NOTE PURCHASE AGREEMENT

Exhibit 10.1

EXECUTION COPY

NOTE PURCHASE AGREEMENT

dated as of

July 28, 2008

among

NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION,

as Seller

ALPINE SECURITIZATION CORP.,

as Conduit Investor

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Committed Investor

CREDIT SUISSE, NEW YORK BRANCH,

as Agent for the Investors

and

NAVISTAR FINANCIAL CORPORATION,

Individually and as Servicer

NAVISTAR FINANCIAL 2008-B OWNER TRUST,

Series 2008-B Variable Funding Floating Rate Asset Backed Notes

TABLE OF CONTENTS

 

 

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TABLE OF CONTENTS

(continued)

 

EXHIBIT A - Documents To Be Delivered to the Agent On or Prior to the Closing Date

EXHIBIT B - Form of Notice of Funding

SCHEDULE I List of Designated Financial Institutions

 

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NOTE PURCHASE AGREEMENT dated as of July 28, 2008 (as amended, supplemented or otherwise modified from time to time, the “ Agreement ”), among:

NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION, a Delaware corporation, as seller (the “ Seller ”);

ALPINE SECURITIZATION CORP., a Delaware corporation (“ Alpine ” or the initial Conduit Investor (as defined below));

CREDIT SUISSE, a Swiss banking corporation (“ Credit Suisse ”), acting through a New York Branch, as Agent (as defined below);

CREDIT SUISSE, a Swiss banking corporation, acting through its Cayman Islands Branch, as Committed Investor (the “ Committed Investor ”); and

NAVISTAR FINANCIAL CORPORATION, a Delaware corporation, individually (“ NFC ”) and as servicer (in such capacity, and together with its successors and assigns, the “ Servicer ”).

RECITALS

WHEREAS, the Trust and the Indenture Trustee are party to an Indenture dated as of July 28, 2008 (as amended, restated, supplemented or otherwise modified from time to time, the “ Indenture ”), pursuant to which the Trust has issued the Purchased Note (as defined below); and

WHEREAS, on the Closing Date, the Seller intends to sell the Purchased Note to the Agent for the benefit of the Conduit Investor and the other Investors, and the Conduit Investor and the other Investors desire to acquire the Purchased Note;

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms . Terms used herein but not otherwise defined herein have the respective meanings given to such terms in Part I of Appendix A to the Pooling Agreement, dated as of July 28, 2008 (the “ Pooling Agreement ”) between NFRRC and the Issuer (each as defined below), as amended, restated, supplemented or otherwise modified from time to time. As used in this Agreement, the following terms have the meanings specified below:

“ 1940 Act ” means the Investment Company Act of 1940, as amended.

“ Act ” means the Securities Act of 1993, as amended.

“ Agent ” means Credit Suisse, New York Branch, in its capacity as agent for the Investors, and its successors and assigns appointed pursuant to Section 7.09.

“ Agent-Related Person ” means the Agent, its Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and their respective Affiliates.

“ Agreement ” is defined in the preamble .

“ Alpine ” is defined in the preamble .

“ Alternate Rate ” for any Fixed Period for any Funding Tranche means an interest rate per annum equal to the sum of (x) Applicable Margin per annum and (y) the Eurodollar Rate for such Fixed Period; provided , however , that in the case of:

(i) any Fixed Period existing on or after the first day of which the Agent shall have been notified by the Conduit Investor, the Committed Investor or any Program Support Provider that:

(w) the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other Governmental Authority asserts that it is unlawful, for the Conduit Investor, the Committed Investor or such Program Support Provider to fund any Funding Tranche (based on the Eurodollar Rate) set forth above (and the Conduit Investor, the Committed Investor or such Program Support Provider shall not have subsequently notified the Agent that such circumstances no longer exist),

(x) U.S. dollar deposits in the London interbank market in the relevant amounts and for the relevant portion of such Fixed Period are not available,

(y) adequate and reasonable means do not exist for ascertaining LIBOR for such Fixed Period, or

(z) LIBOR does not accurately reflect the cost to the Conduit Investor, the Committed Investor or such Program Support Provider (as conclusively determined by the Conduit Investor, the Committed Investor or such Program Support Provider (or by the Agent on its behalf)) of maintaining the applicable Funding Tranche during such Fixed Period;

(ii) any Fixed Period of one to (and including) 13 days,

(iii) any Fixed Period relating to a Funding Tranche which is less than $1,000,000, or

(iv) any Fixed Period with respect to which the Alternate Rate, for any reason, becomes applicable on notice to the Agent of less than three (3) Business Days;

the “ Alternate Rate ” for each such Fixed Period shall be an interest rate per annum equal to the Corporate Base Rate in effect on each day of such Fixed Period. The “ Alternate Rate ” for any day on or after the occurrence of an Event of Default shall be an interest rate equal to 2.0%  per annum above the Corporate Base Rate in effect on such day.

 

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“ Applicable Margin ” has the meaning specified in the Fee Letter.

“ Bankruptcy Code ” means the Bankruptcy Reform Act of 1978, 11 U.S.C. §§ 101 et seq.

“ Breakage Payment ” is defined in Section 2.03(b) .

“ Commercial Paper ” means short-term promissory notes issued or to be issued by the Conduit Investor (or its related CP Issuer) to fund the Conduit Investor’s investments in accounts receivable or other financial assets.

“ Commission ” is defined in Section 3.01(c) .

“ Committed Investor ” means, if applicable, each bank or financial institution designated as such with respect to a particular Conduit Investor on the signature pages hereto (or on any assignment or similar agreement pursuant to which such Person becomes a party hereto as a Committed Investor).

“ Conduit Assignee ” means any commercial paper conduit administered by Credit Suisse (including any of its branches) or any of its Affiliates and designated by Credit Suisse (including any such branch) from time to time to accept an assignment from the Conduit Investor of all or a portion of its rights and obligations hereunder.

“ Conduit Investor ” means, initially, Alpine, together with its respective successors and assigns, including any of its Conduit Assignees. A “Conduit Investor” may include one or more commercial paper conduits as long as such commercial paper conduits are either (i) Affiliates of one another or (ii) administered by the same Person or its Affiliates. If a “Conduit Investor” consists of more than one commercial paper conduit, each such commercial paper conduit will have the rights and obligations with respect to the Purchased Note as may be determined between them from time to time.

“ Corporate Base Rate ” means, for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate for such day, plus 0.50% and (b) the rate of interest in effect for such day as publicly announced from time to time by the Agent as its “prime rate”. The “prime rate” is a rate set by the Agent based upon various factors including the Agent’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in the prime rate announced by the Agent shall take effect at the opening of business on the day specified in the public announcement of such change.

“ CP Issuer ” means, with respect to the Conduit Investor, any other Person which, in the ordinary course of its business, issues Commercial Paper, the proceeds of which Commercial Paper are made available to the Conduit Investor to acquire and maintain its interest in the Purchased Note.

 

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“ Day Count Fraction ” means, as to any Funding Tranche for any Fixed Period, a fraction (a) the numerator of which is the number of days in such Fixed Period and (b) the denominator of which is 360 (or, with respect to any Funding Tranche which accrues interest by reference to the Corporate Base Rate, the actual number of days in the related calendar year).

“ Designated Financial Institution ” means any financial institution identified on (or referenced in) Schedule I attached hereto.

“ Distribution Period ” means, initially, the period from, and including, the Closing Date to, but excluding, the first Distribution Date and thereafter the period from, and including, each Distribution Date to, but excluding, the next Distribution Date.

“ Eurodollar Rate ” means, for any Fixed Period, an interest rate per annum (rounded upward to the nearest 1/1000th of 1%) determined pursuant to the following formula:

 

where,

“ Eurodollar Reserve Percentage ” means, for any Fixed Period, the maximum reserve percentage (expressed as a decimal, rounded upward to the nearest 1/1000th of 1%) in effect on the date LIBOR for such Fixed Period is determined under regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”) having a term comparable to such Fixed Period; and

“ LIBOR ” means the rate per annum equal to the applicable British Bankers’ Association Interest Settlement Rate for deposits in U.S. dollars for a period of one month appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) on the second Business Day prior to the commencement of such Fixed Period in the approximate amount of the portion of the Funded Amount associated with such Fixed Period, provided that, (i) if Reuters Screen FRBD is not available to the Agent for any reason, LIBOR for such Fixed Period shall instead be the applicable British Bankers’ Association Interest Settlement Rate for deposits in U.S. dollars for a period of one month as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) on the second Business Day prior to the commencement of such Fixed Period in the approximate amount of the portion of the Funded Amount associated with such Fixed Period, and (ii) if no such British Bankers’ Association Interest Settlement Rate is available to the Agent, LIBOR for such Fixed period shall instead be the rate determined by the Agent to be the rate at which the Agent offers to place deposits in U.S. dollars for a period of one month with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) on the second Business Day prior to the commencement of such Fixed Period in the approximate amount of the portion of the Funded Amount associated with such Fixed Period.

 

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“ Event of Bankruptcy ” means, with respect to any Person, (a) that such Person (i) shall generally not pay its debts as such debts become due or (ii) shall admit in writing its inability to pay its debts generally or (iii) shall make a general assignment for the benefit of creditors; (b) any proceeding shall be instituted by or against such Person seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property; or (c) such Person shall take any corporate, partnership or other similar appropriate action to authorize any of the actions set forth in the preceding clauses (a)  or (b)  .

“ Federal Funds Rate ” means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Agent on such day on such transactions as determined by it.

“ Fee Letter ” means the agreement, dated as of the Closing Date, among the Seller, NFC and the Agent.

“ Fitch ” means Fitch Ratings and its successors in interest.

“ Fixed Period ” means, unless otherwise mutually agreed by the Agent and the applicable Investor, with respect to any Funding Tranche, (i) initially the period commencing on (and including) the date of the initial purchase or funding of such Funding Tranche and ending on (but excluding) the next following Distribution Date and (ii) thereafter, each period commencing on (and including) the first day after the last day of the immediately preceding Fixed Period for such Funding Tranche and ending on (and excluding) the next following Distribution Date; provided , that

(i) any Fixed Period with respect to any Funding Tranche which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day; provided , however , if interest in respect of such Fixed Period is computed by reference to the Eurodollar Rate, and such Fixed Period would otherwise end on a day which is not a Business Day, and there is no subsequent Business Day in the same calendar month as such day, such Fixed Period shall end on the next preceding Business Day; and

(ii) in the case of any Fixed Period for any Funding Tranche which commences before the Final Scheduled Distribution Date and would otherwise end on a date occurring after the Final Scheduled Distribution Date, such Fixed

 

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Period shall end on such Final Scheduled Distribution Date and the duration of each Fixed Period which commences on or after the Final Scheduled Distribution Date shall be of such duration as shall be selected by the Agent.

“ Funded Amount ” means on any Business Day, an amount equal to the result of (a) the Initial Invested Amount, plus (b) all Subsequent Invested Amounts, minus (c) the aggregate principal amount of principal payments made to the Noteholder prior to such day; provided , that the Funded Amount shall be restored or reinstated to the extent any such principal payment so received and applied is at any time rescinded, returned or refunded for any reason.

“ Funding Date ” means each date on which an Incremental Funding is made hereunder.

“ Funding Limit ” means with respect to any Investor, the amount set forth with respect to such Investor on the signature pages hereto or on any assignment agreement or similar document pursuant to which such Person became a party hereto as an Investor.

“ Funding Period Expiration Date ” means October 31, 2008.

“ Funding Tranche ” means, at any time, each portion of the Funded Amount allocated to the same Fixed Period and accruing interest by reference to the same Alternate Rate at such time.

“ Governmental Actions ” means any and all consents, approvals, permits, orders, authorizations, waivers, exceptions, variances, exemptions or licenses of, or registrations, declarations or filings with, any Governmental Authority required under any Governmental Rules.

“ Governmental Authority ” means the United States of America, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and having jurisdiction over the applicable Person.

“ Governmental Rules ” means any and all laws, statutes, codes, rules, regulations, ordinances, orders, writs, decrees and injunctions, of any Governmental Authority and any and all legally binding conditions, standards, prohibitions, requirements and judgments of any Governmental Authority.

“ Incremental Funding ” means any loan or advance made hereunder from time to time on any date following the Closing Date.

“ Indemnified Amounts ” has the meaning specified in Section 6.01 .

“ Indemnified Parties ” has the meaning specified in Section 6.01 .

“ Indenture ” is defined in the first paragraph of the Recitals hereto.

“ Indenture Trustee ” is defined in the Indenture.

“ Initial Invested Amount ” means $239,044,564.85.

 

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“ Investors ” means the Conduit Investor (and its related CP Issuer, if any), the Committed Investor and/or the Program Support Providers, as the context may require or permit.

“ Issuer ” or “ Trust ” means Navistar Financial 2008-B Owner Trust, a Delaware statutory trust.

“ Material Adverse Effect ” means a material adverse effect on (i) the business, results of operations or financial condition or the material properties or assets of NFC or NFRRC, (ii) the ability of NFC or NFRRC to perform its obligations hereunder or under any other Basic Document or (iii) the interests of the Agent or any Investor hereunder or under the other Basic Documents.

“ Maximum Net Investment ” means $300,000,000; provided, that the Maximum Net Investment shall be reduced to the then Funded Amount on the earlier of (i) the Funding Period Expiration Date and (ii) the date specified by the Seller in a written notice delivered to the Agent and, at all times thereafter, the Maximum Net Investment shall equal the Funded Amount.

“ Moody’s ” means Moody’s Investors Service, Inc., or any successor that is a nationally recognized statistical rating organization.

“ NFC ” is defined in the preamble .

“ NFRRC ” means Navistar Financial Retail Receivables Corporation, a Delaware corporation, and its successors and permitted assigns.

“ Noteholders’ Interest Distributable Amount ” means, with respect to any Distribution Date, the sum of:

(A) the sum of (i) the summation of the amount of interest accrued during the related Distribution Period on each Funding Tranche funded by the Conduit Investor through the issuance of Commercial Paper, determined by multiplying (a) the applicable Alternate Rate times (b) the Weighted Average Funded Amount for such Funding Tranche times (c) the applicable Day Count Fraction for which interest accrued at such rate and (ii) any Noteholders’ Interest Distributable Amount calculated in accordance with clause (A)(i) above due but not paid with respect to the prior Distribution Period, plus interest on such unpaid amount calculated as the product of (x) the weighted average Alternate Rate for all Funding Tranches during the most recent Distribution Period, times (y) the amount of such unpaid Noteholders’ Interest Distributable Amount, times (z) for Funding Tranches that do not accrue interest by reference to the Corporate Base Rate, the quotient of the number of days in the related Distribution Period divided by 360 and for Funding Tranches that accrue interest by reference to the Corporate Base Rate, the quotient of the number of days in the related Distribution Period divided by 365 or 366, as applicable.

plus

(B) the sum of (i) the summation of the amount of interest accrued during the related Distribution Period on each Funding Tranche not described in preceding clause (A), determined by multiplying (a) the applicable Alternate Rate times (b) the Weighted Average Funded

 

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Amount for such Funding Tranche times (c) the applicable Day Count Fraction for which interest accrued at such rate and (ii) any Noteholders’ Interest Distributable Amount calculated in accordance with clause (B)(i) above due but not paid with respect to the prior Distribution Period, plus interest on such unpaid amount calculated as the product of (x) the weighted average Alternate Rate for all Funding Tranches during the most recent Distribution Period, times (y) the amount of such unpaid Noteholders’ Interest Distributable Amount, times (z) for Funding Tranches that do not accrue interest by reference to the Corporate Base Rate, the quotient of the number of days in the related Distribution Period divided by 360 and for Funding Tranches that accrue interest by reference to the Corporate Base Rate, the quotient of the number of days in the related Distribution Period divided by 365 or 366, as applicable.

“ Note Interest ” means, with respect to any Investor at any time, the undivided interest in the Purchased Note owned by such Investor at such time.

“ Notice of Funding ” means each notice relating to a request for Incremental Funding delivered pursuant to Section 2.01(b) and in the form attached hereto as Exhibit B .

“ Other Obligations ” means the fees under the Fee Letter and any other amounts payable to the Agent or any Investor under or in connection with this Agreement or any other Basic Document (other than principal or interest in respect of the Purchased Note), including, without limitation, all Breakage Payments and all amounts payable from time to time pursuant to Article VI .

“ Program Support Agreement ” means and includes any agreement entered into by any Program Support Provider providing for the issuance of one or more letters of credit for the account of the Conduit Investor, the issuance of one or more surety bonds for which the Conduit Investor is obligated to reimburse the applicable Program Support Provider for any drawings thereunder, the sale by the Conduit Investor to any Program Support Provider of the Purchased Note (or any portion thereof or participation therein) and/or the making of loans and/or other extensions of credit to the Conduit Investor in connection with the Conduit Investor’s commercial paper program, together with any letter of credit, surety bond or other instrument issued thereunder, whether any of the foregoing is for the purpose of providing credit support or liquidity to the Conduit Investor.

“ Program Support Provider ” means and includes any Person now or hereafter extending credit or having a commitment to extend credit to or for the account of, or to make purchases from, the Conduit Investor or issuing a letter of credit, surety bond or other instrument to support any obligations arising under or in connection with the Conduit Investor’s commercial paper program.

“ Purchased Note ” means the Note, in the maximum aggregate principal amount of $300,000,000 issued on the Closing Date by the Trust to the Agent (or its nominee) on behalf of the Investors pursuant to the Indenture and Section 2.01 hereof.

“ Recipient ” has the meaning specified in Section 2.04 .

“ Seller ” is defined in the preamble .

 

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“ Servicer ” is defined in the preamble .

“ Standard & Poor’s ” or “ S&P ” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., or any successor that is a nationally recognized statistical rating organization.

“ Subsequent Invested Amount ” means, with respect to any Incremental Funding, the dollar amount of such Incremental Funding.

“ Trust ” or “ Issuer ” means Navistar Financial 2008-B Owner Trust, a Delaware statutory trust.

“ Weighted Average Funded Amount ” means, with respect to any Funding Tranche for any Fixed Period, the quotient of (i) the summation of the portion of the Funded Amount allocated to such Funding Tranche determined as of each day in such Fixed Period, divided by (ii) the number of days in such Fixed Period.

SECTION 1.02. Terms Generally . All terms defined directly or by incorporation herein shall have the defined meanings when used in any certificate or other document delivered pursuant hereto unless otherwise defined therein. For purposes of this Agreement and all such certificates and other documents, unless the context otherwise requires: (a) accounting terms not otherwise defined herein, and accounting terms partly defined herein to the extent not defined, shall have the respective meanings given to them under, and shall be construed in accordance with, generally accepted accounting principles in effect in the United States from time to time; (b) terms used in Article 9 of the applicable UCC as in effect from time to time, and not specifically defined herein, are used herein as defined in such Article 9; (c) references to any amount as on deposit or outstanding on any particular date means such amount at the close of business on such day; (d) the words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement (or the certificate or other document in which they are used) as a whole and not to any particular provision of this Agreement (or such certificate or document); (e) references to any Article, Section, Schedule or Exhibit are references to Articles, Sections, Schedules and Exhibits in or to this Agreement (or the certificate or other document in which the reference is made) and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (f) the term “including” means “including without limitation”; (g) references to any law refer to that law as amended from time to time and include any successor law; (h) references to any agreement refer to that agreement as from time to time amended or supplemented or as the terms of such agreement are waived or modified in accordance with its terms; (i) references to any Person include that Person’s successors and permitted assigns; and (j) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof.

SECTION 1.03. Computation of Time Periods . Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including”, the words “to” and “until” each means “to but excluding”, and the word “within” means “from and excluding a specified date and to and including a later specified date”.

 

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ARTICLE II

Matters Relating to the Purchased Note

SECTION 2.01. Purchase of the Purchased Note; Incremental Fundings .

(a) Purchase of the Purchased Note . On the terms and subject to the conditions set forth in this Agreement, and in reliance on the covenants, representations, warranties and agreements herein and therein set forth, the Seller shall cause to be issued (and shall cause the Indenture Trustee to authenticate and deliver to the Agent), and the Agent shall purchase (on behalf of the Investors), the Purchased Note issued on the Closing Date. The purchase price payable for the Purchased Note shall be equal to the Initial Invested Amount. The Agent (or its nominee) shall hold the Purchased Note on behalf of the Investors pro rata in accordance with their respective outstanding portions (if any) of the Funded Amount funded by them from time to time. The Purchased Note so issued shall be dated as of the Closing Date, registered in the name of the Agent (or its nominee) and duly authenticated in accordance with the provisions of the Indenture. Without limiting any other provision of this Agreement, the issuance of the Purchased Note and the funding of the Initial Invested Amount thereunder on the Closing Date are subject to the satisfaction of the conditions precedent set forth in Sections 4.01(a) and 4.01(b) . Upon such issuance, (i) the Agent shall thereby acquire the Purchased Note, and (ii) the Agent and the Investors shall become subject to the terms and conditions set forth herein and the Indenture.

(b) Incremental Fundings . Subject to the terms and conditions of this Agreement (including, without limitation, Sections 4.01(a) and 4.01(c) hereof) and the other Basic Documents, from time to time prior to the Funding Period Expiration Date upon receipt by the Agent of a Notice of Funding at least five (5) Business Days (or such other period as the Seller and the Agent may agree) prior to the proposed Funding Date, the Agent, on behalf of the Investors (ratably based on their respective Funding Limits), shall make Incremental Fundings to the Seller on Funding Dates in the amounts so requested in any such Notice of Funding (but in no event shall the Funded Amount after giving effect to such Incremental Funding exceed the Maximum Net Investment), and upon such request, each Investor severally agrees to make available to the Agent the amount necessary to fund its ratable portion of such Incremental Funding; provided , however , that neither the Agent nor any Investor shall be required to (i) fund any portion of an Incremental Funding to the extent that, after giving effect thereto, its ratable share of the Funded Amount would exceed its Funding Limit or (ii) make more than one Incremental Funding during any calendar month. Notwithstanding anything to the contrary herein, in no event shall the Conduit Investor be committed or obligated to provide any funding under Section 2.01(a) or (b) . In the event that the Conduit Investor elects (in its sole discretion) not to provide any funding in respect of the Initial Invested Amount or any Subsequent Invested Amount, then the Committed Investor relating to the Conduit Investor shall, subject to all of the other terms and conditions set forth herein (including Article IV), make the funding that the Conduit Investor elected not to fund.

 

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SECTION 2.02. The Purchased Note; Etc . The funding of the Initial Invested Amount and each Subsequent Invested Amount shall be evidenced by the Purchased Note and shall be governed by and subject to the Indenture. All payments to be made on the Purchased Note shall be made in accordance with the Indenture and the terms of this Agreement. The sole Holder of the Purchased Note shall be the Agent, which shall hold such Purchased Note for the benefit of the Investors. Except as otherwise required in the Indenture, all payments to be made on the Purchased Note shall be made by wire transfer of immediately available funds to the account set forth below the Agent’s signature to this Agreement (or to such other account as the Agent may specify from time to time in writing to the Seller and the Indenture Trustee).

SECTION 2.03. Calculation of Interest; Etc .

(a) On or before the second Business Day after the end of each Monthly Period, the Agent shall calculate for the related Distribution Date, the Noteholders’ Interest Distributable Amount payable on such Distribution Date and provide such calculation to the Servicer in writing. If (i) there is an Incremental Funding on or after the first day of any calendar month but prior to the Distribution Date in such calendar month and/or (ii) any Funding Tranche begins to accrue interest by reference to the Corporate Base Rate, in each case, after the date the Agent provides the Noteholders’ Interest Distributable Amount calculation for any Distribution Date, the Agent shall promptly provide the Servicer a recalculation of the of “Noteholders’ Interest Distributable Amount” for such Distribution Date.

(b) If (i) any distribution of principal is made with respect to any Funding Tranche with a Fixed Period and a fixed interest rate other than on a Distribution Date or any Notice of Funding is delivered by the Seller but the proposed Incremental Funding is not drawn upon by the Seller and (ii) as a consequence of such distribution or failure to draw the interest paid by an Investor to providers of funds to it to fund such Funding Tranche, or to fund such failed Incremental Funding, exceeds returns earned by such Investor with respect to such Funding Tranche or the funds raised to fund such failed Incremental Funding, factoring in actual returns earned during the Fixed Period and assuming redeployment of such funds in highly rated short-term money market instruments from the date of principal distribution (or failure to draw) through the end of the Fixed Period, then, upon written notice (including a detailed calculation of the Breakage Payment) from the Agent to the Servicer, such Investor shall be entitled to receive additional amounts in the amount of such excess (each, a “ Breakage Payment ”) on the second Business Day after the Servicer receives such notice or, if later, on the date of such distribution.

(c) On each date the principal amount of the Purchased Note is increased or reduced, a duly authorized officer, employee or agent of the Agent (or its nominee) shall make appropriate notations in its books and records of the applicable rates of interest and the amount of each such increase or reduction, as applicable. Each of the Servicer, the Seller and each Investor authorizes each duly authorized officer, employee and agent of the Agent (or its nominee) to make such notations on the books and records as aforesaid and such notation made in accordance with the foregoing authority shall be binding on the Servicer, the Seller and each Investor absent manifest error.

(d) Whenever any amount is paid pursuant to the Indenture to the Agent in connection with the Purchased Note, the Agent shall promptly allocate such amounts among the applicable Investors and pay, or cause to be paid, out of such funds received by it, to each

 

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applicable Investor, its share of such amount; provided , that if any such amount paid to the Agent is insufficient to pay the amount due to each Investor in respect of such amounts, the Agent shall distribute the amount it has received to each Investor pro rata based on the amounts owed to each Investor and forthwith report the amount of such deficiency to the Seller, the Indenture Trustee and the Servicer.

SECTION 2.04. Sharing of Payments, Etc . If any Investor (for purposes of this Section only, being a “ Recipient ”) shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of any Note Interest owned by it in excess of its ratable share of payments on account of the applicable Funded Amount obtained by the Investors entitled thereto, such Recipient shall forthwith purchase from the Investors entitled to a share of such amount participations in the applicable Note Interests owned by such Persons as shall be necessary to cause such Recipient to share the excess payment ratably with each such other Person entitled thereto; provided , that if all or any portion of such excess payment is thereafter recovered from such Recipient, such purchase from each such other Person shall be rescinded and each such other Person shall repay to the Recipient the purchase price paid by such Recipient for such participation to the extent of such recovery, together with an amount equal to such other Person’s ratable share (according to the proportion of (a) the amount of such other Person’s required payment to (b) the total amount so recovered from the Recipient) of any interest or other amount paid or payable by the Recipient in respect of the total amount so recovered.

ARTICLE III

Representations and Warranties

SECTION 3.01. Representation and Warranties .

(a) The Seller . The Seller hereby makes the following representations and warranties to the Agent and the Investors as of the Closing Date and as of each subsequent Funding Date, and the Investors and the Agent shall be deemed to have relied on such representations and warranties in purchasing the Purchased Note on the Closing Date and making an Incremental Funding on such Funding Date:

(i) the Seller repeats and reaffirms the representations and warranties of the Seller set forth in Section 2.05 and Section 3.01 of the Pooling Agreement and represents and warrants that such representations and warranties are true and correct;

(ii) each of the Basic Documents executed by the Seller has been duly authorized, executed and delivered by the Seller, and is the valid and legally binding obligation of the Seller, enforceable against the Seller in accordance with its terms, except that the enforcement thereof may be subject to (x) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and (y) general principles of equity and the discretion of the court before which any proceeding therefor may be brought;

 

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(iii) the Purchased Note has been duly and validly authorized and, when executed and authenticated in accordance with the terms of the Indenture, and delivered to and paid for in accordance with this Agreement, (x) will be duly and validly issued and outstanding and will constitute the valid and binding obligation of the Trust enforceable against the Trust in accordance with its terms, except that the enforcement thereof may be subject to (A) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and (B) general principles of equity and the discretion of the court before which any proceeding therefor may be brought and (y) will be entitled to the benefits of the Indenture;

(iv) there is no pending or, to the Seller’s knowledge, threatened action, suit or proceeding by or against the Seller before any Governmental Authority or any arbitrator (w) asserting the invalidity of this Agreement, any other Basic Document or the Purchased Note, (x) seeking to prevent the issuance of the Purchased Note or the consummation of any of the transactions contemplated by this Agreement or any other Basic Document, (y) that might materially and adversely affect the performance by the Seller or the Trust of its obligations under, or the validity or enforceability of, this Agreement, any other Basic Document or the Purchased Note or (z) that if determined adversely as to the Seller or the Trust would have a Material Adverse Effect;

(v) except for those caused by the failure of NFC and its affiliates to deliver its financial statements and related financial information for fiscal quarter ended July 31 of 2008 prior to the earliest of (1) November 30, 2008, (2) five (5) Business Days after the filing thereof with the Commission and (3) the date on which such financial statements are (or any of them is) required to be delivered pursuant to the Credit Agreement, the Seller (x) is not in violation of its Certificate of Incorporation or By-Laws and (y) is not in breach or violation of any of the terms or provisions of, or with the giving of notice or lapse of time, or both, would be in default under, any contract, indenture, mortgage, deed of trust, loan agreement, note, lease, partnership agreement, or other agreement or instrument to which the Seller is a party or by which it may be bound or to which any of its properties or assets may be subject, except for such violations or defaults that would not have a Material Adverse Effect;

(vi) any taxes, fees and other charges of Governmental Authorities applicable to the Seller in connection with the execution, delivery and performance by the Seller of the Basic Documents or otherwise applicable to the Seller in connection with the Trust have been paid or will be paid by the Seller at or prior to the Closing Date or such subsequent Funding Date, as applicable, to the extent then due, except for any such failures to pay which, individually and in the aggregate, would not have a Material Adverse Effect;

(vii) the Trust has been duly created and is validly existing under the laws of the State of Delaware and the Seller has authorized the Trust to issue and sell the Purchased Note and to incur Incremental Fundings;

(viii) neither the Trust nor the Seller is insolvent or the subject of any voluntary or involuntary bankruptcy proceeding;

 

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(ix) no proceeds of a purchase hereunder will be used by the Seller (x) for a purpose that violates or would be inconsistent with Regulations T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time or (y) to acquire any security in any transaction in violation of Section 13 or 14 of the Securities Exchange Act of 1934, as amended;

(x) assuming the accuracy of the representations and warranties of the Investors set forth below, the sale of the Purchased Note pursuant to the terms of this Agreement and the Indenture will not require registration of the Purchased Note under the Act;

(xi) neither the Trust nor the Seller is an “investment company” or is controlled by an “investment company” within the meaning of the 1940 Act;

(xii) no written information furnished or to be furnished by the Seller or any of its Affiliates, agents or representatives to the Investors or the Agent for purposes of or in connection with this Agreement, including, without limitation, any reports delivered pursuant to Section 5.02 and any information relating to the Receivables and NFC’s retail receivables financing business, is or shall be inaccurate in any material respect, or contains or shall contain any material misstatement of fact, or omits or shall omit to state a material fact or any fact necessary to make the statements contained therein not misleading, in each case as of the date such information was or shall be stated or certified and as of the date such information was delivered by the Seller or any of its Affiliates, agents or representatives to the Investors or the Agent;

(xiii) the Indenture is not required to be qualified under the Trust Indenture Act; and

(xiv) (A) the Seller’s chief executive office and principal place of business is, and has been at all times during the five years preceding the date of this Agreement, located in the State of Illinois and (B) the Seller is a “registered organization” (as defined in Section 9-102 of the UCC) incorporated in the State of Delaware and, for purposes of Article 9 of the UCC, NFC is, and has been at all times during the five years preceding the date of this Agreement, located in the State of Delaware.

(b) NFC . NFC hereby makes the following representations and warranties to the Investors and the Agent as of the Closing Date and as of each subsequent Funding Date (or with respect to the Designated Receivables, as of the date such Designated Receivables were sold to the Seller), and the Investors and the Agent shall be deemed to have relied on such representations and warranties in purchasing the Purchased Note on the Closing Date and in making (or committing to make) an Incremental Funding on such Funding Date:

(i) NFC repeats and reaffirms the representations, warranties and covenants of the Servicer set forth in Section 5.01 of the Servicing Agreement and the representations and warranties of NFC set forth in Sections 3.01, 3.02 and 5.01 of the Purchase Agreement and represents and warrants that all such representations and warranties are true and correct as of such date;

 

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(ii) no Governmental Action which has not been obtained is required by or with respect to NFC in connection with any of the Basic Documents, except any such failure which would not have a Material Adverse Effect;

(iii) each of the Basic Documents has been duly authorized, executed and delivered by NFC, and is the valid and legally binding obligation of NFC, enforceable against NFC in accordance with its terms, except that the enforcement thereof may be subject to (x) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and (y) general principles of equity and the discretion of the court before which any proceeding therefor may be brought;

(iv) the Purchased Note has been duly and validly authorized and, when executed and authenticated in accordance with the terms of the Indenture, and delivered to and paid for in accordance with this Agreement, (x) will be duly and validly issued and outstanding and will constitute the valid and binding obligation of the Trust enforceable against the Trust in accordance with its terms, except that the enforcement thereof may be subject to (A) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and (B) general principles of equity and the discretion of the court before which any proceeding therefor may be brought and (y) will be entitled to the benefits of the Indenture;

(v) there is no pending or, to NFC’s knowledge, threatened action, suit or pro