NOTE PURCHASE AGREEMENT

Exhibit 10.1

EXECUTION COPY

NOTE PURCHASE AGREEMENT

dated as of

April 30, 2009

among

NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION,

as Seller

THUNDER BAY FUNDING, LLC,

as the Conduit Investor

ROYAL BANK OF CANADA,

as Agent for the Investors

and

NAVISTAR FINANCIAL CORPORATION,

Individually and as Servicer

NAVISTAR FINANCIAL 2009-A OWNER TRUST,

Series 2009-A Floating Rate Asset Backed Notes

TABLE OF CONTENTS

 

 

-i-

TABLE OF CONTENTS

(continued)

 

 

-ii-

NOTE PURCHASE AGREEMENT dated as of April 30, 2009 (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 ”);

THUNDER BAY FUNDING, LLC, a Delaware limited liability company (“ Thunder Bay ” or the initial Conduit Investor (as defined below));

ROYAL BANK OF CANADA, a Canadian chartered bank, acting through a New York Branch (“ Royal Bank ”), as Agent (as defined below); 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 April 30, 2009 (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 April 30, 2009 (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 Royal Bank, 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 .

“ 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 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 or such Program Support Provider to fund any Funding Tranche (based on the Eurodollar Rate) set forth above (and the Conduit 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 or such Program Support Provider (as conclusively determined by the Conduit 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 2.00%  per annum above 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 (unless such Event of Default has been waived or eliminated by amendment) shall be an interest rate equal to 4.00%  per annum above the Corporate Base Rate in effect on such day.

“ 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.

 

2

“ 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 to fund the Conduit Investor’s investments in accounts receivable or other financial assets.

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

“ Conduit Assignee ” means any commercial paper conduit administered by Royal Bank or any of its Affiliates and designated by Royal Bank from time to time to accept an assignment from the Conduit Investor of all or a portion of its rights and obligations hereunder.

“ Conduit Consolidation Event ” means the consolidation, for financial and/or regulatory accounting purposes, of all or any portion of the assets and liabilities of the Conduit Investor that are subject to this Agreement or any other Basic Document with all or any portion of the assets and liabilities of an Consolidation Affected Entity. A Conduit Consolidation Event shall be deemed to occur on the date any Consolidation Affected Entity shall acknowledge in writing that any such consolidation of the assets and liabilities of a Conduit Investor shall occur. Notwithstanding the foregoing, if, as of the date on which any Conduit Investor first becomes a party to this Agreement (or otherwise subject to the terms hereof), the assets and liabilities of such Conduit Investor are required to be (or are otherwise) consolidated with the assets and liabilities of any Consolidation Affected Entity, then notwithstanding the immediately preceding sentence, no Conduit Consolidation Event shall occur with respect to such Conduit Investor and such Consolidation Affected Entity.

“ Conduit Investor ” means, initially, Thunder Bay, 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.

“ Consolidation Affected Entity ” shall mean (i) any Program Support Provider, (ii) any insurance company, bank or other funding entity providing liquidity, credit enhancement or back-up purchase support or facilities to the Conduit Investor, (iii) any agent, administrator or manager of the Conduit Investor, or (iv) any bank holding company in respect of any of the foregoing.

“ 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 1.00% 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” plus 0.50%. 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.

 

3

“ Corporate Services Provider ” is defined in Section 8.11 .

“ CP Rate ” for any Fixed Period for any Funding Tranche means, to the extent a Conduit Investor funds such Funding Tranche for such Fixed Period by issuing Commercial Paper, the per annum rate equivalent to the “weighted average cost” (as defined below) related to the issuance of Commercial Paper that are allocated, in whole or in part, by the Conduit Investor or the Agent to fund or maintain such Funding Tranche (and which may also be allocated in part to the funding of other Funding Tranches hereunder or of other assets of the Conduit Investor); provided , however , that if any component of such rate is a discount rate, in calculating the “ CP Rate ” for such Funding Tranche for such Fixed Period, the Conduit Investor shall for such component use the rate resulting from converting such discount rate to an interest bearing equivalent rate per annum. As used in this definition, a Conduit Investor’s “ weighted average cost ” shall consist of (w) the actual interest rate (or discount) paid to purchasers of the Conduit Investor’s Commercial Paper, together with the commissions of placement agents and dealers in respect of such Commercial Paper, to the extent such commissions are allocated, in whole or in part, to such Commercial Paper by a Conduit Investor or the Agent, (x) certain documentation and transaction costs associated with the issuance of such Commercial Paper, (y) any incremental carrying costs incurred with respect to Commercial Paper maturing on dates other than those on which corresponding funds are received by the Conduit Investor, and (z) other borrowings by the Conduit Investor (other than under any Program Support Agreement), including borrowings to fund small or odd dollar amounts that are not easily accommodated in the commercial paper market. The “ CP Rate ” for any day on or after the occurrence of an Event of Default (unless such Event of Default has been waived or eliminated by amendment) shall be an interest rate equal to 4.00%  per annum above the Corporate Base Rate in effect on such day.

“ 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,

 

4

“ 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 rate for deposits in U.S. dollars for a period of one month appearing on Reuters Page LIBOR01 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 Page LIBOR01 is not available to the Agent for any reason, LIBOR for such Fixed Period shall instead be the applicable 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 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.

“ 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.

 

5

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

“ Fixed Period ” means, unless otherwise mutually agreed by the Agent and the Conduit Investor, (a) with respect to any Funding Tranche funded by the issuance of Commercial Paper prior to the occurrence of a Conduit Consolidation Event, (i) initially the period commencing on (and including) the date of the initial purchase or funding of such Funding Tranche and ending on (and including) the last day of the current calendar month, 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 including) the last day of the current calendar month and (b) with respect to any Funding Tranche not funded by the issuance of Commercial Paper or funded by the issuance of Commercial Paper from and after the occurrence of a Conduit Consolidation Event, (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 not funded by the issuance of Commercial Paper, or funded by the issuance of Commercial Paper from and after the occurrence of a Conduit Consolidation Event, 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;

(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 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; and

(iii) any Fixed Period in respect of which interest is computed by reference to the CP Rate may be terminated at the election of, and upon notice thereof to the Seller by, the Agent at any time if the related Funding Tranche is no longer funded through the issuance of Commercial Paper (or is funded through the issuance of Commercial Paper, but after the occurrence of a Conduit Consolidation Event), in which case the Funding Tranche allocated to such terminated Fixed Period shall be allocated to a new Fixed Period commencing on (and including) the date of such termination and ending on (but excluding) the next following Distribution Date, and shall accrue interest at the Alternate Rate ( provided , that, notwithstanding anything to the contrary contained in the defined term “Alternate Rate”, during the first three (3) Business Days of such new Fixed Period, the related Funding Tranche shall accrue interest at a per annum rate equal to 2.00% per annum above the Corporate Base Rate in effect on each such day).

 

6

“ Funded Amount ” means on any Business Day, an amount equal to the result of (a) the Initial Invested Amount minus (b) 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 Rate ” means, with respect to any Fixed Period and any Funding Tranche, (a) prior to the occurrence of a Conduit Consolidation Event, to the extent the Conduit Investor is funding such Funding Tranche during such Fixed Period through the issuance of Commercial Paper, the CP Rate, and (b) from and after the occurrence of a Conduit Consolidation Event or to the extent any Investor is not funding such Funding Tranche through the issuance of Commercial Paper, a rate per annum (expressed as a percentage and an interest yield equivalent and calculated on the basis of a 360-day year and the actual days elapsed) equal to the Alternate Rate.

“ 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 Funding 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.

“ 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 $298,639,300.17.

“ Investors ” means the Conduit Investor and/or the Program Support Providers, as the context may require or permit.

“ Issuer ” or “ Trust ” means Navistar Financial 2009-A Owner Trust, a Delaware statutory trust.

 

7

“ 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.

“ 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 Monthly Period on each Funding Tranche funded through the issuance of Commercial Paper (but prior to the occurrence of a Conduit Consolidation Event), determined by multiplying (a) the applicable Funding 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 Monthly Period, plus interest on such unpaid amount calculated as the product of (x) the weighted average Funding Rate for all Funding Tranches funded through the issuance of Commercial Paper (but prior to the occurrence of a Conduit Consolidation Event) during the most recent Monthly Period, times (y) the amount of such unpaid Noteholders’ Interest Distributable Amount, times (z) the applicable Day Count Fraction for which interest accrued at such rate,

plus

(B) the sum of (i) the summation of the amount of interest accrued during the related Distribution Period on each Funding Tranche not funded through the issuance of Commercial Paper or funded through the issuance of Commercial Paper from and after the occurrence of a Conduit Consolidation Event, determined by multiplying (a) the applicable Funding 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 (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 Funding Rate for all Funding Tranches not funded through the issuance of Commercial Paper, or funded through the issuance of Commercial Paper from and after the occurrence of a Conduit Consolidation Event, during the most recent Distribution Period, times (y) the amount of such unpaid Noteholders’ Interest Distributable Amount, times (z) the applicable Day Count Fraction for which interest accrued at such rate,

 

8

plus

(C) on any Distribution Date on which the Funded Amount is reduced to zero and on the Final Scheduled Distribution Date, any amounts which accrue in clause (A) above (together with all fees which accrue pursuant to paragraph 1 of the Fee Letter) from (and excluding) the last day of the related Monthly Period through (and including) such Distribution Date.

“ 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.

“ 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 $298,639,300.17 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 .

“ Royal Bank ” is defined in the preamble .

“ Seller ” is defined in the preamble .

“ 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.

“ Thunder Bay ” is defined in the preamble .

 

9

“ 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.”

ARTICLE II

Matters Relating to the Purchased Note

SECTION 2.01. 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

 

10

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 Article IV . 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.

SECTION 2.02. The Purchased Note; Etc . The funding of the Initial 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 and NFC in writing. If any Funding Tranche begins to accrue interest at a Funding Rate other than the CP Rate after the date the Agent provides the Noteholders’ Interest Distributable Amount calculation for any Distribution Date, the Agent shall promptly provide the Servicer and NFC a calculation of the interest that will accrue on such Funding Tranche and be included in the definition of “Noteholders’ Interest Distributable Amount” for such Distribution Date. The parties acknowledge that the interest calculation set forth in clause (C)  of the definition of “Noteholders’ Interest Distributable Amount” shall be an estimate. If the estimated accruals exceed the actual accruals, the Agent shall reimburse such excess. If the actual accruals exceed the estimated accruals, the Seller shall reimburse the Agent.

(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 the Final Scheduled Distribution Date and (ii) as a consequence of such distribution the interest paid by an Investor to providers of funds to it to fund such Funding Tranche exceeds returns earned by such Investor with respect to such Funding Tranche, 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 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 and NFC, 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.

 

11

(c) On each date the principal amount of the Purchased Note is 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 reduction, as applicable. Each of NFC, 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 NFC, 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 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 NFC, 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 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:

(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;

 

12

(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, excep