Servicer, subject to the provisions of Section 5.01 of the Sale and Servicing Agreement. All income or other gain from investments of moneys deposited in the Collection Account shall be deposited by the Indenture Trustee in the Collection Account and paid to the Servicer as servicing compensation on any Business Day on or after which such amount is deposited in the Collection Account, and any loss resulting from such investments shall be charged to such account. The Servicer will not direct the Indenture Trustee, and the Issuer shall cause the Servicer not, to make any investment of any funds or to sell any investment held in the Collection Account unless the security interest Granted and perfected in such account will continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Indenture Trustee to make any such investment or sale, if requested by the Indenture Trustee, the Servicer shall deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the Indenture Trustee, to such effect. (b) So long as no Default or Event of Default shall have occurred and be continuing, all or a portion of the funds in the Reserve Account and the Yield Supplement Account shall be invested in Eligible Investments and reinvested by the Indenture Trustee at the written direction of the Servicer, subject to the provisions of Section 5.07 and Section 5.08, respectively, of the Sale and Servicing Agreement and the provisions of the Securities Account Control Agreement. All income or other gain from investments of moneys deposited in the Reserve Account shall be paid by the Indenture Trustee to the Seller on any Business Day on or after which such amount is deposited in the Reserve Account. All income or other gain from investments of moneys deposited in the Yield Supplement Account shall be deposited into the Collection Account on each Distribution Date. Subject to the right of the Indenture Trustee to make withdrawals therefrom, as directed by the Servicer, for the purposes and in the amounts set forth in Section 5.06 of the Sale and Servicing Agreement, the Reserve Account [and the Yield 52 60 Supplement Account] and all funds held therein shall be the property of the Seller and not the property of the Trust, the Owner Trustee or the Indenture Trustee. The Seller will grant to the Indenture Trustee, for the benefit of the Noteholders and the Class C Certificateholders, a security interest in all funds (including Eligible Investments) in the Reserve Account (including the Reserve Account Initial Deposit) and the proceeds thereof, and the Issuer will grant to the Indenture Trustee, for the benefit of the Noteholders, a security interest in all funds (including Eligible Investments) in the Yield Supplement Account and the proceeds thereof, and the Indenture Trustee shall have all of the rights of a secured party under the UCC with respect thereto; provided that all income from the investment of funds in the Reserve Account and the right to receive such income are retained by the Seller and are not transferred, assigned or otherwise conveyed hereunder; and provided, further, that amounts on deposit in the Yield Supplement Account in excess of the Required Yield Supplement Amount will be deposited into the Collection Account for distribution in accordance with the terms of Section 5.06(c) of the Sale and Servicing Agreement. The Servicer will not direct the Indenture Trustee to make any investment of any funds or to sell any investment held in the Reserve Account or the Yield Supplement Account unless the security interest granted and perfected in such account will continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Indenture Trustee to make any such investment or sale, if requested by the Indenture Trustee, the Servicer shall deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the Indenture Trustee, to such effect. (c) Subject to Section 6.01(c), the Indenture Trustee shall not in any way be held liable by reason of any insufficiency in the Collection Account, the Reserve Account or the Yield Supplement Account resulting from any loss on any Eligible Investment included therein at the direction of the Servicer, except for losses attributable to the Indenture Trustee's failure to make payments on such Eligible Investments issued by the Indenture Trustee, in its commercial capacity as principal obligor and not as trustee, in accordance with the terms thereof. (d) If (i) the Servicer shall have failed to give investment directions for any funds on deposit in the Collection Account, the Reserve Account or 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 Indenture Trustee) on any Business Day or (ii) a Default or Event of Default shall have occurred and be continuing with respect to the Notes but the Notes shall not have been declared due and payable pursuant to Section 5.02 or (iii) if such Notes shall have been declared due and payable following an Event of Default, amounts collected or receivable from the Trust Estate are being applied in accordance with Section 5.05 as if there had not been such a declaration, then the Indenture Trustee shall, to the fullest extent practicable, invest and reinvest funds in the Accounts in one or more Eligible Investments specified in clauses (i), (iv) or (vi) of the definition of Eligible Investments provided in the Sale and Servicing Agreement. If the Indenture Trustee invests and reinvests funds in the Reserve Account or the Yield Supplement Account pursuant to clause (ii) or clause (iii) above, the Indenture Trustee shall issue a prohibition notice to the securities intermediary as provided in the Securities Account Control Agreement. If the Default or Event of Default that caused the Indenture Trustee to assume control over the investment of funds in the Reserve Account and Yield Supplement Account has been waived and the acceleration, if any, of the Notes has been rescinded, the Indenture Trustee 53 61 shall issue a rescission of prohibition notice to the securities intermediary as provided in the Securities Account Control Agreement. SECTION 8.04. Release of Trust Estate. (a) Subject to the payment of its fees and expenses pursuant to Section 6.07, the Indenture Trustee may, and when required by the provisions of this Indenture shall, execute instruments to release property from the lien of this Indenture, or convey the Indenture Trustee's interest in the same, in a manner and under circumstances that are not inconsistent with the provisions of this Indenture. No party relying upon an instrument executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee's authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys. (b) The Indenture Trustee shall, at such time as there are no Notes outstanding and all sums due the Indenture Trustee pursuant to Section 6.07 have been paid [and all amounts owing under the Interest Rate Swap Agreement have been paid], release any remaining portion of the Trust Estate that secured the Notes [and the Interest Rate Swap Agreement] from the lien of this Indenture and release to or to the order of the Issuer, or, in the case of the Reserve Account or the Yield Supplement Account, to the Seller, any funds entitled thereto then on deposit in the Collection Account, the Reserve Account and the Yield Supplement Account, as the case may be. The Indenture Trustee shall release property from the lien of this Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer Request accompanied by [confirmation that all amounts owing under the Interest Rate Swap Agreement have been paid and] an Officer's Certificate and (if required by the TIA) Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.01. SECTION 8.05. Release of Receivables Upon Purchase by the Seller or the Servicer . (a) Upon repurchase of any Receivable by the Seller pursuant to Section 3.02 of the Sale and Servicing Agreement or any purchase of any Receivable by the Servicer pursuant to Section 4.06 or Section 9.01 of the Sale and Servicing Agreement, the Indenture Trustee, on behalf of the Noteholders, shall, without further action, be deemed to release from the Lien of this Indenture such repurchased Receivable, all monies due or to become due with respect thereto and all proceeds thereof and the other property with respect to such Receivable, and all security and any documents relating thereto, and the Seller or the Servicer, as applicable, shall thereupon own each such Receivable, and all such related security and documents, free of any further obligation to the Issuer, the Indenture Trustee or the Noteholders with respect thereto. (b) The Indenture Trustee shall execute such documents and instruments and take such other actions as shall be reasonably requested by the Seller or the Servicer, as the case may be, to effect the release of such Receivable pursuant hereto and the assignment of such Receivable by the Issuer pursuant to Section 9.02 of the Sale and Servicing Agreement. SECTION 8.06. Opinion of Counsel. The Indenture Trustee shall receive at least seven days notice when requested by the Issuer to take any action pursuant to Section 8.04(a), 54 62 accompanied by copies of any instruments involved, and the Indenture Trustee shall also require, except in connection with any action contemplated by Section 8.04(b), as a condition to such action, an Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee, stating the legal effect of any such action, outlining the steps required to complete the same, and concluding that all conditions precedent to the taking of such action have been complied with and such action will not materially and adversely impair the security for the Notes or the rights of the Noteholders [or adversely affect the Swap Counterparty] in contravention of the provisions of this Indenture; provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the Trust Estate. Counsel rendering any such opinion may rely, without independent investigation, on the accuracy and validity of any certificate or other instrument delivered to the Indenture Trustee in connection with any such action. ARTICLE IX Supplemental Indentures SECTION 9.01. Supplemental Indentures Without Consent of Noteholders. (a) Without the consent of the Holders of any Notes [or the Swap Counterparty] but with prior notice to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the provisions of the TIA as in force at the date of the execution thereof), in form satisfactory to the Indenture Trustee, for any of the following purposes: (i) to correct or amplify the description of any property at any time subject to the lien of this Indenture, or to better assure, convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the lien of this Indenture, or to subject to the lien of this Indenture additional property; (ii) to evidence the succession, in compliance with the applicable provisions hereof, of another person to the Issuer, and the assumption by any such successor of the covenants of the Issuer contained herein and in the Notes; (iii) to add to the covenants of the Issuer, for the benefit of the Holders of the Notes, or to surrender any right or power herein conferred upon the Issuer; (iv) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee; (v) to cure any ambiguity, to correct or supplement any provision herein or in any supplemental indenture that may be inconsistent with any other provision herein or in any supplemental indenture or to make any other provisions with respect to matters or questions arising under this Indenture or in any supplemental indenture to the extent such action shall not adversely affect the interests of the Holders of the Notes [or adversely affect the rights or obligations of the Swap Counterparty under the Interest Rate Swap 55 63 Agreement or modify the obligations of or impair the ability of the Issuer to fully perform any of its obligations under the Interest Rate Swap Agreement]; (vi) to evidence and provide for the acceptance of the appointment hereunder by a successor trustee with respect to the Notes and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Article VI; or (vii) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the TIA or under any similar federal statute hereafter enacted and to add to this Indenture such other provisions as may be expressly required by the TIA. The Indenture Trustee is hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations that may be therein contained. (b) The Issuer and the Indenture Trustee, when authorized by an Issuer Order, may, also without the consent of any of the Holders of the Notes, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Notes under this Indenture; provided, however, that such action shall not materially and adversely affect the interests of any Noteholder. SECTION 9.02. Supplemental Indentures with Consent of Noteholders. The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may, with prior notice to the Rating Agencies and with the consent of the Holders of the Controlling Class of Notes representing a majority of the Outstanding Amount of such Class (excluding for such purpose the outstanding principal amount of any Notes held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates, unless at such time all of the Notes of such Class are held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates), by Action of such Holders delivered to the Issuer and the Indenture Trustee, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Notes under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Note affected thereby: (a) change the due date of any installment of principal of or interest on any Note, or reduce the principal amount thereof, the Interest Rate thereon or redemption price therefor, or change any place of payment where, or the coin or currency in which, any Note or the interest thereon is payable; (b) impair the right to institute suit for the enforcement of the provisions of this Indenture requiring the application of funds available therefor, as provided in Article V, to the payment of any such amount due on the Notes on or after the respective due dates thereof; 56 64 (c) reduce the percentage of the Outstanding Amount of the Notes, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture; (d) modify or alter the provisions of the proviso to the definition of the term "Outstanding"; (e) reduce the percentage of the Outstanding Amount of the Notes required to direct the Indenture Trustee to sell or liquidate the Trust Estate if the proceeds of that sale would be insufficient to pay the principal amount of and accrued but unpaid interest on the Notes pursuant to Section 5.04(c)(iv); (f) reduce any percentage required to amend the sections of the Indenture that specify the applicable percentage of Outstanding Amount of the Notes necessary to amend the Indenture; or (g) permit the creation of any lien ranking prior to or on a parity with the lien of this Indenture with respect to any part of the Trust Estate or, except as otherwise permitted or contemplated herein, terminate the lien of this Indenture on any property at any time subject hereto or deprive the Holder of any Note of the security provided by the lien of this Indenture. The Indenture Trustee may in its discretion determine whether or not any Notes would be adversely affected by any supplemental indenture and any such determination shall be conclusive upon the Holders of all Notes, whether theretofore or thereafter authenticated and delivered hereunder. The Indenture Trustee shall not be liable for any such determination made in good faith. It shall not be necessary for any Action of Noteholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Action shall approve the substance thereof. Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture pursuant to this Section, the Indenture Trustee shall mail to the Holders of the Notes to which such amendment or supplemental indenture relates a notice setting forth in general terms the substance of such supplemental indenture. Any failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 9.03. Execution of Supplemental Indentures. In executing, or permitting the additional trusts created by, any supplemental indenture permitted by this Article IX or the modification thereby of the trusts created by this Indenture, the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion of Counsel from external counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee's own rights, duties, liabilities or immunities under this Indenture or otherwise. 57 65 SECTION 9.04. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and shall be deemed to be modified and amended in accordance therewith with respect to the Notes affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 9.05. Conformity with Trust Indenture Act. Every amendment of this Indenture and every supplemental indenture executed pursuant to this Article IX shall conform to the requirements of the Trust Indenture Act as then in effect so long as this Indenture shall then be qualified under the Trust Indenture Act. SECTION 9.06. Reference in Notes to Supplemental Indentures. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and if required by the Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture. If the Issuer or the Indenture Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Indenture Trustee and the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Indenture Trustee in exchange for Outstanding Notes. ARTICLE X Release SECTION 10.01. Optional Purchase of All Receivables. If the Servicer or any successor to the Servicer shall notify the Owner Trustee and the Indenture Trustee of its intention to exercise the option granted to it in Section 9.01 of the Sale and Servicing Agreement to repurchase the outstanding Receivables primarily comprising the Owner Trust Estate, then the Owner Trustee and the Indenture Trustee shall give written notice thereof to each Securityholder and the Rating Agencies as soon as practicable after their receipt of notice from the Servicer. Upon deposit by the Servicer or any successor to the Servicer of the amount necessary to effect such purchase of the corpus of the Owner Trust Estate, the Indenture Trustee shall make the final distributions to the Noteholders and Certificateholders as set forth in Section 5.06 of the Sale and Servicing Agreement and shall promptly transfer all of its right, title and interest in and to any amounts or investments remaining on deposit in the Collection Account to the Owner Trustee, and in the Reserve Account and the Yield Supplement Account to the Seller (in any event excluding any portion thereof necessary to make distributions to Noteholders described in Section 3.03), and release from the lien of this Indenture all of the remaining Collateral. The Indenture Trustee shall execute, deliver and file all agreements, certificates, instruments or other documents necessary or reasonably requested by the Issuer in order to effect such release and the transfer to the Issuer of the Collateral. 58 66 ARTICLE XI Miscellaneous. SECTION 11.01. Compliance Certificates and Opinions, etc. (a) Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the Issuer shall, upon written request therefor from the Indenture Trustee, furnish to the Indenture Trustee (i) an Officer's Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (ii) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, and (iii) (if required by the TIA) an Independent Certificate from a firm of certified public accountants meeting the applicable requirements of this Section, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no such written request from the Indenture Trustee need be furnished (and only such expressly required documents need be delivered in connection therewith). (b) Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (i) a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the definitions herein relating thereto; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (iii) a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with. (c) Prior to the deposit of any Collateral or other property or securities with the Indenture Trustee that is to be made the basis for the release of any property or securities subject to the lien of this Indenture, the Issuer shall, in addition to any obligation imposed in Section 11.01(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days of such deposit) to the Issuer of the Collateral or other property or securities to be so deposited. Whenever the Issuer is required to furnish to the Indenture Trustee an Officer's Certificate certifying or stating the opinion of any signatory thereof as to the matters described in this clause (c) above, the Issuer shall also deliver to the Indenture Trustee an Independent 59 67 Certificate as to the same matters, if the fair value to the Issuer of the securities to be so deposited and of all other such securities made the basis of any such withdrawal or release since the commencement of the then-current calendar year of the Issuer, as set forth in the certificates delivered pursuant to this clause (c), is 10% or more of the Outstanding Amount of the Notes, but such a certificate need not be furnished with respect to any securities so deposited, if the fair value thereof to the Issuer as set forth in the related Officer's Certificate is less than $25,000 or less than one percent of the Outstanding Amount of the Notes. Whenever any property or securities are to be released from the lien of this Indenture, the Issuer shall also furnish to the Indenture Trustee an Officer's Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days of such release) of the property or securities proposed to be released and stating that in the opinion of such person the proposed release will not impair the security under this Indenture in contravention of the provisions hereof. Notwithstanding Section 2.09 or any other provision of this Section, the Issuer may, without compliance with the requirements of the other provisions of this Section, (A) collect, liquidate, sell or otherwise dispose of Receivables and Financed Vehicles as and to the extent permitted or required by the Basic Documents and (B) make cash payments out of the Accounts as and to the extent permitted or required by the Basic Documents so long as the Issuer shall deliver to the Indenture Trustee every six months, commencing [____________], an Officer's Certificate of the Issuer stating that all such dispositions of Collateral that occurred during the preceding six calendar months were in the ordinary course of the Issuer's business and that the proceeds thereof were applied in accordance with the Basic Documents. SECTION 11.02. Form of Documents Delivered to Indenture Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an Authorized Officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which such officer's certificate or opinion is based are erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Servicer, the Seller, the Issuer or the Administrator, stating that the information with respect to such factual matters is in the possession of the Servicer, the Seller, the Issuer or the Administrator, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. 60 68 Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee's right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI. SECTION 11.03. Acts of Noteholders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by agents duly appointed in writing; and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Action" of the Noteholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section. (b) The fact and date of the execution by any person of any such instrument or writing may be proved in any manner that the Indenture Trustee deems sufficient. (c) The ownership of Notes shall be proved by the Note Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Notes shall bind the Holder of every Note issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note. SECTION 11.04. Notices, to Indenture Trustee, Issuer and Rating Agencies. Any request, demand, authorization, direction, notice, consent, waiver or Action of Noteholders or other documents provided or permitted by this Indenture shall be in writing and if such request, demand, authorization, direction, notice, consent, waiver or Action of Noteholders is to be made upon, given or furnished to or filed with: (a) the Indenture Trustee by any Noteholder or by the Issuer, it shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Indenture Trustee at its Corporate Trust Office, or 61 69 (b) the Issuer by the Indenture Trustee or by any Noteholder, it shall be sufficient for every purpose hereunder if in writing and mailed first-class, postage prepaid to the Issuer addressed to: Nissan Auto Receivables [____-_] Owner Trust, c/o [______________________], Attention: [____________], with a copy to Nissan Motor Acceptance Corporation, 990 West 190th Street, Torrance, California 90502, Attention: Secretary, or at any other address previously furnished in writing to the Indenture Trustee by the Issuer or the Administrator. The Issuer shall promptly transmit any notice received by it from the Noteholders to the Indenture Trustee. Notices required to be given to the Rating Agencies by the Issuer, the Indenture Trustee or the Owner Trustee shall be in writing, personally delivered or mailed by certified mail, return receipt requested, to (i) in the case of Moody's, at the following address: Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007, and (ii) in the case of Standard & Poor's, at the following address: Standard & Poor's Ratings Services, a Division of 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 11.05. Notices to Noteholders; Waiver. Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class, postage prepaid to each Noteholder affected by such event, at his address as it appears on the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given. Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver. In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder, and shall not under any circumstance constitute a Default or Event of Default. SECTION 11.06. Alternate Payment and Notice Provisions. Notwithstanding any provision of this Indenture or any of the Notes to the contrary, the Issuer may enter into any agreement with any Holder of a Note providing for a method of payment, or notice by the Indenture Trustee or any Paying Agent to such Holder, that is different from the methods 62 70 provided for in this Indenture for such payments or notices. The Issuer will furnish to the Indenture Trustee a copy of each such agreement and the Indenture Trustee will cause payments to be made and notices to be given in accordance with such agreements. SECTION 11.07. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. The provisions of TIA Sections 310 through 317 that impose duties on any person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein. SECTION 11.08. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 11.09. Successors and Assigns. All covenants and agreements in this Indenture and the Notes by the Issuer shall bind its successors and assigns, whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind its successors, co-trustees and agents. SECTION 11.10. Severability. If any one or more of the covenants, agreements, provisions or terms of this Indenture shall be for any reason whatsoever held invalid or unenforceable in any jurisdiction, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Indenture and shall in no way affect the validity or enforceability of the other provisions of this Indenture or of the Notes or the Certificates or the rights of the Holders thereof. SECTION 11.11. Benefits of Indenture. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Noteholders, and any other party secured hereunder, and any other Person with an ownership interest in any part of the Trust Estate, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 11.12. Governing Law. This Indenture shall be governed by and construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions (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 11.13. Counterparts. This Indenture may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and all of which shall constitute but one and the same instrument. SECTION 11.14. Recording of Indenture. If this Indenture is subject to recording in any appropriate public recording offices, such recording is to be effected by the Issuer and at its 63 71 expense accompanied by an Opinion of Counsel (which may be counsel to the Indenture Trustee or any other counsel reasonably acceptable to the Indenture Trustee) to the effect that such recording is necessary either for the protection of the Noteholders or any other Person secured hereunder or for the enforcement of any right or remedy granted to the Indenture Trustee under this Indenture. SECTION 11.15. Trust Obligation. No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or Certificates or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (i) the Indenture Trustee or the Owner Trustee in its individual capacity, (ii) the Seller, any Certificateholder or other owner of a beneficial interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director, employee or agent of the Indenture Trustee or the Owner Trustee in its individual capacity, any Certificateholder or other owner of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or assign of the Indenture Trustee or the Owner Trustee in its individual capacity, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee and the Owner Trustee have no such obligations in their individual capacity) and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. For all purposes of this Indenture, in the performance of any duties or obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to the benefits of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement. SECTION 11.16. No Petition. The Indenture Trustee, by entering into this Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree that they will not at any time file, join in any filing of, or cooperate or encourage others to file against the Seller or the Issuer any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar law, in connection with any obligations relating to the Notes, the Certificates or any of the Basic Documents. SECTION 11.17. Inspection. The Issuer agrees that, on reasonable prior notice, it will permit any representative of the Indenture Trustee, during the Issuer's normal business hours, to examine all the books of account, records, reports and other papers of the Issuer, to make copies and extracts therefrom, to cause (at the expense of the requesting party) such books to be audited by Independent certified public accountants, and to discuss the Issuer's affairs, finances and accounts with the Issuer's officers, employees, and Independent certified public accountants, all at such reasonable times and as often as may be reasonably requested. The Indenture Trustee shall and shall cause its representatives to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder. 64 72 IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Indenture to be duly executed by their respective officers, thereunto duly authorized and duly attested, all as of the day and year first above written. NISSAN AUTO RECEIVABLES ____-_ OWNER TRUST By: [_____________________________], not in its individual capacity but solely as Owner Trustee By: ------------------------------------- Name: Title: [______________________________], not in its individual capacity but solely as Indenture Trustee By: -------------------------------------- Name: Title: S-1 73 EXHIBIT A-1 (Form of Class A-1 Note, Class A-2 Note, Class A-3 Note and Class B Note) UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT AN OBLIGATION OF, AND WILL NOT BE INSURED OR GUARANTEED BY, ANY GOVERNMENTAL AGENCY OR [NISSAN AUTO RECEIVABLES CORPORATION][NISSAN AUTO RECEIVABLES CORPORATION II], NISSAN MOTOR ACCEPTANCE CORPORATION, NISSAN NORTH AMERICA, INC., NISSAN MOTOR CO., LTD., ANY TRUSTEE OR ANY OF THEIR AFFILIATES. THE PRINCIPAL AND INTEREST ON THIS NOTE IS PAYABLE SOLELY FROM PAYMENTS ON THE RECEIVABLES AND AMOUNTS ON DEPOSIT IN THE RESERVE ACCOUNT AND THE YIELD SUPPLEMENT ACCOUNT. A-1-1 74 No._____ $__________ NISSAN AUTO RECEIVABLES ___-___ OWNER TRUST CLASS [A-1][A-2][A-3] [B] ___% ASSET BACKED NOTES Nissan Auto Receivables Owner Trust, a business trust organized and existing under the laws of the State of Delaware (herein referred to as the "Issuer"), for value received, hereby promises to pay to ____________________, or registered assigns, the principal sum of _______________ DOLLARS ($__________) payable on each Distribution Date in an aggregate amount, if any, payable from the Collection Account in respect of the principal on the Class [A-1][A-2][A-3][B] Notes pursuant to Section 3.01 of the Indenture dated as of __________, _____ (the "Indenture"), between the Issuer and [________], a ___________________, as Indenture Trustee (the "Indenture Trustee") and Sections 5.06(c) and (d) of the Sale and Servicing Agreement dated as of [_________] among the Issuer, [NARC][NARC II], as Seller, and NMAC, as Servicer (which amounts shall be limited to the portion of Available Amounts specified in such sections); provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the Distribution Date occurring in [________] (the "Class [A-1][A-2][A-3][B] Final Scheduled Distribution Date"). Capitalized terms used but not defined herein have the meanings ascribed thereto in the Indenture and the Sale and Servicing Agreement, as the case may be. The Issuer will pay interest on this Note at the rate per annum shown above on each Distribution Date until the principal of this Note is paid or made available for payment, on the principal amount of this Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on the preceding Distribution Date), subject to certain limitations contained in Section 3.01 of the Indenture. Interest on this Note will accrue for each Distribution Date, [during the period from (and including) the Distribution Date during the calendar month preceding such Distribution Date (or in the case of the first Distribution Date, from (and including) the Closing Date to (but excluding) such Distribution Date)] [during 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]. Interest will be computed on the basis specified in the Indenture for each Interest Period. Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof. The principal of and interest on this Note is payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note. Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note. A-1-2 75 Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer, as of the date set forth below. Date: -------------- NISSAN AUTO RECEIVABLES _____-_ OWNER TRUST By: ------------------------------------- not in its individual capacity but solely as Owner Trustee under the Trust Agreement, By: ------------------------------------- Authorized Signatory A-1-3 76 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes designated above and referred to in the within-mentioned Indenture. Date: -------------- (______________________________________), not in its individual capacity but solely as Indenture Trustee, By: ------------------------------------- Authorized Signatory A-1-4 77 This Note is one of a duly authorized issue of Notes of the Issuer, designated as [____]% Asset Backed Notes, Class [A-1][A-2][A-3][B] (herein called the "Class [A-1][A-2][A-3][B] Notes"), all issued under the Indenture, to which Indentures and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Holders of the Notes. The Class [A-1][A-2][A-3][B] Notes are subject to all terms of the Indenture. The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class B Notes (collectively, the "Notes") are and will be equally and ratably secured by the collateral pledged as security therefor as provided in the Indenture. Principal of the Class [A-1][A-2][A-3] [B] Notes will be payable on each Distribution Date in an amount described in the Indenture. "Distribution Date" means the [________] day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing [________]. Notwithstanding the foregoing, the entire unpaid principal amount of the Notes shall be due and payable on the date on which an Event of Default shall have occurred and be continuing and the Indenture Trustee or the Holders of the Controlling Class of Notes representing not less than a majority of the Outstanding Amount of such Class (excluding for such purpose the outstanding principal amount of any Notes held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates, unless at such time all of the Notes of such Class are held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates) have declared the Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture or following the exercise by the Servicer of its option to purchase the Receivables pursuant to Section 9.01 of the Sale and Servicing Agreement and Section 10.01 of the Indenture. In case of an Event of Default, all interest and principal payments will be made (1) first to the holders of the Class A-1 Notes, until the outstanding principal balance of the Class A-1 Notes has been paid in full; (2) then to the holders of the Class A-2 Notes, the Class A-3 Notes on a pro rata basis (x) with respect to interest, based on the respective aggregate amounts of interest due to these classes of notes and (y) with respect to principal, based on the respective outstanding balances of those classes of notes, until the outstanding principal balances of those classes of notes have been paid in full; and (3) then to the holders of Class B Notes on a pro rata basis (x) with respect to interest, based on the respective aggregate amounts of interest due to the Class B Notes and (y) with respect to principal, based on the respective outstanding balances of the Class B Notes, until the outstanding principal balances of the Class B Notes have been paid in full. In case of the optional purchase of the Receivables, all interest and all principal payments on the Class [A-1][A-2][A-3] [A-4] Notes shall be made pro rata to the Class [A-1][A-2][A-3] [B] Noteholders entitled thereto. Payments of interest on this Note due and payable on each Distribution Date, together with the installment of principal, if any, to the extent not in full payment of this Note, shall be paid to the Person in whose name of such Note (or one or more Predecessor Notes) is registered on the Record Date by wire transfer in immediately available funds to the account designated by such nominee, except for the final installment of principal payable with respect to such Note on a Distribution Date or on the applicable Final Scheduled Distribution Date, which shall be payable as provided below. Any reduction in the principal amount of this Note (or any one or more A-1-5 78 Predecessor Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Note on a Distribution Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, will notify the Person who was the Registered Holder hereof as of the Record Date preceding such Distribution Date by notice mailed or transmitted by facsimile prior to such Distribution Date, and the amount then due and payable shall be payable only upon presentation and surrender of this Note at the Indenture Trustee's principal Corporate Trust Office or at the office of the Indenture Trustee's agent appointed for such purposes located in The City of New York. The Issuer shall pay interest on overdue installments of interest at the Class [A-1][A-2][A-3][B] Rate to the extent lawful. [FOR CLASS B NOTES] Default in the payment of interest on this Class [B] Note is not an Event of Default under the Indenture so long as any Class [A] Notes are Outstanding. By acceptance of this Class [B] Note or any beneficial interest herein, you are deemed to have consented to the delay in payment of interest on such Class [B] Note and waived your rights to institute suit for enforcement of any such payment to the extent described in the Indenture. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Note may be registered on the Note Register upon surrender of this Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee as set forth in Section 2.04 of the Indenture, and thereupon one or more new Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Indenture Trustee or the Owner Trustee in its individual capacity, (ii) the Seller or any owner of a beneficial interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Indenture Trustee or the Owner Trustee in its individual capacity, any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or assign of the Indenture Trustee or the Owner Trustee in its individual capacity, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee and the Owner Trustee have no such obligations in their individual capacity) and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. A-1-6 79 The Holder of this Note by its acceptance hereof agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Holder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuer for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees by accepting the benefits of the Indenture that such Noteholder or Note Owner will not at any time file, join in the filing of, or cooperate with or encourage others to file against the Seller or the Issuer, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under any United States federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Basic Documents. The Issuer has entered into the Indenture and this Note is issued with the intention that, for federal, state and local income, single business and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each Note Owner by acceptance of a beneficial interest in a Note), agrees to treat the Notes for federal, state and local income, single business and franchise tax purposes as indebtedness of the Issuer. Prior to the due presentment for registration of transfer of this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Note be overdue, and none of the Issuer, the Indenture Trustee or any such agent shall be affected by notice to the contrary. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders of the Notes under the Indenture at any time by the Issuer and the Indenture Trustee, when authorized by an Issuer Order, with prior notice to the Rating Agencies and with the consent of the Holders of the Controlling Class of Notes representing a majority of the Outstanding Amount of such Class (excluding for such purpose the outstanding principal amount of any Notes held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates, unless at such time all of the Notes are held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates). Section 5.12 of the Indenture also contains provisions permitting the Holders of the Controlling Class of Notes representing a majority of the Outstanding Amount of such Class (excluding for such purpose the outstanding principal amount of any Notes held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates, unless at such time all of the Notes of such Class are held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates), on behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note (or any one or more Predecessor Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any A-1-7 80 Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Note. The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Notes issued thereunder. The term "Issuer" as used in this Note includes any successor to the Issuer under the Indenture. The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate, subject to the rights of the Indenture Trustee and the Holders of Notes under the Indenture. The Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations therein set forth. This Note and the Indenture shall be construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions (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 and thereunder shall be determined in accordance with such laws. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency herein prescribed. A-1-8 81 ASSIGNMENT Social Security or taxpayer I.D. or other identifying number of assignee: ______________ FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto: ________________________________________________________________________________ (name and address of assignee) the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints , attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises. Dated:_____________________*/ Signature Guaranteed: ___________________________*/ */ NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-1-9 82 EXHIBIT A-2 [FORM OF VARIABLE PAY TERM NOTE] THIS VARIABLE PAY TERM NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF BY PURCHASING THIS VARIABLE PAY TERM NOTE, AGREES THAT THIS VARIABLE PAY TERM NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS, AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE, OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), SUBJECT TO THE RECEIPT BY THE INDENTURE TRUSTEE AND THE VARIABLE PAY TERM NOTE REGISTRAR OF SUCH EVIDENCE ACCEPTABLE TO THE INDENTURE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS, (3) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RECEIPT BY THE INDENTURE TRUSTEE AND THE NOTE REGISTRAR OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE INDENTURE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS, OR (4) TO THE SELLER OR ITS AFFILIATES, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND SECURITIES AND BLUE SKY LAWS OF THE STATES OF THE UNITED STATES. THE PRINCIPAL OF THIS VARIABLE PAY TERM NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS VARIABLE PAY TERM NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. A-2-1 83 $[ ] No. ______ CUSIP NO. [ ] FLOATING RATE ASSET BACKED VARIABLE PAY TERM NOTE NISSAN AUTO RECEIVABLES ___-___ OWNER TRUST, a business trust organized and existing under the laws of the State of Delaware (herein referred to as the "Issuer"), for value received, hereby promises to pay to [_________], or registered assigns, the principal sum of [___________] MILLION DOLLARS payable on each Distribution Date in an amount equal to the result obtained by multiplying (i) a fraction, the numerator of which is [_________] (the original face amount of this Note) and the denominator of which is [_________] (the aggregate principal amount of the VPTN on the original issuance date of this VPTN) by (ii) the aggregate amount, if any, payable to the VPTNs issued on the original issuance date of this VPTN in respect of principal pursuant to the Indenture dated as of [___________] (as from time to time amended, supplemented or otherwise modified and in effect, the "Indenture"), between the Issuer and _________________, as Indenture Trustee (in such capacity the "Indenture Trustee"); provided, however, the entire unpaid principal amount of this Note shall be due and payable on the ___________, ____ Distribution Date (the "VPTN Final Scheduled Distribution Date") and upon the optional repurchase of the Receivables, if any, pursuant to Section 10.01 of the Indenture. Capitalized terms used but not defined herein are defined in Article I of the Indenture, which also contains rules as to construction that shall be applicable herein. The Issuer shall pay interest on this VPTN on each Distribution Date at a rate equal to one-month LIBOR on the related LIBOR Determination Date (as defined in the Indenture) plus [___]%. Interest on this VPTN will accrue, in the case of the first Distribution Date following the issuance of the VPTN, the period from and including the issuance date to and excluding such Distribution Date and for any other Distribution Date, the period from and including the most recent Distribution Date to but excluding such Distribution Date. Interest will be computed on the basis of actual days elapsed and a 360-day year. Such principal of and interest on this VPTN shall be paid in the manner specified on the reverse hereof. "Distribution Date" means the fifteenth day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing __________, ____. The principal of and interest on this VPTN are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this VPTN shall be applied first to interest due and payable on this VPTN as provided above and then to the unpaid principal of this VPTN. Reference is made to the further provisions of this VPTN set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this VPTN. Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, the VPTN shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.] A-2-2 84 IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer, as of the date set forth below. Date: ___________, ____ NISSAN AUTO RECEIVABLES ___-___ OWNER TRUST By: ------------------------------------- not in its individual capacity but solely as Owner Trustee under the Trust Agreement By: -------------------------------------- Authorized Signatory TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the VPTNs designated above and referred to in the within-mentioned Indenture. Date: ___________, ____ [_______________________________________] not in its individual capacity but solely as Indenture Trustee By: -------------------------------------- Authorized Signatory A-2-3 85 [REVERSE OF NOTE] The VPTN is one of a duly authorized issue of VPTNs of the Issuer, designated as its Floating Rate Asset Backed Variable Pay Term Notes (the "VPTNs") which, together with the Issuer's Class A-1 ___% Asset Backed Notes (the "Class A-1 Notes"), Class A-2 ___% Asset Backed Notes (the "Class A-2 Notes"), Class A-3 ___% Asset Backed Notes (the "Class A-3 Notes," and together with the Class A-1 Notes and the Class A-2 Notes, the "Class A Notes") and Class B ___% Asset Backed Notes (the "Class B Notes" and, together with the VPTNs and the Class A Notes, the "Notes"), are issued under the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Noteholders. The VPTNs are subject to all the terms of the Indenture. The VPTNs are and will be equally and ratably secured by the collateral pledged as security therefor as provided in the Indenture. As described on the face thereof, the entire unpaid principal amount of this VPTN shall be due and payable on the VPTN Final Scheduled Distribution Date. Notwithstanding the foregoing, the entire unpaid principal amount of the VPTNs shall be due and payable on the date on which an Event of Default shall have occurred and be continuing and the Indenture Trustee or the Holders of the Controlling Class of Notes representing not less than a majority of the Outstanding Amount of such Class (excluding for such purposes the outstanding principal amount of any Notes held of record or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates, unless at such time all of the Notes of such Class are held of record or beneficially owned by [NARC][NARC II], NMAC or any of their Affiliates) have declared the Notes to be immediately due and payable in the manner provided in Section 5.02 of the Indenture. All principal payments on the VPTNs shall be made sequentially, such that no payments of principal on a VPTN shall be payable until all earlier issued VPTNs have been paid in full. Payments of interest on this VPTN on each Distribution Date, together with the installment of principal, if any, to the extent not in full payment of this VPTN, shall be made to the Person whose name appears as the Registered Noteholder of the VPTN on the Note Register as of the close of business on each Record Date either by wire transfer in immediately available funds, to the account of such Noteholder at a bank or other entity having appropriate facilities therefor, if such Noteholder shall have provided to the Note Registrar appropriate written instructions at least five (5) Business Days prior to such Distribution Date and such Noteholder's Notes in the aggregate evidence a denomination of not less than $1,000,000, or, if not, by check mailed first-class postage prepaid to such Person's address as it appears on the Note Register on such Record Date. Such payments will be made without requiring that the VPTN be submitted for notation of payment. Any reduction in the principal amount of this VPTN effected by any payments made on any Distribution Date shall be binding upon all future Noteholders of this VPTN and of any VPTN issued upon the registration of transfer hereof or in exchange thereof or in lieu hereof, whether or note noted herein. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this VPTN on a Distribution Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, will notify the Person who was the Registered Noteholder hereof as of the Record Date A-2-4 86 preceding such Distribution Date by notice mailed or transmitted by facsimile prior to such Distribution Date, and the amount then due and payable shall be payable only upon presentation and surrender of this VPTN at the Indenture Trustee's principal Corporate Trust Office or at the office of the Indenture Trustee's agent appointed for such purposes located _______________________. The Issuer shall pay interest on overdue installments of interest at the VPTN Rate to the extent lawful. As provided in the Indenture, the Notes may be redeemed, in whole but not in part, in the manner and to the extent described in the Indenture and the Sale and Servicing Agreement. As provided in the Indenture, and subject to the restrictions on transfer set forth in the legend on the face of this VPTN and in the Indenture, the transfer of this VPTN may be registered on the Note Register upon surrender of this VPTN for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Noteholder hereof or such Noteholder's attorney duly authorized in writing, with such signature guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar, and thereupon one or more new VPTNs of the same Class in authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this VPTN, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder, by its acceptance of a VPTN covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the VPTNs or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Indenture Trustee or the Owner Trustee, each in its individual capacity, (ii) any owner of a beneficial interest in the Issuer, (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Indenture Trustee or the Owner Trustee, each in its individual capacity or (iii) any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee, each in its individual capacity, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. Each Noteholder, by acceptance of a VPTN covenants and agrees by accepting the benefits of the Indenture that such Noteholder will not at any time institute against the Seller or the Issuer, or join in any institution against the Seller or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under any United States federal or State bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the other Basic Documents. A-2-5 87 The Issuer has entered into the Indenture and this VPTN is issued with the intention that, for federal, State and local income, and franchise tax purposes, the VPTNs will qualify as indebtedness of the Issuer secured by the Indenture Trust Estate. Each Noteholder, by its acceptance of a VPTN, will be deemed to agree to treat the VPTNs for federal, State or local income, single business and franchise tax purposes as indebtedness of the Issuer. Prior to the due presentment for registration of transfer of this VPTN, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this VPTN (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this VPTN be overdue, and none of the Issuer, the Indenture Trustee or any such agent shall be affected by notice to the contrary. The Indenture permits (with certain exceptions requiring the consent of all Noteholders adversely affected) the amendment thereof by the Issuer and the Indenture Trustee without the consent of the Noteholders provided certain conditions are satisfied. The Indenture also contains provisions permitting the Noteholders of VPTNs evidencing specified percentages of the principal amount of the Notes Outstanding or of the Controlling Class of Notes, on behalf of all Noteholders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Noteholder of this VPTN shall be conclusive and binding upon such Noteholder and upon all future Noteholders of this VPTN and of any VPTN issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this VPTN. The term "Issuer", as used in this VPTN, includes any successor to the Issuer under the Indenture. The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate, subject to the rights of the Indenture Trustee and the Noteholders under the Indenture. The VPTNs are issuable only in registered form in denominations of $100,000 and integral multiples of $1,000 thereof as provided in the Indenture, subject to certain limitations therein set forth. This VPTN and the Indenture shall be governed by, and construed in accordance with the laws of the State of New York, without reference to its conflicts of law provisions. No reference herein to the Indenture, and no provision of this VPTN or of the Indenture, shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this VPTN at the times, place and rate, and in the coin or currency herein prescribed. Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, none of ______________, in its individual capacity, _______________, in its individual capacity, any owner of a beneficial interest in the Issuer, or any of their respective partners, beneficiaries, agents, officers, directors, employees or successors or assigns shall be A-2-6 88 personally liable for, nor shall recourse be had to any of them for, the payment of principal or of interest on this VPTN or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in the Indenture. The Noteholder of this VPTN, by its acceptance hereof, agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Noteholder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuer for any and all liabilities, obligations and undertakings contained in the Indenture or in this VPTN. A-2-7 89 ASSIGNMENT Social Security Number or taxpayer I.D. or other identifying number of assignee: FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto: (name and address of assignee) the within VPTN and all rights thereunder, and hereby irrevocably constitutes and appoints _______________, attorney, to transfer said VPTN on the books kept for registration thereof, with full power of substitution in the premises. Dated: */ ------------ --------------------------------------- Signature Guaranteed */ */ NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within VPTN in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar. A-2-8 EX-4.3 6 a67668a1ex4-3.txt EXHIBIT 4.3 1 EXHIBIT 4.3 SALE AND SERVICING AGREEMENT among NISSAN AUTO RECEIVABLES ______-_ OWNER TRUST as Issuer, [NISSAN AUTO RECEIVABLES CORPORATION][NISSAN AUTO RECEIVABLES CORPORATION II], as Seller, and NISSAN MOTOR ACCEPTANCE CORPORATION, as Servicer Dated as of [_______] 2 TABLE OF CONTENTS ARTICLE I DEFINITIONS
SECTION 1.01 Definitions..............................................................1 SECTION 1.02 Usage of Terms..........................................................21 ARTICLE II CONVEYANCE OF RECEIVABLES SECTION 2.01 Conveyance of Receivables...............................................21 SECTION 2.02 Custody of Receivables Files............................................22 SECTION 2.03 Acceptance by Issuer....................................................23 ARTICLE III THE RECEIVABLES SECTION 3.01 Representations and Warranties of the Seller with Respect to the Receivables.........................................................23 SECTION 3.02 Repurchase upon Breach..................................................26 SECTION 3.03 Duties of Servicer as Custodian.........................................27 SECTION 3.04 Instructions; Authority To Act..........................................28 SECTION 3.05 Custodian's Indemnification.............................................28 SECTION 3.06 Effective Period and Termination........................................28 ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES SECTION 4.01 Duties of Servicer......................................................29 SECTION 4.02 Collection of Receivable Payments.......................................30 SECTION 4.03 Realization upon Receivables............................................30 SECTION 4.04 Maintenance of Security Interests in Financed Vehicles..................30 SECTION 4.05 Covenants of Servicer...................................................31 SECTION 4.06 Purchase of Receivables upon Breach.....................................31 SECTION 4.07 Servicing Fee and Expenses..............................................32 SECTION 4.08 Servicer's Certificate..................................................32 SECTION 4.09 Annual Statement as to Compliance; Notice of Default....................32 SECTION 4.10 Annual Independent Certified Public Accountants' Report.................33 SECTION 4.11 Access to Certain Documentation and Information Regarding Receivables...................................................33 SECTION 4.12 Appointment of Subservicer..............................................34 SECTION 4.13 Amendments to Schedule of Receivables...................................34
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SECTION 4.14 Acknowledgement by Servicer of its Obligations under the Indenture.....................................................34 ARTICLE V DISTRIBUTIONS; ACCOUNTS; STATEMENTS TO THE CERTIFICATEHOLDERS AND THE NOTEHOLDERS SECTION 5.01 Establishment of Accounts...............................................34 SECTION 5.02 Collections.............................................................37 SECTION 5.03 Application of Collections..............................................38 SECTION 5.04 Advances................................................................38 SECTION 5.05 Additional Deposits.....................................................39 SECTION 5.06 Payments and Distributions..............................................39 SECTION 5.07 Reserve Account.........................................................44 SECTION 5.08 Yield Supplement Account................................................46 SECTION 5.09 Statements to Certificateholders and Noteholders........................47 SECTION 5.10 Net Deposits............................................................49 ARTICLE VI THE SELLER SECTION 6.01 Representations of Seller...............................................49 SECTION 6.02 Additional Covenants of the Seller......................................50 SECTION 6.03 Liability of Seller; Indemnities........................................52 SECTION 6.04 Merger or Consolidation of, or Assumption of the Obligations of, Seller..............................................................53 SECTION 6.05 Limitation on Liability of Seller and Others............................54 SECTION 6.06 Seller May Own Certificates or Notes....................................54 ARTICLE VII THE SERVICER SECTION 7.01 Representations of Servicer.............................................55 SECTION 7.02 Indemnities of Servicer.................................................56 SECTION 7.03 Merger or Consolidation of, or Assumption of the Obligations of, Servicer................................................................57 SECTION 7.04 Limitation on Liability of Servicer and Others..........................58 SECTION 7.05 NMAC Not To Resign as Servicer..........................................58 ARTICLE VIII DEFAULT SECTION 8.01 Servicer Default........................................................59 SECTION 8.02 Appointment of Successor................................................60
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SECTION 8.03 Repayment of Advances...................................................61 SECTION 8.04 Notification............................................................61 SECTION 8.05 Waiver of Past Defaults.................................................61 ARTICLE IX TERMINATION; RELEASE OF RECEIVABLES SECTION 9.01 Optional Purchase of All Receivables....................................62 SECTION 9.02 Release of Receivables..................................................62 SECTION 9.03 Termination.............................................................63 ARTICLE X MISCELLANEOUS SECTION 10.01 Amendment...............................................................63 SECTION 10.02 Protection of Title to Trust............................................65 SECTION 10.03 Notices.................................................................67 SECTION 10.04 Assignment by the Seller or the Servicer................................67 SECTION 10.05 Limitations on Rights of Others.........................................67 SECTION 10.06 Severability............................................................67 SECTION 10.07 Separate Counterparts...................................................68 SECTION 10.08 Headings................................................................68 SECTION 10.09 Governing Law...........................................................68 SECTION 10.10 Assignment by Issuer....................................................68 SECTION 10.11 Nonpetition Covenants...................................................68 SECTION 10.12 Limitation of Liability of Owner Trustee and Indenture Trustee..........68 SCHEDULE A Schedule of Receivables SCHEDULE B Location of the Receivable Files EXHIBIT A Form of Yield Supplement Agreement
iii 5 SALE AND SERVICING AGREEMENT, dated as of [_______], among NISSAN AUTO RECEIVABLES _____-_ OWNER TRUST, a Delaware business trust (the "Issuer"), [NISSAN AUTO RECEIVABLES CORPORATION][NISSAN AUTO RECEIVABLES CORPORATION II], a Delaware corporation, and NISSAN MOTOR ACCEPTANCE CORPORATION, a California corporation. Capitalized terms used herein without definition shall have the respective meanings assigned to such terms in Article I. WHEREAS, the Issuer desires to purchase a portfolio of receivables arising in connection with retail installment sales contracts secured by new, near-new or used automobiles and light-duty trucks generated by NMAC in the ordinary course of business and sold to the Seller; WHEREAS, the Seller is willing to sell such receivables to the Issuer; and WHEREAS, the Servicer is willing to service such receivables. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto hereby agree as follows: ARTICLE I Definitions SECTION 1.01 Definitions. Except as otherwise provided in this Agreement, whenever used herein, the following words and phrases, unless the context otherwise requires, shall have the following respective meanings: "Accounts" means the Collection Account, the Yield Supplement Account and the Reserve Account. ["Accumulation Account" is an account created pursuant to Section 5.01(e).] "Administration Agreement" means the Administration Agreement, dated as of [_______], among the Administrator, the Issuer and the Indenture Trustee. "Administrative Purchase Payment" for any Administrative Receivable as of the last day of any Collection Period, means the sum of the Principal Balance thereof as of the beginning of such Collection Period plus interest accrued thereon through the due date for the Obligor's payment in such Collection Period at the related APR, after giving effect to the receipt of monies collected (from whatever source other than the Advances) on such Administrative Receivable, if any, during such Collection Period. "Administrative Receivable" means a Receivable purchased as of the close of business on the last day of a Collection Period by the Servicer pursuant to Section 4.06 or Section 9.01. "Administrator" means NMAC, or any successor Administrator under the Administration Agreement. 1 6 "Advance" means the amount, as of the last day of a Collection Period, that the Servicer is required to advance on the respective Receivable pursuant to Section 5.04. "Affiliate" means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, "control," when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the term "controlling" and "controlled" have meanings correlative to the foregoing. "Aggregate Certificateholders' Interest Distributable Amount" means, with respect to any Distribution Date, the sum of the Certificateholders' Interest Distributable Amount for all Classes of Certificates for such Distribution Date. "Aggregate Noteholders' Interest Distributable Amount" means, with respect to any Distribution Date, the sum of the Noteholders' Interest Distributable Amount for all Classes of Notes with respect to such Distribution Date. "Agreement" means this Sale and Servicing Agreement among Nissan Auto Receivables [___-___] Owner Trust, as Issuer, [NARC][NARC II], as Seller, and NMAC, as Servicer. "AICPA" shall have the meaning assigned to such term in Section 4.10. "Allocable Principal" means, for any Distribution Date, an amount equal to the excess, if any, of (i) the sum of the Outstanding Amount of the Notes and the Certificate Balance as of the close of business on the immediately preceding Distribution Date over (ii) the Pool Balance as of the end of the related Collection Period. "Amount Financed" with respect to any Receivable, means the amount advanced under the Receivable toward the purchase price of the related Financed Vehicle and any related costs, including but not limited to accessories, insurance premiums, service and warranty contracts and other items customarily financed as part of retail automobile and light-duty truck installment sale contracts. "Annual Percentage Rate" or "APR" of a Receivable means the annual rate of finance charges stated in such Receivable. "Annual USAP Report" shall have the meaning specified in Section 4.10. "Assignment" shall have the meaning assigned to such term in the Purchase Agreement. "Available Amounts" means, with respect to any Distribution Date, the sum of Available Interest and Available Principal for such Distribution Date. "Available Interest" means, for any Distribution Date, the sum of the following amounts received during the related Collection Period: (i) that portion of all collections on Receivables allocable to interest, (ii) without duplication of amounts described in clause (i), Net Liquidation Proceeds to the extent allocable to interest due on a Liquidated Receivable in accordance with 2 7 the Servicer's customary servicing procedures, (iii) all Advances made by the Servicer pursuant to Section 5.04, (iv) without duplication of any amounts described above in clauses (i) and (ii), the Administrative Purchase Payment of each Receivable that became an Administrative Receivable during the related Collection Period to the extent attributable to interest thereon, (v) without duplication of any amounts described above in clauses (i) and (ii), the Warranty Purchase Payment of each Receivable that became a Warranty Receivable during the related Collection Period to the extent attributable to interest thereon, and (vi) the Yield Supplement Deposit plus the sum of (x) reinvestment income on the Yield Supplement Account and (y) the amount, if any, deposited into the Collection Account pursuant to the second or third sentence of Section 5.08(b); provided, however, that in calculating Available Interest, amounts to be paid to the Servicer as reimbursement for Advances pursuant to Sections 5.06(c)(i), 5.06(c)(ii), 5.06(d)(i) and 5.06(d)(ii) on such Distribution Date shall be excluded. "Available Principal" means, for any Distribution Date, the sum of the following amounts received during the related Collection Period: (i) that portion of all collections on Receivables attributable to principal, (ii) without duplication of amounts described in clause (i), Net Liquidation Proceeds attributable to principal due on a Liquidated Receivable in accordance with the Servicer's customary servicing procedures, (iii) without duplication of any amounts described above in clauses (i) and (ii), the Administrative Purchase Payment of each Receivable that became an Administrative Receivable during the related Collection Period to the extent attributable to principal, and (iv) without duplication of any amounts described above in clauses (i) and (ii), the Warranty Purchase Payment of each Receivable that became a Warranty Receivable during the related Collection Period to the extent attributable to principal. "Base Servicing Fee" means the fee payable to the Servicer on each Distribution Date, calculated pursuant to Section 4.07, for services rendered during the related Collection Period, which shall be equal to one-twelfth of the Servicing Rate multiplied by the Pool Balance as of the close of business on the last day of the immediately preceding Collection Period or, with respect to the first Distribution Date, the Original Pool Balance. "Basic Documents" means the Purchase Agreement, the Trust Agreement, the Certificate of Trust, this Agreement, the Indenture, the Administration Agreement, the Securities Account Control Agreement, the Yield Supplement Agreement, the Note Depository Agreement, the Certificate Depository Agreement and the other documents and certificates delivered in connection herewith and therewith. "Business Day" means any day other than a Saturday, a Sunday or a day on which banking institutions in New York, New York, Los Angeles, California, Wilmington, Delaware or Minneapolis, Minnesota are authorized or obligated by law, regulation, executive order or governmental decree to remain closed. "Certificate Balance" means, as of any Distribution Date and for each Class of Certificates, the Original Certificate Balance of such Class, reduced by all amounts distributed to the Certificateholders of such Class allocable to principal pursuant to Section 5.06(c) and/or (d) hereof (but in no event less than zero). When the term "Certificate Balance" is not used in respect of any Class of Certificates, then it shall mean the sum of the Certificate Balance of the Class C Certificates and the Class D Certificates. For the purposes of determining whether the 3 8 vote of the requisite percentage of Certificateholders necessary to effect any consent, waiver, request or demand shall have been obtained, the Certificate Balance shall be deemed to be reduced by the amount equal to the balance (without giving effect to this provision) evidenced by any Certificate registered in the name of the Seller, the Servicer or any Person actually known to a Trust Officer of the Owner Trustee or the Indenture Trustee, as the case may be, to be the Seller or the Servicer or any of their Affiliates. "Certificate Depository Agreement" means the agreement entitled "Letter of Representations" dated on or before the Closing Date among the Clearing Agency, the Trust and the Owner Trustee with respect to certain matters relating to the duties thereof with respect to the Book-Entry Certificates. "Certificate Factor" means, with respect to any Class of Certificates and any Distribution Date, a seven-digit decimal figure obtained by dividing the Certificate Balance of such Class of Certificates as of the close of business on the last day of the related Collection Period by the Original Certificate Balance of such Class of Certificates. "Certificate of Trust" shall have the meaning assigned to such term in the Trust Agreement. "Certificate Pool Factor" means, with respect to any Class of Certificates and any Distribution Date, a seven-digit decimal figure obtained by dividing the Certificate Balance of such Class of Certificates as of the close of business on the last day of the related Collection Period by the Original Pool Balance. "Certificate Register" means the register maintained by the Certificate Registrar pursuant to the Trust Agreement recording the names of the Certificateholders. "Certificateholders" shall have the meaning assigned to such term in the Trust Agreement. "Certificateholders' Distributable Amount" means, with respect to any Distribution Date, the sum of the Aggregate Certificateholders' Interest Distributable Amount and the Certificateholders' Principal Distributable Amount, if any, for the most senior Class of Certificates for such Distribution Date. "Certificateholders' Interest Carryover Shortfall" means, with respect to any Distribution Date and a Class of Certificates, the excess, if any, of the sum of the Certificateholders' Monthly Interest Distributable Amount for such Class for the preceding Distribution Date plus any outstanding Certificateholders' Interest Carryover Shortfall for such Class on such preceding Distribution Date, over the amount in respect of interest that is actually paid on the Certificates of such Class on such preceding Distribution Date, plus, to the extent permitted by applicable law, interest on the Certificateholders' Interest Carryover Shortfall at the related Pass-Through Rate for such Class for the related Interest Period. "Certificateholders' Interest Distributable Amount" means, with respect to any Distribution Date and a Class of Certificates, the sum of the Certificateholders' Monthly Interest Distributable Amount for such Class plus any outstanding Certificateholders' Interest Carryover 4 9 Shortfall for such Class as of the close of the immediately preceding Distribution Date. "Certificateholders' Monthly Interest Distributable Amount" means, with respect to any Distribution Date and a Class of Certificates, interest accrued for the related Interest Period at the related Pass-Through Rate for such Class of Certificates on the Certificate Balance of such Class on the immediately preceding Distribution Date, after giving effect to all payments of principal to Certificateholders of such Class on or prior to such Distribution Date (or, in the case of the first Distribution Date, on the Original Certificate Balance of such Class of Certificates). "Certificateholders' Monthly Principal Distributable Amount" means, with respect to any Distribution Date, the Certificateholders' Percentage of the Allocable Principal for such Distribution Date. "Certificateholders' Percentage" means the following: (i) for each Distribution Date until the Distribution Date on which the principal amount of all of the Notes has been paid in full, 0%; (ii) for the Distribution Date on which the principal amount of all the Notes has been paid in full, the percentage of Allocable Principal remaining after the Notes have been paid in full; and (iii) for each Distribution Date after the Distribution Date on which the principal amount of all of the Notes is reduced to zero, 100%. "Certificateholders' Principal Carryover Shortfall" means, with respect to any Distribution Date and a Class of Certificates, the excess, if any, of the Certificateholders' Monthly Principal Distributable Amount for such Class plus any outstanding Certificateholders' Principal Carryover Shortfall for such Class for the preceding Distribution Date over the amount in respect of principal that is actually distributed to the Certificateholders on such current Distribution Date. Certificateholders' Principal Carryover Shortfall is not used to determine the amount of principal due on such Class on any Distribution Date, but is used solely for reporting purposes. "Certificateholders' Principal Distributable Amount" means, with respect to any Distribution Date and a Class of Certificates, the sum of (i) the Certificateholders' Monthly Principal Distributable Amount for such Distribution Date, and (ii) on the Final Scheduled Distribution Date for such Class of Certificates, if any, or upon the termination of the Trust, the amount necessary to reduce the outstanding principal amount of such Class of Certificates to zero; provided, however, that the Certificateholders' Principal Distributable Amount with respect to a Class of Certificates shall not exceed the Certificate Balance of such Class of Certificates. "Certificates" shall have the meaning assigned to such term in the Trust Agreement. "Class" means any one of the classes of Notes or Certificates, as the case may be. "Class A-1 Interest Rate" means ___% per annum. "Class A-1 Note" means any of the [__%] Asset Backed Notes, Class A-1, issued under the Indenture. "Class A-1 Noteholder" means the Person in whose name a Class A-1 Note is registered in the Note Register. 5 10 "Class A-2 Interest Rate" means ___% per annum. "Class A-2 Note" means any of the [__%] Asset Backed Notes, Class A-2, issued under the Indenture. "Class A-2 Noteholder" means the Person in whose name a Class A-2 Note is registered in the Note Register. "Class A-3 Interest Rate" means ___% per annum. "Class A-3 Note" means any of the [__%] Asset Backed Notes, Class A-3, issued under the Indenture. "Class A-3 Noteholder" means the Person in whose name a Class A-3 Note is registered in the Note Register. "Class B Interest Rate" means ___% per annum. "Class B Note" means any of the [__%] Asset Backed Notes, Class B, issued under the Indenture. "Class B Noteholder" means the Person in whose name a Class B Note is registered in the Note Register. "Class C Certificateholder" means the holder of any Class C Certificate as evidenced by the Certificate Register. "Class C Pass-Through Rate" means [_______]% per annum. "Class D Certificateholder" means the holder of any Class D Certificate as evidenced by the Certificate Register. "Class D Pass-Through Rate" means [_______]% per annum. "Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act. "Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. "Closing Date" means [_______]. "Collection Account" means the account designated as such, established and maintained pursuant to Section 5.01. "Collection Period" means, with respect to any Distribution Date, the preceding calendar month. Any amount stated "as of the close of business of the last day of a Collection Period" shall give effect to the following calculations as determined as of the end of the day on such last 6 11 day: (i) all applications of collections, (ii) all Advances and reductions of Outstanding Advances and (iii) all distributions. "Controlling Class of Certificates" means, on any date of determination, until the Class C Certificates have been paid in full, the Class C Certificates, and thereafter, the Class D Certificates. "Controlling Class of Notes" means, on any date of determination, until the Class A Notes have been paid in full, the Class A Notes, and thereafter, the Class B Notes. "Corporate Trust Office" shall have the meaning assigned to such term in the Indenture. "Cutoff Date" means [_______]. "Damages" shall have the meaning assigned to such term in Section 7.02. "Dealer" means the dealer who sold a Financed Vehicle and who originated and assigned the related Receivable to NMAC under an existing agreement between such dealer and NMAC. "Dealer Recourse" means, with respect to a Receivable, all recourse rights against the Dealer which originated the Receivable, and any successor Dealer. "Default" shall have the meaning assigned to such term in the Indenture. "Defaulted Receivable" means a Receivable (other than an Administrative Receivable or a Warranty Receivable), which, by its terms, is delinquent 120 or more days or, with respect to Receivables that are delinquent less than 120 days, the Servicer has (i) determined, in accordance with its customary servicing procedures, that eventual payment in full is unlikely or (ii) repossessed the Financed Vehicle. "Definitive Certificates" and "Definitive Notes" shall have the meanings ascribed thereto in the Trust Agreement and the Indenture, respectively. "Determination Date" means the tenth calendar day of each calendar month, or if such tenth day is not a Business Day, the next succeeding Business Day. "Distribution Date" means, for each Collection Period, the 15th calendar day of the following calendar month, or if the 15th day is not a Business Day, the next succeeding Business Day, commencing [_______]. "DTC" means The Depository Trust Company. "Eligible Deposit Account" means an account maintained (i) with the Indenture Trustee or the Owner Trustee so long as the Indenture Trustee's or the Owner Trustee's short-term unsecured debt obligations have a rating of "P-1" by Moody's and a rating of "A-1+" by Standard & Poor's, and for any account in which deposits in excess of 30 days are to be made, so long as the Indenture Trustee's or the Owner Trustee's long-term unsecured debt obligations have a rating of at least "AA-" by Standard & Poor's (such short-term and long-term (if 7 12 applicable) ratings being, the "Required Deposit Rating"), or (ii) in a segregated trust account in the trust department of the Indenture Trustee or the Owner Trustee, as the case may be. Notwithstanding anything to the contrary, as of the Closing Date, the Indenture Trustee shall be deemed to have met the requirements in clause (i). "Eligible Investments" means, at any time, any one or more of the following obligations and securities: (i) direct obligations of, and obligations fully guaranteed as to timely payment of principal and interest by, the United States of America; (ii) demand deposits, time deposits or certificates of deposit of any depository institution or trust company incorporated under the laws of the United States of America or any state thereof (or any domestic branch of a foreign bank) and subject to supervision and examination by Federal or State banking or depository institution authorities; provided, however, that at the time of the investment or contractual commitment to invest therein, the commercial paper or other short-term unsecured debt obligations (other than such obligations the rating of which is based on the credit of a Person other than such depository institution or trust company) thereof shall have a credit rating from each of the Rating Agencies in the highest investment category granted thereby; (iii) commercial paper having, at the time of the investment or contractual commitment to invest therein, a rating from each of the Rating Agencies in the highest investment category granted thereby; (iv) investments in money market funds having a rating from each of the Rating Agencies in the highest investment category granted thereby (including funds for which the Owner Trustee, the Indenture Trustee or any of their respective Affiliates is investment manager or advisor); (v) bankers' acceptances issued by any depository institution or trust company referred to in clause (ii) above; (vi) repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with a depository institution or trust company (acting as principal) described in clause (ii); (vii) repurchase obligations with respect to any security or whole loan, entered into with (a) a depository institution or trust company (acting as principal) described in clause (ii) above (except that the rating referred to in the proviso in such clause (ii) shall be "A-1" or higher in the case of Standard & Poor's) (such depository institution or trust company being referred to in this definition as a "financial institution"), (b) a broker/dealer (acting as principal) registered as a broker or dealer under Section 15 of the Exchange Act (a "broker/dealer"), the unsecured short-term debt obligations of which are rated "P-1" by Moody's and at least "A-1" by Standard & Poor's at the time of entering into such repurchase obligation (a "rated broker/dealer"), (c) an unrated broker/dealer (an 8 13 "unrated broker/dealer"), acting as principal that is a wholly-owned subsidiary of a non-bank holding company the unsecured short-term debt obligations of which are rated "P-1" by Moody's and at least "A-1" by Standard & Poor's at the time of entering into such repurchase obligation (a "Rated Holding Company"), or (d) an unrated wholly-owned subsidiary of a direct or indirect parent Rated Holding Company, which guarantees such subsidiary's obligations under such repurchase agreement (a "Guaranteed Counterparty"); provided that the following conditions are satisfied: (A) the aggregate amount of funds invested in repurchase obligations of a financial institution, a rated broker/dealer, an unrated broker/dealer or a Guaranteed Counterparty in respect of which the unsecured short-term ratings of Standard & Poor's are "A-1" (in the case of an unrated broker/dealer or Guaranteed Counterparty, such rating being that of the related Rated Holding Company) shall not exceed 20% of the outstanding Pool Balance (there being no limit on the amount of funds that may be invested in repurchase obligations in respect of which such Standard & Poor's rating is "A-1+" (in the case of an unrated broker/dealer or Guaranteed Counterparty, such rating being that of the related Rated Holding Company)); (B) in the case of the Reserve Account and the Yield Supplement Account, the rating from Standard & Poor's in respect of the unsecured short term debt obligations of the financial institution, rated broker/dealer, unrated broker/dealer or Guaranteed Counterparty (in the case of an unrated broker/dealer or Guaranteed Counterparty, such rating being that of the related Rated Holding Company) shall be "A-1+"; (C) the repurchase obligation must mature within 30 days of the date on which the Indenture Trustee or the Owner Trustee, as applicable, enters into such repurchase obligation; (D) the repurchase obligation shall not be subordinated to any other obligation of the related financial institution, rated broker/dealer, unrated broker/dealer or Guaranteed Counterparty; (E) the collateral subject to the repurchase obligation is held, in the appropriate form, by a custodial bank on behalf of the Indenture Trustee or the Owner Trustee, as applicable; (F) the repurchase obligation shall require that the collateral subject thereto shall be marked to market daily; (G) in the case of a repurchase obligation of a Guaranteed Counterparty, the following conditions shall also be satisfied: (1) the Indenture Trustee or the Owner Trustee, as applicable, shall have received an Opinion of Counsel to the effect that the guarantee of the related Rated Holding Company is a legal, valid and binding agreement of the Rated Holding Company, enforceable in accordance with 9 14 its terms, subject to the effect of bankruptcy, insolvency, reorganization and moratorium or other similar laws affecting creditors' rights generally and to general equitable principles; (2) the Indenture Trustee or the Owner Trustee, as applicable, shall have received (x) an incumbency certificate for the signer of such guarantee, certified by an officer of such Rated Holding Company, and (y) a resolution, certified by an officer of the Rated Holding Company, of the board of directors (or applicable committee thereof) of the Rated Holding Company authorizing the execution, delivery and performance of such guarantee by the Rated Holding Company; (3) the only conditions to the obligation of such Rated Holding Company to pay on behalf of the Guaranteed Counterparty shall be that the Guaranteed Counterparty shall not have paid under such repurchase obligation when required (it being understood that no notice to, demand on or other action in respect of the Guaranteed Counterparty is necessary) and that the Indenture Trustee or the Owner Trustee, as applicable, shall make a demand on the Rated Holding Company to make the payment due under such guarantee; (4) the guarantee of the Rated Holding Company shall be irrevocable with respect to such repurchase obligation and shall not be subordinated to any other obligation of the Rated Holding Company; and (5) each of the Rating Agencies has confirmed in writing to the Indenture Trustee or the Owner Trustee, as applicable, that it has reviewed the form of the guarantee of the Rated Holding Company and has determined that the issuance of such guarantee will not result in the downgrade or withdrawal of the ratings assigned to the Notes or the Class C Certificates; and (H) the repurchase obligation shall require that the repurchase obligation be overcollateralized and shall provide that, upon any failure to maintain such overcollateralization, the repurchase obligation shall become due and payable, and unless the repurchase obligation is satisfied immediately, the collateral subject to the repurchase agreement shall be liquidated and the proceeds applied to satisfy the unsatisfied portion of the repurchase obligation; and (viii) any other investment with respect to which the Servicer has received written notification from the Rating Agencies that the acquisition of such investment as an Eligible Investment will not result in a withdrawal or downgrading of the ratings on the Notes or the Class C Certificates; provided that, unless otherwise expressly stated herein, each of the foregoing investments shall be denominated in U.S. dollars, shall not be purchased at a premium, shall mature no later than the Business Day prior to the Distribution Date immediately following the date of purchase, and 10 15 shall be required to be held to such maturity; and provided, further, that notwithstanding clauses (i) through (viii) above, "Eligible Investments" shall not include any security having an "r" subscript attached to its Standard & Poor's rating. For purposes of this definition, any reference to the highest available credit rating of an obligation shall mean the highest available credit rating for such obligation (excluding any "+" signs associated with such rating), or such lower credit rating (as approved in writing by each Rating Agency) as will not result in the qualification, downgrading or withdrawal of the rating then assigned by such Rating Agency to any of the Notes. "Event of Default" shall have the meaning assigned to such term in the Indenture. "Exchange Act" means the Securities Exchange Act of 1934. "Final Scheduled Distribution Date" means, with respect to the Class A-1 Notes, the Distribution Date in [_______]; with respect to the Class A-2 Notes, the Distribution Date in [_______]; with respect to the Class A-3 Notes, the Distribution Date in [_______]; with respect to the Class B Notes, the Distribution Date in [_______]; with respect to the Class C Certificates, the Distribution Date in [_______]; and with respect to the Class D Certificates, the Distribution Date in [_______]. "Financed Vehicle" means a new, near-new or used automobile or light-duty truck, together with all accessions thereto, securing an Obligor's indebtedness under the related Receivable. "Holder" or "Securityholder" means the registered holder of any Certificate or Note as evidenced by the Certificate Register (as defined in the Trust Agreement) or Note Register (as defined in the Indenture) except that, solely for the purposes of giving certain consents, waivers, requests or demands pursuant to the Trust Agreement or the Indenture, the interest evidenced by any Certificate or Note registered in the name of [NARC][NARC II] or NMAC, or any Person actually known to a Trust Officer to be an Affiliate of [NARC][NARC II] or NMAC, shall not be taken into account in determining whether the requisite percentage necessary to effect any such consent, waiver, request or demand shall have been obtained unless [NARC][NARC II] or NMAC are the only holders. "Indenture" means the Indenture dated as of [_______], between the Issuer and the Indenture Trustee. "Indenture Trustee" means the Person acting as Indenture Trustee under the Indenture, its successors in interest and any successor trustee under the Indenture. "Initial Yield Supplement Amount" means $[_____________] [in cash] [and receivables with an aggregate principal balance of $[__________] as of [the Cutoff Date] or other assets (including vehicle lease contracts)]. "Insolvency Event" means, with respect to a specified Person, (a) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or all or substantially all of its property in an involuntary case under any applicable federal or state 11 16 bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for all or substantially all of its property, or ordering the winding-up or liquidation of such Person's affairs, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or (b) the commencement by such Person of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for all or substantially all of its property, or the making by such Person of any general assignment for the benefit of creditors. "Interest Period" means, with respect to any Distribution Date and the Class A-1 Notes, the period from (and including) the preceding Distribution Date to (but excluding) such Distribution Date, except that the initial Interest Period will be from (and including) the Closing Date to (but excluding) [___________], and, with respect to any Distribution Date and the Class A-2 Notes, the Class A-3 Notes, the Class B Notes and the Certificates, the period from (and including) the 15th day of the preceding calendar month to (but excluding) the 15th day of the month in which such Distribution Date occurs, except that the initial Interest Period will be from (and including) the Closing Date to (but excluding) [___________]. "Interest Rate" means the Class A-1 Interest Rate, the Class A-2 Interest Rate, the Class A-3 Interest Rate or the Class B Interest Rate. "Issuer" means Nissan Auto Receivables ____-_ Owner Trust. "Lien" means any security interest, lien, charge, pledge, equity or encumbrance of any kind, other than, in the case of a Financed Vehicle, tax liens, mechanics' liens and any liens that attach to such Financed Vehicle by operation of law. "Liquidated Receivable" means a Defaulted Receivable as to which the related Financed Vehicle has been liquidated by the Servicer. "Monthly Remittance Conditions" shall have the meaning assigned to such term in Section 5.02. "Moody's" means Moody's Investors Service, Inc. "[NARC][NARC II]" means [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], a Delaware corporation. "Net Liquidation Proceeds" means the monies collected from whatever source on a Liquidated Receivable, net of the sum of any amounts expended by the Servicer for the account of the Obligor, plus any amounts required by law to be remitted to the Obligor. "Nissan" means Nissan Motor Co., Ltd. 12 17 "NMAC" means Nissan Motor Acceptance Corporation, in its individual capacity and not as Servicer. "Nonrecoverable Advance" means any Outstanding Advance with respect to (i) any Defaulted Receivable or (ii) any Receivable as to which the Servicer determines that any recovery from payments made on or with respect to such Receivable is unlikely. "Note" means any one of the notes issued under the Indenture. "Note Depository Agreement" shall have the meaning assigned to such term in the Indenture. "Note Factor" means, with respect to any Class of Notes and any Distribution Date, a seven-digit decimal figure obtained by dividing the Outstanding Amount of such Class of Notes, as of the close of business on the last day of the related Collection Period, by the initial Outstanding Amount of that Class of Notes. "Noteholder" shall have the meaning assigned to such term in the Indenture. "Noteholders' Distributable Amount" means, with respect to any Distribution Date, the Aggregate Noteholders' Interest Distributable Amount with respect to such Distribution Date plus the Noteholders' Principal Distributable Amount with respect to such Distribution Date for the most senior Class of Notes. "Noteholders' Interest Carryover Shortfall" means, with respect to any Distribution Date and a Class of Notes, the excess, if any, of the sum of the Noteholders' Monthly Interest Distributable Amount for such Class for the preceding Distribution Date plus any outstanding Noteholders' Interest Carryover Shortfall for such Class on such preceding Distribution Date, over the amount in respect of interest that is actually paid on the Notes of such Class on such preceding Distribution Date, plus, to the extent permitted by applicable law, interest on the Noteholders' Interest Carryover Shortfall at the related Interest Rate for the related Interest Period (calculated on the same basis as interest on that Class of Notes for the same period). "Noteholders' Interest Distributable Amount" means, with respect to any Distribution Date and a Class of Notes, the sum of the Noteholders' Monthly Interest Distributable Amount for such Class plus any outstanding Noteholders' Interest Carryover Shortfall for such Class as of the close of the immediately preceding Distribution Date. "Noteholders' Monthly Interest Distributable Amount" means, with respect to any Distribution Date and a Class of Notes, interest accrued for the related Interest Period (calculated on the basis of, in the case of Class A-1 Notes, the actual number of days in such Interest Period and a year assumed to consist of 360 days, and in the case of all other Classes of Notes, such Interest Period being assumed to consist of 30 days and a year assumed to consist of 360 days) at the related Interest Rate for such Class of Notes on the Outstanding Amount of the Notes of such Class on the immediately preceding Distribution Date, after giving effect to all payments of principal to Noteholders of such Class on or prior to such Distribution Date (or, in the case of the first Distribution Date, on the original principal amount of such Class of Notes). 13 18 "Noteholders' Monthly Principal Distributable Amount" means, with respect to any Distribution Date, the Noteholders' Percentage of the Allocable Principal for such Distribution Date. "Noteholders' Percentage" means (i) for each Distribution Date until the Distribution Date on which the aggregate principal amount of all of the Notes has been paid in full, 100%; (ii) for the Distribution Date on which the Notes have been paid in full, the percentage of Allocable Principal required to pay all of the Notes in full; and (iii) thereafter, 0%. "Noteholders' Principal Carryover Shortfall" means, with respect to any Distribution Date and a Class of Notes, the excess, if any, of the Noteholders' Monthly Principal Distributable Amount for such Class for the preceding Distribution Date over the amount in respect of principal that is actually paid as principal on such Class on such current Distribution Date. Noteholders' Principal Carryover Shortfall is not used to determine the amount of principal due on such Class on any Distribution Date, but is used solely for reporting purposes. "Noteholders' Principal Distributable Amount" means, with respect to any Distribution Date and a Class of Notes, the sum of (i) the Noteholders' Monthly Principal Distributable Amount for such Distribution Date, and (ii) on the Final Scheduled Distribution Date for such Class of Notes, the amount necessary to reduce the outstanding principal amount of such Class of Notes to zero; provided, however, that the Noteholders' Principal Distributable Amount with respect to a Class of Notes shall not exceed the Outstanding Amount of such Class of Notes. "Note Owner" shall have the meaning assigned to such term in the Indenture. "Note Pool Factor" means, with respect to any Class of Notes and any Distribution Date, a seven-digit decimal figure obtained by dividing the Outstanding Amount of such Class of Notes as of the close of business on the last day of the related Collection Period by the Original Pool Balance. "Note Register" means the register maintained by the Indenture Trustee pursuant to the Indenture recording the name of each Noteholder. "Notes" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class B Notes. "Obligor" on a Receivable means the purchaser or co-purchasers of the Financed Vehicle or any other Person who owes payments under the Receivable (but excluding any Dealer in respect of Dealer Recourse). "Officer's Certificate" means a certificate signed by the chairman of the board, the president, any executive vice president, any vice president, the treasurer, any assistant treasurer or the controller of the Seller or the Servicer, as the case may be. "Opinion of Counsel" means one or more written opinions of counsel who may, except as otherwise provided herein, be an employee of or counsel to the Issuer, the Seller or the Servicer, which counsel shall be reasonably acceptable to the Indenture Trustee, the Owner Trustee or the Rating Agencies, as the case may be. 14 19 "Optional Purchase Percentage" means 10.00%. "Optional Purchase Price" means an amount equal to the aggregate Administrative Purchase Payments for the Receivables (including Receivables that became Defaulted Receivables in the Collection Period preceding the Distribution Date on which a purchase pursuant to Section 9.01 is effected), plus the appraised value of any other property held by the Trust, such value to be determined by an appraiser mutually agreed upon by the Servicer and the Trustee, and shall succeed to all interests in and to the Trust (less liquidated expenses); provided, however, that the Optional Purchase Price shall be equal to or greater than the sum of (i) the Outstanding Amount of all Classes of Notes, (ii) the Noteholders' Interest Distributable Amount for all Classes of Notes for such Distribution Date, (iii) the Certificate Balance of the Class C Certificates, and (iv) the Certificateholders' Interest Distributable Amount of the Class C Certificates for such Distribution Date. "Original Certificate Balance" means $[_________] for the Class C Certificates and $[_________] for the Class D Certificates. "Original Pool Balance" means the aggregate Principal Balance of the Receivables on the Cutoff Date. "Original Principal Amount " means $[_________] for the Class A-1 Notes, $[_________] for the Class A-2 Notes, $[_________] for the Class A-3 Notes and $[_________] for the Class B Notes. "Outstanding" shall have the meaning assigned to that term in the Indenture. "Outstanding Advances" means, with respect to a Receivable and the last day of a Collection Period, the sum of all Advances made as of or prior to such date, minus all payments or collections as of or prior to such date that are specified in Sections 5.04(b) and 5.04(d) as applied to reimburse all unpaid Advances with respect to such Receivable. "Outstanding Amount" means the aggregate principal amount of all Notes, or, if indicated by the context, all Notes of any Class, Outstanding at the date of determination. "Owner Trust Estate" means all right, title and interest of the Trust in and to the Receivables (other than the Warranty Receivables for which the Seller has paid the Warranty Purchase Payment in accordance with Section 3.02 and Administrative Receivables for which the Servicer has paid the Administrative Purchase Payment in accordance with Section 4.06), and all monies paid thereon, and all monies accrued thereon, after the Cutoff Date; security interests in the Financed Vehicles and any accessions thereto; funds deposited in the Collection Account; [the Yield Supplement Account and all funds deposited in the Yield Supplement Account;] all property (including the right to receive Net Liquidation Proceeds) that shall have secured a Receivable and that shall have been acquired by or on behalf of the Owner Trustee; proceeds from claims on any physical damage, credit life or disability insurance policies covering the Financed Vehicles or the Obligors; all right to receive payments in respect of any Dealer Recourse with respect to the Receivables; all right, title and interest of the Seller in and to the Purchase Agreement and the Assignment; all right, title and interest of the Owner Trustee and the Trust pursuant to this Agreement [, the Yield Supplement Agreement] and the 15 20 Administration Agreement; certain rebates of premiums and other amounts relating to certain insurance policies and other items financed under the Receivables in effect as of the Cutoff Date; and the proceeds of any and all of the foregoing. "Owner Trustee" means the Person acting as Owner Trustee under the Trust Agreement, its successors in interest and any successor owner trustee under the Trust Agreement. "Pass-Through Rate" means the Class C Pass-Through Rate or the Class D Pass-Through Rate. "Paying Agent" shall have the meaning assigned to such term in the Indenture. "Person" means any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Pool Balance" as of the close of business on the last day of a Collection Period means the aggregate Principal Balance of the Receivables (excluding Administrative Receivables, Warranty Receivables and Defaulted Receivables) as of the close of business on such day; provided, however, that where the Pool Balance is relevant in determining whether the requisite percentage of Certificateholders or Noteholders (or relevant Class or Classes of Certificates or Notes, as the case may be) necessary to effect any consent, waiver, request or demand shall have been obtained, the Pool Balance shall be deemed to be reduced by the amount equal to the portion of the Pool Balance (before giving effect to this provision) represented by the interests evidenced by any applicable Certificate or Note registered in the name of the Seller, the Servicer or any Person actually known to a Trust Officer of the Owner Trustee or the Indenture Trustee, as the case may be, to be an Affiliate of the Seller or the Servicer, unless all of the Certificates or Notes, as the case may be, are held or beneficially owned by NMAC, [NARC] [NARC II] or any of their Affiliates. "Pool Factor" for a particular Class of Notes or Certificates on any Distribution Date means a seven-digit decimal figure indicating the principal amount of such Class of Notes or the Certificate Balance of such Class of Certificates, as the case may be, as of the close of business on the last day of the related Collection Period as a fraction of the Original Pool Balance. "Prepayment" means, with respect to any Receivable, any prepayment, whether in part or in full, in respect of such Receivable. "Principal Balance" of a Receivable, as of any date of determination, means the Amount Financed minus the sum of (i) all payments on such Receivable allocable to principal, (ii) any refunded portion of extended warranty protection plan or service contract costs, or of physical damage, credit life or disability insurance premiums included in the Amount Financed, (iii) any payment of the Administrative Purchase Payment or the Warranty Purchase Payment with respect to the Receivable allocable to principal and (iv) any Net Liquidation Proceeds allocable to principal. 16 21 "Purchase Agreement" means that certain agreement, dated as of [______________], between NMAC and the Seller, relating to the purchase by the Seller from NMAC of the Receivables. "Rating Agency" means, as of any date, any of the nationally recognized statistical rating organizations that has been requested by the Seller or one of its Affiliates to rate any Class of Certificates or Notes and that is rating such Class of Certificates or Notes, as the case may be, on such date. "Receivable" means any retail installment sale contract that appears on Schedule A to this Agreement (which Schedule A may be in the form of microfiche, CD, datatape or paper) and that has not been released by the Owner Trustee from the Trust. "Receivable File" means the documents specified in Section 2.02 pertaining to a particular Receivable. "Record Date" means, with respect to the Notes or Certificates of any Class and each Distribution Date, the 14th day of the calendar month in which such Distribution Date occurs, or, if Definitive Notes representing any Class of Notes or Definitive Certificates representing any Class of Certificates have been issued, the last day of the Collection Period preceding the related Distribution Date. Any amount stated "as of a Record Date" or "on a Record Date" shall give effect to (i) all applications of collections, and (ii) all distributions to any party under this Agreement, the Indenture and the Trust Agreement or to the related Obligor, as the case may be, in each case as determined as of the opening of business on the related Record Date. "Relevant Trustee" means (i) with respect to the control over or appropriate designation denoting ownership or control over any property comprising a portion of the Owner Trust Estate that either is not conveyed or pledged to the Indenture Trustee for the benefit of the Noteholders pursuant to the Granting Clause of the Indenture or that has been released from the lien of the Indenture, the Owner Trustee, and (ii) with respect to any property comprising a portion of the Trust Estate (as defined in the Indenture) that has not been released from the lien of the Indenture, the Indenture Trustee; provided, however, that with respect to any property that is under the joint or separate control of a co-trustee or separate trustee under the Trust Agreement or the Indenture, respectively, "Relevant Trustee" shall refer to either or both of the Owner Trustee and such co-trustee or separate trustee or to either or both of the Indenture Trustee and such co-trustee or separate trustee, as the case may be. "Required Deposit Rating" shall have the meaning assigned to such term in the definition of "Eligible Deposit Account." "Required Rate" means, with respect to each Collection Period, the sum of (1) the [Class B Interest Rate] [weighted average Interest Rate of the Notes and the Class C Pass-Through Rate] and (2) the Servicing Rate. "Required Yield Supplement Amount" means, with respect to every Distribution Date, an amount equal to the lesser of (i) the aggregate amount of Yield Supplement Deposits that would become due for all future Distribution Dates under the Yield Supplement Agreement, assuming (1) that payments on the Receivables are made on their scheduled due dates, (2) that no 17 22 Receivable becomes a prepaid Receivable, and (3) a discount rate of [___]%, and (ii) the Initial Yield Supplement Amount. "Reserve Account" means the account designated as such, established and maintained pursuant to Section 5.07. "Reserve Account Initial Deposit" means $[_______]. "Schedule of Receivables" means the schedule of receivables attached as Schedule A to this Agreement, as it may be amended from time to time. "Scheduled Payment" on a Receivable means the payment required to be made by the Obligor during each Collection Period that is sufficient to amortize the related Principal Balance under the Simple Interest Method over the term of the Receivable and to provide interest at the related APR. "Securities Account Control Agreement" means the Securities Account Control Agreement, dated as of [__________], among the Seller, [___________], as Securities Intermediary thereunder, [__________], as Indenture Trustee, and [___________], as Owner Trustee, pursuant to which the Reserve Account and the Yield Supplement Account will be established and maintained. "Securities Intermediary" shall have the meaning assigned to such term in the Securities Account Control Agreement. "Securityholders" has the meaning set forth in this Section 1.01 under the definition of "Holder." "Seller" means [NARC][NARC II], as the seller of the Receivables under this Agreement, and each successor to [NARC][NARC II] (in the same capacity) pursuant to Section 6.04. "Servicer" means NMAC, as the servicer of the Receivables, and each successor to NMAC (in the same capacity) pursuant to Section 7.03 or 8.02. "Servicer Default" means an event specified in Section 8.01. "Servicer's Certificate" means a certificate completed and executed on behalf of the Servicer by the president, any executive vice president, any vice president, the treasurer, any assistant treasurer, the controller or any assistant controller of the Servicer pursuant to Section 4.08. "Servicing Rate" means 1.00% per annum. "Simple Interest Method" means the method of allocating a fixed level payment to principal and interest pursuant to which the portion of such payment that is allocated to interest is equal to the product of the fixed rate of interest multiplied by the unpaid principal balance 18 23 multiplied by the quotient obtained by calculating the period of time elapsed since the preceding payment of interest was made and dividing such period of time by 365 or 366, as appropriate. "Simple Interest Receivable" means any Receivable under which the portion of a payment allocable to interest and the portion allocable to principal is determined in accordance with the Simple Interest Method. "Specified Reserve Account Balance" means with respect to any Distribution Date, an amount equal to $______________, provided, however, that in the event that on any Distribution Date (i) the annualized average for the preceding three Collection Periods (or such smaller number of Collection Periods as have elapsed since the Cutoff Date) of the percentage equivalents of the ratios of net losses (i.e., the net balances of all Liquidated Receivables, less any Net Liquidation Proceeds with respect to such Liquidated Receivables from that or prior Collection Periods) to the Pool Balance as of the first day of each such Collection Period exceeds [ ]% or (ii) the average for the preceding three Collection Periods (or such smaller number of Collection Periods as have elapsed since the Cutoff Date) of the percentage equivalents of the ratios of the number of Receivables that are delinquent 60 days or more to the outstanding number of Receivables exceeds [ ]%, then the Specified Reserve Account Balance for such Distribution Date (and for each succeeding Distribution Date until the relevant averages have not exceeded the specified percentages in clauses (i) and (ii) above for three successive Distribution Dates) shall be a dollar amount equal to the greater of (i) $[__________] and (ii) [ ]% of the Outstanding Amount of the Notes and the Certificate Balance as of the preceding Distribution Date (after giving effect to payments of principal made on such Distribution Date). "Standard & Poor's" means Standard & Poor's Ratings Services, a Division of the 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). 19 24 "Trust Estate" means all money, instruments, rights and other property that are subject or intended to be subject to the lien and security interest of the Indenture for the benefit of the Noteholders (including, without limitation, all property and interests granted to the Indenture Trustee pursuant to the Granting Clause of the Indenture), including all proceeds thereof. "Trust Officer" means, in the case of the Indenture Trustee, any officer within the Corporate Trust Office of the Indenture Trustee, including any Vice President, Assistant Vice President, Secretary, Assistant Secretary or any other officer of the Indenture Trustee customarily performing functions similar to those performed by any of the above designated officers and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject and, with respect to the Owner Trustee, any officer in the Corporate Trust Administration Department of the Owner Trustee with direct responsibility for the administration of the Trust Agreement and the Basic Documents on behalf of the Owner Trustee. "UCC" means the Uniform Commercial Code as in effect in the relevant jurisdiction. "USAP" shall have the meaning assigned to such term in Section 4.10. ["VPTN Proceeds Account" is an account created pursuant to Section 5.01(f).] "Warranty Purchase Payment," for any Warranty Receivable as of the last day of any Collection Period, means the sum of the Principal Balance thereof as of the beginning of such Collection Period plus interest accrued thereon through the due date for the Obligor's payment in such Collection Period, at the related APR, after giving effect to the receipt of monies collected (from whatever source other than Advances) on such Warranty Receivable, if any, during such Collection Period. "Warranty Receivable" means a Receivable purchased as of the close of business on the last day of a Collection Period by the Seller pursuant to Section 3.02. "Yield Supplement Account" means the segregated trust account established and maintained for the benefit of the Noteholders and the Class C Certificateholders pursuant to Section 5.08(a). "Yield Supplement Agreement means that certain agreement, dated as of [______________], among [NARC] [NARC II], NMAC, the Indenture Trustee and the Trust, substantially in the form attached hereto as Exhibit A. "Yield Supplement Amount" means, with respect to any Distribution Date, the aggregate amount on deposit in the Yield Supplement Account after giving effect to the withdrawal therefrom of the related Yield Supplement Deposit and without regard to any amounts on deposit therein in respect of interest or investment earnings earned on the investment of amounts on deposit therein in Eligible Investments for any period. "Yield Supplement Deposit" means, with respect to any Distribution Date, the amount by which (a) the aggregate amount of interest that would have been due during the related Collection Period on all Yield Supplemented Receivables if such Yield Supplemented 20 25 Receivables bore interest at the Required Rate exceeds (b) the amount of interest accrued on such Yield Supplemented Receivables at their respective APRs and due during such Collection Period. "Yield Supplemented Receivable" means any Receivable that has an APR less than the Required Rate. SECTION 1.02 Usage of Terms. With respect to all terms in this Agreement, the singular includes the plural and the plural the singular; words importing any gender include the other genders; references to "writing" include printing, typing, lithography and other means of reproducing words in a visible form; references to agreements and other contractual instruments include all subsequent amendments, amendments and restatements and supplements thereto or changes therein entered into in accordance with their respective terms and not prohibited by this Agreement; references to Persons include their permitted successors and assigns; references to laws include their amendments and supplements, the rules and regulations thereunder and any successors thereto; and the term "including" means "including without limitation." ARTICLE II Conveyance of Receivables SECTION 2.01 Conveyance of Receivables. (a) In consideration of the premises and the agreements, provisions and covenants herein contained and other good and valuable consideration to be delivered to the Seller hereunder, on behalf of the Issuer, the Seller does hereby sell, transfer, assign and otherwise convey to the Issuer, without recourse (but subject to the Seller's obligations in this Agreement): (i) all right, title and interest of the Seller in and to the Receivables (including all related Receivable Files) listed in Schedule A hereto and all monies due thereon or paid thereunder or in respect thereof (including proceeds of the repurchase of Receivables by the Seller pursuant to Section 3.02 or the purchase of Receivables by the Servicer pursuant to Section 4.06 or 9.01) after the Cutoff Date; (ii) the right of the Seller in the security interests in the Financed Vehicles granted by the Obligors pursuant to the Receivables and any related property; (iii) the right of the Seller in any proceeds from claims on any physical damage, credit life, credit disability or other insurance policies covering the Financed Vehicles or the Obligors; (iv) the right of the Seller through NMAC to receive payments in respect of any Dealer Recourse with respect to the Receivables; (v) the rights of the Seller under the Purchase Agreement and the Assignment; 21 26 (vi) the right of the Seller to realize upon any property (including the right to receive future Net Liquidation Proceeds) that shall have secured a Receivable; (vii) the right of the Seller in rebates of premiums and other amounts relating to insurance policies and other items financed under the Receivables in effect as of the Cutoff Date; (viii) all other assets comprising the Owner Trust Estate; and (ix) all proceeds of the foregoing. On the Closing Date, the Seller shall deliver to, or to the order of, the Issuer all property conveyed pursuant to this Section 2.01(a) except for monies received in respect of the Receivables after the Cutoff Date and before the Closing Date which shall be deposited by NMAC (in its individual capacity or as the Servicer) into the Collection Account no later than the first Record Date after the Closing Date. Concurrently therewith and in exchange therefor, the Issuer shall deliver to, or to the order of, the Seller the Notes and the Certificates. (b) It is the intention of the Seller that the transfer and assignment contemplated by this Agreement shall constitute a sale of the Receivables from the Seller to the Issuer and the beneficial interest in and title to the Receivables shall not be part of the Seller's estate in the event of the filing of a bankruptcy petition by or against the Seller under any bankruptcy law. The Seller agrees to execute and file all filings (including filings under the UCC) necessary in any jurisdiction to provide third parties with notice of the sale of the Receivables pursuant to this Agreement and to perfect such sale under the UCC. (c) Although the parties hereto intend that the transfer and assignment contemplated by this Agreement be a sale, if such transfer and assignment is deemed to be other than a sale, the parties intend that all filings described in the foregoing paragraph shall give the Issuer a first priority perfected security interest in, to and under the Receivables, and other property conveyed hereunder and all proceeds of any of the foregoing. This Agreement shall be deemed to be the grant of a security interest from the Seller to the Issuer, and the Issuer shall have all the rights, powers and privileges of a secured party under the UCC. (d) In connection with the foregoing conveyance, the Servicer shall maintain its computer system so that, from and after the time of sale of the Receivables to the Issuer under this Agreement, the Servicer's master computer records that refer to any Receivable indicate clearly the interest of the Issuer in such Receivables and that such Receivable is owned by the Issuer and controlled by the Issuer. Indication of the Issuer's ownership of a Receivable shall be deleted from or modified on the Servicer's computer systems when, and only when, the Receivable has been paid in full, repurchased or assigned pursuant to this Agreement. (e) Ownership and control of the Receivables, as between the Issuer and the Indenture Trustee (on behalf of the Noteholders and the Certificateholders) shall be governed by the Indenture. SECTION 2.02 Custody of Receivables Files. To assure uniform quality in servicing the Receivables and to reduce administrative costs, the Issuer, upon the execution and delivery of 22 27 this Agreement, appoints the Servicer, and the Servicer accepts such appointment, to act as the agent of the Issuer as custodian of the following documents or instruments that are hereby constructively delivered to the Issuer with respect to each Receivable: (a) the original of such Receivable (or a photocopy or other image thereof that the Servicer shall keep on file in accordance with its customary procedures) fully executed by the Obligor; (b) the original credit application fully executed by the related Obligor (or a photocopy or other image thereof that the Servicer shall keep on file in accordance with its customary procedures); (c) the original certificate of title (or a photocopy or other image thereof or such documents that the Servicer shall keep on file in accordance with its customary procedures), evidencing the security interest of the Servicer in the related Financed Vehicle; and (d) any and all other documents that the Servicer shall keep on file, in accordance with its customary procedures, relating to such Receivable, the related Obligor or Financed Vehicle. SECTION 2.03 Acceptance by Issuer. The Issuer acknowledges its acceptance pursuant to this Agreement, of all right, title and interest in and to the Receivables conveyed by the Seller pursuant to this Agreement and declares and shall declare from and after the date hereof that the Issuer holds and shall hold such right, title and interest, upon the terms and conditions set forth in this Agreement. ARTICLE III The Receivables SECTION 3.01 Representations and Warranties of the Seller with Respect to the Receivables. The Seller makes the following representations and warranties as to the Receivables on which the Issuer is deemed to have relied in acquiring the Receivables. Such representations and warranties speak as of the execution and delivery of this Agreement and as of the Closing Date, but shall survive the sale, transfer and assignment of the Receivables to the Issuer and the pledge thereof to the Indenture Trustee pursuant to the Indenture. (a) Characteristics of Receivables. Each Receivable (i) has been originated in the United States of America by a Dealer for the retail sale of a Financed Vehicle in the ordinary course of such Dealer's business, has been fully and properly executed by the parties thereto, has been purchased by the Seller from NMAC pursuant to the Purchase Agreement, which in turn has purchased such Receivables from such Dealer under an existing dealer agreement with NMAC, and has been validly assigned by such Dealer to NMAC, which in turn has been validly assigned pursuant to the Purchase Agreement by NMAC to the Seller in accordance with its terms, (ii) created a valid, subsisting and enforceable security interest in favor of NMAC in such Financed Vehicle, which security interest has been validly assigned pursuant to the Purchase Agreement by NMAC to the Seller, which in turn has been validly assigned by the Seller to the 23 28 Issuer in accordance with the terms hereof, (iii) contains customary and enforceable provisions such that the rights and remedies of the holder thereof are adequate for realization against the collateral of the benefits of the security, (iv) provides for level monthly payments (provided that the payment in the first or last month in the life of the Receivable may be minimally different from the level payment) that fully amortize the Amount Financed over an original term of no greater than [___] months, and (v) provides for interest at the related APR. (b) Schedule of Receivables. The information set forth in Schedule A to this Agreement was true and correct in all material respects as of the opening of business on the Cutoff Date; the Receivables were selected at random from NMAC's retail installment sale contracts (other than contracts originated in Alabama [or Hawaii]) meeting the criteria of the Trust set forth in this Agreement; and no selection procedures believed to be adverse to the Securityholders were utilized in selecting the Receivables. (c) Compliance with Law. Each Receivable, the origination of such Receivable, and the sale of the Financed Vehicle complied at the time it was originated or made and at the execution of this Agreement complies in all material respects with all requirements of applicable federal, state and local laws, and regulations thereunder, including usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the 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 not reinstated. (f) Receivables in Force. No Receivable has been satisfied, subordinated or rescinded, nor has any Financed Vehicle been released from the lien granted by the related Receivable in whole or in part. (g) No Waiver. No provision of a Receivable has been waived in a manner that is prohibited by the provisions of Section 4.01 or that would cause such Receivable to fail to meet all of the other requirements and warranties made by the Seller herein with respect thereto. 24 29 (h) No Defenses. No Receivable is subject to any right of rescission, setoff, counterclaim or defense, including the defense of usury, and the operation of any of the terms of any Receivable, or the exercise of any right thereunder, will not render such Receivable unenforceable in whole or in part or subject such Receivable to any right of rescission, setoff, counterclaim or defense, including the defense of usury, and no such right of rescission, setoff, counterclaim or defense has been asserted with respect thereto. (i) No Liens. To the Seller's knowledge, no liens have been filed for work, labor or materials relating to a Financed Vehicle that shall be liens prior to, or equal or coordinate with, the security interest in the Financed Vehicle granted by the Receivable. (j) No Default. Except for payment defaults continuing for a period of not more than 29 days as of the Cutoff Date, no default, breach, violation or event permitting acceleration under the terms of any Receivable has occurred; and no continuing condition that with notice or the lapse of time would constitute a default, breach, violation or event permitting acceleration under the terms of any Receivable has arisen (other than deferrals and waivers of late payment charges or fees permitted hereunder). (k) Insurance. NMAC, in accordance with its customary procedures, has determined at the time of origination of each Receivable that the related Obligor has agreed to obtain physical damage insurance covering the Financed Vehicle and the Obligor is required under the terms of the related Receivable to maintain such insurance. (l) Title. It is the intention of the Seller that the transfer and assignment herein contemplated constitute a sale of the Receivables from the Seller to the Trust and that the beneficial interest in and title to the Receivables not be part of the Seller's estate in the event of the filing of a bankruptcy petition by or against the Seller under any bankruptcy law. Immediately prior to the transfer and assignment herein contemplated, the Seller had good and marketable title to each Receivable free and clear of all Liens, and immediately upon the transfer thereof, the Issuer, for the benefit of the Noteholders and the Certificateholders, shall have good and marketable title to each Receivable, free and clear of all Liens and rights of others. Each Receivable File contains the original certificate of title (or a photocopy or image thereof) or evidence that an application for a certificate of title has been filed. (m) Lawful Assignment. No Receivable has been originated in, or shall be subject to the laws of, any jurisdiction under which the sale, transfer and assignment of such Receivable under this Agreement are unlawful, void or voidable. (n) All Filings Made. All filings (including, without limitation, UCC filings) necessary in any jurisdiction to give the Relevant Trustee a first priority perfected ownership interest in the Receivables have been made or have been delivered in form suitable for filing to the Relevant Trustee. (o) Chattel Paper. Each Receivable constitutes "chattel paper," as such term is defined in the UCC. (p) Simple Interest Receivables. All of the Receivables are Simple Interest Receivables. 25 30 (q) One Original. There is only one original executed copy of each Receivable. (r) No Amendments. No Receivable has been amended such that the amount of the Obligor's Scheduled Payments has been increased. (s) APR. The APR of each Receivable equals or exceeds [__%]. (t) Maturity. As of the Cutoff Date, each Receivable had a remaining term to maturity of not less than [____] months and not greater than [____] months. (u) Balance. Each Receivable had an original Principal Balance of not more than $[_______] and, as of the Cutoff Date, had a principal balance of not less than $[_______] and not more than $[_______]. (v) Delinquency. No Receivable was more than 29 days past due as of the Cutoff Date and no Receivable has been extended by more than two months. (w) Bankruptcy. No Obligor was the subject of a bankruptcy proceeding (according to the records of NMAC) as of the Cutoff Date. (x) Transfer. Each Receivable prohibits the sale or transfer of the Financed Vehicle without the consent of NMAC. (y) New, Near-New and Used Vehicles. Each Financed Vehicle was a new, near-new or used automobile or light-duty truck at the time the related Obligor executed the retail installment sale contract. (z) Origination. Each Receivable has an origination date on or after [_______]. (aa) Location of Receivable Files. The Receivable Files shall be kept at one or more of the locations listed in Schedule B hereto. (bb) Forced-Placed Insurance Premiums. No contract relating to any Receivable has had forced-placed insurance premiums added to the amount financed. (cc) No Fraud or Misrepresentation. To the knowledge of the Seller, no Receivable was originated by a Dealer and sold by such Dealer to the Seller with any conduct constituting fraud or misrepresentation on the part of such Dealer. (dd) No Further Amounts Owed on the Receivables. No further amounts are owed by the Seller to any Obligor under the Receivables. SECTION 3.02 Repurchase upon Breach. The Seller, the Servicer or the Issuer, as the case may be, shall inform the other parties to this Agreement and the Indenture Trustee promptly, in writing, upon the discovery of any breach of the Seller's representations and warranties pursuant to Section 3.01 that materially and adversely affects the interests of the 26 31 Securityholders in any Receivable. Unless the breach shall have been cured by the last day of the second Collection Period following such discovery (or, at the Seller's election, the last day of the first Collection Period following such discovery), the Seller shall be obligated (whether or not such breach was known to the Seller on the Closing Date), and the Issuer shall enforce the obligation of the Seller under this Agreement and, if necessary, the Seller shall enforce the obligation of NMAC under the Purchase Agreement, to repurchase any Receivable the Securityholders' interest in which was materially and adversely affected by the breach as of such last day. A breach of the representation in Section 3.01(a)(iv), (t) or (u) shall be deemed to affect materially and adversely the related Receivable. In consideration of the purchase of the Receivables, the Seller shall remit the Warranty Purchase Payment in the manner specified in Section 5.05. For purposes of this Section 3.02, the Warranty Purchase Payment of a Receivable that is not consistent with the Seller's warranty pursuant to Section 3.01(a)(iv) shall include such additional amount as shall be necessary to provide the full amount of interest as contemplated therein to the date of repurchase. The sole remedy of the Trust, the Indenture Trustee (by operation of the assignment of the Issuer's rights hereunder pursuant to the Indenture) or any Securityholder with respect to a breach of the Seller's representations and warranties pursuant to Section 3.01 shall be to require the Seller to repurchase Receivables pursuant to this Section and to enforce the obligation of NMAC to the Seller to repurchase such Receivables pursuant to the Purchase Agreement. SECTION 3.03 Duties of Servicer as Custodian. (a) Safekeeping. The Servicer shall hold the Receivable Files as custodian for the benefit of the Issuer and maintain such accurate and complete accounts, records and computer systems pertaining to each Receivable File as shall enable the Issuer to comply with this Agreement. In performing its duties as custodian, the Servicer shall act with reasonable care, using that degree of skill and attention that the Servicer exercises with respect to the receivable files relating to all comparable automotive receivables that the Servicer services for itself or others. In accordance with its customary practices with respect to its retail installment sale contracts, the Servicer shall conduct, or cause to be conducted, periodic audits of the Receivable Files held by it under this Agreement and of the related accounts, records and computer systems, in such a manner as shall enable the Issuer, the Owner Trustee or the Indenture Trustee to verify the accuracy of the Servicer's record keeping. The Servicer shall promptly report to the Issuer and the Indenture Trustee any material failure on its part to hold the Receivable Files and maintain its accounts, records and computer systems as herein provided in all material respects and shall promptly take appropriate action to remedy any such material failure. Nothing herein shall be deemed to require an initial review or any periodic review by the Issuer, the Owner Trustee or the Indenture Trustee of the Receivable Files. (b) Maintenance of and Access to Records. The Servicer shall maintain each Receivable File at one of its offices specified in Schedule B or at such other office as shall be specified to the Owner Trustee and the Indenture Trustee by written notice from the Servicer not later than 90 days after any change in location. The Servicer shall make available to the Owner Trustee and the Indenture Trustee or their respective duly authorized representatives, attorneys or auditors the Receivable Files and the related accounts, records and computer systems maintained by the Servicer at such times during normal business hours as the Owner Trustee or the Indenture Trustee shall instruct. The Servicer shall permit the Owner Trustee, the Indenture Trustee and 27 32 their respective agents at any time during normal business hours upon reasonable prior notice to inspect, audit and make copies of and abstracts from the Servicer's records regarding any Receivable. (c) Release of Documents. Upon the occurrence and during the continuation of a Servicer Default or to the extent necessary for the Indenture Trustee to comply with its obligations under this Agreement, the Servicer shall, upon instruction from the Indenture Trustee, release any Receivable File to the Indenture Trustee, the Indenture Trustee's agent or the Indenture Trustee's designee, as the case may be, at such place or places as the Indenture Trustee may designate, as soon as practicable. SECTION 3.04 Instructions; Authority To Act. The Servicer shall be deemed to have received proper instructions with respect to the Receivable Files upon its receipt of written instructions signed by a Trust Officer of the Owner Trustee or the Indenture Trustee. SECTION 3.05 Custodian's Indemnification. The Servicer, as custodian, shall indemnify the Issuer, the Owner Trustee and the Indenture Trustee for any and all liabilities, obligations, losses, compensatory damages, payments, costs or expenses of any kind whatsoever that may be imposed on, incurred by or asserted against any of them as the result of any improper act or omission in any way relating to the maintenance and custody by the Servicer as custodian of the Receivable Files; provided, however, that the Servicer shall not be liable to the Owner Trustee for any portion of any such amount resulting from the willful misfeasance, bad faith or negligence of the Owner Trustee, and the Servicer shall not be liable to the Indenture Trustee for any portion of any such amount resulting from the willful misfeasance, bad faith or negligence of the Indenture Trustee. SECTION 3.06 Effective Period and Termination. The Servicer's appointment as custodian shall become effective as of the Cutoff Date, and shall continue in full force and effect until terminated pursuant to this Section. If NMAC shall resign as Servicer in accordance with the provisions of this Agreement or if all of the rights and obligations of any Servicer shall have been terminated under Section 8.01, the appointment of NMAC as custodian may be terminated by the Indenture Trustee or by the Holders of Notes evidencing not less than 25% of the Outstanding Amount of the Notes (but excluding for purposes of such calculation and action all Notes held or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates unless all of the Notes are held or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates) or, with the consent of Holders of the Notes evidencing not less than 25% of the Outstanding Amount of the Notes, by the Owner Trustee or by the Certificateholders evidencing not less than 25% of the Certificate Balance (but excluding for purposes of such calculation and action all Certificates, held or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates unless all of the Certificates are held or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates), in the same manner as the Indenture Trustee or such Holders may terminate the rights and obligations of the Servicer under Section 8.01. The Indenture Trustee or, with the consent of the Indenture Trustee, the Issuer may terminate the Servicer's appointment as custodian, with cause, at any time upon written notification to the Servicer, and without cause upon 30 days' prior written notification to the Servicer. As soon as practicable after any termination of such appointment, the Servicer shall deliver the Receivable 28 33 Files and the related accounts and records maintained by the Servicer to the Relevant Trustee or the agent thereof at such place or places as the Relevant Trustee may reasonably designate. ARTICLE IV Administration and Servicing of Receivables SECTION 4.01 Duties of Servicer. (a) The Servicer shall manage, service, administer and make collections on the Receivables with reasonable care, using that degree of skill and attention that the Servicer exercises with respect to all comparable receivables that it services for itself or others. Except with respect to Defaulted Receivables, Administrative Receivables or Warranty Receivables, the Servicer shall not change the amount of or reschedule the due date of any Scheduled Payment, change the APR of, or extend any Receivable except as provided herein or change any material term of a Receivable; provided, however, that: (1) if a default, breach, violation, delinquency or event permitting acceleration under the terms of any Receivable shall have occurred or, in the judgment of the Servicer, is imminent, the Servicer may (A) extend such Receivable for credit related reasons that would be acceptable to the Servicer with respect to comparable new, near-new or used automobile or light-duty truck receivables that it services for itself, but only if (i) the final scheduled payment date of such Receivable as extended would not be later than the last day of the Collection Period preceding the Final Scheduled Distribution Date for the Class C Certificates, and (ii) the rescheduling or extension would not modify the terms of such Receivable in a manner which would constitute a cancellation of such Receivable and the creation of a new receivable for federal income tax purposes; or (B) reduce an Obligor's monthly payment amount in the event of a prepayment resulting from refunds of credit life and disability insurance premiums and service contracts and make similar adjustments in an Obligor's payment terms to the extent required by law; or (2) if at the end of the scheduled term of any Receivable, the outstanding principal amount thereof is such that the final payment to be made by the related Obligor is larger than the regularly scheduled payment of principal and interest made by such Obligor, the Servicer may permit such Obligor to pay such remaining principal amount in more than one payment of principal and interest, provided that the last such payment shall be due on or prior to the last day of the Collection Period preceding the Final Scheduled Distribution Date for the Class C Certificates; and (3) the Servicer may in its discretion waive any late payment charge or any other fees that may be collected in the ordinary course of servicing a Receivable. (b) The Servicer's duties shall include collection and posting of all payments, responding to inquiries of Obligors on the Receivables, investigating delinquencies, sending remittance advises to Obligors, reporting tax information to Obligors, accounting for collections, furnishing monthly and annual statements to the Owner Trustee and the Indenture Trustee with respect to distributions and making Advances pursuant to Section 5.04. 29 34 (c) Without limiting the generality of the foregoing, the Servicer is authorized and empowered to execute and deliver, on behalf of itself, the Trust, the Owner Trustee, the Indenture Trustee and the Securityholders or any of them, any and all instruments of satisfaction or cancellation, or partial or full release or discharge, and all other comparable instruments, with respect to the Receivables or to the Financed Vehicles securing the Receivables. If the Servicer shall commence a legal proceeding to enforce a Receivable, the Issuer (in the case of a Receivable other than an Administrative Receivable or a Warranty Receivable) shall thereupon be deemed to have automatically assigned, solely for the purpose of collection, such Receivable to the Servicer. If in any enforcement suit or legal proceeding it shall be held that the Servicer may not enforce a Receivable on the ground that it shall not be a real party in interest or a holder entitled to enforce such Receivable, the Issuer shall, at the Servicer's expense and direction, take steps to enforce the Receivable, including bringing suit in its name or the name of the Indenture Trustee or the Securityholders. The Issuer shall furnish the Servicer with any powers of attorney and other documents reasonably necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder. (d) The Servicer, at its expense, shall obtain on behalf of the Trust all licenses, including those required under the Pennsylvania Motor Vehicle Sales Finance Act and the Maryland Financial Institutions Article, required by the laws of any jurisdiction to be held by the Trust in connection with ownership of the Receivables, and shall make all filings and pay all fees as may be required in connection therewith during the term hereof. Nothing in the foregoing or in any other section of this Agreement shall be construed to prevent the Servicer from implementing new programs, whether on an intermediate, pilot or permanent basis, or on a regional or nationwide basis, or from modifying its standards, policies and procedures as long as, in each case, the Servicer does or would implement such programs or modify its standards, policies and procedures in respect of comparable assets serviced for itself in the ordinary course of business. SECTION 4.02 Collection of Receivable Payments. The Servicer shall make reasonable efforts to collect all payments called for under the terms and provisions of the Receivables as and when the same shall become due and shall follow such collection procedures as it follows with respect to all comparable receivables that it services for itself or others. SECTION 4.03 Realization upon Receivables. On behalf of the Trust, the Servicer shall use commercially reasonable efforts, consistent with its customary servicing procedures, to repossess or otherwise convert the ownership of the Financed Vehicle securing any Receivable as to which the Servicer shall have determined eventual payment in full is unlikely. The Servicer shall follow such customary and usual practices and procedures as it shall deem necessary or advisable in its servicing of comparable receivables, which may include reasonable efforts to realize upon any Dealer Recourse and selling the related Financed Vehicle at public or private sale. The foregoing shall be subject to the provision that, in any case in which the Financed Vehicle shall have suffered damage, the Servicer shall not expend funds in connection with the repair or the repossession of such Financed Vehicle unless it shall determine in its discretion that such repair and/or repossession will increase the Net Liquidation Proceeds. SECTION 4.04 Maintenance of Security Interests in Financed Vehicles. The Servicer shall, in accordance with its customary servicing procedures, take such steps as are necessary to 30 35 maintain perfection of the security interest created by each Receivable in the related Financed Vehicle. The Servicer is hereby authorized to take such steps as are necessary to re-perfect such security interest on behalf of the Issuer and the Indenture Trustee in the event of the relocation of a Financed Vehicle or for any other reason. If the assignment of a Receivable to the Trust is insufficient, without a notation on the related Financed Vehicle's certificate of title, to grant to the Trust a first priority perfected security interest in the related Financed Vehicle, the Servicer hereby agrees to serve as the agent of the Trust for the purpose of perfecting the security interest of the Trust in such Financed Vehicle and agrees that the Servicer's listing as the secured party on the certificate of title is in this capacity as agent of the Trust. SECTION 4.05 Covenants of Servicer. (a) The Servicer shall not release the Financed Vehicle securing any Receivable from the security interest granted by such Receivable in whole or in part except in the event of payment in full by or on behalf of the Obligor thereunder or repossession. (b) The Servicer shall not do anything to impair the rights of the Securityholders in the Receivables. (c) Except with respect to Defaulted Receivables, Administrative Receivables or Warranty Receivables, the Servicer shall not alter the APR of any Receivable or forgive payments on a Receivable. Except as provided in Section 4.01, the Servicer shall not modify the number of payments under a Receivable, increase the amount financed under a Receivable or extend the due date for any payment on a Receivable. (d) If the Servicer shall determine not to make an Advance related to delinquency or non-payment of any Receivable pursuant to Section 5.04 because it determines that such Advance would not be recoverable from subsequent collections on such Receivable, such Receivable shall be designated by the Servicer to be a Defaulted Receivable, provided that such Receivable otherwise meets the definition of a Defaulted Receivable. SECTION 4.06 Purchase of Receivables upon Breach. The Servicer or the Issuer shall inform the other party and the Indenture Trustee promptly, in writing, upon the discovery of any breach by the Servicer of its obligations under the second sentence of Section 4.01 or under Section 4.02, 4.04 or 4.05 that would materially and adversely affect any Receivable. Unless the breach shall have been cured by the last day of the second Collection Period following such discovery (or, at the Servicer's election, the last day of the first Collection Period following discovery), the Servicer shall (whether or not such breach was known to the Servicer on the Closing Date) purchase any Receivable materially and adversely affected by such breach as of such last day. In consideration of such Receivable, the Servicer shall remit the Administrative Purchase Payment (as reduced by any Outstanding Advances with respect to such Receivable) in the manner specified in Section 5.05. For the purposes of this Section 4.06, the Administrative Purchase Payment shall consist in part of a release by the Servicer of all rights of reimbursement with respect to Outstanding Advances with respect to the purchased Receivable. The sole remedy of the Indenture Trustee, the Owner Trustee, the Trust or the Securityholders against the Servicer with respect to a breach by the Servicer of its obligations under the second sentence of 31 36 Section 4.01 or under Section 4.02, 4.04 or 4.05 shall be to require the Servicer to purchase Receivables pursuant to this Section 4.06. SECTION 4.07 Servicing Fee and Expenses. As compensation for the performance of its obligations hereunder, the Servicer shall be entitled to receive on each Distribution Date the Total Servicing Fee. Except to the extent otherwise provided herein, the Servicer shall be required to pay all expenses incurred by it in connection with its activities under this Agreement (including fees and disbursements of the Indenture Trustee and independent accountants, taxes imposed on the Servicer, expenses incurred in connection with distributions and reports to Securityholders and all other fees and expenses not expressly stated under this Agreement to be for the account of the Securityholders). SECTION 4.08 Servicer's Certificate. (a) On or before the tenth day of each month (or, if such tenth day is not a Business Day, then on the next succeeding Business Day), the Servicer shall deliver to the Owner Trustee, each Paying Agent, [the Swap Counterparty] and the Indenture Trustee with a copy to each Rating Agency, a Servicer's Certificate containing all information necessary to make the distributions pursuant to Sections 5.06, 5.07 and 5.08 (including the amount of the aggregate collections on the Receivables; the aggregate Advances to be made by the Servicer, if any, the aggregate Administrative Purchase Payments for any Administrative Receivables to be purchased by the Servicer, and the aggregate Warranty Purchase Payments for any Warranty Receivables to be purchased by the Seller) for the Collection Period preceding the date of such Servicer's Certificate, all information necessary for the Owner Trustee to send statements to the Certificateholders and the Indenture Trustee to send statements to the Noteholders pursuant to the Trust Agreement or Indenture, as the case may be. Each of the Owner Trustee and the Indenture Trustee may conclusively rely on the information in any Servicer's Certificate and shall have no duty to confirm or verify the contents thereof. (b) Concurrently with delivery of the Servicer's Certificate in each month, the Servicer shall deliver to the underwriters of the Class A Notes, the Class B Notes, the Class C Certificates and, if any Class D Certificate is held by a Person other than the Seller or any Affiliate of the Seller, to such Class D Certificateholder, the Note Factor for each Class of Notes, the Certificate Factor for each Class of Certificates, and the Pool Factor for each Class of Notes and Certificates, in each case as of the close of business on the Distribution Date occurring in such month. SECTION 4.09 Annual Statement as to Compliance; Notice of Default. (a) The Servicer shall deliver to the Owner Trustee, the Indenture Trustee and each of the Rating Agencies, on or before June 30 of each year, beginning June 30, _____, an Officers' Certificate with respect to the prior twelve months ended on March 31 of such calendar year (or with respect to the initial Officer's Certificate, the period from the date of the initial issuance of the Securities to March 31, ______), stating that (i) a review of the activities of the Servicer during the preceding 12-month (or shorter) period and of its performance under this Agreement has been made under such officer's supervision and (ii) to the best of such officer's knowledge, based on such review, the Servicer has fulfilled all its obligations under this Agreement throughout such twelve-month (or shorter) period, or, if there has been a default in the fulfillment of any such 32 37 obligation, specifying each such default known to such officer and the nature and status thereof. A copy of such Officer's Certificate may be obtained by any Certificateholder or Noteholder by a request in writing to the Owner Trustee or the Indenture Trustee addressed as set forth in Section 10.03 hereof. (a) The Servicer shall deliver to the Owner Trustee, the Indenture Trustee and each Rating Agency, promptly after having obtained knowledge thereof, but in no event later than five Business Days thereafter, written notice in an Officer's Certificate of any event that with the giving of notice or lapse of time, or both, would become a Servicer Default under Section 8.01. The Seller shall deliver to the Owner Trustee, the Indenture Trustee and to each such Rating Agency, promptly after having obtained knowledge thereof, but in no event later than five Business Days thereafter, written notice in an Officer's Certificate of any event that with the giving of notice or lapse of time, or both, would become an Event of Default under Section 8.01(a)(ii) or would result in any lowering of the ratings described in Section 5.02(a)(ii)(A). SECTION 4.10 Annual Independent Certified Public Accountants' Report. The Servicer shall cause a firm of independent certified public accountants, who may also render other services to the Servicer, the Seller or their Affiliates, to deliver to the Owner Trustee, the Indenture Trustee and each of the Rating Agencies, on or before June 30 of each year, beginning June 30, ______, with respect to the prior 12 months ended on March 31 of such year (or with respect to the initial reports, the period from the date of the initial issuance of the Securities to March ______) the following reports: (a) a report that such firm has audited the consolidated financial statements of the Servicer in accordance with generally accepted auditing standards, that such firm is independent of the Servicer within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants ("AICPA"), and expressing such firm's opinion thereon; and (b) a report indicating that such firm has examined, in accordance with standards established by AICPA, management's assertion about the Servicer's compliance with the minimum servicing standards identified in the Mortgage Bankers Association of America's Uniform Single Attestation Program for Mortgage Bankers ("USAP") as such standards relate to automobile and light-duty truck loans serviced for others, and expressing such firm's opinion on such management assertion (the "Annual USAP Report"). Upon the request of any Certificateholder or Note Owner, the Owner Trustee or the Indenture Trustee, as the case may be, shall promptly provide such Certificateholder or Note Owner with a copy of such Annual USAP Report. For all purposes of this Agreement, the Owner Trustee and the Indenture Trustee may rely on the representation of any Person that it is a Certificateholder or a Note Owner, as the case may be. SECTION 4.11 Access to Certain Documentation and Information Regarding Receivables. The Servicer shall provide to the Owner Trustee and the Indenture Trustee access to the Receivable Files in such cases where the Securityholders shall be required by applicable statutes or regulations to review such documentation. In each case, such access shall be afforded without charge, but only upon reasonable request and during the normal business hours at the respective offices of the Servicer. Nothing in this Section shall affect the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Obligors and the failure of the Servicer to provide access to information as a result of such obligation shall not constitute a breach of this Section. 33 38 SECTION 4.12 Appointment of Subservicer. So long as NMAC acts as the Servicer, the Servicer may at any time without notice or consent subcontract substantially all its duties under this Agreement to any corporation more than 50% of the voting stock of which is owned, directly or indirectly, by Nissan. The Servicer may at any time perform specific duties as servicer under this Agreement through other subcontractors; provided, however, that no such delegation or subcontracting shall relieve the Servicer of its responsibilities with respect to such duties as to which the Servicer shall remain primarily responsible with respect thereto. SECTION 4.13 Amendments to Schedule of Receivables. If the Servicer, during any Collection Period, assigns to a Receivable an account number that differs from the original account number identifying such Receivable on the Schedule of Receivables, the Servicer shall deliver to the Owner Trustee and the Indenture Trustee, on or before the Distribution Date relating to such Collection Period, an amendment to the Schedule of Receivables reporting the newly assigned account number, together with the old account number of each such Receivable. The first such delivery of amendments to the Schedule of Receivables shall include monthly amendments reporting account numbers appearing on the Schedule of Receivables with the new account numbers assigned to such Receivables during any prior Collection Period. SECTION 4.14 Acknowledgement by Servicer of its Obligations under the Indenture. The Servicer hereby agrees and consents to the provisions of the Indenture applicable to it (including, without limitation, Sections 8.03(a) and 8.03(b) thereof) and agrees to be bound by such provisions. ARTICLE V Distributions; Accounts; Statements to the Certificateholders and the Noteholders SECTION 5.01 Establishment of Accounts. (a) The Servicer, on behalf of the Owner Trustee and the Indenture Trustee, shall establish the Collection Account in the name of the Indenture Trustee for the benefit of the Securityholders. The Collection Account shall be a segregated trust account initially established with the Indenture Trustee and maintained with the Indenture Trustee as long as (i) the deposits of the Indenture Trustee have the Required Deposit Rating or (ii) the Collection Account is maintained in a segregated trust account in the trust department of the Indenture Trustee; provided, however, that all amounts held in the Collection Account shall, to the extent permitted by applicable laws, rules and regulations and as directed by the Servicer, be invested by the Indenture Trustee in Eligible Investments; otherwise, such amounts shall be maintained in cash; provided that if (x) the Servicer shall have failed to give investment directions for any funds on deposit in the Collection Account to the Indenture Trustee by 5:00 p.m. Eastern Time (or such other time as may be agreed by the Servicer and the Indenture Trustee) on any Business Day, or (y) a Default or Event of Default shall have occurred and be continuing with respect to the Notes but the Notes shall not have been declared due and payable pursuant to the Indenture, or (z) if the Notes shall have been declared due and payable following an Event of Default, amounts collected or receivable from the Trust Estate are being applied in accordance with Section 5.05 of the Indenture as if there had not been such a declaration, then the Indenture Trustee shall, to the fullest extent practicable, invest and reinvest funds in the Collection Account in one or more 34 39 Eligible Investments specified in clauses (i), (iv) or (vi) of the definition of Eligible Investments. All such Eligible Investments shall mature not later than the Business Day preceding the next Distribution Date, in such manner that such amounts invested shall be available to make the required distributions on the Distribution Date. The Servicer will not direct the Indenture Trustee, and the Issuer shall cause the Servicer not, to make any investment of any funds or to sell any investment held in the Collection Account unless the security interest granted and perfected in such account will continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Indenture Trustee to make any such investment or sale, if requested by the Indenture Trustee, the Servicer shall deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the Indenture Trustee, to such effect. Should the short-term unsecured debt obligations of the Indenture Trustee no longer have the Required Deposit Rating then, unless the Collection Account is maintained in segregated trust accounts in the trust department of the Indenture Trustee, the Servicer shall, with the Indenture Trustee's assistance as necessary and within ten Business Days of receipt of notice from the Indenture Trustee that the Indenture Trustee no longer has the Required Deposit Rating, cause the Collection Account (i) to be moved to segregated trust accounts in a bank or trust company, the short-term unsecured debt obligations of which shall have the Required Deposit Rating or (ii) to be moved to the trust department of the Indenture Trustee. (b) Earnings on investment of funds in the Collection Account shall be paid to the Servicer as servicing compensation, and any losses and investment expenses shall be charged against the funds on deposit in the Collection Account. (c) Subject to the foregoing, the Servicer, on behalf of the Owner Trustee and the Indenture Trustee, shall establish and maintain the Collection Account as an Eligible Deposit Account in the name of and under the exclusive control of the Indenture Trustee, bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Securityholders. The Indenture Trustee shall transfer all amounts remaining on deposit in the Collection Account on the Distribution Date on which the Notes of all Classes have been paid in full (or substantially all of the Trust Estate is otherwise released from the lien of the Indenture) to another Eligible Deposit Account established pursuant to the Trust Agreement for the benefit of the Certificateholders (the "Trust Collection Account"), and to take all necessary or appropriate actions to transfer all of its right, title and interest in the Collection Account, all funds or investments held therein and all proceeds thereof, whether or not on behalf of the Securityholders, to the Owner Trustee for the benefit of the Certificateholders, subject to the limitations set forth in the Indenture with respect to amounts held for payment to Noteholders that do not promptly deliver a Note for payment on such Distribution Date. After the transfer to the Trust Collection Account described in the immediately preceding sentence, references in this Agreement to "Collection Account" shall be deemed to be references to the "Trust Collection Account." (d) With respect to the Collection Account and all property held therein, the Owner Trustee agrees, by its acceptance hereof that, on the terms and conditions set forth in the Indenture, for so long as Notes of any Class remain outstanding, the Indenture Trustee shall possess all right, title and interest therein (excluding interest or investment income thereon payable to the Servicer or the Seller, as the case may be), and the Accounts shall be under the 35 40 sole dominion and control of the Indenture Trustee for the benefit of the Noteholders and the Certificateholders, as the case may be, as set forth in the Indenture. The parties hereto agree that the Issuer, the Owner Trustee and the Holders of the Class D Certificates have no right, title or interest in the Reserve Account or any amounts on deposit therein at any time. The parties hereto agree that the Servicer shall have the power, revocable by the Indenture Trustee or by the Owner Trustee with the consent of the Indenture Trustee, to instruct the Indenture Trustee to make withdrawals and payments from the Collection Account for the purpose of permitting the Servicer, Indenture Trustee or the Owner Trustee to carry out its respective duties hereunder or under the Indenture or the Trust Agreement, as the case may be. Notwithstanding the foregoing, the Servicer shall be entitled to withhold, or to be reimbursed from amounts otherwise payable into or on deposit in the Collection Account, as the case may be, amounts previously deposited in the Collection Account but later determined to have resulted from mistaken deposits or posting. [(e) The Servicer shall, prior to the Closing Date, establish and maintain a segregated trust account in the name of the Indenture Trustee, which shall be designated as the "Accumulation Account." The Accumulation Account shall be held in trust for the benefit of the Noteholders. The Accumulation Account shall be under the sole dominion and control of the Indenture Trustee; provided that the Servicer may make deposits to and direct the Indenture Trustee in writing to make withdrawals from the Accumulation Account in accordance with the Basic Documents. All monies deposited from time to time in the Accumulation Account shall be held by the Indenture Trustee as part of the Trust Property and all deposits to and withdrawals from the Accumulation Account shall be made only upon the terms and conditions of the Basic Documents. All amounts held in the Accumulation Account shall, to the extent permitted by applicable law, rules and regulations, be invested, as directed in writing by the Servicer, by the bank or trust company then maintaining the Accumulation Account in Eligible Investments that mature not later than the Business Day immediately prior to the Distribution Date for the Collection Period to which such amounts relate and such Eligible Investments shall be held to maturity. All interest and other income on funds on deposit in the Accumulation Account shall be withdrawn and deposited in the Collection Account for distribution on each Distribution Date. (f) The Servicer shall, prior to the Closing Date, establish and maintain a segregated trust account in the name of the Indenture Trustee, which shall be designated as the "VPTN Proceeds Account." The VPTN Proceeds Account shall be held in trust for the benefit of the holders of the subclass of the Class A Notes to be paid on its Targeted Scheduled Distribution Date from the proceeds of issuance after the Closing Date of VPTNs deposited to such account from time to time. The VPTN Proceeds Account shall be under the sole dominion and control of the Indenture Trustee; provided that the Servicer may make deposits to and direct the Indenture Trustee in writing to make withdrawals from the VPTN Proceeds Account in accordance with the Basic Documents. All monies deposited from time to time in the VPTN Proceeds Account shall be held by the Indenture Trustee as part of the Trust Property and all deposits to and withdrawals from the VPTN Proceeds Account shall be made only upon the terms and conditions of the Basic Documents.] 36 41 SECTION 5.02 Collections. (a) Except as otherwise provided in this Agreement, the Servicer shall remit daily to the Collection Account all payments received by or on behalf of the Obligors on or in respect of the Receivables (excluding payments on the Warranty Receivables or the Administrative Receivables) and all Net Liquidation Proceeds not later than the first Business Day after receipt thereof. For purposes of this Article V, the phrase "payments received by or on behalf of the Obligors" shall mean payments made by Persons other than the Servicer. Notwithstanding the foregoing, for so long as (i) NMAC is the Servicer, (ii) (A) NMAC's short-term unsecured debt obligations are rated at least "P-1" by Moody's and NMAC's short-term unsecured debt obligations (or, if NMAC is the Servicer and the Servicer then has no short-term rating from Standard & Poor's, Nissan Capital of America, Inc.'s short-term unsecured debt obligations) are rated "A-1" by Standard & Poor's (so long as Moody's and Standard & Poor's are Rating Agencies), or (B) certain arrangements are made that are acceptable to the Rating Agencies, and (iii) no Event of Default or Servicer Default shall have occurred and be continuing (unless waived by the appropriate Securityholders), except that the requirement in clause (ii) shall not apply if only the Class C Certificates are outstanding and the Class C Certificates do not have an investment grade rating, (collectively, the "Monthly Remittance Conditions"); the Servicer shall not be required to remit such collections to the Collection Account on the foregoing daily basis but shall be entitled to retain such collections, without segregation from its other funds, until the Business Day before each Distribution Date at which time the Servicer shall remit all such collections in respect of the related Collection Period to the Collection Account in immediately available funds. Commencing with the first day of the first Collection Period that begins at least two Business Days after the day on which any Monthly Remittance Condition ceases to be satisfied and for so long as any Monthly Remittance Condition is not satisfied, all collections then held by the Servicer shall be immediately deposited into the Collection Account and all future collections on or in respect of the Receivables (other than payments on Warranty Receivables and the Administrative Receivables) and all Net Liquidation Proceeds shall be remitted by the Servicer to the Collection Account on a daily basis not later than the first Business Day after receipt thereof. (b) The Indenture Trustee or the Owner Trustee shall not be deemed to have knowledge of any event or circumstances under clause (iii) of the definition of the Monthly Remittance Condition unless the Indenture Trustee or the Owner Trustee has received notice of such event or circumstance from the Seller or the Servicer in an Officer's Certificate or from the Holders of Notes or Certificates evidencing not less than 25% in principal amount of the Outstanding Amount of the Notes and the aggregate balance of the Certificates, acting together as a single class, or a Trust Officer of the Indenture Trustee or the Owner Trustee with knowledge hereof or familiarity herewith has actual knowledge of such event or circumstances. (c) The Servicer shall give the Owner Trustee, the Indenture Trustee and each Rating Agency written notice of the failure of any Monthly Remittance Condition (and any subsequent curing of a failed Monthly Remittance Condition) as soon as practical after the occurrence thereof but in no event later than 10 Business Days after obtaining knowledge thereof (it being understood that if the Monthly Remittance Condition is not satisfied as of the Closing Date, no such notice shall be required in connection therewith). (d) Notwithstanding the foregoing, if a Monthly Remittance Condition is not satisfied, the Servicer may utilize an alternative remittance schedule (which may include the 37 42 remittance schedule utilized by the Servicer before the Monthly Remittance Condition became unsatisfied), if the Servicer provides to the Owner Trustee and the Indenture Trustee written confirmation from each Rating Agency that such alternative remittance schedule will not result in the downgrading or withdrawal by such Rating Agency of the ratings then assigned to any Class of Notes or the Class C Certificates. SECTION 5.03 Application of Collections. As of the Business Day immediately preceding the related Distribution Date, all collections for the related Collection Period with respect to each Receivable shall be applied by the Servicer as follows: (a) First, to interest accrued to date on such Receivable; (b) Second, to principal until the Principal Balance of such Receivable is brought current; (c) Third, to reduce the unpaid late charges (if any) as provided in such Receivable; and (d) Fourth, to prepay principal on such Receivable. SECTION 5.04 Advances. (a) The Servicer shall make a payment with respect to each Receivable (other than an Administrative Receivable, a Warranty Receivable or a Liquidated Receivable) (each, an "Advance") equal to the excess if any, of (x) the product of the Principal Balance of such Receivable as of the first day of the related Collection Period and one-twelfth of its APR (calculated on the basis of a 360-day year comprised of twelve 30-day months), over (y) the interest actually received by the Servicer with respect to such Receivable from the Obligor or from payments of the Administrative Purchase Payment or the Warranty Purchase Payment, as the case may be, during such Collection Period. The Servicer will not be obligated to make an Advance in respect of a Receivable (other than an Advance in respect of an interest shortfall arising from the Prepayment of a Receivable) to the extent that the Servicer, in its sole discretion, shall determine that the Advance constitutes a Nonrecoverable Advance. With respect to each Receivable, the Advance shall increase the Outstanding Advances. No Advances will be made with respect to the Principal Balance of the Receivables. The Servicer shall deposit all such Advances into the Collection Account in immediately available funds no later than 5:00 p.m., New York City time, on the Business Day immediately preceding the related Distribution Date. To the extent that the amount set forth in clause (y) above with respect to a Receivable is greater than the amount set forth in clause (x) above with respect thereto, such amount shall be distributed to the Servicer pursuant to Section 5.06; provided, however, that, notwithstanding anything else herein, the Servicer shall not be reimbursed for any amounts representing an Advance, or any portion thereof, made in respect of an interest shortfall arising from the Prepayment of a Receivable. (b) The Servicer shall be entitled to reimbursement for Outstanding Advances, without interest, with respect to a Receivable from the following sources with respect to such Receivable pursuant to Section 5.06(c)(i) or Section 5.06(d)(i): (i) subsequent payments made 38 43 by or on behalf of the related Obligor, (ii) Net Liquidation Proceeds, and (iii) the Warranty Purchase Payments. (c) To the extent that the Servicer has determined that any Outstanding Advance is a Nonrecoverable Advance, the Servicer may provide to the Owner Trustee and the Indenture Trustee an Officer's Certificate setting forth the amount of such Nonrecoverable Advance, and on the related Distribution Date, the Relevant Trustee shall remit to the Servicer from funds on deposit in the Collection Account an amount equal to the amount of such Nonrecoverable Advance pursuant to Section 5.06(c)(ii) or Section 5.06(d)(ii). (d) Notwithstanding anything to the contrary in this Agreement, for so long as NMAC is the Servicer, in lieu of causing the Servicer first to deposit and then the Relevant Trustee to remit to the Servicer the amounts described in clauses (i) through (iii) in Section 5.04(b) reimbursable in respect on Outstanding Advances, or the amounts described in Section 5.04(c) applicable in respect of Nonrecoverable Advances, the Servicer may deduct such amounts from deposits otherwise to be made into the Collection Account. (e) Notwithstanding the provisions of Section 5.04(a), no Successor Servicer, including the Indenture Trustee, shall be obligated to make Advances unless it has expressly agreed to do so in writing. SECTION 5.05 Additional Deposits. (a) The following additional deposits shall be made to the Collection Account: (i) the Seller shall remit the aggregate Warranty Purchase Payments with respect to Warranty Receivables pursuant to Section 3.02; (ii) the Servicer shall remit (A) the aggregate Advances pursuant to Section 5.04(a), (B) the aggregate Administrative Purchase Payments with respect to Administrative Receivables pursuant to Section 4.06, and (C) the amount required upon any optional purchase of the Receivables by the Servicer, or any Successor Servicer, pursuant to Section 9.01; and (iii) the Indenture Trustee shall transfer (A) the Yield Supplement Deposit from the Yield Supplement Account to the Collection Account pursuant to Section 5.08, plus reinvestment income on the Yield Supplement Account (in assuring the availability therein of the related Available Interest), and (B) the amounts described in Sections 5.06 and 5.07 from the Reserve Account to the Collection Account pursuant to Section 5.07. (b) All deposits required to be made pursuant to this Section 5.05 by the Seller or the Servicer, as the case may be, may be made in the form of a single deposit and shall be made in immediately available funds, no later than 5:00 P.M., New York City time, on the Business Day immediately preceding the related Distribution Date. At the direction of the Servicer, the Relevant Trustee shall invest such amounts in Eligible Investments maturing not later than 12:00 P.M. New York City Time, on the related Distribution Date. SECTION 5.06 Payments and Distributions. (a) The rights of the Certificateholders to receive distributions in respect of the Certificates shall be and hereby are subordinated to the rights of the Noteholders to receive distributions in respect of the Notes to the extent provided in this Section 5.06. 39 44 (b) On each Determination Date, the Servicer shall calculate the Available Interest, the Available Principal, the Allocable Principal, the Yield Supplement Deposit, the Noteholders' Distributable Amount, the Certificateholders' Distributable Amount, the amount to be distributed to Noteholders and Certificateholders of each Class pursuant to Section 5.06(c) or (d), and all other distributions, deposits and withdrawals to be made on the related Distribution Date. (c) Subject to Section 5.06(d), on each Distribution Date, the Relevant Trustee shall make the following payments and distributions from the Collection Account (after payment of the Supplemental Servicing Fee to the extent not previously retained by the Servicer) in the following order of priority and in the amounts set forth in the Servicer's Certificate for such Distribution Date; provided, however, that such payments and distributions shall be made only from those funds deposited in the Collection Account for the related Collection Period: (i) to the Servicer, from amounts on deposit in the Collection Account, any payments in respect of Advances required to be reimbursed and to the extent set forth in Section 5.04(b); (ii) to the Servicer, from amounts on deposit in the Collection Account, any payments in respect of Nonrecoverable Advances required to be reimbursed and to the extent set forth in Section 5.04(c); (iii) to the Servicer, from Available Amounts, the Base Servicing Fee (including any unpaid Base Servicing Fees from one or more prior Collection Periods); (iv) on a pro rata basis (based on the amounts distributable pursuant to this clause to each such Class), to the Class A-1 Noteholders, the Noteholders' Interest Distributable Amount for such Class, to the Class A-2 Noteholders, the Noteholders' Interest Distributable Amount for such Class, and to the Class A-3 Noteholders, the Noteholders' Interest Distributable Amount for such Class; such amounts to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clause (iii) above); (v) to the Class B Noteholders, the Noteholders' Interest Distributable Amount for such Class; such amounts to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) and (iv) above); (vi) to the Class A-1 Noteholders, an amount equal to the Noteholders' Principal Distributable Amount for such Class, such amount to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) through (v) above), until the principal amount of the Class A-1 Notes is reduced to zero; (vii) on the Distribution Date on which the Class A-1 Notes have been paid in full and on each Distribution Date thereafter, to the Class A-2 Noteholders, an amount equal to the Noteholders' Principal Distributable Amount for such Class, such amount to be paid from Available Amounts (after giving effect to any reduction in 40 45 Available Amounts described in clauses (iii) through (vi) above), until the principal amount of the Class A-2 Notes is reduced to zero; (viii) on the Distribution Date on which the Class A-2 Notes have been paid in full and on each Distribution Date thereafter, to the Class A-3 Noteholders, an amount equal to the Noteholders' Principal Distributable Amount for such Class, such amount to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) through (vii) above), until the principal amount of the Class A-3 Notes is reduced to zero; (ix) on the Distribution Date on which the Class A-3 Notes have been paid in full and on each Distribution Date thereafter, to the Class B Noteholders, an amount equal to the Noteholders' Principal Distributable Amount for such Class, such amount to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) through (viii) above), until the principal amount of the Class B Notes is reduced to zero; (x) to the Class C Certificateholders, an amount equal to the Certificateholders' Interest Distributable Amount for such Class, such amount to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) through (ix) above); (xi) on each Distribution Date after the Class B Notes have been paid in full, to the Class C Certificateholders, an amount equal to the Certificateholders' Principal Distributable Amount for such Class, such amount to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) through (x) above), until the principal amount of the Class C Certificates is reduced to zero; (xii) to the Reserve Account, the amount, if any, necessary to cause the balance of funds therein to equal the Specified Reserve Account Balance with respect to such Distribution Date, such amounts to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) through (xi) above); (xiii) to the Class D Certificateholders, an amount equal to the Certificateholders' Interest Distributable Amount for such Class, such amounts to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) through (xii) above); (xiv) after the Class C Certificates have been paid in full, to the Class D Certificateholders, an amount equal to the Certificateholders' Principal Distributable Amount for such Class, such amount to be paid from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (iii) through (xiii) above); and (xv) any Available Amounts remaining after giving effect to the foregoing, to the Seller. 41 46 (d) Notwithstanding the provisions of Section 5.06(c), after the occurrence of an Event of Default that results in the acceleration of any Notes, on each Distribution Date, the Relevant Trustee shall make the following payments and distributions from the Collection Account (after payment of the Supplemental Servicing Fee to the extent not previously retained by the Servicer) in the following order of priority and in the amounts set forth in the Servicer's Certificate for such Distribution Date; provided, however, that such payments and distributions shall be made only from those funds deposited in the Collection Account for the related Collection Period: (i) to the Servicer, from amounts on deposit in the Collection Account, any payments in respect of Advances required to be reimbursed and to the extent set forth in Section 5.04(b); (ii) to the Servicer, from amounts on deposit in the Collection Account, any payments in respect of Nonrecoverable Advances required to be reimbursed and to the extent set forth in Section 5.04(c); (iii) to the Servicer, from Available Amounts, the Base Servicing Fee (including any unpaid Base Servicing Fees from one or more prior Collection Periods); (iv) to the Class A-1 Noteholders, the Noteholders' Interest Distributable Amount for such Class after giving effect to any reduction in Available Amounts described in clause (iii) above; (v) to the Class A-1 Noteholders, until the total amount paid to such Noteholders in respect of principal from the Closing Date is equal to the Original Principal Amount for such Class of Notes, such amounts to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) and (iv) above; (vi) on the Distribution Date on which the Class A-1 Notes have been paid in full and on each Distribution Date thereafter, on a pro rata basis (based on the amounts distributable pursuant to this clause to each such Class), to the Class A-2 Noteholders, the Noteholders' Interest Distributable Amount for such Class, and to the Class A-3 Noteholders, the Noteholders' Interest Distributable Amount for such Class; such amounts to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) through (v) above); (vii) to the Class A-2 Noteholders and the Class A-3 Noteholders, on a pro rata basis (based on the Outstanding Amount of each Class), until the total amount paid to such Noteholders in respect of principal from the Closing Date is equal to the Original Principal Amount for such Class of Notes, such amounts to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) through (vi) above); (viii) to the Class B Noteholders, the Noteholders' Interest Distributable Amount for such Class; such amounts to be paid from Available Amounts (after giving 42 47 effect to any reduction in Available Amounts described in clauses (iii) through (vii) above); (ix) on each Distribution Date after the Class A Notes have been paid in full, to the Class B Noteholders, until the total amount paid to the Class B Noteholders in respect of principal from the Closing Date is equal to the Original Principal Amount for the Class B Notes, such amount to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) through (viii) above); (x) to the Class C Certificateholders, an amount equal to the Certificateholders' Interest Distributable Amount for such Class, such amount to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) through (ix) above); (xi) on each Distribution Date after the Class B Notes have been paid in full, to the Class C Certificateholders, until the total amount paid to the Class C Certificateholders in respect of principal from the Closing Date is equal to the Original Certificate Balance of the Class C Certificates, such amount to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) through (x) above); (xii) to the Class D Certificateholders, an amount equal to the Certificateholders' Interest Distributable Amount for such Class, such amounts to be paid from Available Amounts (after giving effect to any reduction in Available Amounts described in clauses (iii) through (xi) above); (xiii) after the Class C Certificates have been paid in full, to the Class D Certificateholders, an amount equal to the Certificateholders' Principal Distributable Amount for such Class, such amount to be paid from Available Amounts (after giving effect to the reduction in Available Amounts described in clauses (iii) through (xii) above); and (xiv) any Available Amounts remaining after giving effect to the foregoing, to the Seller. (e) For purposes of determining whether an Event of Default pursuant to Section 5.01(c) of the Indenture has occurred, the amount of principal required to be paid to the Holders of any Class of Notes on any Distribution Date is the amount available to be paid thereto pursuant to Section 5.06(c); provided, however, that (i) the Class A-1 Notes are required to be paid in full on or before the Final Scheduled Distribution Date for such Class, meaning that the Class A-1 Noteholders are entitled to have received on or before such date payments in respect of principal in an aggregate amount equal to the Original Principal Amount for such Class, together with all interest accrued thereon through such date; (ii) the Class A-2 Notes are required to be paid in full on or before the Final Scheduled Distribution Date for such Class, meaning that the Class A-2 Noteholders are entitled to have received on or before such date payments in respect of principal in an aggregate amount equal to the Original Principal Amount for such 43 48 Class, together with all interest accrued thereon through such date; (iii) the Class A-3 Notes are required to be paid in full on or before the Final Scheduled Distribution Date for such Class, meaning that the Class A-3 Noteholders are entitled to have received on or before such date payments in respect of principal in an aggregate amount equal to the Original Principal Amount for such Class, together with all interest accrued thereon through such date; and (iv) the Class B Notes are required to be paid in full on or before the Final Scheduled Distribution Date for such Class, meaning that the Class B Noteholders are entitled to have received on or before such date payments in respect of principal in an aggregate amount equal to the Original Principal Amount for such Class, together with all interest accrued thereon through such date. (f) Except with respect to the final payment upon retirement of a Note or Certificate, the Servicer shall on each Distribution Date instruct the Relevant Trustee to pay or distribute to each Securityholder of record on the related Record Date by check mailed to such Securityholder at the address of such Holder appearing in the Certificate Register or Note Register, as the case may be, (or, if DTC, its nominee or a Clearing Agency is the relevant Holder, by wire transfer of immediately available funds or pursuant to other arrangements), the amount to be paid or distributed to such Securityholder pursuant to such Holder's Note or Certificate. With respect to the final payment upon retirement of a Note or Certificate, the Servicer shall on the relevant final Distribution Date instruct the Relevant Trustee to pay or distribute the amounts due thereon only upon delivery for cancellation of the certificate representing such Note or Certificate in accordance with the Indenture or the Trust Agreement, as the case may be. SECTION 5.07 Reserve Account. (a) In order to assure that certain amounts will be available to make required payments to Noteholders, the Seller will, pursuant to the Securities Account Control Agreement, establish and maintain with the Securities Intermediary a segregated trust account (the "Reserve Account") in the name of the Indenture Trustee which will include the money and other property deposited and held therein pursuant to Sections 5.06(c), 5.06(d) and this Section 5.07. On or prior to the Closing Date, the Seller shall deposit an amount equal to the Reserve Account Initial Deposit into the Reserve Account. As and to the extent set forth in Section 5.06(c) or (d), the Relevant Trustee will deposit Available Amounts into the Reserve Account on each Distribution Date as provided in the Servicer's Certificate, until the amount on deposit therein equals the Specified Reserve Account Balance. On each Distribution Date, to the extent that amounts in the Collection Account and/or Available Amounts, as the case may be, are insufficient to fully fund the payments and distributions described in clauses (i) through (x) of Section 5.06(c) or clauses (i) through (xi) of Section 5.06(d), the Relevant Trustee will withdraw amounts then on deposit in the Reserve Account, up to the amounts of any such deficiencies, and deposit such amounts into the Collection Account for application pursuant to such clauses. On each Distribution Date, as provided in the Servicer's Certificate, the Relevant Trustee will release to the Seller any amounts remaining on deposit in the Reserve Account in excess of the Specified Reserve Account Balance. Upon the payment in full of the Notes under the Indenture, as directed in writing by the Servicer, the Relevant Trustee will release to the Seller any amounts remaining on deposit in the Reserve Account, and all rights to the Reserve Account and all other collateral registered or held therein shall revert to the Seller in accordance with the Securities Account Control Agreement. Upon any such distribution to the Seller, the Issuer, Owner Trustee, 44 49 Certificateholders, Indenture Trustee and Noteholders will have no further rights in, or claims to, such amounts. (b) All amounts held in the Reserve Account shall be invested by the Relevant Trustee, as directed in writing by the Servicer, in Eligible Investments; provided that if (x) the Servicer shall have failed to give investment directions for any funds on deposit in the Reserve Account to the Indenture Trustee by 5:00 p.m. Eastern Time (or such other time as may be agreed by the Servicer and the Indenture Trustee) on any Business Day, or (y) a Default or Event of Default shall have occurred and be continuing with respect to the Notes but the Notes shall not have been declared due and payable pursuant to the Indenture, or (z) the Notes shall have been declared due and payable following an Event of Default, but amounts collected or receivable from the Trust Estate are being applied pursuant to Section 5.05 of the Indenture as if there had not been such a declaration, then the Indenture Trustee shall, to the fullest extent practicable, invest and reinvest funds in the Reserve Account in one or more Eligible Investments specified in clauses (i), (iv) or (vi) of the definition of Eligible Investments. All such Eligible Investments shall mature not later than the Business Day preceding the next Distribution Date, in such manner that such amounts invested shall be available to make the required deposits on the Distribution Date; provided that if permitted by the Rating Agencies, monies on deposit therein may be invested in Eligible Investments that mature later than the Business Day preceding the next Distribution Date. The Servicer will not direct the Relevant Trustee to make any investment of any funds or to sell any investment held in the Reserve Account unless the security interest granted and perfected in such account will continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Relevant Trustee to make any such investment or sale, if requested by the Relevant Trustee, the Servicer shall deliver to the Relevant Trustee an Opinion of Counsel, acceptable to the Relevant Trustee, to such effect. Earnings, if any, on investment of funds in the Reserve Account shall be paid to the Seller, and losses and any investment expenses shall be charged against the funds on deposit therein. The Relevant Trustee shall incur no liability for the selection of investments or for losses thereon absent its own negligence or willful misfeasance. The Relevant Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any investment prior to its stated maturity date or the failure of the Servicer to provide timely written investment directions. (c) Subject to the right of the Relevant Trustee to make withdrawals therefrom, as directed by the Servicer, for the purposes and in the amounts set forth in Section 5.06, the Reserve Account and all funds held therein shall be the property of the Seller and not the property of the Issuer, the Owner Trustee or the Indenture Trustee. The Issuer, the Owner Trustee, the Seller and the Indenture Trustee will treat the Reserve Account, all funds therein and all net investment income with respect thereto as assets of the Seller for federal income tax and all other purposes. (d) The Seller hereby grants to the Relevant Trustee for the benefit of the Noteholders and the Class C Certificateholders a security interest in all funds (including Eligible Investments) in the Reserve Account (including the Reserve Account Initial Deposit) and the proceeds thereof to secure the payment of interest on and principal of the Notes, and the Relevant Trustee shall have all of the rights of a secured party under the UCC with respect thereto; provided that all income from the investment of funds in the Reserve Account and the 45 50 right to receive such income are retained by the Seller and are not transferred, assigned or otherwise conveyed hereunder. If for any reason the Reserve Account is no longer an Eligible Deposit Account, the Relevant Trustee shall promptly cause the Reserve Account to be moved to another institution or otherwise changed so that the Reserve Account becomes an Eligible Deposit Account. (e) Neither the Owner Trustee nor the Indenture Trustee shall enter into any subordination or intercreditor agreement with respect to the Reserve Account. SECTION 5.08 Yield Supplement Account. (a) In order to assure that sufficient amounts to make required distributions of interest to Noteholders and the Class C Certificateholders will be available, the Owner Trustee will, pursuant to the Securities Account Control Agreement and the Yield Supplement Agreement, establish and maintain with the Securities Intermediary a segregated trust account (the "Yield Supplement Account") in the name of the Indenture Trustee which will include the money and other property deposited and held therein pursuant to the Yield Supplement Agreement and this Section 5.08. (b) On or prior to the Closing Date, the Seller shall [[make a capital contribution to the Trust by depositing an amount equal to $___________] [deposit an amount equal to $_________] [in cash] into the Yield Supplement Account][, transfer retail installment sales contracts with an aggregate principal balance, as of the Cut-Off Date, of $_________ to the Trust] [and transfer receivables or other assets (including vehicle lease contracts) in an amount, collectively, equal to $__________ to the Trust] ([the][collectively,] "Initial Yield Supplement Amount"). [On each Distribution Date, the Servicer will deposit payments received with respect to the retail installment sales contracts referred to above into the Yield Supplement Account.] [On each Distribution Date, the Servicer will deposit payments received with respect to those receivables or other assets referred to above into the Yield Supplement Account.] On each Distribution Date, to the extent amounts then on deposit in the Yield Supplement Account are sufficient therefor, the Relevant Trustee will withdraw amounts then on deposit in the Yield Supplement Account in an amount equal to the Yield Supplement Deposit with respect to such Distribution Date and deposit such amounts into the Collection Account for application pursuant to Section 5.06. On each Distribution Date, if the amount on deposit in the Yield Supplement Account (after giving effect to all deposits thereto or withdrawals therefrom on such Distribution Date) is greater than the Required Yield Supplement Amount, the Relevant Trustee will deposit such excess into the Collection Account for distribution by the Relevant Trustee in accordance with the terms of Section 5.06(c). Upon payment in full of the Notes under the Indenture, as directed in writing by the Servicer, the Indenture Trustee will release any amounts remaining on deposit in the Yield Supplement Account and all other Collateral registered or held therein to the Owner Trustee for the benefit of the Certificateholders, which amounts the Owner Trustee shall deposit into the Trust Collection Account. (c) All amounts held in the Yield Supplement Account shall be invested by the Relevant Trustee, as directed in writing by the Servicer, in Eligible Investments ; provided that if (x) the Servicer shall have failed to give investment directions for any funds on deposit in the 46 51 Yield Supplement Account to the Indenture Trustee by 5:00 p.m. Eastern Time (or such other time as may be agreed by the Servicer and the Indenture Trustee) on any Business Day, or (y) a Default or Event of Default shall have occurred and be continuing with respect to the Notes but the Notes shall not have been declared due and payable pursuant to the Indenture, or (z) the Notes shall have been declared due and payable following an Event of Default, but amounts collected or receivable from the Trust Estate are being applied pursuant to Section 5.05 of the Indenture as if there had not been such a declaration, then the Indenture Trustee shall, to the fullest extent practicable, invest and reinvest funds in the Yield Supplement Account in one or more Eligible Investments specified in clauses (i), (iv) or (vi) of the definition of Eligible Investments. All such Eligible Investments shall mature not later than the Business Day preceding the next Distribution Date, in such manner that such amounts invested shall be available to make the required deposits on the Distribution Date; provided that if permitted by the Rating Agencies, monies on deposit therein may be invested in Eligible Investments that mature later than the Business Day preceding the next Distribution Date. The Servicer will not direct the Relevant Trustee to make any investment of any funds or to sell any investment held in the Yield Supplement Account unless the security interest granted and perfected in such account will continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Relevant Trustee to make any such investment or sale, if requested by the Relevant Trustee, the Servicer shall deliver to the Relevant Trustee an Opinion of Counsel, acceptable to the Relevant Trustee, to such effect. Earnings, if any, on investment of funds in the Yield Supplement Account shall be deposited in the Collection Account on each Distribution Date, and losses and any investment expenses shall be charged against the funds on deposit therein. The Relevant Trustee shall incur no liability for the selection of investments or for losses thereon absent its own negligence or willful misfeasance. The Relevant Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any investment prior to its stated maturity date or the failure of the Servicer to provide timely written investment directions. (d) [The Trust, the Owner Trustee, the Seller and the Indenture Trustee will treat the Yield Supplement Account, all funds therein and all net investment income with respect thereto as assets of the Trust for federal income tax and all other purposes.] (e) Pursuant to the Yield Supplement Agreement and the Securities Account Control Agreement, the Trust will grant to the Indenture Trustee, for the benefit of the Noteholders and the Class C Certificateholders, a security interest in all funds (including Eligible Investments) in the Yield Supplement Account (including the Initial Yield Supplement Amount) and the proceeds thereof to secure the payment of interest on the Notes, and the Indenture Trustee shall have all of the rights of a secured party under the UCC with respect thereto. If for any reason the Yield Supplement Account is no longer an Eligible Deposit Account, the Relevant Trustee shall promptly cause the Yield Supplement Account to be moved to another institution or otherwise changed so that the Yield Supplement Account becomes an Eligible Deposit Account. (f) Neither the Owner Trustee nor the Indenture Trustee shall enter into any subordination or intercreditor agreement with respect to the Yield Supplement Account. SECTION 5.09 Statements to Certificateholders and Noteholders. 47 52 (a) On each Distribution Date, the Indenture Trustee shall include with each distribution to each Noteholder and the Owner Trustee shall include with each distribution to each Certificateholder a statement (which statement shall also be provided to each Rating Agency) based on information in the Servicer's Certificate furnished pursuant to Section 4.08, setting forth for the Collection Period relating to such Distribution Date the following information: (i) the amount of the payment allocable to the principal amount of each Class of Notes and to the Certificate Balance of each Class of Certificates; (ii) the amount of the payment allocable to interest on or with respect to each Class of Notes and Certificates; (iii) the amount of the distribution allocable to the Yield Supplement Deposit, if any plus reinvestment income, if any, on the Yield Supplement Account; (iv) the Pool Balance as of the close of business on the last day of the related Collection Period; (v) the amount of the Base Servicing Fee paid to the Servicer with respect to the related Collection Period, the amount of any unpaid Base Servicing Fees and the change in such amount from that of the prior Distribution Date; (vi) the Interest Rate or the Pass-Through Rate for the Interest Period relating to the succeeding Distribution Date for any Class of Notes or the Certificates with variable or adjustable rates; (vii) the Noteholders' Interest Carryover Shortfall, the Noteholders' Principal Carryover Shortfall, the Certificateholders' Interest Carryover Shortfall, the Certificateholders' Principal Carryover Shortfall, if any, with respect to each Class of Notes and the Certificates, and the change in such amounts from the preceding Distribution Date; (viii) the Outstanding Amount, the Note Factor and the Note Pool Factor with respect to each Class of Notes, and the aggregate Certificate Balance, the Certificate Balance, the Certificate Factor and the Certificate Pool Factor with respect to each Class of Certificates, in each case after giving effect to all payments in respect of principal on such Distribution Date; (ix) the amount of Advances made in respect of the Receivables during the related Collection Period and the amount of unreimbursed Advances on such Distribution Date; (x) the balance of the Reserve Account and the Yield Supplement Account on such Distribution Date, after giving effect to changes thereto on such Distribution Date and the amount of such changes; 48 53 (xi) the amount of defaults and net losses on the Receivables for the related Collection Period; and (xii) the number of delinquencies on the Receivables as a percentage of the number of Receivables. (b) Copies of such statements may be obtained by the Certificateholders or the Note Owners from the Owner Trustee or the Indenture Trustee, as the case may be, by a request in writing. The Owner Trustee or the Indenture Trustee, as the case may be, shall provide such copies promptly after such requests. SECTION 5.10 Net Deposits. So long as NMAC is the Servicer, the Servicer (in whatever capacity) may make the remittances pursuant to Sections 5.02 and 5.05 above net of amounts to be distributed to the Servicer (in whatever capacity) pursuant to Section 5.06. Accounts between the Seller and the Servicer will be adjusted accordingly. Nonetheless, the Servicer shall account for all of the above described remittances and distributions (except for the Supplemental Servicing Fee to the extent that the Servicer is entitled to retain such amounts) in the Servicer's Certificate as if the amounts were deposited and/or transferred separately. ARTICLE VI The Seller SECTION 6.01 Representations of Seller. The Seller makes the following representations on which the Issuer is deemed to have relied in acquiring the Receivables. The representations speak as of the execution and delivery of this Agreement and as of the Closing Date, and shall survive the sale of the Receivables to the Issuer and the pledge thereof to the Indenture Trustee pursuant to the Indenture. (a) Organization and Good Standing. The Seller has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted, and had at all relevant times, and has, corporate power, authority and legal right to acquire and own the Receivables. The location of the Seller's chief executive office and principal place of business is Torrance, California. (b) Due Qualification. The Seller is duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business shall require such qualifications and where the failure to so qualify would have a material adverse effect on the ability of the Seller to perform its obligations under this Agreement. (c) Power and Authority. The Seller has the corporate power and authority to execute and deliver this Agreement and to carry out its terms. The Seller has full power and authority to sell and assign the property to be sold and assigned to and deposited as part of the Owner Trust Estate and has duly authorized such sale and assignment to the Trust by all necessary corporate action; and the execution, delivery and performance of this Agreement has been duly authorized by the Seller by all necessary corporate action. 49 54 (d) Valid Sale; Binding Obligations. This Agreement evidences a valid sale, transfer and assignment of the Receivables, enforceable against creditors of and purchasers from the Seller (other than a good faith purchaser for value in the ordinary course of business who takes actual possession of one or more Receivables); and this Agreement is a legal, valid and binding obligation of the Seller enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general equitable principles. (e) No Violation. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time) a default under, the certificate of incorporation or by-laws of the Seller, or any indenture, agreement or other instrument to which the Seller is a party or by which it shall be bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than the Basic Documents); nor violate any law or, to the best of the Seller's knowledge, any order, rule or regulation applicable to the Seller of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller or its properties; which breach, default, conflict, Lien or violation in any case would have a material adverse effect on the ability of the Seller to perform its obligations under this Agreement. (f) No Proceedings. There are no proceedings or investigations pending, or, to the best of the Seller's knowledge, threatened, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller or its properties: (i) asserting the invalidity of this Agreement, the Trust Agreement, the Indenture, the Securities Account Control Agreement, the Yield Supplement Agreement, the Certificates or the Notes; (ii) seeking to prevent the issuance of the Certificates or the Notes or the consummation of any of the transactions contemplated by this Agreement, the Trust Agreement, the Indenture, the Securities Account Control Agreement or the Yield Supplement Agreement; (iii) seeking any determination or ruling that would materially and adversely affect the performance by the Seller of its obligations under, or the validity or enforceability of, this Agreement, the Trust Agreement, the Indenture, the Securities Account Control Agreement, the Yield Supplement Agreement, the Certificates or the Notes; or (iv) relating to the Seller and that would adversely affect the federal or any state income tax attributes of the Issuer, the Certificates or the Notes. SECTION 6.02 Additional Covenants of the Seller. (a) The Seller agrees with the Certificateholders, the Note Owners and each Rating Agency that the Seller shall not issue any securities or deposit assets into a trust that issues any securities, the issuance of which could reasonably be expected to materially and adversely affect the rating of any Class of Notes or the Class C Certificates unless it shall have first obtained the written consent of each Rating Agency to the effect that such issuance will not materially adversely affect such rating; provided that, the issuance of another series of certificates or notes pursuant to agreements with terms substantially similar to the terms of the Basic Documents shall not be deemed to materially and adversely affect the ratings on the Certificates or the Notes. The Seller shall provide a copy of any such consent to the Owner Trustee and the Indenture Trustee. 50 55 (b) The Seller shall not do any of the following (without the prior written consent of each Rating Agency (other than Moody's) (which consent shall be to the effect that the acts set forth below shall not affect materially adversely the rating on any Class of Notes or the Class C Certificates) and, upon the Seller's receipt of such written consent from each Rating Agency (other than Moody's), the Owner Trustee and the Indenture Trustee shall, without any exercise of its own discretion, also provide its written consent to the Seller (promptly after the occurrence of any of the following, the Seller shall provide notice of such occurrence to Moody's, so long as 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 supported by assets acquired by the Seller from NMAC by each nationally recognized statistical rating organization that has rated such outstanding certificates or notes or, prior to the issuing of such future indebtedness incurred in connection with such certificates or notes, the Seller shall have received confirmation from each nationally recognized statistical rating organization that has rated such outstanding certificates or notes that the ratings of such outstanding certificates or notes will not be adversely affected by the issuance of such future indebtedness; and (B) (i) any indebtedness to NMAC or any of its Affiliates incurred in connection with the acquisition of receivables, which indebtedness shall be fully subordinated (and which shall provide for payment only after payment in respect of all outstanding rated debt) and nonrecourse against any assets of the Seller other than the assets pledged to secure such indebtedness, (ii) such indebtedness does not constitute a claim against the Seller in the event the assets pledged to secure such indebtedness are insufficient to pay such indebtedness, (iii) holders of such indebtedness agree that they have no rights in any assets of the Seller other than the assets pledged to secure such indebtedness, and (iv) to the extent that any holder of such indebtedness is deemed to have any interest in any assets of the Seller other than the assets pledged to secure such indebtedness, holders of such indebtedness agree that their interest is subordinate to claims or rights of holders of other indebtedness issued by the Seller, and that such agreement constitutes a subordination agreement for purposes of Section 510(a) of the Bankruptcy Code; (3) dissolve or liquidate, in whole or in part, consolidate or merge with or into any other entity or convey or transfer its properties and assets substantially as an entirety to any entity, unless: (i) the entity (if other than the Seller) formed or surviving the consolidation or merger or which acquires the properties and assets of the Seller is organized and existing under the laws of the State of Delaware, expressly assumes the due and punctual payment of all obligations of the Seller, including those obligations of the Seller under this Agreement and the Basic Documents, and has 51 56 a Certificate of Incorporation containing provisions identical to the provisions of Article Three, Article Four and Article Fifteen of the Seller's Certificate of Incorporation, as amended; and (ii) immediately after giving effect to the transaction, no default or event of default has occurred and is continuing under any indebtedness of the Seller or any agreements relating to such indebtedness; and (iii) the entity (if other than the Seller) formed or surviving the consolidation or merger or which acquires the properties and assets of the Seller agrees that (i) it shall maintain its funds or assets as identifiable and not commingle its funds or assets with those of any direct or ultimate parent of such entity and pay from its assets all obligations and indebtedness of any kind incurred by it, (ii) it shall maintain bank accounts, corporate records and books of account separate from those of any direct or ultimate parent of such entity and (iii) the business affairs of such entity will be managed by or under the direction of its board of directors and it will conduct its business from an office space separate from any direct or ultimate parent of such entity; and (iv) each nationally recognized statistical rating organization that has rated any issue of certificates or notes secured or supported by assets acquired by the Seller from NMAC shall confirm in writing that the rating of such certificates or notes shall not be adversely affected by such consolidation or merger; (4) without the affirmative vote of 100% of the members of the board of directors of the Seller, institute proceedings to be adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against it, or file a petition seeking or consent to reorganization or relief under any applicable federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the corporation or all or substantially all of its property, or make any assignment for the benefit of creditors. (5) cease to have an "Independent Director," as defined in the Seller's charter; (6) without the affirmative vote of at least one "Independent Director," as defined in the Seller's charter, enter into any transactions with the Servicer not in the ordinary course of business; or (7) modify any provision of Article Three, Article Four or Article Fifteen of the Seller's Certificate of Incorporation, as amended, in any material respect. SECTION 6.03 Liability of Seller; Indemnities. The Seller shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Agreement. (a) The Seller shall indemnify, defend and hold harmless the Trust, the Owner Trustee, the Indenture Trustee from and against any taxes that may at any time be asserted 52 57 against any such Person with respect to, as of the date hereof, the sale of the Receivables to the Trust or the issuance and original sale of the Notes and the Certificates, including any sales, gross receipts, general corporation, tangible personal property, privilege or license taxes (but, in the case of the Trust, not including any taxes asserted with respect to ownership of the Receivables or federal or other income taxes arising out of the transactions contemplated by this Agreement and the Basic Documents) and costs and expenses in defending against the same. (b) The Seller shall indemnify, defend and hold harmless the Owner Trustee and the Indenture Trustee, the Trust, the Certificateholders and the Noteholders from and against any loss, liability or expense incurred by reason of (i) the Seller's willful misfeasance, bad faith or negligence in the performance of its duties under this Agreement, or by reason of reckless disregard of its obligations and duties under this Agreement and (ii) the Seller's or the Issuer's violation of federal or state securities laws in connection with the registration or the sale of the Certificates and the Notes. Indemnification under this Section 6.03 shall survive the termination of this Agreement and shall include reasonable fees and expenses of counsel and expenses of litigation. If the Seller shall have made any indemnity payment to any Person entitled thereto pursuant to this Section 6.03 and such Person thereafter shall collect any of such amounts from others, such Person shall promptly repay such amounts to the Seller, without interest (except to the extent the recipient collects interest from others). Promptly after receipt by a party indemnified under this Section 6.03 (for purposes of this paragraph, an "Indemnified Party") of notice of the commencement of any action, such Indemnified Party will, if a claim is to be made in respect thereof against the Seller under this Section 6.03, notify the Seller of the commencement thereof. If any such action is brought against any Indemnified Party under this Section 6.03 and it notifies the Seller of the commencement thereof, the Seller will assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Party (who may, unless there is, as evidenced by an Opinion of Counsel to the Indemnified Party stating that there is a conflict of interest, be counsel to the Seller), and the Seller will not be liable to such Indemnified Party under this Section 6.03 for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof, other than reasonable costs of investigation. The obligations set forth in this Section 6.03 shall survive the termination of this Agreement or the resignation or removal of the Owner Trustee or the Indenture Trustee and shall include reasonable fees and expenses of counsel and expenses of litigation. If the Seller shall have made any indemnity payments pursuant to this Section 6.03 and the Person to or on behalf of whom such payments are made thereafter collects any of such amounts from others, such Person shall promptly repay such amounts to the Seller, without interest (except to the extent received by such Person). SECTION 6.04 Merger or Consolidation of, or Assumption of the Obligations of, Seller. Subject to Section 6.02, any Person (i) into which the Seller may be merged or consolidated, (ii) resulting from any merger, conversion or consolidation to which the Seller shall be a party, (iii) succeeding to the business of the Seller or (iv) that is a corporation more than 50% of the voting stock of which is owned directly or indirectly by Nissan, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Seller under this Agreement, will be the successor to the Seller under this Agreement without the 53 58 execution or filing of any document or any further act on the part of any of the parties to this Agreement; provided, however, that (x) immediately after giving effect to such transaction, no representation or warranty made pursuant to Section 6.01 shall have been breached and no Servicer Default, and no event that, after notice or lapse of time, or both, would become a Servicer Default, shall have occurred and be continuing, (y) the Seller shall have delivered to the Owner Trustee and the Indenture Trustee an Officer's Certificate stating that such consolidation, merger or succession and such agreement or assumption comply with this Section 6.04 and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with and (z) the Seller shall have delivered to the Owner Trustee and the Indenture Trustee an Opinion of Counsel either (A) stating that, in the opinion of such counsel, based on customary qualifications and assumptions, all financing statements and continuation statements and amendments thereto have been executed and filed that are necessary fully to perfect the interest of the Issuer and the Indenture Trustee, respectively, in the Receivables, and reciting the details of such filings, or (B) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest. The Seller shall provide notice of any merger, consolidation or succession pursuant to this Section 6.04 to each Rating Agency. Notwithstanding anything herein to the contrary, the execution of the foregoing agreement of assumption and compliance with clauses (x), (y) and (z) above shall be conditions to the consummation of the transactions referred to in clauses (i), (ii), (iii) or (iv) above. SECTION 6.05 Limitation on Liability of Seller and Others. (a) Neither the Seller nor any of the directors, officers, employees or agents of the Seller shall be under any liability to the Trust, the Certificateholders or the Noteholders, except as provided under this Agreement, for any action taken or for refraining from the taking of any action pursuant to this Agreement or for errors in judgment; provided, however, that this provision shall not protect the Seller or any such person against any liability that would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in the performance of duties or by reason of reckless disregard of obligations and duties under this Agreement. The Seller and any director, officer, employee or agent of the Seller may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising under this Agreement. (b) The Seller shall not be under any obligation to appear in, prosecute or defend any legal action that shall not be incidental to its obligations under this Agreement, and that in its opinion may cause it to incur any expense or liability; provided, however, that the Servicer may undertake any reasonable action that it may deem necessary or desirable in respect of this Agreement and the rights and duties of the parties to this Agreement and the interests of the Certificateholders and the Noteholders under this Agreement. In such event, the legal expenses and costs of such action and any liability resulting therefrom shall be expenses, costs and liabilities of the Servicer, and the Servicer will not be entitled to be reimbursed therefor. SECTION 6.06 Seller May Own Certificates or Notes. The Seller and any Affiliate of the Seller may in its individual or any other capacity become the owner or pledgee of Certificates or Notes with the same rights as it would have if it were not the Seller or an Affiliate thereof, except as otherwise provided in the Basic Documents. Certificates or Notes so owned by or pledged to the Seller or such controlling or commonly controlled Person shall have an equal and 54 59 proportionate benefit under the provisions of this Agreement, without preference, priority or distinction as among all of the Certificates or the Notes, as the case may be, except as otherwise expressly provided in the Basic Documents. ARTICLE VII The Servicer SECTION 7.01 Representations of Servicer. The Servicer makes the following representations on which the Issuer is deemed to have relied in acquiring the Receivables. The representations speak as of the execution and delivery of this Agreement and as of the Closing Date and shall survive the sale of the Receivables to the Issuer and the pledge thereof to the Indenture Trustee pursuant to the Indenture. (a) Organization and Good Standing. The Servicer is duly organized and is validly existing as a corporation in good standing under the laws of the state of its incorporation, with corporate power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted, and had at all relevant times, and has, corporate power, authority and legal right to acquire, own, sell and service the Receivables and to hold the Receivable Files as custodian on behalf of the Trust and the Indenture Trustee. The location of the Servicer's chief executive office and principal place of business is Torrance, California. (b) Due Qualification. The Servicer is duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business relating to the servicing of the Receivables as required by this Agreement shall require such qualifications and where the failure to so qualify would have a material adverse effect on the ability of the Servicer to perform its obligations under this Agreement. (c) Power and Authority. The Servicer has the power and authority to execute and deliver this Agreement and to carry out its terms; and the execution, delivery and performance of this Agreement have been duly authorized by the Servicer by all necessary corporate action. (d) Binding Obligation. This Agreement constitutes a legal, valid and binding obligation of the Servicer enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general equitable principles. (e) No Violation. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time) a default under, the articles of incorporation or by-laws of the Servicer, or any indenture, agreement or other instrument to which the Servicer is a party or by which it shall be bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than the Basic Documents); nor violate any law or any order, rule or regulation applicable to the Servicer of any court or of any federal 55 60 or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or its properties; which breach, default, conflict, Lien or violation in any case would have a material adverse effect on the ability of the Seller to perform its obligations under this Agreement. (f) No Proceedings. There are no proceedings or investigations pending, or, to the best of the Servicer's knowledge, threatened, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or its properties: (i) asserting the invalidity of this Agreement, the Trust Agreement, the Indenture, the Certificates or the Notes; (ii) seeking to prevent the issuance of the Certificates or the Notes or the consummation of any of the transactions contemplated by this Agreement, the Trust Agreement or the Indenture; (iii) seeking any determination or ruling that would materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability of, this Agreement, the Trust Agreement, the Indenture, the Certificates or the Notes ; or (iv) relating to the Servicer and that would adversely affect the federal or any state income tax attributes of the Certificates or the Notes. SECTION 7.02 Indemnities of Servicer. The Servicer shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Servicer under this Agreement: (a) The Servicer shall defend, indemnify and hold harmless the Owner Trustee, the Indenture Trustee, the Trust, the Certificateholders and the Noteholders from and against any and all costs, expenses, losses, damages, claims and liabilities (collectively, "Damages") arising out of or resulting from the use, ownership or operation by the Servicer or any of its Affiliates (other than the Trust) of a Financed Vehicle. (b) The Servicer shall indemnify, defend and hold harmless the Owner Trustee, the Indenture Trustee, the Trust, the Certificateholders and the Noteholders from and against any and all Damages to the extent that such Damage arose out of, or was imposed upon, the Owner Trustee, the Indenture Trustee, the Trust, the Certificateholders or the Noteholders through the negligence, willful misfeasance or bad faith of the Servicer in the performance of its duties under this Agreement or by reason of reckless disregard of its obligations and duties under this Agreement. (c) The Servicer shall indemnify, defend and hold harmless the Owner Trustee and the Indenture Trustee from and against all Damages arising out of or incurred in connection with the acceptance or performance of the trusts and duties herein contained, except to the extent that such Damage: (i) shall be due to the willful misfeasance, bad faith, or negligence (except for errors in judgment) of the Owner Trustee or the Indenture Trustee, as the case may be; (ii) relates to any tax other than the taxes with respect to which the Seller shall be required to indemnify the Owner Trustee or the Indenture Trustee; (iii) shall arise from the breach by the Owner Trustee or the Indenture Trustee of any of their respective representations or warranties set forth in the Basic Documents; (iv) shall be one as to which the Seller is required to indemnify the Owner Trustee or the Indenture Trustee and as to which such Person has received payment of indemnity from the Seller; or (v) shall arise out of or be incurred in connection with the performance by the Indenture Trustee of the duties of Successor Servicer hereunder. 56 61 Promptly after receipt by a party indemnified under this Section 7.02 (for purposes of this paragraph, an "Indemnified Party") of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against the Servicer under this Section 7.02, notify the Servicer of the commencement thereof. If any such action is brought against any Indemnified Party under this Section 7.02 and it notifies the Servicer of the commencement thereof, the Servicer will assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Party (who may, unless there is, as evidenced by an Opinion of Counsel to the Indemnified Party stating that there is a conflict of interest, be counsel to the Servicer), and the Servicer will not be liable to such Indemnified Party under this Section 7.02 for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof, other than reasonable costs of investigation. The obligations set forth in this Section 7.02 shall survive the termination of this Agreement or the resignation or removal of the Servicer, the Owner Trustee or the Indenture Trustee and shall include reasonable fees and expenses of counsel and expenses of litigation. If the Servicer shall have made any indemnity payments pursuant to this Section 7.02 and the Person to or on behalf of whom such payments are made thereafter collects any of such amounts from others, such Person shall promptly repay such amounts to the Servicer, without interest (except to the extent received by such Person). Indemnification under this Section 7.02 by NMAC (or any successor thereto pursuant to Section 7.03) as Servicer, with respect to the period such Person was the Servicer, shall survive the termination of such Person as Servicer or a resignation by such Person as Servicer as well as the termination of this Agreement and shall include reasonable fees and expenses of counsel and expenses of litigation. If the Servicer shall have made any indemnity payments pursuant to this Section 7.02 and the recipient thereafter collects any of such amounts from others, the recipient shall promptly repay such amounts to the Servicer, without interest (except to the extent the recipient collects interest from others). SECTION 7.03 Merger or Consolidation of, or Assumption of the Obligations of, Servicer. Any Person (i) into which the Servicer may be merged or consolidated, (ii) resulting from any merger, conversion or consolidation to which the Servicer shall be a party, (iii) succeeding to the business of the Servicer, or (iv) so long as NMAC acts as Servicer, that is a corporation more than 50% of the voting stock of which is owned directly or indirectly by Nissan, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Servicer under this Agreement, will be the successor to the Servicer under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties to this Agreement; provided, however, that (x) immediately after giving effect to such transaction, no Servicer Default, and no event which, after notice or lapse of time, or both, would become a Servicer Default, shall have occurred and be continuing, (y) the Servicer shall have delivered to the Owner Trustee and the Indenture Trustee an Officer's Certificate stating that such consolidation, merger or succession and such agreement of assumption comply with this Section 7.03 and that all conditions precedent provided for in this Agreement relating to such transaction have been complied with and (z) the Servicer shall have delivered to the Owner Trustee and the Indenture Trustee an Opinion of Counsel either (A) stating that, in the opinion of such counsel, based on customary qualifications and assumptions, all financing statements and continuation statements and amendments thereto have been executed and filed that are necessary fully to preserve and protect the interest of the Issuer 57 62 and the Indenture Trustee in the Receivables, and reciting the details of such filings, or (B) stating that, in the opinion of such counsel, no such action shall be necessary to perfect such interest. The Servicer shall provide notice of any merger, consolidation or succession pursuant to this Section 7.03 to each Rating Agency. Notwithstanding anything herein to the contrary, the execution of the foregoing agreement of assumption and compliance with clauses (x), (y) and (z) above shall be conditions to the consummation of the transactions referred to in clauses (i), (ii), (iii) or (iv) above. SECTION 7.04 Limitation on Liability of Servicer and Others. (a) Neither the Servicer nor any of the directors, officers, employees or agents of the Servicer shall be under any liability to the Trust, the Certificateholders or the Noteholders, except as provided under this Agreement, for any action taken or for refraining from the taking of any action pursuant to this Agreement or for errors in judgment; provided, however, that this provision shall not protect the Servicer or any such person against any liability that would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in the performance of duties or by reason of reckless disregard of obligations and duties under this Agreement. The Servicer and any director, officer, employee or agent of the Servicer may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising under this Agreement. (b) Except as provided in this Agreement, the Servicer shall not be under any obligation to appear in, prosecute or defend any legal action that shall not be incidental to its duties to service the Receivables in accordance with this Agreement, and that in its opinion may cause it to incur any expense or liability; provided, however, that the Servicer may undertake any reasonable action that it may deem necessary or desirable in respect of the Basic Documents and the rights and duties of the parties to the Basic Documents and the interests of the Certificateholders under this Agreement and the Noteholders under the Indenture. In such event, the legal expenses and costs of such action and any liability resulting therefrom shall be expenses, costs and liabilities of the Servicer, and the Servicer will not be entitled to be reimbursed therefor. SECTION 7.05 NMAC Not To Resign as Servicer. Subject to the provisions of Section 7.03, NMAC shall not resign from the obligations and duties hereby imposed on it as Servicer under this Agreement except upon determination that the performance of its duties under this Agreement shall no longer be permissible under applicable law. Notice of any such determination permitting the resignation of NMAC shall be communicated to the Owner Trustee and the Indenture Trustee at the earliest practicable time (and, if such communication is not in writing, shall be confirmed in writing at the earliest practicable time) and any such determination shall be evidenced by an Opinion of Counsel to such effect delivered to the Owner Trustee and the Indenture Trustee concurrently with or promptly after such notice. No such resignation shall become effective until the Indenture Trustee or a Successor Servicer shall (i) have taken the actions required by Section 8.01 of this Agreement to effect the termination of the responsibilities and rights of the predecessor Servicer under this Agreement, including the transfer to the Successor Servicer for administration by it of all cash amounts that shall at the time be held by the predecessor Servicer for deposit, or shall thereafter be received with respect to a Receivable and the delivery of the Receivable Files, and the related accounts and records 58 63 maintained by the Servicer, (ii) have assumed the responsibilities and obligations of NMAC as Servicer under this Agreement in accordance with Section 8.02 of this Agreement (other than the initial Servicer's obligation to make Advances), and (iii) become the Administrator under the Administration Agreement in accordance with Section 8 of such Agreement. ARTICLE VIII Default SECTION 8.01 Servicer Default. If any one of the following events (a "Servicer Default") shall occur and be continuing: (a) any failure by the Servicer (or the Seller, so long as NMAC is the Servicer) to deliver to the Relevant Trustee for deposit in any of the Accounts any required payment or to direct the Relevant Trustee to make any required distributions therefrom, which failure continues unremedied for a period of three Business Days after (i) receipt by the Servicer (or the Seller, so long as NMAC is the Servicer) of written notice of such failure given by the Owner Trustee or the Indenture Trustee, (ii) receipt by the Servicer (or the Seller, so long as NMAC is the Servicer), the Owner Trustee or the Indenture Trustee of written notice of such failure given by the Holders of Notes or Certificates evidencing not less than 25% of the sum of the Outstanding Amount or Holders of Certificates evidencing not less than 25% of the Certificate Balance, or (iii) discovery of such failure by any officer of the Servicer; (b) any failure by the Servicer (or the Seller, as long as NMAC is the Servicer) to duly observe or perform in any material respect any other covenants or agreements of the Servicer (or the Seller, as long as NMAC is the Servicer) set forth in this Agreement (including its obligation to purchase Receivables pursuant to Section 4.06), which failure shall materially and adversely affect the rights of the Certificateholders or the Noteholders and shall continue unremedied for a period of 90 days after giving of written notice of the failure to (i) the Servicer (or the Seller, as long as NMAC is the Servicer) by the Owner Trustee or the Indenture Trustee, or (ii) the Servicer (or the Seller, as long as NMAC is the Servicer) and the Owner Trustee or the Indenture Trustee by the Holders of Notes or Certificates evidencing not less than 25% of the sum of the Outstanding Amount or Holders of Certificates evidencing not less than 25% of the Certificate Balance; or (c) the occurrence of an Insolvency Event with respect to the Servicer; then, and in each and every case, so long as the Servicer Default shall not have been remedied, either the Indenture Trustee or the Holders of Notes evidencing a majority of the Outstanding Amount of the Notes (but excluding for purposes of such calculation and action all Notes held or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates unless all of the Notes are held or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates), acting together as a single Class, by notice then given in writing to the Servicer (and to the Indenture Trustee and the Owner Trustee if given by the Noteholders) may terminate all of the rights and obligations (other than the obligations set forth in Section 7.02 hereof) of the Servicer under this Agreement. On or after the receipt by the Servicer of such written notice, all authority and power of the Servicer under this Agreement, whether with respect to the Notes, the 59 64 Certificates or the Receivables or otherwise, shall, without further action, pass to and be vested in the Indenture Trustee or such Successor Servicer as may be appointed under Section 8.02; and, without limitation, the Indenture Trustee and the Owner Trustee are hereby authorized and empowered to execute and deliver, for the benefit of the predecessor Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such notice of termination, whether to complete the transfer and endorsement of the Receivables and related documents, or otherwise. The predecessor Servicer shall cooperate with the Successor Servicer and the Owner Trustee in effecting the termination of the responsibilities and rights of the predecessor Servicer under this Agreement, including, without limitation, the transfer to the Successor Servicer for administration by it of all cash amounts that shall at the time be held by the predecessor Servicer for deposit, or have been deposited by the predecessor Servicer, in the Accounts or thereafter received with respect to the Receivables that shall at that time be held by the predecessor Servicer and the delivery of the Receivables Files and the related accounts and records maintained by the predecessor Servicer. All reasonable costs and expenses (including attorneys' fees) incurred in connection with transferring the Receivable Files to the Successor Servicer and amending this Agreement to reflect such succession as Servicer pursuant to this Section 8.01 shall be paid by the predecessor Servicer upon presentation of reasonable documentation of such costs and expenses. Notwithstanding the foregoing, in the event the predecessor Servicer is the Indenture Trustee, the original Servicer hereunder shall reimburse the Indenture Trustee for all reasonable costs and expenses as described in the immediately preceding sentence. Upon receipt of notice of the occurrence of a Servicer Default, the Indenture Trustee shall give notice thereof to the Rating Agencies. SECTION 8.02 Appointment of Successor. (a) Upon the Servicer's receipt of notice of termination pursuant to Section 8.01 or the Servicer's resignation in accordance with the terms of this Agreement, the predecessor Servicer shall continue to perform its functions as Servicer under this Agreement, in the case of termination, only until the date specified in such termination notice or, if no such date is specified in a notice of termination, until receipt of such notice and, in the case of resignation, until the earlier of (i) the date 45 days from the delivery to the Owner Trustee and the Indenture Trustee of written notice of such resignation (or written confirmation of such notice) in accordance with the terms of this Agreement and (ii) the date upon which the predecessor Servicer shall become unable to act as Servicer, as specified in the notice of resignation and accompanying Opinion of Counsel. In the event of the Servicer's resignation or termination hereunder, the Indenture Trustee shall appoint a Successor Servicer, and the Successor Servicer shall accept its appointment (including its appointment as Administrator under the Administration Agreement as set forth in Section 8.02(b)) by a written assumption in form acceptable to the Owner Trustee and the Indenture Trustee. If a Successor Servicer has not been appointed at the time when the predecessor Servicer has ceased to act as Servicer in accordance with this Section 8.02, the Indenture Trustee without further action shall automatically be appointed the Successor Servicer and the Indenture Trustee shall be entitled to the Total Servicing Fee. Notwithstanding the above, the Indenture Trustee shall, if it shall be legally unable so to act, appoint or petition a court of competent jurisdiction to appoint, and the predecessor Servicer, if no successor Servicer has been appointed at the time the predecessor Servicer has ceased to act, may petition a court of competent jurisdiction to appoint any 60 65 established institution having a net worth of not less than $100,000,000 and whose regular business shall include the servicing of automobile and/or light-duty truck receivables, as the successor to the Servicer under this Agreement. (b) Upon appointment, the Successor Servicer (including the Indenture Trustee acting as Successor Servicer) shall (i) be the successor in all respects to the predecessor Servicer and shall be subject to all the responsibilities, duties and liabilities arising thereafter relating thereto placed on the predecessor Servicer (except the initial Servicer's obligation to make Advances) and shall be entitled, subject to the arrangements referred to in paragraph (c) below, to the servicing fee and all the rights granted to the predecessor Servicer by the terms and provisions of this Agreement and (ii) become the Administrator under the Administration Agreement in accordance with Section 8 of such Agreement. (c) In connection with such appointment, the Issuer may make such arrangements for the compensation of such Successor Servicer out of payments on Receivables as it and such Successor Servicer shall agree; provided, however, that no such compensation shall be in excess of that permitted the predecessor Servicer under this Agreement. The Issuer, the Indenture Trustee and such Successor Servicer shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession. SECTION 8.03 Repayment of Advances. If the Servicer shall resign or be terminated, the Servicer shall continue to be entitled to receive, to the extent of available funds, reimbursement for Outstanding Advances pursuant to Sections 5.03 and 5.04 with respect to all Advances previously made thereby. SECTION 8.04 Notification . Upon any termination of, or appointment of a successor to, the Servicer pursuant to this Article VIII, the Owner Trustee shall give prompt written notice thereof to the Certificateholders, and the Indenture Trustee shall give prompt written notice thereof to Noteholders[, the Swap Counterparty] and the Rating Agencies. SECTION 8.05 Waiver of Past Defaults. The Holders of Notes evidencing a majority of the Outstanding Amount of the Controlling Class of Notes, or, in the case of any Servicer Default which does not adversely affect the Indenture Trustee or the Noteholders, the Holders of Certificates evidencing a majority of the Certificate Balance of the Controlling Class of Certificates, in each case excluding for purposes of such calculation and action all Securities held or beneficially owned by NMAC, [NARC][NARC II] or any of their Affiliates (unless all of the Notes of such Class or the Certificates of such Class, as the case may be, are held by NMAC, [NARC][NARC II] and their Affiliates), may, on behalf of all the Noteholders and the Certificateholders, waive in writing any default by the Servicer in the performance of its obligations hereunder and its consequences, except a default in making any required deposits to or payments from the Collection Account in accordance with this Agreement. Upon any such waiver of a past default, such default shall cease to exist, and any Servicer Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereto. 61 66 ARTICLE IX Termination; Release of Receivables SECTION 9.01 Optional Purchase of All Receivables. (a) On each Distribution Date following the last day of a Collection Period as of which the Pool Balance shall be less than or equal to the Optional Purchase Percentage multiplied by the Original Pool Balance, the Servicer or any successor to the Servicer shall have the option to purchase the corpus of the Owner Trust Estate (whether or not such assets then comprise all or a portion of the Trust Estate) for an amount equal to the Optional Purchase Price. To exercise such option, the Servicer or any successor to the Servicer shall notify the Owner Trustee and the Indenture Trustee of its intention to do so in writing, no later than the tenth day of the month preceding the month in which the Distribution Date as of which such purchase is to be effected and shall, on or before the Distribution Date on which such purchase is to occur, deposit pursuant to Section 5.05 in the Collection Account an amount equal to the Optional Purchase Price, and shall succeed to all interests in and to the Trust Estate and the Owner Trust Estate; provided, however, that the Servicer shall not effect any such purchase so long as the rating of NMAC by 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 Receivable, and all security and any documents relating thereto, such assignment being an assignment outright and not for security; and the 62 67 Seller or the Servicer, as applicable, shall thereupon own each such Receivable, and all such related security and documents, free of any further obligation to the Issuer, the Owner Trustee, the Certificateholders, the Indenture Trustee or the Noteholders with respect thereto. (b) The Issuer and Indenture Trustee shall execute such documents and instruments of transfer and assignment and take such other actions as shall be reasonably requested by the Seller or the Servicer, as the case may be, to effect the conveyance of such Receivable pursuant to Sections 3.02, 4.06 and 9.02. (c) If in any enforcement suit or legal proceeding it is held that the Seller or the Servicer may not enforce a repurchased Receivable on the ground that it is not a real party in interest or a holder entitled to enforce the Receivable, the Issuer, and the Indenture Trustee on behalf of the Noteholders, shall, at the written direction and expense of the Seller or Servicer, as the case may be, take such reasonable steps as the Seller or the Servicer deems necessary to enforce the Receivable, including bringing suit in the name or names of the Issuer, the Certificateholders or the Noteholders. SECTION 9.03 Termination. (a) The respective obligations of the Seller, the Servicer, NMAC (so long as NMAC has rights or obligations hereunder), the Owner Trustee, and the Indenture Trustee, as the case may be, pursuant to this Agreement shall terminate upon the earliest of (i) the maturity or other liquidation of the last Receivable and the final disposition of all amounts received upon liquidation of any remaining Receivables, or (ii) the election by the Servicer to purchase the corpus of the Trust as described in Section 9.01 and the payment or distribution to Securityholders of all amounts required to be paid to them under the Indenture or the Trust Agreement, as the case may be. (b) Notice of any such termination under this Section 9.03 shall be given by the Indenture Trustee or the Owner Trustee to each Securityholder of record as specified in the Indenture or the Trust Agreement, as appropriate. ARTICLE X Miscellaneous SECTION 10.01 Amendment. (a) This Agreement may be amended by the Seller, the Servicer and the Issuer, with the consent of the Indenture Trustee, but without the consent of any of the Noteholders or the Certificateholders, (1) to cure any ambiguity, correct or supplement any provision herein that may be inconsistent with any other provision herein, or make any other provisions with respect to matters or questions arising hereunder that are not inconsistent with the provisions herein; provided that (i) the amendment will not materially and adversely affect the interest of any Noteholder or Certificateholder and (ii) the Servicer shall have delivered an Officer's Certificate to the Indenture Trustee and the Owner Trustee stating 63 68 that such amendment will not materially and adversely affect the interest of any Noteholder or Certificateholder; and (2) to change the formula for determining the required amount for the Specified Reserve Account Balance upon (i) confirmation from each Rating Agency that such amendment will not result in the qualification, reduction or withdrawal of any rating it currently assigns to any Class of Notes or Certificates, and (ii) delivery by the Servicer to the Indenture Trustee and the Owner Trustee of an Officer's Certificate stating that such amendment will not materially and adversely affect the interest of any Securityholder. An amendment will be deemed not to materially and adversely affect the interests of any Noteholder or Certificateholder of any Class if (x) the amendment does not adversely affect the Trust's status as a partnership (or, for any period during which there is not more than one beneficial owner of a Certificate, the Trust's status as an entity that is disregarded as an entity separate from the Certificateholder) for federal income tax purposes, (y) each Rating Agency confirms that that amendment will not result in a reduction or withdrawal of its rating on the Certificates or the Notes of that Class, and (z) the Servicer has delivered the Officer's Certificate described in this Section 10.01(a). (b) This Agreement may also be amended from time to time by the Seller, the Servicer and the Issuer, with the consent of the Indenture Trustee and the consent of: (1) the Holders of Notes evidencing a majority of the Outstanding Amount of the Controlling Class of Notes; or (2) in the case of any amendment that does not adversely affect the Indenture Trustee or the Noteholders, the Holders of the Certificates evidencing a majority of the outstanding Certificate Balance of the Controlling Class of Certificates (but excluding for purposes of calculation and action all Certificates held by the Seller, the Servicer or any of their Affiliates, unless all of the Certificates of such Class are held by the Seller, the Servicer or any of their Affiliates), for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of those Noteholders or Certificateholders; provided, however, that no amendment shall: (x) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on the Receivables or distributions that are required to be made for the benefit of those Noteholders or Certificateholders or change the Interest Rate or the Pass-Through Rate or the Specified Reserve Account Balance (except as described above under clause (2) of subsection (a) above) without the consent of each "adversely affected" Noteholder or Certificateholder; or (y) reduce the aforesaid percentage of the Outstanding Amount of the Notes or Certificate Balance of the Certificates which is required to consent to any 64 69 amendment, without the consent of the Holders of all the then outstanding Notes or Certificates. An amendment referred to in clause (x) above will be deemed not to "adversely affect" a Certificateholder or Noteholder of any Class only if each Rating Agency confirms that that amendment will not result in a reduction or withdrawal of its rating on the Certificates or Notes of that Class. In connection with any amendment referred to in clause (x) above, the Servicer shall deliver an Officer's Certificate to the Indenture Trustee and the Owner Trustee stating that those Noteholders and Certificateholders whose consents were not obtained were not adversely affected by such amendment. Promptly after the execution of any such amendment or consent, the Owner Trustee shall furnish written notification of the substance of such amendment or consent to each Certificateholder, the Indenture Trustee and each of the Rating Agencies. It shall not be necessary for the consent of the Certificateholders or the Noteholders pursuant to this Section 10.01 to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof. Prior to the execution of any amendment to this Agreement, the Owner Trustee and the Indenture Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and the Opinion of Counsel referred to in Section 10.02. The Owner Trustee and the Indenture Trustee may, but shall not be obligated to, enter into any such amendment which affects the Owner Trustee's or the Indenture Trustee's, as applicable, own rights, duties or immunities under this Agreement or otherwise. SECTION 10.02 Protection of Title to Trust. (a) The Seller shall execute and file such financing statements and cause to be executed and filed such continuation statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of the Issuer and of the Indenture Trustee in the Receivables and in the proceeds thereof. The Seller shall deliver (or cause to be delivered) to the Owner Trustee and the Indenture Trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. (b) The Seller and the Servicer shall notify the Owner Trustee and the Indenture Trustee within 30 days after any change of its name, identity or corporate structure in any manner that would, could or might make any financing statement or continuation statement filed in accordance with paragraph (a) above seriously misleading within the meaning of Section 9-402(7) of the UCC, and shall promptly file appropriate amendments to all previously filed financing statements or continuation statements. (c) Each of the Seller and the Servicer shall notify the Owner Trustee and the Indenture Trustee of any relocation of its principal executive office within 30 days after such relocation, if, as a result of such relocation, the applicable provisions of the UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any 65 70 new financing statement and shall promptly file any such amendment or new financing statement. The Servicer shall at all times maintain each office from which it shall service Receivables, and its principal executive office, within the United States of America. (d) The Servicer shall maintain accounts and records as to each Receivable accurately and in sufficient detail to permit (i) the reader thereof to know at any time the status of such Receivable, including payments and recoveries made and payments owing (and the nature of each) and (ii) reconciliation between payments or recoveries on (or with respect to) each Receivable and the amounts from time to time deposited in the Collection Account in respect of such Receivable. (e) The Servicer shall maintain its computer systems so that, from and after the time of sale under this Agreement of the Receivables to the Trust, the Servicer's master computer records that refer to any Receivable shall indicate clearly the interest of the Issuer and the Indenture Trustee in such Receivable and that such Receivable is owned by the Issuer and has been pledged to the Indenture Trustee. Indication of these respective interests in a Receivable shall be deleted from or modified on the Servicer's computer systems when, and only when, the related Receivable shall have become a Liquidated Receivable or been repurchased. (f) If at any time the Seller or the Servicer shall propose to sell, grant a security interest in, or otherwise transfer any interest in automotive receivables to, any prospective purchaser, lender or other transferee, the Servicer shall give to such prospective purchaser, lender or other transferee computer tapes, records or printouts that, if they shall refer in any manner whatsoever to any Receivable, shall indicate clearly that such Receivable has been sold and is owned by the Issuer and has been pledged to the Indenture Trustee. (g) Upon receipt of a written request from the Owner Trustee or the Indenture Trustee, which request shall be made no more frequently than annually, the Servicer shall furnish to the Owner Trustee or the Indenture Trustee, as the case may be, within 20 Business Days after receipt of such request, a list of all Receivables (by contract number and name of Obligor) then held as part of the Trust, together with a reconciliation of the list of Receivables attached hereto as Schedule A and to each of the Servicer's Certificates furnished before such request indicating removal of Receivables from the Trust. The Servicer shall permit the Indenture Trustee and its agents at any time during normal business hours upon reasonable prior notice to inspect, audit and make copies of and abstracts from the Servicer's records regarding any Receivable. (h) The Servicer shall deliver to the Owner Trustee and the Indenture Trustee: (A) upon the execution and delivery of this Agreement and of each amendment hereto, an Opinion of Counsel, based on customary assumptions and qualifications, stating that, in the opinion of such counsel, either (A) all financing statements and continuation statements have been executed and filed that are necessary to perfect the interest of the Trust and the Indenture Trustee in the Receivables, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (B) no such action shall be necessary to preserve and protect such interest; and 66 71 (B) if requested by the Indenture Trustee or the Owner Trustee, not more frequently than annually, an Opinion of Counsel, dated as of a date during such 90-day period, either (A) stating that, in the opinion of such counsel, based on customary assumptions and qualifications, all financing statements and continuation statements have been executed and filed that are necessary to perfect the interest of the Trust and the Indenture Trustee in the Receivables, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (B) no such action shall be necessary to preserve and protect such interest. (i) Each Opinion of Counsel referred to in clause (h)(A) or (B) above shall specify any action necessary (as of the date of such Opinion of Counsel) to be taken in the following year to preserve and protect such interest. SECTION 10.03 Notices. All demands, notices, communications and instructions upon or to the Seller, the Servicer, the Owner Trustee, the Indenture Trustee or the Rating Agencies under this Agreement shall be in writing, personally delivered or mailed by certified mail, return receipt requested, and shall be deemed to have been duly given upon receipt (a) in the case of the Seller, to [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], 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, 55 Water Street, New York, New York 10041-0003, Attention: Asset Backed Surveillance Department; or, as to each of the foregoing, at such other address as shall be designated by written notice to the other parties. SECTION 10.04 Assignment by the Seller or the Servicer. Notwithstanding anything to the contrary contained herein, except as provided in Sections 6.04 and 7.03 of this Agreement and as provided in the provisions of this Agreement concerning the resignation or termination of the Servicer, this Agreement may not be assigned by the Seller or the Servicer without the prior written consent of the Indenture Trustee, the Owner Trustee, the Holders of the Certificates and Notes evidencing not less than 66 2/3% of the Outstanding Amount and the Certificate Balance, voting as a single class. SECTION 10.05 Limitations on Rights of Others. The provisions of this Agreement are solely for the benefit of the Seller, the Servicer, the Issuer, the Owner Trustee, the Certificateholders, the Indenture Trustee and the Noteholders, and nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Owner Trust Estate or under or in respect of this Agreement or any covenants, conditions or provisions contained herein. SECTION 10.06 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any 67 72 such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.07 Separate Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 10.08 Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 10.09 Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions (other than Section 5-1401 of the General Obligations Law of the State of New York), and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. SECTION 10.10 Assignment by Issuer. The Seller hereby acknowledges and consents to any mortgage, pledge, assignment and grant of a security interest by the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the Noteholders of all right, title and interest of the Issuer in, to and under the Receivables and the related property acquired hereunder and/or the assignment of any or all of the Issuer's rights and obligations hereunder to the Indenture Trustee. SECTION 10.11 Nonpetition Covenants. (a) Notwithstanding any prior termination of this Agreement, the Servicer and the Seller shall not, prior to the date which is one year and one day after the termination of this Agreement with respect to the Issuer, acquiesce, petition or otherwise invoke or cause the Issuer to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer under any federal or state bankruptcy, insolvency or similar law, or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer. (b) Notwithstanding any prior termination of this Agreement, each of the Servicer and the Owner Trustee (not in its individual capacity but solely as Owner Trustee), prior to the date which is one year and one day after the Notes are paid in full, covenants and agrees that it will not at any time file, join in any filing of, or cooperate with or encourage others to file any bankruptcy, reorganization arrangement, insolvency or liquidation proceeding, or other proceeding against the Seller under any federal or state bankruptcy, insolvency or similar law, appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Seller or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Seller. SECTION 10.12 Limitation of Liability of Owner Trustee and Indenture Trustee. Notwithstanding anything contained herein to the contrary, this Agreement has been countersigned by [________________], not in its individual capacity, but solely in its capacity as 68 73 Owner Trustee of the Issuer, and by [________________], not in its individual capacity, but solely in its capacity as Indenture Trustee under the Indenture. In no event shall [______________] or [________________] have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer hereunder or in any of the certificates, notices or agreements delivered by the Seller or the Servicer, or prepared by the Seller or the Servicer for delivery by the Owner Trustee on behalf of the Issuer, pursuant hereto, as to all of which recourse shall be had solely to the assets of the Issuer. For all purposes of this Agreement, in the performance of its duties or obligations hereunder or in the performance of any duties or obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to the benefits of, the terms and provisions of Articles VI, VII and VIII of the Trust Agreement. 69 74 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers as of the day and year first above written. NISSAN AUTO RECEIVABLES [___-___] OWNER TRUST By: , --------------------------------- not in its individual capacity but solely as Owner Trustee on behalf of the Trust By: ---------------------------------------------- Name: -------------------------------------------- Title: ------------------------------------------- [NISSAN AUTO RECEIVABLES CORPORATION][NISSAN AUTO RECEIVABLES CORPORATION II], Seller By: ---------------------------------------------- Name: -------------------------------------------- Title: ------------------------------------------- NISSAN MOTOR ACCEPTANCE CORPORATION, Servicer By: ---------------------------------------------- Name: -------------------------------------------- Title: ------------------------------------------- ACKNOWLEDGED AND ACCEPTED AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN: ___________________________________ , not in its individual capacity but solely as Indenture Trustee By: ---------------------------------------------- Name: -------------------------------------------- Title: ------------------------------------------- S-1 75 SCHEDULE A SCHEDULE OF RECEIVABLES (Delivered to the Trust on CD-ROM on the Closing Date) 76 SCHEDULE B LOCATION OF THE RECEIVABLES FILES 1. NISSAN MOTOR ACCEPTANCE CORPORATION 2901 Kinwest Parkway Irving, Texas 75063 2. NISSAN MOTOR ACCEPTANCE CORPORATION 990 W. 190th Street Torrance, California 90502 3. IRON MOUNTAIN, INC. 1235 N. Union Bower Irving, Texas 75061 77 EXHIBIT A FORM OF YIELD SUPPLEMENT AGREEMENT EX-4.4 7 a67668a1ex4-4.txt EXHIBIT 4.4 1 EXHIBIT 4.4 POOL AND SERVICING AGREEMENT among [NISSAN AUTO RECEIVABLES CORPORATION][NISSAN AUTO RECEIVABLES CORPORATION II], Seller, NISSAN MOTOR ACCEPTANCE CORPORATION, Servicer and in its individual capacity, and --------------------------------, Trustee Dated as of ______________ 2 ARTICLE I INTRODUCTION Section 1.01. Definitions................................................................ 1 Section 1.02. Usage of Terms............................................................. 19 Section 1.03. Cutoff Date and Record Date................................................ 19 Section 1.04. Section References......................................................... 19 ARTICLE II THE TRUST Section 2.01. Creation of Trust.......................................................... 19 Section 2.02. Conveyance of Receivables.................................................. 19 Section 2.03. Acceptance by Trustee...................................................... 20 Section 2.04. Characterization........................................................... 20 ARTICLE III THE RECEIVABLES Section 3.01. Representations and Warranties of Seller................................... 21 Section 3.02. Repurchase Upon Breach..................................................... 24 Section 3.03. Custody of Receivable Files................................................ 24 Section 3.04. Duties of Servicer as Custodian............................................ 25 Section 3.05. Instructions; Authority to Act............................................. 26 Section 3.06. Custodian's Indemnification................................................ 26 Section 3.07. Effective Period and Termination........................................... 26 ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES Section 4.01. Duties of Servicer......................................................... 26 Section 4.02. Collection of Receivable Payments.......................................... 28 Section 4.03. Realization Upon Receivables............................................... 28 Section 4.04. Maintenance of Security Interests in Financed Vehicles..................... 28 Section 4.05. Covenants of Servicer...................................................... 28 Section 4.06. Purchase of Receivables Upon Breach........................................ 29 Section 4.07. Total Servicing Fee........................................................ 29 Section 4.08. Servicer's Certificate..................................................... 29 Section 4.09. Annual Statement as to Compliance; Notice of Default....................... 30 Section 4.10. Annual Independent Certified Public Accountant's Report.................... 30 Section 4.11. Access to Certain Documentation and Information Regarding Receivables...... 31 Section 4.12. Appointment of Subservicer................................................. 31
i 3 Section 4.13. Servicer Expenses.......................................................... 31 ARTICLE V DISTRIBUTIONS; SUBORDINATION SPREAD ACCOUNTS; STATEMENTS TO CERTIFICATEHOLDERS Section 5.01. Accounts................................................................... 31 Section 5.02. Collections................................................................ 32 Section 5.03. Application of Collections................................................. 33 Section 5.04. Advances................................................................... 33 Section 5.05. Additional Deposits........................................................ 34 Section 5.06. Distributions.............................................................. 35 Section 5.07. Net Deposits............................................................... 37 Section 5.08. Statements to Certificateholders........................................... 38 Section 5.09. No Petition................................................................ 39 ARTICLE VI ADDITIONAL AGREEMENTS Section 6.01. Yield Supplement Account................................................... 40 Section 6.02. Custody and Pledge Agreement............................................... 41 Section 6.03. Limitations on the Trust................................................... 41 ARTICLE VII THE CERTIFICATES Section 7.01. The Certificates........................................................... 41 Section 7.02. Authentication of Certificates............................................. 42 Section 7.03. Registration of Transfer and Exchange of Certificates...................... 42 Section 7.04. Mutilated, Destroyed, Lost, or Stolen Certificates......................... 44 Section 7.05. Persons Deemed Owners...................................................... 44 Section 7.06. Access to List of Certificateholders' Names and Addresses.................. 45 Section 7.07. Maintenance of Office or Agency............................................ 45 Section 7.08. Book-Entry Certificates.................................................... 45 Section 7.09. Notices to Clearing Agency................................................. 46 Section 7.10. Definitive Certificates.................................................... 46 ARTICLE VIII THE SELLER Section 8.01. Representations of Seller.................................................. 47 Section 8.02. Liability of Seller; Indemnities........................................... 48 Section 8.03. Merger or Consolidation of, or Assumption of the Obligations of, Seller.... 49 Section 8.04. Limitation on Liability of Seller and Others............................... 49
ii 4 Section 8.05. Seller May Own Certificates................................................ 50 Section 8.06. Additional Covenants....................................................... 50 ARTICLE IX THE SERVICER Section 9.01. Representations of Servicer................................................ 52 Section 9.02. Indemnities of Servicer.................................................... 53 Section 9.03. Merger or Consolidation of, or Assumption of the Obligations of, Servicer.. 55 Section 9.04. Limitation on Liability of Servicer and Others............................. 55 Section 9.05. Delegation of Duties....................................................... 56 Section 9.06. NMAC Not to Resign as Servicer............................................. 56 ARTICLE X DEFAULT Section 10.01. Events of Default.......................................................... 56 Section 10.02. Appointment of Successor................................................... 58 Section 10.03. Repayment of Advances...................................................... 59 Section 10.04. Notification to Certificateholders......................................... 59 Section 10.05. Waiver of Past Defaults.................................................... 59 ARTICLE XI THE TRUSTEE Section 11.01. Duties of Trustee.......................................................... 59 Section 11.02. Trustee's Certificate...................................................... 61 Section 11.03. Trustee's Assignment of Administrative Receivables and Warranty Receivables................................................... 61 Section 11.04. Certain Matters Affecting the Trustee...................................... 62 Section 11.05. Trustee Not Liable for Certificates or Receivables......................... 63 Section 11.06. Trustee May Own Certificates............................................... 64 Section 11.07. Trustee's Fees and Expenses................................................ 64 Section 11.08. Indemnity of Trustee....................................................... 64 Section 11.09. Eligibility Requirements for Trustee....................................... 64 Section 11.10. Resignation or Removal of Trustee.......................................... 65 Section 11.11. Successor Trustee.......................................................... 65 Section 11.12. Merger or Consolidation of Trustee......................................... 66 Section 11.13. Appointment of Co-Trustee or Separate Trustee.............................. 66 Section 11.14. Representations and Warranties of Trustee.................................. 67 Section 11.15. Tax Returns................................................................ 67 Section 11.16. Trustee May Enforce Claims Without Possession of Certificates.............. 68 Section 11.17. Suits for Enforcement...................................................... 68 Section 11.18. Rights of Certificateholders to Direct Trustee............................. 68
iii 5 Section 11.19. Appointment of Custodian................................................... 68 ARTICLE XII TERMINATION; RELEASE OF RECEIVABLES Section 12.01. Termination of the Trust................................................... 68 Section 12.02. Optional Purchase of All Receivables....................................... 69 Section 12.03. Release of Receivables..................................................... 70 ARTICLE XIII MISCELLANEOUS PROVISIONS Section 13.01. Amendment.................................................................. 71 Section 13.02. Protection of Title to Trust............................................... 72 Section 13.03. Limitation on Rights of Certificateholders................................. 74 Section 13.04. GOVERNING LAW.............................................................. 75 Section 13.05. Notices.................................................................... 75 Section 13.06. Severability of Provisions................................................. 75 Section 13.07. Assignment................................................................. 75 Section 13.08. Certificates Nonassessable and Fully Paid.................................. 75 Section 13.09. Further Assurances......................................................... 75 Section 13.10. No Waiver; Cumulative Remedies............................................. 76 Section 13.11. Third-Party Beneficiaries.................................................. 76 Section 13.12. Actions by Certificateholders.............................................. 76 Section 13.13. Qualification as Grantor Trust; Separate Assets............................ 76 Section 13.14. Counterparts............................................................... 76
iv 6 EXHIBITS Exhibit A Form of Class A Certificate Exhibit B Form of Class B Certificate Exhibit C Form of Class C Certificate Exhibit D Form of Depository Agreement Exhibit E Form of Form of Custody and Pledge Agreement Exhibit F-1 Form of Trustee's Certificate to Seller Exhibit F-2 Form of Trustee's Certificate to Servicer Exhibit G Form of Yield Supplement Agreement Exhibit H-1 Form of Representation Letter for the Class A Certificates Exhibit H-2 Form of Representation Letter for the Class [B] [C] Certificates SCHEDULES Schedule A List of Receivables Schedule B Location of Receivables v 7 This Pooling and Servicing Agreement, dated as of _______________, is made with respect to the formation of the Nissan Auto Receivables ____-_____ Grantor Trust, among [NISSAN AUTO RECEIVABLES CORPORATION][NISSAN AUTO RECEIVABLES CORPORATION II], a Delaware corporation, as Seller, NISSAN MOTOR ACCEPTANCE CORPORATION, a California corporation, as Servicer and in its individual capacity, and ___________________________________, a ______________________________. WITNESSETH THAT: In consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows: ARTICLE I INTRODUCTION SECTION 1.01. DEFINITIONS. 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: "Administrative Purchase Payment" for any Administrative Receivable as of the last day of any Collection Period, means the sum of the Principal Balance thereof as of the beginning of such Collection Period plus interest accrued thereon through the due date for the Obligor's payment in such Collection Period at the related APR, after giving effect to the receipt of monies collected (from whatever source other than Advances) on such Administrative Receivable, if any, during such Collection Period. "Administrative Receivable" means a Receivable purchased as of the close of business on the last day of a Collection Period by the Servicer pursuant to Section 4.06 or Section 12.02. "Advance" means the amount, as of the last day of a Collection Period, that the Servicer is required to advance on the respective Receivable pursuant to Section 5.04(a). "Affiliate" means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, "control," when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the term "controlling" and "controlled" have meanings correlative to the foregoing. "Agreement" means this Pooling and Servicing Agreement. "AICPA" shall have the meaning assigned to such term in Section 4.10. "Amount Financed" with respect to any Receivable, means the amount advanced under the Receivable toward the purchase price of the Financed Vehicle and any related costs, including but not limited to accessories, insurance premiums, service and warranty contracts and other items customarily financed as part of retail automobile and light-duty truck installment sale contracts. 1 8 "Annual Percentage Rate" or "APR" of a Receivable means the annual rate of finance charges stated in such Receivable. "Annual USAP Report" shall have the meaning assigned to such term in Section 4.10. "Available Interest" means, for any Distribution Date, the sum of the following amounts received during the related Collection Period: (a) that portion of all collections on Receivables allocable to interest, (b) without duplication of amounts described in clause (a), Net Liquidation Proceeds to the extent allocable to interest due on a Liquidated Receivable in accordance with the Servicer's customary servicing procedures, (c) all Advances made by the Servicer pursuant to Section 5.04, (d) without duplication of any amounts described above in clauses (a) and (b), the Administrative Purchase Payment of each Receivable that became an Administrative Receivable during the related Collection Period to the extent attributable to interest thereon, (e) without duplication of any amounts described above in clauses (a) and (b), 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 (f) the Yield Supplement Deposit plus the sum of (i) reinvestment income on the Yield Supplement Account and (ii) the amount, if any, deposited into the Collection Account pursuant to Section 6.01; provided, however, that in calculating Available Interest, amounts to be paid to the Servicer as reimbursement for Advances pursuant to Section 5.06(a)(ii) on such Distribution Date shall be excluded. "Available Principal" means, for any Distribution Date, the sum of the following amounts received during the related Collection Period: (a) that portion of all collections on Receivables allocable to principal, (b) without duplication of amounts described in clause (a), Net Liquidation Proceeds attributable to principal due on a Liquidated Receivable in accordance with the Servicer's customary servicing procedures, (c) without duplication of any amounts described above in clauses (a) and (b), the Administrative Purchase Payment of each Receivable that became an Administrative Receivable during the related Collection Period to the extent attributable to principal, and (d) without duplication of any amounts described above in clauses (a) and (b), the Warranty Purchase Payment of each Receivable that became a Warranty Receivable during the related Collection Period to the extent attributable to principal. "Base Servicing Fee" means the fee payable to the Servicer on each Distribution Date, calculated pursuant to Section 4.07, for services rendered during the related Collection Period, which shall be equal to one-twelfth of the Servicing Rate multiplied by the Pool Balance as of the close of business on the last day of the immediately preceding Collection Period or, with respect to the first Distribution Date, the Original Pool Balance. "Basic Documents" means the Purchase Agreement, this Agreement, the Depository Agreement, the Custody and Pledge Agreement, the Yield Supplement Agreement and the other documents and certificates delivered in connection herewith and therewith. "Book-Entry Certificates" means a beneficial interest in the Class A Certificates or Class B Certificates, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 7.08. 2 9 "Business Day" means any day other than a Saturday, a Sunday or a day on which banking institutions or trust companies in New York, New York, [or] Los Angeles, California [Minneapolis, Minnesota,] [or Wilmington, Delaware] shall be authorized or obligated by law, regulation, executive order or governmental decree to remain closed. "Certificate" means a Class A Certificate, a Class B Certificate or a Class C Certificate. "Certificates" means the Class A Certificates, the Class B Certificates and the Class C Certificates. "Certificate Account" means the account designated as such, established and maintained pursuant to Section 5.01. "Certificateholder" or "Holder" means the Person in whose name a Certificate shall be registered in the Certificate Register, except that, solely for the purposes of giving any consent, waiver, request, or demand pursuant to this Agreement, the interest evidenced by any Class A Certificate or Class B Certificate registered in the name of the Seller, the Servicer, or any Person actually known to a Trustee Officer to be an Affiliate of the Seller or the Servicer, shall not be taken into account in determining whether the requisite percentage necessary to effect any such consent, waiver, request, or demand shall have been obtained. "Certificate Owner" shall mean, with respect to a Book-Entry Certificate, the Person who is the owner of such Book-Entry Certificate, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency) and shall mean, with respect to a Definitive Certificate, the Certificateholder. "Certificate Register" and "Certificate Registrar" mean the register maintained and the registrar appointed pursuant to Section 7.03. "Class A Certificate" means any one of the Certificates executed by the Trust and authenticated by the Trustee, in substantially the form set forth in Exhibit A hereto. "Class A Certificate Balance" shall equal, initially, the Original Class A Certificate Balance and, thereafter, shall equal the Original Class A Certificate Balance, reduced by all amounts previously distributed to the Class A Certificateholders and allocable to principal; provided, however, that on any Distribution Date on or after the Distribution Date on which the Class B Certificate Balance and the Class C Certificate Balance are reduced to zero, the Class A Certificate Balance on any Distribution Date will equal the Pool Balance as of the last day of the related Collection Period after all required distributions, deposits and withdrawals have been made. "Class A Certificate Factor" means, as of any Distribution Date, a seven-digit decimal figure equal to the Class A Certificate Balance as of the close of business on such Distribution Date divided by the Original Class A Certificate Balance. 3 10 "Class A Distributable Amount" means, with respect to any Distribution Date, the sum of the Class A Principal Distributable Amount and the Class A Interest Distributable Amount. "Class A Interest Carryover Shortfall" means, as of the close of business on any Distribution Date, the excess, if any, of the Class A Interest Distributable Amount for such Distribution Date plus any outstanding unpaid interest owed to holders of Class A Certificates from the preceding Distribution Date, plus interest on such outstanding unpaid interest amount, to the extent permitted by law, at the Class A Pass-Through Rate from such preceding Distribution Date to but not including such current Distribution Date, over the amount of interest that the holders of the Class A Certificates actually received on such current Distribution Date. "Class A Interest Distributable Amount" means, with respect to any Distribution Date, the sum of (i) thirty (30) days of interest or, in the case of the initial Distribution Date, the number of days in the related Collection Period, at the Class A Pass-Through Rate on the Class A Certificate Balance as of the close of business on the last day of the related Collection Period, calculated on the basis of a 360-day year consisting of twelve 30-day months, and (ii) the Class A Interest Carryover Shortfall, if any, for the preceding Distribution Date. "Class A Pass-Through Rate" means ___% per annum. "Class A Percentage" means ___%. "Class A Pool Factor" means, as of the last day of a Collection Period, a seven-digit decimal figure equal to the Class A Certificate Balance as of the close of business on such day divided by the Original Pool Balance. "Class A Principal Carryover Shortfall" means, as of the close of business on any Distribution Date, the excess, if any, of the Class A Principal Distributable Amount plus any outstanding unpaid principal owed to holders of Class A Certificates from preceding Distribution Dates over the amount of principal that the holders of the Class A Certificates actually received on such current Distribution Date. "Class A Principal Distributable Amount" means, with respect to any Distribution Date, the Class A Percentage of the sum of: (a) the principal portion of all payments on Receivables, including prepayments of principal, received during the related Collection Period, (b) the aggregate outstanding principal balance as of the beginning of the related Collection Period of all Receivables that became Administrative Receivables or Warranty Receivables under obligations that arose during the related Collection Period (without duplication of amounts referred to in clause (a) above), and (c) the aggregate outstanding principal balance as of the beginning of the related Collection Period of all Receivables that became Defaulted Receivables during the related Collection Period (without duplication of amounts referred to in clauses (a) or (b) above). "Class B Certificate" means any one of the Certificates executed by the Trust and authenticated by the Trustee, in substantially the form set forth in Exhibit B hereto. 4 11 "Class B Certificate Balance" shall equal, initially, the Original Class B Certificate Balance and, thereafter, shall equal the Original Class B Certificate Balance, reduced by all amounts previously distributed to the Class B Certificateholders and allocable to principal; provided, however, that on any Distribution Date on or after the Distribution Date on which the Class C Certificate Balance is reduced to zero, the Class B Certificate Balance on any Distribution Date will equal the excess of the Pool Balance as of the last day of the related Collection Period over the Class A Certificate Balance as of such Distribution Date after all required distributions, deposits and withdrawals have been made. "Class B Certificate Factor" means, as of any Distribution Date, a seven-digit decimal figure equal to the Class B Certificate Balance as of the close of business on such Distribution Date divided by the Original Class B Certificate Balance. "Class B Distributable Amount" means, with respect to any Distribution Date, the sum of the Class B Principal Distributable Amount and the Class B Interest Distributable Amount. "Class B Interest Carryover Shortfall" means, as of the close of business on any Distribution Date, the excess, if any, of the Class B Interest Distributable Amount for such Distribution Date plus any outstanding unpaid interest owed to holders of Class B Certificates from the preceding Distribution Date plus interest on such outstanding unpaid interest amount, to the extent permitted by law, at the Class B Pass-Through Rate from such preceding Distribution Date to but not including such Distribution Date, over the amount of interest that the holders of the Class B Certificates actually received on such current Distribution Date. "Class B Interest Distributable Amount" means, with respect to any Distribution Date, the sum of (a) thirty (30) days of interest or, in the case of the initial Distribution Date, the number of days in the related Collection Period, at the Class B Pass-Through Rate on the Class B Certificate Balance as of the close of business on the last day of the related Collection Period, calculated on the basis of a 360-day year consisting of twelve 30-day months, and (b) the Class B Interest Carryover Shortfall, if any, for the preceding Distribution Date. "Class B Pass-Through Rate" means ___% per annum. "Class B Percentage" means ___%. "Class B Pool Factor" means, as of the last day of a Collection Period, a seven-digit decimal figure equal to the Class B Certificate Balance as of the close of business on such day divided by the Original Pool Balance. "Class B Principal Carryover Shortfall" means, as of the close of any Distribution Date, the excess, if any, of the Class B Principal Distributable Amount plus any outstanding unpaid principal owed to holders of Class B Certificates from the preceding Distribution Date over the amount of principal that the holders of the Class B Certificates actually received on such current Distribution Date. "Class B Principal Distributable Amount" means, with respect to any Distribution Date, the Class B Percentage of the sum of: (a) the principal portion of all payments on 5 12 Receivables, including prepayments of principal, received during the related Collection Period, (b) the aggregate outstanding principal balance as of the beginning of the related Collection Period of all Receivables that became Administrative Receivables or Warranty Receivables under an obligation that arose during the related Collection Period (without duplication of amounts included in clause (a) above), and (c) the aggregate outstanding principal balance as of the beginning of the related Collection Period of all Receivables that become Defaulted Receivables during the related Collection Period (without duplication of amounts included in clauses (a) or (b) above). "Class C Certificate" means any one of the Certificates executed by the Trust and authenticated by the Trustee, in substantially the form set forth in Exhibit C hereto. "Class C Certificate Balance" shall equal, initially, the Original Class C Certificate Balance and, thereafter, shall equal the amount by which the Pool Balance as of the last day of the related Collection Period exceeds the sum of the Class A Certificate Balance and the Class B Certificate Balance as of such Distribution Date after all required distributions, deposits and withdrawals have been made. "Class C Distributable Amount" means, with respect to any Distribution Date, the sum of the Class C Principal Distributable Amount and the Class C Interest Distributable Amount. "Class C Interest Carryover Shortfall" means, as of the close of business on any Distribution Date, the excess, if any, of the Class C Interest Distributable Amount for such Distribution Date plus any outstanding unpaid interest owed to holders of Class C Certificates from the preceding Distribution Date plus interest on such outstanding unpaid interest amount, to the extent permitted by law, at the Class C Pass-Through Rate from such preceding Distribution Date to but not including such Distribution Date, over the amount of interest that the holders of the Class C Certificates actually received on such current Distribution Date. "Class C Interest Distributable Amount" means, with respect to any Distribution Date, the sum of (a) thirty (30) days of interest or, in the case of the initial Distribution Date, the number of days in the related Collection Period, at the Class C Pass-Through Rate on the Class C Certificate Balance as of the close of business on the last day of the related Collection Period, calculated on the basis of a 360-day year consisting of twelve 30-day months, and (b) the Class C Interest Carryover Shortfall, if any, for the preceding Distribution Date. "Class C Pass-Through Rate" means __% per annum. "Class C Percentage" means __%. "Class C Principal Carryover Shortfall" means, as of the close of any Distribution Date, the excess, if any, of the Class C Principal Distributable Amount plus any outstanding unpaid principal owed to holders of Class C Certificates from the preceding Distribution Date over the amount of principal that the holders of the Class C Certificates actually received on such current Distribution Date. 6 13 "Class C Principal Distributable Amount" means, with respect to any Distribution Date, the Class C Percentage of the sum of: (a) the principal portion of all payments on Receivables, including prepayments of principal, received during the related Collection Period, (b) the aggregate outstanding principal balance as of the beginning of the related Collection Period of all Receivables that became Administrative Receivables or Warranty Receivables under an obligation that arose during the related Collection Period (without duplication of amounts included in clause (a) above), and (c) the aggregate outstanding principal balance as of the beginning of the related Collection Period of all Receivables that become Defaulted Receivables during the related Collection Period (without duplication of amounts included in clauses (a) or (b) above). "Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934. "Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. "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: (a) all applications of collections, (b) all Advances and reductions of Outstanding Advances and (c) all distributions. "Controlling Class of Certificates" means, with respect to the Certificates, (a) first, until the Class A Certificate Balance has been reduced to zero, the Class A Certificates, (b) second, until the Class B Certificate has been reduced to zero, the Class B Certificates, and (c) thereafter, the Class C Certificates. "Corporate Trust Office" means the office of the Trustee, which at the date hereof is located at_____________________________________________. "Custodian" means the party named as such in the Custody and Pledge Agreement. "Custody and Pledge Agreement" means the agreement, dated as of the date of this Agreement, between ________________________, substantially in the form attached hereto as Exhibit E. "Cutoff Date" means ___________________. "Damages" shall have the meaning assigned to such term in Section 9.02. 7 14 "Dealer" means the dealer who sold a Financed Vehicle and who originated and assigned the related Receivable to NMAC under an existing agreement between such dealer and NMAC. "Dealer Recourse" means, with respect to a Receivable, all recourse rights against the Dealer which originated the Receivable, and any successor Dealer. "Defaulted Receivable" means a Receivable (other than an Administrative Receivable or a Warranty Receivable as to which a Warranty Purchase Payment or an Administrative Purchase Payment has been made), which, by its terms, is delinquent 120 days or more or, with respect to Receivables that are delinquent less than 120 days, the Servicer has (i) determined, in accordance with its customary servicing procedures, that eventual payment in full is unlikely or (ii) repossessed the Financed Vehicle. "Definitive Certificates" shall have the meaning specified in Section 7.08. "Delivery" when used with respect to Subordination Spread Account Property means: (a) with respect to bankers' acceptances, commercial paper, negotiable certificates of deposit and other obligations that constitute "instruments" within the meaning of Section 9-105(1)(i) of the UCC and are susceptible of physical delivery, transfer thereof to the Custodian by physical delivery to the Custodian indorsed to, or registered in the name of, the Custodian or indorsed in blank, and, with respect to a certificated security (as defined in Section 8-102 of the UCC), transfer thereof (i) by delivery of such certificated security to the Custodian or by delivery of such certificated security to a securities intermediary (as defined in Section 8-102(a)(14) of the UCC) indorsed to, or registered in the name of, the Custodian or indorsed in blank (as defined in Section 8-304 of the UCC) and the making by such securities intermediary of entries on its books and records identifying such certificated securities as belonging to the Custodian and the sending by such securities intermediary of a confirmation of the purchase of such certificated security by the Custodian, or (ii) by delivery thereof to a "clearing corporation" (as defined in section 8-102(a)(5) of the UCC) and the making by such clearing corporation of appropriate entries on its books reducing the appropriate securities account of the transferor and increasing the appropriate securities account of a securities intermediary by the amount of such certificated security, the identification by the clearing corporation of the certificated securities for the sole and exclusive account of the securities intermediary, the maintenance of such certificated securities by such clearing corporation or its nominee subject to the clearing corporation's exclusive control, the sending of a confirmation by the securities intermediary of the purchase by the Custodian of such securities and the making by such securities intermediary of entries on its books and records identifying such certificated securities as belonging to the Custodian (all of the foregoing, "Physical Property"), and, in any event, any such Physical Property in registered form shall be in the name of the Custodian or its nominee; and such additional or alternative procedures as may hereafter become appropriate to effect the complete transfer of ownership of any such Subordination Spread Account 8 15 Property to the Custodian, consistent with changes in applicable law or regulations or the interpretation thereof; (b) with respect to any security issued by the U.S. Treasury, the Federal Home Loan Mortgage Corporation or by the Federal National Mortgage Association that is a book-entry security held through the Federal Reserve System pursuant to Federal book-entry regulations, the following procedures, all in accordance with applicable law, including applicable federal regulations and Articles 8 and 9 of the UCC: book-entry registration of such Subordination Spread Account Property to an appropriate book-entry account maintained with a Federal Reserve Bank by a securities intermediary which is also a "depositary" pursuant to applicable federal regulations and issuance by such securities intermediary of a deposit advice or other written confirmation of such book-entry registration to the Custodian of the purchase by the Custodian of such book-entry securities; the making by such securities intermediary of entries in its books and records identifying such book-entry security held through the Federal Reserve System pursuant to Federal book-entry regulations as belonging to the Custodian and indicating that such securities intermediary holds such Subordination Spread Account Property solely as agent for the Custodian; and such additional or alternative procedures as may hereafter become appropriate to effect complete transfer of ownership of any such Subordination Spread Account Property to the Custodian, consistent with changes in applicable law or regulations or the interpretation thereof; and (c) with respect to any item of Subordination Spread Account Property that is an uncertificated security under Article 8 of the UCC and that is not governed by clause (b) above, registration on the books and records of the issuer thereof in the name of the securities intermediary, the sending of a confirmation by the securities intermediary of the purchase by the Custodian of such uncertificated security and the making by such securities intermediary of entries on its books and records identifying such uncertificated certificates as belonging to the Custodian. "Depository Agreement" means the agreement dated as of the date of this Agreement, among the Seller, the Custodian and the initial Clearing Agency, substantially in the form attached hereto as Exhibit D. "Determination Date" means the [tenth] calendar day of each calendar month, or if such [tenth] day is not a Business Day, the next succeeding Business Day. "Distribution Date" means, for each Collection Period, the 15th day of the following month, or if the 15th day is not a Business Day, the next succeeding Business Day, commencing with __________________. "Eligible Deposit Account" means an account maintained (a) with the Trustee so long as the 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 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 (b) in a segregated trust account in the trust 9 16 department of the Trustee. Notwithstanding anything to the contrary, as of the Closing Date, the Trustee shall be deemed to have met the requirements in clause (a). "Eligible Investments" means, at any time, any one or more of the following obligations and securities: (a) direct obligations of, and obligations fully guaranteed as to timely payment of principal and interest by, the United States of America; (b) demand deposits, time deposits or certificates of deposit of any depository institution or trust company incorporated under the laws of the United States of America or any state thereof (or any domestic branch of a foreign bank) and subject to supervision and examination by Federal or State banking or depository institution authorities; provided, however, that at the time of the investment or contractual commitment to invest therein, the commercial paper or other short-term unsecured debt obligations (other than such obligations the rating of which is based on the credit of a Person other than such depository institution or trust company) thereof shall have a credit rating from each of the Rating Agencies in the highest investment category granted thereby; (c) commercial paper having, at the time of the investment or contractual commitment to invest therein, a rating from each of the Rating Agencies in the highest investment category granted thereby; (d) investments in money market funds having a rating from each of the Rating Agencies in the highest investment category granted thereby (including funds for which the Trustee or any of its affiliates is investment manager or advisor); (e) bankers' acceptances issued by any depository institution or trust company referred to in clause (b) above; (f) repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with a depository institution or trust company (acting as principal) described in clause (ii) above; (g) repurchase obligations with respect to any security or whole loan, entered into with (i) a depository institution or trust company (acting as principal) described in clause (b) above (except that the rating referred to in the proviso in such clause (b) shall be "A-1" or higher in the case of Standard & Poor's) (such depository institution or trust company being referred to in this definition as a "financial institution"), (ii) a broker/dealer (acting as principal) registered as a broker or dealer under Section 15 of the Securities Exchange Act of 1934 (a "broker/dealer"), the unsecured short-term debt obligations of which are rated "P-1" by Moody's and at least "A-1" by Standard & Poor's at the time of entering into such repurchase obligation (a "rated broker/dealer"), (iii) 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 10 17 at the time of entering into such repurchase obligation (a "Rated Holding Company") or (iv) 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 Subordination Spread Account and the Yield Supplement Account, the rating from Standard & Poor's in respect of the unsecured short term debt obligations of the financial institution, rated broker/dealer, unrated broker/dealer or Guaranteed Counterparty (in the case of an unrated broker/dealer or Guaranteed Counterparty, such rating being that of the related Rated Holding Company) shall be "A-1+"; (C) the repurchase obligation must mature within 30 days of the date on which the Trustee or the Custodian, as applicable, enters into such repurchase obligation; (D) the repurchase obligation shall not be subordinated to any other obligation of the related financial institution, rated broker/dealer, unrated broker/dealer or Guaranteed Counterparty; (E) the collateral subject to the repurchase obligation is held, in the appropriate form, by a custodial bank on behalf of the Trustee or the Custodian, as applicable; (F) the repurchase obligation shall require that the collateral subject thereto shall be marked to market daily; (G) in the case of a repurchase obligation of a Guaranteed Counterparty, the following conditions shall also be satisfied: (1) the Trustee or the Custodian, as applicable, shall have received an Opinion of Counsel to the effect that the guarantee of the related Rated Holding Company is a legal, valid and binding agreement of the Rated Holding Company, enforceable in accordance with its terms, subject, to the effect of bankruptcy, insolvency, reorganization, moratorium or other 11 18 similar laws affecting creditors' rights generally and to general equitable principles; (2) the Trustee or the Custodian, as applicable, shall have received (x) an incumbency certificate for the signer of such guarantee, certified by an officer of such Rated Holding Company, and (y) a resolution, certified by an officer of the Rated Holding Company, of the board of directors (or applicable committee thereof) of the Rated Holding Company authorizing the execution, delivery and performance of such guarantee by the Rated Holding Company; (3) the only conditions to the obligation of such Rated Holding Company to pay on behalf of the Guaranteed Counterparty shall be that the Guaranteed Counterparty shall not have paid under such repurchase obligation when required (it being understood that no notice to, demand on or other action in respect of the Guaranteed Counterparty is necessary) and that the Trustee or the Custodian, as applicable, shall make a demand on the Rated Holding Company to make the payment due under such guarantee; (4) the guarantee of the Rated Holding Company shall be irrevocable with respect to such repurchase obligation and shall not be subordinated to any other obligation of the Rated Holding Company; and (5) each of the Rating Agencies has confirmed in writing to the Trustee or the Custodian, as applicable, that it has reviewed the form of the guarantee of the Rated Holding Company and has determined that the issuance of such guarantee will not result in the downgrade or withdrawal of the ratings assigned to the Certificates; and (H) the repurchase obligation shall require that the repurchase obligation be overcollateralized and shall provide that, upon any failure to maintain such overcollateralization, the repurchase obligation shall become due and payable, and unless the repurchase obligation is satisfied immediately, the collateral subject to the repurchase agreement shall be liquidated and the proceeds applied to satisfy the unsatisfied portion of the repurchase obligation; and (h) any other investment with respect to which the Servicer has received written notification from the Rating Agencies that the acquisition of such investment as an Eligible Investment will not result in a withdrawal or downgrading of the ratings on the Certificates; provided that, unless otherwise expressly stated herein, each of the foregoing investments shall be denominated in U.S. dollars, shall not be purchased at a premium, shall mature no later than 12 19 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 (a) through (h) 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 Certificates. "ERISA" means the Employee Retirement Income Security Act of 1974. "Event of Default" means an event specified in Section 10.01. "Excess Amounts" means, with respect to each Distribution Date, all interest collections on or in respect of the Receivables on deposit in the Certificate Account in respect of such Distribution Date, after making the distributions to the Servicer and the Certificateholders pursuant to Section 5.06(c). "Excess Proceeds" shall have the meaning assigned to such term in Section 8.06(b)(ii). "Final Scheduled Distribution Date" means _______________. "Financed Vehicle" means a new, near-new or used automobile or light-duty truck, together with all accessions thereto, securing an Obligor's indebtedness under the respective Receivable. "Initial Yield Supplement Amount" means $[_____________] [in cash] [and receivables with an aggregate principal balance of $[__________] or other assets (including vehicle lease contracts)]. "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][NARC II]" means [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], a Delaware corporation. 13 20 "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 (a) any Defaulted Receivable or (b) any Receivable as to which the Servicer determines that any recovery from payments made on or with respect to such Receivable is unlikely. "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 Trustee or the Rating Agencies, as the case may be. "Optional Purchase Percentage" means 10.00%. "Original Class A Certificate Balance" means $_________________. "Original Class B Certificate Balance" means $_________________. "Original Class C Certificate Balance" mans $__________________. "Original Pool Balance" means $_________________, the aggregate Principal Balance of the Receivables on the Cutoff Date. "Outstanding Advances" " 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. "Pass-Through Rate" means the Class A Pass-Through Rate, the Class B Pass-Through Rate or the Class C Pass-Through Rate. "Person" means any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated organization or government or any agency or political subdivision thereof. 14 21 "Plan" shall have the meaning assigned to such term in Section 7.03(b). "Pool Balance" as of the close of business on the last day of a Collection Period means the aggregate Principal Balance of the Receivables (excluding Administrative Receivables, Warranty Receivables and Defaulted Receivables) as of the close of business on such day; provided, however, that where the Pool Balance is relevant in determining whether the requisite percentage of Class A Certificateholders or Class B Certificateholders necessary to effect any consent, waiver, request or demand shall have been obtained, the Pool Balance shall be deemed to be reduced by the amount equal to the portion of the Pool Balance (before giving effect to this provision) represented by the interests evidenced by any Class A Certificate or Class B Certificate, as applicable, registered in the name of the Seller, the Servicer or any Person actually known by a Trustee Officer to be an Affiliate of the Seller or the Servicer. "Pool Factor" for a particular Class of Certificates and any Distribution Date means a seven-digit decimal figure indicating the principal amount of the Certificate Balance of such Class of Certificates as of the close of business on the last day of the related Collection Period as a fraction of the Original Pool Balance. "Principal Balance" of a Receivable, as of any date of determination, means the Amount Financed minus the sum of (a) all payments on such Receivable allocable to principal, (b) 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, (c) any payment of the Administrative Purchase Payment or the Warranty Purchase Payment with respect to the Receivable allocable to principal and (d) any Net Liquidation Proceeds allocable to principal. "Purchase Agreement" means the agreement, dated as of the date of this Agreement, among _________________________, relating to the purchase by the Seller from NMAC of the Receivables. "Rating Agency" means, as of any date, any of the nationally recognized statistical rating organizations that has been requested by the Seller or one of its Affiliates to rate any of the Certificates and that is rating such Certificates on such date. "Receivable" means any retail installment sale contract that appears on Schedule A to this Agreement (which Schedule A may be in the form of microfiche, CD, datatape or paper) and that has not been released by the Trustee from the Trust. "Receivable Files" means the documents specified in Section 3.03. "Record Date" means, with respect to any Distribution Date, the 14th day of the calendar month in which such Distribution Date occurs or, if Definitive Certificates have been issued, the last day of the Collection Period preceding the related Distribution Date. Any amount stated "as of a Record Date" or "on a Record Date" shall give effect to (i) all applications of collections, and (ii) all distributions to any party under this Agreement and the Trust Agreement or to the related Obligor, as the case may be, in each case as determined as of the opening of business on the related Record Date. 15 22 "Required Deposit Rating" for so long as the Certificates shall be outstanding, shall mean a rating on (i) short-term unsecured debt obligations of P-1 by Moody's and (ii) short-term unsecured debt obligations of A-1+ by Standard & Poor's, and for any account in which deposits in excess of 30 days are to be made, so long as the 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"). "Residual Certificate" shall have the meaning assigned to such term in Section 7.01. "Required Rate" means, with respect to each Collection Period, the sum of the Servicing Rate and [specify rate]. "Securities Act" means the Securities Act of 1933. "Scheduled Payment" on a Receivable means the payment required to be made by the Obligor during each Collection Period that is sufficient to amortize the related Principal Balance under the Simple Interest Method over the term of the Receivable and to provide interest at the APR. "Seller" means [NARC][NARC II], as the seller of the Receivables under this Agreement, and each successor to [NARC][NARC II] (in the same capacity) pursuant to Section 8.03. "Servicer" means NMAC, as the servicer of the Receivables and not in its individual capacity, and each successor to NMAC (in the same capacity) pursuant to Section 9.03 or Section 10.02. "Servicer's Certificate" means a certificate completed and executed on behalf of the Servicer by the president, any executive vice president, any vice president, the treasurer, any assistant treasurer, the controller or any assistant controller of the Servicer pursuant to Section 4.08. "Servicing Rate" means 1.00% per annum. "Simple Interest Method" means the method of allocating a fixed level payment to principal and interest pursuant to which the portion of such payment that is allocated to interest is equal to the product of the fixed rate of interest multiplied by the unpaid principal balance, multiplied by the quotient obtained by calculating the period of time elapsed since the preceding payment of interest was made and dividing such period of time by 365. "Simple Interest Receivable" means any Receivable under which the portion of a payment allocable to interest and the portion allocable to principal is determined in accordance with the Simple Interest Method. "Specified Subordination Spread Account Balance" with respect to any Distribution Date shall mean $_____________; provided, however, that if on any Distribution Date (a) the annualized average for the preceding three Collection Periods (or such shorter 16 23 number of Collection Periods as have elapsed since the Cutoff Date) of the percentage equivalents of the ratios of net losses (i.e., the net balances of all Liquidated Receivables, less any Net Liquidation Proceeds with respect to such Liquidated Receivables from that or prior Collection Periods) to the Pool Balance as of the first day of each such Collection Period exceeds ___%, or (b) 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 Subordination Spread Account Balance for such Distribution Date (and for each succeeding Distribution Date until the relevant averages have not exceeded the specified percentages in clauses (a) and (b) above for three successive Distribution Dates) shall be a dollar amount equal to (i) __% of the Pool Balance as of the first day of the related Collection Period minus (ii) the excess of the Pool Balance over the Class A Certificate Balance as of the opening of business of the first day of such Collection Period, but in no event shall the Specified Subordination Spread Account Balance be more than $_____________ or less than $_____________; and provided further, that on any Distribution Date on which the aggregate balance of the Class A Certificates and the Class B Certificates is $______________ or less, after giving effect to the distributions on such Distribution Date, the Specified Subordination Spread Account Balance shall be the greater of the balance described above and $_______________. "Standard & Poor's" means Standard & Poor's Ratings Services, a Division of the McGraw-Hill Companies, Inc. "State" means any state or commonwealth of the United States of America or the District of Columbia. "Subordination Initial Deposit" means $_______________. "Subordination Spread Account Property" shall have the meaning set forth in the Custody and Pledge Agreement. "Subordination Spread Account" means the account established and maintained pursuant to the Custody and Pledge Agreement for the benefit of the Holders of the Class A Certificates and the Class B Certificates. "Supplemental Servicing Fee" means the fee payable to the Servicer for certain services rendered during a Collection Period, determined pursuant to and defined in Section 4.07. "Total Available Amount" means, for each Distribution Date, the sum of the Available Interest and the Available Principal. "Total Servicing Fee" means the sum of the Base Servicing Fee and the Supplemental Servicing Fee. "Trust" means the Nissan Auto Receivables _______ Grantor Trust created hereunder, the estate of which shall consist of the Receivables (other than Warranty Receivables for which the Seller has paid the Warranty Purchase Payment in accordance with Section 3.02 and Administrative Receivables for which the Servicer has paid the Administrative Purchase 17 24 Payment in accordance with Section 4.06), and all monies paid thereon, and all monies accrued thereon, on or after the Cutoff Date; security interests in the Financed Vehicles and any accessions thereto; funds deposited in the Collection Account and the Certificate Account; all property (including the right to receive Net Liquidation Proceeds) that shall have secured a Receivable and that shall have been acquired by or on behalf of the Trustee; proceeds from claims on any physical damage, credit life or disability insurance policies covering Financed Vehicles or Obligors; all Dealer Recourse; all right, title and interest of the Seller in and to the Purchase Agreement, the Yield Supplement Agreement and the Custody and Pledge Agreement; certain rebates of premiums and other amounts relating to certain insurance policies and other items financed under the Receivables in effect as of the Cutoff Date; and the proceeds of any and all of the foregoing. "Trustee" means the Person acting as Trustee under this Agreement (which initially shall be ______________________________________), its successor in interest, and any successor trustee appointed pursuant to Section 11.11. "Trustee Officer" means, with respect to the Trustee, any officer assigned to the Corporate Trust Division (or any successor thereto), including any Vice President, Assistant Vice President, Trustee Officer, any Assistant Secretary, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and having direct responsibility for the administration of the Trust. "Trustee's Certificate" means a certificate completed and executed on behalf of the Trustee by a Trustee Officer pursuant to Section 11.02, substantially in the form of, in the case of assignment to the Seller, Exhibit F-1 and, in the case of an assignment to the Servicer, Exhibit F-2. "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. "Warranty Purchase Payment," for any Warranty Receivable as of the last day of any Collection Period, means the sum of the Principal Balance thereof as of the beginning of such Collection Period plus interest accrued thereon through the due date for the Obligor's payment in such Collection Period, at the APR, after giving effect to the receipt of monies collected (from whatever source other than Advances) on such Warranty Receivable, if any, during Collection Period. "Warranty Receivable" means a Receivable purchased as of the close of business on the last day of a Collection Period by the Seller pursuant to Section 3.02. "Yield Supplement Account" shall have the meaning assigned to such term in Section 6.01. "Yield Supplement Agreement" means the agreement, dated as of the date of this Agreement, between _________________________, substantially in the form attached hereto as Exhibit G. 18 25 "Yield Supplement Amount" means, with respect to any Distribution Date, the aggregate amount on deposit in the Yield Supplement Account after giving effect to the withdrawal therefrom of the related Yield Supplement Deposit and without regard to any amounts on deposit therein in respect of interest or investment earnings earned on the investment of amounts on deposit therein in Eligible Investments for any period. "Yield Supplement Deposit" means, with respect to any Distribution Date, the amount by which (i) the aggregate amount of interest that would have been due during the related Collection Period on all Yield Supplemented Receivables if such Yield Supplemented Receivables bore interest at the Required Rate exceeds (ii) the amount of interest accrued on such Yield Supplemented Receivables at their respective APRs and due during such Collection Period. "Yield Supplemented Receivable" means any Receivable that has an APR less than the Required Rate. SECTION 1.02. USAGE OF TERMS. With respect to all terms in this Agreement, the singular includes the plural and the plural the singular; words importing any gender include the other genders; references to "writing" include printing, typing, lithography and other means of reproducing words in a visible form; references to agreements and other contractual instruments include all subsequent amendments, amendments and restatements and supplements thereto or changes therein entered into in accordance with their respective terms and not prohibited by this Agreement; references to Persons include their permitted successors and assigns; references to laws include their amendments and supplements, the rules and regulations thereunder and any successors thereto; and the term "including" means "including without limitation." SECTION 1.03. CUTOFF DATE AND RECORD DATE. All references to the Record Date prior to the first Record Date in the life of the Trust shall be to the Cutoff Date. SECTION 1.04. SECTION REFERENCES. All section references shall be to Sections in this Agreement. ARTICLE II THE TRUST SECTION 2.01. CREATION OF TRUST. Upon the execution of this Agreement by the parties hereto, there is hereby created the Trust. SECTION 2.02. CONVEYANCE OF RECEIVABLES. In consideration of the Trustee's delivery to, or upon the order of, the Seller of Certificates in an aggregate amount equal to the Original Pool Balance, the Seller does hereby irrevocably sell, transfer, assign and otherwise convey to the Trustee, in trust for the benefit of the Certificateholders, without recourse (subject to the obligations herein): (a) 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 19 26 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 12.02) on or after the Cutoff Date; (b) amounts on deposit in the accounts established for the Trust; (c) the right of the Seller in the security interests in the Financed Vehicles granted by Obligors pursuant to the Receivables and any related property; (d) 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; (e) the right of the Seller through NMAC to receive payments in respect of any Dealer Recourse with respect to the Receivables; (f) the rights of the Seller under this Agreement, the Yield Supplement Agreement, the Purchase Agreement and the Custody and Pledge Agreement; (g) 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; (h) 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; (i) all other assets comprising the corpus of the Trust; and (j) all proceeds of the foregoing. Concurrently therewith and in exchange therefor, the Trustee shall deliver to, or to the order of, the Seller the Certificates. SECTION 2.03. ACCEPTANCE BY TRUSTEE. The Trustee does hereby accept all consideration conveyed by the Seller pursuant to Section 2.02, and declares that the Trustee shall hold such consideration upon the trust herein set forth for the benefit of all present and future Certificate Owners, subject to the terms and provisions of this Agreement. SECTION 2.04. CHARACTERIZATION. Although the parties hereto intend that the transfer and assignment contemplated by this Agreement be a sale, if such transfer and assignment is deemed to be other than a sale, the parties intend that all filings described in this Agreement shall give the Trustee on behalf of the Trust a first priority perfected security interest in, to and under the Receivables and other property conveyed hereunder and all proceeds of any of the foregoing. This Agreement shall be deemed to be the grant of a security interest from the Seller to the Trustee on behalf of the Trust, and the Trustee on behalf of the Trust shall have all the rights, powers and privileges of a secured party under the UCC. 20 27 ARTICLE III THE RECEIVABLES SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF SELLER WITH RESPECT TO THE RECEIVABLES. The Seller makes the following representations and warranties as to the Receivables on which the Trustee relies in accepting the Receivables in trust and executing and authenticating the Certificates. Such representations and warranties speak as of the execution and delivery of this Agreement, but shall survive the sale, transfer and assignment of the Receivables to the Trust in accordance with the terms hereof: (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 Trustee in accordance with the terms hereof, (iii) contains customary and enforceable provisions such that the rights and remedies of the holder thereof are adequate for realization against the collateral of the benefits of the security, (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 yield interest at the related APR. (b) Schedule of Receivables. The information set forth in Schedule A to this Agreement was true and correct in all material respects as of the opening of business on the Cutoff Date; the Receivables were selected at random from NMAC's retail installment sale contracts (other than contracts originated in Alabama) meeting the criteria of the Trust set forth in this Agreement; and no selection procedures believed to be adverse to the Certificateholders were utilized in selecting the Receivables. (c) Compliance with Law. Each Receivable, 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. 21 28 (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 Trustee, each Receivable was secured by a validly perfected first priority security interest in the Financed Vehicle in favor of NMAC as secured party or all necessary and appropriate actions shall have been commenced that would result in the valid perfection of a first priority security interest in the Financed Vehicle in favor of NMAC as secured party, and (ii) as of the Cutoff Date, according to the records of NMAC, no Financed Vehicle has been repossessed and not reinstated. (f) Receivables in Force. No Receivable has been satisfied, subordinated or rescinded, nor has any Financed Vehicle been released from the lien granted by the related Receivable in whole or in part. (g) No Waiver. No provision of a Receivable has been waived in a manner that is prohibited by the provisions of Section 4.01 or that would cause such Receivable to fail to meet all of the other requirements and warranties made by the Seller herein with respect thereto. (h) No Defenses. No Receivable is subject to any right of rescission, setoff, counterclaim or defense, including the defense of usury, and the operation of any of the terms of any Receivable, or the exercise of any right thereunder, will not render such Receivable unenforceable in whole or in part or subject such Receivable to any right of rescission, setoff, counterclaim or defense, including the defense of usury, and no such right of rescission, setoff, counterclaim or defense has been asserted with respect thereto. (i) No Liens. To the Seller's knowledge, no liens have been filed for work, labor or materials relating to a Financed Vehicle that shall be liens prior to, or equal or coordinate with, the security interest in the Financed Vehicle granted by the Receivable. (j) No Default. Except for payment defaults continuing for a period of not more than 29 days as of the Cutoff Date, no default, breach, violation or event permitting acceleration under the terms of any Receivable has occurred; and no continuing condition that with notice or the lapse of time would constitute a default, breach, violation or event permitting acceleration under the terms of any Receivable has arisen (other than deferrals and waivers of late payment charges or fees permitted hereunder). (k) Insurance. NMAC, in accordance with its customary procedures, has determined at the time of origination of each Receivable that the related Obligor has agreed to obtain physical damage insurance covering the Financed Vehicle and the Obligor is required under the terms of the related Receivable to maintain such insurance. (l) Title. It is the intention of the Seller that the transfer and assignment herein contemplated constitute a sale of the Receivables from the Seller to the Trust and that the beneficial interest in and title to the Receivables not be part of the Seller's estate in the event of 22 29 the filing of a bankruptcy petition by or against the Seller under any bankruptcy law. Immediately prior to the transfer and assignment herein contemplated, the Seller had good and marketable title to each Receivable free and clear of all Liens and, immediately upon the transfer thereof, the Trustee, for the benefit of the Certificateholders, shall have good and marketable title to each Receivable, free and clear of all Liens and rights of others. Each Receivable File contains the original certificate of title (or a photocopy or image thereof) or evidence that an application for a certificate of title has been filed. (m) Lawful Assignment. No Receivable has been originated in, or shall be subject to the laws of, any jurisdiction under which the sale, transfer and assignment of such Receivable under this Agreement or pursuant to transfers of the Certificates are unlawful, void or voidable. (n) All Filings Made. All filings (including, without limitation, UCC filings) necessary in any jurisdiction to give the Trustee a first priority perfected ownership interest in the Receivables have been made or have been delivered in form suitable for filing to the Trustee. (o) Chattel Paper. Each Receivable constitutes "chattel paper," as such term is defined in the UCC. (p) Simple Interest Receivables. All of the Receivables are Simple Interest Receivables. (q) One Original. There is only one original executed copy of each Receivable. (r) No Amendments. No Receivable has been amended such that the amount of the Obligor's Scheduled Payments has been increased. (s) APR. The APR of each Receivable equals or exceeds ___%. (t) Maturity. As of the Cutoff Date, each Receivable had a remaining term to maturity of not less than _____ months and not greater than _____ months. (u) Balance. Each Receivable had an original Principal Balance of not more than $____________ and, as of the Cutoff Date, had a Principal Balance of not less than $______ and not more than $_________. (v) Delinquency. No Receivable was more than 29 days past due as of the Cutoff Date and no Receivable has been extended by more than two months. (w) Bankruptcy. No Obligor was the subject of a bankruptcy proceeding (according to the records of NMAC) as of the Cutoff Date. (x) Transfer. Each Receivable prohibits the sale or transfer of the Financed Vehicle without the consent of NMAC. (y) New, Near-New and Used Vehicles. Each Financed Vehicle was a new, near-new or used automobile or light-duty truck at the time the related Obligor executed the retail installment sale contract. 23 30 (z) Origination. Each Receivable has an origination date on or after _____________. (aa) Location of Receivable Files. The Receivable Files shall be kept at one or more of the locations listed in Schedule B hereto. (bb) Forced-Placed Insurance Premiums. No contract relating to any Receivable has had forced-placed insurance premiums added to the amount financed. (cc) No Fraud or Misrepresentation. To the knowledge of the Seller, no Receivable was originated by a Dealer and sold by such Dealer to the Seller with any conduct constituting fraud or misrepresentation on the part of such Dealer. (dd) No Further Amounts Owed on the Receivables. No further amounts are owed by the Seller to any Obligor under the Receivables. SECTION 3.02. REPURCHASE UPON BREACH. The Seller, the Servicer or the Trustee, as the case may be, shall inform the other parties to this Agreement promptly, in writing, upon the discovery of any breach of the Seller's representations and warranties pursuant to Section 3.01 that materially and adversely affects any Receivable. Unless the breach shall have been cured by the last day of the second Collection Period following such discovery (or, at the Seller's election, the last day of the first Collection Period following such discovery), the Seller shall be obligated (whether or not such breach was known to the Seller on the Closing Date (as defined in the Purchase Agreement)), and the Trustee shall enforce the obligation of the Seller under this Agreement, and, if necessary, the Seller shall enforce the obligation of NMAC under the Purchase Agreement, to repurchase any Receivable materially and adversely affected by the breach as of such last day. A breach of the representation in Section 3.01(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 Trustee, the Trust, or the Certificateholders with respect to a breach of the Seller's representations and warranties pursuant to Section 3.01 shall be to require the Seller to repurchase Receivables pursuant to this Section 3.02 and to enforce the obligation of NMAC to the Seller to repurchase such Receivables pursuant to the Purchase Agreement. SECTION 3.03. CUSTODY OF RECEIVABLE FILES. To assure uniform quality in servicing the Receivables and to reduce administrative costs, the Trustee, upon the execution and delivery of this Agreement, hereby revocably appoints the Servicer, and the Servicer hereby accepts such appointment, to act as the agent of the Trustee as custodian of the following documents or instruments (collectively, the "Receivable Files") that are hereby constructively delivered to the Trustee with respect to each Receivable: (a) The original of the Receivable (or a photocopy or other image thereof that the Servicer shall keep on file in accordance with its customary procedures) fully executed by the Obligor; 24 31 (b) The original credit application fully executed by the Obligor (or a photocopy or other image thereof that the Servicer shall keep on file in accordance with its customary procedures); (c) The original certificate of title (or a photocopy or other image thereof or such documents that the Servicer shall keep on file, in accordance with its customary procedures), evidencing the security interest of NMAC in the Financed Vehicle; and (d) Any and all other documents that the Servicer shall keep on file, in accordance with its customary procedures, relating to a Receivable, the related Obligor or a Financed Vehicle. SECTION 3.04. DUTIES OF SERVICER AS CUSTODIAN. (a) Safekeeping. The Servicer shall hold the Receivable Files on behalf of the Trustee for the use and benefit of all present and future Certificateholders, and maintain such accurate and complete accounts, records and computer systems pertaining to each Receivable File as shall enable the Trustee to comply with this Agreement. In performing its duties as custodian, the Servicer shall act with reasonable care, using that degree of skill and attention that the Servicer exercises with respect to the receivable files relating to all comparable automotive receivables that the Servicer services for itself or others. In accordance with its customary practices with respect to its retail installment sale contracts, the Servicer shall conduct, or cause to be conducted, periodic audits of the Receivable Files held by it under this Agreement, and of the related accounts, records and computer systems, in such a manner as shall enable the Trustee to verify the accuracy of the Servicer's record keeping. The Servicer shall promptly report to the Trustee any material failure on its part to hold the Receivable Files and maintain its accounts, records and computer systems as herein provided in all material respects and 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 Trustee of the Receivable Files. (b) Maintenance of and Access to Records. The Servicer shall maintain each Receivable File at one of its offices specified in Schedule B to this Agreement, or at such other office as shall be specified to the Trustee by written notice from the Servicer not later than 90 days after any change in location. The Servicer shall make available to the Trustee or its duly authorized representatives, attorneys or auditors the Receivable Files and the related accounts, records and computer systems maintained by the Servicer at such times during normal business hours as the Trustee shall instruct. The Servicer shall permit the Trustee and its agents at any time during normal business hours upon reasonable prior notice to inspect, audit and make copies of and abstracts from the Servicer's records regarding any Receivable. (c) Release of Documents. Upon the occurrence and during the continuation of an Event of Default or to the extent necessary for the Trustee to comply with its obligations under this Agreement, the Servicer shall, upon instruction from the Trustee, release any Receivable File to the Trustee, the Trustee's agent or the Trustee's designee, as the case may be, at such place or places as the Trustee may designate, as soon as practicable. 25 32 SECTION 3.05. 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 the Trustee Officer. SECTION 3.06. CUSTODIAN'S INDEMNIFICATION. The Servicer, as custodian, shall indemnify the Trustee for any and all liabilities, obligations, losses, compensatory damages, payments, costs or expenses of any kind whatsoever that may be imposed on, incurred by or asserted against the Trustee as the result of any improper act or omission in any way relating to the maintenance and custody by the Servicer, as custodian of the Receivable Files; provided, however, that the Servicer shall not be liable for any portion of any such amount resulting from the willful misfeasance, bad faith or negligence of the Trustee. SECTION 3.07. EFFECTIVE PERIOD AND TERMINATION. The Servicer's appointment as custodian pursuant to Section 3.03 shall become effective as of the Cutoff Date and shall continue in full force and effect until terminated pursuant to this Section 3.07. If NMAC shall resign as Servicer in accordance with the provisions of this Agreement or if all of the rights and obligations of the Servicer shall have been terminated under Section 10.01, the appointment of the Servicer as custodian may be terminated by the Trustee, or by the Holders evidencing not less than 25% of the Controlling Class of Certificates, in the same manner as the Trustee or such Holders may terminate the rights and obligations of the Servicer under Section 10.01. As soon as practicable after any termination of such appointment, the Servicer shall deliver the Receivable Files and the related accounts and records maintained by the Servicer to the Trustee or the Trustee's agent at such place or places as the Trustee may reasonably designate. 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: (i) if a default, breach, violation, delinquency or event permitting acceleration under the terms of any Receivable shall have occurred or, in the judgment of the Servicer, is imminent, the Servicer may (A) extend such Receivable for credit related reasons that would be acceptable to the Servicer with respect to comparable new, near-new or used automobile or light-duty truck receivables that it services for itself, but only (1) if the final scheduled payment date of such Receivable as extended would not be later than the last day of the Collection Period preceding the Final Scheduled Distribution Date, and (2) the rescheduling or extension would not modify the terms of such Receivable in a manner which would constitute a cancellation of such Receivable and the creation of a new receivable for federal income tax purposes; or (B) reduce an Obligor's monthly payment amount in the event of a prepayment resulting from refunds of credit life and 26 33 disability insurance premiums and service contracts and make similar adjustments in an Obligor's payment terms to the extent required by law; or (ii) if at the end of the scheduled term of any Receivable, the outstanding principal amount thereof is such that the final payment to be made by the related Obligor is larger than the regularly scheduled payment of principal and interest made by such Obligor, the Servicer may permit such Obligor to pay such remaining principal amount in more than one payment of principal and interest, provided that the last such payment shall be due on or prior to the last day of the Collection Period preceding the Final Scheduled Distribution Date; and (iii) the Servicer may in its discretion waive any late payment charge or any other fees that may be collected in the ordinary course of servicing a Receivable. (b) The Servicer's duties shall include collection and posting of all payments, responding to inquiries of Obligors on the Receivables, investigating delinquencies, sending remittance advices to Obligors, reporting tax information to Obligors, accounting for collections, furnishing monthly and annual statements to the Trustee with respect to distributions and making Advances pursuant to Section 5.04. (c) Without limiting the generality of the foregoing, the Servicer is authorized and empowered by the Trustee to execute and deliver, on behalf of itself, the Trust, the Certificateholders or the Trustee or any of them, any and all instruments of satisfaction or cancellation, or partial or full release or discharge, and all other comparable instruments, with respect to the Receivables or to the Financed Vehicles securing the Receivables. If the Servicer shall commence a legal proceeding to enforce a Receivable, the Trustee (in the case of a Receivable other than an Administrative Receivable or a Warranty Receivable) shall thereupon be deemed to have automatically assigned, solely for the purpose of collection, such Receivable to the Servicer. If in any enforcement suit or legal proceeding it shall be held that the Servicer may not enforce a Receivable on the ground that it shall not be a real party in interest or a holder entitled to enforce such Receivable, the Trustee shall, at the Servicer's expense and direction, take steps to enforce the Receivable, including bringing suit in its name or the name of the Certificateholders. The Trustee shall furnish the Servicer with any powers of attorney and other documents reasonably necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder. (d) The Servicer, at its expense, shall obtain on behalf of the Trust all licenses, 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. 27 34 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 Trustee hereby authorizes the Servicer to take such steps as are necessary to re-perfect such security interest on behalf of the Trust in the event of the relocation of a Financed Vehicle or for any other reason. If the assignment of a Receivable to the Trust is insufficient, without a notation on the related Financed Vehicle's certificate of title, to grant to the Trust a first priority perfected security interest in the related Financed Vehicle, the Servicer hereby agrees to serve as the agent of the Trust for the purpose of perfecting the security interest of the Trust in such Financed Vehicle and agrees that the Servicer's listing as the secured party on the certificate of title is in this capacity as agent of the Trust. SECTION 4.05. COVENANTS OF SERVICER. (a) The Servicer shall not release the Financed Vehicle securing any Receivable from the security interest granted by such Receivable in whole or in part except in the event of payment in full by or on behalf of the Obligor thereunder or repossession. (b) If the Servicer shall determine not to make an Advance related to delinquency or non-payment of any Receivable pursuant to Section 5.04 because it determines that such Advance would not be recoverable from subsequent collections on such Receivable, such Receivable shall be designated by the Servicer to be a Defaulted Receivable, provided that such Receivable otherwise meets the definition of a Defaulted Receivable. (c) Except with respect to Defaulted Receivables, Administrative Receivables or Warranty Receivables, the Servicer shall not (i) 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. 28 35 (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 Trustee shall inform the other party promptly, in writing, upon the discovery of any breach by the Servicer of its obligations under the second sentence of Section 4.01 or 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 such discovery), the Servicer shall (whether or not such breach was known to the Servicer on the Closing Date (as defined in the Purchase Agreement)) purchase any Receivable materially and adversely affected by such breach as of such last day. In consideration of the purchase of such Receivable, the Servicer shall remit the Administrative Purchase Payment (as reduced by any Outstanding Advances with respect to such Receivable) in the manner specified in Section 5.05. For the purposes of this Section 4.06, 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 Trustee, the Trust or the Certificateholders with respect to a breach by the Servicer of its obligations under the second sentence of Section 4.01 or 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. TOTAL SERVICING FEE. The Servicer shall be entitled to the Base Servicing Fee, as provided herein. As additional servicing compensation, the Servicer shall be entitled to an amount equal to any interest earned on the amounts deposited in the Collection Account and the Certificate Account and earned on funds held by the Servicer pending deposit therein during such Collection Period, plus an amount that may be retained by the Servicer consisting of all late fees, prepayment charges and other administrative fees and expenses or similar charges allowed by applicable law (and which comply with Prohibited Transaction Exemption 97-34) with respect to Receivables, collected (from whatever source) on the Receivables during such Collection Period (collectively, the "Supplemental Servicing Fee"). 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 (i) the Trustee (with a copy to each of the Rating Agencies), (ii) for so long as the Custody and Pledge Agreement is in existence, the Custodian, and (iii) if any Class C Certificate is held by a Person other than the Seller or any Affiliate of the Seller, such Class C Certificateholder, a Servicer's Certificate containing all information necessary to make the distributions pursuant to Section 5.06 (including the amount of the aggregate collections on the Receivables, the aggregate Advances to be made by the Servicer, if any, the aggregate Administrative Purchase Payments for any Administrative Receivables to be purchased by the Servicer, and the aggregate Warranty Purchase Payments for any Warranty Receivables to be purchased by the Seller) for the Collection Period preceding the date of such Servicer's Certificate, all information necessary 29 36 for the Trustee to send statements to Certificateholders pursuant to Section 5.08 and, for so long as the Custody and Pledge Agreement or a related agreement is in existence, all information necessary for the Custodian to determine the amounts necessary to be deposited in the Subordination Spread Account and the amount that may be released to the Seller. Receivables purchased or to be purchased by the Servicer or the Seller shall be identified by the Servicer by the Seller's account number with respect to such Receivable (as specified in Schedule A of this Agreement). The Trustee and the Custodian may conclusively rely on the information in any Servicer's Certificate, and shall have no duty to confirm or verify the contents thereof. (b) Concurrently with delivery of the Servicer's Certificate in each month, the Servicer shall deliver to the underwriters of the Class A Certificates and the Class B Certificates and, if any Class C Certificate is held by a Person other than the Seller or any Affiliate of the Seller, to such Class C Certificateholder, the Class A Certificate Factor and the Class B Certificate Factor as of the close of business on the Distribution Date occurring in such month. SECTION 4.09. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT. (a) The Servicer shall deliver to the Trustee and to each of the Rating Agencies on or before June 30th of each year, beginning June 30, ______, an Officer's Certificate with respect to the prior twelve months ended on March 31 of such calendar year (or with respect to the initial Officer's Certificate, the period from the date of the initial issuance of Certificates hereunder to March 31, ______), stating that (i) a review of the activities of the Servicer during the preceding 12-month (or shorter) period and of its performance under this Agreement has been made under such officer's supervision and (ii) to the best of such officer's knowledge, based on such review, the Servicer has fulfilled all its obligations under this Agreement throughout such twelve-month (or shorter) period, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof. A copy of such Officer's Certificate may be obtained by any Certificateholder by a request in writing to the Trustee addressed to the Corporate Trust Office. (b) The Servicer shall deliver to the Trustee and to each of the Rating Agencies promptly after having obtained knowledge thereof, but in no event later than five Business Days thereafter, written notice in an Officer's Certificate of any Event of Default or event that with the giving of notice or lapse of time, or both, would become an Event of Default under Section 10.01. The Seller shall deliver to the Trustee and to each such Rating Agency, promptly after having obtained knowledge thereof, but in no event later than five Business Days thereafter, written notice in an Officer's Certificate of any event that with the giving of notice or lapse of time, or both, would become an Event of Default under Section 10.01(a)(ii) or of any lowering of the rating described in clause (ii) of the definition of "Monthly Remittance Condition". SECTION 4.10. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT. The Servicer shall cause a firm of independent certified public accountants, who may also render other services to the Servicer or to the Seller, to deliver to the Trustee and each of the Rating Agencies, on or before June 30 of each year, beginning June 30, _______, with respect to the prior twelve months ended on March 31 of such year (or with respect to the initial reports, the period from the date of the initial issuance of Certificates hereunder to March 31, _______) the following reports: (a) a report that such firm has audited the consolidated financial statements of 30 37 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 a Certificate Owner, the Trustee shall promptly provide such Certificate Owner with a copy of such Annual USAP Report. For all purposes of this Agreement, the Trustee may rely on the representation of any Person that it is a Certificate Owner. SECTION 4.11. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING RECEIVABLES. The Servicer shall provide to the Certificateholders access to the Receivable Files in such cases where the Certificateholders shall be required by applicable statutes or regulations to review such documentation. 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. SERVICER EXPENSES. The Servicer shall be required to pay all expenses incurred by it in connection with its activities hereunder, including fees and disbursements of independent accountants and the Trustee, taxes imposed on the Servicer, expenses incurred in connection with distributions and reports to Certificateholders and all other fees and expenses not expressly stated under this Agreement to be for the account of the Certificateholders. ARTICLE V DISTRIBUTIONS; SUBORDINATION SPREAD ACCOUNTS; STATEMENTS TO CERTIFICATEHOLDERS SECTION 5.01. ACCOUNTS. The Servicer shall establish the Collection Account and the Certificate Account in the name of the Trustee for the benefit of the Certificateholders. Each of the Collection Account and the Certificate Account shall be a segregated trust account initially established with the Trustee and maintained with the Trustee so long as (a) the deposits of the Trustee have the Required Deposit Rating or (b) the Collection Account or the Certificate 31 38 Account, as the case may be, is maintained in a segregated trust account in the trust department of the Trustee; provided, however, that all amounts held in the Collection Account and the Certificate Account shall, to the extent permitted by applicable laws, rules and regulations and as directed by the Servicer, be invested by the Trustee in Eligible Investments and such Eligible Investments shall mature not later than the Business Day preceding the next Distribution Date, in such manner that such amounts invested shall be available to make the required distributions on the Distribution Date. Should the short-term unsecured debt obligations of the Trustee no longer have the Required Deposit Rating then, unless the Collection Account and the Certificate Account are maintained in segregated trust accounts in the trust department of the Trustee, the Servicer shall, with the Trustee's assistance as necessary and within ten Business Days of receipt of notice from the Trustee that the Trustee no longer has the Required Deposit Rating, cause the Collection Account and the Certificate Account (a) to be moved to segregated trust accounts in a bank or trust company, the short-term unsecured debt obligations of which shall have the Required Deposit Rating, or (b) to be moved to the trust department of the Trustee. Earnings on the investment of funds in the Collection Account and the Certificate Account shall be paid to the Servicer on each Distribution Date as servicing compensation, and any losses and investment expenses shall be charged against the funds on deposit in the Collection Account or the Certificate Account, as the case may be. SECTION 5.02. COLLECTIONS. The Servicer shall remit to the Collection Account (a) all payments by or on behalf of the Obligors in respect of the Receivables (excluding payments on Administrative Receivables or Warranty Receivables and amounts constituting Supplemental Servicing Fees) and (b) all Net Liquidation Proceeds, not later than the first Business Day after receipt thereof. Prior to each Distribution Date, for so long as the Custody and Pledge Agreement or any similar agreement is in existence, the Servicer shall notify the Custodian that the Custodian will be required to remit to the Collection Account from the Subordination Spread Account the lesser of (i) the amount of the Subordination Spread Account, (ii) the amounts, if any, required to be distributed to Class A Certificateholders from the Subordination Spread Account pursuant to Sections 5.06(c)(ii) and 5.06(c)(iii), and (iii) the amounts, if any, required to be distributed to Class B Certificateholder, from the Subordination Spread Account pursuant to Sections 5.06(c)(iv) and 5.06(c)(v). 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. Accordingly, notwithstanding the provisions of the first sentence of this Section 5.02, the Servicer shall remit collections received during a Collection Period to the Collection Account in immediately available funds on the Business Day prior to the related Distribution Date but only for so long as (i) NMAC is the Servicer, (ii) the rating of the Servicer's short-term unsecured debt obligations is at least "P-1" by Moody's and the rating of the Servicer's (or, if NMAC is the Servicer and the Servicer then has no short-term rating from Standard & Poor's, Nissan Capital of America, Inc.'s) short-term unsecured debt obligations is at least "A-1" by Standard & Poor's (so long as Moody's and Standard & Poor's are Rating Agencies), and (iii) no Event of Default shall have occurred and be continuing (each, a "Monthly Remittance Condition"); except that the requirement in clause (i) above shall not apply if the Class A Certificates and the Class B Certificates are not then outstanding and the Class C Certificates do not have an investment grade rating. Notwithstanding the foregoing, if a Monthly Remittance Condition is not satisfied, the Servicer may utilize an alternative remittance schedule (which may include the remittance 32 39 schedule utilized by the Servicer before the Monthly Remittance Condition became unsatisfied), if the Servicer provides to the Trustee written confirmation from each Rating Agency that such alternative remittance schedule will not result in the downgrading or withdrawal by such Rating Agency of the ratings then assigned to such Certificates. The Servicer shall give the Trustee and each Rating Agency written notice of the failure of any Monthly Remittance Condition (and any subsequent curing of a failed Monthly Remittance Condition) as soon as practical after the occurrence thereof but in no event later than 10 Business Days after obtaining knowledge thereof (it being understood that if the Monthly Remittance Condition is not satisfied as of the Closing Date no such notice shall be required in connection therewith). The Trustee shall not be deemed to have knowledge of any event or circumstance under clause (ii) of the definition of Monthly Remittance Condition that would require daily remittance by the Servicer to the Collection Account unless the Trustee has received notice of such event or circumstance from the Seller or the Servicer in an Officer's Certificate or from the Holders of Certificates evidencing not less than 25% of the Class A Certificate Balance or the Class B Certificate Balance, or a Trustee Officer in the Corporate Trust Office with knowledge hereof or familiarity herewith has actual knowledge of such event or circumstance. For purposes of this Article V the phrase "payments by or on behalf of Obligors" shall mean payments made by Persons other than the Servicer. SECTION 5.03. APPLICATION OF COLLECTIONS. 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) equal to the excess, if any, of (i) 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 (ii) 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 33 40 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 (ii) above with respect to a Receivable is greater than the amount set forth in clause (i) above with respect thereto, such amount shall be distributed to the Servicer pursuant to Section 5.06(a)(ii); provided, however, that, notwithstanding anything else herein, the Servicer shall not be reimbursed for any amounts representing an Advance, or any portion thereof, made in respect of an interest shortfall arising from the prepayment of a Receivable. (b) The Servicer shall be entitled to reimbursement for Outstanding Advances, without interest, with respect to a Receivable from the following sources with respect to such Receivable pursuant to Section 5.06(a)(ii): (i) subsequent payments made by or on behalf of the related Obligor, (ii) Net Liquidation Proceeds, and (iii) the Warranty Purchase Payments. (c) To the extent that the Servicer has determined that any Outstanding Advance is a Nonrecoverable Advance, the Servicer may provide to the Trustee an Officer's Certificate setting forth the amount of such Nonrecoverable Advance, and on the related Distribution Date, the Trustee shall remit to the Servicer from funds on deposit in the Collection Account an amount equal to the amount of such Nonrecoverable Advance pursuant to Section 5.06(a)(iii). (d) For so long as the Monthly Remittance Conditions are satisfied, in lieu of causing the Servicer first to deposit and then the Trustee to remit to the Servicer the amounts described in clauses (i) through (iii) of Section 5.04(b) reimbursable in respect on Outstanding Advances, or the amounts described in Section 5.04(c) applicable in respect of Nonrecoverable Advances, the Servicer may deduct such amounts from deposits otherwise to be made into the Collection Account. (e) Notwithstanding the provisions of Section 5.04(a), no successor servicer, including the Trustee, shall be obligated to make Advances unless it has expressly agreed to do so in writing. SECTION 5.05. ADDITIONAL DEPOSITS. (a) The Servicer shall deposit into the Collection Account the aggregate amount of Advances pursuant to Section 5.04(a). The Servicer and the Seller shall deposit in the Collection Account the aggregate Administrative Purchase Payments with respect to Administrative Receivables pursuant to Section 4.06 and the aggregate Warranty Purchase Payments with respect to Warranty Receivables pursuant to Section 3.02, and the Servicer shall deposit therein all amounts to be paid under Section 12.02. All such deposits with respect to a Collection Period shall be made, in immediately available funds, by 5:00 p.m., New York City time, on the Business Day immediately preceding the Distribution Date related to such Collection Period. (b) All deposits required to be made pursuant to this Section 5.05 by the Seller or the Servicer, as the case may be, may be made in the form of a single deposit and shall be made in immediately available funds, no later than 5:00 P.M., New York City time, on the Business Day immediately preceding the related Distribution Date. At the direction of the Servicer, the Trustee shall invest such amounts in Eligible Investments maturing not later than 3:00 P.M. New York City Time, on the related Distribution Date. 34 41 SECTION 5.06. DISTRIBUTIONS. (a) On each Distribution Date, the Trustee shall cause to be made the following transfers and distributions in the amounts set forth in the Servicer's Certificate for such Distribution Date: (i) From the Collection Account to the Certificate Account, in immediately available funds, the entire amount then on deposit in the Collection Account; provided, however, that if the Servicer is required to make deposits to the Collection Account on a daily basis pursuant to Section 5.02, the amount of the funds transferred from the Collection Account to the Certificate Account will include only those funds that were deposited in the Collection Account for the Collection Period related to such Distribution Date. (ii) From the Certificate Account to the Servicer, in immediately available funds, from amounts on deposit or amounts received from Obligors and allocable to interest, the amount payable in respect of Outstanding Advances pursuant to the last sentence of Section 5.04(a) and Section 5.04(b). (iii) From the Certificate Account to the Servicer, in immediately available funds, any payments in respect of Nonrecoverable Advances required and to the extent set forth in Section 5.04(c). (b) The Servicer shall calculate on each Determination Date the Total Available Amount, the Available Interest, the Available Principal, the Class A Distributable Amount, the Class B Distributable Amount and the Class C Distributable Amount and, based on the Total Available Amount and the other distributions to be made on such Distribution Date, determine the amount distributable to Certificateholders of each class. (c) The rights of the Class B Certificateholders and the Class C Certificateholders to receive distributions in respect of the Class B Certificates and the Class C Certificates shall be and hereby are subordinated to the rights of the Class A Certificateholders to receive distributions in respect of the Class A Certificates as provided below. In addition, the rights of the Class C Certificateholders to receive distributions in respect of the Class C Certificates shall be and hereby are subordinated to the rights of the Class B Certificateholders to receive distributions in respect of the Class B Certificates as provided below. On each Distribution Date, the Trustee (based on the information contained in the Servicer's Certificate delivered on the related Determination Date pursuant to Section 4.08) shall make the following distributions (after payment of the Supplemental Servicing Fee, to the extent not previously retained by the Servicer) from the Certificate Account in the following order of priority: (i) first, to the Servicer, from Available Interest, the Base Servicing Fee and all unpaid Base Servicing Fees from prior Collection Periods, if any; (ii) second, to the Class A Certificateholders, from Available Interest (as such Available Interest has been reduced as described in clause (i) above), an amount equal to the sum of the Class A Interest Distributable Amount and any outstanding Class A Interest Carryover Shortfall as of the close of business on the preceding Distribution 35 42 Date; and if such Available Interest is insufficient, the Class A Certificateholders will receive such shortfall first, from monies on deposit in the Subordination Spread Account, and second, if such amounts are insufficient, from the Class C Percentage of Available Principal, and third, if such amounts are insufficient, from the Class B Percentage of Available Principal; (iii) third, to the Class A Certificateholders, from Available Principal, an amount equal to the sum of the Class A Principal Distributable Amount and any outstanding Class A Principal Carryover Shortfall as of the close of business on the preceding Distribution Date; and if such Available Principal is insufficient, the Class A Certificateholders will receive such shortfall first, from monies on deposit in the Subordination Spread Account, and second, if such amounts are insufficient, from Available Interest (as such Available Interest has been reduced as described in clauses (i) and (ii) above); (iv) fourth, to the Class B Certificateholders, from Available Interest (as such Available Interest has been reduced by the distributions described above in clauses (i), (ii) and (iii) above), an amount equal to the sum of the Class B Interest Distributable Amount and any outstanding Class B Interest Carryover Shortfall as of the close of business on the preceding Distribution Date; and if such Available Interest is insufficient, the Class B Certificateholders will receive such shortfall first, from monies on deposit in the Subordination Spread Account, and second, if such amounts are insufficient, from the Class C Percentage of Available Principal; (v) fifth, to the Class B Certificateholders, from Available Principal (as such Available Principal has been reduced as described in clauses (iii) and (iv) above), an amount equal to the sum of the Class B Principal Distributable Amount and any outstanding Class B Principal Carryover Shortfall as of the close of business on the preceding Distribution Date; and if such Available Principal is insufficient, the Class B Certificateholders will receive such shortfall first, from monies on deposit in the Subordination Spread Account, and second, if such amounts are insufficient, from Available Interest (as such Available Interest has been reduced as described in clauses (i), (ii), (iii) and (iv) above); (vi) sixth, to the Class C Certificateholders, from Available Interest (as such Available Interest has been reduced as described in clauses (i), (ii), (iii), (iv) and (v) above), an amount equal to the sum of the Class C Interest Distributable Amount and any outstanding Class C Interest Carryover Shortfall as of the close of business on the preceding Distribution Date; (vii) seventh, to the Class C Certificateholders, from Available Principal (as such Available Principal has been reduced as described in clauses (iii), (iv) and (v) above), an amount equal to the sum of the Class C Principal Distributable Amount and any outstanding Class C Principal Carryover Shortfall as of the close of business on the preceding Distribution Date; and if such Available Principal is insufficient, the Class C Certificateholders will receive such shortfall from Available Interest (as such 36 43 Available Interest has been reduced as described in clauses (i), (ii), (iii), (iv), (v) and (vi) above); and (viii) eighth, to the Seller, any Excess Amounts, except to the extent required to be deposited in the Subordination Spread Account pursuant to the Custody and Pledge Agreement; provided, however, that amounts otherwise distributable to the holders of Class C Certificates pursuant to clauses (vi) and (vii) above shall be deposited by the Trustee on behalf of such holders in the Subordination Spread Account to the extent of any deficiency in the Specified Subordination Spread Account Balance. For purposes of all of the provisions of this Agreement, all such amounts deposited in the Subordination Spread Account shall be deemed to have been distributed pro rata to the holders of Class C Certificates and contributed by such holders to the Subordination Spread Account pursuant to the Custody and Pledge Agreement. Notwithstanding anything herein to the contrary, no amount shall be paid to the Certificateholders in respect of any Yield Supplement Deposit with respect to a Receivable, except to the extent of amounts withdrawn from the Yield Supplement Account and deposited in the Certificate Account or paid to the Certificate Account by the Seller pursuant to the Yield Supplement Agreement; provided, however, that, if an insufficiency of funds in the Yield Supplement Account would result in a shortfall of interest, the amount of such shortfall shall be withdrawn from the Subordination Spread Account and deposited in the Certificate Account prior to such Distribution Date. Other withdrawals and deposits into the Subordination Spread Account shall be made as provided in the Custody and Pledge Agreement. (d) Subject to Section 12.01 respecting the final payment upon retirement of each Certificate, the Servicer shall on each Distribution Date instruct the Trustee to distribute to each Certificateholder of any class of record on the preceding Record Date either by wire transfer, in immediately available funds to the account of such holder at a bank or other entity having appropriate facilities therefor, if such Certificateholder is the Seller or a Clearing Agency and shall have provided to the Trustee appropriate instructions prior to such Distribution Date, or, if not, by check mailed to such Certificateholder (such check to be mailed as soon as reasonably practicable on or after such Distribution Date) at the address of such holder appearing in the Certificate Register, the amounts to be distributed to such Certificateholder pursuant to such holder's Certificates. SECTION 5.07. NET DEPOSITS. For so long as each Monthly Remittance Condition is satisfied (or the rating agency confirmation described in the fifth sentence of Section 5.02 has been obtained), the Servicer (in whatever capacity) may make the remittances pursuant to Sections 5.02 and 5.05 above net of amounts to be distributed to the Servicer (in whatever capacity) pursuant to Section 5.06(a)(ii), Section 5.06(a)(iii) or Section 5.06(c). In addition, the Seller agrees that such remittances may be made net of amounts to be distributed to the Seller hereunder and under the Custody and Pledge Agreement, if any. Accounts between the Seller and the Servicer will be adjusted accordingly. Nonetheless, the Servicer shall account for all of 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. 37 44 SECTION 5.08. STATEMENTS TO CERTIFICATEHOLDERS. (a) On each Distribution Date, the Trustee shall include with each distribution to each Class A Certificateholder and Class B Certificateholder, and, if the Class C Certificateholder is not the Seller or an Affiliate of the Seller, to the Class C Certificateholder, a statement (which statement shall also be provided to each Rating Agency) based on information in the Servicer's Certificate furnished pursuant to Section 4.08, setting forth for the Collection Period relating to such Distribution Date the following information: (i) the amount of such distribution allocable to principal; (ii) the amount of such distribution allocable to interest; (iii) the amount of such distribution allocable to the Yield Supplement Deposit, if any, plus reinvestment income, if any, on the Yield Supplement Account; (iv) the amount on deposit in the Yield Supplement Account; (v) the Pool Balance as of the close of business on the last day of the related Collection Period; (vi) the amount of the Base Servicing Fee paid to the Servicer with respect to the related Collection Period, the Class A Certificateholder's, the Class B Certificateholder's, or the Class C Certificateholder's Class A Percentage, Class B Percentage, or Class C Percentage, as the case may be, of the Base Servicing Fees, the amount of any unpaid Base Servicing Fees and the change in such amount from that of the prior Distribution Date; (vii) the amount of the Class A Interest Carryover Shortfall, the Class A Principal Carryover Shortfall, the Class B Interest Carryover Shortfall, the Class B Principal Carryover Shortfall, the Class C Interest Carryover Shortfall and the Class C Principal Carryover Shortfall, if any, on such Distribution Date and the change in such amounts from the preceding Distribution Date; (viii) the Class A Certificate Balance, the Class A Certificate Factor, the Class A Pool Factor, the Class B Certificate Balance, the Class B Certificate Factor, the Class B Pool Factor and the Class C Certificate Balance as of such Distribution Date; (ix) the amounts otherwise distributable to the Class B Certificateholders and Class C Certificateholders that are distributed to Class A Certificateholders on such Distribution Date, and the amount otherwise distributable to the Class C Certificateholders that is distributed to the Class B Certificateholders or deposited in the Subordination Spread Account on such Distribution Date; (x) for so long as the Custody and Pledge Agreement or a related agreement is in existence, the balance of the Subordination Spread Account, as the case may be, on such Distribution Date, after giving effect to distributions made on such Distribution Date, and the change in such balance from the preceding Distribution Date; 38 45 (xi) the amount of Advances made in respect of the Receivables during the related Collection Period and the amount of the unreimbursed Advances on such Distribution Date; (xii) the amount of defaults and net losses on the Receivables for the related Collection Period; and (xiii) the number of delinquencies on the Receivables as a percentage of the number of Receivables. (b) Copies of such statements may be obtained by Certificate Owners from the Trustee by a request in writing. The Trustee shall provide such copies promptly after such requests. (c) Within the prescribed period of time for tax reporting purposes after the end of each calendar year during the term of this Agreement, but not later than the latest date permitted by law, the Trustee shall make available with the Clearing Agency holding Book-Entry Certificates or, if Definitive Certificates have been issued, mail to each Person who at any time during such calendar year shall have been a holder of a Definitive Certificate (other than the Seller or any Affiliate of the Seller) a statement containing the sum of the amounts or the amount as of the end of such calendar year, as the case may be, set forth in clauses (i), (ii), (iii), (v), (vi) and (vii) of Section 5.08(a) above and such other information, if any, as the Servicer determines is necessary to ascertain the Certificateholder's share of the gross income and deductions of the Trust (exclusive of the Supplemental Servicing Fee) or is otherwise necessary under applicable law for the preparation of the federal income tax returns by Certificateholders for such calendar year or, if such Person shall have been a holder of a Certificate during a portion of such calendar year, for the applicable portion of such year, for the purposes of such Certificateholder's preparation of federal income tax returns. SECTION 5.09. NO PETITION. Each of the Servicer and the Trustee (not in its individual capacity but solely as Trustee) covenants and agrees that, prior to the date which is one year and one day after the date upon which the Certificates are paid in full, 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 proceedings under any federal or state bankruptcy or similar law against the Seller. This Section 5.09 shall survive the termination of this Agreement or the termination of the Servicer or the Trustee, as the case may be, under this Agreement. Each Certificateholder hereby covenants and agrees that it will not at any time file, join in any filing of, or cooperate with or encourage others to file bankruptcy, reorganization arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar law against the Seller in connection with any obligations relating to the Certificates. 39 46 ARTICLE VI ADDITIONAL AGREEMENTS SECTION 6.01. YIELD SUPPLEMENT ACCOUNT. (a) In order to assure that sufficient amounts to make required distributions of interest to Certificateholders will be available, the [Servicer] [Trustee], pursuant to [the Securities Account Control Agreement and] the Yield Supplement Agreement, will establish and maintain with the [Securities Intermediary] [Trustee] a segregated trust account (the "Yield Supplement Account") in the name of the Trustee which will include the money and other property deposited and held therein pursuant to the Yield Supplement Agreement and this Section 6.01. (b) On or prior to the Closing Date, the Seller shall [[make a capital contribution to the Trust by depositing an amount equal to $___________] [deposit an amount equal to $_________] [in cash] into the Yield Supplement Account][, transfer retail installment sales contracts with an aggregate principal balance, as of the Cut-Off Date, of $_________ to the Trust] [and transfer receivables or other assets (including vehicle lease contracts) in an amount, collectively, equal to $__________ to the Trust] ([the][collectively,] "Initial Yield Supplement Amount"). [On each Distribution Date, the Servicer will deposit payments received with respect to the retail installment sales contracts referred to above into the Yield Supplement Account.] [On each Distribution Date, the Servicer will deposit payments received with respect to those receivables or other assets referred to above into the Yield Supplement Account.] On each Distribution Date, to the extent amounts then on deposit in the Yield Supplement Account are sufficient therefor, the Trustee will withdraw amounts then on deposit in the Yield Supplement Account in an amount equal to the Yield Supplement Deposit[, comprising a portion of the Available Interest to be distributed in accordance with Section 5.06 and this Section,] 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 Trustee [will distribute any remaining amounts to the Seller [or third party]]. Upon such distribution to the Seller [or third party], the Certificateholders will have no further rights in, or claims to, such amount. (c) All amounts held in the Yield Supplement Account shall be invested by the [Trustee, as directed in writing by the Servicer,] [Servicer] in Eligible Investments [; provided that if (i) the Servicer shall have failed to give investment directions for any funds on deposit in the Yield Supplement Account to the Trustee by 5:00 p.m. Eastern Time (or such other time as may be agreed by the Servicer and the Trustee) on any Business Day, or (ii) an Event of Default shall have occurred and be continuing but the Certificates shall not have been declared due then the 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 40 47 Investments that mature later than the Business Day preceding the next Distribution Date. [The Servicer will not direct the Trustee to make] [The Trustee will not 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 Trustee to make any such investment or sale, if requested by the Trustee, the Servicer shall deliver to the Trustee an Opinion of Counsel, reasonably acceptable to the 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 Trustee shall incur no liability for the selection of investments or for losses thereon absent its own negligence or willful misfeasance. The Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any investment prior to its stated maturity date or the failure of the Servicer to provide timely written investment directions.] (d) [The Trustee and the Seller 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) 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) The Trustee shall not enter into any subordination or intercreditor agreement with respect to the Yield Supplement Account. (g) Upon termination of the Trust pursuant to 12.01, any amounts on deposit in the Yield Supplement Account, after payment of all amounts due to the Certificateholders, shall be paid to the [Seller] [third party].] SECTION 6.02. CUSTODY AND PLEDGE AGREEMENT. The Seller and the Trustee, as initial Custodian, shall enter into the Custody and Pledge Agreement or otherwise provide such partial credit support, if any, as may be necessary for each Rating Agency to provide those ratings necessary to satisfy the related condition precedent to the underwriters' obligation to purchase the Class A Certificates and the Class B Certificates. SECTION 6.03. LIMITATIONS ON THE TRUST. The Trust shall not (a) incur any indebtedness or obligations or (b) engage in any business activity other than acquiring and holding the assets of the Trust, issuing the Certificates and making payments thereon, each in accordance with the terms of this Agreement. ARTICLE VII THE CERTIFICATES SECTION 7.01. THE CERTIFICATES. The Class A Certificates and the Class B Certificates shall be issued in denominations of $1,000 and integral multiples thereof; the Class C 41 48 Certificates shall be issued in denominations of $100,000 or in any amount in excess thereof, in each case in fully registered form and integral multiples thereof; provided, however, that one Class A Certificate, one Class B Certificate and one Class C Certificate may be issued in a denomination equal to the residual amount (the "Residual Certificate"). The Certificates shall be executed on behalf of the Trust by manual or facsimile signature of a Trustee Officer of the Trustee. Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be valid and binding obligations of the Trust, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such offices at the date of such Certificates. SECTION 7.02. AUTHENTICATION OF CERTIFICATES. The Trustee shall cause the Certificates to be executed on behalf of the Trust, authenticated and delivered to or upon the written order of the Seller, signed by its chairman of the board, its president or any vice president, without further corporate action by the Seller, in authorized denominations, pursuant to this Agreement. No Certificate shall entitle its holder to any benefit under this Agreement, or shall be valid for any purpose, unless there shall appear on such Certificate a certificate of authentication substantially in the form set forth in Exhibit A, Exhibit B or Exhibit C hereto executed by the Trustee by manual or facsimile signature; such authentication shall constitute conclusive evidence that such Certificate shall have been duly authenticated and delivered hereunder. All Certificates shall be dated the date of their authentication. SECTION 7.03. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES. (a) The Certificate Registrar shall keep or cause to be kept, at the office or agency maintained pursuant to Section 7.07, a Certificate Register in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of Certificates and of transfers and exchanges of Certificates as herein provided. The Trustee shall be the initial Certificate Registrar. (b) The Class C Certificates shall initially be retained by the Seller. No transfer of a Class C Certificate shall be made unless (i) the registration requirements of the Securities Act, and any applicable State securities laws are complied with, (ii) such transfer is exempt from the registration requirements under the Securities Act and any applicable State securities laws or (iii) the prospective transferee of the Class C Certificate certifies in writing to the Seller and the Trustee, to the Seller's satisfaction, that such transferee is a Qualified Institutional Buyer (as defined in Rule 144A under said Act); provided, however, that no such transfer pursuant to clause (i), (ii) or (iii) shall be made (A) if such transfer would result in a downgrading or withdrawal of the rating of any Rating Agency or (B) if such transfer would cause the Trust or any arrangements identified in the Custody and Pledge Agreement to be characterized as an association taxable as a corporation or otherwise adversely affect the federal, state or local income tax status of the Trust and (C) unless the Custody and Pledge Agreement is amended, in form and substance satisfactory to the Trustee and the Seller, in order to reflect such transfer and cause such transferee to be bound by the obligations thereunder. If a transfer is to be made in reliance upon an exemption from the Securities Act or any applicable State securities laws to a Person other than a Qualified Institutional Buyer, the Class C Certificateholder desiring to effect such transfer and such Certificateholder's prospective transferee must each certify in writing to 42 49 the Seller and the Trustee the facts surrounding such transfer and, at the request of the Seller, provide both the Seller and the Trustee with an Opinion of Counsel in form and substance satisfactory to the Seller that such transfer may be made pursuant to an exemption from the Securities Act or any applicable State securities laws and such transfer will not result in the Trust or any arrangements identified in the Custody and Pledge Agreement from being characterized as an association taxable as a corporation or otherwise adversely affect the federal, state or local income tax status of the Trust, which Opinion of Counsel shall not be an expense of the Seller or the Trustee. Neither the Seller nor the Trustee is under an obligation to register the Class C Certificates under the Securities Act or any other securities law. (c) No transfer of a Class A Certificate, or beneficial interest therein, shall be made unless the Trustee shall have received a representation from the transferee thereof substantially in the form of Exhibit H-1 to the effect that: (i) such transferee is not an employee benefit plan or an arrangement subject to Section 406 of ERISA or a plan subject to Section 4975 of the Code (a "Plan"), nor a person acting on behalf of a Plan nor using the assets of a Plan to effect such transfer; or (ii) if such transferee is a Plan, then: (A) such Plan is an "accredited investor" as defined in Rule 501(a)(1) of Regulation D under the Securities Act; (B) such Plan's investment in the Class A Certificates does not exceed 25% of all of the Class A Certificates outstanding at the time of such transfer; and (C) immediately after the acquisition, no more than 25% of the assets of the Plan with respect to which a person has discretionary authority or renders investment advice are invested in certificates representing interests in trusts containing assets sold or serviced by the same entity. (d) Without limiting the generality of Section 7.03(b), no transfer of a Class B Certificate or Class C Certificate, or beneficial interest therein, shall be made unless the Trustee shall have received a representation from the transferee thereof substantially in the form of Exhibit H-2 to the effect that such transferee (A) is not a Plan nor a person acting on behalf of a Plan nor using the assets of a Plan to effect such transfer, or (B) is an insurance company purchasing a Class B Certificate or Class C Certificate with funds contained in an "insurance company general account" (as defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) as to which there is a Plan with respect to which the amount of such general account's reserves and liabilities for the contracts held by or on behalf of such Plan and all other Plans maintained by the same employer (or affiliate thereof as defined in Section V(a)(1) of PTCE 95-60) or by the same employee organization does not exceed 10% of the total of all reserves and liabilities of such general account (as such amounts are determined under Section I(a) of PTCE 95-60) at the date of acquisition. (e) For purposes of Sections 7.04(c) and (d), with respect to any Certificate that is a Book-Entry Certificate, the representations contained therein shall be deemed to have been made to the Trustee by the transferee's (including an initial acquiror's) acceptance of an interest in 43 50 such Certificate. Notwithstanding anything else to the contrary herein, any purported transfer of a Certificate, or a beneficial interest therein, to or on behalf of a Plan or a person acting on behalf of a Plan or using the assets of a Plan to effect such transfer not exempt pursuant to PTCE 97-34 or to an insurance company purchasing with funds from a general account not exempt pursuant to PTCE 95-60 shall be void and of no effect. (f) To the extent permitted under applicable law (including, but not limited to, ERISA), the Trustee shall be under no liability to any Person for any registration of transfer of any Certificate that is in fact not permitted by this Section 7.03 or for making any payments due on such Certificate to the Certificateholder thereof or taking any other action with respect to such Certificateholder under the provisions of this Agreement so long as the transfer was registered by the Trustee in accordance with the foregoing requirements. Upon surrender for registration of transfer of any Certificate at the Corporate Trust Office, the Trustee shall execute, authenticate and deliver, in the name of the designated transferee or transferees, one or more new Certificates in authorized denominations of a like aggregate amount dated the date of authentication by the Trustee. At the option of a Holder, Certificates may be exchanged for other Certificates of authorized denominations of a like aggregate amount upon surrender of the Certificates to be exchanged at the Corporate Trust Office. (g) Every Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Certificate Registrar duly executed by the Holder or his attorney duly authorized in writing. Each Certificate surrendered for registration of transfer or exchange shall be cancelled and subsequently disposed of by the Trustee. (h) No service charge shall be made for any registration of transfer or exchange of Certificates, but the Trustee may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Certificates. SECTION 7.04. MUTILATED, DESTROYED, LOST, OR STOLEN CERTIFICATES. If (a) any mutilated Certificate shall be surrendered to the Certificate Registrar, or if the Certificate Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (b) there shall be delivered to the Certificate Registrar and the Trustee such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Certificate shall have been acquired by a bona fide purchaser, the Trustee on behalf of the Trust shall execute and the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like tenor and denomination. In connection with the issuance of any new Certificate under this Section 7.04, the Trustee and the Certificate Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to this Section 7.04 shall constitute conclusive evidence of ownership in the Trust, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time. SECTION 7.05. PERSONS DEEMED OWNERS. Prior to due presentation of a Certificate for registration of transfer, the Trustee or the Certificate Registrar shall treat the Person in whose 44 51 name any Certificate shall be registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 5.06 and for all other purposes whatsoever, and neither the Trustee nor the Certificate Registrar shall be bound by any notice to the contrary. SECTION 7.06. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES. The Trustee shall furnish or cause to be furnished to the Servicer, within 15 days after receipt by the Trustee of a request therefor from the Servicer in writing, a list, in such form as the Servicer may reasonably require, of the names and addresses of all Certificateholders as of the most recent Record Date. If three or more Certificateholders, or one or more Holders of Certificates aggregating not less than 25% of the Class A Certificate Balance or the Class B Certificate Balance, apply in writing to the Trustee, and such application states that the applicants desire to communicate with other Certificateholders of their class with respect to their rights under this Agreement or under the Certificates and such application shall be accompanied by a copy of the communication that such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, request from the Clearing Agency and make available to such Certificateholders access during normal business hours to the current list of Certificateholders of such class. Each Holder, by receiving and holding a Certificate, shall be deemed to have agreed to hold neither the Servicer nor the Trustee accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived. SECTION 7.07. MAINTENANCE OF OFFICE OR AGENCY. The Trustee shall maintain in the Borough of Manhattan, The City of New York, an office or offices or agency or agencies where Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Trustee in respect of the Certificates and this Agreement may be served. The Trustee initially designates the Corporate Trust Office as its office for such purposes. The Trustee shall give prompt written notice to the Servicer and to the Certificateholders of any change in the location of the Certificate Register or any such office or agency. SECTION 7.08. BOOK-ENTRY CERTIFICATES. The Class A Certificates and the Class B Certificates, upon original issuance, will be issued in the form of typewritten Certificates representing the Book-Entry Certificates, to be delivered to The Depository Trust Company, the initial Clearing Agency (or a custodian therefor), by, or on behalf of, the Seller. The Class A Certificates and the Class B Certificates delivered to The Depository Trust Company shall initially be registered on the Certificate Register in the name of CEDE & Co., the nominee of the initial Clearing Agency, and no Certificate Owner will receive a definitive certificate representing such Certificate Owner's interest in the Class A Certificates or the Class B Certificates, except as provided in Section 7.10. Unless and until definitive, fully registered Certificates (the "Definitive Certificates") have been issued to Certificate Owners pursuant to Section 7.10: (a) the provisions of this Section 7.08 shall be in full force and effect; (b) the Seller, the Servicer, the Certificate Registrar and the Trustee may deal with the Clearing Agency for all purposes (including the making of distributions on the Class A Certificates and the Class B Certificates) as the authorized representative of the Certificate Owners; 45 52 (c) to the extent that the provisions of this Section 7.08 conflict with any other provisions of this Agreement, the provisions of this Section 7.08 shall control; (d) the rights of Certificate Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Certificate Owners and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the Depository Agreement, unless and until Definitive Certificates are issued pursuant to Section 7.10, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal and interest on the Class A Certificates and the Class B Certificates to such Clearing Agency Participants; and (e) whenever this Agreement requires or permits actions to be taken based upon instructions or directions of Holders evidencing a specified percentage of the Controlling Class of Certificates, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from Certificate Owners and/or Clearing Agency Participants owning or representing, respectively, such required percentage of the Controlling Class of Certificates and has delivered such instructions to the Trustee. The Trustee shall have no obligation to ascertain whether the Clearing Agency has in fact received any such instructions. SECTION 7.09. NOTICES TO CLEARING AGENCY. Whenever notice or other communication to the Class A Certificateholders or the Class B Certificateholders are required under this Agreement, unless and until Definitive Certificates shall have been issued to Certificate Owners pursuant to Section 7.10, the Trustee and the Servicer shall give all such notices and communications specified herein to be given to Holders of the Class A Certificates and the Class B Certificates to the Clearing Agency. SECTION 7.10. DEFINITIVE CERTIFICATES. If (a)(i) the Seller advises the Trustee in writing that the Clearing Agency is no longer willing or able properly to discharge its responsibilities under the Depository Agreement, and (ii) the Trustee or the Seller is unable to locate a qualified successor, (b) the Seller, at its option, advises the Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency, or (c) after the occurrence of an Event of Default, Certificate Owners representing beneficial interests aggregating not less than a majority of the Class A Certificate Balance or Class B Certificate Balance, as applicable, advise the Trustee and the Clearing Agency through the Clearing Agency Participants in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Certificate Owners of such class, then the Trustee shall notify the Clearing Agency and request that the Clearing Agency notify all Certificate Owners of such class of the occurrence of any such event and of the availability of Definitive Certificates to Certificate Owners of such class requesting the same. Upon surrender to the Trustee of the Certificates of such class by the Clearing Agency, accompanied by registration instructions from the Clearing Agency for registration, the Trustee shall issue the applicable Definitive Certificates of such class and deliver such Definitive Certificates in accordance with the instructions of the Clearing Agency. Neither the Seller, the Certificate Registrar nor the Trustee shall be liable for any delay in delivery of such instructions and each may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Certificates, the Trustee shall recognize the Holders of the Definitive Certificates as Certificateholders hereunder. 46 53 ARTICLE VIII THE SELLER SECTION 8.01. REPRESENTATIONS OF SELLER. The Seller makes the following representations on which the Trustee relies in accepting the Receivables in trust and executing and authenticating the Certificates. The representations speak as of the execution and delivery of this Agreement and shall survive the sale of the Receivables to the Trustee: (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 with the Trustee as part of the Trust and has duly authorized such sale and assignment to the Trustee by all necessary corporate action; and the execution, delivery and performance of this Agreement has been duly authorized by the Seller by all necessary corporate action. (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 47 54 governmental instrumentality having jurisdiction over the Seller or its properties; which breach, default, conflict, Lien or violation in any case would have a material adverse effect on the ability of the Seller to perform its obligations under this Agreement. (f) No Proceedings. There are no proceedings or investigations pending, or, to the best of the Seller's knowledge, threatened, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller or its properties: (i) asserting the invalidity of this Agreement, the Yield Supplement Agreement, the Custody and Pledge Agreement or the Certificates; (ii) seeking to prevent the issuance of the Certificates or the consummation of any of the transactions contemplated by this Agreement, , the Yield Supplement Agreement, the Custody and Pledge Agreement; (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 Yield Supplement Agreement, the Custody and Pledge Agreement or the Certificates; or (iv) relating to the Seller and which would adversely affect the federal or any state income tax attributes of the Certificates. SECTION 8.02. LIABILITY OF SELLER; INDEMNITIES. The Seller shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Agreement. (a) The Seller shall indemnify, defend and hold harmless the Trustee, the Trust and the Certificateholders and the Trust from and against any taxes that may at any time be asserted against the Trustee or the Trust with respect to, and as of the date of, the sale of the Receivables to the Trust or the issuance and original sale of the Certificates, including any sales, gross receipts, general corporation, tangible personal property, privilege or license taxes (but, in the case of the Trust, not including any taxes asserted with respect to ownership of the Receivables or federal or other income taxes arising out of the transactions contemplated by this Agreement) and costs and expenses in defending against the same. (b) The Seller shall indemnify, defend and hold harmless the Trustee 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 violation of federal or state securities laws in connection with the registration or the sale of the Certificates. Indemnification under this Section 8.02 shall survive the termination of this Agreement and shall include reasonable fees and expenses of counsel and expenses of litigation. If the Seller shall have made any indemnity payment to the Trustee pursuant to this Section 8.02 and the Trustee thereafter shall collect any of such amounts from others, the Trustee shall promptly repay such amounts to the Seller, without interest (except to the extent the recipient collects interest from others). Promptly after receipt by a party indemnified under this Section 8.02 (for purposes of this paragraph, an "Indemnified Party") of notice of the commencement of any action, such Indemnified Party will, if a claim is to be made in respect thereof against the Seller under this Section 8.02, notify the Seller of the commencement thereof. If any such action is 48 55 brought against any Indemnified Party under this Section 8.02 and it notifies the Seller of the commencement thereof, the Seller will assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Party (who may, unless there is, as evidenced by an Opinion of Counsel to the Indemnified Party stating that there is a conflict of interest, be counsel to the Seller), and the Seller will not be liable to such Indemnified Party under this Section 8.02 for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof, other than reasonable costs of investigation. The obligations set forth in this Section 8.02 shall survive the termination of this Agreement or the resignation or removal of the Trustee and shall include reasonable fees and expenses of counsel and expenses of litigation. If the Seller shall have made any indemnity payments pursuant to this Section 8.02 and the Person to or on behalf of whom such payments are made thereafter collects any of such amounts from others, such Person shall promptly repay such amounts to the Seller, without interest (except to the extent received by such Person). SECTION 8.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, SELLER. Subject to Section 8.06, any Person (a) into which the Seller may be merged or consolidated, (b) resulting from any merger, conversion or consolidation to which the Seller shall be a party, (c) succeeding to the business of the Seller or (d) 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 (i) immediately after giving effect to such transaction, no representation or warranty made pursuant to Section 3.01 shall have been breached and no Event of Default, and no event that, after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing, (ii) the Seller shall have delivered to the Trustee an Officer's Certificate stating that such consolidation, merger or succession and such agreement or assumption comply with this Section 8.03 and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with and (iii) the Seller shall have delivered to the Trustee an Opinion of Counsel either (A) stating that, in the opinion of such counsel, based on customary qualifications and assumptions, all financing statements and continuation statements and amendments thereto have been executed and filed that are necessary fully to perfect the interest of the Trustee in the Receivables, and reciting the details of such filings, or (B) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest. The Seller shall provide notice of any merger, consolidation or succession pursuant to this Section 8.03 to each Rating Agency. Notwithstanding anything herein to the contrary, the execution of the foregoing agreement of assumption and compliance with clauses (i), (ii) and (iii) above shall be conditions to the consummation of the transactions referred to in clauses (a), (b), (c) or (d) above. SECTION 8.04. LIMITATION ON LIABILITY OF SELLER AND OTHERS. (a) Neither the Seller nor any of the directors, officers, employees or agents of the Seller shall be under any liability to the Trust or the Certificateholders, except as provided under this Agreement, for any action taken or for refraining from the taking of any action pursuant to this Agreement; provided, however, that this provision shall not protect the Seller or any such 49 56 person against any liability that would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in the performance of duties or by reason of reckless disregard of obligations and duties under this Agreement. The Seller and any director, officer, employee or agent of the Seller may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising under this Agreement. (b) The Seller shall not be under any obligation to appear in, prosecute or defend any legal action that shall not be incidental to its obligations under this Agreement, and that in its opinion may cause it to incur any expense or liability; provided, however, that the Seller may undertake any reasonable action that it may deem necessary or desirable in respect of this Agreement and its obligations under this Agreement. In such event, the legal expenses and costs of such action and any liability resulting therefrom shall be expenses, costs and liabilities of the Seller and the Seller will not be entitled to be reimbursed therefor. SECTION 8.05. SELLER MAY OWN CERTIFICATES. The Seller and any Affiliate of the Seller may in its individual or any other capacity become the owner or pledgee of Certificates with the same rights as it would have if it were not the Seller or an affiliate thereof, except as otherwise provided in the definition of "Certificateholder" specified in Section 1.01 and except as otherwise specifically provided herein. Certificates so owned by or pledged to the Seller or such controlling or commonly controlled Person shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority or distinction as among all of the Certificates, except as otherwise expressly provided in this Agreement. SECTION 8.06. ADDITIONAL COVENANTS. (a) The Seller agrees with the Certificate Owners and each Rating Agency that the Seller shall not issue any additional securities that could reasonably be expected to affect materially and adversely the rating of the Certificates issued pursuant to this Agreement unless it shall have first obtained the written consent of each Rating Agency to the effect that such issuance will not materially adversely affect such rating; provided that, the issuance of another series of certificates pursuant to an agreement with terms substantially similar to the terms of this Agreement shall not be deemed to materially and adversely affect the ratings on the Certificates. The Seller shall provide a copy of any such consent to the Trustee. (b) The Seller shall not do any of the following without the prior written consent of each Rating Agency (other than Moody's) (which consent shall be to the effect that the acts set forth below shall not affect materially adversely such rating) and, upon the Seller's receipt of such written consent from each Rating Agency (other than Moody's), the Trustee shall, without any exercise of its own discretion, also provide its written consent to the Seller and, 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 Certificates: (i) engage in any business or activity other than those set forth in Article [Three][Two] of the Seller's Certificate of Incorporation[, as amended]; 50 57 (ii) incur any indebtedness, or assume or guaranty any indebtedness of any other entity, other than (A) any indebtedness incurred in connection with any certificates or notes (as defined in the Seller's Certificate of Incorporation), provided that any such future indebtedness incurred in connection with any certificates or notes must be rated at least with the same ratings given the outstanding certificates or notes secured or supported by assets acquired by the Seller from NMAC by each nationally recognized statistical rating organization that has rated such outstanding certificates or notes or, prior to the issuing of such future indebtedness incurred in connection with such certificates or notes, the Seller shall have received confirmation from each nationally recognized statistical rating organization that has rated such outstanding certificates or notes that the ratings of such outstanding certificates or notes will not be adversely affected by the issuance of such future indebtedness and (B) any indebtedness to NMAC or any of its Affiliates incurred in connection with the acquisition of Receivables, provided that (1) such indebtedness shall be fully subordinated (and shall provide for payment only after payment in respect of all outstanding rated debt) and shall be nonrecourse against any assets of the Seller other than the assets pledged to secure such indebtedness; (2) 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; (3) 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 (4) 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. (iii) dissolve or liquidate, in whole or in part; consolidate or merge with or into any other entity or convey or transfer its properties and assets substantially as an entirety to any entity, unless: (A) the entity (if other than the Seller) formed or surviving the consolidation or merger or which acquires the properties and assets of the Seller is organized and existing under the laws of the State of Delaware, expressly assumes the due and punctual payment of, 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][Two], Article [Four][Five] and Article [Fifteen][Seven] of the Seller's Certificate of Incorporation[, as amended]; and (B) immediately after giving effect to the transaction, no default or event of default has occurred and is continuing under any indebtedness of the Seller or any agreements relating to such indebtedness; and (C) the entity (if other than the Seller) formed or surviving the consolidation or merger or which acquires the properties and assets of the Seller agrees that (1) 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 51 58 entity and pay from its assets all obligations and indebtedness of any kind incurred by it, (2) it shall maintain bank accounts, corporate records and books of account separate from those of any direct or ultimate parent of such entity and (3) the business affairs of such entity will be managed by or under the direction of its board of directors and it will conduct its business from an office space separate from any direct or ultimate parent of such entity; and (D) each nationally recognized statistical rating organization that has rated any issue of certificates or notes secured or supported by the 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; (iv) 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. (v) cease to have an "Independent Director," as defined in the Seller's Certificate of Incorporation; (vi) without the affirmative vote of at least one "Independent Director," as defined in the Seller's Certificate of Incorporation, enter into any transaction with the Servicer not in the ordinary course of business; or (vii) modify any provision of Article [Three][Two], Article [Four][Five], or Article [Fifteen][Seven] of the Seller's Certificate of Incorporation[, as amended,] in any material respect. ARTICLE IX THE SERVICER SECTION 9.01. REPRESENTATIONS OF SERVICER. The Servicer makes the following representations on which the Trustee relies in accepting the Receivables in trust and executing and authenticating the Certificates. The representations speak as of the execution and delivery of this Agreement and shall survive the sale of the Receivables to the Trust: (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 Trustee. The location of the Servicer's chief executive office and principal place of business is Torrance, California. 52 59 (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 to 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 this 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 Servicer 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 or the Certificates; (ii) seeking to prevent the issuance of the Certificates or the consummation of any of the transactions contemplated by this Agreement; (iii) seeking any determination or ruling that would materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability of, this Agreement or the Certificates; or (iv) relating to the Servicer and that would adversely affect the federal or any state income tax attributes of the Certificates. SECTION 9.02. INDEMNITIES OF SERVICER. The Servicer shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Servicer under this Agreement. (a) The Servicer shall defend, indemnify and hold harmless the Trustee, the Trust and the Certificateholders from and against any and all costs, expenses, losses, damages, claims and liabilities (collectively, "Damages") arising out of or resulting from the use, ownership or 53 60 operation by the Servicer or any of its Affiliates thereof (other than the Trust) of a Financed Vehicle. (b) The Servicer shall indemnify, defend and hold harmless the Trustee, the Trust and the Certificateholders from and against any and all Damages to the extent that such Damage arose out of, or was imposed upon the Trustee, the Trust or the Certificateholders through the negligence, willful misfeasance or bad faith of the Servicer in the performance of its duties under this Agreement or by reason of reckless disregard of its obligations and duties under this Agreement. (c) The Servicer shall indemnify, defend and hold harmless the Trustee from and against all Damages arising out of or incurred in connection with the acceptance or performance of the trusts and duties herein contained, except to the extent that such Damage: (i) shall be due to the willful misfeasance, bad faith, or negligence (except for errors in judgment) of the Trustee; (ii) relates to any tax other than the taxes with respect to which the Seller shall be required to indemnify the Trustee; (iii) shall arise from the Trustee's breach of any of its representations or warranties set forth in the Basic Documents; (iv) shall be one as to which the Seller is required to indemnify the Trustee and as to which the Trustee has received payment of indemnity from the Seller; or (v) shall arise out of or be incurred in connection with the performance by the Trustee of the duties of successor Servicer hereunder. Promptly after receipt by a party indemnified under this Section 9.02 (for purposes of this paragraph, an "Indemnified Party") of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against the Servicer under this Section 9.02, notify the Servicer of the commencement thereof. If any such action is brought against any Indemnified Party under this Section 9.02 and it notifies the Servicer of the commencement thereof, the Servicer will assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Party (who may, unless there is, as evidenced by an opinion of counsel to the Indemnified Party stating that there is an unwaivable conflict of interest, be counsel to the Servicer), and the Servicer will not be liable to such Indemnified Party under this Section 9.02 for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof, other than reasonable costs of investigation. The obligations set forth in this Section 9.02 shall survive the termination of this Agreement or the resignation or removal of the Servicer or the Trustee and shall include reasonable fees and expenses of counsel and expenses of litigation. If the Servicer shall have made any indemnity payments pursuant to this Section 9.02 and the Person to or on behalf of whom such payments are made thereafter collects any of such amounts from others, such Person shall promptly repay such amounts to the Servicer, without interest (except to the extent received by such Person). Indemnification under this Section 9.02 by NMAC (or any successor thereto pursuant to Section 9.03) as Servicer, with respect to the period such Person was the Servicer, shall survive the termination of such Person as Servicer or a resignation by such Person as Servicer as well as the termination of this Agreement and shall include reasonable fees and expenses of counsel and expenses of litigation. If the Servicer shall have made any indemnity payments pursuant to this Section 9.02 and the recipient thereafter collects any of such amounts 54 61 from others, the recipient shall promptly repay such amounts to the Servicer, without interest (except to the extent the recipient collects interest from others). SECTION 9.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, SERVICER. Any Person (a) into which the Servicer may be merged or consolidated, (b) resulting from any merger, conversion or consolidation to which the Servicer shall be a party, (c) succeeding to the business of the Servicer, or (d) 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 (i) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing, (ii) the Servicer shall have delivered to the Trustee an Officer's Certificate stating that such consolidation, merger or succession and such agreement of assumption comply with this Section 9.03 and that all conditions precedent provided for in this Agreement relating to such transaction have been complied with and (iii) the Servicer shall have delivered to the Trustee an Opinion of Counsel either (A) stating that, in the opinion of such counsel, based on customary qualifications and assumptions, all financing statements and continuation statements and amendments thereto have been executed and filed that are necessary fully to preserve and protect the interest of the Trustee in the Receivables, and reciting the details of such filings, or (B) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest. The Servicer shall provide notice of any merger, consolidation or succession pursuant to this Section 9.03 to each Rating Agency. Notwithstanding anything herein to the contrary, the execution of the foregoing agreement of assumption and compliance with clauses (i), (ii) and (iii) above shall be conditions to the consummation of the transactions referred to in clauses (a), (b), (c) or (d) above. SECTION 9.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. (a) Neither the Servicer nor any of the directors, officers, employees or agents of the Servicer shall be under any liability to the Trust or the Certificateholders, except as provided under this Agreement, for any action taken or for refraining from the taking of any action pursuant to this Agreement 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 55 62 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. In such event, the legal expenses and costs of such action and any liability resulting therefrom shall be expenses, costs and liabilities of the Servicer and the Servicer will not be entitled to be reimbursed therefor. SECTION 9.05. DELEGATION OF DUTIES. So long as NMAC acts as Servicer, the Servicer may at any time without notice or consent subcontract substantially all its duties under this Agreement to any corporation more than 50% of the voting stock of which is owned, directly or indirectly, by Nissan. The Servicer may at any time perform specific duties as servicer under this Agreement through other subcontractors; provided, however, that no such delegation or subcontracting shall relieve the Servicer of its responsibilities with respect to such duties as to which the Servicer shall remain primarily responsible with respect thereto. SECTION 9.06. NMAC NOT TO RESIGN AS SERVICER. Subject to the provisions of Section 9.03 hereof, NMAC shall not resign from the obligations and duties hereby imposed on it as Servicer under this Agreement except upon determination that the performance of its duties under this Agreement shall no longer be permissible under applicable law. Notice of any such determination permitting the resignation of NMAC shall be communicated to the Trustee at the earliest practicable time (and, if such communication is not in writing, shall be confirmed in writing at the earliest practicable time) and any such determination shall be evidenced by an Opinion of Counsel to such effect delivered to the Trustee concurrently with or promptly after such notice. No such resignation shall become effective until the Trustee or a successor Servicer shall (a) have taken the actions required by Section 10.01(b) of this Agreement to effect the termination of the responsibilities and rights of the predecessor Servicer under this Agreement, including the transfer to the successor Servicer for administration by it of all cash amounts that shall at the time be held by the predecessor Servicer for deposit, or shall thereafter be received with respect to a Receivable and the delivery of the Receivable Files, and the related accounts and records maintained by the Servicer, and (b) have assumed the responsibilities and obligations of NMAC as Servicer under this Agreement in accordance with Section 10.02 of this Agreement (other than the initial Servicer's obligation to make Advances). ARTICLE X DEFAULT SECTION 10.01.EVENTS OF DEFAULT. (a) If any one of the following events ("Events of Default") shall occur and be continuing: (i) Any failure (A) by the Servicer to deliver to the Trustee for distribution to Certificateholders, or (B) by the Seller to deliver, for so long as the Custody and Pledge Agreement or similar agreement is in existence, to the Custodian for deposit in the Subordination Spread Account any proceeds or payment required to be so delivered under the terms of the Certificates, this Agreement or the Custody and Pledge Agreement, as the case may be, that shall continue unremedied for a period of three 56 63 Business Days after (1) written notice of such failure is received by the Servicer or the Seller, as the case may be, from the Trustee or Custodian, as the case may be, (2) discovery of such failure by an officer of the Servicer or the Seller, as the case may be, or (3) written notice of such failure is received by the Servicer or the Seller, as the case may be, from the Holders of Certificates evidencing not less than [25%] of the Class A Certificate Balance or the Class B Certificate Balance; or (ii) Any failure by the Servicer (or the Seller, as long as NMAC is the Servicer) to duly observe or to perform in any material respect any other covenant or agreement of the Servicer (or the Seller, as long as NMAC is the Servicer) set forth in the Certificates or in this Agreement (including its agreement to purchase the Receivables pursuant to Section 4.06), which failure shall (A) materially and adversely affect the rights of Certificateholders and (B) continue unremedied for a period of 90 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given (1) to the Servicer (or the Seller, as long as NMAC is the Servicer) by the Trustee, or (2) to the Servicer (or the Seller, as long as NMAC is the Servicer) and to the Trustee by the Holders of Certificates evidencing not less than [25%] of the Class A Certificate Balance or the Class B Certificate Balance; or (iii) The filing of a decree or order by a court or agency or supervisory authority having jurisdiction in the premises in respect to the Servicer 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 in appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for the Servicer or for all or substantially all of its property, or in ordering the winding up or liquidation of its affairs, provided such decree or order remains unstayed and in effect for a period of 90 consecutive days; or (iv) The commencement by the Servicer of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Servicer to the entry of an order for relief in an involuntary case under any such law, or the consent of the Servicer to the appointment of or taking possession by any receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for the Servicer or for all or substantially all of its property, or the making by the Servicer of any general assignment for the benefit of creditors; then, and in each and every case, so long as an Event of Default shall not have been remedied, either the Trustee, or the Holders evidencing not less than a majority of the Controlling Class of Certificates, by notice then given in writing to the Servicer (and to the Trustee if given by the Certificateholders) may terminate all of the rights and obligations of the Servicer under this Agreement. On or after the receipt by the Servicer of such written notice, all authority and power of the Servicer under this Agreement, whether with respect to the Certificates or the Receivables or otherwise, shall, without further action, pass to and be vested in the Trustee or such successor Servicer as may be appointed under Section 10.02; and, without limitation, the Trustee is hereby authorized and empowered to execute and deliver, 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 57 64 purposes of such notice of termination, whether to complete the transfer and endorsement of the Receivables and related documents, or otherwise. (b) The predecessor Servicer shall cooperate with the successor Servicer and the Trustee in effecting the termination of the responsibilities and rights of the predecessor Servicer under this Agreement, including, 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 shall thereafter be received with respect to a Receivable and the delivery of the Receivable Files, and the related accounts and records maintained by the Servicer. All reasonable costs and expenses (including attorneys' fees) incurred in connection with transferring the Receivable Files to the successor Servicer and amending this Agreement to reflect such succession as Servicer pursuant to this Section 10.01 shall be paid by the predecessor Servicer upon presentation of reasonable documentation of such costs and expenses. Upon receipt of notice of an Event of Default, the Trustee shall give notice thereof to each of the Rating Agencies. SECTION 10.02.APPOINTMENT OF SUCCESSOR. (a) Upon the Servicer's receipt of notice of termination pursuant to Section 10.01 or the Servicer's resignation in accordance with the terms of this Agreement, the predecessor Servicer shall continue to perform its functions as Servicer under this Agreement, in the case of termination, only until the date specified in such termination notice or, if no such date is specified in a notice of termination, until receipt of such notice and, in the case of resignation, until the earlier of (i) the date 45 days from the delivery to the Trustee of written notice of such resignation (or written confirmation of such notice) in accordance with the terms of this Agreement and (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 Trustee shall appoint a successor Servicer, and the successor Servicer shall accept its appointment by a written assumption in form acceptable to the Trustee. If a successor Servicer has not been appointed at the time when the predecessor Servicer has ceased to act as Servicer in accordance with this Section 10.02, the Trustee without further action shall automatically be appointed the successor Servicer. Notwithstanding the above, the Trustee shall, if it shall be unwilling or legally unable so to act, appoint, or petition a court of competent jurisdiction to appoint, and the predecessor Servicer, if no successor Servicer has been appointed at the time the predecessor Servicer has ceased to act, may petition a court of competent jurisdiction to appoint, any established institution, having a net worth of not less than $100,000,000 and whose regular business shall include the servicing of automobile and/or light-duty truck receivables, as the successor to the Servicer under this Agreement. (b) Upon appointment, the successor Servicer shall be the successor in all respects to the predecessor Servicer and shall be subject to all the responsibilities, duties and liabilities arising thereafter relating thereto placed on the predecessor Servicer (except the initial Servicer's obligation to make Advances), and shall be entitled, subject to the arrangements referred to in paragraph (c) below, to the Total Servicing Fees and all of the rights granted to the predecessor Servicer by the terms and provisions of this Agreement. 58 65 (c) In connection with such appointment, the Trustee may make such arrangements for the compensation of such successor Servicer out of payments on Receivables as it and such successor Servicer shall agree; provided, however, that no such compensation shall be in excess of that permitted the predecessor Servicer under this Agreement. The Trustee and such successor Servicer shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession. SECTION 10.03.REPAYMENT OF ADVANCES. If the 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 5.04 and 5.06 with respect to all Advances previously made by such Servicer. SECTION 10.04.NOTIFICATION TO CERTIFICATEHOLDERS. Upon any termination of, or appointment of a successor to, the Servicer pursuant to this Article X, the Trustee shall give prompt written notice thereof to Certificateholders at their respective addresses appearing in the Certificate Register and to each of the Rating Agencies. SECTION 10.05.WAIVER OF PAST DEFAULTS. The Holders of Certificates evidencing not less than a majority of the Controlling Class of Certificates may, on behalf of all Holders of Certificates, waive any default by the Servicer in the performance of its obligations hereunder and its consequences, except a default in making any required deposits to or payments from the Collection Account or the Certificate Account in accordance with this Agreement. Upon any such waiver of a past default, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereon. ARTICLE XI THE TRUSTEE SECTION 11.01.DUTIES OF TRUSTEE. The Trustee, both prior to the occurrence of an Event of Default and after an Event of Default shall have been cured or waived, shall undertake to perform such duties as are specifically set forth in this Agreement. If an Event of Default shall have occurred and shall not have been cured or waived and, in the case of an Event of Default described in clause (i) of Section 10.01(a), the Trustee has received notice of such Event of Default pursuant to Section 4.09(b), the Trustee shall exercise such of the rights and powers vested in it by this Agreement, and shall use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of its own affairs; provided, however, that if the Trustee shall assume the duties of the Servicer pursuant to Section 10.02, the Trustee in performing such duties shall use the degree of skill and attention customarily exercised by a servicer with respect to automobile receivables that it services for itself or others. If the Trustee becomes the successor servicer, the Trustee shall not be obligated to make Advances pursuant to Section 5.04. The Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Trustee that shall be specifically required 59 66 to be furnished pursuant to any provision of this Agreement, shall examine them to determine whether they conform to the requirements of this Agreement. The Trustee shall take and maintain custody of the list of Receivables included as Schedule A to this Agreement and shall retain all Servicer's Certificates identifying Receivables that become Administrative Receivables or Warranty Receivables. No provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own bad faith; provided, however, that: (a) Prior to the occurrence of an Event of Default (or, in the case of an Event of Default described in clause (i) of Section 10.01(a), before the Trustee has received notice thereof pursuant to Section 4.09(b)), and after the curing or waiving of all such Events of Default that may have occurred, (i) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Agreement, (ii) the Trustee shall not be liable except for the performance of such duties and obligations as shall be specifically set forth in this Agreement, (iii) no implied covenants or obligations shall be read into this Agreement against the Trustee and (iv) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely on the truth of the statements and the correctness of the opinions expressed upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Agreement; (b) The Trustee shall not be liable for an error of judgment made in good faith by a Trustee Officer, unless it shall be proved that the Trustee shall have been negligent in ascertaining the pertinent facts; (c) The Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken in good faith in accordance with this Agreement or at the direction of the Holders of Certificates evidencing not less than a majority of the Controlling Class of Certificates relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement; (d) The Trustee shall not be charged with knowledge of any failure by the Servicer to comply with the obligations of the Servicer referred to in Section 10.01, or of any failure by the Seller to comply with the obligations of the Seller referred to in Section 10.01, unless a Trustee Officer assigned to the Trustee's Corporate Trust Administration Department obtains actual knowledge of such failure (it being understood that knowledge of the Servicer or the Servicer as custodian, in its capacity as agent for the Trustee, is not attributable to the Trustee) or the Trustee receives written notice of such failure from the Servicer or the Seller, as the case may be, or the Holders of Certificates evidencing not less than a majority of the Class A Certificate Balance or the Class B Certificate Balance; and (e) Without limiting the generality of this Section 11.01 or Section 11.04, the Trustee shall have no duty (i) to see to any recording, filing or depositing of this Agreement, any agreement referred to herein, or any financing statement or continuation statement evidencing a security interest in the Receivables or the Financed Vehicles, or to see to the maintenance of any 60 67 such recording, filing or depositing or to any re-recording, refiling or redepositing of any thereof, (ii) to see to any insurance of the Financed Vehicles or Obligors or to effect or maintain any such insurance, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any Lien or encumbrance of any kind owing with respect to, assessed or levied against, any part of the Trust, (iv) to confirm or verify the contents of any reports or certificates of the Servicer delivered to the Trustee pursuant to this Agreement believed by the Trustee to be genuine and to have been signed or presented by the proper party or parties, or (v) to inspect the Financed Vehicles at any time or ascertain or inquire as to the performance or observance of any of the Seller's or the Servicer's representations, warranties or covenants or the Servicer's duties and obligations as Servicer and as custodian of the Receivable Files under this Agreement. The Trustee shall not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such risk or liability shall not be reasonably assured to it, and none of the provisions contained in this Agreement shall in any event require the Trustee to perform, or be responsible for the manner of performance of, any of the obligations of the Servicer under this Agreement except during such time, if any, as the Trustee shall be the successor to, and be vested with the rights, duties, powers and privileges of, the Servicer in accordance with the terms of this Agreement. SECTION 11.02.TRUSTEE'S CERTIFICATE. Upon request of the Seller or Servicer, on or as soon as practicable after each Distribution Date on which Receivables shall be assigned to the Seller or the Servicer, as applicable, pursuant to Section 11.03, the Trustee shall execute a Trustee's Certificate based on (a) the information contained in the Servicer's Certificate for the related Collection Period, (b) amounts deposited to the Certificate Account and (c) notices received pursuant to this Agreement, identifying the Receivables repurchased by the Seller pursuant to Section 3.02 or purchased by the Servicer pursuant to Sections 4.06 or 12.02 during such Collection Period, and shall deliver such Trustee's Certificate, accompanied by a copy of the Servicer's Certificate for such Collection Period, to the Seller or the Servicer, as the case may be. The Trustee's Certificate submitted with respect to such Distribution Date shall operate, as of such Distribution Date, as an assignment, without recourse, representation or warranty, to the Seller or the Servicer, as the case may be, of all the Trustee's right, title and interest in (other than that the Trustee has good and marketable title to such Receivables on behalf of the Trust) and to such repurchased Receivable, and all security and documents relating thereto, such assignment being an assignment outright and not for security. SECTION 11.03. TRUSTEE'S ASSIGNMENT OF ADMINISTRATIVE RECEIVABLES AND WARRANTY RECEIVABLES. With respect to all Receivables repurchased by the Seller pursuant to Section 3.02 or purchased by the Servicer pursuant to Sections 4.06 or 12.02, the Trustee shall by a Trustee's Certificate assign, without recourse, representation or warranty (other than that the Trustee has good and marketable title to such Receivables on behalf of the Trust), to the Seller or the Servicer (as the case may be) all the Trustee's right, title and interest in and to such Receivables, and all security and documents relating thereto. If in any enforcement suit or legal proceeding it shall be held that the Servicer may not enforce a Receivable on the ground that it shall not be a real party in interest or a holder entitled to enforce the Receivable, the Trustee shall, at the Servicer's expense, take such steps as the Trustee deems necessary or the Servicer may 61 68 reasonably request to enforce the Receivable, including bringing suit in its name or in the name of the Certificateholders. SECTION 11.04.CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as otherwise provided in Section 11.01: (a) The Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officer's Certificate, Servicer's Certificate, certificate of auditors, or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) The Trustee may consult with counsel and any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it under this Agreement in good faith and in accordance with such Opinion of Counsel; (c) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement, or to institute, conduct or defend any litigation under this Agreement or in relation to this Agreement, at the request, order or direction of any of the Certificateholders pursuant to the provisions of this Agreement, unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby; provided, however, that nothing contained in this Agreement shall relieve the Trustee of the obligations, upon the occurrence of an Event of Default (that shall not have been cured or waived), to exercise such of the rights and powers vested in it by this Agreement, and to use the same degree of care and skill in its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs; (d) The Trustee shall not be liable for any action taken, suffered or omitted by it in good faith in accordance with its standard of care and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Agreement; (e) Prior to the occurrence of an Event of Default (or in the case of an Event of Default described in clause (i) of Section 10.01(a), before the Trustee has received notice of such Event of Default pursuant to Section 4.09(b)) and after the curing or waiving of all Events of Default that may have occurred, the Trustee shall not be bound to make any investigation into the facts of matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document, unless requested in writing to do so by Holders of Certificates evidencing not less than a majority of the Class A Certificate Balance or the Class B Certificate Balance; provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation shall be, in the reasonable opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Agreement, the Trustee may require reasonable indemnity against such cost, expense or liability as a condition to so proceeding. The reasonable expense of every such examination shall be paid by the Servicer or, if paid by the Trustee, shall be reimbursed by the Servicer within 30 days after demand. Nothing in this clause (e) shall affect the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Obligors; 62 69 (f) The Trustee may execute any of the trusts or powers hereunder or perform any duties under this Agreement either directly or by or through agents or attorneys or a custodian. The Trustee shall not be responsible for any misconduct or negligence of any such agent or custodian appointed with due care by it hereunder or of the Servicer in its capacity as Servicer or custodian; and (g) Subsequent to the sale of the Receivables by the Seller to the Trustee, the Trustee shall have no duty of independent inquiry, except as may be required by Section 11.01, and the Trustee may rely upon the representations and warranties and covenants of the Seller and the Servicer contained in this Agreement with respect to the Receivables and the Receivable Files. SECTION 11.05.TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES. The recitals contained herein and in the Certificates (other than the certificate of authentication on the Certificates) shall be taken as the statements of the Seller or the Servicer, as the case may be, and the Trustee assumes no responsibility for the correctness thereof. The Trustee shall make no representations as to the validity or sufficiency of this Agreement or of the Certificates (other than the certificate of authentication on the Certificates), or of any Receivable or related document. The Trustee shall at no time have any responsibility or liability for or with respect to the legality, validity and enforceability of any security interest in any Financed Vehicle or any Receivable, or the perfection and priority of such security interest or the maintenance of any such perfection and priority, or for or with respect to the efficacy of the Trust or its ability to generate the payments to be distributed to Certificateholders under this Agreement, including (a) the existence, condition, location and ownership of any Financed Vehicle; (b) the review of any Receivable File therefor; (c) the existence and enforceability of any physical damage insurance thereon; (d) the existence and contents of any Receivable or any Receivable File or any computer or other record thereof; (e) the validity of the assignment of any Receivable to the Trust or of any intervening assignment; (f) the completeness of any Receivable or any Receivable File; (g) the performance or enforcement of any Receivable; (h) the compliance by the Seller or the Servicer with any warranty or representation made under this Agreement or in any related document and the accuracy of any such warranty or representation prior to the Trustee's receipt of notice or other discovery of any noncompliance therewith or any breach thereof; (i) any investment of monies by the Servicer or any loss resulting therefrom (other than monies invested in obligations of the Trustee in its individual capacity) (it being understood that the Trustee shall remain responsible for any Trust property that it may hold); (j) the acts or omissions of the Seller, the Servicer or any Obligor; (k) any action of the Servicer taken in the name of the Trustee; or (l) any action by the Trustee taken at the instruction of the Servicer; provided, however, that the foregoing shall not relieve the Trustee of its obligation to perform its duties under this Agreement. Except with respect to a claim based on the failure of the Trustee to perform its duties under this Agreement or based on the Trustee's bad faith, negligence or willful misconduct, no recourse shall be had for any claim based on any provision of this Agreement, the Certificates or any Receivable or assignment thereof against the Trustee in its individual capacity and the Trustee shall not have any personal obligation, liability or duty whatsoever to any Certificateholder or any other Person with respect to any such claim, and any such claim shall be asserted solely against the Trust or any indemnitor who shall furnish indemnity as provided in this Agreement. The Trustee shall not be accountable for the use or application by the Seller of any of the Certificates or of the proceeds of such Certificates, or for the use or application of any funds paid to the Servicer in respect of the Receivables. 63 70 SECTION 11.06.TRUSTEE MAY OWN CERTIFICATES. The Trustee in its individual or any other capacity may become the owner or pledgee of Certificates and may deal with the Seller and the Servicer in banking transactions with the same rights as it would have if it were not Trustee. SECTION 11.07.TRUSTEE'S FEES AND EXPENSES. The Servicer shall pay to the Trustee, and the Trustee shall be entitled to, the compensation separately agreed upon between the Servicer and the Trustee for all services rendered by it in the execution of the trusts created by this Agreement and in the exercise and performance of any of the Trustee's powers and duties under this Agreement, and the Servicer shall pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances (including the reasonable compensation and the expenses and disbursements of its counsel and of all persons not regularly in its employ) incurred or made by the Trustee in accordance with any provisions of this Agreement, except any such expense, disbursement or advance as may be attributable to the Trustee's willful misfeasance, negligence, or bad faith, and the Servicer shall indemnify the Trustee for, and hold it harmless against, any loss, liability or expense incurred without willful misfeasance, negligence or bad faith or breach of representations and warranties contained in Section 11.14 on the Trustee's part, arising out of or in connection with the acceptance or administration of the Trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Additionally, the Seller, pursuant to Section 8.02, and the Servicer, pursuant to Section 9.02, respectively, shall indemnify the Trustee with respect to certain matters, and the Certificateholders, pursuant to Section 11.04, shall, upon the circumstances therein set forth, indemnify the Trustee under certain circumstances. The provisions of this Section 11.07 shall survive the termination of this Agreement. SECTION 11.08.INDEMNITY OF TRUSTEE. The Trustee shall be indemnified by the Servicer and held harmless against any loss, liability, fee, disbursement or expense (including any compensation or expense referred to in Section 11.07) arising out of or incurred in connection with the acceptance or performance of the trusts and duties contained in this Agreement to the extent that (a) the Trustee shall not be entitled to indemnity for such loss, liability, fee, disbursement or expense by the Seller pursuant to Section 8.02, the Servicer pursuant to Section 9.02, or the Certificateholders pursuant to Section 11.04; (b) such loss, liability, fee, disbursement or expense shall not have been incurred by reason of the Trustee's willful misfeasance, bad faith or negligence; and (c) such loss, liability, fee, disbursement or expense shall not have been incurred by reason of the Trustee's breach of its representations and warranties contained in Section 11.14. SECTION 11.09. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee under this Agreement shall at all times be a corporation having an office in the same state as the location of the Corporate Trust Office as specified in this Agreement, organized and doing business under the laws of such state or the United States of America, authorized under such laws to exercise corporate trust powers and having a combined capital and surplus of at least $50,000,000 and a long-term rating from Moody's of at least Baa3 (or having a corporate parent with at least such rating) and subject to supervision or examination by federal or state authorities. If such corporation shall publish reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purpose of this Section 11.09, the combined capital and surplus of such corporation shall be deemed to be its 64 71 combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 11.09, the Trustee shall resign immediately in the manner and with the effect specified in Section 11.10. SECTION 11.10.RESIGNATION OR REMOVAL OF TRUSTEE. The Trustee may at any time resign and be discharged from the trusts hereby created by giving written notice thereof to the Servicer. Upon receiving such notice of resignation, the Servicer shall promptly appoint a successor Trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor Trustee. If no successor Trustee shall have been so appointed and have accepted appointment within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. If at any time the Trustee shall cease to be eligible in accordance with the provisions of Section 11.09 and shall fail to resign after written request therefor by the Servicer, or if at any time the Trustee shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation, or liquidation, then the Servicer may remove the Trustee. If it shall remove the Trustee under the authority of the immediately preceding sentence, the Servicer shall promptly appoint a successor Trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor Trustee and shall promptly pay all fees owed to the outgoing Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee pursuant to any of the provisions of this Section 11.10 shall not become effective until acceptance of appointment by the successor Trustee pursuant to Section 11.11 and payment of all fees and expenses owed and any other amounts due hereunder to the outgoing Trustee. The Servicer shall provide notice of such resignation or removal of the Trustee to each of the Rating Agencies. SECTION 11.11.SUCCESSOR TRUSTEE. Any successor Trustee appointed pursuant to Section 11.10 shall execute, acknowledge and deliver to the Servicer and to its predecessor Trustee an instrument accepting such appointment under this Agreement, and thereupon the resignation or removal of the predecessor Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become fully vested with all the rights, powers, duties and obligations of its predecessor under this Agreement, with like effect as if originally named as Trustee. The predecessor Trustee shall upon payment of its fees and expenses and any other amounts due it hereunder deliver to the successor Trustee all documents and statements and monies held by it under this Agreement; and the Servicer and the predecessor Trustee shall execute and deliver such instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor Trustee all such rights, powers, duties and obligations. No successor Trustee shall accept appointment as provided in this Section 11.11 unless at the time of such acceptance such successor Trustee shall be eligible pursuant to Section 11.09. 65 72 Upon acceptance of appointment by a successor Trustee pursuant to this Section 11.11, the Servicer shall mail notice of such successor Trustee to all Certificateholders at their addresses as shown in the Certificate Register and to the Rating Agencies. If the Servicer shall fail to mail such notice within 10 days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Servicer. SECTION 11.12.MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be eligible pursuant to Section 11.09, without the execution or filing of any instrument or any further act on the part of any of the parties hereto; anything herein to the contrary notwithstanding. SECTION 11.13.APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. Notwithstanding any other provisions of this Agreement, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust or any Financed Vehicle may at the time be located, the Servicer and the Trustee acting jointly shall have the power and shall execute and deliver all instruments to appoint one or more Persons approved by the Trustee to act as co-trustee, jointly with the Trustee, or separate trustee or separate trustees, of all or any part of the Trust, and to vest in such Person, in such capacity and for the benefit of the Certificateholders, such title to the Trust, or any part thereof, and, subject to the other provisions of this Section 11.13, such powers, duties, obligations, rights and trusts as the Servicer and the Trustee may consider necessary or desirable. If the Servicer shall not have joined in such appointment within 15 days after the receipt by it of a request to do so, or if an Event of Default shall have occurred and be continuing, the Trustee alone shall have the power to make such appointment. No co-trustee or separate trustee under this Agreement shall be required to meet the terms of eligibility as a successor trustee pursuant to Section 11.09 and no notice of a successor trustee shall be required pursuant to Section 11.11. Each separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (a) All rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred upon and exercised or performed by the Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (whether as Trustee under this Agreement or as successor to the Servicer under this Agreement), the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Trustee; (b) No trustee under this Agreement shall be personally liable by reason of any act or omission of any other trustee under this Agreement; 66 73 (c) The Servicer and the Trustee acting jointly may at any time accept the resignation of or remove any separate trustee or co-trustee; and (d) All duties owed hereunder to the Trustee by the Servicer shall be deemed to be owed to each separate trustee and co-trustee. Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Agreement and the conditions of this Article XI. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Trustee or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Trustee. Each such instrument shall be filed with the Trustee and a copy thereof given to the Servicer. Any separate trustee or co-trustee may at any time appoint the Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. Notwithstanding anything to the contrary contained in this Agreement, the appointment of any separate trustee or co-trustee shall not relieve the Trustee of its obligations and duties thereunder. SECTION 11.14.REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee hereby makes the following representations and warranties on which the Seller, the Servicer and the Certificateholders shall rely: (a) The Trustee is a [_______________] duly organized, and validly existing, under the laws of the State of __________ and authorized to conduct and engage in a banking and trust business under such laws; (b) The Trustee has full corporate power, authority and legal right to execute, deliver and perform this Agreement, and has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement; and (c) This Agreement has been duly executed and delivered by the Trustee. SECTION 11.15.TAX RETURNS. The Servicer shall prepare or shall cause to be prepared any tax or information returns required to be filed by the Trust and shall remit or cause to be remitted such returns to the Trustee for signature at least five days before such returns are due to be filed. The Trustee, upon request, will furnish the Servicer with all such information known to the Trustee as may be reasonably required in connection with the preparation of all tax or information returns of the Trust, and shall, upon request, execute such returns. 67 74 SECTION 11.16.TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF CERTIFICATES. All rights of action and claims under this Agreement or the Certificates may be prosecuted and enforced by the Trustee without the possession of any of the Certificates or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee. Any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Certificateholders in respect of which such judgment has been obtained. SECTION 11.17.SUITS FOR ENFORCEMENT. If an Event of Default shall occur and be continuing, the Trustee, in its discretion may, subject to the provisions of Section 11.01, proceed to protect and enforce its rights and the rights of the Certificateholders under this Agreement by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Agreement or in aid of the execution of any power granted in this Agreement or for the enforcement of any other legal, equitable or other remedy as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Trustee or the Certificateholders. SECTION 11.18.RIGHTS OF CERTIFICATEHOLDERS TO DIRECT TRUSTEE. Holders of Certificates evidencing not less than a majority of the Controlling Class of Certificates shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee; provided, however, that, subject to Section 11.01, the Trustee shall have the right to decline to follow any such direction if the Trustee being advised by counsel determines that the action so directed may not lawfully be taken, or if the Trustee in good faith shall, by a Trustee Officer, determine that the proceedings so directed would be illegal or subject it to personal liability or be unduly prejudicial to the rights of Certificateholders not parties to such direction; and provided further that nothing in this Agreement shall impair the right of the Trustee to take any action deemed proper by the Trustee and which is not inconsistent with such direction by the Certificateholders. SECTION 11.19.APPOINTMENT OF CUSTODIAN. For so long as the Custody and Pledge Agreement or any similar agreement is in existence, the Trustee shall appoint the Custodian in accordance with the terms hereof, including that the Custodian must satisfy the requirements for eligibility of the Trustee pursuant to Section 11.09. The Custodian may, but is not required to, be the Trustee. If the Trustee is not the Custodian, the Trustee shall pay any Custodian fees out of the Trustee's fees and not out of assets of the Trust. ARTICLE XII TERMINATION; RELEASE OF RECEIVABLES SECTION 12.01. TERMINATION OF THE TRUST. The respective obligations and responsibilities of the Seller, the Servicer and the Trustee (except for the obligations contained in Sections 5.08(c) and 11.15) created hereby and the Trust created by this Agreement shall terminate upon (a) the purchase as of the last day of any Collection Period by the Servicer at its option, pursuant to Section 12.02, of the corpus of the Trust and the subsequent distribution to Certificateholders pursuant to Section 5.06 of the amount required to be deposited pursuant to 68 75 Section 12.02, (b) the payment to Certificateholders of all amounts required to be paid to them pursuant to this Agreement and the disposition of all property held as part of the Trust or (c) the maturity or other liquidation of the last Receivable and the disposition of any amounts received upon liquidation of any remaining Receivables; provided, however, that in no event shall the trust created by this Agreement continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Rose Kennedy, formerly of Massachusetts, living on the date of this Agreement. The Servicer shall promptly notify the Trustee of any prospective termination pursuant to this Section 12.01. Notice of any termination, specifying the Distribution Date upon which the Certificateholders may surrender their Certificates to the Trustee for payment of the final distribution and cancellation, shall be given promptly by the Trustee by letter to Certificateholders mailed not earlier than the 15th day and not later than the 25th day of the month next preceding the specified Distribution Date stating (a) the Distribution Date upon which final payment of the Certificates shall be made upon presentation and surrender of the Certificates at the office of the Trustee therein designated, (b) the amount of any such final payment and (c) if applicable, that the Record Date otherwise applicable to such Distribution Date is not applicable, payments being made only upon presentation and surrender of the Certificates at the office of the Trustee therein specified. The Trustee shall give such notice to the Certificate Registrar (if other than the Trustee) at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed to Certificateholders amounts distributable on such Distribution Date pursuant to Section 5.06. If fewer than all of the Certificateholders shall surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. If within one year after the second notice fewer than all the Certificates have been surrendered for cancellation, the Trustee may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining Certificateholders concerning surrender of their Certificates, and the cost thereof shall be paid out of the funds and other assets that shall remain subject to this Agreement. Subject to any applicable law, any funds remaining in the Trust after exhaustion of such remedies shall be distributed by the Trustee to the Children's Hospital Los Angeles. SECTION 12.02.OPTIONAL PURCHASE OF ALL RECEIVABLES. On each Distribution Date following the last day of a Collection Period as of which the Pool Balance shall be less than or equal to the Optional Purchase Percentage multiplied by the Original Pool Balance, the Servicer or any successor to the Servicer shall have the option to purchase the corpus of the Trust (whether or not such assets then comprise all or a portion of the Trust). To exercise such option, the Servicer, or any successor to the Servicer, as the case may be, shall notify the Trustee of its intention to do so in writing, no later than the tenth day of the month preceding the month in which the Distribution Date as of which such purchase is to be effected and shall, on or before the Distribution Date on which such purchase is to occur, deposit pursuant to Section 5.05 in the Collection Account an amount equal to the aggregate Administrative Purchase Payments for the Receivables, plus the appraised value of any other 69 76 property held by the Trust, such value to be determined by an appraiser mutually agreed upon by the Servicer and the Trustee, and shall succeed to all interests in and to the Trust; provided, however, that (a) the purchase price shall be equal to or greater than the sum of the Class A Certificate Balance, the Class B Certificate Balance, the Class C Certificate Balance, the Class A Interest Distributable Amount, the Class B Interest Distributable Amount, and the Class C Interest Distributable Amount for such Distribution Date, and (b) the Servicer shall not effect any such purchase so long as the rating of NMAC by Moody's, or if NMAC shall then be unrated by Moody's, then the rating of Nissan Capital of America, Inc., is less than "Bal" by Moody's, and the Seller shall not effect any such purchase so long as the rating of [NARC][NARC II] by Moody's, or if [NARC][NARC II] shall then be unrated by Moody's, then the rating of Nissan Capital of America, Inc., is less than "Ba1" by Moody's, in each case unless the Trustee shall have received an Opinion of Counsel to the effect that such purchase shall not constitute a fraudulent conveyance, subject to such assumptions as to factual matters as may be contained therein. Amounts so deposited will be paid and distributed as set forth in Section 5.06 of this Agreement. Upon such deposit of the amount necessary to purchase the corpus of the Trust, the Servicer shall for all purposes of this Agreement be deemed to have released all claims for reimbursement of Outstanding Advances made in respect of the Receivables. Notice of any such purchase of the corpus of the Trust shall be given by the Trustee to each Certificateholder as soon as practicable after their receipt of notice thereof from the Servicer. SECTION 12.03.RELEASE OF RECEIVABLES. (a) Upon repurchase of any Receivable by the Seller pursuant to Section 3.02 or the Servicer pursuant to Section 4.06 or 12.02, the Trustee on behalf of the Certificateholders shall, without further action, be deemed to transfer, assign, set-over and otherwise convey to the Seller or the Servicer, as the case may be, all right, title and interest of the Trustee in, to and under such repurchased Receivable, all monies due or to become due with respect thereto and all proceeds thereof and the other property conveyed to the Trustee hereunder pursuant to Section 2.02 with respect to such Receivable, and all security and any documents relating thereto, such assignment being an assignment outright and not for security; and the Seller or the Servicer, as applicable, shall thereupon own each such Receivable, and all such related security and documents, free of any further obligation to the Trustee or the Certificateholders with respect thereto. (b) The Trustee shall execute such documents and instruments of transfer and assignment and take such other actions as shall be reasonably requested by the Seller or the Servicer, as the case may be, to effect the conveyance of such Receivable pursuant to Sections 3.02, 4.06 and 12.02. (c) If in any enforcement suit or legal proceeding it is held that the Seller or Servicer may not enforce a repurchased Receivable on the ground that it is not a real party in interest or a holder entitled to enforce the Receivable, the Trustee on behalf of the Certificateholders shall, at the written direction and expense of the Seller or Servicer, as the case may be, take such reasonable steps as the Seller or the Servicer deems necessary to enforce the Receivable, including bringing suit in the name or names of the Certificateholders. 70 77 ARTICLE XIII MISCELLANEOUS PROVISIONS SECTION 13.01.AMENDMENT. This Agreement may be amended from time to time by the Seller, the Servicer, NMAC (so long as NMAC has any rights or obligations thereunder) and the Trustee, without the consent of Certificateholders, (a) to cure any ambiguity, to correct or supplement any provision in this Agreement that may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising hereunder that are not inconsistent with the provisions herein; provided, however, that (i) such amendment shall not materially and adversely affect the interests of any Certificateholder and (ii) the Servicer shall have delivered an Officer's Certificate to the Trustee stating that such amendment will not materially and adversely affect the interests of any Certificateholder; and (b) to change the formula for determining the Specified Subordination Spread Account Balance, provided that (i) each Rating Agency delivers a letter to the Trustee to the effect that the use of such new formulation will not result in a qualification, reduction or withdrawal of its then-current rating of the Certificates and (ii) the Servicer delivers to the Trustee an Officer's Certificate stating that such amendment will not materially and adversely affect the interests of any Certificateholder. An amendment shall be deemed to not materially and adversely affect the interests of the Class A Certificateholders or the Class B Certificateholders if (A) such amendment does not adversely affect the Trust's status as a grantor trust for federal income tax purposes and (B) each Rating Agency confirms in writing that such amendment will not result in a reduction or withdrawal of its then current rating of the Certificates of those Classes, and (C) the Servicer has delivered the Officer's Certificate described in this Section 13.01. This Agreement may also be amended from time to time by the Seller, the Servicer, NMAC (so long as NMAC has any rights or obligations hereunder) and the Trustee with the consent of the Holders of Class A Certificates, the Class B Certificates and the Class C Certificates, each voting as a separate class (which consent of any Holder of a Certificate given pursuant to this Section or pursuant to any other provision of this Agreement shall be conclusive and binding on such Holder and on all future Holders of such Certificate and of any Certificate issued upon the transfer thereof or in exchange thereof or in lieu thereof whether or not notation of such consent is made upon the Certificate), evidencing not less than a majority of the Class A Certificate Balance, the Class B Certificate Balance and the Class C Certificates, respectively, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, or of modifying in any manner the rights of the Holders of Certificates; provided, however, that no such amendment shall (a) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on Receivables or distributions that shall be required to be made on any Certificate or change the Class A Pass-Through Rate, the Class B Pass-Through Rate or the Class C Pass-Through Rate or the Specified Subordinated Spread Account Balance (except as described in clause (b) above) without the consent of each adversely affected Certificateholder or (b) reduce the aforesaid percentage of the Class A Certificate Balance, the Class B Certificate Balance or the Class C Certificate Balance which is required to consent to any such amendment, without the consent of the Holders of all Certificates of such class then outstanding. Notwithstanding the foregoing, no amendment referred to in clause (a) of the preceding proviso will be made unless each Rating Agency confirms that such amendment will not result in a reduction or withdrawal of its rating of 71 78 the Certificates of such class. In connection with any amendment referred to in clause (a) above, the Servicer shall deliver an Officer's Certificate to the Trustee stating that those Certificateholders whose consents were not obtained were not adversely affected by such amendment. Prior to the execution of any such amendment or consent pursuant to this Section 13.01, the Servicer will provide and the Trustee shall distribute written notification of the substance of such amendment or consent to each of the Rating Agencies at least ten Business Days prior to the execution thereof. Promptly after the execution of any such amendment or consent, the Trustee shall furnish written notification of the substance of such amendment or consent to each Certificateholder. It shall not be necessary for the consent of Certificateholders pursuant to this Section 13.01 to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents (and any other consents of Certificateholders provided for in this Agreement) and of evidencing the authorization of the execution thereof by Certificateholders shall be subject to such reasonable requirements as the Trustee may prescribe, including the establishment of record dates pursuant to paragraph number 2 of the Depository Agreement. Prior to the execution of any amendment to this Agreement, the Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and the Opinion of Counsel referred to in Section 13.02(h)(i). The Trustee may, but shall not be obligated to, enter into any such amendment that affects the Trustee's own rights, duties or immunities under this Agreement or otherwise. SECTION 13.02.PROTECTION OF TITLE TO TRUST. (a) The Seller shall execute and file such financing statements and cause to be executed and filed such continuation statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of the Certificateholders and the Trustee in the Receivables and in the proceeds thereof. The Seller shall deliver (or cause to be delivered) to the Trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. (b) The Seller and the Servicer shall notify the Trustee within 30 days after any change of its name, identity or corporate structure in any manner that would, could or might make any financing statement or continuation statement filed by the Seller in accordance with paragraph (a) above seriously misleading within the meaning of Section 9-402(7) of the UCC, and shall promptly file appropriate amendments to all previously filed financing statements or continuation statements. (c) The Seller and the Servicer shall notify the Trustee of any relocation of its principal executive office within 30 days after such relocation, if, as a result of such relocation, the applicable provisions of the UCC would require the filing of any amendment of any 72 79 previously filed financing or continuation statement or of any new financing statement and shall promptly file any such amendment. The Servicer shall at all times maintain each office from which it shall service Receivables, and its principal executive office, within the United States of America. (d) The Servicer shall maintain accounts and records as to each Receivable accurately and in sufficient detail to permit (i) the reader thereof to know at any time the status of such Receivable, including payments and recoveries made and payments owing (and the nature of each), and (ii) reconciliation between payments or recoveries on (or with respect to) each Receivable and the amounts from time to time deposited in the Certificate Account in respect of such Receivable. (e) The Servicer shall maintain its computer systems so that, from and after the time of sale under this Agreement of the Receivables to the Trust, the Servicer's master computer records that refer to a Receivable shall indicate clearly the interest of the Trust in such Receivable and that such Receivable is owned by the Trust. Indication of the Trust's ownership of a Receivable shall be deleted from or modified on the Servicer's computer systems when, and only when, the 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 print-outs that, if they shall refer in any manner whatsoever to any Receivable, shall indicate clearly that such Receivable has been sold to and is owned by the Trust. (g) Upon receipt of a written request from the Trustee, which request shall be made no more frequently than annually, the Servicer shall furnish to the Trustee, within 20 Business Days after receipt of such request, a list of all Receivables (by contract number and name of Obligor) then held as part of the Trust, together with a reconciliation of the list of Receivables attached hereto as Schedule A and to each of the Servicer's Certificates furnished before such request indicating removal of Receivables from the Trust. The Servicer shall permit the Trustee and its agents at any time during normal business hours upon reasonable prior notice to inspect, audit and make copies and abstracts from the Servicer's records regarding any Receivable. (h) The Servicer shall deliver to the Trustee: (i) upon the execution and delivery of this Agreement and of each amendment hereto, an Opinion of Counsel based on the 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 Trustee in the Receivables, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (B) no such action shall be necessary to preserve and protect such interest; and 73 80 (ii) if requested by the Trustee, not more frequently than annually, an Opinion of Counsel, dated as of a date during such 90-day period, stating that, in the opinion of such counsel, based on customary assumptions and qualifications, either (A) all financing statements and continuation statements have been executed and filed that are necessary to perfect the interest of the Trustee in the Receivables, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (B) no such action shall be necessary to preserve and protect such interest. Each Opinion of Counsel referred to in clause (h)(i) or (h)(ii) above shall specify any action necessary (as of the date of such Opinion of Counsel) to be taken in the following year to preserve and protect such interest. SECTION 13.03.LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death or incapacity of any Certificateholder shall not operate to terminate this Agreement or the Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, nor otherwise affect the rights, obligations and liabilities of the parties to this Agreement or any of them. No Certificateholder shall have any right to vote (except as specifically provided herein) or in any manner otherwise control the operation and management of the Trust, or the obligations of the parties to this Agreement, nor shall anything in this Agreement set forth, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association; nor shall any Certificateholder be under any liability to any third person by reason of any action taken pursuant to any provision of this Agreement. No Certificateholder shall have any right by virtue or by availing itself of any provisions of this Agreement to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Agreement, unless such Holder previously shall have given to the Trustee a written notice of default and of the continuance thereof, and unless also (a) the default arises from the Seller's or the Servicer's failure to remit payments when due hereunder, or (b) the Holders of Certificates evidencing not less than a majority of the Controlling Class of Certificates shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee under this Agreement and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee, for 30 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding and during such 30-day period no request or waiver inconsistent with such written request has been given to the Trustee pursuant to this Section 13.03 or Section 10.05; no one or more Holders of Certificates shall have any right in any manner whatever by virtue or by availing itself or themselves of any provisions of this Agreement to affect, disturb or prejudice the rights of the Holders of any of the other Certificates, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Agreement except in the manner provided in this Agreement and for the equal, ratable and common benefit of all Certificateholders of that class. For the protection and enforcement of the provisions of this Section 13.03, each Certificateholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. 74 81 SECTION 13.04.GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTION 13.05.NOTICES. All demands, notices, communications, and instructions upon or to the Seller, the Servicer, the Trustee or any Rating Agencies under this Agreement shall be (a) in writing, personally delivered or mailed by certified mail, return receipt requested, or (b) by facsimile, at its facsimile number, and shall be deemed to have been duly given upon receipt (i) in the case of the Seller or the Servicer, to [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], 990 West 190th Street, Torrance, CA 90502, Attention: Secretary, (310) 719-8013, (ii) in the case of the Trustee, at the Corporate Trust Office, (iii) in the case of Moody's, to Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007, and (iv) in the case of Standard & Poor's, to Standard & Poor's Ratings Services, 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. Any notice required or permitted to be mailed to a Certificateholder shall be given by first class mail, postage prepaid, at the address of such Holder as shown in the Certificate Register. Any notice so mailed within the time prescribed in this Agreement shall be conclusively presumed to have been duly given, whether or not the Certificateholder shall receive such notice. SECTION 13.06.SEVERABILITY OF PROVISIONS. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or of the Certificates or the rights of the Holders thereof. SECTION 13.07.ASSIGNMENT. Notwithstanding anything to the contrary contained herein, except as provided in Sections 8.03 and 9.03 and as provided in the provisions of this Agreement concerning the resignation of the Servicer, this Agreement may not be assigned by the Seller or the Servicer without the prior written consent of the Trustee and the Holders of Certificates evidencing not less than 66-2/3% of the Controlling Class of Certificates. SECTION 13.08.CERTIFICATES NONASSESSABLE AND FULLY PAID. Certificateholders shall not be personally liable for obligations of the Trust. The interests represented by the Certificates shall be nonassessable for any losses or expenses of the Trust or for any reason whatsoever, and, upon authentication thereof by the Trustee pursuant to Section 7.02 or Section 7.03, Certificates shall be deemed fully paid. SECTION 13.09. FURTHER ASSURANCES. The Seller and the Servicer agree to do and perform, from time to time, any and all acts and to execute any and all further instruments required or reasonably requested by the Trustee more fully to effect the purposes of this Agreement, including the execution of any financing statements or continuation statements 75 82 relating to the Receivables for filing under the provisions of the UCC of any applicable jurisdiction. SECTION 13.10.NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay in exercising, on the part of the Trustee or the Certificateholders, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided herein are cumulative and not exhaustive of any rights, remedies, powers and privileges provided by law. SECTION 13.11.THIRD-PARTY BENEFICIARIES. This Agreement will inure to the benefit of and be binding upon the parties hereto, the Certificateholders and their respective successors and permitted assigns. Except as otherwise provided in this Article XIII, no other Person will have any right or obligation hereunder. SECTION 13.12.ACTIONS BY CERTIFICATEHOLDERS. (a) Wherever in this Agreement a provision is made that an action may be taken or a notice, demand or instruction given by Certificateholders, such action, notice or instruction may be taken or given by any Certificateholder, unless such provision requires a specific percentage of Certificateholders. (b) Any request, demand, authorization, direction, notice, consent, waiver or other act by a Certificateholder shall bind such Certificateholder and every subsequent Holder of such Certificate issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or omitted to be done by the Trustee or the Servicer in reliance thereon, whether or not notation of such action is made upon such Certificate. SECTION 13.13.QUALIFICATION AS GRANTOR TRUST; SEPARATE ASSETS. The Trust created hereunder is intended to be a separate grantor trust within the meaning of Subpart E of Part I of Subchapter J of the Internal Revenue Code of 1986, as amended. Those assets held pursuant to the Custody and Pledge Agreement and pursuant to the Yield Supplement Agreement shall not be considered to be owned by the Trust but instead, (i) with respect to the Custody and Pledge Agreement, shall be considered to be owned by the Seller [and/or by the holders of the Class C Certificates,] as the case may be, as set forth in the Custody and Pledge Agreement, and to be pledged to the Trust and (ii) with respect to the Yield Supplement Agreement, shall be considered owned by the Seller, as set forth in the Yield Supplement Agreement, and to be pledged to the Trust. Each agreement should be interpreted accordingly. No party to this Agreement shall take any action to cause the Trust to be treated as other than a grantor trust for federal income tax and state tax purposes. SECTION 13.14.COUNTERPARTS. For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. 76 83 IN WITNESS WHEREOF, the Seller, Servicer, NMAC and the Trustee have caused this Pooling and Servicing Agreement to be duly executed by their respective officers as of the ___ day of ___________________________. [NISSAN AUTO RECEIVABLES CORPORATION][NISSAN AUTO RECEIVABLES CORPORATION II], as Seller By: ----------------------------------- Name: Title: NISSAN MOTOR ACCEPTANCE CORPORATION, as Servicer By: ----------------------------------- Name: Title: NISSAN MOTOR ACCEPTANCE CORPORATION, in its individual capacity By: ----------------------------------- Name: Title: ------------------------------ ------------------------------, as Trustee By: ----------------------------------- Name: Title: S-1 84 SCHEDULE A 85 SCHEDULE B LOCATION OF THE RECEIVABLES FILES 1. NISSAN MOTOR ACCEPTANCE CORPORATION 2901 Kinwest Parkway Irving, Texas 75063 2. NISSAN MOTOR ACCEPTANCE CORPORATION 990 W. 190th Street Torrance, California 90502 3. IRON MOUNTAIN, INC. 1235 N. Union Bower Irving, Texas 75061 86 EXHIBIT A: FORM OF CLASS A CERTIFICATE SEE REVERSE FOR CERTAIN DEFINITIONS [the following legend to be inserted if this Certificate is issued to CEDE & Co.:] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. NISSAN AUTO RECEIVABLES _______ GRANTOR TRUST [_]% ASSET BACKED CERTIFICATE CLASS A evidencing a fractional undivided interest in the Trust, as defined below, the property of which includes a pool of retail installment sale contracts secured by new, near-new and used automobiles and light-duty trucks and sold to the Trust by [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II]. (This Certificate does not represent an interest in or obligation of [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II] or Nissan Motor Acceptance Corporation or any of their respective affiliates thereof, except to the extent described below.) NUMBER CUSIP ___________ R US$_____________ THIS CERTIFIES THAT _______ is the registered owner of a __ dollars nonassessable, fully-paid, fractional undivided interest in the Nissan Auto Receivables _______ Grantor Trust (the "Trust") formed by [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], a Delaware corporation (the "Seller"). The Trust was created pursuant to a Pooling and Servicing Agreement dated as of [_____________], __________ (the "Agreement"), among the Seller, Nissan Motor Acceptance Corporation ("NMAC"), as Servicer (the "Servicer") and in its individual capacity, and ______________________________________, as Trustee (the "Trustee"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in this Agreement. This Certificate is one of the duly authorized Certificates designated as "[__]% Asset Backed A-1 87 Certificates, Class A" (herein called the "Class A Certificates"). Also issued under this Agreement are Certificates designated as "[_]% Asset Backed Certificates, Class B" (the "Class B Certificates") and "[_]% Asset Backed Certificates, Class C" (the "Class C Certificates"). The Class C Certificates, the Class B Certificates and the Class A Certificates are hereinafter collectively called the "Certificates." The aggregate undivided interest in the Trust evidenced by all Class A Certificates is [_]%. This Class A Certificate is issued under and is subject to the terms, provisions and conditions of this Agreement, to which Agreement the holder of this Class A Certificate, by virtue of the acceptance hereof, assents and by which such holder is bound. The property of the Trust includes (as more fully described in this Agreement) a pool of retail installment sale contracts of new, near-new and used automobiles and light-duty trucks (the "Receivables"), certain monies paid thereon on or after ____________, security interests in the vehicles financed thereby, certain bank accounts and the proceeds thereof, property (including the right to receive Net Liquidation Proceeds) securing the Receivables and held by the Trustee, proceeds from claims on physical damage, credit life and disability insurance policies covering vehicles financed thereby and the obligors thereunder, certain interests of the Seller in Dealer Recourse, all right, title and interest of the Seller in and to the Purchase Agreement, the Yield Supplement Agreement and the Custody and Pledge Agreement and any and all proceeds of the foregoing. Under this Agreement, there will be distributed on the 15th day of each month or, if such 15th day is not a Business Day, the next Business Day (the "Distribution Date"), commencing on _____________________, to the person in whose name this Class A Certificate is registered at the close of business on the Record Date (as determined pursuant to this Agreement), such Class A Certificateholder's fractional undivided interest of the amounts to be distributed to the Class A Certificateholders as determined pursuant to this Agreement. Distributions on this Class A Certificate will be made by the Trustee by check or money order mailed to the Class A Certificateholder of record in the Certificate Register without the presentation or surrender of this Class A Certificate or the making of any notation hereon except that with respect to Class A Certificates registered in the name of Cede & Co., the nominee for the Clearing Agency, distributions will be made in the form of immediately available funds. Except as otherwise provided in this Agreement and notwithstanding the above, the final distribution on this Class A Certificate will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Class A Certificate at the office or agency maintained for that purpose by the Trustee in the Borough of Manhattan, The City of New York. The Record Date otherwise applicable to such distribution shall not be applicable. Reference is hereby made to the further provisions of this Class A Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon shall have been executed by an authorized officer of the Trustee, by manual signature, this Class A Certificate shall not entitle the holder hereof to any benefit under this Agreement or be valid for any purpose. A-2 88 IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its individual capacity has caused this Class A Certificate to be duly executed. NISSAN AUTO RECEIVABLES GRANTOR TRUST BY , ----------------------------------- as Trustee By: ----------------------------------- DATED: [SEAL] ATTEST: - ---------------------- Authorized Officer This is one of the Class A Certificates referred to in the within-mentioned Agreement. ------------------------------, ------------------------------, as Trustee By: ----------------------------------- Authorized Officer A-3 89 [Reverse of Certificate] The Certificates do not represent an obligation of, or an interest in, the Seller, Nissan Motor Acceptance Corporation, the Trustee or any affiliate of any of them. The Certificates are limited in right of payment to certain collections and recoveries respecting the Receivables, all as more specifically set forth in this Agreement. A copy of this Agreement may be examined during normal business hours at the principal office of the Seller, and at such other places, if any, designated by the Seller, by any Certificate Owner upon request. This Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Seller and the rights of the Certificateholders under this Agreement at any time by the Seller, the Servicer, NMAC and the Trustee with the consent of the Holders of Class A Certificates, Class B Certificates and Class C Certificates, each voting as a Class, evidencing not less than a majority of the Class A Certificate Balance, the Class B Certificate Balance and the Class C Certificate Balance, respectively. Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and on all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate. This Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any of the Certificates. As provided in this Agreement and subject to certain limitations set forth therein, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Certificate Registrar, or by any successor Certificate Registrar, in the Borough of Manhattan, The City of New York, accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Certificate Registrar duly executed by the holder hereof or such holder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate interest in the Trust will be issued to the designated transferee. The Class A Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 and integral multiples thereof; however, one Certificate may be issued in a denomination equal to the residual amount. As provided in this Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of authorized denomination evidencing the same aggregate denomination, as requested by the holder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee may require payment of a sum sufficient to cover any tax or governmental charges payable in connection therewith. The Trustee, the Certificate Registrar and any agent of the Trustee or the Certificate Registrar shall treat the person in whose name this Class A Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Certificate Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by this Agreement and the Trust created thereby shall terminate upon the payment to Certificateholders of all amounts required to A-4 90 be paid to them pursuant to this Agreement and the disposition of all property held as part of the Trust. The Servicer of the Receivables may at its option purchase the corpus of the Trust at a price specified in this Agreement, and such purchase of the Receivables and other property of the Trust will effect early retirement of the Certificates; however, such right of purchase is exercisable only as of a Record Date as of which the Pool Balance is less than or equal to 10% of the original aggregate principal balance of the Receivables. The recitals contained herein (other than the certificate of authentication herein) shall be taken as the statements of the Seller or the Servicer, as the case may be, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representations as to the validity or sufficiency of this Certificate (other than the certificate of authentication herein), or of any Receivable or related document. A-5 91 ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE (Please print or typewrite name and address, including postal zip code, of assignee) the within Certificate, and all rights thereunder, hereby irrevocably constituting and appointing ____________________________________________________________ Attorney to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated: * ---------------------------- Signature Guaranteed: * ---------------------------- * NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. A-6 92 EXHIBIT B: FORM OF CLASS B CERTIFICATE SEE REVERSE FOR CERTAIN DEFINITIONS THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE TRANSFERRED OR SOLD TO A PERSON OTHER THAN A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE ACT) THAT CERTIFIES AS SUCH TO THE SATISFACTION OF THE SELLER, UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED AND THE SATISFACTION OF CERTAIN OTHER SIGNIFICANT REQUIREMENTS SPECIFIED IN THIS AGREEMENT (AS DEFINED BELOW). NISSAN AUTO RECEIVABLES _______ GRANTOR TRUST [_]% ASSET BACKED CERTIFICATE CLASS B evidencing a fractional undivided interest in the Trust, as defined below, the property of which includes a pool of retail installment sale contracts secured by new, near-new and used automobiles and light-duty trucks and sold to the Trust by [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II]. (This Certificate does not represent an interest in or obligation of [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II] or Nissan Motor Acceptance Corporation or any of their respective affiliates thereof, except to the extent described below.) NUMBER CUSIP_________________ R US$___________________ THIS CERTIFIES THAT _______________________ is the registered owner of a _____________ dollars nonassessable, fully-paid, fractional undivided interest in the Nissan Auto Receivables _______ Grantor Trust (the "Trust") formed by [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], a Delaware corporation (the "Seller"). The Trust was created pursuant to a Pooling and Servicing Agreement dated as of [__________], ____ (the "Agreement"), among the Seller, Nissan Motor Acceptance Corporation ("NMAC"), as Servicer (the "Servicer") and in its individual capacity, and ______________________________________, as Trustee (the "Trustee"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in this Agreement. This Certificate is one of the duly authorized Certificates designated as "[_]% Asset Backed Certificates, Class B" (herein called the "Class B Certificates"). Also issued under this Agreement are Certificates designated as "[__]% Asset Backed Certificates, Class A" (the "Class A Certificates"). The Class B Certificates and the Class A Certificates are hereinafter B-1 93 collectively called the "Certificates." The aggregate undivided interest in the Trust evidenced by all Class B Certificates is [__]%. This Class B Certificate is issued under and is subject to the terms, provisions, and conditions of this Agreement, to which Agreement the holder of this Class B Certificate, by virtue of the acceptance hereof, assents and by which such holder is bound. The property of the Trust includes (as more fully described in this Agreement) a pool of retail installment sale contracts for new, near-new and used automobiles and light-duty trucks (the "Receivables"), certain monies paid thereon on or after ________________, security interests in the vehicles financed thereby, certain bank accounts and the proceeds thereof, property (including the right to receive Net Liquidation Proceeds) securing the Receivables, proceeds from claims on physical damage, credit life and disability insurance policies covering vehicles financed thereby and the obligors thereunder, certain interests of the Seller in Dealer Recourse, all right, title and interest of the Seller in and to the Purchase Agreement, the Yield Supplement Agreement and the Custody and Pledge Agreement and any and all proceeds of the foregoing. The rights of the holders of the Class B Certificates are subordinated to the rights of the holders of the Class A Certificates, as set forth in this Agreement. Under this Agreement, there will be distributed on the 15th day of each or, if such 15th day is not a Business Day, the next Business Day (the "Distribution Date"), commencing on _________________, to the person in whose name this Class B Certificate is registered at the close of business on the Record Date (as determined pursuant to this Agreement), such Class B Certificateholder's fractional undivided interest in the amounts to be distributed to the Class B Certificateholders as determined pursuant to this Agreement. Distributions on this Class B Certificate will be made by the Trustee by wire transfer, check or money order mailed to the Class B Certificateholder of record in the Certificate Register without the presentation or surrender of this Class B Certificate or the making of any notation hereon. Except as otherwise provided in this Agreement and notwithstanding the above, the final distribution on this Class B Certificate will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Class B Certificate at the office or agency maintained for that purpose by the Trustee in the Borough of Manhattan, The City of New York. Reference is hereby made to the further provisions of this Class B Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon shall have been executed by an authorized officer of the Trustee, by manual signature, this Class B Certificate shall not entitle the holder hereof to any benefit under this Agreement or be valid for any purpose. B-2 94 IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its individual capacity has caused this Class B Certificate to be duly executed. NISSAN AUTO RECEIVABLES _______ GRANTOR TRUST BY , ------------------------------------- as Trustee DATED: BY ----------- ----------------------------------- [SEAL] ATTEST: - ----------------------------------- Authorized Officer This is one of the Class B Certificates referred to in the within-mentioned Agreement. ------------------------------------- ------------------------------------- as Trustee By ------------------------------------- Authorized Officer B-3 95 [Reverse of Certificate] The Certificates do not represent an obligation of, or an interest in, the Seller, Nissan Motor Acceptance Corporation, the Trustee or any affiliate of any of them. The Certificates are limited in right of payment to certain collections and recoveries respecting the Receivables, all as more specifically set forth in this Agreement. A copy of this Agreement may be examined during normal business hours at the principal office of the Seller, and at such other places, if any, designated by the Seller, by any Certificate Owner upon request. This Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Seller and the rights of the Certificateholders under this Agreement at any time by the Seller, the Servicer, NMAC and the Trustee with the consent of the Holders of Class A Certificates, Class B Certificates and Class C Certificates, each voting as a Class, evidencing not less than a majority of the Class A Certificate Balance, the Class B Certificate Balance and the Class C Certificate Balance, respectively. Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and on all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate. This Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any of the Certificates. As provided in this Agreement and subject to certain significant limitations on transfer therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Certificate Registrar, or by any successor Certificate Registrar, in the Borough of Manhattan, The City of New York, accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Certificate Registrar duly executed by the holder hereof or such holder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate interest in the Trust will be issued to the designated transferee. The Class B Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 or in any amount in excess thereof; however, one Certificate may be issued in a denomination representing or including any residual amount. As provided in this Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate denomination, as requested by the holder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee may require payment of a sum sufficient to cover any tax or governmental charges payable in connection therewith. The Trustee, the Certificate Registrar and any agent of the Trustee or the Certificate Registrar shall treat the person in whose name this Class B Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Certificate Registrar, nor any such agent shall be affected by any notice to the contrary. B-4 96 The obligations and responsibilities created by this Agreement and the Trust created thereby shall terminate upon the payment to Certificateholders of all amounts required to be paid to them pursuant to this Agreement and the disposition of all property held as part of the Trust. The Servicer of the Receivables may at its option purchase the corpus of the Trust at a price specified in this Agreement, and such purchase of the Receivables and other property of the Trust will effect early retirement of the Certificates; however, such right of purchase is exercisable only as of a Record Date as of which the Pool Balance is less than or equal to 10% of the original aggregate principal balance of the Receivables. The recitals contained herein (other than the certificate of authentication herein) shall be taken as the statements of the Seller or the Servicer, as the case may be, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representations as to the validity or sufficiency of this Certificate (other than the certificate of authentication herein), or of any Receivable or related document. B-5 97 ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - ------------------------------------------------------------ (Please print or typewrite name and address, including postal zip code, of assignee) the within Certificate, and all rights thereunder, hereby irrevocably constituting and appointing ___________________________________________________ Attorney to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated: * ------------------------------ Signature Guaranteed: ------------------------------ * NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. B-6 98 EXHIBIT C: FORM OF CLASS C CERTIFICATE SEE REVERSE FOR CERTAIN DEFINITIONS THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE TRANSFERRED OR SOLD TO A PERSON OTHER THAN A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE ACT) THAT CERTIFIES AS SUCH TO THE SATISFACTION OF THE SELLER, UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED AND THE SATISFACTION OF CERTAIN OTHER SIGNIFICANT REQUIREMENTS SPECIFIED IN THIS AGREEMENT (AS DEFINED BELOW). NISSAN AUTO RECEIVABLES _______ GRANTOR TRUST [_]% ASSET BACKED CERTIFICATE CLASS C evidencing a fractional undivided interest in the Trust, as defined below, the property of which includes a pool of retail installment sale contracts secured by new, near-new and used automobiles and light-duty trucks and sold to the Trust by [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II]. (This Certificate does not represent an interest in or obligation of [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II] or Nissan Motor Acceptance Corporation or any of their respective affiliates thereof, except to the extent described below.) NUMBER CUSIP_____________ R US$_______________ THIS CERTIFIES THAT _______________________ is the registered owner of a _____________ dollars nonassessable, fully-paid, fractional undivided interest in the Nissan Auto Receivables _______ Grantor Trust (the "Trust") formed by [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], a Delaware corporation (the "Seller"). The Trust was created pursuant to a Pooling and Servicing Agreement dated as of [__________], _____ (the "Agreement"), among the Seller, Nissan Motor Acceptance Corporation("NMAC"), as Servicer (the "Servicer") and in its individual capacity, and ______________________________________, as Trustee (the "Trustee"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in this Agreement. This Certificate is one of the duly authorized Certificates designated as "[_]% Asset Backed Certificates, Class C" (herein called the "Class C Certificates"). Also issued under this Agreement are Certificates designated as "[__]% Asset Backed Certificates, Class A" (the "Class A Certificates") and [_]% Asset Backed Certificates, Class B. The Class C Certificates, C-1 99 the Class B Certificates and the Class A Certificates are hereinafter collectively called the "Certificates." The aggregate undivided interest in the Trust evidenced by all Class C Certificates is [__]%. This Class C Certificate is issued under and is subject to the terms, provisions, and conditions of this Agreement, to which Agreement the holder of this Class C Certificate, by virtue of the acceptance hereof, assents and by which such holder is bound. The property of the Trust includes (as more fully described in this Agreement) a pool of retail installment sale contracts for new, near-new and used automobiles and light-duty trucks (the "Receivables"), certain monies paid thereon on or after ______________, security interests in the vehicles financed thereby, certain bank accounts and the proceeds thereof, property (including the right to receive Net Liquidation Proceeds) securing the Receivables, proceeds from claims on physical damage, credit life and disability insurance policies covering vehicles financed thereby and the obligors thereunder, certain interests of the Seller in Dealer Recourse, all right, title and interest of the Seller in and to the Purchase Agreement, the Yield Supplement Agreement and the Custody and Pledge Agreement and any and all proceeds of the foregoing. The rights of the holders of the Class C Certificates are subordinated to the rights of the holders of the Class A Certificates and the Class B Certificates, as set forth in this Agreement. Under this Agreement, there will be distributed on the 15th day of each or, if such 15th day is not a Business Day, the next Business Day (the "Distribution Date"), commencing on _______________, to the person in whose name this Class C Certificate is registered at the close of business on the Record Date (as determined pursuant to this Agreement), such Class C Certificateholder's fractional undivided interest in the amounts to be distributed to the Class C Certificateholders as determined pursuant to this Agreement; provided, however, that under certain circumstances specified in this Agreement, amounts otherwise distributable to the Class C Certificateholders will be deposited in the Subordination Spread Account. Distributions on this Class C Certificate will be made by the Trustee by wire transfer, check or money order mailed to the Class C Certificateholder of record in the Certificate Register without the presentation or surrender of this Class C Certificate or the making of any notation hereon. Except as otherwise provided in this Agreement and notwithstanding the above, the final distribution on this Class C Certificate will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Class C Certificate at the office or agency maintained for that purpose by the Trustee in the Borough of Manhattan, The City of New York. Reference is hereby made to the further provisions of this Class C Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon shall have been executed by an authorized officer of the Trustee, by manual signature, this Class C Certificate shall not entitle the holder hereof to any benefit under this Agreement or be valid for any purpose. C-2 100 IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its individual capacity has caused this Class C Certificate to be duly executed. NISSAN AUTO RECEIVABLES _______ GRANTOR TRUST BY , ------------------------------------- as Trustee DATED: BY ----------- ----------------------------------- [SEAL] ATTEST: - ----------------------------------- Authorized Officer This is one of the Class B Certificates referred to in the within-mentioned Agreement. ------------------------------------- ------------------------------------- as Trustee By ------------------------------------- Authorized Officer C-3 101 [Reverse of Certificate] The Certificates do not represent an obligation of, or an interest in, the Seller, Nissan Motor Acceptance Corporation, the Trustee or any affiliate of any of them. The Certificates are limited in right of payment to certain collections and recoveries respecting the Receivables, all as more specifically set forth in this Agreement. A copy of this Agreement may be examined during normal business hours at the principal office of the Seller, and at such other places, if any, designated by the Seller, by any Certificate Owner upon request. This Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Seller and the rights of the Certificateholders under this Agreement at any time by the Seller, the Servicer, NMAC and the Trustee with the consent of the Holders of Class A Certificates, Class B Certificates and Class C Certificates, each voting as a Class, evidencing not less than a majority of the Class A Certificate Balance, the Class B Certificate Balance and the Class C Certificate Balance, respectively. Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and on all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate. This Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any of the Certificates. As provided in this Agreement and subject to certain significant limitations on transfer therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Certificate Registrar, or by any successor Certificate Registrar, in the Borough of Manhattan, The City of New York, accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Certificate Registrar duly executed by the holder hereof or such holder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate interest in the Trust will be issued to the designated transferee. The Class C Certificates are issuable only as registered Certificates without coupons in denominations of $100,000 or in any amount in excess thereof; however, one Certificate may be issued in a denomination representing or including any residual amount. As provided in this Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate denomination, as requested by the holder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee may require payment of a sum sufficient to cover any tax or governmental charges payable in connection therewith. The Trustee, the Certificate Registrar and any agent of the Trustee or the Certificate Registrar shall treat the person in whose name this Class C Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Certificate Registrar, nor any such agent shall be affected by any notice to the contrary. C-4 102 The obligations and responsibilities created by this Agreement and the Trust created thereby shall terminate upon the payment to Certificateholders of all amounts required to be paid to them pursuant to this Agreement and the disposition of all property held as part of the Trust. The Servicer of the Receivables may at its option purchase the corpus of the Trust at a price specified in this Agreement, and such purchase of the Receivables and other property of the Trust will effect early retirement of the Certificates; however, such right of purchase is exercisable only as of a Record Date as of which the Pool Balance is less than or equal to 10% of the original aggregate principal balance of the Receivables. The recitals contained herein (other than the certificate of authentication herein) shall be taken as the statements of the Seller or the Servicer, as the case may be, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representations as to the validity or sufficiency of this Certificate (other than the certificate of authentication herein), or of any Receivable or related document. C-5 103 ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - ------------------------------------------------------------ (Please print or typewrite name and address, including postal zip code, of assignee) the within Certificate, and all rights thereunder, hereby irrevocably constituting and appointing ___________________________________________________ Attorney to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated: * ---------------------------------- Signature Guaranteed: * ---------------------------------- * NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. C-6 104 Exhibit F-1 Trustee's Certificate pursuant to Section 11.03 of the Pooling and Servicing Agreement ______________________________________, as trustee (the "Trustee") of the Nissan Auto Receivables _______ Grantor Trust created pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") dated as of [_____________], ____, among [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], as Seller (the "Seller"), Nissan Motor Acceptance Corporation, as Servicer and in its individual capacity, and the Trustee, does hereby sell, transfer, assign and otherwise convey to the Seller, without recourse, representation or warranty, all of the Trustee's right, title and interest in and to all of the Receivables (as defined in the Pooling and Servicing Agreement) identified in the attached Servicer's Certificate as "Warranty Receivables," which are to be repurchased by the Seller pursuant to Section 3.02, and all security and documents relating thereto. IN WITNESS WHEREOF I have hereunto set my hand this ____ day of __________ ,__________. - -------------------------------------------------------------------------------- F-1 105 Exhibit F-2 Trustee's Certificate pursuant to Section 11.03 of the Pooling and Servicing Agreement ______________________________________, as trustee (the "Trustee") of the Nissan Auto Receivables _______ Grantor Trust created pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") dated as of [__________], ____, among [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], as Seller, Nissan Motor Acceptance Corporation, as Servicer (the "Servicer") and in its individual capacity and the Trustee, does hereby sell, transfer, assign and otherwise convey to the Servicer, without recourse, representation or warranty, all of the Trustee's right, title and interest in and to all of the Receivables (as defined in the Pooling and Servicing Agreement) identified in the attached Servicer's Certificate as "Administrative Receivables," which are to be purchased by the Servicer pursuant to Section 4.06 or 12.02, and all security and documents relating thereto. IN WITNESS WHEREOF I have hereunto set my hand this ___ day of _________ ,________. 106 EXHIBIT H-1 FORM OF REPRESENTATION LETTER Nissan Auto Receivables [____-___] Grantor Trust ___% Asset Backed Certificates, Class A I [Name], hereby represent and warrant to [____________], as trustee (the "Trustee") of the above-named trust, as follows: 1. I am [an officer of [Name of the Transferee],] the proposed transferee (the "Transferee") of an ownership interest in the Class A Certificates (the "Certificates") issued pursuant to the Pooling and Servicing Agreement (the "Agreement"), dated as of [_________], relating to the above-referenced securities, among [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], as seller, Nissan Motor Acceptance Corporation, as servicer, and the Trustee. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Agreement. [The Transferee has authorized me to make the following representations and warranties on behalf of the Transferee.] 2. The Transferee agrees to require a Representation Letter substantially in the form of this Representation Letter from any Person to whom the Transferee attempts to transfer its interest in the Certificates and in connection with any transfer by a Person for whom the Transferee is acting as nominee, trustee or agent. The Transferee will not transfer its interest or cause any interest to be transferred to any Person that the Transferee knows cannot truthfully complete such a Representation Letter. 3. CHECK APPROPRIATE BOX: [ ] The Transferee is not an employee benefit plan or arrangement subject to Section 406 of the Employee Retirement Income Security Act of 1974, as amended, or a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (a "Plan"), nor a person acting on behalf of a Plan nor using the assets of a Plan to effect such transfer; or [ ] if such Transferee is a Plan, then (A) such Plan is an "accredited investor" as defined in Rule 501(a)(1) of Regulation D under the Securities Act; (B) such Plan's investment in the Certificates does not exceed 25% of all of the Certificates outstanding at the time of such transfer; and H-1-1 107 (C) immediately after the acquisition, no more than 25% of the assets of the Plan with respect to which a person has discretionary authority or renders investment advice are invested in certificates representing interests in trusts containing assets sold or serviced by the same entity. IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed this [___] day of [________, __]. ------------------------------ Print Name of the Transferee [By: ----------------------------------- Name: Title:] H-1-2 108 EXHIBIT H-2 FORM OF REPRESENTATION LETTER Nissan Auto Receivables [_____-__] Grantor Trust ___% Asset Backed Certificates, Class [B][C] I [Name], hereby represent and warrant to [_____________], as trustee (the "Trustee") of the above-named trust, as follows: 1. I am [an officer of [Name of Transferee],] the proposed transferee (the "Transferee") of an ownership interest in the Class [B][C] Certificates (the "Certificates") issued pursuant to the Pooling and Servicing Agreement (the "Agreement"), dated as of [_________], relating to the above-referenced securities, among [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], as seller, Nissan Motor Acceptance Corporation, as servicer, and the Trustee. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Agreement. [The Transferee has authorized me to make the following representations and warranties on behalf of the Transferee.] 2. The Transferee agrees to require a Representation Letter substantially in the form of this Representation Letter from any Person to whom the Transferee attempts to transfer its interest in the Certificates and in connection with any transfer by a Person for whom the Transferee is acting as nominee, trustee or agent. The Transferee will not transfer its interest or cause any interest to be transferred to any Person that the Transferee knows cannot truthfully complete such a Representation Letter. 3. CHECK APPROPRIATE BOX: [ ] The Transferee is not an employee benefit plan or arrangement subject to Section 406 of the Employee Retirement Income Security Act of 1974, as amended, or a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (a "Plan"), nor a person acting on behalf of a Plan nor using the assets of a Plan to effect such transfer; or [ ] The Transferee is an insurance company purchasing the Certificates or beneficial interest therein with funds contained in an "insurance company general account" (as defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) as to which there is the Plan with respect to which the amount of such general account's reserves and liabilities for the contracts held by or on behalf of such Plan and all other Plans maintained by the same employer (or affiliate thereof as defined in Section V(a)(1) of PTCE 95-60) or by the same employee organization does not exceed 10% of the total of all reserves and liabilities of such general account (as such amounts are determined under Section I(a) of PTCE 95-60) at the date of acquisition. H-2-1 109 IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed this [___] day of [________, __]. ------------------------------ Print Name of the Transferee [By: ----------------------------------- Name: Title:] H-1-2 EX-4.5 8 a67668a1ex4-5.txt EXHIBIT 4.5 1 EXHIBIT 4.5 PURCHASE AGREEMENT This PURCHASE AGREEMENT is made as of this ______ day of ____________, by and between NISSAN MOTOR ACCEPTANCE CORPORATION, a California corporation (the "Seller"), having its principal executive office at 990 W. 190th Street, Torrance, California 90502, and [NISSAN AUTO RECEIVABLES CORPORATION][NISSAN AUTO RECEIVABLES CORPORATION II], a Delaware corporation (the "Purchaser"), having its principal executive office at 990 W. 190th Street, Torrance, California 90502. WHEREAS, in the regular course of its business, the Seller purchases certain motor vehicle retail installment sale contracts secured by new and used automobiles and light duty trucks from motor vehicle dealers. WHEREAS, the Seller and the Purchaser wish to set forth the terms pursuant to which the Receivables (as hereinafter defined) and certain other property are to be sold by the Seller to the Purchaser, which Receivables will be transferred by the Purchaser pursuant to the [Pooling and Servicing Agreement (as hereinafter defined)] [Sale and Servicing Agreement (as hereinafter defined)], to the NISSAN AUTO RECEIVABLES [GRANTOR] [OWNER] TRUST, which will issue [notes backed by such Receivables and the other property of the Trust (the "Notes") and] certificates representing fractional undivided interests in such Receivables and the other property of the Trust (the "Certificates"). NOW, THEREFORE, in consideration of the foregoing, other good and valuable consideration, and the mutual terms and covenants contained herein, the parties hereto agree as follows: ARTICLE I CERTAIN DEFINITIONS Terms not defined in this Agreement shall have the respective meanings assigned such terms set forth in the [Pooling and Servicing Agreement] [Sale and Servicing Agreement or Trust Agreement, as the case may be]. As used in this Agreement, the following terms shall, unless the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms of the terms defined): "Agreement" means this Purchase Agreement and all amendments hereof and supplements hereto. 1 2 "Assignment" means the document of assignment attached to this Agreement as Exhibit A. "Certificates" shall have the meaning specified in the introductory paragraphs of this Agreement. "Closing" shall have the meaning specified in Section 2.2. "Closing Date" means [ ]. "Collections" means all amounts collected by the Servicer (from whatever source) on or with respect to the Receivables. "Damages" shall have the meaning specified in Section 5.4(a). "Distribution Date" means, for each Collection Period, the 15th day of the following month or, if such 15th day is not a Business Day, the next succeeding Business Day. ["Notes" shall have the meaning specified in the introductory paragraphs of this Agreement.] ["Pooling and Servicing Agreement" means the Pooling and Servicing Agreement by and among the Seller, as servicer and in its individual capacity, the Purchaser, and [ ], as trustee (the "Trustee"), dated as of [ ], as the same may be amended, amended and restated, supplemented or modified.] "Prospectus" has the meaning assigned to such term in the Underwriting Agreement. "Purchaser" means [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], a Delaware corporation, and its successors and assigns. "Rating Agency" means [ ] or any successors thereto. "Receivable" means any retail installment sale contract that appears on the Schedule of Receivables. "Receivables Purchase Price" means $[ ]. "Repurchase Event" shall have the meaning specified in Section 6.2. ["Sale and Servicing Agreement" means the Sale and Servicing Agreement by and among [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], as seller, Nissan Motor Acceptance Corporation, as servicer, and the Trust dated as of [ ], as the same may be amended, amended and restated, supplemented or modified.] 2 3 "Schedule of Receivables" means the list of Receivables annexed to the Assignment as Schedule A thereto. ["Securities" means the Notes and the Certificates.] "Seller" means Nissan Motor Acceptance Corporation, a California corporation, and its successors and assigns. "Trust" means the Nissan Auto Receivables [ - ][Grantor] [Owner] Trust. ["Trust Agreement" means the Amended and Restated Trust Agreement by and between [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II], as seller, and [ ], as trustee (the "Trustee"), dated as of [ ], as the same may be amended, amended and restated, supplemented or modified.] "Underwriting Agreement" means the Underwriting Agreement by and between [ ] and the Purchaser, dated [ ]. "Yield Supplement Agreement" means the agreement, dated as of the date of this Agreement, among the Purchaser, the Seller, [ ], as Indenture Trustee, and the Trust. With respect to all terms in this Agreement, the singular includes the plural and the plural the singular; words importing any gender include the other genders; references to "writing" include printing, typing, lithography and other means of reproducing words in a visible form; references to agreements and other contractual instruments include all subsequent amendments, amendments and restatements and supplements thereto or changes therein entered into in accordance with their respective terms and not prohibited by this Agreement; references to Persons include their permitted successors and assigns; references to laws include their amendments and supplements, the rules and regulations thereunder and any successors thereto; and the term "including" means "including without limitation." ARTICLE II PURCHASE AND SALE OF RECEIVABLES 2.1 Purchase and Sale of Receivables. On the Closing Date, subject to the terms and conditions of this Agreement, the Seller agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the Seller, the Receivables and the other property relating thereto (as defined below). (a) Transfer of Receivables. On the Closing Date and simultaneously with the transactions pursuant to the [Pooling and Servicing Agreement] [Sale and 3 4 Servicing Agreement], the Seller shall sell, transfer, assign and otherwise convey to the Purchaser, without recourse, (i) all right, title and interest of the Seller in and to the Receivables (including all related Receivable Files) and all monies due thereon or paid thereunder or in respect thereof after the Cutoff Date; (ii) the right of the Seller in the security interests in the Financed Vehicles granted by the Obligors pursuant to the Receivables and any related property; (iii) the right of the Seller in any proceeds from claims on any physical damage, credit life, credit disability or other insurance policies covering Financed Vehicles or Obligors; (iv) the right of the Seller to receive payments in respect of any Dealer Recourse with respect to the Receivables; (v) the right of the Seller to realize upon any property (including the right to receive future Net Liquidation Proceeds) that shall have secured a Receivable; (vi) the right of the Seller in rebates of premiums and other amounts relating to insurance policies and other items financed under the Receivables in effect as of the Cutoff Date; and (vii) all proceeds of the foregoing; provided, that the Seller shall not be required to deliver to the Purchaser on the Closing Date monies received in respect of the Receivables after the Cutoff Date and before the Closing Date but shall or shall cause the Servicer to deposit such monies into the Collection Account no later than the first Record Date after the Closing Date. (b) Receivables Purchase Price. In consideration for the Receivables and other properties described in Section 2.1(a), the Purchaser shall, on the Closing Date, pay to the Seller the Receivables Purchase Price. An amount equal to approximately [ ]% of the Receivables Purchase Price shall be paid to the Seller in cash by federal wire transfer (same day) funds. The remaining approximately [ ]% of the Receivables Purchase Price shall be deemed paid by the Purchaser to the Seller and then immediately returned by the Seller to the Purchaser as a contribution to capital. 2.2 The Closing. The sale and purchase of the Receivables shall take place at a closing (the "Closing") at the offices of [ ] on the Closing Date, simultaneously with the closings under: (a) the [Pooling and Servicing Agreement] [Sale and Servicing Agreement] pursuant to which (i) the Purchaser will assign all of its right, title and interests in and to the Receivables and other property conveyed pursuant to Section 2.1(a) to the Trust for the benefit of the [Certificateholders] [Securityholders]; and (ii) the Purchaser will deposit the foregoing into the Trust in exchange for [the 4 5 Certificates][the Securities]; and (b) the Underwriting Agreement, pursuant to which the Purchaser will sell to the underwriters named therein [the Class A Certificates and the Class B Certificates] [the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class B Notes and the Class C Certificates]. ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 Warranties of the Purchaser. The Purchaser hereby represents and warrants to the Seller as of the date hereof and as of the Closing Date: (a) Organization, etc. The Purchaser has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to execute and deliver this Agreement and to perform the terms and provisions hereof. (b) Due Authorization and No Violation. This Agreement has been duly authorized, executed and delivered by the Purchaser, and constitutes a legal, valid and binding obligation of the Purchaser, enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and to general equitable principles. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not conflict with, result in a breach of any of the terms or provisions of, nor constitute (with or without notice or lapse of time) a default under, or result in the creation or imposition of any Lien to the Purchaser upon any of the property or assets of the Purchaser pursuant to the terms of, any indenture, mortgage, deed of trust, loan agreement, guarantee, lease financing agreement or similar agreement or instrument under which the Purchaser is a debtor or guarantor, nor will such action result in any violation of the provisions of the Certificate of Incorporation or the By-laws of the Purchaser; which breach, default, conflict, Lien or violation in any case would have a material adverse effect on the ability of the Seller to perform its obligations under this Agreement. (c) No Litigation. There are no proceedings or investigations pending to which the Purchaser is a party or of which any property of the Purchaser is the subject, and, to the best of the Purchaser's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; other than such proceedings that would not have a material adverse effect upon the ability of the Purchaser to perform its obligations under, or the validity and enforceability of, this Agreement. 3.2 Representations and Warranties of the Seller. (a) The Seller hereby represents and warrants to the Purchaser as of the date hereof and as of the Closing Date: (i) Organization, etc. The Seller has been duly organized and is validly existing as a corporation in good standing under the laws of the State of 5 6 California and is in good standing in each jurisdiction in the United States of America in which the conduct of its business or the ownership of its property requires such qualification and where the failure to so qualify would have a material adverse effect on the ability of the Seller to perform its obligations under this Agreement. (ii) Power and Authority. The Seller has the corporate power and authority to sell and assign the property sold and assigned to the Purchaser hereunder and has duly authorized such sale and assignment to the Purchaser by all necessary corporate action. This Agreement has been duly authorized, executed and delivered by the Seller and constitutes a legal, valid and binding obligation of the Seller, enforceable in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general equitable principles. (iii) No Violation. The consummation of the transaction contemplated by this Agreement, and the fulfillment of the terms hereof, do not conflict with, or result in a breach of any of the terms or provisions of, nor constitute (with or without notice or lapse of time) a default under, or result in the creation or imposition of any Lien upon any of the property or assets of the Seller pursuant to the terms of, any indenture, mortgage, deed of trust, loan agreement, guarantee, lease financing agreement or similar agreement or instrument under which the Seller is a debtor or guarantor, nor will such action result in any violation of the provisions of the Articles of Incorporation or the By-Laws of the Seller; which breach, default, conflict, Lien or violation in any case would have a material adverse effect on the ability of the Seller to perform its obligations under this Agreement. (iv) No Proceedings. There are no proceedings or investigations pending to which the Seller is a party or of which any property of the Seller is the subject, and, to the best of the Seller's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others, other than such proceedings that would not have a material adverse effect upon the ability of the Seller to perform its obligations under, or the validity and enforceability of, this Agreement. (b) The Seller makes the following representations and warranties as to the Receivables on which the Purchaser relies in accepting the Receivables. Such representations and warranties speak as of the execution and delivery of this Agreement, but shall survive the sale, transfer, and assignment of the Receivables to the Purchaser hereunder and the subsequent assignment and transfer pursuant to the [Pooling and Servicing Agreement] [Sale and Servicing Agreement]: (i) Characteristics of Receivables. Each Receivable (a) has been originated in the United States of America by a Dealer for the retail sale of a Financed Vehicle in the ordinary course of such Dealer's business, has been fully and properly executed by the parties thereto, has been purchased by the Seller 6 7 from such Dealer under an existing dealer agreement with the Seller, and has been validly assigned by such Dealer to the Seller, (b) created a valid, subsisting and enforceable security interest in favor of the Seller in such Financed Vehicle, (c) contains customary and enforceable provisions such that the rights and remedies of the holder thereof are adequate for realization against the collateral of the benefits of the security, (d) provides for level monthly payments (provided that the payment in the first or last month in the life of the Receivable may be minimally different from the level payment) that fully amortize the Amount Financed over an original term of no greater than ____ months, and (e) provides for interest at the related Annual Percentage Rate. (ii) Schedule of Receivables. The information set forth in Schedule A to this Agreement was true and correct in all material respects as of the opening of business on the Cutoff Date; the Receivables were selected at random from the Seller's retail installment sale contracts (other than contracts originated in Alabama [or Hawaii]) meeting the criteria of the Trust set forth in the [Pooling and Servicing Agreement] [Sale and Servicing Agreement]; and no selection procedures believed to be adverse to the [Certificateholders] [Securityholders] were utilized in selecting the Receivables. (iii) Compliance with Law. Each Receivable, 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. (iv) Binding Obligation. Each Receivable represents the genuine, legal, valid and binding payment obligation in writing of the Obligor, enforceable by the holder thereof in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general equitable principles. (v) Security Interest in Financed Vehicle. (a) Immediately prior to the sale, assignment and transfer thereof to the Purchaser, each Receivable was secured by a validly perfected first priority security interest in the Financed Vehicle in favor of the Seller as secured party or all necessary or all appropriate actions shall have been commenced that would result in the valid perfection of a first priority security interest in the Financed Vehicle in favor of the Seller as secured party, and (b) as of the Cutoff Date, according to the records of the Seller, no Financed Vehicle has been repossessed and not reinstated. 7 8 (vi) Receivables in Force. No Receivable has been satisfied, subordinated or rescinded, nor has any Financed Vehicle been released from the lien granted by the related Receivable in whole or in part. (vii) No Waiver. No provision of a Receivable has been waived in such a manner that is prohibited by the provisions of the [Pooling and Servicing Agreement] [Sale and Servicing Agreement] or that would cause such Receivable to fail to meet all of the other requirements and warranties made by the Seller herein with respect thereto. (viii) No Defenses. No Receivable is subject to any right of rescission, setoff, counterclaim or defense, including the defense of usury, and the operation of any of the terms of any Receivable, or the exercise of any right thereunder, will not render such Receivable unenforceable in whole or in part or subject such Receivable to any right of rescission, setoff, counterclaim or defense, including the defense of usury, and no such right of rescission, setoff, counterclaim or defense has been asserted with respect thereto. (ix) No Liens. To the Seller's knowledge, no liens have been filed for work, labor or materials relating to a Financed Vehicle that shall be liens prior to, or equal or coordinate with, the security interest in the Financed Vehicle granted by the Receivable. (x) No Default. Except for payment defaults continuing for a period of not more than 29 days as of the Cutoff Date, no default, breach, violation or event permitting acceleration under the terms of any Receivable has occurred; and no continuing condition that with notice or the lapse of time would constitute a default, breach, violation or event permitting acceleration under the terms of any Receivable has arisen (other than deferrals and waivers of late payment charges or fees permitted under the [Pooling and Servicing Agreement] [Sale and Servicing Agreement]). (xi) Insurance. The Seller, in accordance with its customary procedures, has determined at the time of origination of each Receivable that the related Obligor has agreed to obtain physical damage insurance covering the Financed Vehicle and the Obligor is required under the terms of related Receivable to maintain such insurance. (xii) Title. It is the intention of the Seller that the transfer and assignment herein contemplated constitute a sale of the Receivables from the Seller to the Purchaser and that the beneficial interest in and title to the Receivables not be part of the Seller's estate in the event of the filing of a bankruptcy petition by or against the Seller under any bankruptcy law. Immediately prior to the transfer and assignment herein contemplated, the Seller had good and marketable title to each Receivable free and clear of all Liens and, immediately upon the transfer thereof, the Purchaser shall have good and marketable title to each Receivable, free and clear of all Liens and rights of 8 9 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. (xiii) Lawful Assignment. No Receivable has been originated in, or shall be subject to the laws of, any jurisdiction under which the sale, transfer and assignment of such Receivable under this Agreement or pursuant to the [Pooling and Servicing Agreement][Sale and Servicing Agreement] are unlawful, void or voidable. (xiv) All Filings Made. All filings (including, without limitation, UCC filings) necessary in any jurisdiction to give the Purchaser a first priority perfected ownership interest in the Receivables have been made or have been delivered in form suitable for filing to the Purchaser . (xv) Chattel Paper. Each Receivable constitutes "chattel paper", as such term is defined in the UCC. (xvi) Simple Interest Receivables. All of the Receivables are Simple Interest Receivables. (xvii) One Original. There is only one original executed copy of each Receivable. (xviii)No Amendments. No Receivable has been amended such that the amount of the Obligor's Scheduled Payments has been increased. (xix) APR. The Annual Percentage Rate of each Receivable equals or exceeds ___%. (xx) Maturity. As of the Cutoff Date, each Receivable had a remaining term to maturity of not less than _____ months and not greater than _____ months. (xxi) Balance. Each Receivable had an original principal balance of not more than $____________ and, as of the Cutoff Date, had a principal balance of not less than $______ and not more than $_________. (xxii) Delinquency. No Receivable was more than 29 days past due as of the Cutoff Date and no Receivable has been extended by more than two months. (xxiii) Bankruptcy. No Obligor was the subject of a bankruptcy proceeding (according to the records of the Seller) as of the Cutoff Date. (xxiv) Transfer. Each Receivable prohibits the sale or transfer of the Financed Vehicle without the consent of the Seller. 9 10 (xxv) New, Near-New and Used Vehicles. Each Financed Vehicle was a new, near-new or used automobile or light-duty truck at the time the related Obligor executed the retail installment sale contract. (xxvi) Origination. Each Receivable has an origination date on or after _____________. (xxvii)Forced-Placed Insurance Premiums. No contract relating to any Receivable has had forced-placed insurance premiums added to the amount financed. (xxviii) No Fraud or Misrepresentation. To the knowledge of the Seller, no Receivable was originated by a Dealer and sold by such Dealer to the Seller with any conduct constituting fraud or misrepresentation on the part of such Dealer. (xxix) No Further Amounts Owed on the Receivables. No further amounts are owed by the Seller to any Obligor under the Receivables. ARTICLE IV CONDITIONS 4.1 Conditions to Obligation of the Purchaser. The obligation of the Purchaser to purchase the Receivables and the related property described in Section 2.1(a) is subject to the satisfaction of the following conditions: (a) Representations and Warranties True. The representations and warranties of the Seller hereunder shall be true and correct in all material respects on the Closing Date with the same effect as if then made, and the Seller shall have performed in all material respects all obligations to be performed by it hereunder on or prior to the Closing Date. (b) Computer Files Marked. The Seller shall, at its own expense, on or prior to the Closing Date, indicate in its computer files that the Receivables have been sold to the Purchaser pursuant to this Agreement and shall deliver to the Purchaser the Schedule of Receivables certified by an officer of the Seller to be true, correct and complete in all material respects. (c) Documents to be delivered by the Seller at the Closing. (i) The Assignment. At the Closing, the Seller shall execute and deliver the Assignment. (ii) Evidence of UCC Filing. On or prior to the Closing Date, the Seller shall record and file, or deliver in a form suitable for filing to the Purchaser, at its own expense, a UCC-1 financing statement in each jurisdiction in which required by applicable law, executed by the Seller, as seller or debtor, and 10 11 naming the Purchaser, as purchaser or secured party, and the Trust, as assignee of the Purchaser, naming the Receivables and the other property conveyed hereunder as collateral, meeting the requirements of the laws of each such jurisdiction and in such manner as is necessary to perfect the sale, transfer, assignment and conveyance of such Receivables and other property conveyed hereunder to the Purchaser. (iii) Other Documents. At the Closing, the Seller shall deliver such other documents as the Purchaser may reasonably request. (d) Other Transactions. The transactions contemplated by the [Pooling and Servicing Agreement] [Sale and Servicing Agreement] shall be consummated on the Closing Date. 4.2 Conditions to Obligation of the Seller. The obligation of the Seller to sell the Receivables and other property conveyed hereunder to the Purchaser is subject to the satisfaction of the following conditions: (a) Representations and Warranties True. The representations and warranties of the Purchaser hereunder shall be true and correct in all material respects on the Closing Date with the same effect as if then made, and the Purchaser shall have performed in all material respects all obligations to be performed by it hereunder on or prior to the Closing Date. (b) Receivables Purchase Price. On the Closing Date, the Purchaser shall deliver to the Seller the Receivables Purchase Price, as provided in Section 2.1(b). ARTICLE V COVENANTS OF THE SELLER The Seller agrees with the Purchaser as follows; provided, however, that, to the extent that any provision of this ARTICLE V conflicts with any provision of the [Pooling and Servicing Agreement] [Sale and Servicing Agreement], the [Pooling and Servicing Agreement] [Sale and Servicing Agreement] shall govern: 5.1 Protection of Right, Title and Interest. (a) The Seller shall execute and file such financing statements and cause to be executed and filed such continuation statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of the Purchaser in the Receivables, the other property conveyed hereunder and the proceeds thereof. The Seller shall deliver (or cause to be delivered) to the Purchaser file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. (b) The Seller shall notify the Purchaser within 30 days after any change of its name, identity or corporate structure in any manner that would, could or 11 12 might make any financing statement or continuation statement filed by the Seller in accordance with paragraph (a) above seriously misleading within the meaning of Section 9-402(7) of the UCC, and shall promptly file appropriate amendments to all previously filed financing statements or continuation statements. (c) The Seller shall notify the Purchaser of any relocation of its principal executive office within 30 days after such relocation, if, as a result of such relocation, the applicable provisions of the UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any new financing statement and shall promptly file any such amendment. The Seller shall at all times maintain its principal executive office within the United States of America. (d) The Seller shall maintain its computer systems so that, from and after the time of sale hereunder of the Receivables to the Purchaser, the Seller's master computer records that refer to a Receivable shall indicate clearly the interest of the Purchaser in such Receivable and that such Receivable is owned by the Purchaser. (e) If at any time the Seller shall propose to sell, grant a security interest in, or otherwise transfer any interest in automotive receivables to any prospective purchaser, lender or other transferee, the Seller shall give to such prospective purchaser, lender or other transferee computer tapes, records or print-outs that, if they shall refer in any manner whatsoever to any Receivable, shall indicate clearly that such Receivable has been sold and is owned by the Purchaser. (f) The Seller shall permit the Purchaser and its agents at any time during normal business hours upon reasonable advance notice to inspect, audit and make copies of and abstracts from the Seller's records regarding any Receivable. 5.2 Other Liens or Interests. Except for the conveyances hereunder and contemplated pursuant to the [Pooling and Servicing Agreement] [Sale and Servicing Agreement], the Seller shall not sell, pledge, assign or transfer to any other Person, or grant, create, incur, assume or suffer to exist any Lien on any interest therein, and the Seller shall defend the right, title and interest of the Purchaser in, to and under such Receivables against all claims of third parties claiming through or under the Seller; provided, however, that the Seller's obligations under this Section 5.2 shall terminate upon the termination of the Trust pursuant to the [Pooling and Servicing Agreement] [Sale and Servicing Agreement]. 5.3 Costs and Expenses. The Seller agrees to pay all reasonable costs and disbursements in connection with the perfection, as against all third parties, of the Purchaser's right, title and interest in and to the Receivables. 5.4 Indemnification. (a) The Seller shall defend, indemnify and hold harmless the Purchaser from and against any and all costs, expenses, losses, damages, claims and liabilities (collectively, "Damages"), arising out of or resulting from the failure of a 12 13 Receivable to be originated in compliance with all requirements of law and for any breach of any of the Seller's representations and warranties contained herein. (b) The Seller shall defend, indemnify and hold harmless the Purchaser from and against any and all Damages arising out of or resulting from the use, ownership or operation by the Seller or any affiliate thereof of a Financed Vehicle. (c) The Seller shall defend, indemnify and hold harmless the Purchaser from and against any and all taxes that may at any time be asserted against the Purchaser with respect to the transactions contemplated herein, including, without limitation, any sales, gross receipts, general corporation, tangible personal property, privilege, or license taxes (but not including any taxes asserted with respect to ownership of the Receivables or federal or other taxes arising out of the transactions contemplated by this Agreement and any related documents) and costs and expenses in defending against the same. (d) The Seller shall defend, indemnify and hold harmless the Purchaser from and against any and all Damages to the extent that such Damage arose out of, or was imposed upon the Purchaser through, the negligence, willful misfeasance or bad faith of the Seller in the performance of its duties under this Agreement or by reason of reckless disregard of the Seller's obligations and duties under this Agreement. (e) The Seller shall defend, indemnify and hold harmless the Purchaser from and against all Damages arising out of or incurred in connection with the acceptance or performance of the Seller's trusts and duties as Servicer under the [Pooling and Servicing Agreement] [Sale and Servicing Agreement], except to the extent that such Damages shall be due to the willful misfeasance, bad faith or negligence of the Purchaser. These indemnity obligations shall be in addition to any obligation that the Seller may otherwise have. (f) Promptly after receipt by a party indemnified under this Section 5.4 (an "Indemnified Party") of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against the Seller under this Section 5.4, notify the Seller of the commencement thereof. If any such action is brought against any Indemnified Party under this Section 5.4 and it notifies the Seller of the commencement thereof, the Seller will assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Party (who may, unless there is, as evidenced by an opinion of counsel to the Indemnified Party stating that there is an unwaivable conflict of interest, be counsel to the Indemnifying Party), and the Seller will not be liable to such Indemnified Party under this Section 5.4 for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof, other than reasonable costs of investigation. The obligations set forth in this Section 5.4 shall survive the termination of this Agreement and shall include reasonable fees and expenses of counsel and expenses of litigation. If the Seller shall have made any indemnity payments pursuant to this Section 5.4 and the Person to or on behalf of whom such payments are made thereafter collects any of such amounts from others, such Person 13 14 shall promptly repay such amounts to the Seller, without interest (except to the extent received by such Person). ARTICLE VI MISCELLANEOUS PROVISIONS 6.1 Obligations of Seller. The obligations of the Seller under this Agreement shall not be affected by reason of any invalidity, illegality or irregularity of any Receivable. 6.2 Repurchase Events. The Seller hereby covenants and agrees with the Purchaser for the benefit of the Purchaser, the Trust[, the Indenture Trustee] and the holders of the [Securities] [Certificates], that the occurrence of a breach of any of the Seller's representations and warranties contained in Section 3.2(b) shall constitute events obligating the Seller to repurchase Receivables hereunder ("Repurchase Events") [and pursuant to Section 3.02 of the Sale and Servicing Agreement], at the amount of the Warranty Purchase Payment from the Purchaser or, as described in Section 6.4 below, from the Trust. The repurchase obligation of the Seller shall constitute the sole remedy of the holders of the [Securities] [Certificates], the Trust[, the Indenture Trustee] and the Purchaser against the Seller with respect to any Repurchase Event. 6.3 Seller's Assignment of Purchased Receivables. With respect to all Receivables repurchased by the Seller pursuant to this Agreement, the Purchaser (without the need of any further written assignment) shall assign hereby, without recourse, representation or warranty (other than that it has good and marketable title to such Receivables), to the Seller all the Purchaser's right, title and interest in and to such Receivables, and all security and documents relating thereto. 6.4 Trust. The Seller acknowledges that the Purchaser will, pursuant to the [Pooling and Servicing Agreement] [Sale and Servicing Agreement], sell the Receivables to the Trust and assign its rights under this Agreement to the Trust [and that the Trust will assign such rights to the Indenture Trustee] for the benefit of the holders of the [Securities] [Certificates], and that the representations and warranties contained in this Agreement and the rights of the Purchaser under Section 6.2 and the obligations under 6.3 are intended to benefit the Trust and the holders of the [Securities] [Certificates]. The Seller hereby consents to such sales and assignments. 6.5 Amendment. This Agreement may be amended from time to time by a written amendment duly executed and delivered by the Seller and the Purchaser; provided, however, that any such amendment must be consented to by the [Holders of Certificates evidencing a majority of the Voting Interests] [Holders of Notes representing a majority of the Outstanding Amount of the Controlling Class of Notes, or, in the case of any amendment that does not adversely affect the Indenture Trustee or the Noteholders, the Holder of the Controlling Class of Certificates (as evidenced by an Officer's Certificate of the Servicer and an external Opinion of Counsel indicating that such amendment will not adversely affect the Indenture Trustee or the Noteholders)]. 14 15 6.6 Accountants' Letters. (a) The Seller will cause Deloitte & Touche LLP to review the characteristics of the Receivables described in the Schedule of Receivables and to compare those characteristics to the information with respect to the Receivables contained in the Prospectus. (b) The Seller will cooperate with the Purchaser and Deloitte & Touche LLP in making available all information and taking all steps reasonably necessary to permit such accountants to complete the review set forth in Section 6.6(a) and to deliver the letters required of them under the Underwriting Agreement. 6.7 Waivers. No failure or delay on the part of the Purchaser in exercising any power, right or remedy under this Agreement or the Assignment shall operate as a waiver hereof or thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other or further exercise hereof or thereof or the exercise of any other power, right or remedy. 6.8 Notices. All communications and notices pursuant hereto to either party shall be in writing (including via telecopy) and addressed or delivered to it at its address (or in the case of telecopy, at its telecopy number at such address) shown in the opening portion of this Agreement or at such other address as may be designated by it by notice to the other party and, if mailed or delivered, shall be deemed given when mailed or delivered, or transmitted by telecopy. 6.9 Costs and Expenses. The Seller agrees to pay all expenses incident to the performance of its obligations under this Agreement and the Seller agrees to pay all reasonable out-of-pocket costs and expenses of the Purchaser, excluding fees and expenses of counsel, in connection with the perfection as against third parties of the Purchaser's right, title and interest in and to the Receivables and the enforcement of any obligation of the Seller hereunder. 6.10 Survival. The respective agreements, representations, warranties and other statements by the Seller and the Purchaser set forth in or made pursuant to this Agreement shall remain in full force and effect and will survive the Closing. 6.11 Headings and Cross-References. The various headings in this Agreement are included for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement. References in this Agreement to Section names or numbers are to such Sections of this Agreement. 6.12 Governing Law. This Agreement and the Assignment shall be governed by and construed in accordance with the internal laws of the State of New York, 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 under this Agreement shall be determined in accordance with such laws. 15 16 6.13 Counterparts. This Agreement may be executed in two counterparts and by different parties on separate counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. 6.14 Sale. Each party hereto agrees to treat the conveyance under this Agreement for all purposes (including, without limitation, tax and financial accounting purposes) as a sale of the Receivables on all of its relevant books, records, tax returns, financial statements and other applicable documents. Although the parties hereto intend that the transfer and assignment contemplated by this Agreement be a sale, in the event such transfer and assignment is deemed to be other than a sale, the parties intend that all filings described in this Agreement shall give the Purchaser a first priority perfected security interest in, to and under the Receivables and other property conveyed hereunder and all proceeds of any of the foregoing. This Agreement shall be deemed to be the grant of a security interest from the Seller to the Purchaser, and the Purchaser shall have all the rights, powers and privileges of a secured party under the UCC. IN WITNESS WHEREOF, the parties hereto hereby have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the ___day of ________. NISSAN MOTOR ACCEPTANCE CORPORATION By: ----------------------------------------------- Name: Title: [NISSAN AUTO RECEIVABLES CORPORATION] [NISSAN AUTO RECEIVABLES CORPORATION II] By: ----------------------------------------------- Name: Title: ACCEPTED: ----------------------------------, not in its individual capacity but solely as Trustee By: ----------------------------------------------- Name: Title: 16 17 Exhibit A ASSIGNMENT For value received, in accordance with the Purchase Agreement dated as of ___________________________, (the "Purchase Agreement"), between the undersigned (the "Seller") and [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II] (the "Purchaser"), the undersigned does hereby sell, assign, transfer and otherwise convey unto the Purchaser, without recourse, the following: (i) all right, title and interest of the Seller in and to the Receivables listed on Schedule A hereto (including all related Receivable Files) and all monies due thereon or paid thereunder or in respect thereof after the Cutoff Date; (ii) the right of the Seller in the security interests in the Financed Vehicles granted by the Obligors pursuant to the Receivables and any related property; (iii) the right of the Seller in any proceeds from claims on any physical damage, credit life, credit disability or other insurance policies covering Financed Vehicles or Obligors; (iv) the right of the Seller to receive payments in respect of any Dealer Recourse with respect to the Receivables; (v) the right of the Seller to realize upon any property (including the right to receive future Net Liquidation Proceeds) that shall have secured a Receivable; (vi) the right of the Seller in rebates of premiums and other amounts relating to insurance policies and other items financed under the Receivables in effect as of the Cutoff Date; and (vii) all proceeds of the foregoing. The foregoing sale does not constitute and is not intended to result in any assumption by the Purchaser of any obligation of the undersigned to the Obligors, insurers or any other person in connection with the Receivables, Receivable Files, any insurance policies or any agreement or instrument relating to any of them. This Assignment is made pursuant to and upon the representations, warranties and agreements on the part of the undersigned contained in the Purchase Agreement and is to be governed by the Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to such terms in the Purchase Agreement. Exhibit A 18 IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly executed as of the ___ day of ____________. NISSAN MOTOR ACCEPTANCE CORPORATION By: ----------------------------------------------- Name: Title: Exhibit B 19 SCHEDULE A Schedule of Receivables See schedule attached to the [Pooling and Servicing Agreement][Sale and Servicing Agreement]. Annex A EX-4.6 9 a67668a1ex4-6.txt EXHIBIT 4.6 1 EXHIBIT 4.6 ADMINISTRATION AGREEMENT among NISSAN AUTO RECEIVABLES [____-___] OWNER TRUST, as Issuer NISSAN MOTOR ACCEPTANCE CORPORATION, as Administrator [____________________], as Indenture Trustee and [____________________], as [Owner Trustee] Dated as of [__________] 2 TABLE OF CONTENTS 1. DUTIES OF THE ADMINISTRATOR............................................2 2. RECORDS................................................................9 3. COMPENSATION...........................................................9 4. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER...................9 5. INDEPENDENCE OF THE ADMINISTRATOR......................................9 6. NO JOINT VENTURE.......................................................9 7. OTHER ACTIVITIES OF ADMINISTRATOR......................................9 8. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF ADMINISTRATOR...........10 9. ACTION UPON TERMINATION, RESIGNATION OR REMOVAL.......................11 10. NOTICES...............................................................11 11. AMENDMENTS............................................................12 12. SUCCESSOR AND ASSIGNS.................................................13 13. GOVERNING LAW.........................................................13 14. NO PETITION...........................................................13 15. HEADINGS..............................................................13 16. COUNTERPARTS..........................................................13 17. SEVERABILITY OF PROVISIONS............................................13 18. NOT APPLICABLE TO NMAC IN OTHER CAPACITIES............................14 19. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE TRUSTEE........14
i 3 ADMINISTRATION AGREEMENT, dated as of [__________], among NISSAN AUTO RECEIVABLES [_________-___________] OWNER TRUST, a Delaware business trust (the "Issuer"), NISSAN MOTOR ACCEPTANCE CORPORATION, a California corporation, as administrator (the "Administrator"), [____________________], a [______________________], not in its individual capacity but solely as Indenture Trustee (as defined below), and [____________________], a [__________________________], not in its individual capacity but solely as [Owner Trustee](as defined below). W I T N E S S E T H: WHEREAS, beneficial ownership interests in the Issuer represented by the Nissan Auto Receivables [_________-_________] Owner Trust Asset Backed Certificates, Class C and Class D (the "Certificates") have been issued in connection with the formation of the Issuer pursuant to the Trust Agreement, dated as of [__________] (the "Trust Agreement"), between [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II] ("[NARC][NARC II]"), a Delaware corporation, as depositor, and [____________________], as owner trustee (the "Owner Trustee") to the owners thereof (the "Owners"); WHEREAS, the Issuer is issuing the Nissan Auto Receivables [___-__] Owner Trust [___]% Asset Backed Notes Class A-1, the Nissan Auto Receivables [___-__] Owner Trust [___]% Asset Backed Notes Class A-2, the Nissan Auto Receivables [___-__] Owner Trust [___]% Asset Backed Notes Class A-3, [Floating Rate Asset Backed Variable Pay Term Notes issued from time to time] and the Nissan Auto Receivables [___-__] Owner Trust [___]% Asset Backed Notes Class B (collectively, the "Notes") pursuant to the Indenture, dated as of [__________] (as amended and supplemented from time to time, the "Indenture"), between the Issuer and [_________], as indenture trustee (the "Indenture Trustee"; capitalized terms used herein and not defined herein shall have the meanings ascribed thereto in the Indenture, the Trust Agreement or the Sale and Servicing Agreement, dated as of [__________], among the Issuer, Nissan Motor Acceptance Corporation ("NMAC"), as servicer, and [NARC][NARC II], as seller (the "Sale and Servicing Agreement"), as the case may be); WHEREAS, the Issuer has entered into certain agreements in connection with the issuance of the Certificates[, the VPTNs] and the Notes, including the Purchase Agreement, dated as of [__________] (the "Purchase Agreement"), between NMAC, as seller, and [NARC][NARC II], as purchaser, the Trust Agreement, the Indenture, this Agreement, the Securities Account Control Agreement, the Yield Supplement Agreement, the Note Depository Agreement, the Certificate Depository Agreement, [the Interest Rate Swap Agreement] and the Sale and Servicing Agreement (collectively, the "Basic Documents"); WHEREAS, pursuant to the Basic Documents, the Issuer is required to perform certain duties in connection with the Certificates, the Notes[, the VPTNs] and the Collateral; WHEREAS, the Issuer desires to appoint NMAC as administrator to perform certain of the duties of the Issuer under the Basic Documents and to provide such additional services 1 4 consistent with the terms of this Agreement and the Basic Documents as the Issuer may from time to time request; and WHEREAS, the Administrator has the capacity to provide the services required hereby and is willing to perform such services for the Issuer on the terms set forth herein; NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: 1. DUTIES OF THE ADMINISTRATOR. (a) Duties with respect to the Note Depository Agreement and the Indenture. (i) The Administrator agrees to perform all its duties as Administrator under the Basic Documents and the duties of the Issuer under the Note Depository Agreement and the Indenture. In addition, the Administrator shall consult with the Owner Trustee regarding the duties of the Issuer under the Indenture and the Note Depository Agreement. The Administrator shall monitor the performance of the Issuer and shall advise the Owner Trustee when action by the Issuer or the Owner Trustee is necessary to comply with the Issuer's duties under the Indenture and the Note Depository Agreement. The Administrator shall prepare for execution by the Issuer or shall cause the preparation by other appropriate persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Issuer to prepare, file or deliver pursuant to the Indenture[, the Interest Rate Swap Agreement] and the Note Depository Agreement. In furtherance of the foregoing, the Administrator shall take all appropriate action that is the duty of the Issuer to take pursuant to the Indenture including, without limitation, such of the foregoing as are required with respect to the following matters under the Indenture (references are to sections of the Indenture): (A) preparing or obtaining the documents and instruments required for the proper authentication of Notes and delivering the same to the Indenture Trustee (Section 2.02); (B) appointing the Note Registrar and giving the Indenture Trustee notice of any appointment of a new Note Registrar and the location, or change in location, of the Note Register (Section 2.04); (C) preparing the notification to Noteholders of the final principal payment on their Notes (Section 2.07(b)); (D) preparing, obtaining and/or filing of all instruments, opinions and certificates and other documents required for the release of Collateral (Section 2.09); 2 5 (E) maintaining an office in the Borough of Manhattan, City of New York, for the registration of transfer or exchange of Notes (Section 3.02); (F) causing newly appointed Paying Agents, if any, to deliver to the Indenture Trustee the instrument specified in the Indenture regarding funds held in trust (Section 3.03); (G) directing the Indenture Trustee to deposit moneys with Paying Agents, if any, other than the Indenture Trustee (Section 3.03); (H) obtaining and preserving or causing the Owner Trustee to obtain and preserve the Issuer's qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of the Indenture, the Notes, the Collateral and each other instrument and agreement included in the Trust Estate (Section 3.04); (I) preparing all supplements, amendments, financing statements, continuation statements, instruments of further assurance and other instruments, in accordance with Section 3.05 of the Indenture, necessary to protect the Trust Estate (Sections 3.05 and 3.07(c)); (J) furnishing the required Opinions of Counsel on the Closing Date and at such other times, in accordance with Sections 3.06 and 8.06 of the Indenture, and delivering the annual Officer's Certificates and certain other statements as to compliance with the Indenture, in accordance with Section 3.09 of the Indenture (Sections 3.06, 3.09 and 8.06); (K) identifying to the Indenture Trustee in an Officer's Certificate any Person with whom the Issuer has contracted to perform its duties under the Indenture (Section 3.07); (L) notifying the Indenture Trustee and the Rating Agencies of any Servicer Default pursuant to the Sale and Servicing Agreement and, if such Servicer Default arises from the failure of the Servicer to perform any of its duties under the Sale and Servicing Agreement, taking all reasonable steps available to remedy such failure (Section 3.07(d)); (M) preparing and obtaining documents and instruments required in connection with the consolidation, merger or transfer of assets of the Issuer (Section 3.10); (N) delivering notice to the Indenture Trustee of each Event of Default and each other default by the Servicer or the Seller under the Sale and Servicing Agreement (Section 3.19); 3 6 (O) monitoring the Issuer's obligations as to the satisfaction and discharge of the Indenture and the preparation of an Officer's Certificate and obtaining the Opinion of Counsel and the Independent Certificate (as defined in the Indenture) related thereto (Section 4.01); (P) preparing and mailing the notification of the Indenture Trustee and Noteholders with respect to special payment dates, if any (Section 5.04(d)); (Q) preparing and, after execution by the Issuer and the Indenture Trustee, filing with the Commission and any applicable state agencies of documents required to be filed on a periodic basis with the Commission and any applicable state agencies (including any summaries thereof required by rules and regulations prescribed thereby), and transmitting of such summaries to the Noteholders (Section 7.03); (R) preparing any Issuer Request and Officer's Certificates and obtaining any Opinions of Counsel and Independent Certificates necessary for the release of the Trust Estate (Section 8.04); (S) preparing Issuer Orders and obtaining Opinions of Counsel with respect to the execution of any supplemental indentures, and mailing notices to the Noteholders with respect thereto (Sections 9.01, 9.02 and 9.03); (T) executing and delivering new Notes conforming to the provisions of any supplemental indenture, as appropriate (Section 9.06); (U) preparing all Officer's Certificates, Opinions of Counsel and Independent Certificates with respect to any requests by the Issuer to the Indenture Trustee to take any action under the Indenture (Section 11.01(a)); (V) preparing and delivering Officer's Certificates and obtaining Independent Certificates, if necessary, for the release of property or securities from the lien of the Indenture (Section 11.01(c)); (W) notifying the Rating Agencies, upon any failure of the Indenture Trustee to give such notification, of the information required pursuant to Section 11.04 of the Indenture (Section 11.04); (X) preparing and delivering to the Noteholders and the Indenture Trustee any agreements with respect to alternate payment and notice provisions (Section 11.06); and (Y) recording the Indenture, if applicable (Section 11.14). 4 7 (ii) The Administrator shall also: (A) pay the Indenture Trustee from time to time the reasonable compensation provided for in the Indenture with respect to services rendered by the Indenture Trustee under the Indenture (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (B) reimburse the Indenture Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Indenture Trustee in accordance with any provision of the Indenture (including the reasonable compensation, expenses and disbursements of its agents and counsel) to the extent the Indenture Trustee is entitled to such reimbursement by the Issuer under the Indenture; (C) indemnify the Indenture Trustee for, and hold it harmless against, any losses, liability or expense incurred without negligence or bad faith on the part of the Indenture Trustee, arising out of or in connection with the acceptance or administration of the trusts and duties contemplated by the Indenture, including the reasonable costs and expenses of defending themselves against any claim or liability in connection therewith to the extent the Indenture Trustee is entitled to such indemnification from the Issuer under the Indenture; and (D) pay the reasonable expense of any examination or investigation by the Owner Trustee undertaken pursuant to Section 7.01(e) of the Trust Agreement, and if such expense is paid by the Owner Trustee, then such expense shall be reimbursed by the Administrator upon demand. [(iii) With respect to the issuance of the VPTNs and the Interest Rate Swap Agreement, the Administrator agrees to perform the following duties (references are to sections of the Indenture): (A) subject to conditions set forth in Section 2.02 of the Indenture, causing the Issuer to offer each VPTN that may be issued on the Targeted Scheduled Distribution Date for a subclass of the Class A Notes to [_______________] and, if [______________] is unable or unwilling to purchase such VPTN, using reasonable efforts to locate another purchaser and causing the Issuer to offer such VPTN to such purchaser; (B) preparing the Issuer Order, including determining or obtaining all necessary information to be included thereto, for signature by one of the Issuer's Authorized Officers and delivering the same to the Indenture Trustee (Section 2.02); 5 8 (C) if the Swap Counterparty is required to collateralize any Interest Rate Swap transaction, sending written instructions to the Indenture Trustee to establish individual collateral accounts and to hold any securities deposited therein in trust and to invest any cash amounts therein in accordance with the provisions of the Interest Rate Swap Agreement (Section 6.14(iii)); (D) calculating and providing written notification to the Swap Counterparty and to the Indenture Trustee of the notional amount of the Interest Rate Swap as of each Distribution Date on or before the twelfth day of the month of the related Distribution Date (Section 6.1(iv)); (E) obtaining the calculation of LIBOR from the Calculation Agent and calculating the amount of all Swap Payments, Swap Receipts and Swap Termination Payments payable on each Distribution Date, and providing written notification of such amounts to the Swap Counterparty and to the Indenture Trustee prior to such Distribution Date (Section 6.1(iv)); (F) providing the Rating Agencies with a copy of any amendment or supplement to the Interest Rate Swap Agreement at least five days prior to the effective date of such proposed amendment or supplement (Section 6.14(iv)); (G) promptly following the early termination of the Interest Rate Swap Agreement due to a Termination Event or an Event of Default (as such terms are defined in the Interest Rate Swap Agreement), using its reasonable efforts to cause the Issuer to enter into a replacement Interest Rate Swap Agreement with an eligible Swap Counterparty (Section 6.14(v)); (H) upon the occurrence of a downgrade of the Swap Counterparty by the Rating Agencies or of a suspension or withdrawal of its ratings, within 30 days of such downgrade, suspension or withdrawal, causing the Issuer to require that the Swap Counterparty either (1) post collateral acceptable to the Issuer in amounts sufficient to secure its obligations under the Interest Rate Swap Agreement, (2) assign its rights and obligations under the Interest Rate Swap Agreement to a replacement counterparty acceptable to the Issuer or (3) establish other arrangements necessary, if any, in each case so that the Rating Agencies confirm the ratings of the Class A Notes and the VPTNs that were in effect immediately prior to such downgrade, suspension or withdrawal (Section 6.14(vi)); and (I) notifying the Swap Counterparty of any proposed amendment or supplement to any of the Basic Documents, including 6 9 obtaining consents from the Swap Counterparty prior to the adoption of such amendment or supplement if such proposed amendment or supplement would adversely affect such Swap Counterparty's rights or obligations under the Interest Rate Swap Agreement or modify the obligations of, or impair the ability of the Issuer to fully perform any of its obligations under the Interest Rate Swap Agreement (Section 6.14(vii)). (b) Additional Duties. (i) In addition to the duties of the Administrator set forth above, the Administrator shall perform such calculations, and shall prepare for execution by the Issuer or the Owner Trustee or shall cause the preparation by other appropriate persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Issuer or the Owner Trustee to prepare, file or deliver pursuant to the Basic Documents, and at the request of the Owner Trustee shall take all appropriate action that it is the duty of the Issuer or the Owner Trustee to take pursuant to the Basic Documents. Subject to Section 5 of this Agreement, and in accordance with the reasonable written directions of the Owner Trustee, the Administrator shall administer, perform or supervise the performance of such other activities in connection with the Collateral (including the Basic Documents) as are not covered by any of the foregoing provisions and as are expressly requested by the Owner Trustee and are reasonably within the capability of the Administrator. (ii) Notwithstanding anything in this Agreement or the Basic Documents to the contrary, the Administrator shall be responsible for promptly notifying the Owner Trustee in the event that any withholding tax is imposed on the Issuer's payments (or allocations of income) to a Certificateholder as contemplated in Section 5.02(c) of the Trust Agreement. Any such notice shall specify the amount of any withholding tax required to be withheld by the Owner Trustee pursuant to such provision. (iii) Notwithstanding anything in this Agreement or the Basic Documents to the contrary, the Administrator shall be responsible for performance of the duties of the Administrator set forth in Section 5.04(a), (b), (c), (d), (e) and (f) of the Trust Agreement with respect to, among other things, accounting and reports to the Certificateholders; provided, however, that the Owner Trustee shall remain exclusively responsible for the mailing of the Schedule K-1s necessary to enable each Certificateholder to prepare its federal and state income tax returns. (iv) The Administrator shall satisfy its obligations with respect to clauses (ii) and (iii) above and under the Trust Agreement by retaining, at the expense of the Administrator, a firm of independent public accountants (the "Accountants") which shall perform the obligations of the Administrator thereunder; provided, however, that the Certificateholder is not the Administrator 7 10 or any of its Affiliates. In connection with paragraph (ii) above, the Accountants will provide prior to [_________________], a letter in form and substance satisfactory to the Owner Trustee as to whether any tax withholding is then required and, if required, the procedures to be followed with respect thereto to comply with the requirements of the Code; provided, however that the Certificateholder is not the Administrator or any of its Affiliates. The Accountants shall be required to update the letter in each instance that any additional tax withholding is subsequently required or any previously required tax withholding shall no longer be required. (v) The Administrator shall perform the duties of the Administrator specified in Section 10.02 of the Trust Agreement required to be performed in connection with the resignation or removal of the Owner Trustee, and any other duties expressly required to be performed by the Administrator under the Trust Agreement. (vi) In carrying out the foregoing duties or any of its other obligations under this Agreement, the Administrator may enter into transactions with or otherwise deal with any of its Affiliates; provided, however, that the terms of any such transactions or dealings shall be in accordance with any directions received from the Issuer and shall be, in the Administrator's opinion, no less favorable to the Issuer than would be available from unaffiliated parties. (c) Non-Ministerial Matters. (i) With respect to matters that in the reasonable judgment of the Administrator are non-ministerial, the Administrator shall not take any action unless within a reasonable time before the taking of such action the Administrator shall have notified the Owner Trustee of the proposed action and the Owner Trustee shall not have withheld consent or provided an alternative direction and all approvals required under the Basic Documents shall have been obtained. For the purpose of the preceding sentence, "non-ministerial matters" shall include, without limitation: (A) the amendment of the Indenture or execution of any supplement to the Indenture; (B) the initiation of any claim or lawsuit by the Issuer and the compromise of any action, claim or lawsuit brought by or against the Issuer (other than in connection with the collection of the Receivables); (C) the amendment, change or modification of any of the Basic Documents; (D) the appointment of successor Note Registrars, or successor Paying Agents pursuant to the Indenture or the appointment of successor 8 11 Administrators, or the consent to the assignment by the Note Registrar, Paying Agent or Indenture Trustee of its obligations, in each case under the Indenture; and (E) the removal of the Indenture Trustee. (ii) Notwithstanding anything to the contrary in this Agreement, the Administrator shall not be obligated to, and shall not (x) make any payments to the Noteholders under the Basic Documents, (y) sell the Trust Estate pursuant to Section 5.04 of the Indenture or (z) take any other action that the Issuer directs the Administrator not to take on its behalf. 2. RECORDS. The Administrator shall maintain appropriate books of account and records relating to services performed hereunder, which books of account and records shall be accessible for inspection by the Issuer, the Owner Trustee and the Indenture Trustee at any time during normal business hours upon reasonable advance written notice. 3. COMPENSATION. As compensation for the performance of the Administrator's obligations under this Agreement and as reimbursement for its expenses related thereto, the Administrator shall be entitled to a fee of $200.00 per month which shall be solely an obligation of the Servicer. 4. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. The Administrator shall furnish to the Issuer from time to time such additional information regarding the Collateral as the Issuer shall reasonably request. 5. INDEPENDENCE OF THE ADMINISTRATOR. For all purposes of this Agreement, the Administrator shall be an independent contractor and shall not be subject to the supervision of the Issuer, the Owner Trustee or the Indenture Trustee with respect to the manner in which it accomplishes the performance of its obligations hereunder. Unless expressly authorized by the Issuer hereunder or otherwise, the Administrator shall have no authority to act for or represent the Issuer, the Owner Trustee or the Indenture Trustee, and shall not otherwise be or be deemed an agent of the Issuer, the Owner Trustee or the Indenture Trustee. 6. NO JOINT VENTURE. Nothing contained in this Agreement shall (i) constitute the Administrator and any of the Issuer, the Owner Trustee or the Indenture Trustee as members of any partnership, joint venture, association, syndicate, unincorporated business or other separate entity, (ii) be construed to impose any liability as such on any of them or (iii) be deemed to confer on any of them any express, implied or apparent authority to incur any obligation or liability on behalf of the others. 7. OTHER ACTIVITIES OF ADMINISTRATOR. Nothing herein shall prevent the Administrator or its Affiliates from engaging in other businesses or, in its or their sole discretion, from acting as an administrator for any other person or entity, or in a similar capacity therefor, even though such person or entity may engage in business activities similar to those of the Issuer, the Owner Trustee or the Indenture Trustee. 9 12 8. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF ADMINISTRATOR. (a) This Agreement shall continue in force until the termination of the Issuer, upon which event this Agreement shall automatically terminate. (b) Subject to Sections 8(e) and 8(f), the Administrator may resign by providing the Issuer with at least 30 days' prior written notice. (c) Subject to Sections 8(e) and 8(f), the Issuer may remove the Administrator without cause by providing the Administrator at least 30 days' prior written notice. (d) Subject to Sections 8(e) and 8(f), at the sole option of the Issuer, the Administrator may be removed immediately upon written notice of termination from the Issuer to the Administrator if any of the following events shall occur: (i) the Administrator shall fail to perform in any material respect any of its duties under this Agreement and, after notice of such default, shall not cure such default within 10 days (or, if such default cannot be cured in such time, shall not give within such 10 days such assurance of timely and complete cure as shall be reasonably satisfactory to the Issuer); (ii) the entry of a decree or order by a court or agency or supervisory authority having jurisdiction in the premises for the appointment of a trustee in bankruptcy, conservator, receiver or liquidator for the Administrator in any bankruptcy, insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding up or liquidation of their respective affairs, and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days; or (iii) the consent by the Administrator to the appointment of a trustee in bankruptcy, conservator or receiver or liquidator in any bankruptcy, insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to the Administrator of or relating to substantially all of their property, or the Administrator shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations. The Administrator agrees that if any of the events specified in clauses (ii) or (iii) of this Section shall occur, it shall give written notice thereof to the Issuer, the Owner Trustee and the Indenture Trustee within seven days after the occurrence of such event. (e) No resignation or removal of the Administrator pursuant to this Section shall be effective until (i) a successor Administrator shall have been appointed by the 10 13 Issuer and (ii) such successor Administrator shall have agreed in writing to be bound by the terms of this Agreement on substantially the same terms as the Administrator is bound hereunder. (f) The appointment of any successor Administrator shall be effective only after each Rating Agency (other than Moody's) has provided to the Owner Trustee and the Indenture Trustee notice that the proposed appointment will not result in the reduction or withdrawal of any rating, if any, then assigned by such Rating Agency to any Class of Notes or the Class C Certificates. Promptly after the appointment of any successor Administrator, the Owner Trustee will provide notice of such appointment to Moody's (so long as Moody's is then rating any outstanding Notes). (g) Subject to Section 8(e) and 8(f), the Administrator acknowledges that upon the appointment of a Successor Servicer pursuant to the Sale and Servicing Agreement, the Administrator shall immediately resign and such Successor Servicer shall automatically succeed to the rights, duties and obligations of the Administrator under this Agreement. 9. ACTION UPON TERMINATION, RESIGNATION OR REMOVAL. Promptly upon the effective date of termination of this Agreement pursuant to Section 8(a) or the resignation or removal of the Administrator pursuant to Section 8(b) or (c) or (d), the Administrator shall be entitled to be paid all fees and reimbursable expenses accruing to it to the date of such termination, resignation or removal. The Administrator shall forthwith upon such termination pursuant to Section 8(a) deliver to or to the order of the Issuer all property and documents of or relating to the Collateral then in the custody of the Administrator. In the event of the resignation or removal of the Administrator pursuant to Section 8(b) or (c) or (d), the Administrator shall cooperate with the Issuer and take all reasonable steps requested to assist the Issuer in making an orderly transfer of the duties of the Administrator. 10. NOTICES. Any notice, report or other communication given hereunder shall be in writing and addressed as follows: (a) if to the Issuer or the Owner Trustee, to: Nissan Auto Receivables [_____-___] Owner Trust In care of: ________________________ [_________________________________] Attention: Nissan Auto Receivables [_____-___] Owner Trust with a copy to Nissan Auto Receivables [_____-___] Owner Trust In care of: Nissan Motor Acceptance Corporation 990 West 190th Street Torrance, California 90502 Attention: Joy Crose, General Counsel 11 14 (b) if to the Administrator, to: Nissan Motor Acceptance Corporation 990 West 190th Street Torrance, California 90502 Attention: Joy Crose, General Counsel (c) if to the Indenture Trustee, to: [_________________________________] [_________________________________] [_________________________________] Attention: Nissan Auto Receivables [___-___] Owner Trust or to such other address as any party shall have provided to the other parties in writing. Any notice required to be in writing hereunder shall be deemed given if such notice is mailed by certified mail, postage prepaid, or hand delivered to the address of such party as provided above. 11. AMENDMENTS. This Agreement may be amended from time to time by a written amendment duly executed and delivered by the Issuer, the Administrator and the Indenture Trustee, with the consent of the Owner Trustee but without the consent of any Noteholders or the Certificateholders, for the purpose of adding any provisions to or modifying or changing in any manner or eliminating any of the provisions of this Agreement; provided that such amendment does not and will not, in the Opinion of Counsel satisfactory to the Indenture Trustee, materially and adversely affect the interest of any Noteholder or Certificateholder. This Agreement may also be amended from time to time by the Issuer, the Administrator and the Indenture Trustee with the consent of the Owner Trustee and (i) the holders of Notes evidencing a majority of the Outstanding Amount of the Controlling Class of Notes or (ii) in the case of any amendment that does not adversely affect the Indenture Trustee or the Noteholders (as evidenced by an Officer's Certificate of the Servicer and an outside Opinion of Counsel indicating that such amendment will 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 at such time all Certificates are then owned by the Seller, the Servicer and their Affiliates), for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of those Noteholders or Certificateholders which are not covered by the immediately preceding sentence. [Upon any proposed amendment or supplement to this Agreement pursuant to this Section 11, if such proposed amendment or supplement would adversely affect any of the Swap Counterparty's rights or obligations under the Interest Rate Swap Agreement or modify the obligations of, or impair the ability of the Issuer to fully perform any of its obligations under the Interest Rate Swap Agreement, then the Administrator shall obtain the consent of the Swap Counterparty prior to the adoption of such amendment or supplement, provided the Swap Counterparty's consent shall not be unreasonably withheld, and provided, 12 15 further, the Swap Counterparty's consent will be deemed to have been given if the Swap Counterparty does not object in writing within ten Business Days of receipt of a written request for such consent.] 12. SUCCESSOR AND ASSIGNS. This Agreement may not be assigned by the Administrator unless such assignment is consented to in writing by the Issuer, the Owner Trustee and the Indenture Trustee, and the conditions precedent to appointment of a successor Administrator set forth in Section 8 are satisfied. An assignment with such consent and satisfaction, if accepted by the assignee, shall bind the assignee hereunder in the same manner as the Administrator is bound hereunder. Notwithstanding the foregoing, this Agreement may be assigned by the Administrator without the consent of the Issuer, the Owner Trustee and the Indenture Trustee to a corporation or other organization that is a successor (by merger, consolidation or purchase of assets) to the Administrator, provided that such successor organization executes and delivers to the Issuer, the Owner Trustee and the Indenture Trustee an agreement in which such corporation or other organization agrees to be bound hereunder by the terms of said assignment in the same manner as the Administrator is bound hereunder. Subject to the foregoing, this Agreement shall bind any successors or assigns of the parties hereto. 13. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions (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. 14. NO PETITION. The Administrator, by entering into this Administration Agreement, hereby covenants and agrees that it will not at any time institute against the Issuer, or join in any institution against the Issuer of any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar law, in connection with any obligations relating to the Notes, the Certificates or any of the Basic Documents. 15. HEADINGS. The section headings hereof have been inserted for convenience of reference only and shall not be construed to affect the meaning, construction or effect of this Agreement. 16. COUNTERPARTS. This Agreement may be executed in counterparts, each of which when so executed shall together constitute but one and the same agreement. 17. SEVERABILITY OF PROVISIONS. If any one or more of the agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid or unenforceable in any jurisdiction, then such agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or the other rights of the parties hereto. 13 16 18. NOT APPLICABLE TO NMAC IN OTHER CAPACITIES. Nothing in this Agreement shall affect any obligation, right or benefit NMAC may have in any other capacity or under any Basic Document. 19. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE TRUSTEE. Notwithstanding anything contained herein to the contrary, this instrument has been countersigned by [_________________], not in its individual capacity but solely in its capacity as Owner Trustee of the Issuer, and [_________________], not in its individual capacity but solely in its capacity as Indenture Trustee under the Indenture and in no event shall [_________________] in its individual capacity, [________________], in its individual capacity, or any Certificateholder have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer hereunder or in any of the certificates, notices or agreements delivered pursuant hereto, as to all of which recourse shall be had solely to the assets of the Issuer. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first above written. NISSAN AUTO RECEIVABLES [____-___] OWNER TRUST By: [_________________________________], not in its individual capacity but solely as [Owner Trustee] By: _______________________________ Name: Title: [______________________________], not in its individual capacity but solely as [Indenture Trustee] By: ____________________________________ Name: Title: NISSAN MOTOR ACCEPTANCE CORPORATION, as Administrator 14 17 By: ____________________________________ Name: Title: [_________________________________], not in its individual capacity but solely as Owner Trustee By: ____________________________________ Name: Title: 15 EX-4.7 10 a67668a1ex4-7.txt EXHIBIT 4.7 1 EXHIBIT 4.7 [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II] 990 West 190th Street Torrance, California 90502 Dated as of [______________] YIELD SUPPLEMENT AGREEMENT [NAME OF [INDENTURE] TRUSTEE] [__________________] [__________________] [NAME OF TRUST] [NAME OF [OWNER] TRUSTEE] [__________________] [__________________] Ladies and Gentlemen: [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II] (the "Company") hereby confirms arrangements made as of the date hereof with you, as [Indenture] Trustee and [Owner] Trustee for the benefit of [the Noteholders] [and] [the [Class [__]] Certificateholders], to be effective upon (i) receipt by the Company of the enclosed copy of this letter agreement (the "Yield Supplement Agreement"), executed by the Company, Nissan Motor Acceptance Corporation ("NMAC") [, the Indenture Trustee] [and the Owner Trustee], (ii) execution of the Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"), between the Company and NMAC, (iii) receipt by NMAC of the payment by the Company of the purchase price under the Purchase Agreement, and (iv) the receipt by the Company of the capital contribution of NMAC in connection with the payment of the purchase price under the Purchase Agreement. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the [Sale] [Pooling] and Servicing Agreement, dated as of the date hereof, among NMAC, as Servicer, the Company, and [Nissan Auto Receivables ____-_____ Owner Trust, as Issuer] [[NAME OF TRUSTEE], in its capacity as Trustee] (the "[Sale] [Pooling] and Servicing Agreement"). 1. On or prior to each Determination Date, the Servicer shall notify the Company [, Indenture Trustee] and the [Owner] Trustee of the "Yield Supplement Deposit" (as defined below) for the related Distribution Date, the amount on deposit in the Yield Supplement Account (as defined below), and the amount of reinvestment income during the related Collection Period on the Yield Supplement Account. The "Yield Supplement Deposit" means, with respect to any Distribution Date, the amount by which (i) the aggregate amount of interest that would have been due during the related Collection Period on all Yield Supplemented Receivables (as defined 2 below) if such Yield Supplemented Receivables bore interest at the Required Rate (as defined below) exceeds (ii) the amount of interest accrued on such Yield Supplemented Receivables at their respective APRs and due during such Collection Period. "Required Rate" means, with respect to each Collection Period, the sum of (i) the [Class B Interest Rate][weighted average interest rate of the Notes and the Class C Pass-Through Rate][specify rate] and (ii) the Servicing Rate. "Yield Supplemented Receivable" means any Receivable that has an APR less than the Required Rate. 2. On or before the date hereof, the Owner Trustee shall establish and maintain with [the Securities Intermediary] and pledge to the [Indenture] Trustee [and the Owner Trustee] a segregated account in the name of the [Indenture] Trustee for the benefit of [the Noteholders] [and] [the Class [__] Certificateholders] [the Certificateholders] a segregated trust account in the name of the [Indenture] Trustee (the "Yield Supplement Account") [in accordance with the Securities Account Control Agreement], or such other account as may be acceptable to the Rating Agencies, and the [Company][Trust] hereby grants to the [Indenture] Trustee [and the Owner Trustee] for the benefit of [the Noteholders] [and] [the Class [__] Certificateholders] [Certificateholders] a first priority security interest in the monies on deposit and the other property that from time to time comprise the Yield Supplement Account (including the Initial Yield Supplement Amount), and any and all proceeds thereof (collectively, the "Yield Supplement Account Property"). The [Relevant] Trustee shall possess all of the rights of a secured party under the UCC with respect thereto. The Yield Supplement Account Property and the Yield Supplement Account shall be under the sole dominion and control of the [Relevant] Trustee. Neither the Company, the Trust nor any Person claiming by, through or under the Company or the Trust shall have any right, title or interest in, any control over the use of, or any right to withdraw amounts from, the Yield Supplement Account Property or the Yield Supplement Account. All Yield Supplement Account Property in the Yield Supplement Account shall be applied by the [Relevant] Trustee as specified in this Yield Supplement Agreement and the [Sale] [Pooling] and Servicing Agreement. The [Relevant] Trustee shall, not later than 5:00 P.M., New York City time on the Business Day preceding each Distribution Date, withdraw from the Yield Supplement Account and deposit in the [Collection Account] [Certificate Account] an amount equal to the Yield Supplement Deposit plus the amount of reinvestment income on the Yield Supplement Account for such Distribution Date. 3. On or prior to the date hereof, the Company shall [[make a capital contribution to the Trust by depositing an amount equal to $___________] [deposit an amount equal to $_________] [in cash] into the Yield Supplement Account][, transfer retail installment sales contracts with an aggregate principal balance, as of the Cut-Off Date, of $_________ to the Trust] [and transfer receivables or other assets (including vehicle lease contracts) in an amount, collectively, equal to $__________ to the Trust] ([the][collectively,] "Initial Yield Supplement Amount"). [On each Distribution Date, the Servicer will deposit payments received with respect to the retail installment sales contracts referred to above into the Yield Supplement Account.] [On each Distribution Date, the Servicer will deposit payments received with respect to those receivables or other assets referred to above into the Yield Supplement Account.] The amount required to be on deposit in the Yield Supplement Account on the date of issuance of [the Notes] [the Certificates] and for each Distribution Date until the [Notes of all Classes and the Class [ ] Certificates] [Certificates of all Classes] have been paid in full [or the Indenture is otherwise 2 3 terminated] (the "Required Yield Supplement Amount"), as determined by the Servicer and notified to the [Relevant] Trustee, means an amount equal to the lesser of (i) the aggregate amount of each Yield Supplement Deposit that will become due on each future Distribution Date, assuming that payments on the Receivables are made on their scheduled due dates, no Receivable becomes a prepaid Receivable, and a discount rate of [ ]% and (ii) the Initial Yield Supplement Amount. The Required Yield Supplement Amount may decline as a result of prepayments or repayments in full of the Receivables. The [Relevant] Trustee shall have no duty or liability to determine the Required Yield Supplement Amount and may fully rely on the determination thereof by the Servicer. If, on any Distribution Date, the funds in the Yield Supplement Account are in excess of the Required Yield Supplement Amount for such Distribution Date after giving effect to all distributions to be made on such Distribution Date, the [Relevant] Trustee shall deposit the amount of such excess into the [Collection Account] [Certificate Account] for distribution by the [Relevant] Trustee in accordance with the terms of [Sale] [Pool] and Servicing Agreement. [The Yield Supplement Account shall [not] be part of the Trust.] [It is the intent of the parties that the Yield Supplement Account Property be treated as property of the Trust for all federal, state and local income and franchise tax purposes.] The provisions of this Yield Supplement Agreement should be interpreted accordingly. [Further, the Trust shall include in its gross income all income earned on the Yield Supplement Account Property and the Yield Supplement Account.] 4. All or a portion of the Yield Supplement Account may be invested and reinvested in the manner specified in Section [5.08] [5.01] of the [Sale] [Pooling] and Servicing Agreement in accordance with written instructions from the Servicer. All such investments shall be made in the name of the [Relevant] Trustee. Earnings on investment of funds in the Yield Supplement Account shall be deposited in the [Collection Account] [Certificate Account] on each Distribution Date, and losses and any investment expenses shall be charged against the funds on deposit therein. Upon payment in full of the [Notes] [and] [Certificates], as directed in writing by the Servicer, the [Relevant] Trustee will release any amounts remaining on deposit in the Yield Supplement Account to the Owner Trustee for the benefit of the Certificateholders, which amounts the Owner Trustee will deposit in the [Collection Account] [Certificate Account]. If for any reason the Yield Supplement Account [is no longer an Eligible Deposit Account] [no longer satisfies the requirements relating to eligibility of accounts set forth in Section 5.01 of the Pooling and Servicing Agreement], the [Relevant] Trustee shall promptly cause the Yield Supplement Account to be moved to another institution or otherwise changed so that the Yield Supplement Account [becomes an Eligible Deposit Account] [complies with such requirements]. 5. Our agreements set forth in this Yield Supplement Agreement are our primary obligations and such obligations are irrevocable, absolute and unconditional, shall not be subject to any counterclaim, setoff or defense (other than full and strict compliance by us with our obligations hereunder) and shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by, any circumstances or condition whatsoever. 6. [In order to more fully protect the interests of [the Noteholders] [and] [the Certificateholders], the Company will transfer, assign and convey its interest in this Yield Supplement Agreement to the Nissan Auto Receivables [____-____] [Owner] [Grantor] Trust established under the [Trust Agreement] [Pooling and Servicing Agreement]. Following such transfer, assignment and conveyance, this] [This] Yield Supplement Agreement shall not be amended, modified or terminated except in 3 4 accordance with the provisions for amendments, modifications and terminations of the [Sale] [Pooling] and Servicing Agreement as set forth in Section [10.01] [13.01] of the [Sale] [Pooling] and Servicing Agreement. 7. THIS YIELD SUPPLEMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, 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 UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. 8. Except as otherwise provided herein, all notices pursuant to this Yield Supplement Agreement shall be in writing, personally delivered, sent by telecopier, sent by courier or mailed by certified mail, return receipt requested, and shall be effective upon receipt thereof. All notices shall be directed as set forth below, or to such other address or telecopy number or to the attention of such other person as the relevant party shall have designated for such purpose in a written notice. The Company: [Nissan Auto Receivables Corporation][Nissan Auto Receivables Corporation II] 990 West 190th Street Torrance, California 90502 Attention: Treasurer Facsimile No.: 310-324-2542 [Indenture] Trustee: [_______________] [_______________] [_______________] [_______________] Trust: [_______________] [_______________] [_______________] [_______________] 9. This Yield Supplement Agreement may be executed in one or more counterparts and by the different parties hereto on separate counterparts, all of which shall be deemed to be one and the same document. [10. Each of the parties hereto agrees and acknowledges that all of the rights and interests of the Indenture Trustee hereunder shall be automatically transferred to the Owner 4 5 Trustee, and the Owner Trustee shall succeed to all such rights and interests, upon the payment in full of the Notes in accordance with the terms of the Indenture and the Sale and Servicing Agreement.] 5 6 If the foregoing satisfactorily sets forth the terms and conditions of our agreement, please indicate your acceptance thereof by signing in the space provided below and returning to us the enclosed duplicate original of this letter. Very truly yours, [NISSAN AUTO RECEIVABLES CORPORATION][NISSAN AUTO RECEIVABLES CORPORATION II] By: --------------------------------- Name: Title: Agreed and accepted as of [_________,____] NISSAN MOTOR ACCEPTANCE CORPORATION By: --------------------------------- Name: Title: [INDENTURE TRUSTEE] [TRUSTEE] AS [INDENTURE] TRUSTEE By: --------------------------------- Name: Title: TRUST By: [OWNER] TRUSTEE AS [OWNER] TRUSTEE By: --------------------------------- Name: Title: 6 EX-5.1(A) 11 a67668a1ex5-1a.txt EXHIBIT 5.1(A) 1 EXHIBIT 5.1(a) [LETTERHEAD OF O'MELVENY & MYERS LLP] January 11, 2001 Nissan Auto Receivables Corporation Nissan Auto Receivables Corporation II Nissan Motor Acceptance Corporation Nissan Auto Receivables Trusts 990 West 190th Street Torrance, California 90502 Re: Nissan Auto Receivables Corporation Nissan Auto Receivables Corporation II Nissan Motor Acceptance Corporation Nissan Auto Receivables Trusts Registration Statement on Form S-3 Registration No. 333-51224 Registration No. 333-51224-01 Ladies and Gentlemen: We have acted as special counsel to Nissan Auto Receivables Corporation ("NARC") and Nissan Auto Receivables Corporation II ("NARC II"), each a Delaware corporation and wholly owned limited purpose subsidiary of Nissan Motor Acceptance Corporation ("NMAC"), a California corporation, and certain trusts, all of the beneficial ownership of which will initially be owned by NARC or NARC II (together with NARC and NARC II, each an "Issuer"), in connection with the proposed issuance of $8,500,000,000 aggregate principal amount of asset-backed notes (the "Notes") to be offered pursuant to a registration statement on Form S-3 (such registration statement, as amended, the "Registration Statement") relating to the Notes. The Registration Statement has been filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "1933 Act"), and the rules and regulations promulgated thereunder. The Notes for each series will be issued under and pursuant to an indenture between the applicable Issuer and the Indenture Trustee (as defined therein). The indenture in the form filed with the Securities and Exchange Commission on January 11, 2001, as an exhibit to the Registration Statement, is herein referred to as the "Indenture." We have examined originals or copies, certified or otherwise identified to our satisfaction, of the organizational documents of the Issuers, the Indenture, the form of Notes 2 included as an exhibit to the Indenture, and such other records, documents and certificates of the Issuers and public officials and other instruments as we have deemed necessary for the purpose of this opinion. In addition, we have assumed that the Indenture as completed for each series will be duly executed and delivered by the parties thereto; that the Notes as completed for each series will be duly executed and delivered substantially in the forms contemplated by the Indenture; and that the Notes for each series will be sold as described in the Registration Statement. Based upon the foregoing, we are of the opinion that: The Notes are in due and proper form and, assuming the due authorization, execution and delivery of the Indenture by the applicable Issuer and the Indenture Trustee, and the due authorization of the Notes for each series by all necessary action on the part of the applicable Issuer, when the Notes for each series have been validly executed, authenticated and issued in accordance with the applicable Indenture and delivered against payment therefor, the Notes for each series will be valid and binding obligations of the applicable Issuer, enforceable against the applicable Issuer in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally (including, without limitation, fraudulent conveyance laws), and general principles of equity, including without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance or injunctive relief, regardless of whether such enforceability is considered in a proceeding in equity or at law. The opinions expressed above are limited to the federal laws of the United States of America and the laws of the States of California and New York (excluding choice of law principles therein). We express no opinion herein as to the laws of any other jurisdiction and no opinion regarding the statutes, administrative decisions, rules, regulations or requirements of any county, municipality, subdivision or local authority of any jurisdiction. We consent to the filing of this letter as an exhibit to the Registration Statement and to the reference to this firm under the heading "Legal Opinions" in the Prospectus and the Prospectus Supplement, without admitting that we are "experts," within the meaning of the 1933 Act or the rules or regulations of the Securities and Exchange Commission thereunder, with respect to any part of the Registration Statement, including this exhibit. Respectfully submitted, /s/ O'MELVENY & MYERS LLP EX-5.1(B) 12 a67668a1ex5-1b.txt EXHIBIT 5.1(B) 1 EXHIBIT 5.1(b) [LETTERHEAD OF O'MELVENY & MYERS LLP] January 11, 2001 Nissan Auto Receivables Corporation Nissan Auto Receivables Corporation II Nissan Motor Acceptance Corporation Nissan Auto Receivables Trusts 990 West 190th Street Torrance, California 90502 Re: Nissan Auto Receivables Corporation Nissan Auto Receivables Corporation II Nissan Motor Acceptance Corporation Nissan Auto Receivables Trusts Registration Statement on Form S-3 Registration No. 333-51224 Registration No. 333-51224-01 Ladies and Gentlemen: We have acted as special counsel to Nissan Auto Receivables Corporation("NARC") and Nissan Auto Receivables Corporation II ("NARC II"), a Delaware corporation and wholly owned limited purpose subsidiary of Nissan Motor Acceptance Corporation, a California corporation ("NMAC"), and certain trusts, all of the beneficial ownership of which will initially be owned by NARC or NARC II (together with NARC and NARC II, each an "Issuer"), in connection with the proposed issuance of $8,500,000,000 aggregate principal amount of asset-backed certificates (the "Certificates") to be offered pursuant to a registration statement on Form S-3 (such registration statement, as amended, the "Registration Statement") relating to the Certificates. The Registration Statement has been filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "1933 Act"), and the rules and regulations promulgated thereunder. The Certificates for each series will be issued under and pursuant to a pooling and servicing agreement among the applicable Issuer, NMAC and the Trustee (as defined therein) or a trust agreement between the applicable Issuer and the Owner Trustee (as defined therein). The pooling and servicing agreement in the form filed with the Securities and Exchange Commission 2 on January 11, 2001, as an exhibit to the Registration Statement, is herein referred to as the "Pooling and Servicing Agreement." The trust agreement in the form filed with the Securities and Exchange Commission on January 11, 2001, as an exhibit to the Registration Statement, is herein referred to as the "Trust Agreement." We have examined originals or copies, certified or otherwise identified to our satisfaction of the organizational documents of the Issuers, the Pooling and Servicing Agreement, the Trust Agreement , the forms of Certificates included as exhibits to the Pooling and Servicing Agreement and the Trust Agreement, and such other records, documents and certificates of the Issuers and public officials and other instruments as we have deemed necessary for the purpose of this opinion. In addition, we have assumed that each of the Pooling and Servicing Agreement and the Trust Agreement, as applicable, as completed for each series will be duly executed and delivered by each of the respective parties thereto; that the Certificates as completed for each series will be duly executed and delivered substantially in the forms contemplated by the Pooling and Servicing Agreement and the Trust Agreement, as applicable; and that the Certificates for each series will be sold as described in the Registration Statement. Based upon the foregoing, we are of the opinion that: The Certificates are in due and proper form and, assuming the due authorization, execution and delivery of the Pooling and Servicing Agreement and the Trust Agreement, as applicable, by the parties thereto, and the due authorization of the Certificates for each series by all necessary action on the part of the applicable Issuer, when the Certificates for each series have been validly executed, authenticated and issued in accordance with the Pooling and Servicing Agreement or the Trust Agreement, as applicable, and delivered against payment therefor, the Certificates for each series will be validly issued and outstanding, fully paid and nonassessable, and entitled to the benefits of the Pooling and Servicing Agreement or the Trust Agreement, as applicable, in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally (including, without limitation, fraudulent conveyance laws), and general principles of equity, including without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance or injunctive relief, regardless of whether such enforceability is considered in a proceeding in equity or at law. The opinions expressed above are limited to the federal laws of the United States of America and the laws of the States of California and of New York (excluding choice of law principles therein). We express no opinion herein as to the laws of any other jurisdiction and no opinion regarding the statutes, administrative decisions, rules, regulations or requirements of any county, municipality, subdivision or local authority of any jurisdiction. We consent to the filing of this letter as an exhibit to the Registration Statement and to the reference to this firm under the heading "Legal Opinions" in the Prospectus and the Prospectus Supplement, without admitting that we are "experts," within the meaning of the 1933 Act or the rules or regulations of the Securities and Exchange Commission thereunder, with respect to any part of the Registration Statement, including this exhibit. Respectfully submitted, /s/ O'MELVENY & MYERS LLP EX-8.1 13 a67668a1ex8-1.txt EXHIBIT 8.1 1 EXHIBIT 8.1 [LETTERHEAD OF O'MELVENY & MYERS LLP] January 11, 2001 Nissan Auto Receivables Corporation Nissan Auto Receivables Corporation II Nissan Motor Acceptance Corporation Nissan Auto Receivables Trusts 990 West 190th Street Torrance, California 90502 Re: Nissan Auto Receivables Corporation Nissan Auto Receivables Corporation II Nissan Motor Acceptance Corporation Nissan Auto Receivables Trusts Registration Statement on Form S-3 Registration No. 333-51224 Registration No. 333-51224-01 Ladies and Gentlemen: We have acted as special counsel to Nissan Auto Receivables Corporation ("NARC") and Nissan Auto Receivables Corporation II ("NARC II"), each a Delaware corporation and wholly-owned limited purpose subsidiary of Nissan Motor Acceptance Corporation, a California corporation ("NMAC"), and certain trusts, each of which will be owned initially by NARC or NARC II (together with NARC and NARC II, each an "Issuer"), in connection with the Issuer's proposed issuance of $8,500,000,000 aggregate principal amount of asset-backed notes (the "Notes") and/or asset-backed certificates (the "Certificates") to be offered pursuant to a registration statement on Form S-3 (such registration statement, as amended, the "Registration Statement") relating to the Notes and Certificates. The Registration Statement has been filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "1933 Act"), and the rules and regulations promulgated thereunder. The Notes for each series will be issued under and pursuant to an indenture between the Issuer and the Indenture Trustee (as defined in the indenture). The indenture, in the form filed with the Securities and Exchange Commission on January 11, 2001 as an exhibit to the Registration Statement, is referred to hereinafter as the "Indenture." The Certificates for each series will be issued under and pursuant to a pooling and servicing agreement among the Issuer, NMAC and the Trustee (as defined in the pooling and servicing agreement) or a trust agreement 2 between the Issuer and the Owner Trustee (as defined in the trust agreement). The pooling and servicing agreement, in the form filed with the Securities and Exchange Commission on January 11, 2001 as an exhibit to the Registration Statement, is referred to hereinafter as the "Pooling and Servicing Agreement." The trust agreement, in the form filed with the Securities and Exchange Commission on January 11, 2001 as an exhibit to the Registration Statement, is referred to hereinafter as the "Trust Agreement." We have examined originals or copies, certified or otherwise identified to our satisfaction, of the organizational documents of the Issuer, the Indenture, the Pooling and Servicing Agreement, the Trust Agreement, the form of Notes included as an exhibit to the Indenture, the forms of Certificates included as exhibits to the Pooling and Servicing Agreement or the Trust Agreement, and such other records, documents and certificates of the Issuers and public officials and other instruments as we have deemed necessary for the purpose of this opinion. In addition, we have assumed that each of the Indenture, the Pooling and Servicing Agreement and the Trust Agreement, as applicable, and as completed for each series, will be duly executed and delivered by each of the respective parties thereto; that the Notes and Certificates, as applicable, and as completed for each series, will be duly executed and delivered substantially in the forms contemplated by the Indenture, the Pooling and Servicing Agreement or the Trust Agreement, as applicable; and that the Notes and Certificates for each series will be sold as described in the Registration Statement. The law covered by this opinion is limited to the present federal law of the United States and the laws of the State of California, including relevant provisions of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations thereunder (including proposed and temporary Treasury Regulations), and interpretations of the foregoing as expressed in court decisions, administrative determinations and the legislative history as of the date hereof. These provisions and interpretations are subject to change, which may or may not be retroactive in effect, that might result in modifications of our opinion. We express no opinion as to the laws of any other jurisdiction and, unless otherwise specified, no opinion regarding the statutes, administrative decisions, rules, regulations or requirements of any county, municipality, subdivision or local authority of any jurisdiction. This opinion is furnished by us as special counsel for NARC, NARC II or NMAC and may be relied upon by you only in connection with the transactions contemplated by Indenture, the Pooling and Servicing Agreement, or the Trust Agreement, as applicable. It may not be used or relied upon by you for any other purpose, nor may copies be delivered to any other person, without in each instance our prior written consent. This opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters. We assume no obligation to update or supplement this opinion to reflect any facts or circumstances which may hereafter come to our attention, or any changes in laws which may hereafter occur. As special tax counsel to the Issuers, we have advised the Issuers with respect to certain federal income tax aspects of the proposed issuance of the Notes and the Certificates after the date hereof as described in the Registration Statement. Such advice has formed the basis for the description of selected federal income tax consequences for holders of the Notes and Certificates that appears under the heading "Material Income Tax Consequences" in the 3 Prospectus. Such description does not purport to discuss all possible income tax ramifications of the proposed issuance of the Notes and Certificates, but with respect to those federal income tax consequences which are discussed, in our opinion, the description is accurate. We consent to the filing of this letter as an exhibit to the Registration Statement and to the reference to this firm under the heading "Material Income Tax Consequences" in the Prospectus and the Prospectus Supplement, without admitting that we are "experts," within the meaning of the 1933 Act or the rules or regulations of the Securities and Exchange Commission thereunder, with respect to any part of the Registration Statement, including this exhibit. Respectfully submitted, /s/ O'MELVENY & MYERS LLP EX-25.1 14 a67668a1ex25-1.txt EXHIBIT 25.1 1 EXHIBIT 25.1 Filed pursuant to: Registration No.: 333-51224 Registration No.: 333-51224-01 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ----------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b) (2) WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) A U.S. NATIONAL BANKING ASSOCIATION 41-1592157 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national Identification No.) bank) SIXTH STREET AND MARQUETTE AVENUE MINNEAPOLIS, MINNESOTA 55479 (Address of principal executive offices) (Zip code) STANLEY S. STROUP, GENERAL COUNSEL WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION SIXTH STREET AND MARQUETTE AVENUE MINNEAPOLIS, MINNESOTA 55479 (612) 667-1234 (Name, address and telephone number of Agent for Service) ----------------------------- NISSAN AUTO RECEIVABLES TRUST (Issuer with respect to the securities) NISSAN AUTO RECEIVABLES CORPORATION NISSAN AUTO RECEIVABLES CORPORATION II (Exact names of the registrants as specified in their charters) 33-0479655 DELAWARE 95-4831541 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 990 W. 190TH STREET TORRANCE, CALIFORNIA 90502 (Address of principal executive offices) (Zip code) ----------------------------- ASSET BACKED SECURITIES (Title of the indenture securities) ================================================================================ 2 Filed pursuant to: Registration No.: 333-51224 Registration No.: 333-51224-01 Item 1.General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency Treasury Department Washington, D.C. Federal Deposit Insurance Corporation Washington, D.C. The Board of Governors of the Federal Reserve System Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. Item 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None with respect to the trustee. No responses are included for Items 3-14 of this Form T-1, pursuant to General Instruction B, because the obligor is not in default as provided under Item 13. Item 15. Foreign Trustee. Not applicable. Item 16. List of Exhibits. List below all exhibits filed as a part of this Statement of Eligibility. Exhibit 1. a. A copy of the Articles of Association of the trustee now in effect.* Exhibit 2. a. A copy of the certificate of authority of the trustee to commence business issued June 28, 1872, by the Comptroller of the Currency to The Northwestern National Bank of Minneapolis.* b. A copy of the certificate of the Comptroller of the Currency dated January 2, 1934, approving the consolidation of The Northwestern National Bank of Minneapolis and The Minnesota Loan and Trust Company of Minneapolis, with the surviving entity being titled Northwestern National Bank and Trust Company of Minneapolis.* c. A copy of the certificate of the Acting Comptroller of the Currency dated January 12, 1943, as to change of corporate title of Northwestern National Bank and Trust Company of Minneapolis to Northwestern National Bank of Minneapolis.* d. A copy of the letter dated May 12, 1983 from the Regional Counsel, Comptroller of the Currency, acknowledging receipt of notice of name change effective May 1, 1983 from Northwestern National Bank of Minneapolis to Norwest Bank Minneapolis, National Association.* 3 e. A copy of the letter dated January 4, 1988 from the Administrator of National Banks for the Comptroller of the Currency certifying approval of consolidation and merger effective January 1, 1988 of Norwest Bank Minneapolis, National Association with various other banks under the title of "Norwest Bank Minnesota, National Association."* Exhibit 3. A copy of the authorization of the trustee to exercise corporate trust powers issued January 2, 1934, by the Federal Reserve Board.* Exhibit 4. Copy of By-laws of the trustee as now in effect.* Exhibit 5. Not applicable. Exhibit 6. The consent of the trustee required by Section 321(b) of the Act. Exhibit 7. Consolidated Reports of Condition and Income of the trustee as of September 30, 2000. Exhibit 8. Not applicable. Exhibit 9. Not applicable. * Incorporated by reference to the corresponding numbered exhibits to the form T-1 filed as Exhibit 25 to registration statement number 33-66026. 4 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Wells Fargo Bank Minnesota, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Minneapolis and State of Minnesota on the 18th day of December 18, 2000. WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION /s/ Cheryl Zimmerman -------------------------------------------- Cheryl Zimmerman Corporate Trust Officer 5 EXHIBIT 6 December 18, 2000 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, the undersigned hereby consents that reports of examination of the undersigned made by Federal, State, Territorial, or District authorities authorized to make such examination may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION /s/ Cheryl Zimmerman -------------------------------------------- Cheryl Zimmerman Corporate Trust Officer 6 Board of Governors of the Federal Reserve System OMB Number: 7100-0036 Federal Deposit Insurance Corporation OMB Number: 3064-0052 Office of the Comptroller of the Currency OMB Number: 1557-0081 Expires March 31, 2002 FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL - -------------------------------------------------------------------------------- [1] Please refer to page 1, Table of Contents, for the required disclosure of estimated burden. - -------------------------------------------------------------------------------- CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND FOREIGN OFFICES -- FFIEC 031 REPORT AT THE CLOSE OF BUSINESS SEPTEMBER 30, 2000 This report is required by law: 12 U.S.C. Section 324 (State member banks); 12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161 (National banks). 20000930 ----------- (RCRI 9999) This report form is to be filed by banks with branches and consolidated subsidiaries in U.S. territories and possessions, Edge or Agreement subsidiaries, foreign branches, consolidated foreign subsidiaries, or international Banking Facilities. - -------------------------------------------------------------------------------- NOTE: The Reports of Condition and Income must be signed by an authorized officer and the Report of Condition must be attested to by not less than two directors (trustees) for State nonmember banks and three directors for State member and National Banks. I, ROBERT F. GOODSELL, MGR. OF REGULATORY REPORTING - ----------------------------------------------------- Name and Title of Officer Authorized to Sign Report of the named bank do hereby declare that the Reports of Condition and Income (including the supporting schedules) for this report date have been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and are true to the best of my knowledge and belief. /s/ ROBERT F. GOODSELL - ----------------------------------------------------- Signature of Officer Authorized to Sign Report 10/27/00 - ----------------------------------------------------- Date of Signature The Reports of Condition and Income are to be prepared in accordance with Federal regulatory authority instructions. We, the undersigned directors (trustees), attest to the correctness of the Report of Condition (including the supporting schedules) for this report date and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. /s/ Marilyn A. Dahl - ----------------------------------------------------- Director (Trustee) /s/ Gerald B. Stinson - ----------------------------------------------------- Director (Trustee) /s/ Patrick J. Donovan - ----------------------------------------------------- Director (Trustee) - -------------------------------------------------------------------------------- Submission of Reports Each bank must prepare its Reports of Condition and Income either: (a) In electronic form and then file the computer data file directly with the banking agencies' collection agent, Electronic Data Systems Corporation (EDS), by modem or on computer diskette; or (b) In hard-copy (paper) form and arrange for another party to convert the paper report to electronic form. That party (if other than EDS) must transmit the bank's computer data file to EDS. For electronic filing assistance, contact EDS Call Report Services, 2150 N. Prospect Ave., Milwaukee, WI 53202, telephone (800) 255-1571. To fulfill the signature and attestation requirement for the Reports of Condition and Income for this report date, attach this signature page (or a photocopy or a computer-generated version of this page) to the hard-copy record of the completed report that the bank places in its files. - -------------------------------------------------------------------------------- FDIC Certificate Number: 05208 ----------- (RCRI 9050) http://www.wellsfargo.com - ----------------------------------------------------- Primary Internet Web Address of Bank (Home Page), if any (TEXT4087) (Example: www.examplebank.com) WELLS FARGO BANK MINNESOTA, N.A. - ----------------------------------------------------- Legal Title of Bank (TEXT9010) MINNEAPOLIS - ----------------------------------------------------- City (TEXT9130) MN 55479 - ----------------------------------------------------- State Abbrev. (TEXT9200) Zip Code (TEXT9220) Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency - -------------------------------------------------------------------------------- 7
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RI-1 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 3 ------- CONSOLIDATED REPORT OF INCOME FOR THE PERIOD JANUARY 1, 2000 - SEPTEMBER 30, 2000 All Report of Income schedules are to be reported on a calendar year-to-date basis in thousands of dollars. SCHEDULE RI - INCOME STATEMENT I480 <- Dollar Amounts in Thousands - ---------------------------------------------------------------------------------------------------------------- 1. Interest Income: a. Interest and fee income on loans: (1) In domestic offices: ............................................................ RIAD ---- (a) Loans secured by real estate ................................................ 4011 683,470 1.a.1.a (b) Loans to depository institutions ............................................ 4019 15,507 1.a.1.b (c) Loans to finance agricultural production and other loans to farmers ...................................................... 4024 12,830 1.a.1.c (d) Commercial and industrial loans ............................................. 4012 347,362 1.a.1.d (e) Acceptances of other banks .................................................. 4026 113 1.a.1.e (f) Loans to individuals for household, family, and other personal expenditures: (1) Credit cards and related plans .......................................... 4054 24,357 1.a.1.f.1 (2) Other ................................................................... 4055 100,301 1.a.1.f.2 (g) Loans to foreign governments and official institutions ...................... 4056 0 1.a.1.g (h) Obligations (other than securities and leases) of states and political subdivisions in the U.S.: (1) Taxable obligations ..................................................... 4503 348 1.a.1.h.1 (2) Tax-exempt obligations .................................................. 4504 1,863 1.a.1.h.2 (i) All other loans in domestic offices ......................................... 4058 82,149 1.a.1.i (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ................... 4059 1,121 1.a.2 b. Income from lease financing receivables: (1) Taxable leases .................................................................. 4505 84,703 1.b.1 (2) Tax-exempt leases ............................................................... 4307 0 1.b.2 c. Interest income on balances due from depository institutions: (1) (1) In domestic offices ............................................................. 4105 2,023 1.c.1 (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ................... 4106 81 1.c.2 d. Interest and dividend income on securities: (1) U.S. Treasury securities and U.S. Government agency obligations (INCLUDING MORTGAGE-BACKED SECURITIES ISSUED OR GUARANTEED BY FNMA, FHLMC, OR GNMA) ........................................ 4027 82,865 1.d.1 (2) Securities issued by states and political subdivisions in the U.S.: (a) Taxable securities ......................................................... 4506 239 1.d.2.a (b) Tax-exempt securities ...................................................... 4507 10,757 1.d.2.b (3) Other domestic debt securities (INCLUDING MORTGAGE-BACKED SECURITIES NOT ISSUED OR GUARANTEED BY FNMA, FHLMC, OR GNMA) ........................................ 3657 70,915 1.d.3 (4) Foreign debt securities ......................................................... 3658 0 1.d.4 (5) Equity securities (including investments in mutual funds) ....................... 3659 23,807 1.d.5 e. Interest income from trading assets .................................................. 4069 202 1.e
- ------- (1) Includes interest income on time certificates of deposits not held for trading. 8
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RI-2 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 4 ------- SCHEDULE RI - CONTINUED Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------- 1. Interest income (continued) RIAD YEAR-TO-DATE f. Interest income on federal funds sold and securities purchased under ---- agreements to resell ............................................... 4020 767,868 1.f g. Total interest income (sum of items 1.a through 1.f) ................ 4107 2,312,881 1.g 2. Interest expense: a. Interest on deposits: (1) Interest on deposits in domestic offices: (a) Transaction accounts (NOW accounts, ATS accounts, and telephone and preauthorized transfer accounts) ........... 4508 5,358 2.a.1.a (b) Nontransaction accounts: (1) Money market deposit accounts (MMDAs) ................. 4509 55,177 2.a.1.b.1 (2) Other savings deposits ................................ 4511 93,242 2.a.1.b.2 (3) Time deposits of $100,000 or more ..................... A517 13,741 2.a.1.b.3 (4) Time deposits of less than $100,000 ................... A518 83,415 2.a.1.b.4 (2) Interest on deposits in foreign offices, Edge and agreement subsidiaries, and IBFs ......................................... 4172 389,415 2.a.2 b. Expense of federal funds purchased and securities sold under agreements to repurchase ......................................... 4180 517,935 2.b c. Interest on demand notes issued to the U.S. Treasury, trading liabilities, and on other borrowed money ................. 4185 304,031 2.c d. Not applicable e. Interest on subordinated notes and debentures ..................... 4200 0 2.e f. Total interest expense (sum of items 2.a through 2.e) ............. 4073 1,462,314 RIAD 2.f ---- 3. Net interest income (item 1.g minus 2.f) ................................................ 4074 850,567 3. 4. Provisions: a. Provision for credit losses ......................................................... 4230 45,860 4.a b. Provision for allocated transfer risk ............................................... 4243 0 4.b 5. Noninterest income: RIAD ---- a. Income from fiduciary activities ................................... 4070 210,516 5.a b. Service charges on deposit accounts in domestic offices ............ 4080 115,003 5.b c. Trading revenue (must equal Schedule RI, sum of Memorandum items 8.a through 8.d) ........................................... A220 22,681 5.c d. - e. Not applicable f. Other noninterest income: (1) Other fee income ............................................... 5407 131,903 5.f.1 (2) All other noninterest income (*) ............................... 5408 48,030 RIAD 5.f.2 ---- g. Total noninterest income (sum of items 5.a through 5.f) ............................. 4079 528,133 5.g 6. a. Realized gains (losses) on held-to-maturity securities ............................... 3521 0 6.a b. Realized gains (losses) on available-for-sale securities ............................ 3196 (95,735) 6.b 7. Noninterest expense: ................................................... RIAD ---- a. Salaries and employee benefits ..................................... 4135 329,854 7.a b. Expenses of premises and fixed assets (net of rental income) (excluding salaries and employee benefits and mortgage interest) .. 4217 64,951 7.b c. Other noninterest expense (*) ...................................... 4092 382,378 RIAD 7.c ---- d. Total noninterest expense (sum of items 7.a through 7.c) ............................ 4093 777,183 7.d 8. Income (loss) before income taxes and extraordinary items and other adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d) ............................................................................... 4301 459,922 8. 9. Applicable income taxes (on item 8) ..................................................... 4302 169,254 9. 10. Income (loss) before extraordinary items and other adjustments (item 8 minus 9) ........................................................................ 4300 290,668 10. 11. Extraordinary items and other adjustments, net of income taxes (*) ...................... 4320 0 11 12. Net income (loss) (sum of items 10 and 11) .............................................. 4340 290,668 12.
- ------------ (*) Describe on Schedule RI-E - Explanations. 9
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RI-3 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 5 ------- SCHEDULE RI - CONTINUED I481 <- Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------- MEMORANDA RIAD YEAR-TO-DATE 1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after ---- August 7, 1986, that is not deductible for federal income tax purposes ...................... 4513 582 M.1 2. Income from the sale and servicing of mutual funds and annuities in domestic offices (included in Schedule RI, item 8) ........................................................... 8431 2,642 M.2 3. - 4. Not applicable 5. Number of full-time equivalent employees on payroll at end of current period (round to NUMBER nearest whole number) ....................................................................... 4150 6,845 M.5 6. Not applicable 7. If the reporting bank has restated its balance sheet as a result of applying push CCYY / MM / DD accounting this calendar year, report the date of the bank's acquisition .................... 9106 N/A M.7 8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) (sum of Memorandum items 8.a through 8.d must equal Schedule RI, item 5.c): a. Interest rate exposures .................................................................. 8757 13,173 M.8.a b. Foreign exchange exposures ............................................................... 8758 19,671 M.8.b c. Equity security and index exposures ...................................................... 8759 0 M.8.c d. Commodity and other exposures ............................................................ 8760 (10,163) M.8.d 9. Impact on income of off-balance sheet derivatives held for purposes other than trading: a. Net increase (decrease) to interest income ............................................... 8761 932 M.9.a b. Net (increase) decrease to interest expense .............................................. 8762 (98) M.9.b c. Other (noninterest) allocations .......................................................... 8763 (10) M.9.c 10. Credit losses on off-balance sheet derivatives (see instructions) ........................... A251 0 M.10 11. Does the reporting bank have a Subchapter S election in effect for YES / NO federal income tax purposes for the current tax year ? ...................................... A530 NO M.11 12. Deferred portion of total applicable income taxes included in Schedule RI, items 9 and 11 (to be reported with the December Report of Income) ......................... 4772 N/A M.12
- --------- (1) For example, a bank acquired on June 1, 1998, would report 1998/06/01 (*) Describe on Schedule RI-E - Explanations. 10
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RI-4 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 6 ------- SCHEDULE RI-A - CHANGES IN EQUITY CAPITAL Indicate decreases and losses in parentheses. I483 <- Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------- RIAD 1. Total equity capital originally reported in the December 31, 1999, ---- Reports of Condition and Income ............................................. 3215 1,979,872 1 2. Equity capital adjustments from amended Reports of Income, net (*) ........... 3216 0 2. 3. Amended balance end of previous calendar year (sum of items 1 and 2) ......... 3217 1,979,872 3. 4. Net income (loss) (must equal Schedule RI, item 12) .......................... 4340 290,668 4. 5. Sale, conversion, acquisition, or retirement of capital stock, net ........... 4346 0 5. 6. Changes incident to business combinations, net ............................... 4356 394,038 6. 7. LESS: Cash dividends declared on preferred stock ............................. 4470 0 7. 8. LESS: Cash dividends declared on common stock ................................ 4460 24,100 8. 9. Cumulative effect of changes in accounting principles from prior years (*) (see instructions for this schedule) ........................................ 4411 0 9. 10. Corrections of material accounting errors from prior years (*) (see instructions for this schedule) .............................................. 4412 0 10. 11. a Change in net unrealized holding gains (losses) on available-for-sale securities ................................................................ 8433 41,410 11.a b. Change in accumulated net gains (losses) on cash flow hedges .............. 4574 0 11.b 12. Foreign currency translation adjustments ..................................... 4414 (20) 12 13. Other transactions with parent holding company (*) (not included in item 5, 7, or 8 above) .................................................... 4415 325,000 13 14. Total equity capital end of current period (sum of items 3 through 13) (must equal Schedule RC, item 28) .............................. 3210 3,006,868 14
- --------- (*) Describe on Schedule RI-E - Explanations. SCHEDULE RI-B - CHARGE-OFFS AND RECOVERIES ON LOANS AND LEASES AND CHANGES IN ALLOWANCE FOR CREDIT LOSSES PART I. CHARGE-OFFS AND RECOVERIES ON LOANS AND LEASES (1)
Part I excludes charge-offs and recoveries through the allocated transfer risk reserve. I486 <- Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------- CALENDAR YEAR-TO-DATE (Column A) (Column B) RIAD Charge-offs RIAD Recoveries ---- ---- 1. Loans secured by real estate: a. To U.S. addressees (domicile) ......................................... 4651 2,063 4661 2,095 1.a b. To non-U.S. addressees (domicile) ..................................... 4652 0 4662 0 1.b 2. Loans to depository institutions and acceptances of other banks: a. To U.S. banks and other U.S. depository institutions .................. 4653 0 4663 0 2.a b. To foreign banks ...................................................... 4654 0 4664 0 2.b 3. Loans to finance agricultural production and other loans to farmers ....... 4655 1,018 4665 922 3 4. Commercial and industrial loans: a. To U.S. addressees (domicile) ......................................... 4645 28,180 4617 4,306 4.a b. To non-U.S. addressees (domicile) ..................................... 4646 2,500 4618 2,407 4.b 5. Loans to individuals for household, family, and other personal expenditures: a. Credit cards and related plans ........................................ 4656 16,368 4666 865 5.a. b. Other (includes single payment, installment, and all student loans) ... 4657 14,100 4667 8,521 5.b. 6. Loans to foreign governments and official institutions .................... 4643 0 4627 0 6 7. All other loans ........................................................... 4644 0 4628 46 7 8. Lease financing receivables: a. Of U.S. addressees (domicile) ......................................... 4658 0 4668 1 8.a. b. Of non-U.S. addressees (domicile) ..................................... 4659 0 4669 0 8.b. 9. Total (sum of items 1 through 8) .......................................... 4635 64,229 4605 19,163 9
11
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RI-5 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 7 ------- SCHEDULE RI-B -- CONTINUED PART I. CONTINUED MEMORANDA Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------- CALENDAR YEAR-TO-DATE 1. -- 3. Not applicable. (Column A) (Column B) 4. Loans to finance commercial real estate, construction, and land RIAD Charge-offs RIAD Recoveries development activities (not secured by real estate) included in ---- ---- Schedule RI-B, part I, items 4 and 7, above ................................ 5409 0 5410 0 M.4 5. Loans secured by real estate in domestic offices (included in Schedule RI-B, part I, item 1, above): a. Construction and land development ....................................... 3582 0 3583 0 M.5.a b. Secured by farmland ..................................................... 3584 89 3585 83 M.5.b c. Secured by 1--4 family residential properties: (1) Revolving, open-end loans secured by 1--4 family residential properties and extended under lines of credit ..................... 5411 215 5412 146 M.5.c.1 (2) All other loans secured by 1--4 family residential properties ..... 5413 940 5414 863 M.5.c.2 d. Secured by multifamily (5 or more) residential properties ............... 3588 0 3589 0 M.5.d e. Secured by nonfarm nonresidential properties ............................ 3590 819 3591 1,003 M.5.e
PART II. CHANGES IN ALLOWANCE FOR CREDIT LOSSES
Dollar Amounts in Thousands - -------------------------------------------------------------------------------------------------- RIAD ---- 1. Balance originally reported in the December 31, 1999, Reports of Condition and Income .................................................. 3124 200,322 1. 2. Recoveries (must equal or exceed part I, item 9, column B above) ......... 2419 19,163 2. 3. LESS: Charge-offs (must equal or exceed part I, item 9, column A above) .. 2432 64,229 3. 4. Provision for credit losses (must equal Schedule RI, item 4.a) ........... 4230 45,860 4. 5. Adjustments* (see instructions for this schedule) ........................ 4815 51,807 5. 6. Balance end of current period (sum of items 1 through 5) (must equal or exceed Schedule RC, item 4.b) ............................. A512 252,923 6
- --------- * Describe on Schedule RI-E - Explanations. 12
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RI-6 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 8 ------- SCHEDULE RI-D -- INCOME FROM INTERNATIONAL OPERATIONS FOR ALL BANKS WITH FOREIGN OFFICES, EDGE OR AGREEMENT SUBSIDIARIES, OR IBFS WHERE INTERNATIONAL OPERATIONS ACCOUNT FOR MORE THAN 10 PERCENT OF TOTAL REVENUES, TOTAL ASSETS, OR NET INCOME. PART I. ESTIMATED INCOME FROM INTERNATIONAL OPERATIONS I492 <- Dollar Amounts in Thousands - ---------------------------------------------------------------------------------------------------------------- 1. Interest income and expense booked at foreign offices, Edge and RIAD YEAR-TO-DATE Agreement subsidiaries, and IBFs: ---- a. Interest income booked ............................................................ 4837 N/A 1.a b. Interest expense booked ........................................................... 4838 N/A 1.b c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and IBFs (item 1.a minus 1.b) ....................................... 4839 N/A 1.c 2. Adjustments for booking location of international operations: a. Net interest income attributable to international operations booked at domestic offices ............................................................... 4840 N/A 2.a b. Net interest income attributable to domestic business booked at foreign offices ... 4841 N/A 2.b c. Net booking location adjustment (item 2.a minus 2.b) .............................. 4842 N/A 2.c 3. Noninterest income and expense attributable to international operations: a. Noninterest income attributable to international operations ....................... 4097 N/A 3.a b. Provision for loan and lease losses attributable to international operations ...... 4235 N/A 3.b c. Other noninterest expense attributable to international operations ................ 4239 N/A 3.c d. Net noninterest income (expense) attributable to international operations (item 3.a minus 3.b and 3.c) ...................................................... 4843 N/A 3.d 4. Estimated pretax income attributable to international operations before capital allocation adjustment (sum of items 1.c, 2.c, and 3.d) ........................ 4844 N/A 4 5. Adjustment to pretax income for internal allocations to international operations to reflect the effects of equity capital on overall bank funding costs ..... 4845 N/A 5 6. Estimated pretax income attributable to international operations after capital allocation adjustment (sum of items 4 and 5) .................................. 4846 N/A 6 7. Income taxes attributable to income from international operations as estimated in item 6 ................................................................... 4797 N/A 7 8. Estimated net income attributable to international operations (item 6 minus 7) ........ 4341 N/A 8 Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------- MEMORANDA RIAD ---- 1. Intracompany interest income included in item 1.a above ............................... 4847 N/A M.1 2. Intracompany interest expense included in item 1.b above .............................. 4848 N/A M.2 PART II. SUPPLEMENTARY DETAILS ON INCOME FROM INTERNATIONAL OPERATIONS REQUIRED BY THE DEPARTMENTS OF COMMERCE AND TREASURY FOR PURPOSES OF THE U.S. INTERNATIONAL ACCOUNTS AND THE U.S. NATIONAL INCOME AND PRODUCT ACCOUNTS Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------- RIAD YEAR-TO-DATE ---- ------------ 1. Interest income booked at IBFs ........................................................ 4849 N/A 1 2. Interest expense booked at IBFs ....................................................... 4850 N/A 2 3. Noninterest income attributable to international operations booked at domestic offices (excluding IBFs): a. Gains (losses) and extraordinary items ............................................ 5491 N/A 3.a b. Fees and other noninterest income ................................................. 5492 N/A 3.b 4. Provision for loan and lease losses attributable to international operations booked at domestic offices (excluding IBFs) ........................................... 4852 N/A 4 5. Other noninterest expense attributable to international operations booked at domestic offices (excluding IBFs) .................................................. 4853 N/A 5
13
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RI-7 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 9 ------- SCHEDULE RI-E -- EXPLANATIONS SCHEDULE RI-E IS TO BE COMPLETED EACH QUARTER ON A CALENDAR YEAR-TO-DATE BASIS. Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and other adjustments in Schedule RI, and all significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.) I495 <- Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------- 1. All other noninterest income (from Schedule RI, item 5.f.(2)) Report amounts that exceed 10% of Schedule RI, item 5.f.(2): RIAD YEAR-TO-DATE ---- a. Net gains (losses) on other real estate owned ............................ 5415 N/A 1.a b. Net gains (losses) on sales of loans ..................................... 5416 7,009 1.b c. Net gains (losses) on sales of premises and fixed assets ................. 5417 N/A 1.c Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, item 5.f.(2): TEXT RIAD ---- d. 4461 [Operating lease rental income] 4461 10,142 1.d e. 4462 [Processing fees] 4462 6,010 1.e f. 4463 4463 N/A 1.f 2. Other noninterest expense (from Schedule RI, item 7.c): YEAR-TO-DATE a. Amortization expense of intangible assets ................................ 4531 6,939 2.a Report amounts that exceed 10% of Schedule RI, item 7.c: b. Net (gains) losses on other real estate owned ............................ 5418 N/A 2.b c. Net (gains) losses on sales of loans ..................................... 5419 N/A 2.c d. Net (gains) losses on sales of premises and fixed assets ................. 5420 N/A 2.d Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, item 7.c: TEXT RIAD ---- e. 4464 [Affiliate expense allocation] 4464 91,215 2.e f. 4467 4467 N/A 2.f g. 4468 4468 N/A 2.g 3. Extraordinary items and other adjustments and applicable income tax effect (from Schedule RI, item 11.b) (itemize and describe all extraordinary items and other adjustments): TEXT a. (1) 6373 Effect of adopting FAS 133, RIAD ---- "Accounting for Derivative Instruments and Hedging Activities" RIAD 6373 0 3.a.1 ---- (2) Applicable income tax effect ....................... 4486 0 3.a.2 b. (1) 4487 4487 0 3.b.1 (2) Applicable income tax effect ........................ 4488 0 3.b.2 c. (1) 4489 4489 0 3.c.1 (2) Applicable income tax effect ........................ 4491 0 3.c.2 4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, item 2) (itemize and describe all adjustments): TEXT RIAD ---- a. 4492 4492 N/A 4.a b. 4493 4493 N/A 4.b 5. Cumulative effect of changes in accounting principles from prior years (from Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): TEXT RIAD ---- a. 4494 4494 N/A 5.a b. 4495 4495 N/A 5.b 6. Corrections of material accounting errors from prior years (from Schedule RI-A, item 10) (itemize and describe all corrections): TEXT RIAD ---- a. 4496 4496 N/A 6.a b. 4497 4497 N/A 6.b
14
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RI-8 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 10 ------- SCHEDULE RI-E - CONTINUED Dollar Amounts in Thousands - ----------------------------------------------------------------------------------------------------------- 7. Other transactions with parent holding company (from Schedule RI-A, item 13) (itemize and describe all such transactions): TEXT RIAD YEAR-TO-DATE ---- a. 4498 [Capital infusion] 4498 325,000 7.a b. 4499 4499 N/A 7.b 8. Adjustments to allowance for credit losses (from Schedule RI-B, part II, item 5) (itemize and describe all adjustments): TEXT RIAD ---- a. 4521 [Merger adjustment] 4521 51,807 8.a b. 4522 4522 N/A 8.b I498 I499 <- 9. Other explanations (the space below is provided for bank to briefly describe, at its option, any other significant items affecting the Report RIAD X = NO COMMENT - Y = COMMENT 4769 [X] Other explanations (please type or print clearly): TEXT 4769 ( 70 characters per line ) --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- ---------------------------------------------------------------------------
15
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-1 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 11 ------- CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR SEPTEMBER 30, 2000 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. SCHEDULE RC - BALANCE SHEET C400 <- Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------- ASSETS RCFD 1. Cash and balances due from depository institutions (from Schedule RC-A): ---- a. Noninterest-bearing balances and currency and coin(1) .................................... 0081 2,423,059 1.a b. Interest-bearing balances(2) ............................................................. 0071 10,710 1.b 2. Securities: a. Held-to-maturity securities (from Schedule RC-B, column A) ............................... 1754 0 2.a b. Available-for-sale securities (from Schedule RC-B, column D) ............................. 1773 3,233,065 2.b 3. Federal funds sold and securities purchased under agreements to resell ........................ 1350 16,644,886 3 4. Loans and lease financing receivables: RCFD ---- a. Loans and leases, net of unearned income (from Schedule RC-C) ......... 2122 26,691,355 4.a b. LESS: Allowance for loan and lease losses ............................. 3123 252,923 4.b c. LESS: Allocated transfer risk reserve ................................. 3128 0 4.c RCFD d. Loans and leases, net of unearned income, allowance, and reserve ---- (item 4.a minus 4.b and 4.c) ............................................................. 2125 26,438,432 4.d 5. Trading assets (from Schedule RC-D) ........................................................... 3545 46,336 5. 6. Premises and fixed assets (including capitalized leases) ...................................... 2145 165,017 6. 7. Other real estate owned (from Schedule RC-M) .................................................. 2150 8,190 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) .......................................................................... 2130 0 8. 9. Customers' liability to this bank on acceptances outstanding .................................. 2155 36,295 9. 10. Intangible assets (from Schedule RC-M) ........................................................ 2143 140,586 10. 11. Other assets (from Schedule RC-F) ............................................................. 2160 894,284 11. 12. Total assets (sum of items 1 through 11) ...................................................... 2170 50,040,860 12.
- ------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 16
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-2 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 12 ------- SCHEDULE RC - CONTINUED Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------- LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) ..........................................RCON RCON ---- ---- 2200 18,994,819 13.a (1) Noninterest-bearing (1) ..........................................6631 10,278,539 13.a.1 (2) Interest-bearing .................................................6636 8,716,280 13.a.2 b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II) ...............................RCFN RCFN ---- ---- 2200 11,833,154 13.b (1) Noninterest-bearing ..............................................6631 28,117 13.b1 (2) Interest-bearing .................................................6636 11,805,037 RCFD 13.b2 ---- 14. Federal funds purchased and securities sold under agreements to repurchase .................... 2800 9,264,113 14 RCON ---- 15. a. Demand notes issued to the U.S. Treasury ................................................... 2840 299,239 15.a RCFD ---- b. Trading liabilities (from Schedule RC-D) ................................................... 3548 70,443 15.b 16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): a. With a remaining maturity of one year or less .............................................. 2332 1,144,933 16.a b. With a remaining maturity of more than one year through three years ........................ A547 3,615,469 16.b c. With a remaining maturity of more than three years ......................................... A548 827,648 16.c 17. Not applicable 18. Bank's liability on acceptances executed and outstanding ...................................... 2920 36,295 18 19. Subordinated notes and debentures(2) .......................................................... 3200 0 19 20. Other liabilities (from Schedule RC-G) ........................................................ 2930 947,879 20 21. Total liabilities (sum of items 13 through 20) ................................................ 2948 47,033,992 21 22. Not applicable EQUITY CAPITAL 23. Perpetual preferred stock and related surplus ................................................. 3838 0 23 24. Common stock .................................................................................. 3230 100,000 24 25. Surplus (exclude all surplus related to preferred stock) ...................................... 3839 1,646,588 25 26. a. Undivided profits and capital reserves ..................................................... 3632 1,260,180 26.a b. Net unrealized holding gains (losses) on available-for-sale securities ..................... 8434 677 26.b c. Accumulated net gains (losses) on cash flow hedges ......................................... 4336 0 26.c 27. Cumulative foreign currency translation adjustments ........................................... 3284 (577) 27 28. Total equity capital (sum of items 23 through 27) ............................................. 3210 3,006,868 28 29. Total liabilities and equity capital (sum of items 21 and 28) ................................. 3300 50,040,860 29 MEMORANDUM TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION. 1. Indicate in the box at the right the number of the statement below that best describes the RCFD Number most comprehensive level of auditing work performed for the bank by independent external ---- auditors as of any date during 1999 ......................................................... 6724 N/A M.1 1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other with generally accepted auditing standards by a certified external auditors (may be required by state chartering public accounting firm which submits a report on the bank authority) 2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external conducted in accordance with generally accepted auditing auditors standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by submits a report on the consolidated holding company (but external auditors not on the bank separately) 7 = Other audit procedures (excluding tax preparation work) 3 = Directors' examination of the bank conducted in accordance 8 = No external audit work with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority)
- -------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. (2) Includes limited-life preferred stock and related surplus. 17
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-3 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 13 ------- SCHEDULE RC-A - CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS Exclude assets held for trading. C405 <- Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------------- (Column A) (Column B) Consolidated Domestic RCFD Bank Offices 1. Cash items in process of collection, unposted debits, and currency and ---- coin .................................................................. 0022 1,731,788 RCON 1 ---- a. Cash items in process of collection and unposted debits ......................................... 0020 1,573,930 1.a b. Currency and coin ............................................................................... 0080 156,082 1.b 2. Balance due from depository institutions in the U.S. ................................................ 0082 104,864 2 a. U.S. branches and agencies of foreign banks (including their IBFs) .. 0083 0 2.a b. Other commercial banks in the U.S. and other depository institutions in the U.S. (including their IBFs) ..................... 0085 104,918 2.b 3. Balances due from banks in foreign countries and foreign central banks .. 0070 5,123 3 a. Foreign branches of other U.S. banks ................................ 0073 0 3.a b. Other banks in foreign countries and foreign central banks .......... 0074 8,428 3.b 4. Balances due from Federal Reserve Banks ................................. 0090 588,635 0090 588,411 4 5. Total (sum of items 1 through 4) (total of column A must equal Schedule RC, sum of items 1.a and 1.b) ................................. 0010 2,433,769 0010 2,428,410 5 MEMORANDUM Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------- RCON 1. Noninterest-bearing balances due from commercial banks in the U.S. ---- (included in item 2, column B above) ............................................................. 0050 96,959 M.1
SCHEDULE RC-B - SECURITIES Exclude assets held for trading.
C410 <- Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------- HELD-TO-MATURITY AVAILABLE-FOR-SALE (Column A) (Column B) (Column C) (Column D) Amortized Cost Fair Value Amortized Cost Fair Value(1) RCFD RCFD RCFD RCFD ---- ---- ---- ---- 1. U.S. Treasury securities .......................... 0211 0 0213 0 1286 394,048 1287 395,995 1 2. U.S. Government agency obligations (exclude mortgage-backed securities): a. Issued by U.S. Government agencies(2).......... 1289 0 1290 0 1291 307 1293 309 2.a b. Issued by U.S. Government-sponsored agencies(3) ................................... 1294 0 1295 0 1297 73,570 1298 72,618 2.b
- -------- (1) Includes equity securities without readily determinable fair values at historical cost in item 6.b, column D. (2) Includes Small Business Administration 'Guaranteed Loan Pool Certificates,' U.S. Maritime Administration obligations, and Export - Import Bank participation certificates. (3) Includes obligations (other than mortgage-backed securities) issued by the Farm Credit System, the Federal Home Loan Bank System, The Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Financing Corporation, Resolution Funding Corporation, the Student Loan Marketing Association, and the Tennessee Valley Authority. 18
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-4 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 14 -------
SCHEDULE RC-B -- CONTINUED
Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------------------------ HELD-TO-MATURITY AVAILABLE-FOR-SALE (Column A) (Column B) (Column C) (Column D) Amortized Cost Fair Value Amortized Cost Fair Value(1) 3. Securities issued by states and political subdivisions in the U.S.: RCFD RCFD RCFD RCFD ---- ---- ---- ---- a. General obligations ............................. 1676 0 1677 0 1678 99,496 1679 101,457 3.a b. Revenue obligations ............................. 1681 0 1686 0 1690 100,975 1691 105,899 3.b c. Industrial development and similar obligations .. 1694 0 1695 0 1696 0 1697 0 3.c 4. Mortgage-backed securities (MBS): a. Pass-through securities: (1) Guaranteed by GNMA ......................... 1698 0 1699 0 1701 307,806 1702 308,761 4.a.1 (2) Issued by FNMA and FHLMC ................... 1703 0 1705 0 1706 632,350 1707 626,964 4.a.2 (3) Other pass-through securities .............. 1709 0 1710 0 1711 0 1713 0 4.a.3 b. Other mortgage-backed securities (include (CMOs, REMICs and stripped MBS): RCFD RCFD RCFD RCFD ---- ---- ---- ---- (1) Issued or guaranteed by FNMA, FHLMC, or GNMA ................................... 1714 0 1715 0 1716 5,416 1717 5,194 4.b.1 (2) Collateralized by MBS issued or guaranteed by FNMA, FHLMC, or GNMA ................... 1718 0 1719 0 1731 0 1732 0 4.b.2 (3) All other mortgage-backed securities ....... 1733 0 1734 0 1735 19,200 1736 18,850 4.b.3 5. Other debt securities: a. Other domestic debt securities .................. 1737 0 1738 0 1739 1,259,972 1741 1,260,963 5.a b. Foreign debt securities ......................... 1742 0 1743 0 1744 0 1746 0 5.b 6. Equity securities: a. Investments in mutual funds and other equity securities with RCFD RCFD readily determinable fair values ............................................. A510 19,805 A511 16,982 6.a b. All other equity securities(1) ................................................ 1752 319,073 1753 319,073 6.b 7. Total (sum of items 1 through 6) (total of Column A must equal Schedule RC item 2.a) RCFD RCFD RCFD RCFD (total of column D must equal Schedule RC, ---- ---- ---- ---- item 2.b) .......................................... 1754 0 1771 0 1772 3,232,018 1773 3,233,065 7
- --------- (1) Includes equity securities without readily determinable fair values at historical cost in item 6.b, column D. 19
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-5 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 15 ------- SCHEDULE RC-B -- CONTINUED C412 <- MEMORANDA Dollar Amounts in Thousands - ----------------------------------------------------------------------------------------------------------------- RCFD ---- 1. Pledged securities(2) ................................................................... 0416 293,518 M.1 2. Maturity and repricing data for debt securities (1,2)(excluding those in nonaccrual status): a. Securities issued by the U.S. Treasury, U.S. Government agencies, and states and political subdivisions in the U.S.; other non-mortgage debt securities; and mortgage pass-through securities other than those backed by closed-end first lien 1-4 family residential mortgages with a remaining maturity or repricing frequency of:(3,4) RCFD ---- (1) Three months or less .......................................................... A549 1,195,407 M.2.a1 (2) Over three months through 12 months ........................................... A550 13,133 M.2.a2 (3) Over one year through three years ............................................. A551 262,865 M.2.a3 (4) Over three years through five years ........................................... A552 61,476 M.2.a4 (5) Over five years through 15 years .............................................. A553 286,279 M.2.a5 (6) Over 15 years ................................................................. A554 118,081 M.2.a6 b. Mortgage pass-through securities backed by closed-end first lien 1-4 family resi- dential mortgages with a remaining maturity or repricing frequency of:(3,5) (1) Three months or less .......................................................... A555 18,056 M.2.b1 (2) Over three months through 12 months ........................................... A556 19,468 M.2.b2 (3) Over one year through three years ............................................. A557 1,283 M.2.b3 (4) Over three years through five years ........................................... A558 1,298 M.2.b4 (5) Over five years through 15 years .............................................. A559 29,780 M.2.b5 (6) Over 15 years ................................................................. A560 865,840 M.2.b6 c. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS; exclude mortgage pass-through securities) with an expected average life of:(6) (1) Three years or less .......................................................... A561 4,018 M.2.c1 (2) Over three years ............................................................. A562 20,026 M.2.c2 d. Debt securities with a REMAINING MATURITY of one year or less (included in Memorandum items 2.a through 2.c above) ................. A248 1,206,737 M.2.d 3. - 6. Not applicable 7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or trading securities during the calendar year-to-date (report the amortized cost at date of sale or transfer) ................................. 1778 0 M.7 8. Not applicable 9. Structured notes (included in the held-to-maturity and available-for-sale accounts in Schedule RC-B, items 2, 3, and 5): a. Amortized cost ..................................................................... 8782 0 M.9.a b. Fair value ......................................................................... 8783 0 M.9.b
- ----------- (1) Includes held-to-maturity securities at amortized cost and available-for-sale securities at fair value. (2) Exclude equity securities, e.g., investments in mutual funds, Federal Reserve stock, common stock, and preferred stock. (3) Report fixed rate debt securities by remaining maturity and floating rate debt securities by repricing frequency. (4) Sum of Memorandum items 2.a.(1) through 2.a.(6) plus any nonaccrual debt securities in the categories of debt securities reported in Memorandum item 2.a that are included in Schedule RC-N, item 9, column C, must equal Schedule RC-B, sum of items 1, 2, 3 and 5, columns A and D, plus mortgage pass-through securities other than those backed by closed-end first lien 1-4 family residential mortgages included in Schedule RC-B, item 4.a, columns A and D. (5) Sum of Memorandum items 2.b.(1) through 2.b.(6) plus any nonaccrual mortgage pass-through securities backed by closed-end first lien 1-4 family residential mortgages included in Schedule RC-N, item 9, column C, must equal Schedule RC-B, item 4.a, sum of columns A and D, less the amount of mortgage pass-through securities other than those backed by closed-end first lien 1-4 family residential mortgages included in Schedule RC-B, item 4.a, columns A and D. (6) Sum of Memorandum items 2.c.(1) and 2.c.(2) plus any nonaccrual "Other mortgage-backed securities" included in Schedule RC-N, item 9, column C, must equal Schedule RC-B, item 4.b, sum of columns A and D. 20
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-6 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 16 -------
SCHEDULE RC-C - LOANS AND LEASE FINANCING RECEIVABLES PART I. LOANS AND LEASES Do not deduct the allowance for loan and lease losses from amounts reported in this schedule. Report total loans and leases, net of unearned income. Exclude assets held for trading and commercial paper.
C415 <- Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------- -- (Column A) -- -- (Column B) -- RCFD Consolidated Domestic ---- Bank Offices 1. Loans secured by real estate .......................................... 1410 14,500,097 RCON 1 ---- a. Construction and land development ................................. 1415 237,459 1.a b. Secured by farmland (including farm residential and other improvements) .................................................... 1420 106,529 1.b c. Secured by 1-4 family residential properties: (1) Revolving, open-end loans secured by 1-4 family residential properties and extended under lines of credit ............... 1797 973,477 1.c.1 (2) All other loans secured by 1-4 family residential properties: (a) Secured by first liens ................................. 5367 11,131,220 1.c.2a (b) Secured by junior liens ................................ 5368 1,056,940 1.c.2b d. Secured by multifamily (5 or more) residential properties ......... 1460 120,638 1.d e. Secured by nonfarm nonresidential properties ...................... 1480 873,834 1.e 2. Loans to depository institutions: a. To commercial banks in the U.S. ................................... 1505 2,984,815 2.a (1) To U.S. branches and agencies of foreign banks ............... 1506 0 2.a1 (2) To other commercial banks in the U.S. ........................ 1507 2,987,690 2.a2 b. To other depository institutions in the U.S. ...................... 1517 265 1517 265 2.b c. To banks in foreign countries ..................................... 1510 0 2.c (1) To foreign branches of other U.S. banks ...................... 1513 0 2.c1 (2) To other banks in foreign countries .......................... 1516 1,794 2.c2 3. Loans to finance agricultural production and other loans to farmers ... 1590 181,490 1590 181,490 3. 4. Commercial and industrial loans: a. To U.S. addressees (domicile) ..................................... 1763 4,610,912 1763 4,610,322 4.a b. To non-U.S. addressees (domicile) ................................. 1764 16,595 1764 29 4.b 5. Acceptances of other banks: a. Of U.S. banks ..................................................... 1756 1 1756 1 5.a b. Of foreign banks .................................................. 1757 596 1757 0 5.b 6. Loans to individuals for household, family, and other personal expenditures (i.e., consumer loans) (includes purchased paper) ....... 1975 1,856,674 6 a. Credit cards and related plans (includes check credit and other revolving credit plans) .......................................... 2008 273,955 6.a b. Other (includes single payment, installment, and all student loans) ........................................................... 2011 1,584,000 6.b 7. Loans to foreign government and official institutions (including foreign central banks) ............................................... 2081 0 2081 0 7 8. Obligations (other than securities and leases) of states and political subdivisions in the U.S. ............................................. 2107 29,031 2107 29,031 8 9. Other loans ........................................................... 1563 181,131 9 a. Loans for purchasing or carrying securities (secured and unsecured) ....................................................... 1545 31,211 9.a b. All other loans (exclude consumer loans) .......................... 1564 149,920 9.b 10. Lease financing receivables (net of unearned income) .................. 2165 2,323,798 10 a. Of U.S. addressees (domicile) ..................................... 2182 2,323,798 10.a b. Of non-U.S. addressees (domicile) ................................. 2183 0 10.b 11. LESS: Any unearned income on loans reflected in items 1-9 above ....... 2123 0 2123 0 11. 12. Total loans and leases, net of unearned income (sum of items 1 through 10 minus item 11) (total of column A must equal Schedule RC, item 4.a) ............................................... 2122 26,691,355 2122 26,667,653 12
21
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-7 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 17 ------- SCHEDULE RC-C - CONTINUED PART I. CONTINUED MEMORANDA Dollar Amounts in Thousands - ----------------------------------------------------------------------------------------------------- 1. Not applicable 2. Loans and Leases restructured and in compliance with modified terms (included in Schedule RC-C, part I, above and not reported as past due or nonaccrual in Schedule RC-N, Memorandum item 1): RCFD a. Loans secured by real estate: ---- (1) To U.S. addressees (domicile) ........................................................ 1687 0 M.2.a.1 (2) To non-U.S. addressees (domicile) .................................................... 1689 0 M.2.a.2 b. All other loans and lease financing receivables (exclude loans to individuals for household, family, and other personal expenditures) ...................... 8691 0 M.2.b c. Commercial and industrial loans to and lease financing receivables of non-U.S. addressees (domicile) included in Memorandum item 2.b above .................................................................................... 8692 0 M.2.c 3. Maturity and repricing data for loans and leases (excluding those in nonaccrual status): a. Closed-end loans secured by first liens on 1-4 family residential properties in domestic offices (reported in Schedule RC-C, part I, item 1.c.(2)(a), column B) with a remaining maturity or repricing frequency of: (1, 2) RCON ---- (1) Three months or less ................................................................. A564 8,265,373 M.3.a1 (2) Over three months through 12 months .................................................. A565 629,969 M.3.a2 (3) Over one year through three years .................................................... A566 39,739 M.3.a3 (4) Over three years through five years .................................................. A567 60,867 M.3.a4 (5) Over five years through 15 years ..................................................... A568 1,601,764 M.3.a5 (6) Over 15 years ........................................................................ A569 532,485 M.3.a6 b. All loans and leases (reported in Schedule RC-C, part I, items 1 through 10, column A) EXCLUDING closed-end loans secured by first liens on 1-4 family residential properties in domestic offices (reported in Schedule RC-C, part I item 1.c.(2)(a), column B) with a remaining maturity or repricing frequency of: (1,3) ...................................... RCFD ---- (1) Three months or less ................................................................. A570 7,693,887 M.3.b1 (2) Over three months through 12 months .................................................. A571 1,148,435 M.3.b2 (3) Over one year through three years .................................................... A572 2,904,505 M.3.b3 (4) Over three years through five years .................................................. A573 1,827,747 M.3.b4 (5) Over five years through 15 years ..................................................... A574 1,353,914 M.3.b5 (6) Over 15 years ........................................................................ A575 513,465 M.3.b6 c. Loans and leases (reported in Schedule RC-C, part I, items 1 through 10, column A) with a REMAINING MATURITY of one year or less .................... A247 14,277,960 M.3.c d. Loans secured by nonfarm nonresidential properties in domestic offices (reported in Schedule RC-C, part I, item 1.e, column B) with a RCON ---- REMAINING MATURITY of over five years ..................................................... A577 334,094 M.3.d e. Commercial and industrial loans (reported in Schedule RC-C RCFD ---- part I, Item 4, column A) with a REMAINING MATURITY of over three years ................. A578 2,459,641 M.3.e
- -------- (1) Report fixed rate loans and leases by remaining maturity and floating rate loans by repricing frequency. (2) Sum of Memorandum items 3.a.(1) through 3.a.(6) plus total nonaccrual closed-end loans secured by first liens on 1-4 family residential properties included in Schedule RC-N, Memorandum item 3.c.(2), column C, must equal total closed-end loans secured by first liens on 1-4 family residential properties from Schedule RC-C, part I, item 1.c.(2)(a), column B. (3) Sum of Memorandum items 3.b.(1) through 3.b.(6) plus total nonaccrual loans and leases from Schedule RC-N, sum of items 1 through 8, column C, minus nonaccrual closed-end loans secured by first liens on 1-4 family residential properties in domestic offices included in Schedule RC-N, Memorandum item 3.c.(2), column C, must equal total loans and leases from Schedule RC-C, Part I, sum or items 1 through 10, column A, minus total closed-end loans secured by first liens on 1-4 family residential properties in domestic offices from Schedule RC-C, part I, item 1.c.(2)(a), column B. 22
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-8 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 18 ------- SCHEDULE RC-C - CONTINUED PART I. CONTINUED MEMORANDA Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------ 4. Loans to finance commercial real estate, construction, and land RCFD development activities (not secured by real estate) included in ---- Schedule RC-C, part I, items 4 and 9, column A, page RC-6(1) ................................. 2746 0 M.4 5. Loans and leases held for sale (included in Schedule RC-C, part I, page RC-6) ................. 5369 9,826,950 M.5 6. Adjustable rate closed-end loans secured by first liens on 1-4 family RCON residential properties in domestic offices (included in Schedule RC-C, ---- part I, item 1.c.(2)(a), column B, page RC-6) ............................................... 5370 4,233,208 M.6
- ---------- (1) Exclude loans secured by real estate that are included in Schedule RC-C, part I, item 1, column A. SCHEDULE RC-D - TRADING ASSETS AND LIABILITIES Schedule RC-D is to be completed by banks with $1 billion or more in total assets or with $2 billion or more in par/notional amount of off-balance sheet derivative contracts (as reported in Schedule RC-L, items 14.a through 14.e, columns A through D).
C420 <- Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------- ASSETS RCON ---- 1. U.S. Treasury securities in domestic offices ................................................ 3531 214 1 2. U.S. Government agency obligations in domestic offices (exclude mortgage- backed securities) ......................................................................... 3532 N/A 2 3. Securities issued by states and political subdivisions in the U.S. in domestic offices ...... 3533 N/A 3 4. Mortgage-backed securities (MBS) in domestic offices: a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA .................... 3534 4,183 4.a b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA (include CMOs, REMICs, and stripped MBS) ............................................... 3535 N/A 4.b c. All other mortgage-backed securities .................................................... 3536 N/A 4.c 5. Other debt securities in domestic offices ................................................... 3537 N/A 5 6. - 8. Not applicable 9. Other trading assets in domestic offices .................................................... 3541 N/A 9 RCFN ---- 10. Trading assets in foreign offices ............................................................ 3542 N/A 10 11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity contracts: RCON ---- a. In domestic offices ..................................................................... 3543 41,939 11.a RCFN ---- b. In foreign offices ...................................................................... 3543 N/A 11.b RCFD ---- 12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5) ............ 3545 46,336 12 RCFD LIABILITIES ---- 13. Liability for short positions ................................................................ 3546 N/A 13 RCFD 14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity ---- contracts .................................................................................. 3547 70,443 14 15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) ....... 3548 70,443 15
23
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-9 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 19 -------
SCHEDULE RC-E - DEPOSIT LIABILITIES PART I. DEPOSITS IN DOMESTIC OFFICES
C425 <- Transaction Accounts Nontransaction Accounts (Column A) (Column B) (Column C) Total Memo: Total Total Transaction Demand nontransaction Dollar Amounts in Thousands accounts Deposits Accounts - ------------------------------------------------------ (including total (included in (including demand deposits) column A) MMDAs) DEPOSITS OF: RCON RCON RCON ---- ---- ---- 1. Individuals, partnerships and corporations ...... 2201 5,713,669 2240 5,538,200 2346 12,729,349 1 2. U.S. Government ................................. 2202 10,075 2280 10,075 2520 0 2 3. States and political subdivisions in the U.S. ... 2203 69,586 2290 59,799 2530 147,320 3 4. Commercial banks in the U.S. .................... 2206 290,333 2310 290,333 2550 0 4 5. Other depository institutions in the U.S. ....... 2207 20,336 2312 20,336 2349 0 5 6. Banks in foreign countries ...................... 2213 11,913 2320 11,913 2236 0 6 7. Foreign governments, and official institutions (including foreign central banks) .............. 2216 0 2300 0 2377 0 7 8. Certified and official checks ................... 2330 2,238 2330 2,238 8 9. Total (sum of items 1 through 8) (sum of columns A and C must equal Schedule RC, item 13.a) ..................................... 2215 6,118,150 2210 5,932,894 2385 12,876,669 9
MEMORANDA Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------------ RCON 1. Selected components of total deposits (i.e., sum of item 9, columns A and C): ---- a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts ........................ 6835 551,680 M.1.a b. Total brokered deposits .................................................................... 2365 0 M.1.b c. Fully insured brokered deposits (included in Memorandum item 1.b above): (1) Issued in denominations of less than $100,000 ......................................... 2343 0 M.1.c1 (2) Issued either in denominations of $100,000 or in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less ............. 2344 0 M.1.c2 d. Maturity data for brokered deposits: (1) Brokered deposits issued in denominations of less than $100,000 with a remaining maturity of one year or less (included in Memorandum item 1.c.(1) above) .............. A243 0 M.1.d1 (2) Brokered deposits issued in denominations of $100,000 or more with a remaining maturity of one year or less (included in Memorandum item 1.b above) .................. A244 0 M.1.d2 e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. reported in item 3 above which are secured or collateralized as required under state law) (TO BE COMPLETED FOR THE DECEMBER REPORT ONLY) ............................................ 5590 N/A M.1.e 2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.c must equal item 9, column C, above): RCON a. Savings deposits: .......................................................................... ---- (1) Money market deposit accounts (MMDAs) ................................................. 6810 3,979,988 M.2.a1 (2) Other savings deposits (excludes MMDAs) ............................................... 0352 6,489,296 M.2.a2 b. Total time deposits of less than $100,000 .................................................. 6648 2,086,249 M.2.b c. Total time deposits of $100,000 or more .................................................... 2604 321,136 M.2.c 3. All NOW accounts (included in column A above) .................................................. 2398 185,256 M.3 4. Not applicable
24
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-10 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 20 -------
SCHEDULE RC-E - CONTINUED Part I. Continued
Memoranda (continued) Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------ 5. Maturity and repricing data for time deposits of less than $100,000: a. Time deposits of less than $100,000 with a remaining maturity or repricing RCON frequency of: (1, 2) ---- (1) Three months or less ....................................................... A579 331,775 M.5.a1 (2) Over three months through 12 months ........................................ A580 954,298 M.5.a2 (3) Over one year through three years .......................................... A581 680,562 M.5.a3 (4) Over three years ........................................................... A582 119,614 M.5.a4 b. Time deposits of less than $100,000 with a REMAINING MATURITY of one year or less (included in Memorandum items 5.a.(1) through 5.a.(4) above) ......................................................................... A241 1,286,073 M.5.b 6. Maturity and repricing data for time deposits of $100,000 or more: a. Time deposits of $100,000 or more with a remaining maturity or repricing frequency of: (1, 3) (1) Three months or less ....................................................... A584 95,870 M.6.a1 (2) Over three months through 12 months ........................................ A585 123,082 M.6.a2 (3) Over one year through three years .......................................... A586 72,838 M.6.a3 (4) Over three years ........................................................... A587 29,346 M.6.a4 b. Time deposits of $100,000 or more with a REMAINING MATURITY of one year or less (included in Memorandum items 6.a.(1) through 6.a.(4) above) A242 218,952 M.6.b
- ------- (1) Report fixed rate time deposits by remaining maturity and floating rate time deposits by repricing frequency. (2) Sum of Memorandum items 5.a.(1) through 5.a.(4) must equal Schedule RC-E Memorandum item 2.b above. (3) Sum of Memorandum items 6.a.(1) through 6.a.(4) must equal Schedule RC-E Memorandum item 2.c above. 25
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-11 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 21 -------
SCHEDULE RC-E - CONTINUED PART II. DEPOSITS IN FOREIGN OFFICES (INCLUDING EDGE AND AGREEMENT SUBSIDIARIES AND IBFs)
DEPOSITS OF: Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------- RCFN ----- 1. Individuals, partnerships, and corporations ....................................... 2621 4,762,315 1 2. U.S. banks (including IBFs and foreign branches of U.S. banks) .................... 2623 6,667,953 2 3. Foreign banks (including U.S. branches and agencies of foreign banks, including their IBFs) ............................................................. 2625 402,817 3 4. Foreign governments and official institutions (including foreign central banks) ... 2650 0 4 5. Certified and official checks ..................................................... 2330 0 5 6. All other deposits ................................................................ 2668 69 6 7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b) .............. 2200 11,833,154 7 MEMORANDUM Dollar Amounts in Thousands - ---------------------------------------------------------------------------------------------------------- RCFN 1. Time deposits with a remaining maturity of one year or less ---- (included in Part II, item 7 above) .............................................. A245 9,372,887 M.1 SCHEDULE RC-F - OTHER ASSETS C430 <- Dollar Amounts in Thousands -------------------------------------------------------------------------------------------------------------------- RCFD ---- 1. Income earned, not collected on loans ....................................................... 2164 110,253 1. 2. Net deferred tax assets(1) .................................................................. 2148 0 2. 3. Interest-only strips receivable (not in the form of a security)(2) on: a. Mortgage loans .......................................................................... A519 0 3.a b. Other financial assets .................................................................. A520 0 3.b 4. Other (itemize and describe amounts that exceed 25% of this item) ........................... 2168 784,031 4. TEXT RCFD ---- a. 3549 [Bank-owned life insurance] 3549 226,742 4.a b. 3550 3550 N/A 4.b c. 3551 3551 N/A RCFD 4.c ---- 5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) .......................... 2160 894,284 5.
Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------- MEMORANDUM RCFD ---- 1. Deferred tax assets disallowed for regulatory capital purposes .......... 5610 0 M.1
SCHEDULE RC-G - OTHER LIABILITIES
C435 <- Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------- RCON ---- 1. a. Interest accrued and unpaid on deposits in domestic offices(3) .................................... 3645 55,605 1.a RCFD ---- b. Other expenses accrued and unpaid (includes accrued income taxes payable) ......................... 3646 423,358 1.b 2. Net deferred tax liabilities(1) ...................................................................... 3049 182,658 2. 3. Minority interest in consolidated subsidiaries ....................................................... 3000 0 3. 4. Other (itemize and describe amounts that exceed 25% of this item) .................................... 2938 286,258 4. TEXT RCFD ---- a. 3552 [Trade date settlement account] 3552 122,270 4.a b. 3553 [Clearing account] 3553 90,936 4.b c 3554 3554 N/A RCFD 4.c ---- 5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) .................................. 2930 947,879 5.
- -------- (1) See discussion of deferred income taxes in Glossary entry on "income taxes." (2) Report interest-only strips receivable in the form of a security as available-for sale securities in Schedule RC, item 2.b, or as trading assets in Schedule RC, item 5, as appropriate. (3) For savings banks, includes 'dividends' accrued and unpaid on deposits. 26
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-12 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 22 -------
SCHEDULE RC-H -- SELECTED BALANCE SHEET ITEMS FOR DOMESTIC OFFICES
C440 <- Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------------ DOMESTIC OFFICES RCON ---- 1. Customers' liability to this bank on acceptances outstanding .................................. 2155 4,456 1 2. Bank's liability on acceptances executed and outstanding ...................................... 2920 4,456 2 3. Federal funds sold and securities purchased under agreements to resell ........................ 1350 16,644,886 3 4. Federal funds purchased and securities sold under agreements to repurchase .................... 2800 9,264,113 4 5. Other borrowed money .......................................................................... 3190 5,578,138 5 EITHER 6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs ................... 2163 N/A 6 OR 7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... 2941 11,921,361 7 8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and IBFs) ......................................................................................... 2192 49,973,643 8 9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and IBFs .......................................................................................... 3129 35,045,414 9
IN ITEMS 10-17 REPORT THE AMORTIZED (HISTORICAL) COST OF BOTH HELD-TO-MATURITY AND AVAILABLE-FOR-SALE SECURITIES IN DOMESTIC OFFICES.
10. U.S. Treasury securities ..................................................................... 1039 394,048 10 11. U.S. Government agency obligations (exclude mortgage-backed securities) ...................... 1041 73,877 11 12. Securities issued by states and political subdivisions in the U.S. ........................... 1042 200,471 12 13. Mortgage-backed securities (MBS): a. Pass-through securities: (1) Issued or guaranteed by FNMA, FHLMC, or GNMA ........................................ 1043 940,156 13.a.1 (2) Other pass-through securities ....................................................... 1044 0 13.a.2 b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS): (1) Issued or guaranteed by FNMA, FHLMC, or GNMA ........................................ 1209 5,416 13.b.1 (2) All other mortgage-backed securities ................................................ 1280 19,200 13.b.2 14. Other domestic debt securities ............................................................... 1281 1,259,972 14 15. Foreign debt securities ...................................................................... 1282 0 15 16. Equity securities: a. Investments in mutual funds and other equity securities with readily determinable fair values ........................................................................... A510 19,805 16.a b. All other equity securities ............................................................. 1752 319,073 16.b 17. Total amortized (historical) cost of both held-to-maturity and available-for-sale securities (sum of items 10 through 16) ................................... 1374 3,232,018 17
MEMORANDUM (to be completed only by banks with IBFs and other "foreign" offices)
Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------------ RCON EITHER ---- 1. Net due from the IBF of the domestic offices of the reporting bank............................. 3051 N/A M.1 OR 2. Net due to the IBF of the domestic offices of the reporting bank .............................. 3059 0 M.2
27
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-13 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 23 -------
SCHEDULE RC-I - SELECTED ASSETS AND LIABILITIES OF IBFs To be completed only by banks with IBFs and other "foreign" offices.
C445 <- Dollar Amounts in Thousands - ---------------------------------------------------------------------------------------------------------------------- RCFN ---- 1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12) ............... 2133 N/A 1 2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, item 12, column A) .......................................................................... 2076 N/A 2 3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, column A) ................................................................................... 2077 N/A 3 4. Total IBF liabilities (component of Schedule RC, item 21) ................................... 2898 N/A 4 5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, part II, items 2 and 3) ..................................................................... 2379 N/A 5 6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6) ... 2381 N/A 6
SCHEDULE RC-K - QUARTERLY AVERAGES (1)
C455 <- Dollar Amounts in Thousands - ----------------------------------------------------------------------------------------------------------------------- ASSETS RCFN ---- 1. Interest-bearing balances due from depository institutions ................................. 3381 (11,487) 1. 2. U.S. Treasury securities and U.S. Government agency obligations(2) (INCLUDING MORTGAGE-BACKED SECURITIES ISSUED OR GUARANTEED BY FNMA, FHLMC, OR GNMA) ............................................. 3382 1,338,633 2 3. Securities issued by states and political subdivisions in the U.S.(2) ...................... 3383 249,316 3. 4. a. Other debt securities(2) (INCLUDING MORTGAGE-BACKED SECURITIES NOT ISSUED OR GUARANTEED BY FNMA, FHLMC, OR GNMA) ........................................... 3647 1,346,516 4.a b. Equity securities(3) (includes investments in mutual funds and Federal Reserve stock) .................................................................. 3648 328,671 4.b 5. Federal funds sold and securities purchased under agreements to resell ..................... 3365 18,317,427 5 6. Loans: a. Loans in domestic offices: RCON ---- (1) Total loans ....................................................................... 3360 23,200,640 6.a.1 (2) Loans secured by real estate ...................................................... 3385 13,541,111 6.a.2 (3) Loans to finance agricultural production and other loans to farmers ............... 3386 195,429 6.a.3 (4) Commercial and industrial loans ................................................... 3387 5,140,555 6.a.4 (5) Loans to individuals for household, family, and other personal expenditures ....... 3388 1,928,211 6.a.5 RCFN ---- b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs ............. 3360 23,614 6.b RCFD ---- 7. Trading assets ............................................................................. 3401 4,234 7. 8. Lease financing receivables (net of unearned income) ....................................... 3484 1,927,979 8. 9. Total assets(4) ............................................................................ 3368 50,419,887 9 RCON LIABILITIES ---- 10. Interest-bearing transaction accounts in domestic (NOW accounts, ATS accounts, and telephone and preauthorized transfer accounts) (exclude demand deposits) ............... 3485 232,875 10 11. Nontransaction accounts in domestic offices: a. Money market deposit accounts (MMDAs) ................................................. 3486 3,743,067 11.a b. Other savings deposits ................................................................ 3487 3,859,001 11.b c. Time deposits of $100,000 or more ..................................................... A514 340,701 11.c d. Time deposits of less than $100,000 ................................................... A529 2,097,459 11.d RCFN ---- 12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs ..................................................................... 3404 9,895,226 12 RCFD ---- 13. Federal funds purchased and securities sold under agreements to repurchase ................. 3353 12,040,347 13 14. Other borrowed money RCFD (includes mortgage indebtedness and obligations under capitalized leases) .................. ---- 3355 6,468,896 14
- ------ (1) For all items, banks have the option of reporting either (1) an average of daily figures for the quarter or (2) an average of weekly figures (i.e., the Wednesday of each week of the quarter). (2) Quarterly averages for all debt securities should be based on amortized cost. (3) Quarterly averages for all equity securities should be based on historical cost. (4) The quarterly averages for total assets should reflect all debt securities (not held for trading) at amortized cost, equity securities with readily determinable fair values at the lower of cost or fair value, and equity securities without readily determinable fair values at historical cost. 28
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-14 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 24 -------
SCHEDULE RC-L - OFF-BALANCE SHEET ITEMS Please read carefully the instructions for the preparation of Schedule RC-L. Some of the amounts reported in Schedule RC-L are regarded as volume indicators and not necessarily as measures of risk.
C460 <- Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------- RCFD 1. Unused commitments: ---- a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home equity lines .............................................. 3814 692,289 1.a b. Credit card lines ................................................................ 3815 0 1.b c. Commercial real estate, construction, and land development: (1) Commitments to fund loans secured by real estate ............................ 3816 307,757 1.c.1 (2) Commitments to fund loans not secured by real estate ........................ 6550 0 1.c.2 d. Securities underwriting .......................................................... 3817 0 1.d e. Other unused commitments ......................................................... 3818 3,069,248 1.e 2. Financial standby letters of credit and foreign office guarantees RCFD 3819 890,817 2. ---- a. Amount of financial standby letters of credit conveyed to others .........3820 348,765 2.a 3. Performance standby letters of credit and foreign office guarantees .................. 3821 162,753 3. a. Amount of performance standby letters of credit conveyed to others .......3822 18,301 3.a 4. Commercial and similar letters of credit ............................................. 3411 112,132 4. 5. Participations in acceptances (as described in the instructions) conveyed to others by the reporting bank ............................................ 3428 0 5 6. Participations in acceptances (as described in the instructions) acquired by the reporting (nonaccepting) bank ....................................... 3429 0 6. 7. Securities borrowed .................................................................. 3432 6,535,902 7. 8. Securities lent (including customers' securities lent where the customer is indemnified against loss by the reporting bank) .................................. 3433 757,118 8 9. Financial assets transferred with recourse that have been treated as sold for Call Report purposes : a. First lien 1-to-4 family residential mortgage loans : RCFD (1) Outstanding principal balance of mortgages transferred ---- as of the report date ...................................................... A521 7,018 9.a.1 (2) Amount of recourse exposure on these mortgages as of the report date ...................................................... A522 7,018 9.a.2 b. Other financial assets (excluding small business obligations reported in item 9.c) : (1) Outstanding principal balance of assets transferred as of the report date ...................................................... A523 0 9.b.1 (2) Amount of recourse exposure on these assets as of the report date ...................................................... A524 0 9.b.2 c. Small business obligations transferred with recourse under Section 208 of the Reigle Community Development and Regulatory Improvement Act of 1994: (1) Outstanding principal balance of small business obligations transferred as of the report date .......................................... A249 0 9.c.1 (2) Amount of retained recourse on these obligations as of the report date ..... A250 0 9.c.2 10. Notional amount of credit derivatives : a. Credit derivatives on which the reporting bank is the guarantor .................. A534 0 10.a b. Credit derivatives on which the reporting bank is the beneficiary ................ A535 0 10.b 11. Spot foreign exchange contracts ....................................................... 8765 117,726 11 12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives) (itemize and describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") .................................... 3430 0 12 TEXT RCFD ---- a. 3555 3555 N/A 12.a b. 3556 3556 N/A 12.b c. 3557 3557 N/A 12.c d. 3558 3558 N/A 12.d
29
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-15 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 25 -------
SCHEDULE RC-L - CONTINUED
13. All other off-balance sheet assets (exclude off-balance sheet RCFD derivatives)(itemize and describe each component of this item over 25% ---- Schedule RC item 28., "Total equity capital") 5591 0 13 TEXT RCFD ---- a. 5592 5592 N/A 13.a b. 5593 5593 N/A 13.b c. 5594 5594 N/A 13.c d. 5595 5595 N/A 13.d
OFF-BALANCE SHEET DERIVATIVES C461 <- POSITION INDICATORS Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------- (Column A) (Column B) (Column C) (Column D) 14. Gross amounts (e.g., notional Interest Foreign Equity Commodity amounts) (for each column, sum of Rate Exchange Derivative and other items 14.a through 14.e must equal Contracts Contracts Contracts Contracts sum of items 15, 16.a and 16.b): RCFD RCFD RCFD RCFD ---- ---- ---- ---- a. Futures contracts ...................... 8693 0 8694 0 8695 0 8696 0 14.a b. Forward contracts ...................... 8697 0 8698 824,438 8699 0 8700 0 14.b c. Exchange-traded option contracts: (1) Written options ................... 8701 0 8702 0 8703 0 8704 0 14.c1 (2) Purchased Options ................. 8705 0 8706 0 8707 0 8708 0 14.c2 d. Over-the-counter options contracts: (1) Written options ................... 8709 363,693 8710 0 8711 0 8712 52,383 14.d1 (2) Purchased options ................. 8713 451,179 8714 0 8715 0 8716 52,320 14.d2 e. Swaps .................................. 3450 932,492 3826 0 8719 0 8720 64,215 14.e 15 Total gross notional amount of derivative contracts held for trading ..... A126 1,447,364 A127 824,438 8723 0 8724 168,918 15 16 Total gross notional amount of derivative contracts held for purposes other than trading: .............. RCFD RCFD RCFD RCFD ---- ---- ---- ---- a. Contracts marked to market ............. 8725 0 8726 0 8727 0 8728 0 16.a b. Contracts not marked to market ......... 8729 300,000 8730 0 8731 0 8732 0 16.b RCON c. Interest rate swaps where the bank ---- has agreed to pay a fixed rate ........ A589 200,000 16.c
30
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-16 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 26 -------
SCHEDULE RC-L - CONTINUED
Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------- OFF-BALANCE SHEET DERIVATIVES (Column A) (Column B) (Column C) (Column D) POSITION INDICATORS Interest Foreign Equity Commodity Rate Exchange Derivative and other 17. Gross fair value of derivative contracts: Contracts Contracts Contracts Contracts a. Contracts held for trading: RCFD RCFD RCFD RCFD ---- ---- ---- ---- (1) Gross positive fair value ............. 8733 8,598 8734 29,188 8735 0 8736 35,183 17.a1 (2) Gross negative fair value ............. 8737 8,750 8738 28,818 8739 0 8740 35,202 17.a2 b. Contracts held for purposes other than trading that are marked to market: (1) Gross positive fair value ............. 8741 0 8742 0 8743 0 8744 0 17.b1 (2) Gross negative fair value ............. 8745 0 8746 0 8747 0 8748 0 17.b2 c. Contracts held for purposes other than trading that are not marked to market: (1) Gross positive fair value ............. 8749 1,256 8750 0 8751 0 8752 0 17.c1 (2) Gross negative fair value ............. 8753 1,426 8754 0 8755 0 8756 0 17.c2
MEMORANDA Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------- 1-2. Not applicable 3. Unused commitments with an original maturity exceeding one year that are reported in RCFD Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of ---- commitments that are fee paid or otherwise legally binding) ................................... 3833 3,489,014 M.3 RCFD a. Participations in commitments with an original maturity ---- exceeding one year conveyed to others ............................................. 3834 199,427 M.3.a 4. To be completed only by banks with $ 1 billion or more in total assets: RCFD Standby letters of credit and foreign office guarantees (both financial and performance) issued ---- to non-U.S. addressees (domicile) included in Schedule RC-L, items 2 and 3, above ............. 3377 501 M.4 5. Loans to individuals for household, family, and other personal expenditures that have been securitized and sold (with servicing retained), amounts outstanding by type of loan: RCFD a. Loans to purchase private passenger automobiles ---- (TO BE COMPLETED FOR THE SEPTEMBER REPORT ONLY) ............................................ 2741 8,570 M.5.a b. Credit cards and related plans ( TO BE COMPLETED QUARTERLY ) ............................... 2742 0 M.5.b c. All other consumer credit (including mobile home loans) (TO BE COMPLETED FOR THE SEPTEMBER REPORT ONLY) ............................................ 2743 0 M.5.c
31
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-17 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 27 -------
SCHEDULE RC-M-MEMORANDA
C465 <- Dollar Amounts in Thousands - ----------------------------------------------------------------------------------------------------------------- 1. Extensions of credit by the reporting bank to its executive officers, directors, principal shareholders, and their related interests as of the report date: RCFD a. Aggregate amount of all extensions of credit to all executive officers, directors, principal ---- shareholders, and their related interests ................................................. 6164 3,184 1.a b. Number of executive officers, directors, and principal shareholders to whom the amount of all extensions of credit by the reporting bank (including extensions of credit to RCFD Number related interests) equals or exceeds the lesser of $500,000 or 5 percent ---- of total capital as defined for this purpose in agency regulations ..................6165 2 1.b 2. Federal funds sold and securities purchased under agreements to resell with U.S. branches RCFD ---- and agencies of foreign banks (1) (included in Schedule RC, item 3) ............................ 3405 0 2 3. Not applicable 4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others (include both retained servicing and purchased servicing): a. Mortgages serviced under a GNMA contract .................................................. 5500 0 4.a b. Mortgages serviced under a FHLMC contract: (1) Serviced with recourse to servicer ................................................... 5501 0 4.b.1 (2) Serviced without recourse to servicer ................................................ 5502 0 4.b.2 c. Mortgages serviced under a FNMA contract: (1) Serviced under a regular option contract ............................................. 5503 0 4.c.1 (2) Serviced under a special option contract ............................................. 5504 0 4.c.2 d. Mortgages serviced under other servicing contracts ........................................ 5505 0 4.d 5. To be completed only by banks with $1 billion or more in total assets: Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must equal Schedule RC, item 9): a. U.S. addressees (domicile) ................................................................. 2103 24,021 5.a b. Non-U.S. addressees (domicile) ............................................................. 2104 12,274 5.b 6. Intangible assets: a. Mortgage Servicing Assets .................................................................. 3164 0 6.a (1) Estimated fair value of mortgage servicing assets ..................................... A590 0 6.a.1 b. Other identifiable intangible assets: (1) Purchased credit card relationships and nonmortgage servicing assets .................. B026 0 6.b.1 (2) All other identifiable intangible assets .............................................. 5507 2,347 6.b.2 c. Goodwill ................................................................................... 3163 138,239 6.c d. Total (sum of items 6.a, 6.b.(1), 6.b.(2), and 6.c) (must equal Schedule RC, item 10) ...... 2143 140,586 6.d e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered or are otherwise qualifying for regulatory capital purposes .................. 6442 0 6.e 7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to redeem the debt ................................................................................ 3295 0 7
- ---------- (1) Do not report federal funds sold and securities purchased under agreements to resell with other commercial banks in the U.S. in this item. 32
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-18 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 28 -------
SCHEDULE RC-M - CONTINUED Dollar Amounts in Thousands - -------------------------------------------------------------------------------------------------------------------- 8. a. Other real estate owned: RCFD ---- (1) Direct and indirect investments in real estate ventures .............................. 5372 0 8.a.1 (2) All other real estate owned: RCON ---- (a) Construction and land development in domestic offices ............................ 5508 0 8.a.2a (b) Farmland in domestic offices ..................................................... 5509 0 8.a.2b (c) 1-4 family residential properties in domestic offices ............................ 5510 8,190 8.a.2c (d) Multifamily (5 or more) residential properties in domestic offices ............... 5511 0 8.a.2d (e) Nonfarm nonresidential properties in domestic offices ............................ 5512 0 8.a.2e RCFN ---- (f) In foreign offices .............................................................. 5513 0 8.a.2f RCFD ---- (3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7) ............ 2150 8,190 8.a.3 b. Investments in unconsolidated subsidiaries and associated companies: (1) Direct and indirect investments in real estate ventures .............................. 5374 0 8.b.1 (2) All other investments in unconsolidated subsidiaries and associated companies ........ 5375 0 8.b.2 (3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8) ............ 2130 0 8.b.3 9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, item 23, "Perpetual preferred stock and related surplus" .................................... 3778 0 9 10. Mutual fund and annuity sales in domestic offices during the quarter (include proprietary, RCON private label, and third party products): ---- a. Money market funds ..................................................................... 6441 21,478 10.a b. Equity securities funds ................................................................ 8427 0 10.b c. Debt securities funds .................................................................. 8428 0 10.c d. Other mutual funds ..................................................................... 8429 118,285 10.d e. Annuities .............................................................................. 8430 30,828 10.e f. Sales of proprietary mutual funds and annuities (included in items 10.a through 10.e above) ............................................................................ 8784 65,781 10.f 11. Net unamortized realized deferred gains (losses) RCFD on off-balance sheet derivative contracts included ---- in assets and liabilities reported in Schedule RC ............................................ A525 1,195 11 12. Amount of assets netted against nondeposit liabilities and deposits in foreign offices (other than insured branches in Puerto Rico RCFD and U.S. territories and possessions) on the balance sheet (Schedule RC) ---- in accordance with generally accepted accounting principles(1) ............................... A526 0 12 13. Outstanding principal balance of loans other than 1-4 family residential mortgage loans that are serviced for others (to be completed if this balance is more than $10 million and exceeds ten percent of total assets) ............................................................................. A591 0 13 - ---------------------------------------------------------------------------------------------------------------------------------- MEMORANDUM Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------------ RCFD 1. Reciprocal holdings of banking organizations' capital instruments ---- (TO BE COMPLETED FOR THE DECEMBER REPORT ONLY)................................................ 3836 N/A M.1 - ----------------------------------------------------------------------------------------------------------------------------------
- --------- (1) Exclude netted on-balance sheet amounts associated with off-balance sheet derivative contracts, deferred tax assets netted against deferred tax liabilities, and assets netted in accounting for pensions. 33
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-19 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 29 -------
SCHEDULE RC-N - PAST DUE AND NONACCRUAL LOANS, LEASES, AND OTHER ASSETS The FFIEC regards the information reported in all of Memorandum item 1, in items 1 through 10, column A, and in Memorandum items 2 through 4, column A, as confidential.
C470 <- Dollar Amounts in Thousands - ----------------------------------------------------------------------------------------------------------------- --(Column A)-- --(Column B)-- --(Column C)-- Past due Past due 90 Nonaccrual 30 through 89 days or more days and still and still accruing accruing RCFD RCFD RCFD 1. Loans secured by real estate: ---- ---- ---- a. To U.S. addressees (domicile) ...................... 1245 28,687 1246 12,061 1247 10,657 1.a b. To non-U.S. addressees (domicile) .................. 1248 0 1249 0 1250 0 1.b 2. Loans to depository institutions and acceptances of other banks: RCFD RCFD RCFD a. To U.S. banks and other U.S. depository ---- ---- ---- institutions ....................................... 5377 0 5378 0 5379 0 2.a b. To foreign banks ................................... 5380 0 5381 0 5382 0 2.b 3. Loans to finance agricultural production and other loans to farmers ................................ 1594 5,917 1597 467 1583 2,365 3. 4. Commercial and industrial loans: a. To U.S. addressees (domicile) ...................... 1251 60,700 1252 6,941 1253 56,469 4.a b. To non-U.S. addressees (domicile) .................. 1254 0 1255 0 1256 0 4.b 5. Loans to individuals for household, family, and RCFD RCFD RCFD other personal expenditures: ---- ---- ---- a. Credit cards and related plans ..................... 5383 1,500 5384 254 5385 0 5.a b. Other (includes single payment, installment, and all student loans) ............................. 5386 29,233 5387 1,606 5388 492 5.b 6. Loans to foreign governments and official institutions .......................................... 5389 0 5390 0 5391 0 6 7. All other loans ....................................... 5459 339 5460 0 5461 0 7 8. Lease financing receivables: a. Of U.S. addressees (domicile) ...................... 1257 0 1258 0 1259 49,222 8.a b. Of non-U.S. addressees (domicile) .................. 1271 0 1272 0 1791 0 8.b 9. Debt securities and other assets (exclude other real estate owned and other repossessed assets) ....... 3505 0 3506 0 3507 0 9
================================================================================ Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in items 1 through 8.
10. Loans and leases reported in items 1 RCFD RCFD RCFD through 8 above which are wholly or partially ---- ---- ---- guaranteed by the U.S. Government .................... 5612 11,010 5613 620 5614 43 10 a. Guaranteed portion of loans and leases included in item 10 above ........................ 5615 10,449 5616 516 5617 29 10.a
34
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-20 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 30 -------
SCHEDULE RC-N - CONTINUED
C473 <- Dollar Amounts in Thousands - ----------------------------------------------------------------------------------------------------------------- --(Column A)-- --(Column B)-- MEMORANDA Past due Past due 90 30 through 89 days or more days and still and still --(Column C)-- accruing accruing Nonaccrual 1. Restructured loans and leases included in Schedule RC-N, items 1 through 8, above RCFD RCFD RCFD (and not reported in Schedule RC-C, Part I, ---- ---- ---- Memorandum item 2) ................................ 1658 0 1659 0 1661 0 M.1 2. Loans to finance commercial real estate, construction, and land development activities RCFD RCFD RCFD (not secured by real estate) included in ---- ---- ---- Schedule RC-N, items 4 and 7, above ................ 6558 0 6559 0 6560 0 M.2 3. Loans secured by real estate in domestic offices RCON RCON RCON (included in Schedule RC-N, item 1, above): ---- ---- ---- a. Construction and land development ............... 2759 5,826 2769 3,173 3492 1,143 M.3a b. Secured by farmland ............................. 3493 562 3494 35 3495 3,288 M.3b c. Secured by 1-4 family residential properties: (1) Revolving, open-end loans secured by RCON RCON RCON 1-4 family residential properties and ---- ---- ---- extended under lines of credit .............. 5398 396 5399 306 5400 0 M.3.c1 (2) All other loans secured by 1-4 family residential properties ...................... 5401 10,121 5402 4,267 5403 1,023 M.3c2 d. Secured by multifamily (5 or more) residential properties ...................................... 3499 290 3500 2,694 3501 249 M.3d e. Secured by nonfarm nonresidential properties .... 3502 11,492 3503 1,586 3504 4,954 M.3e --(Column A)-- --(Column B)-- Past due Past due 90 30 through 89 days or more days and still and still accruing accruing -------------- ---------------- 4. Interest rate, foreign exchange rate, and other commodity and equity contracts: RCFD RCFD ---- ---- a. Book value of amounts carried as assets ...... 3522 0 3528 0 M.4.a b. Replacement cost of contracts with a positive replacement cost .................... 3529 0 3530 0 M.4.b
================================================================================================================= PERSON TO WHOM QUESTIONS ABOUT THE REPORTS OF CONDITION AND INCOME SHOULD BE DIRECTED: C477 <- NAME TITLE AREA CODE/PHONE NUMBER/EXTENSION 8901 Robert F. Goodsell 8901 Manager - Regulatory Reporting 8902 (612) 316-2345 ------------------ ------------------------------ -------------- TEXT FAX: AREA CODE/PHONE NUMBER 9116 (612) 667-3659 ---------------------- =================================================================================================================
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WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-21 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 31 -------
SCHEDULE RC-O - OTHER DATA FOR DEPOSIT INSURANCE AND FICO ASSESSMENTS
C475 <- Dollar Amounts in Thousands - ------------------------------------------------------------------------------------------------------------------ RCON 1. Unposted debits (see instructions): ---- a. Actual amount of all unposted debits ....................................................... 0030 N/A 1.a OR b. Separate amount of unposted debits: (1) Actual amount of unposted debits to demand deposits .................................... 0031 0 1.b.1 (2) Actual amount of unposted debits to time and savings deposits (1) ...................... 0032 0 1.b.2 2. Unposted credits (see instructions): a. Actual amount of all unposted credits ...................................................... 3510 N/A 2.a OR b. Separate amount of unposted credits: (1) Actual amount of unposted credits to demand deposits ................................... 3512 0 2.b.1 (2) Actual amount of unposted credits to time and savings deposits (1) ..................... 3514 0 2.b.2 3. Uninvested trust funds (cash) held in bank's own trust department (not included in total deposits in domestic offices) ................................................................. 3520 0 3. 4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in Puerto Rico and U.S. territories and possessions ( not included in total deposits ) : a. Demand deposits of consolidated subsidiaries ............................................... 2211 32,108 4.a b. Time and savings deposits (1) of consolidated subsidiaries ................................. 2351 0 4.b c. Interest accrued and unpaid on deposits of consolidated subsidiaries ....................... 5514 0 4.c 5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: a. Demand deposits in insured branches (included in Schedule RC-E, Part II) ................... 2229 0 5.a b. Time and saving deposits(1) in insured branches (included in Schedule RC-E, Part II) ....... 2383 0 5.b c. Interest accrued and unpaid on deposits in insured branches (included in Schedule RC-G, item 1.b) ..................................................... 5515 0 5.c 6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on behalf of its respondent depository institutions that are also reflected as deposit liabilities of the reporting bank: RCON a. Amount reflected in demand deposits (included in Schedule RC-E, Part I, ---- Item 4 or 5 column B) ...................................................................... 2314 0 6.a b. Amount reflected in time and savings deposits (1) (included in Schedule RC-E, Part I, Item 4 or 5, column A or C, but not column B) .............................................. 2315 0 6.b 7. Unamortized premiums and discounts on time and savings deposits:(1) a. Unamortized premiums ....................................................................... 5516 0 7.a b. Unamortized discounts ...................................................................... 5517 0 7.b 8. To be completed by banks with " Oakar deposits " a. Deposits purchased or acquired from other FDIC-insured institutions during the quarter (exclude deposits purchased or acquired from foreign offices other than insured branches in Puerto Rico and U.S. territories and possessions): RCON (1) Total deposits purchased or acquired from other ---- FDIC-insured institutions during the quarter ............................................ A531 N/A 8.a.1 (2) Amount of purchased or acquired deposits reported in item 8.a.(1) above RCON attributable to a secondary fund (i.e., BIF members report deposits ---- attributable to SAIF; SAIF members report deposits attributable to BIF) ................. A532 N/A 8.a.2 b. Total deposits sold or transferred to other FDIC-insured institutions during the quarter (exclude sales or transfers by the reporting bank of deposits in foreign offices other than insured branches in Puerto Rico and U.S. territories and possessions) ................. A533 N/A 8.b
- --------- (1) For FDIC and FICO insurance assessment purposes, "time and savings deposits" consists of nontransaction accounts and all transaction accounts other than demand deposits. 36
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-22 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 32 -------
SCHEDULE RC-O - CONTINUED
Dollar Amounts in Thousands - -------------------------------------------------------------------------------------------------------------------------- RCON ---- 9. Deposits in lifeline accounts ................................................................ 5596 9 10. Benefit-responsive "Depository Institution Investment Contracts" (included in total deposits in domestic offices) ................................................................ 8432 0 10 11. Adjustments to demand deposits in domestic offices and in insured branches in Puerto Rico and U.S. territories and possessions reported in Schedule RC-E for certain reciprocal demand balances: a. Amount by which demand deposits would be reduced if the reporting bank's reciprocal demand balances with the domestic offices of U.S. banks and savings associations and insured branches in Puerto Rico and U.S. territories RCON and possessions that were reported on a gross basis in Schedule RC-E ---- had been reported on a net basis .......................................................... 8785 0 11.a b. Amount by which demand deposits would be increased if the reporting bank's reciprocal demand balances with foreign banks and foreign offices of other U.S. banks (other than insured branches in Puerto Rico and U.S. territories and possessions) that were reported on a net basis in Schedule RC-E had been reported on a gross basis .......................................... A181 0 11.b c. Amount by which demand deposits would be reduced if cash items in process of collection were included in the calculation of the reporting bank's net reciprocal demand balances with the domestic offices of U.S. banks and savings associations and insured branches in Puerto Rico and U.S. territories and possessions in Schedule RC-E .............................................. A182 0 11.c 12. Amount of assets netted against deposit liabilities in domestic offices and in insured branches in Puerto Rico and U.S. territories and possessions on the balance sheet (Schedule RC) in accordance with generally accepted accounting principles (exclude amounts related to reciprocal demand balances): a. Amount of assets netted against demand deposits .......................................... A527 0 12.a b. Amount of assets netted against time and savings deposits ................................ A528 0 12.b
MEMORANDA (TO BE COMPLETED EACH QUARTER EXCEPT AS NOTED) Dollar Amounts in Thousands - ---------------------------------------------------------------------------------------------------------------------------- 1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a.(1) and 1.b.(1) must equal Schedule RC, item 13.a): RCON a. Deposit accounts of $100,000 or less: ---- (1) Amount of deposit accounts of $100,0000 or less ....................................... 2702 8,038,756 M.1.a1 RCON Number (2) Number of deposit accounts of $100,000 or less ---- (TO BE COMPLETED FOR THE JUNE REPORT ONLY) ..............................3779 N/A M.1.a2 RCON b. Deposit accounts of more than $100,000: ---- (1) Amount of deposit accounts of more than $100,000 ..................................... 2710 10,956,063 M.1.b1 (2) Number of deposit accounts of more than $100,000 .......................2722 12,333 M.1.b2 2. Estimated amount of uninsured deposits in domestic offices of the bank: a. An estimate of your bank's uninsured deposits can be determined by multiplying the number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2) above by $100,000 and subtracting the result from the amount of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(1) above Indicate in the appropriate box at right whether your bank has a method or RCON YES / NO procedure for determining a better estimate of uninsured deposits than the ---- estimate described above ................................................................. 6861 NO M.2.a b. If the box marked YES has been checked, report the estimate of uninsured deposits determined by using your bank's method or procedure ...................................... 5597 N/A M.2.b 3. Has the reporting institution been consolidated with a parent bank or savings association in that parent bank's or parent savings association's Call Report or Thrift Financial Report? If so, report the legal title and FDIC Certificate Number of the parent bank or parent savings association: TEXT RCON FDIC CERT NO. ---- A545 A545 N/A M.3
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WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-23 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 33 -------
SCHEDULE RC-R - REGULATORY CAPITAL This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC item 12, for June 30, 1999, must complete items 2 through 9 and Memoranda items 1 and 2. BANKS WITH ASSETS OF LESS THAN $1 BILLION MUST COMPLETE ITEMS 1 THROUGH 3 BELOW OR SCHEDULE RCR IN ITS ENTIRETY, DEPENDING ON THEIR RESPONSE TO ITEM 1 BELOW.
1. TEST FOR DETERMINING THE EXTENT TO WHICH SCHEDULE RC-R MUST BE COMPLETED. C480 <- TO BE COMPLETED ONLY BY BANKS WITH TOTAL ASSETS OF LESS THAN $1 BILLION. Indicate in the appropriate box at the right whether the bank has total capital greater than or RCFD YES / NO ---- equal to eight percent of adjusted total assets .................................................. 6056 N/A 1.
For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government agency obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan and lease losses and selected off-balance sheet items as reported on Schedule RC-L (see instructions). If the box marked YES has been checked, then the bank only has to complete items 2 and 3 below. If the box marked NO has been checked, the bank must complete the remainder of this schedule. A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight percent or that the bank is not in compliance with the risk-based capital guidelines. NOTE: ALL BANKS ARE REQUIRED TO COMPLETE ITEMS 2 AND 3 BELOW.
Dollar Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------------- 2. Portion of qualifying limited-life capital instruments (original weighted RCFD average maturity of at least five years) that is includible in Tier 2 capital : ---- a. Subordinated debt(1) and intermediate term preferred stock .................................. A515 0 2.a b. Other limited-life capital instruments ...................................................... A516 0 2.b 3. Amounts used in calculating regulatory capital ratios (report amounts determined by the bank for its own internal regulatory capital analyses consistent with applicable capital standards): a. (1) Tier 1 capital ......................................................................... 8274 2,865,603 3.a.1 (2) Tier 2 capital ......................................................................... 8275 252,923 3.a.2 (3) Tier 3 capital ......................................................................... 1395 0 3.a.3 b. Total risk-based capital .................................................................... 3792 3,118,526 3.b c. Excess allowance for loan and lease losses (amount that exceeds 1.25% of gross risk-weighted assets) ................................................ A222 0 3.c d. (1) Net risk-weighted assets (gross risk-weighted assets, including market risk equivalent assets, less excess allowance reported in item 3.c above and all other deductions) ............. A223 27,437,802 3.d.1 (2) Market risk equivalent assets (included in item 3.d.(1) above) .......................... 1651 0 3.d.2 e. Maximum contractual dollar amount of recourse exposure in low level recourse transactions (to be completed only if the bank uses the "direct reduction method" to report these transactions in Schedule RC-R) .............................................. 1727 0 3.e f. "Average total assets" (quarterly average reported in Schedule RC-K, item 9, less all assets deducted from Tier 1 capital)(2) .................................... A224 50,279,300 3.f
ITEMS 4-9 AND MEMORANDA ITEMS 1 AND 2 ARE TO BE COMPLETED BY BANKS THAT ANSWERED NO TO ITEM 1 ABOVE AND BY BANKS WITH TOTAL ASSETS OF $1 BILLION OR MORE.
--(Column A)- -(Column B)-- Assets Credit Equiv- Recorded valent Amount on the of Off-Balance Dollar Amounts in Thousands Balance Sheet Sheet Items(3) - --------------------------------------------------------------------------------------------------------------------------- 4. Assets and credit equivalent amount of off-balance sheet items assigned to the Zero percent risk category: RCFD ---- a. Assets recorded on the balance sheet ..................................... 5163 1,499,419 RCFD 4.a ---- b. Credit equivalent amount of off-balance sheet items...................... 3796 0 4.b
- ------- (1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7. (2) Do not deduct excess allowance for loan and lease losses. (3) Do not report in column B the risk-weighted amount of assets reported in column A. 38
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-24 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 34 -------
SCHEDULE RC-R - CONTINUED
--(Column A)- -(Column B)-- Assets Credit Equiv- Recorded valent Amount on the of Off-Balance Dollar Amounts in Thousands Balance Sheet Sheet Items (2) - ---------------------------------------------------------------------------------------------------------------------------- 5. Assets and credit equivalent amounts of off-balance sheet items assigned to the RCFD 20 percent risk category: ---- RCFD a. Assets recorded on the balance sheet .......................................... 5165 23,213,920 ---- 5.a b. Credit equivalent amount of off-balance sheet items ........................... 3801 1,218,535 5.b 6. Assets and credit equivalent amounts of off-balance sheet items assigned to the 50 percent risk category: a. Assets recorded on the balance sheet .......................................... 3802 10,118,096 6.a b. Credit equivalent amount of off-balance sheet items ........................... 3803 417,533 6.b 7. Assets and credit equivalent amounts of off-balance sheet items assigned to the 100 percent risk category: a. Assets recorded on the balance sheet .......................................... 3804 15,320,737 7.a b. Credit equivalent amount of off-balance sheet items ........................... 3805 1,962,759 7.b 8. On-balance sheet asset values excluded from and deducted in the calculation of the risk-based capital ratio(2) ............................... 3806 141,611 8. 9. Total assets recorded on the balance sheet (sum of items 4.a, 5.a, 6.a, 7.a, and 8, column A) (must equal Schedule RC, item 12 plus items 4.b and 4.c) .................................................. 3807 50,293,783 9. MEMORANDA Dollar Amounts in Thousands - ---------------------------------------------------------------------------------------------------------------------------- 1. Current credit exposure across all off-balance sheet derivative contracts RCFD ---- covered by the risk-based capital standards ................................... 8764 65,886 M.1
WITH A REMAINING MATURITY OF --(Column A)-- --(Column B)-- --(Column C)-- One Year Over Over or less one year five years 2. Notional principal amounts of off-balance thru five years sheet derivative contracts:(3) RCFD RCFD RCFD ---- ---- ---- a. Interest rate contracts ............ 3809 210,992 8766 959,789 8767 212,890 M.2.a b. Foreign exchange contracts ......... 3812 769,511 8769 24,608 8770 N/A M.2.b c. Gold contracts ..................... 8771 N/A 8772 N/A 8773 N/A M.2.c d. Other precious metals contracts .... 8774 N/A 8775 N/A 8776 N/A M.2.d e. Other commodity contracts .......... 8777 61,214 8778 55,321 8779 N/A M.2.e f. Equity derivative contracts ....... A000 N/A A001 N/A A002 N/A M.2.f
- ---------- (1) Do not report in column B the risk-weighted amount of assets reported in column A. (2) Include the difference between the fair value and the amortized cost of its available-for-sale securities in item 8 and report the amortized cost of these securities in items 4 through 7 above. Item 8 also includes on-balance sheet asset values (or portions thereof) of off-balance sheet interest rate, foreign exchange rate, and commodity contracts and those contracts (e.g. future contracts) not subject to risk-based capital. item 8 margin accounts and accrued receivables not included in the calculation of credit equivalent amounts of off-balance sheet derivatives as well as any portion of the allowance for loan and lease losses in excess of the amount that may be included in Tier 2 capital. (3) Exclude foreign exchange contracts with an original maturity of 14 days or less and all futures contracts. 39
WELLS FARGO BANK MINNESOTA, N.A. Call Date: 09/30/2000 State #: 27-4095 FFIEC 031 SIXTH STREET AND MARQUETTE AVENUE Vendor ID: D Cert #: 05208 RC-25 MINNEAPOLIS, MN 55479 Transit #: 91000019 ------- Transmitted to EDS as 0097692 on 10/27/00 at 16:43:57 CST 35 -------
OPTIONAL NARRATIVE STATEMENT CONCERNING THE AMOUNTS REPORTED IN THE REPORTS OF CONDITION AND INCOME at close of business on September 30, 2000 Wells Fargo Bank Minnesota, N.A. Minneapolis MN -------------------------------- ----------- -- LEGAL TITLE OF BANK CITY STATE The management of the reporting bank may, if it wishes, submit a brief narrative statement on the amounts reported in the Reports of Condition and Income. This optional statement will be made available to the public, along with the publicly available data in the Reports of Condition and Income, in response to any request for individual bank report data. However the information reported in column A and in all of Memorandum item 1 of Schedule RC-N is regarded as confidential and will not be released to the public. BANKS CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE STATEMENT DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE MADE PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. All information furnished by the bank in the narrative statement must be accurate and not misleading. Appropriate efforts shall be taken by the submitting bank to ensure the statement's accuracy. If, subsequent to the original submission, material changes are submitted for the data reported in the Reports of Condition and Income, the existing narrative statement will be deleted from the files, and from disclosure; the bank at its option, may replace it with a statement appropriate to the amended area. The optional narrative statement will appear in agency records and in release to the public exactly as submitted (or amended as described in the preceding paragraph) by the management of the bank. THE STATEMENT WILL NOT EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE REPORTING BANK. - -------------------------------------------------------------------------------- C471 C472 <- RCON ---- X = NO COMMENT Y = COMMENT.............................. 6979 [X] BANK MANAGEMENT STATEMENT (please type or print clearly): TEXT (70 CHARACTERS PER LINE) ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- SIGNATURE OF EXECUTIVE OFFICER OF BANK DATE OF SIGNATURE 40 THIS PAGE IS TO BE COMPLETED BY ALL BANKS - -------------------------------------------------------------------------------- [36] WELLS FARGO BANK MINNESOTA, N.A. OMB No. For FDIC: 1557-0081 SIXTH STREET AND MARQUETTE AVENUE OMB No. For FDIC: 3064-0052 MINNEAPOLIS, MN 55479 OMB No. For Federal Reserve: 7100-0036 Expiration Date: 3/31/2002 SPECIAL REPORT C700 <- Dollar Amounts in Thousands - -------------------------------------------------------------------------------- Close of Busi- ness Date: FDIC Cert. # [09/30/2000] [05208] - -------------------------------------------------------------------------------- lOANS TO EXECUTIVE OFFICERS (COMPLETE AS OF EACH CALL REPORT DATE) - -------------------------------------------------------------------------------- The following information is required by Public Laws 90-44 and 102-242, but does not constitute a part of the Report of Condition. With each Report of Condition, these Laws require all banks to furnish a report of all loans or other extensions of credit to their executive officers made since the date of the previous Report of Condition. Data regarding individual loans or other extensions of credit are not required. If no such loans or other extensions of credit were made during the period, insert "none" against subitem (a). (Exclude the first $15,000 of indebtedness of each executive officer under bank credit card plan.) See Section 215.2 and 215.3 of Title 12 of the Code of Federal Regulations. (Federal Reserve Board Regulation O) for the definitions of "executive officer" and "extension of credit", respectively. Exclude loans and other extensions of credit to directors and principal shareholders who are not executive officers. RCFD a. Number of loans made to executive officers since the previous Call Report date ......................................................... 3561 [ 0 ]a. b. Total dollar amount of above loans (in thousands of dollars)......... 3562 [ 0 ]b. c. Range of interest charged on above loans RCFD FROM RCFD TO (example: 9-3/4% = 9.75)................................ 7701 [0.00%] 7702 [0.00%]c.
/s/ ROBERT F. GOODSELL 10/27/00 - -------------------------------------------------------------------------------- SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO DATE SIGN REPORT: (Month, Day, Year): - -------------------------------------------------------------------------------- FDIC 8040/53 (3-98) -----END PRIVACY-ENHANCED MESSAGE-----