UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
___________________
Date of Report (date of earliest event reported):
November 6, 1995
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
File #1-4146-1 51-0337491
(Commission File Number) (I.R.S. Employer Identification No.)
2850 West Golf Road Rolling Meadows, Illinois 60008
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 847-734-4275
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Matters.
(a) On November 6, 1996, the Registrant, a wholly owned
subsidiary of Navistar Financial Corporation ("NFC"), purchased a
pool of retail instalment sale contracts for, and retail loans
evidenced by notes secured by, medium and heavy-duty trucks,
buses and trailers with an aggregate outstanding principal
balance as of October 1, 1996 of $486,507,362.75 (collectively,
the "Receivables") from NFC for a purchase price equal to the
principal balance of the Receivables as of October 1, 1995. The
Registrant paid a portion of the purchase price from the net cash
proceeds of the issuance of the Securities (as described below)
and paid the remainder with an intercompany advance from NFC.
The Registrant immediately transferred the Receivables to
the Navistar Financial 1996-B Owner Trust (the "Trust"). The
Trust issued publicly three classes of notes (the "Notes") and
one class of certificates (the "Class B Certificates") and issued
privately one class of certificates (the "Class C Certificates"
and, together with the Notes and the Class B Certificates, the
"Securities") backed by the Receivables. The net cash proceeds of
the issuance of the Securities were $484,974,311.09, which,
together with a Class C Certificate with an initial certificate
balance of $317,362.75, were transferred to the Registrant. A
portion of the net cash proceeds were used to pay approximately
$450,000 of transaction fees and expenses and to fund a
$12,162,684.06 deposit into a reserve account as credit support
for the Receivables. The balance of the net cash proceeds were
paid to NFC as part of the purchase price for the Receivables.
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
See attached Exhibit Index.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
NAVISTAR FINANCIAL RETAIL
RECEIVABLES CORPORATION
Date: December 16, 1996 By: /s/ R. Wayne Cain
Name: R. Wayne Cain
Title: Vice President
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EXHIBIT INDEX
Exhibit No. Description
1.1 Underwriting Agreement between the Registrant, NFC
and Chase Securities Inc., as Representative of
the several Underwriters named on Schedule I
thereto, dated October 23, 1996
1.2 Certificate Purchase Agreement between the
Registrant, NFC and Chase Securities Inc., dated
October 23, 1996
4.1 Indenture between the Trust and Indenture Trustee,
dated November 6, 1996
4.2 Trust Agreement between the Registrant and the
Owner Trustee, dated November 6, 1996
10.1 Purchase Agreement between NFC and Registrant,
dated November 6, 1996
10.2 Pooling and Servicing Agreement between the
Registrant, NFC and the Trust, dated November 6,
1996
10.3 Custodian Agreement between NFC, as Custodian, and
the Registrant, dated November 6, 1996
10.4 Administration Agreement among NFC (the
"Administrator"), the Trust and the Indenture
Trustee, dated November 6, 1996
<EX-1.1.1 Underwriting Agreement>
EXHIBIT 1.1
NAVISTAR FINANCIAL 1996-B OWNER TRUST
$454,900,000 ASSET BACKED NOTES
$17,028,000 CLASS B ASSET BACKED CERTIFICATES
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
(SELLER)
UNDERWRITING AGREEMENT
October 23, 1996
Chase Securities Inc.
As Representative of the
Several Underwriters named
on Schedule I hereto,
270 Park Avenue
New York, New York 10017
Dear Sirs:
Navistar Financial Retail Receivables Corporation, a
Delaware corporation (the "Seller"), proposes to form an owner
trust, Navistar Financial 1996-B Owner Trust (the "Trust"),
pursuant to a Trust Agreement (the "Trust Agreement") to be dated
as of the Closing Date (as hereinafter defined), between the
Seller and Chase Manhattan Bank Delaware, as owner trustee (the
"Owner Trustee"), which will issue (i) $106,500,000 principal
amount of its 5.49% Class A-1 Asset Backed Notes (the "Class A-1
Notes"), (ii) $111,900,000 principal amount of its 5.93% Class
A-2 Notes (the "Class A-2 Notes"), and (iii) $236,500,000
principal amount of its 6.33% Class A-3 Notes (the "Class A-3
Notes"; together with the Class A-1 Notes and the Class A-2
Notes, the "Notes") pursuant to an Indenture to be dated as of
the Closing Date (the "Indenture") between the Trust and The Bank
of New York, as trustee (the "Indenture Trustee"), (iv)
$17,028,000 principal amount of its 6.50% Class B Asset Backed
Certificates (the "Class B Certificates"), and (v) $14,579,362.75
principal amount of its 7.45% Class C Asset Backed Certificates
(the "Class C Certificates"; together with the Class B
Certificates, the "Certificates") representing fractional
undivided interests in the Trust. The Class C Certificates will
be sold pursuant to a Certificate Purchase Agreement dated
October 23, 1996 (the "Certificate Purchase Agreement") among the
Seller, Navistar Financial Corporation ("NFC") and Chase
Securities Inc. (the "Initial Purchaser"). The Class B
<PAGE>
Certificates together with the Notes shall be referred to herein
as the "Offered Securities". The assets of the Trust will
include, among other things, a pool of retail installment sale
contracts for and retail notes evidencing loans secured by new
and used medium and heavy duty trucks, buses and trailers (the
"Receivables"), certain monies due or received thereunder on or
after October 1, 1996 (the "Cutoff Date"), security interests in
the vehicles financed thereby, certain accounts, and the proceeds
thereof, the proceeds, if any, of Dealer Liability, NITC Purchase
Obligations and any Guaranties, the proceeds from claims on
certain insurance policies, the benefits of any lease assignments
and certain rights of the Seller under the Purchase Agreement.
The Receivables will be transferred to the Trust by the Seller in
exchange for the Offered Securities and the Class C Certificates
and the Receivables will be serviced for the Trust by Navistar
Financial Corporation (in its capacity as Servicer, the
"Servicer") pursuant to a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") to be dated as of the Closing
Date among the Seller, the Servicer and the Trust. Capitalized
terms used and not otherwise defined herein shall have the
meanings given them in the Pooling and Servicing Agreement.
This is to confirm the agreement concerning the
purchase of the Offered Securities from the Seller by the several
Underwriters named in Schedule 1 hereto (the "Underwriters").
1. Representations, Warranties and Agreements of NFC
and the Seller. NFC and the Seller jointly and severally
represent and warrant to and agree with the several Underwriters
that:
(a) A registration statement on Form S-3 (No.
33-55865) has been filed by the Seller with the Securities
and Exchange Commission (the "Commission") and has become
effective under the Securities Act of 1933, as amended (the
"Securities Act"). Such registration statement may have
been amended or supplemented from time to time prior to the
date hereof. Any such amendment or supplement was filed
with the Commission in accordance with the Securities Act
and the rules and regulations of the Commission thereunder
(the "Rules and Regulations") and any such amendment has
become effective under the Securities Act. The Seller
proposes to file with the Commission pursuant to Rule
424(b)(5) of the Rules and Regulations a prospectus
supplement (the "Prospectus Supplement") to the prospectus
dated October 21, 1996, relating to the Offered Securities
and the method of distribution thereof. Copies of such
registration statement, any amendment or supplement thereto,
such prospectus and the Prospectus Supplement have been
delivered to you. Such registration statement, including
exhibits thereto and such prospectus, as amended or
supplemented to the date hereof, and as further supplemented
by the Prospectus Supplement, are hereinafter referred to as
the "Registration Statement" and the "Prospectus,"
respectively. The conditions to the use of a registration
statement on Form S-3 under the Securities Act have been
satisfied.
<PAGE>
(b) The Registration Statement, at the time it became
effective, any post-effective amendment thereto, at the time
it became effective, and the Prospectus, as of the date of
the Prospectus Supplement, complied in all material respects
with the applicable requirements of the Securities Act and
the Rules and Regulations and the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and the rules
of the Commission thereunder and did not include any untrue
statement of a material fact and, in the case of the
Registration Statement and any post-effective amendment
thereto, did not omit to state any material fact required to
be stated therein or necessary to make the statements
therein not misleading and, in the case of the Prospectus,
did not omit to state any material fact necessary in order
to make the statements therein, in light of the
circumstances under which they were made, not misleading; on
the Closing Date, the Registration Statement and the
Prospectus, as amended or supplemented as of the Closing
Date, will comply in all material respects with the
applicable requirements of the Securities Act and the Rules
and Regulations and the Trust Indenture Act and the rules
and regulations of the Commission thereunder and neither the
Prospectus nor any amendment or supplement thereto will
include any untrue statement of a material fact or omit 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. The representation
and warranty in the preceding sentence does not apply to (i)
that part of the Registration Statement which shall
constitute the Statement of Eligibility and Qualification
(Form T-1) of the Indenture Trustee under the Trust
Indenture Act or (ii) that information contained in or
omitted from the Registration Statement or the Prospectus
(or any amendment or supplement thereto) in reliance upon
and in conformity with the Underwriters' Information (as
defined herein). The Indenture has been qualified under the
Trust Indenture Act.
(c) 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 power and authority to own its
properties and to conduct its business as such properties
are presently owned and such business is presently
conducted, and had at all relevant times, and now has,
power, authority and legal right to acquire, own and sell
the Receivables.
(d) The representations and warranties of the Seller
in Section 3.03 of the Purchase Agreement and Section 6.01
of the Pooling and Servicing Agreement will be true and
correct as of the Closing Date.
(e) The representations and warranties of NFC in
Sections 3.01 and 3.02 of the Purchase Agreement and of the
Servicer in Section 6.01 of the Pooling and Servicing
Agreement will be true and correct as of the Closing Date.
(f) Each of the Seller and NFC has the power and
authority to execute and deliver this Agreement and to carry
out the terms of this Agreement and the execution, delivery
and performance by each of the Seller and NFC of this
Agreement
<PAGE>
have been duly authorized by each of the Seller and NFC by
all necessary corporate action.
(g) This Agreement has been duly executed and
delivered by NFC and the Seller.
(h) When authenticated by the Owner Trustee in
accordance with the Trust Agreement and delivered and paid
for pursuant to this Agreement, the Class B Certificates
will be duly issued and entitled to the benefits and
security afforded by the Trust Agreement and the Pooling and
Servicing Agreement.
(i) When authenticated by the Indenture Trustee in
accordance with the Indenture and delivered and paid for
pursuant to this Agreement, the Notes will be duly issued
and constitute legal, valid and binding obligations of the
Trust enforceable against the Trust in accordance with their
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, or other similar
laws affecting the enforcement of creditors' rights in
general and by general principles of equity, regardless of
whether such enforcement is considered in a proceeding in
equity or at law.
(j) The execution, delivery and performance of this
Agreement and the consummation by each of the Seller and NFC
of the transactions contemplated hereby shall not conflict
with, result in any breach of any of the terms and
provisions of or constitute (with or without notice or lapse
of time) a default under, the certificate of incorporation
or by-laws of such party, or any indenture, agreement or
other instrument to which either such party is a party or by
which it is bound, or violate any law or, to either such
party's knowledge, any order, rule or regulation applicable
to such party of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over such party or any
of its properties; and, except for the registration of the
Offered Securities under the Securities Act, the
qualification of the Indenture under the Trust Indenture Act
and such consents, approvals, authorizations, registrations
or qualifications as may be required under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and
applicable state securities laws in connection with the
purchase and distribution of the Offered Securities by the
Underwriters, no permit, consent, approval of, or
declaration to or filing with, any governmental authority is
required in connection with the execution, delivery and
performance of this Agreement or the consummation of the
transactions contemplated hereby.
(k) There are no proceedings or, to either of the
Seller's or NFC's knowledge, investigations pending or, to
such party's knowledge, threatened before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over such
party or its properties (i) asserting the
<PAGE>
invalidity of this Agreement or any of the Offered
Securities, (ii) seeking to prevent the issuance of any of
the Offered Securities or the consummation of any of the
transactions contemplated by this Agreement, (iii) seeking
any determination or ruling that might materially and
adversely affect the performance by such party of its
obligations under, or the validity or enforceability of, the
Offered Securities or this Agreement, or (iv) that may
adversely affect the federal or state income, excise,
franchise or similar tax attributes of the Offered
Securities.
(l) There are no contracts or other documents which
are required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act
or by the Rules and Regulations and which have not been so
described or filed.
(m) The Seller (i) is not in violation of its
certificate of incorporation or by-laws, (ii) is not in
default, in any material respect, and no event has occurred
which, with notice or lapse of time or both, would
constitute such a default, in the due performance or
observance of any term, covenant or condition contained in
any indenture, agreement, mortgage, deed of trust or other
instrument to which the Seller is a party or by which the
Seller is bound or to which any of the Seller's property or
assets is subject or (iii) is not in violation in any
respect of any law, order, rule or regulation applicable to
the Seller or any of the Seller's property of any court or
of any federal or state regulatory body, administrative
agency or other governmental instrumentality having
jurisdiction over it or any of its property, except any
violation or default that would not have a material adverse
effect on the condition (financial or otherwise), results of
operations, business or prospects of the Seller.
(n) The Purchase Agreement, the Custodian Agreement,
the Administration Agreement and the Further Transfer and
Servicing Agreements conform in all material respects with
the descriptions thereof contained in the Registration
Statement and the Prospectus.
(o) Neither the Trust nor the Seller is an "investment
company" or under the "control" of an "investment company"
within the meaning thereof as defined in the Investment
Company Act of 1940, as amended.
(p) None of NFC, the Seller or anyone acting on its
behalf has taken any action that would require qualification
of the Trust Agreement under the Trust Indenture Act.
2. Purchase by the Underwriters. On the basis of the
representations, warranties and agreements contained herein, and
subject to the terms and conditions set forth herein, the Seller
agrees to issue and sell to each of the Underwriters, severally
and not jointly, and each of the Underwriters, severally and not
jointly, agrees to purchase from the Seller, the
<PAGE>
respective principal amount of the Offered Securities set forth
opposite the name of such Underwriter in Schedule 1 hereto at a
purchase price equal to (i) with respect to the Class A-1 Notes,
99.8750000% of the principal amount thereof, (ii) with respect to
the Class A-2 Notes, 99.7721875% of the principal amount thereof,
(iii) with respect to the Class A-3 Notes 99.7343750% of the
principal amount thereof and (iv) with respect to the Class B
Certificates, 99.4765625% of the principal amount thereof.
The Seller shall not be obligated to sell or deliver
any of the Offered Securities except upon payment for all the
Offered Securities to be purchased as provided herein and upon
consummation of the purchase and sale of the Class C Certificates
pursuant to the Certificate Purchase Agreement.
3. Delivery of and Payment for the Securities.
Delivery of and payment for the Offered Securities shall be made
at the office of Simpson Thacher & Bartlett, or at such other
place as shall be agreed upon by Chase Securities Inc., as
representative of the Underwriters (the "Representative") and the
Seller, at 10:00 A.M., New York City time, on November 6, 1996,
or at such other date or time, not later than five full business
days thereafter, as shall be agreed upon by the Representative
and the Seller (such date and time being referred to herein as
the "Closing Date"). On the Closing Date, the Seller shall
deliver or cause to be delivered to the Representative for the
account of each Underwriter the Offered Securities against
payment to or upon the order of the Seller of the purchase price
in immediately available funds. Time shall be of the essence,
and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each
Underwriter hereunder. Upon delivery, each class of the Offered
Securities shall be represented by one or more global
certificates registered in the name of Cede & Co., as nominee of
The Depository Trust Company ("DTC"). The interest of the
beneficial owners of the Offered Securities will be represented
by book-entries on the records of DTC and participating members
thereof. Definitive certificates representing the Offered
Securities will be available only under limited circumstances.
4. Further Agreements of the Seller. The Seller
agrees with each of the several Underwriters:
(a) To file the Prospectus Supplement with the
Commission pursuant to and in accordance with Rule 424(b)(5)
of the Rules and Regulations within the time period
prescribed by such rule and provide evidence satisfactory to
the Representative of such timely filing.
(b) During any period in which a prospectus relating
to the Offered Securities is required to be delivered under
the Securities Act: to advise the Representative promptly of
any proposal to amend the Registration Statement or amend or
supplement the Prospectus and not to effect any such
amendment or supplementation without the consent of the
Representative; to advise the Representative promptly of (i)
the effectiveness of any post-effective amendment to the
Registration Statement, (ii)
<PAGE>
any request by the Commission for any amendment of the
Registration Statement or the Prospectus or for any
additional information, (iii) the issuance by the Commission
of any stop order suspending the effectiveness of the
Registration Statement or the initiation or threatening of
any proceedings for that purpose, (iv) the issuance by the
Commission of any order preventing or suspending the use of
any prospectus relating to the Offered Securities or the
initiation or threatening of any proceedings for that
purpose and (v) the receipt by the Seller of any
notification with respect to the suspension of the
qualification of the Offered Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose; and to use best efforts to
prevent the issuance of any such stop order or of any order
preventing or suspending the use of any prospectus relating
to the Offered Securities or suspending any such
qualification and, if any such stop order or order of
suspension is issued, to obtain the lifting thereof at the
earliest possible time.
(c) If, during any period in which, in the opinion of
counsel to the Underwriters, a prospectus is required by law
to be delivered in connection with the sale of Offered
Securities, any event shall have occurred as a result of
which the Prospectus, as then amended or supplemented, would
include an 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 when
such Prospectus is delivered to a purchaser, not misleading,
or if for any other reason it shall be necessary at such
time to amend or supplement the Prospectus in order to
comply with the Securities Act, to notify the Representative
immediately thereof, and to promptly prepare and file with
the Commission, subject to paragraph (b) of this Section 4,
an amendment or a supplement to the Prospectus such that the
statements in the Prospectus, as so amended or supplemented
will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading, or
such that the Prospectus will comply with the Securities
Act.
(d) To furnish promptly to each of the Representative
and counsel for the Underwriters a signed copy of the
Registration Statement as originally filed with the
Commission, and each amendment thereto filed with the
Commission, including all consents and exhibits filed
therewith; and during the period described in paragraph (c)
of this Section 4, to deliver promptly without charge to the
Representative such number of the following documents as the
Representative may from time to time reasonably request:
(i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment
thereto (in each case excluding exhibits other than this
Agreement, the Purchase Agreement, the Custodian Agreement,
the Administration Agreement and the Further Transfer and
Servicing Agreements) and (ii) any preliminary prospectus
supplement, the Prospectus and any amendment or supplement
thereto.
<PAGE>
(e) During the period described in paragraph (c) of
this Section 4, to file promptly with the Commission any
amendment to the Registration Statement or the Prospectus or
any supplement to the Prospectus that may, in the judgment
of the Seller, or, in the reasonable judgment of the
Representative, be required by the Securities Act or
requested by the Commission.
(f) For so long as any of the Offered Securities are
outstanding, to furnish to the Underwriters (i) copies of
all materials furnished by the Trust to its Securityholders
and all reports and financial statements furnished by the
Trust to the Commission pursuant to the Exchange Act or any
rule or regulation of the Commission thereunder and (ii)
from time to time, such other information concerning the
Seller and the Trust as the Representative may reasonably
request.
(g) Promptly from time to time to take such action as
the Representative may reasonably request to qualify the
Offered Securities for offering and sale under the
securities laws of such jurisdictions as the Representative
may request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete
the distribution of the Offered Securities; provided that in
connection therewith the Seller shall not be required to
qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction.
(h) For a period of 30 days from the date of the
Prospectus, to not offer for sale, sell, contract to sell or
otherwise dispose of, directly or indirectly, or file a
registration statement for, or announce any offering of, any
securities collateralized by, or evidencing an ownership
interest in, a pool of retail installment sale contracts for
and retail notes evidencing loans secured by, for new and
used medium and heavy duty trucks, buses and trailers (other
than the Offered Securities, the Class C Certificates and
retail notes sold under NFC's retail purchase facility)
without the prior written consent of the Representative.
(i) For a period from the date of this Agreement until
the retirement of the Offered Securities, or until such time
as no Underwriter shall maintain a secondary market in the
Offered Securities, whichever occurs first, to deliver to
you the annual statement of compliance and the annual
independent certified public accountants' report furnished
to the Owner Trustee and the Indenture Trustee, pursuant to
the Pooling and Servicing Agreement, as soon as such
statements and reports are furnished to the Owner Trustee
and the Indenture Trustee, respectively.
(j) To the extent, if any, that the ratings provided
with respect to the Offered Securities by the Standard &
Poor's Ratings Services ("S&P") and Moody's Investors
Service Inc. ("Moody's") are conditional upon the furnishing
of documents or the taking of any other actions by NFC or
the Seller, to furnish such documents and take any such
other actions.
<PAGE>
5. Conditions of Underwriters' Obligations. The
respective obligations of the several Underwriters hereunder are
subject to the accuracy, when made and on the Closing Date, of
the representations and warranties of NFC and the Seller
contained herein, to the accuracy of the statements of NFC or the
Seller made in any certificates pursuant to the provisions
hereof, to the performance by the Seller of its obligations
hereunder, and to each of the following additional terms and
conditions:
(a) Prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement
or any part thereof shall have been issued and no proceeding
for that purpose shall have been initiated or threatened by
the Commission; and any request of the Commission for
inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been
complied with to the reasonable satisfaction of the
Representative; and the Seller shall have filed the
Prospectus Supplement with the Commission pursuant to Rule
424(b)(5) of the Rules and Regulations within the time
period prescribed by such rule.
(b) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this
Agreement, the Offered Securities, the Purchase Agreement,
the Custodian Agreement, the Administration Agreement, the
Further Transfer and Servicing Agreements, the Registration
Statement and the Prospectus, and all other legal matters
relating to such agreements and the transactions
contemplated hereby and thereby shall be reasonably
satisfactory in all material respects to counsel for the
Underwriters, and the Seller shall have furnished to such
counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(c) Kirkland & Ellis shall have furnished to the
Representative their written opinion, as counsel to the
Seller, addressed to the Underwriters and dated the Closing
Date, in substantially the form of Exhibit A hereto.
(d) Kirkland & Ellis shall have furnished to the
Representative their written opinion, as counsel to the
Seller, addressed to the Underwriters and dated the Closing
Date, in form and substance reasonably satisfactory to the
Representative, with respect to the characterization of the
transfer of the Receivables by NFC to the Seller pursuant to
the Purchase Agreement as a sale and the non-consolidation
of NFC and the Seller.
(e) The Representative shall have received from
Simpson Thacher & Bartlett, counsel for the Underwriters,
such opinion or opinions, dated the Closing Date, with
respect to such matters as the Representative may require,
and the Seller shall have furnished to such counsel such
documents as they reasonably request for enabling them to
pass upon such matters.
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(f) Pryor, Cashman, Sherman & Flynn shall have
furnished to the Representative their written opinion, as
counsel to the Owner Trustee, addressed to the Underwriters
and dated the Closing Date, in substantially the form of
Exhibit B hereto.
(g) Emmet, Marvin & Martin shall have furnished to the
Representative their written opinion, as counsel to the
Indenture Trustee, addressed to the Underwriters and dated
the Closing Date, in substantially the form of Exhibit C
hereto.
(h) The Representative shall have received a letter
dated the date hereof (the "Procedures Letter") from a firm
of independent nationally recognized certified public
accountants acceptable to the Representative verifying the
accuracy of such financial and statistical data contained in
the Prospectus as the Representative shall deem advisable.
In addition, if any amendment or supplement to the
Prospectus made after the date hereof contains
financial or statistical data, the Representative shall have
received a letter dated the Closing Date confirming the
Procedures Letter and providing additional comfort on
such new data.
(i) The Representative shall have received
certificates, dated the Closing Date, of any two of the
Chairman of the Board, the President, any Vice President and
the chief financial officer of each of NFC and the Seller
stating that (A) the representations and warranties of NFC
or the Seller, as the case may be, contained in this
Agreement, the Purchase Agreement, the Custodian Agreement,
the Administration Agreement and the Further Transfer and
Servicing Agreements are true and correct on and as of the
Closing Date, (B) NFC or the Seller, as the case may be, has
complied with all agreements and satisfied all conditions on
its part to be performed or satisfied hereunder and under
such agreements at or prior to the Closing Date, (C) no stop
order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that
purpose have been instituted or, to the best of his or her
knowledge, are contemplated by the Commission, and (D) since
July 31, 1996, there has been no material adverse change in
the financial position or results of operations of NFC, the
Seller or the Trust or any change, or any development
including a prospective change, in or affecting the
condition (financial or otherwise), results of operations,
business or prospects of NFC, the Seller or the Trust except
as set forth in or contemplated by the Registration
Statement and the Prospectus. Any officer making such
certification may rely upon his or her knowledge as to the
proceedings pending or threatened.
(j) The Notes and the Class B Certificates shall have
been given a rating by S&P or Moody's, that is at least
equal to or better than the rating required for such class
of Securities as set forth in the Prospectus Supplement.
(k) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the
following: (i) trading in securities generally on the New
York
<PAGE>
Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended or
limited, or minimum prices shall have been established on
either of such exchanges or such market by the Commission,
by such exchange or by any other regulatory body or
governmental authority having jurisdiction, or trading in
securities of NFC on any exchange or in the over-the-counter
market shall have been suspended or (ii) a general
moratorium on commercial banking activities shall have been
declared by Federal or New York State authorities or (iii)
an outbreak or escalation of hostilities or a declaration by
the United States of a national emergency or war or such a
material adverse change in general economic, political or
financial conditions (or the effect of international
conditions on the financial markets in the United States
shall be such) as to make it, in the judgment of a majority
in interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or the
delivery of the Offered Securities on the terms and in the
manner contemplated in the Prospectus.
(l) The Class C Certificates being sold pursuant to
the Certificate Purchase Agreement shall have been purchased
by the Initial Purchaser pursuant to the Certificate
Purchase Agreement.
All opinions, letters, evidence and certificates
mentioned above or elsewhere in this Agreement shall be deemed to
be in compliance with the provisions hereof only if they are in
form and substance reasonably satisfactory to counsel for the
Underwriters.
6. Termination. The obligations of the Underwriters
hereunder may be terminated by the Representative, in its
absolute discretion, by notice given to and received by the
Seller prior to delivery of and payment for the Offered
Securities if, prior to that time, any of the events described in
Section 5(k) shall have occurred or any of the conditions
described in Section 5(i) or 5(j) shall not be satisfied.
7. Defaulting Underwriters. (a) If, any one or more
of the Underwriters shall fail to purchase and pay for any of the
Offered Securities agreed to be purchased by such Underwriter
hereunder on the Closing Date, and such failure constitutes a
default in the performance of its or their obligations under this
Agreement, the Representative may make arrangements for the
purchase of such Offered Securities by other persons satisfactory
to the Seller and the Representative, including any of the
Underwriters, but if no such arrangements are made by the Closing
Date, then each remaining non-defaulting Underwriter shall be
severally obligated to purchase the Offered Securities which the
defaulting Underwriter or Underwriters agreed but failed to
purchase on the Closing Date in the respective proportions which
the principal amount of the Offered Securities set forth opposite
the name of each remaining non-defaulting Underwriter in Schedule
1 hereto bears to the aggregate principal amount of the Offered
Securities set forth opposite the names of all the remaining
non-defaulting Underwriters in Schedule 1 hereto; provided,
however, that the remaining non-defaulting Underwriters shall not
be obligated to purchase any of the Offered
<PAGE>
Securities on the Closing Date if the aggregate principal amount
of the Offered Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds
one-eleventh of the aggregate principal amount of the Offered
Securities to be purchased on the Closing Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase in
total more than 110% of the principal amount of the Offered
Securities which it agreed to purchase on the Closing Date
pursuant to the terms of Section 2. If the foregoing maximums
are exceeded and the remaining Underwriters or other underwriters
satisfactory to the Representative and the Seller do not elect to
purchase the Offered Securities which the defaulting Underwriter
or Underwriters agreed but failed to purchase, this Agreement
shall terminate without liability on the part of any
non-defaulting Underwriter or the Seller, except that the Seller
will continue to be liable for the payment of expenses to the
extent set forth in Sections 8 and 12 and except that the
provisions of Sections 9 and 10 shall not terminate and shall
remain in effect. As used in this Agreement, the term
"Underwriter" includes, for all purposes of this Agreement unless
the context otherwise requires, any party not listed in Schedule
1 hereto who, pursuant to this Section 7, purchases Offered
Securities which a defaulting Underwriter agreed but failed to
purchase.
(b) Nothing contained herein shall relieve a
defaulting Underwriter of any liability it may have for damages
caused by its default. If other underwriters are obligated or
agree to purchase the Offered Securities of a defaulting
Underwriter, either the Representative or the Seller may postpone
the Closing Date for up to seven full business days in order to
effect any changes that in the opinion of counsel for the Seller
or counsel for the Underwriters may be necessary in the
Registration Statement, the Prospectus or in any other document
or arrangement, and the Seller agrees to file promptly any
amendment or supplement to the Registration Statement or the
Prospectus that effects any such changes.
8. Reimbursement of Underwriters' Expenses. If (a)
notice shall have been given pursuant to Section 6 terminating
the obligations of the Underwriters hereunder, (b) the Seller
shall fail to tender the Offered Securities for delivery to the
Underwriters for any reason permitted under this Agreement or (c)
the Underwriters shall decline to purchase the Offered Securities
for any reason permitted under this Agreement, the Seller shall
reimburse the Underwriters for the fees and expenses of their
counsel and for such other out-of-pocket expenses as shall have
been reasonably incurred by them in connection with this
Agreement and the proposed purchase of the Offered Securities,
and upon demand the Seller shall pay the full amount thereof to
the Representative. If this Agreement is terminated pursuant to
Section 7 by reason of the default of one or more Underwriters,
the Seller shall not be obligated to reimburse any defaulting
Underwriter on account of those expenses. If this Agreement is
terminated by the Underwriters or the Seller by reason of the
default by the Initial Purchaser of its obligation to purchase
the Class C Certificates being sold pursuant to the Certificate
Purchase Agreement, the Seller shall not be obligated to
reimburse Chase Securities Inc. on account of those expenses.
<PAGE>
9. Indemnification. (a) NFC and the Seller shall,
jointly and severally, indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act
(collectively referred to for the purposes of this Section 9 and
Section 10 as the Underwriter) against any loss, claim, damage or
liability, joint or several, to which that Underwriter may become
subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage or liability (or any action in respect
thereof) arises out of or is based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in any
preliminary prospectus supplement, the Registration Statement or
the Prospectus or in any amendment or supplement thereto or (ii)
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made,
not misleading, and shall reimburse each Underwriter for any
legal or other expenses reasonably incurred by that Underwriter
in connection with investigating or preparing to defend or
defending against or appearing as a third party witness in
connection with any such loss, claim, damage or liability (or any
action in respect thereof) as such expenses are incurred;
provided, however, that neither NFC nor the Seller shall be
liable in any such case to the extent that any such loss, claim,
damage or liability (or any action in respect thereof) arises out
of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any preliminary
prospectus supplement, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon
and in conformity with the Underwriters' Information.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Seller, each of its directors,
each officer of the Seller who signed the Registration Statement
and each person, if any, who controls the Seller within the
meaning of Section 15 of the Securities Act (collectively
referred to for the purposes of this Section 9 and Section 10 as
the Seller), against any loss, claim, damage or liability, joint
or several, to which the Seller may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage
or liability (or any action in respect thereof) arises out of or
is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary
prospectus supplement, the Registration Statement or the
Prospectus or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made,
not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
the written information furnished to the Seller by or on behalf
of such Underwriter specifically for use therein, and shall
reimburse the Seller for any legal or other expenses reasonably
incurred by the Seller in connection with investigating or
preparing to defend or defending against or appearing as third
party witness in connection with any such loss, claim, damage or
liability (or any action in respect thereof) as such expenses are
incurred. The parties acknowledge and agree that the written
information furnished to the Seller through the Representative by
or on behalf of the Underwriters (the "Underwriters'
Information") consists solely of the paragraph below the
footnotes on the
<PAGE>
cover page of the Prospectus Supplement concerning the terms of
the offering and the second paragraph of text and the following
table under the caption "Underwriting" in the Prospectus
Supplement.
(c) Promptly after receipt by an indemnified party
under this Section 9 of notice of any claim or the commencement
of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this
Section 9, notify the indemnifying party in writing of the claim
or the commencement of that action; provided, however, that the
failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 9 except
to the extent it has been materially prejudiced by such failure;
and, provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability which
it may have to an indemnified party otherwise than under this
Section 9. If any such claim or action shall be brought against
an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such
claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other
expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs
of investigation; provided, however, that the Representative
shall have the right to employ one counsel to represent jointly
the Representative and those other Underwriters and their
respective controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be
sought by the Underwriters against NFC or the Seller under this
Section 9 if, in the reasonable judgment of the Representative,
it is advisable for the Representative and those Underwriters and
controlling persons to be jointly represented by separate counsel
because there may be one or more legal defenses available to such
parties which are different from or additional to those available
to the indemnifying party, and in that event the fees and
expenses of such separate counsel shall be paid by NFC or the
Seller. Each indemnified party, as a condition of the indemnity
agreements contained in Sections 9(a) and 9(b), shall use all
reasonable efforts to cooperate with the indemnifying party in
the defense of any such action or claim. No indemnifying party
shall be liable for any settlement of any such action effected
without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent
or if there be a final judgment of the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold
harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
The obligations of NFC, the Seller and the Underwriters
in this Section 9 and in Section 10 are in addition to any other
liability which NFC, the Seller or the Underwriters, as the case
may be, may otherwise have.
<PAGE>
10. Contribution. If the indemnification provided for
in Section 9 is unavailable or insufficient to hold harmless an
indemnified party under Section 9(a) or (b), then each
indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or
liability (i) in such proportion as shall be appropriate to
reflect the relative benefits received by NFC and the Seller on
the one hand and the Underwriters on the other from the offering
of the Offered Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of NFC and the Seller on the one hand and the Underwriters
on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, as well as any
other relevant equitable considerations. The relative benefits
received by NFC and the Seller on the one hand and the
Underwriters on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds
from the offering of the Offered Securities purchased under this
Agreement (before deducting expenses) received by the Seller bear
to the total underwriting discounts and commissions received by
the Underwriters with respect to the Offered Securities purchased
under this Agreement, in each case as set forth in the table on
the cover page of the Prospectus Supplement. 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 NFC or the Seller on the one hand or the
Underwriters on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission.
NFC, the Seller and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this
Section 10 were to be determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or
by any other method of allocation which does not take into
account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability referred to above in this
Section 10 shall be deemed to include, subject to the limitations
on the fees and expenses of separate counsel set forth in Section
9, for purposes of this Section 10, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such claim or any action in
respect thereof. Notwithstanding the provisions of this Section
10, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the
Offered Securities underwritten by it and distributed to the
public were offered to the public less the amount of any damages
which such Underwriter has otherwise paid or become liable to pay
by reason of any 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
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to indemnify as provided in Section 9
and contribute as provided in this Section 10 are several in
proportion to their respective underwriting obligations and not
joint.
<PAGE>
11. Persons Entitled to Benefit of Agreement. This
Agreement shall inure to the benefit of and be binding upon the
Underwriters, NFC, the Seller, and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other
than the Underwriters, NFC and the Seller and their respective
successors and the controlling persons and officers and directors
referred to in Sections 9 and 10 and their heirs and legal
representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained
herein.
12. Expenses. The Seller agrees with the Underwriters
to pay (a) the costs incident to the authorization, issuance,
sale, preparation and delivery of the Offered Securities and any
taxes payable in that connection; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto;
(c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case,
exhibits), any preliminary prospectus supplement, the Prospectus
and any amendment or supplement to the Prospectus, including,
without limitation, the Prospectus Supplement, all as provided in
this Agreement; (d) the costs of printing, reproducing and
distributing this Agreement and any other underwriting and
selling group documents by mail, telex or other means of
communications; (e) the fees and expenses of qualifying the
Offered Securities under the securities laws of the several
jurisdictions as provided in Section 4(h) and of preparing,
printing and distributing Blue Sky Memoranda and Legal Investment
Surveys (including related fees and expenses of counsel to the
Underwriters); (f) any fees charged by S&P and Moody's for rating
the Offered Securities; (g) all fees and expenses of the Owner
Trustee and the Indenture Trustee and their respective counsel;
and (h) all other costs and expenses incident to the performance
of the obligations of the Seller under this Agreement; provided
that, except as otherwise provided in this Section 12 and in
Section 8, the Underwriters shall pay their own costs and
expenses, including the costs and expenses of their counsel, any
transfer taxes on the Offered Securities which they may sell and
the expenses of advertising any offering of the Securities made
by the Underwriters.
13. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of NFC,
the Seller and the Underwriters contained in this Agreement or
made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the
Offered Securities and shall remain in full force and effect,
regardless of any (i) termination or cancellation of this
Agreement, (ii) any investigation made by or on behalf of any of
them or any person controlling any of them or (iii) acceptance of
and payment for the Offered Securities.
14. Notices, etc. All statements, requests, notices
and agreements hereunder shall be in writing, and:
<PAGE>
(a) if to the Underwriters, shall be delivered or sent
by mail or facsimile transmission and confirmed to Chase
Securities Inc., 270 Park Avenue, New York, New York 10017,
Attention: William Magid, with a copy to the Legal
Department;
(b) if to the Seller, shall be delivered or sent by
mail or facsimile transmission and confirmed to the address
of the Seller set forth in the Registration Statement,
Attention: General Counsel, with a copy to NFC at the
address of the Servicer set forth in the Registration
Statement, Attention: General Counsel;
provided, however, that any notice to an Underwriter pursuant to
Section 9(c) shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set
forth in its acceptance telex to the Representative, which
address will be supplied to any other party hereto by the
Representative upon request. Any such statements, requests,
notices or agreements shall take effect at the time of receipt
thereof. The Seller shall be entitled to act and rely upon any
request, consent, notice or agreement given or made on behalf of
the Underwriters by the Representative.
15. Definitions of Certain Terms. For purposes of
this Agreement, "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading.
16. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New
York.
17. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be
an original, but all such counterparts shall together constitute
one and the same instrument.
18. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of,
or to affect the meaning or interpretation of, this Agreement.
<PAGE>
If the foregoing is in accordance with your
understanding of the agreement between the Seller and NFC and the
several Underwriters, kindly indicate your acceptance in the
space provided for that purpose below.
Very truly yours,
NAVISTAR FINANCIAL RETAIL
RECEIVABLES CORPORATION
By
Name: R.W. Cain
Title: Vice President and
Treasurer
NAVISTAR FINANCIAL CORPORATION
By
Name: R.W. Cain
Title: Vice President and
Treasurer
Accepted:
CHASE SECURITIES INC.
For Itself and as Representative
of the Several Underwriters
By
Authorized Signatory
<PAGE>
<TABLE>
SCHEDULE 1
<CAPTION>
Principal Principal Principal
Amount of Amount of Amount of
CLASS A-1 CLASS A-2 CLASS A-3
UNDERWRITER NOTES NOTES NOTES
<S> <C> <C> <C>
Chase 17,750,000 18,650,000 39,425,000
Securities Inc.
BA Securities,
Inc. 17,750,000 18,650,000 39,415,000
CS First Boston 17,750,000 18,650,000 39,415,000
Corporation
First Chicago
Capital 17,750,000 18,650,000 39,415,000
Markets, Inc.
J.P. Morgan 17,750,000 18,650,000 39,415,000
Securities Inc.
NationsBanc
Capital 17,750,000 18,650,000 39,415,000
Markets, Inc.
</TABLE>
Certificate
Balance
of Class B
UNDERWRITER CERTIFICATES
Chase Securities Inc. 8,514,000
J.P. Morgan Securities 8,514,000
Inc.
<EX-1.1.2 Certificate Purchase Agreement>
EXHIBIT 1.2
NAVISTAR FINANCIAL 1996-B OWNER TRUST
$14,262,000 Class C Asset Backed Certificates
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
(SELLER)
CERTIFICATE PURCHASE AGREEMENT
October 23, 1996
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Dear Sirs:
Navistar Financial Retail Receivables Corporation, a
Delaware corporation (the "Seller"), proposes to form an owner
trust, Navistar Financial 1996-B Owner Trust (the "Trust"),
pursuant to a Trust Agreement (the "Trust Agreement") to be dated
as of the Closing Date (as defined herein), between the Seller
and Chase Manhattan Bank Delaware, as owner trustee (the "Owner
Trustee"), which will issue (i) $106,500,000 principal amount of
its 5.49% Class A-1 Asset Backed Notes (the "Class A-1 Notes"),
(ii) $111,900,000 principal amount of its 5.93% Class A-2 Notes
(the "Class A-2 Notes"), and (iii) $236,500,000 principal amount
of its 6.33% Class A-3 Notes (the "Class A-3 Notes"; together
with the Class A-1 Notes and the Class A-2 Notes, the "Notes")
pursuant to an Indenture to be dated as of the Closing Date (the
"Indenture") between the Trust and The Bank of New York, as
trustee (the "Indenture Trustee"), (iv) $17,028,000 principal
amount of its 6.50% Class B Asset Backed Certificates (the "Class
B Certificates"), and (v) $14,579,362.75 principal amount of its
7.45% Class C Asset Backed Certificates (the "Class C
Certificates"; together with the Class B Certificates, the
"Certificates") representing fractional undivided interests in
the Trust. The Notes and the Class B Certificates (the "Other
Securities") will be sold in a public offering pursuant to an
Underwriting Agreement dated October 23, 1996 among the Seller,
Navistar Financial Corporation ("NFC") and Chase Securities Inc.,
as representative of the several underwriters (the
"Underwriters") parties thereto (the "Underwriting Agreement").
The assets of the Trust will include, among other things, a pool
of retail installment sale contracts for and retail notes
evidencing loans secured by new and used medium and heavy duty
trucks, buses and trailers (the "Receivables"), certain monies
due or received thereunder on or after October 1, 1996 (the
"Cutoff Date"), security interests in the vehicles financed
thereby, certain accounts, and the proceeds thereof, the
proceeds, if any, of Dealer Liability, NITC Purchase Obligations
and any Guaranties, the proceeds from claims on certain insurance
policies, the benefits of any lease assignments and certain
rights of the Seller under the Purchase
<PAGE>
Agreement. The Receivables will be transferred to the Trust by
the Seller in exchange for the Notes and the Certificates, and
the Receivables will be serviced for the Trust by Navistar
Financial Corporation (in its capacity as Servicer, the
"Servicer") pursuant to a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") to be dated as of the Closing
Date among the Seller, the Servicer and the Trust. Capitalized
terms used and not otherwise defined herein shall have the
meanings given them in the Pooling and Servicing Agreement.
NFC and the Seller have prepared a private placement
memorandum dated October 23, 1996 (as amended and supplemented
from time to time, the "Memorandum") describing, among other
things, the Class C Certificates, the Receivables, the Reserve
Account, the Pooling and Servicing Agreement and the Trust
Agreement. NFC and the Seller hereby authorize Chase Securities
Inc. (the "Initial Purchaser") to deliver to prospective
subsequent purchasers of the Class C Certificates copies of the
Memorandum, any amendments or supplements thereto, and such other
information obtained pursuant hereto as shall be agreed upon by
the Seller and the Initial Purchaser, in connection with any
re-offer or resale of the Class C Certificates by the Initial
Purchaser in accordance herewith ("Offering Materials"). In
connection with such delivery of copies of the Memorandum, the
Seller agrees to furnish to the Initial Purchaser during the
Offering Period (as hereinafter defined), without charge, as many
copies as the Initial Purchaser may reasonably request of the
Memorandum and any supplement or amendment thereto.
This is to confirm the agreement concerning the
purchase of $14,262,000 principal amount of the Class C
Certificates from the Seller by the Initial Purchaser.
1. Representations, Warranties and Agreements of NFC
and the Seller. NFC and the Seller jointly and severally
represent and warrant to and agree with the Initial Purchaser
that:
(a) The Memorandum does not and will not as of the
Closing Date include an untrue statement of a material fact
or omit 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.
(b) 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 power and authority to own its
properties and to conduct its business as such properties
are presently owned and such business is presently
conducted, and had at all relevant times, and now has,
power, authority and legal right to acquire, own and sell
the Receivables.
(c) The representations and warranties of the Seller
in Section 3.03 of the Purchase Agreement and Section 6.01
of the Pooling and Servicing Agreement will be true and
correct as of the Closing Date.
<PAGE>
(d) The representations and warranties of NFC in
Sections 3.01 and 3.02 of the Purchase Agreement and of the
Servicer in Section 6.01 of the Pooling and Servicing
Agreement will be true and correct as of the Closing Date.
(e) Each of the Seller and NFC has the power and
authority to execute and deliver this Agreement and to carry
out the terms of this Agreement and the execution, delivery
and performance by each of the Seller and NFC of this
Agreement have been duly authorized by each of the Seller
and NFC by all necessary corporate action.
(f) This Agreement has been duly executed and
delivered by NFC and the Seller.
(g) When authenticated by the Owner Trustee in
accordance with the Trust Agreement and delivered and paid
for pursuant to this Agreement, the Class C Certificates
will be duly issued and entitled to the benefits and
security afforded by the Trust Agreement and the Pooling and
Servicing Agreement.
(h) The execution, delivery and performance of this
Agreement and the consummation by each of the Seller and NFC
of the transactions contemplated hereby shall not conflict
with, result in any breach of any of the terms and
provisions of or constitute (with or without notice or lapse
of time) a default under, the certificate of incorporation
or by-laws of such party, or any indenture, agreement or
other instrument to which either such party is a party or by
which it is bound, or violate any law or, to either such
party's knowledge, any order, rule or regulation applicable
to such party of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over such party or any
of its properties; and, except for such consents, approvals,
authorizations, registrations or qualifications as may be
required under applicable state securities laws in
connection with the purchase of the Class C Certificates and
the filing required by Regulation D ("Regulation D") under
the Securities Act of 1933, as amended (the "Securities
Act"), no permit, consent, approval of, or declaration to or
filing with, any governmental authority is required in
connection with the execution, delivery and performance of
this Agreement or the consummation of the transactions
contemplated hereby.
(i) There are no proceedings or, to either of the
Seller's or NFC's knowledge, investigations pending or, to
such party's knowledge, threatened before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over such
party or its properties (i) asserting the invalidity of this
Agreement or any of the Class C Certificates, (ii) seeking
to prevent the issuance of any of the Class C Certificates
or the consummation of any of the transactions contemplated
by this Agreement, (iii) seeking any determination or ruling
<PAGE>
that might materially and adversely affect the performance
by such party of its obligations under, or the validity or
enforceability of, the Class C Certificates or this
Agreement, or (iv) that may adversely affect the federal or
state income, excise, franchise or similar tax attributes of
the Class C Certificates.
(j) The Seller (i) is not in violation of its
certificate of incorporation or by-laws, (ii) is not in
default, in any material respect, and no event has occurred
which, with notice or lapse of time or both, would
constitute such a default, in the due performance or
observance of any term, covenant or condition contained in
any indenture, agreement, mortgage, deed of trust or other
instrument to which the Seller is a party or by which the
Seller is bound or to which any of the Seller's property or
assets is subject or (iii) is not in violation in any
respect of any law, order, rule or regulation applicable to
the Seller or any of the Seller's property of any court or
of any federal or state regulatory body, administrative
agency or other governmental instrumentality having
jurisdiction over it or any of its property, except any
violation or default that would not have a material adverse
effect on the condition (financial or otherwise), results of
operations, business or prospects of the Seller.
(k) None of the Seller, NFC or anyone acting on their
behalf, has offered, transferred, pledged, sold or otherwise
disposed of any Class C Certificate, any interest in any
Class C Certificates or any other similar security of any
entity organized or originated by the Seller or NFC to, or
solicited any offer to buy or accept a transfer, pledge or
other disposition of any Class C Certificate, any interest
in any Class C Certificate or any other similar security
with, any person in any manner, or made any general
solicitation by means of general advertising or in any other
manner, or taken any other action, that would constitute a
distribution of the Class C Certificates under the
Securities Act, or that would render the disposition of any
Class C Certificate by the Initial Purchaser in accordance
herewith a violation of Section 5 of the Securities Act or
any state securities law, or require registration or
qualification pursuant thereto, nor will the Seller or NFC
act, nor has any of them authorized or will any of them
authorize any person to act, in such manner with respect to
any Class C Certificate.
(l) The Purchase Agreement, the Custodian Agreement,
the Administration Agreement and the Further Transfer and
Servicing Agreements conform in all material respects with
the descriptions thereof contained in the Memorandum.
(m) Neither the Trust nor the Seller is an "investment
company" or under the "control" of an "investment company"
within the meaning thereof as defined in the Investment
Company Act of 1940, as amended.
2. Representations, Warranties and Agreements of the
Initial Purchaser. The Initial Purchaser represents and warrants
to and agrees with the Seller and NFC that:
<PAGE>
(a) The Initial Purchaser understands and acknowledges
that the Class C Certificates have not been and will not be
registered under the Securities Act, in reliance upon an
exemption therefrom, or registered or qualified under the
securities or "Blue Sky" laws of any state.
(b) This Agreement has been duly authorized, executed
and delivered by the Initial Purchaser.
(c) The Initial Purchaser invests in securities such
as the Class C Certificates in the normal course of its
business and is familiar with the terms of securities such
as the Class C Certificates.
(d) The Initial Purchaser has such knowledge and
experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment
in the Class C Certificates, is able to bear the economic
risk of investment in the Class C Certificates and is an
"accredited investor" (as defined in Regulation D under the
Securities Act) and a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act).
(e) The Initial Purchaser has advised the Seller that
the Initial Purchaser is purchasing the Certificates for its
own account and presently intends (but has no obligation) to
re-offer and resell all or a portion of the Class C
Certificates at any time or from time to time in privately
negotiated transactions and in accordance with the Trust
Agreement. The Initial Purchaser agrees that it will comply
with applicable laws in offering the Class C Certificates
and will not make a public offering of the Class C
Certificates, that the Initial Purchaser will re-offer or
resell the Class C Certificates only to "qualified
institutional buyers" within the meaning of Rule 144A
promulgated under the Securities Act ("QIBs") and that the
Initial Purchaser will not offer the Class C Certificates
for sale to more than 12 QIBs.
(f) The Initial Purchaser shall not publish or
disseminate any material, other than the Memorandum and
Offering Materials, in connection with the offering of the
Class C Certificates, provided that the Initial Purchaser
may place advertisements in financial and other newspapers
and journals at its own expense describing its services to
the Seller and NFC hereunder, subject to the prior written
consent of the Seller and applicable securities laws.
3. Purchase by the Initial Purchaser. On the basis of
the representations, warranties and agreements contained herein,
and subject to the terms and conditions set forth herein, the
Seller agrees to sell to the Initial Purchaser, and the Initial
Purchaser agrees to purchase from the Seller, the $14,262,000
aggregate principal amount of the Class C Certificates at a
purchase price equal to 99.2265625% of the principal amount
thereof.
<PAGE>
The Seller shall not be obligated to sell or deliver
any of the Class C Certificates except upon payment for all the
Class C Certificates to be purchased as provided herein and upon
consummation of the purchase and sale of the Other Securities
pursuant to the Underwriting Agreement.
4. Delivery of and Payment for the Class C
Certificates. Delivery of and payment for the Class C
Certificates shall be made at the office of Simpson Thacher &
Bartlett, or at such other place as shall be agreed upon by the
Initial Purchaser and the Seller, at 10:00 A.M., New York City
time, on November 6, 1996, or at such other date or time, not
later than five full business days thereafter, as shall be agreed
upon by the Initial Purchaser and the Seller (such date and time
being referred to herein as the "Closing Date"). On the Closing
Date, the Seller shall deliver or cause to be delivered to the
Initial Purchaser the Class C Certificates against payment to or
upon the order of the Seller of the purchase price in immediately
available funds. Time shall be of the essence, and delivery at
the time and place specified pursuant to this Agreement is a
further condition of the obligation of the Initial Purchaser
hereunder. The Class C Certificate to be delivered to the
Initial Purchaser hereunder shall be issued to the Initial
Purchaser in fully registered form only, shall be registered in
such name or names, and be in such denomination or denominations,
as the Initial Purchaser has previously requested (subject to
limitations set forth in the Trust Agreement).
5. Further Agreements of the Seller and NFC. The
Seller and, where applicable, NFC, each hereby agrees with the
Initial Purchaser:
(a) To file in a timely manner with the Securities and
Exchange Commission (the "Commission") the notice with
respect to the sale of the Class C Certificates on the
Closing Date required by Rule 503 of Regulation D and
provide the Initial Purchaser with a signed copy of such
notice.
(b) During the period (the "Offering Period") from the
date of this Agreement through the date which is the earlier
of (i) the first date on which the Initial Purchaser has
re-sold all of the Class C Certificates and (ii) April 23,
1997: to advise the Initial Purchaser promptly of any
proposal to amend or supplement the Memorandum and not to
effect any such amendment or supplementation without the
consent of the Initial Purchaser, and to advise the Initial
Purchaser promptly of (1) any request by the Commission for
any amendment of the registration statement or the
prospectus relating to the Other Securities or for any
additional information with respect to the Other Securities,
(2) the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement
relating to the Other Securities or the initiation or
threatening of any proceedings for that purpose, (3) the
issuance by the Commission of any order preventing or
suspending the use of any prospectus relating to the Other
Securities or the initiation or threatening of any
proceedings for that purpose, (4) the receipt by the Seller
or NFC of any communication from the
<PAGE>
Commission or any state securities authority concerning the
offering or sale of the Class C Certificates and (5) the
commencement of any lawsuit or proceeding to which any of
the Seller or NFC is a party relating to the offering or
sale of, or otherwise relating to, the Class C Certificates.
(c) If during the Offering Period any event shall have
occurred as a result of which the Memorandum, as then
amended or supplemented, would include an 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 when the Memorandum is delivered
to a purchaser, not misleading, to notify the Initial
Purchaser immediately thereof, and to promptly prepare,
subject to paragraph (b) of this Section 5, an amendment or
a supplement to the Memorandum such that the statements in
the Memorandum, as so amended or supplemented will not, in
the light of the circumstances when the Memorandum is
delivered to a purchaser, be misleading.
(d) During the Offering Period, to provide to the
Initial Purchaser and any prospective subsequent purchaser
the opportunity to ask questions and receive answers
concerning the terms and conditions of the offering of the
Class C Certificates, the Receivables, the Reserve Account,
the Pooling and Servicing Agreement, the Trust Agreement and
any other matters relating to the matters described in the
Memorandum and the transactions contemplated hereby and to
obtain any additional information and documents that the
Initial Purchaser may reasonably request and that the Seller
or NFC possesses or can acquire without unreasonable effort
or expense with respect to any of the foregoing.
(e) For so long as any of the Class C Certificates are
outstanding, to furnish to the Initial Purchaser (i) copies
of all materials furnished by the Trust to its
Securityholders and all reports and financial statements
furnished by the Trust to the Commission pursuant to the
Securities Exchange Act of 1934 or any rule or regulation of
the Commission thereunder and (ii) from time to time, such
other information concerning the Seller and the Trust as the
Initial Purchaser may reasonably request.
(f) For so long as any of the Class C Certificates are
outstanding and are "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act, to
provide or cause to be provided to any holder of the Class C
Certificates and any prospective purchaser of the Class C
Certificates designated by a holder of such Class C
Certificates, upon the request of such holder or prospective
purchaser, the information required to be provided to such
holder or prospective purchaser by Rule 144A(d)(4) under the
Securities Act.
(g) For a period of 30 days from the date of the
Memorandum, to not offer for sale, sell, contract to sell or
otherwise dispose of, directly or indirectly, or file a
registration statement for, or announce any offering of, any
securities collateralized by,
<PAGE>
or evidencing an ownership interest in, a pool of retail
installment sale contracts for and retail notes evidencing loans
secured by, for new and used medium and heavy duty trucks, buses
and trailers (other than the Class C Certificates and the Other
Securities and retail notes sold under NFC's retail purchase
facility) without the prior written consent of the Initial
Purchaser.
(h) Not to offer, sell, contract to sell or otherwise
dispose of any Class C Certificates or any securities which
are substantially similar to the Class C Certificates the
result of which would cause the offer and sale of the Class
C Certificates pursuant to this Agreement to fail to be
entitled to the exemption from registration afforded by
Section 4(2) of the Securities Act.
(i) For a period from the date of this Agreement until
the retirement of the Class C Certificates, to deliver to
the Initial Purchaser the annual statement of compliance and
the annual independent certified public accountants' report
furnished to the Owner Trustee and the Indenture Trustee,
pursuant to the Pooling and Servicing Agreement, as soon as
such statements and reports are furnished to the Owner
Trustee and the Indenture Trustee, respectively.
(j) To the extent, if any, that the ratings provided
with respect to the Class C Certificates by the Standard &
Poor's Ratings Services ("S&P") and/or Moody's Investors
Service Inc. ("Moody's") are conditional upon the
furnishing of documents or the taking of any other actions
by NFC or the Seller, to furnish such documents and take any
such other actions.
(k) Not to publish or disseminate any material in
connection with the offering of the Class C Certificates
unless the Initial Purchaser shall have consented to the
publication or use thereof.
6. Conditions of Initial Purchaser's Obligations. The
obligations of the Initial Purchaser hereunder are subject to the
accuracy, when made and on the Closing Date, of the
representations and warranties of NFC and the Seller contained
herein, to the accuracy of the statements of NFC or the Seller
made in any certificates pursuant to the provisions hereof, to
the performance by the Seller of its obligations hereunder, and
to each of the following additional terms and conditions:
(a) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this
Agreement, the Class C Certificates, the Purchase Agreement,
the Custodian Agreement, the Administration Agreement, the
Further Transfer and Servicing Agreements, the Memorandum,
and all other legal matters relating to such agreements and
the transactions contemplated hereby and thereby shall be
reasonably satisfactory in all material respects to counsel
for the Initial Purchaser, and the Seller shall have
furnished to such counsel all documents and
<PAGE>
information that they may reasonably request to enable them
to pass upon such matters.
(b) The Initial Purchaser shall have received such
opinion letters and procedure letters as were required to be
delivered pursuant to the Underwriting Agreement, which
opinions shall be addressed to, or state that they may be
relied upon by, the Initial Purchaser.
(c) The Initial Purchaser shall have received an
opinion of Kirkland & Ellis, as counsel to the Seller,
addressed to the Initial Purchaser and dated the Closing
Date, in form and substance reasonably satisfactory to the
Initial Purchaser, with respect to the issuance and sale of
the Class C Certificates hereunder.
(d) The Initial Purchaser shall have received
certificates, dated the Closing Date, of any two of the
Chairman of the Board, the President, any Vice President and
the chief financial officer of each of NFC and the Seller
stating that (A) the representations and warranties of NFC
or the Seller, as the case may be, contained in this
Agreement, the Purchase Agreement, the Custodian Agreement,
the Administration Agreement and the Further Transfer and
Servicing Agreements are true and correct on and as of the
Closing Date, (B) NFC or the Seller, as the case may be, has
complied with all agreements and satisfied all conditions on
its part to be performed or satisfied hereunder and under
such agreements at or prior to the Closing Date, (C) since
July 31, 1996, there has been no material adverse change in
the financial position or results of operations of NFC, the
Seller or the Trust or any change, or any development
including a prospective change, in or affecting the
condition (financial or otherwise), results of operations,
business or prospects of NFC, the Seller or the Trust except
as set forth in or contemplated by the Memorandum, (D) as of
its date and as of the Closing Date, the Memorandum did not
contain any untrue statement of a material fact or omit to
state a material fact with respect to the Seller or NFC, as
the case may be, necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; and (E) subsequent to the date of
the Memorandum, there has been no material adverse change,
or any development which could reasonably be expected to
result in a material adverse change, in or affecting
particularly the business or properties of the Trust, the
Seller or NFC except as contemplated by the Memorandum or as
described in such certificate. Any officer making such
certification may rely upon his or her knowledge as to the
proceedings pending or threatened.
(e) The Class C Certificates shall have been given a
rating by S&P or Moody's, that is at least equal to or
better than the rating required for the Class C Certificates
as set forth in the Memorandum.
(f) The Other Securities shall have been purchased by
the Underwriters pursuant to the Underwriting Agreement.
<PAGE>
(g) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the
following: (i) trading in securities generally on the New
York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended or
limited, or minimum prices shall have been established on
either of such exchanges or such market by the Commission,
by such exchange or by any other regulatory body or
governmental authority having jurisdiction, or trading in
securities of NFC on any exchange or in the over-the-counter
market shall have been suspended or (ii) a general
moratorium on commercial banking activities shall have been
declared by Federal or New York State authorities or (iii)
an outbreak or escalation of hostilities or a declaration by
the United States of a national emergency or war or such a
material adverse change in general economic, political or
financial conditions (or the effect of international
conditions on the financial markets in the United States
shall be such) as to make it, in the judgment of the Initial
Purchaser, impracticable or inadvisable to proceed with the
purchase or the delivery of the Class C Certificates on the
terms and in the manner contemplated in the Memorandum.
All opinions, letters, evidence and certificates
mentioned above or elsewhere in this Agreement shall be deemed to
be in compliance with the provisions hereof only if they are in
form and substance reasonably satisfactory to counsel for the
Initial Purchaser.
7. Reimbursement of Initial Purchaser's Expenses. If
(a) the Seller shall fail to tender the Class C Certificates for
delivery to the Initial Purchaser for any reason permitted under
this Agreement or (b) the Initial Purchaser shall decline to
purchase the Class C Certificates for any reason permitted under
this Agreement (other than pursuant to paragraph (f) of Section 6
as a result of a default by Chase Securities Inc. of its
obligations under the Underwriting Agreement), the Seller shall
reimburse the Initial Purchaser for the fees and expenses of its
counsel and for such other out-of-pocket expenses as shall have
been reasonably incurred by them in connection with this
Agreement and the proposed purchase of the Class C Certificates,
and upon demand the Seller shall pay the full amount thereof to
the Initial Purchaser.
8. Indemnification. (a) NFC and the Seller shall,
jointly and severally, indemnify and hold harmless the Initial
Purchaser and each person, if any, who controls the Initial
Purchaser within the meaning of Section 15 of the Securities Act
(collectively referred to for the purposes of this Section 8 and
Section 9 as the Initial Purchaser) against any loss, claim,
damage or liability, joint or several, to which the Initial
Purchaser may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage or liability (or
any action in respect thereof) arises out of or is based upon (i)
any untrue statement or alleged untrue statement of a material
fact contained in the Memorandum or in any amendment or
supplement thereto or in any Offering Materials or (ii) the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made,
not misleading, and shall reimburse the Initial Purchaser for any
legal or other expenses reasonably incurred by the
<PAGE>
Initial Purchaser in connection with investigating or preparing
to defend or defending against or appearing as a third party
witness in connection with any such loss, claim, damage or
liability (or any action in respect thereof) as such expenses are
incurred; provided, however, that neither NFC nor the Seller
shall be liable in any such case to the extent that any such
loss, claim, damage or liability (or any action in respect
thereof) arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from
any such documents made in reliance upon and in conformity with
written information furnished to the Seller by the Initial
Purchaser expressly for use therein.
(b) The Initial Purchaser shall indemnify and hold
harmless the Seller and each person, if any, who controls the
Seller within the meaning of Section 15 of the Securities Act
(collectively referred to for the purposes of this Section 8 and
Section 9 as the Seller), against any loss, claim, damage or
liability, joint or several, to which the Seller may become
subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage or liability (or any action in respect
thereof) arises out of or is based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in the
Memorandum or in any amendment or supplement thereto or any
Offering Materials or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, but in
each case only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission was made in
reliance upon and in conformity with the written information
furnished to the Seller by or on behalf of the Initial Purchaser
expressly for use therein, and shall reimburse the Seller for any
legal or other expenses reasonably incurred by the Seller in
connection with investigating or preparing to defend or defending
against or appearing as third party witness in connection with
any such loss, claim, damage or liability (or any action in
respect thereof) as such expenses are incurred.
(c) Promptly after receipt by an indemnified party
under this Section 8 of notice of any claim or the commencement
of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the claim
or the commencement of that action; provided, however, that the
failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 8 except
to the extent it has been materially prejudiced by such failure;
and, provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability which
it may have to an indemnified party otherwise than under this
Section 8. If any such claim or action shall be brought against
an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such
claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by the indemnified party in
connection with the
<PAGE>
defense thereof other than reasonable costs of investigation;
provided, however, that the Initial Purchaser shall have the
right to employ one counsel to represent jointly the Initial
Purchaser and its respective controlling persons who may be
subject to liability arising out of any claim in respect of which
indemnity may be sought by the Initial Purchaser against NFC or
the Seller under this Section 8 if, in the reasonable judgment of
the Initial Purchaser, it is advisable for the Initial Purchaser
and its controlling persons to be jointly represented by separate
counsel because there may be one or more legal defenses available
to such parties which are different from or additional to those
available to the indemnifying party, and in that event the fees
and expenses of such separate counsel shall be paid by NFC or the
Seller. Each indemnified party, as a condition of the indemnity
agreements contained in Sections 8(a) and 8(b), shall use all
reasonable efforts to cooperate with the indemnifying party in
the defense of any such action or claim. No indemnifying party
shall be liable for any settlement of any such action effected
without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent
or if there be a final judgment of the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold
harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
The obligations of NFC, the Seller and the Initial
Purchaser in this Section 8 and in Section 9 are in addition to
any other liability which NFC, the Seller or the Initial
Purchaser, as the case may be, may otherwise have.
9. Contribution. If the indemnification provided for
in Section 8 is unavailable or insufficient to hold harmless an
indemnified party under Section 8(a) or (b), then each
indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or
liability (i) in such proportion as shall be appropriate to
reflect the relative benefits received by NFC and the Seller on
the one hand and the Initial Purchaser on the other from the
offering of the Class C Certificates or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the
relative fault of NFC and the Seller on the one hand and the
Initial Purchaser on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or
liability, as well as any other relevant equitable
considerations. The relative benefits received by NFC and the
Seller on the one hand and the Initial Purchaser on the other
with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the
Class C Certificates purchased under this Agreement (before
deducting expenses) received by the Seller bear to the total
discounts and commissions received by the Initial Purchaser with
respect to the Class C Certificates purchased under this
Agreement and resold to subsequent purchasers. 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 NFC or the Seller on the one
hand or the Initial Purchaser on the other, the intent of the
parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or
omission.
<PAGE>
NFC, the Seller and the Initial Purchaser agree that it
would not be just and equitable if contributions pursuant to this
Section 9 were to be determined by pro rata allocation or by any
other method of allocation which does not take into account the
equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim,
damage or liability referred to above in this Section 9 shall be
deemed to include, subject to the limitations on the fees and
expenses of separate counsel set forth in Section 8, for purposes
of this Section 9, any legal or other expenses reasonably
incurred by such indemnified party in connection with
investigating or defending any such claim or any action in
respect thereof. Notwithstanding the provisions of this Section
9, the Initial Purchaser shall not be required to contribute any
amount in excess of the amount by which the total price at which
the Class C Certificates purchased by it and distributed were
offered less the amount of any damages which the Initial
Purchaser has otherwise paid or become liable to pay by reason of
any 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 Securities Act) shall
be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
10. Persons Entitled to Benefit of Agreement. This
Agreement shall inure to the benefit of and be binding upon the
Initial Purchaser, NFC, the Seller, and their respective
successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or
corporation, other than the Initial Purchaser, NFC and the Seller
and their respective successors, and the controlling persons and
officers and directors referred to in Sections 8 and 9 and their
heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any
provision contained herein.
11. Expenses. The Seller agrees with the Initial
Purchaser to pay (a) the costs incident to the authorization,
issuance, sale, preparation and delivery of the Class C
Certificates and any taxes payable in that connection; (b) the
costs incident to the preparation and printing of Memorandum and
any amendments and exhibits thereto; (c) the costs of
distributing the Memorandum and each amendment thereto, all as
provided in this Agreement; (d) any fees charged by S&P and/or
Moody's for rating the Class C Certificates; (e) all fees and
expenses of the Owner Trustee and the Indenture Trustee and their
respective counsel; and (f) all other costs and expenses incident
to the performance of the obligations of the Seller under this
Agreement; provided that, except as otherwise provided in this
Section 11, the Initial Purchaser shall pay its own costs and
expenses, including the costs and expenses of their counsel and
any transfer taxes on the Class C Certificates which they may
sell.
12. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of NFC,
the Seller and the Initial Purchaser contained in this Agreement
or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the
Class C Certificates and shall remain in full force and effect,
regardless of any (i) termination or cancellation of this
<PAGE>
Agreement, (ii) any investigation made by or on behalf of any of
them or any person controlling any of them or (iii) acceptance of
and payment for the Class C Certificates.
13. Notices, etc. All statements, requests, notices
and agreements hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered or
sent by mail or facsimile transmission and confirmed to
Chase Securities Inc., 270 Park Avenue, New York, New York
10017, Attention: Mr. William Magid, with a copy to the
Legal Department;
(b) if to the Seller, shall be delivered or sent by
mail or facsimile transmission and confirmed to Navistar
Financial Retail Receivables Corporation, 2850 West Golf
Road, Rolling Meadows, IL 60008, Attention: General
Counsel, with a copy to NFC at Navistar Financial
Corporation, 2850 West Golf Road, Rolling Meadows, IL
60008, Attention: General Counsel;
provided, however, that any notice to the Initial Purchaser
pursuant to Section 8(c) shall be delivered or sent by mail,
telex or facsimile transmission to the Initial Purchaser at its
address set forth in its acceptance telex to the Initial
Purchaser, which address will be supplied to any other party
hereto by the Initial Purchaser upon request. Any such
statements, requests, notices or agreements shall take effect at
the time of receipt thereof.
14. Definitions of Certain Terms. For purposes of
this Agreement, "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading.
15. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New
York.
16. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be
an original, but all such counterparts shall together constitute
one and the same instrument.
17. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of,
or to affect the meaning or interpretation of, this Agreement.
<PAGE>
If the foregoing is in accordance with your
understanding of the agreement between the Seller and NFC and the
Initial Purchaser, kindly indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
NAVISTAR FINANCIAL RETAIL
RECEIVABLES CORPORATION
By
Name: R.W. Cain
Title: Vice President and
Treasurer
NAVISTAR FINANCIAL CORPORATION
By
Name: R.W. Cain
Title: Vice President and
Treasurer
Accepted:
CHASE SECURITIES INC.
By
Authorized Signatory
<EX-4.4.1 Indenture>
EXHIBIT 4.1
NAVISTAR FINANCIAL 1996-B OWNER TRUST
Class A-1 5.49% Asset Backed Notes
Class A-2 5.93% Asset Backed Notes
Class A-3 6.33% Asset Backed Notes
INDENTURE
Dated as of November 6, 1996
The Bank of New York,
a New York banking corporation,
Indenture Trustee
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1) 6.11
(a)(2) 6.11
(a)(3) 6.10
(a)(4) 6.14
(b) 6.11
(c) N.A.
311(a) 6.12
(b) 6.12
(c) N.A.
312(a) 7.1, 7.2
(b) 7.2
(c) 7.2
313(a) 7.4(a), 7.4(b)
(b)(1) 7.4(a)
(b)(2) 7.4(a)
(c) 7.4(a)
(d) 7.4(a)
314(a) 7.3(a), 3.9
(b) 3.6
(c)(1) 2.2, 2.9, 4.1, 11.1(a)
(c)(2) 11.1(a)
(c)(3) 11.1(a)
(d) 2.9, 11.1(b)
(e) 11.1(a)
(f) 11.1(a)
315(a) 6.1(b)
(b) 6.5
(c) 6.1(a)
(d) 6.2, 6.1(c)
(e) 5.13
316(a)
last sentence 1.1
(a)(1)(A) 5.11
(a)(1)(B) 5.12
(a)(2) Omitted
316(b),(c) 5.7
317(a)(1) 5.3(b)
(a)(2) 5.3(d)
(b) 3.3
318(a) 11.7
N.A. means Not Applicable.
Note: This cross reference table shall not, for any purpose,
be deemed to be part of this Indenture.
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE 2
SECTION 1.1 Definitions. 2
SECTION 1.2 Incorporation by Reference of Trust Indenture
Act. 2
ARTICLE II THE NOTES 3
SECTION 2.1 Form. 3
SECTION 2.2 Execution, Authentication and Delivery. 3
SECTION 2.3 Temporary Notes. 4
SECTION 2.4 Registration; Registration of Transfer and
Exchange of Notes. 4
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. 6
SECTION 2.6 Persons Deemed Noteholders. 7
SECTION 2.7 Payment of Principal and Interest. 7
SECTION 2.8 Cancellation of Notes. 8
SECTION 2.9 Release of Collateral. 8
SECTION 2.10 Book-Entry Notes. 9
SECTION 2.11 Notices to Clearing Agency. 9
SECTION 2.12 Definitive Notes. 10
SECTION 2.13 Seller as Noteholder. 10
SECTION 2.14 Tax Treatment. 10
ARTICLE III COVENANTS 10
SECTION 3.1 Payment of Principal and Interest. 10
SECTION 3.2 Maintenance of Agency Office. 11
SECTION 3.3 Money for Payments To Be Held in Trust. 11
SECTION 3.4 Existence. 12
SECTION 3.5 Protection of Trust Estate; Acknowledgment
of Pledge. 13
SECTION 3.6 Opinions as to Trust Estate. 13
SECTION 3.7 Performance of Obligations; Servicing of
Receivables. 14
SECTION 3.8 Negative Covenants. 15
SECTION 3.9 Annual Statement as to Compliance. 16
SECTION 3.10 Consolidation, Merger, etc., of Issuer;
Disposition of Trust Assets. 16
SECTION 3.11 Successor or Transferee. 18
SECTION 3.12 No Other Business. 18
SECTION 3.13 No Borrowing. 19
SECTION 3.14 Guarantees, Loans, Advances and Other
Liabilities. 19
SECTION 3.15 Servicer's Obligations. 19
SECTION 3.16 Capital Expenditures. 19
SECTION 3.17 Removal of Administrator. 19
<PAGE>
SECTION 3.18 Restricted Payments. 19
SECTION 3.19 Notice of Events of Default. 20
SECTION 3.20 Further Instruments and Acts. 20
SECTION 3.21 Indenture Trustee's Assignment of
Administrative Receivables and Warranty
Receivables. 20
SECTION 3.22 Representations and Warranties by the
Issuer to the Indenture Trustee. 21
SECTION 3.23 Dissolution upon Bankruptcy of the
Seller. 21
ARTICLE IV SATISFACTION AND DISCHARGE 21
SECTION 4.1 Satisfaction and Discharge of Indenture. 21
SECTION 4.2 Application of Trust Money. 23
SECTION 4.3 Repayment of Monies Held by Paying Agent. 23
SECTION 4.4 Duration of Position of Indenture Trustee
for Benefit of Certificateholders. 23
ARTICLE V DEFAULT AND REMEDIES 23
SECTION 5.1 Events of Default. 23
SECTION 5.2 Acceleration of Maturity; Rescission and
Annulment. 24
SECTION 5.3 Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee. 25
SECTION 5.4 Remedies; Priorities. 27
SECTION 5.5 Optional Preservation of the Trust Estate. 28
SECTION 5.6 Limitation of Suits. 29
SECTION 5.7 Unconditional Rights of Noteholders To Receive
Principal and Interest. 29
SECTION 5.8 Restoration of Rights and Remedies. 30
SECTION 5.9 Rights and Remedies Cumulative. 30
SECTION 5.10 Delay or Omission Not a Waiver. 30
SECTION 5.11 Control by Noteholders. 30
SECTION 5.12 Waiver of Past Defaults. 31
SECTION 5.13 Undertaking for Costs. 31
SECTION 5.14 Waiver of Stay or Extension Laws. 32
SECTION 5.15 Action on Notes. 32
SECTION 5.16 Performance and Enforcement of Certain
Obligations. 32
ARTICLE VI THE INDENTURE TRUSTEE 33
SECTION 6.1 Duties of Indenture Trustee. 33
SECTION 6.2 Rights of Indenture Trustee. 34
SECTION 6.3 Indenture Trustee May Own Notes. 35
<PAGE>
SECTION 6.4 Indenture Trustee's Disclaimer. 35
SECTION 6.5 Notice of Defaults. 35
SECTION 6.6 Reports by Indenture Trustee to Holders. 35
SECTION 6.7 Compensation; Indemnity. 36
SECTION 6.8 Replacement of Indenture Trustee. 36
SECTION 6.9 Merger or Consolidation of Indenture
Trustee. 37
SECTION 6.10 Appointment of Co-Indenture Trustee
or Separate Indenture Trustee. 38
SECTION 6.11 Eligibility; Disqualification. 39
SECTION 6.12 Preferential Collection of Claims Against
Issuer. 39
SECTION 6.13 Representations and Warranties of
Indenture Trustee. 39
SECTION 6.14 Indenture Trustee May Enforce Claims
Without Possession of Notes. 40
SECTION 6.15 Suit for Enforcement. 40
SECTION 6.16 Rights of Noteholders to Direct
Indenture Trustee. 40
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS 41
SECTION 7.1 Issuer To Furnish Indenture Trustee Names
and Addresses of Noteholders. 41
SECTION 7.2 Preservation of Information, Communications
to Noteholders. 41
SECTION 7.3 Reports by Issuer. 41
SECTION 7.4 Reports by Indenture Trustee. 42
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES 42
SECTION 8.1 Collection of Money. 42
SECTION 8.2 Designated Accounts; Payments. 43
SECTION 8.3 General Provisions Regarding Accounts. 44
SECTION 8.4 Release of Trust Estate. 44
SECTION 8.5 Opinion of Counsel. 44
ARTICLE IX SUPPLEMENTAL INDENTURES 45
SECTION 9.1 Supplemental Indentures Without Consent
of Noteholders. 45
SECTION 9.2 Supplemental Indentures With Consent of
Noteholders. 46
SECTION 9.3 Execution of Supplemental Indentures. 48
SECTION 9.4 Effect of Supplemental Indenture. 48
SECTION 9.5 Conformity with Trust Indenture Act. 48
SECTION 9.6 Reference in Notes to Supplemental
Indentures. 48
ARTICLE X REDEMPTION OF NOTES 48
SECTION 10.1 Redemption. 48
SECTION 10.2 Form of Redemption Notice. 49
SECTION 10.3 Notes Payable on Redemption Date. 50
ARTICLE XI MISCELLANEOUS 50
SECTION 11.1 Compliance Certificates and Opinions,
etc. 50
SECTION 11.2 Form of Documents Delivered to
Indenture Trustee. 52
SECTION 11.3 Acts of Noteholders. 53
SECTION 11.4 Notices, etc., to Indenture Trustee,
Issuer and Rating Agencies. 53
SECTION 11.5 Notices to Noteholders; Waiver. 53
SECTION 11.6 Alternate Payment and Notice Provisions. 54
SECTION 11.7 Conflict with Trust Indenture Act. 54
SECTION 11.8 Effect of Headings and Table of Contents. 54
SECTION 11.9 Successors and Assigns. 54
SECTION 11.10 Separability. 55
SECTION 11.11 Benefits of Indenture. 55
SECTION 11.12 Legal Holidays. 55
SECTION 11.13 Governing Law. 55
SECTION 11.14 Counterparts. 55
SECTION 11.15 Recording of Indenture. 55
SECTION 11.16 No Recourse. 55
SECTION 11.17 No Petition. 56
SECTION 11.18 Inspection. 56
Exhibit A - Locations of Schedule of Receivables
Exhibit B - Form of Asset Backed Note
Exhibit C - Form of Note Depository Agreement
<PAGE>
INDENTURE, dated as of November 6, 1996 between NAVISTAR
FINANCIAL 1996-B OWNER TRUST, a Delaware business trust (the
"Issuer"), and THE BANK OF NEW YORK, a New York banking
corporation, 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 the Holders of the
Notes and (only to the extent expressly provided herein) the
Certificateholders:
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the
Closing Date, as trustee for the benefit of the Noteholders and
(only to the extent expressly provided herein) the
Certificateholders, all of the Issuer's right, title and interest
in, to and under (a) the Receivables listed on the Schedule of
Receivables which is on file at the locations listed on Exhibit A
hereto and all monies paid thereon (including Liquidation
Proceeds) and due thereunder on and after the Cutoff Date; (b)
the security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables and, where permitted by law,
any accessions thereto which are financed by NFC; (c) the
benefits of any lease assignments with respect to the Financed
Vehicles; (d) any proceeds from any Insurance Policies with
respect to the Receivables; (e) any proceeds from Dealer
Liability with respect to the Receivables, proceeds from any NITC
Purchase Obligations with respect to the Receivables (subject to
the limitations set forth in Section 2.03 of the Pooling and
Servicing Agreement) and proceeds of any Guaranties with respect
to the Receivables; (f) all funds on deposit from time to time in
the Collection Account and the Note Distribution Account; (g) the
Pooling and Servicing Agreement (including all rights of NFRRC
under the Purchase Agreement assigned to the Issuer pursuant to
the Pooling and Servicing Agreement); (h) the Reserve Account and
all proceeds thereof (other than the Investment Earnings
thereon), including all other amounts and investments held from
time to time in the Reserve Account (whether in the form of
deposit accounts, Physical Property, book-entry securities,
uncertificated securities or otherwise); (i) the Reserve Account
Initial Deposit and all proceeds thereof (other than the
Investment Earnings thereon) ((h) and (i), collectively, the
"Reserve Account Property"); and (j) all present and future
claims, demands, causes and choses in action in respect of any or
all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or
all of the foregoing, including all proceeds of the conversion,
voluntary or involuntary, into cash or other liquid property, all
cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every
kind and other forms of obligations and receivables, instruments
and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing
(collectively, the "Collateral").
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,
<PAGE>
priority or distinction, and to secure compliance with the
provisions of this Indenture, all as provided in this Indenture.
This Indenture constitutes a security agreement under the UCC.
The foregoing Grant includes all rights, powers and
options (but none of the Obligations, if any) of the Issuer under
any agreement or instrument included in the Collateral, including
the immediate and continuing right to claim for, collect, receive
and give receipt for principal and interest payments in respect
of the Receivables included in the Collateral and all other
monies payable under the Collateral, 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 Issuer or otherwise and generally to do and receive
anything that the Issuer is or may be entitled to do or receive
under or with respect to the Collateral.
The Indenture Trustee, as trustee on behalf of the
Noteholders and (only to the extent expressly provided herein)
the Certificateholders, acknowledges such Grant, accepts the
trusts under this Indenture in accordance with the provisions of
this Indenture.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. Certain capitalized terms
used in this Indenture shall have the respective meanings
assigned them in Part I of Appendix A to the Pooling and
Servicing Agreement of even date herewith among the Issuer, NFRRC
and NFC, as it may be amended, supplemented or modified from time
to time, the "Pooling and Servicing Agreement"). All references
herein to "the Indenture" or "this Indenture" are to this
Indenture as it may be amended, supplemented or modified from
time to time, the exhibits hereto and the capitalized terms used
herein which are defined in such Appendix A. All references
herein to Articles, Sections, subsections and exhibits are to
Articles, Sections, subsections and exhibits contained in or
attached to this Indenture unless otherwise specified. All terms
defined in this Indenture shall have the defined meanings when
used in any certificate, notice, Note or other document made or
delivered pursuant hereto unless otherwise defined therein. The
rules of construction set forth in Part II of such Appendix A
shall be applicable to this Indenture.
SECTION 1.2 Incorporation by Reference of Trust
Indenture Act. Whenever this Indenture refers to a provision of
the TIA, such 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 trustee" means the Indenture Trustee.
<PAGE>
"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 by the TIA, defined by TIA reference to another statute
or defined by a Commission rule have the respective meanings
assigned to them by such definitions.
ARTICLE II
THE NOTES
SECTION 2.1 Form.
(a) Each of the Class A-1 Notes, Class A-2 Notes and
Class A-3 Notes, with the indenture Trustee's certificate of
authentication, shall be substantially in the form set forth in
Exhibit B, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this Indenture, and each such class 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 of the Notes. 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.
(b) 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.
(c) Each Note shall be dated the date of its
authentication. The terms of each class of Notes as provided for
in Exhibit B hereto are part of the terms of this Indenture.
SECTION 2.2 Execution, Authentication and Delivery.
(a) Each Note shall be dated the date of its
authentication, and shall be issuable as a registered Note in the
minimum denomination of $1,000 and in integral multiples thereof.
(b) 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.
(c) 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 office prior
to the authentication and delivery of such Notes or did not hold
such office at the date of such Notes.
(d) The Indenture Trustee shall upon Issuer Order
authenticate and deliver to or upon the order of the Issuer, the
Notes for original issue in aggregate principal amount of
<PAGE>
$454,900,000.00, comprised of (i) Class A-1 Notes in the
aggregate principal amount of $106,500,000.00, (ii) Class A-2
Notes in the aggregate principal amount of $111,900,000.00
and(iii) Class A-3 Notes in the aggregate principal amount of
$236,500,000.00. The aggregate principal amount of all Notes
outstanding at any time may not exceed $454,900,000.00 except as
provided in Section 2.5.
(e) No Notes 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 set forth in Exhibit B, executed by the
Indenture Trustee by the manual 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 2.3 Temporary Notes.
(a) Pending the preparation of Definitive Notes, if any,
the Issuer may execute, and upon receipt of an Issuer Order the
Indenture Trustee shall authenticate and deliver, such Temporary
Notes which 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 as are
consistent with the terms of this Indenture as the officers
executing such Notes may determine, as evidenced by their
execution of such Notes.
(b) If Temporary Notes are issued, the Issuer shall 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 Agency Office of the Issuer to be
maintained as provided in Section 3.2, without charge to the
Noteholder. Upon surrender for cancellation of any one or more
Temporary Notes, the Issuer shall execute and the Indenture
Trustee shall authenticate and deliver in exchange therefor a
like principal amount of Definitive Notes of authorized
denominations. Until so delivered in exchange, the Temporary
Notes shall in all respects be entitled to the same benefits
under this Indenture as Definitive Notes.
SECTION 2.4 Registration; Registration of Transfer and
Exchange of Notes.
(a) The Issuer shall cause to be kept the Note Register,
comprising separate registers for each class of Notes, in which,
subject to such reasonable regulations as the Issuer may
prescribe, the Issuer shall provide for the registration of the
Notes and the registration of transfers and exchanges of the
Notes. The Indenture Trustee shall initially be the Note
Registrar for the purpose of registering the Notes and transfers
of the Notes as herein provided. Upon any resignation of any
Note Registrar, the Issuer shall promptly appoint a successor
Note Registrar or, if it elects not to make such an appointment,
assume the duties of the Note Registrar.
(b) 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
<PAGE>
such Note Registrar and of the location, and any change in the
location, of the Note Register. The indenture Trustee shall have
the right to inspect the Note Register at all reasonable times
and to obtain copies thereof. 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 Noteholders and the principal amounts and
number of such Notes.
(c) Upon surrender for registration of transfer of any
Note at the Corporate Trust Office of the Indenture Trustee or
the Agency Office of the Issuer (and following the delivery, in
the former case, of such Notes to the Issuer by the Indenture
Trustee), the Issuer shall execute, the Indenture Trustee shall
authenticate and the Noteholder shall obtain from the Indenture
Trustee, in the name of the designated transferee or transferees,
one or more new Notes in any authorized denominations, of a like
aggregate principal amount.
(d) At the option of the Noteholder, 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 the Corporate Trust
Office of the Indenture Trustee or the Agency Office of the
Issuer (and following the delivery, in the former case, of such
Notes to the Issuer by the Indenture Trustee), 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.
(e) All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Notes surrendered upon such registration
of transfer or exchange.
(f) Every Note presented or surrendered for registration
of transfer or exchange shall be duly endorsed by, or 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 such Holder's attorney
duly authorized in writing, with such signature guaranteed by a
commercial bank or trust company located, or having a
correspondent located, in The City of New York or the city in
which the Corporate Trust Office of the Indenture Trustee is
located, or by a member firm of a national securities exchange,
and such other documents as the Indenture Trustee may require.
(g) No service charge shall be made to a Holder for any
registration of transfer or exchange of Notes, but the Issuer or
Indenture Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Sections 2.3 or 9.6 not
involving any transfer.
(h) The preceding provisions of this Section 2.4
notwithstanding, the Issuer shall not be required to transfer or
make exchanges, and the Note Registrar need not register
transfers or exchanges, of Notes that: (i) have been selected
for redemption pursuant to Article X, if applicable; or (ii) are
due for repayment in full within 15 days of submission to the
Corporate Trust Office or the Agency Office.
<PAGE>
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes.
(a) 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 bona fide purchaser, the
Issuer shall execute and upon the Issuer's 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 a like class and aggregate principal amount;
provided, however, that if any such destroyed, lost or stolen
Note, but not a mutilated Note, shall have become or within seven
days shall be due and payable in full, or shall have been called
for redemption, instead of issuing a replacement Note, the Issuer
may make payment to the Holder of such destroyed, lost or stolen
Note when so due or payable or upon the Redemption Date, if
applicable, without surrender thereof.
(b) If, after the delivery of a replacement Note or
payment in respect of a destroyed, lost or stolen Note pursuant
to subsection (a), any bona fide 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 (i) any Person to whom it was delivered, (ii) the
Person taking such replacement Note from the Person to whom such
replacement Note was delivered or (iii) any assignee of such
Person, except any bona fide purchaser, and the Issuer and the
Indenture Trustee 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.
(c) In connection with the issuance of any replacement
Note under this Section 2.5, the Issuer may require the 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 and any other reasonable expenses (including all fees and
expenses of the Indenture Trustee) connected therewith.
(d) Any duplicate Note issued pursuant to this Section
2.5 in replacement for 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 found at any time or be
enforced by any Person, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
(e) The provisions of this Section 2.5 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 2.6 Persons Deemed Noteholders. 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
<PAGE>
determination) as the Noteholder for the purpose of receiving
payments of principal of and interest on such Note and for all
other purposes whatsoever, whether or not such Note be overdue,
and neither the Issuer, the Indenture Trustee nor any agent of
the Issuer or the Indenture Trustee shall be affected by notice
to the contrary.
SECTION 2.7 Payment of Principal and Interest.
(a) Interest on each class of Notes shall accrue in the
manner set forth in Exhibit B at the applicable Interest Rate for
such class, and such interest shall be payable on each
Distribution Date as specified in the form of Note set forth in
Exhibit B. Any instalment of interest payable on any Note shall
be punctually paid or duly provided for by a deposit by or at the
direction of the Issuer or the Servicer into the Note
Distribution Account before each Distribution Date for payment to
Noteholders on the related Distribution Date and shall be paid to
the Person in whose name such Note (or one or more Predecessor
Notes) is registered on the applicable Record Date, by check
mailed first-class, postage prepaid to such Person's address as
it appears on the Note Register on such Record Date; provided,
however, that, unless and until Definitive Notes have been issued
pursuant to Section 2.12, with respect to Notes registered on the
applicable Record Date in the name of the Note Depository
(initially, Cede & Co.), payment shall be made by wire transfer
in immediately available funds to the account designated by the
Note Depository.
(b) Prior to the occurrence of an Event of Default and a
declaration in accordance with Section 5.2(a) that the Notes have
become immediately due and payable, the principal of each class
of Notes shall be payable in full on the Final Scheduled
Distribution Date for such class and, to the extent of funds
available therefor, in instalments on the Distribution Dates (if
any) preceding the Final Scheduled Distribution Date for such
class, in the amounts and in accordance with the priorities set
forth in Section 8.2(c)(ii). All principal payments on each
class of Notes shall be made pro rata to the Noteholders of such
class entitled thereto. Any instalment of principal payable on
any Note shall be punctually paid or duly provided for by a
deposit by or at the direction of the Issuer into the Note
Distribution Account prior to the applicable Distribution Date
and shall be paid to the Person in whose name such Note (or one
or more Predecessor Notes) is registered on the applicable Record
Date, by check mailed first-class, postage prepaid to such
Person's address as it appears on the Note Register on such
Record Date; provided, however, that, unless and until Definitive
Notes have been issued pursuant to Section 2.12, with respect to
Notes registered on the Record Date in the name of the Note
Depository, payment shall be made by wire transfer in immediately
available funds to the account designated by the Note Depository,
except for: (i) the final instalment of principal on any Note;
and (ii) the Redemption Price for the Notes redeemed pursuant to
Section 10.1, which, in each case, shall be payable as provided
herein. The funds represented by any such checks in respect of
interest or principal returned undelivered shall be held in
accordance with Section 3.3.
(c) [Reserved]
(d) From and after the occurrence of an Event of Default
and a declaration in accordance with Section 5.2(a) that the
Notes have become immediately due and payable, until such
<PAGE>
time as all Events of Default have been cured or waived as
provided in Section 5.2(b), principal on the Notes shall be
payable as provided in Section 8.2(c)(iii).
(e) With respect to any Distribution Date on which the
final instalment of principal and interest on a class of Notes is
to be paid, the Indenture Trustee shall notify each Noteholder of
such class of record as of the Record Date for such Distribution
Date of the fact that the final instalment of principal of and
interest on such Note is to be paid on such Distribution Date.
Such notice shall be sent (i) on such Record Date by facsimile,
if Book-Entry Notes are outstanding; or (ii) not later than three
Business Days after such Record Date in accordance with Section
11.5(a) if Definitive Notes are outstanding, and shall specify
that such final instalment shall 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 instalment and the manner in which such payment
shall be made. Notices in connection with redemptions of Notes
shall be mailed to Noteholders as provided in Section 10.2.
Within sixty days of the surrender pursuant to this Section
2.7(e) or cancellation pursuant to Section 2.8 of all of the
Notes of a particular class, the Indenture Trustee shall provide
each of the Rating Agencies with written notice stating that all
Notes of such class have been surrendered or cancelled.
SECTION 2.8 Cancellation of Notes. All Notes
surrendered for payment, redemption, exchange or registration of
transfer shall, if surrendered to any Person other than the
Indenture Trustee, be 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 2.8,
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 returned to it; provided, however, that such
Issuer Order is timely and the Notes have not been previously
disposed of by the Indenture Trustee. The Indenture Trustee
shall certify to the Issuer that surrendered Notes have been duly
cancelled and retained or destroyed, as the case may be.
SECTION 2.9 Release of Collateral. The Indenture
Trustee shall release property from the lien of this Indenture,
other than as permitted by Sections 3.21, 8.2, 8.4 and 11.1, only
upon receipt of an Issuer Request accompanied by an Officers'
Certificate, an Opinion of Counsel (to the extent required by the
TIA) and Independent Certificates in accordance with TIA Sections
314(c) and 314(d)(1).
SECTION 2.10 Book-Entry Notes. The Notes, upon original
issuance, shall be issued in the form of a typewritten Note or
Notes representing the Book-Entry Notes, to be delivered to The
Depository Trust Company, the initial Clearing Agency by or on
behalf of the Issuer. Such Note or Notes shall be registered on
the Note Register in the name of the Note Depository (initially,
Cede & Co.), and no Note Owner shall receive a Definitive Note
representing
<PAGE>
such Note Owner's interest in such Note, except as provided in
Section 2.12. Unless and until Definitive Notes have been issued
to the Note Owners pursuant to Section 2.12:
(a) the provisions of this Section 2.10 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 sole holder of
the Notes and shall have no obligation to the Note Owners;
(c) to the extent that the provisions of this Section
2.10 conflict with any other provisions of this Indenture,
the provisions of this Section 2.10 shall control;
(d) the rights of the 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 and unless and until Definitive Notes are
issued pursuant to Section 2.12, the initial Clearing Agency
shall make book-entry transfers between the Clearing Agency
Participants and receive and transmit payments of principal
of and interest on the Notes to such Clearing Agency
Participants, pursuant to the Note Depository Agreement; 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
Outstanding Amount of the Notes, the Clearing Agency shall
be deemed to represent such percentage only to the extent
that it has (i) received written 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 (ii) 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 Note Owners pursuant to Section 2.12, the
Indenture Trustee shall give all such notices and communications
specified herein to be given to Noteholders to the Clearing
Agency and shall have no other obligation to the Note Owners.
SECTION 2.12 Definitive Notes.
If (i) 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 Notes
and the Issuer is unable to locate a qualified successor; (ii)
the Administrator, at its option, advises the Indenture Trustee
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 at least a majority of the
Outstanding Amount of the Notes advise the Clearing Agency in
writing that the continuation of a book-entry system
<PAGE>
through the Clearing Agency is no longer in the best interests of
the Note Owners, then the Clearing Agency shall notify all Note
Owners and the Indenture Trustee of the occurrence of any such
event and of the availability of Definitive Notes to Note Owners
requesting the same. Upon surrender to the Indenture Trustee of
the typewritten Note or 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.
SECTION 2.13 Seller as Noteholder. The Seller in its
individual or any other capacity may become the 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 the Seller.
SECTION 2.14 Tax Treatment. The Issuer in entering into
this Indenture, and the Noteholders and the Note Owners, by
acquiring any Note or interest therein, (i) express their
intention that the Notes qualify under applicable tax law as
indebtedness secured by the Collateral, and (ii) unless otherwise
required by appropriate taxing authorities, agree to treat the
Notes as indebtedness secured by the Collateral for the purpose
of federal income taxes, state and local income and franchise
taxes, and any other taxes imposed upon, measured by or based
upon gross or net income.
ARTICLE III
COVENANTS
SECTION 3.1 Payment of Principal and Interest. The
Issuer shall duly and punctually pay the principal of and
interest on the Notes in accordance with the terms of the Notes
and this Indenture. On each Distribution Date and on the
Redemption Date (if applicable), the Indenture Trustee shall
distribute amounts on deposit in the Note Distribution Account to
the Noteholders in accordance with Sections 2.7 and 8.2, less
amounts properly withheld under the Code by any Person from a
payment to any Noteholder of interest and/or principal. Any
amounts so withheld shall be considered as having been paid by
the Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.2 Maintenance of Agency Office. As long as
any of the Notes remains outstanding, the Issuer shall maintain
in the Borough of Manhattan, The City of New York, an office (the
"Agency Office"), being an office or agency where Notes may be
surrendered to the Issuer 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 the Indenture Trustee to serve
as its agent for the foregoing purposes. The Issuer shall give
prompt written notice to the Indenture Trustee of the location,
and of any change in the location, of the Agency Office. If at
any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the
<PAGE>
Indenture Trustee with the address thereof, such surrenders,
notices and demands may be made or served at the Corporate Trust
Office of the Indenture Trustee, and the Issuer hereby appoints
the indenture Trustee as its agent to receive all such
surrenders, notices and demands.
SECTION 3.3 Money for Payments To Be Held in Trust.
(a) As provided in Section 8.2, all payments of amounts
due and payable with respect to any Notes that are to be made
from amounts withdrawn from the Note Distribution Account
pursuant to Section 8.2(c) shall be made on behalf of the Issuer
by the Indenture Trustee or by another Paying Agent, and no
amounts so withdrawn from the Note Distribution Account for
payments of Notes shall be paid over to the Issuer except as
provided in this Section 3.3.
(b) Before each Distribution Date or the Redemption Date
(if applicable), the Indenture Trustee shall deposit in the Note
Distribution Account an aggregate sum sufficient to pay the
amounts then becoming due with respect to the Notes, such sum to
be held in trust for the benefit of the Persons entitled thereto.
(c) The Issuer shall cause each Paying Agent other than
the Indenture Trustee to execute and deliver to the Indenture
Trustee an instrument in which such Paying Agent shall agree with
the Indenture Trustee (and if the Indenture Trustee acts as
Paying Agent, it hereby so agrees), subject to the provisions of
this Section 3.3, that such Paying Agent shall:
(i) hold all sums held by it for the payment of
amounts due with respect to the Notes 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 such sums to such Persons as herein
provided;
(ii) 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;
(iii) 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;
(iv) 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 if at any time it ceases to meet
the standards required to be met by a Paying Agent in effect
at the time of determination; and
(v) comply with all requirements of the Code with
respect to the withholding from any payments made by it on
any Notes of any applicable withholding taxes imposed
thereon and with respect to any applicable reporting
requirements in connection therewith.
<PAGE>
(d) 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.
(e) 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 for one year after such amount
has become due and payable shall be discharged from such trust
and be paid by the Indenture Trustee to the Issuer on Issuer
Request; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment
thereof (but only to the extent of the amounts so paid to the
Issuer), and all liability of the Indenture Trustee or such
Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Indenture Trustee or such
Paying Agent, before being required to make any such payment, may
at the expense 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 shall be paid to the Issuer.
The Indenture Trustee may also adopt and employ, at the expense
of the Issuer, any other reasonable means of notification of such
payment (including, but not limited to, mailing notice of such
payment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in
monies due and payable but not claimed is determinable from the
records of the Indenture Trustee or of any Paying Agent, at the
last address of record for each such Holder).
SECTION 3.4 Existence. The Issuer shall 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 shall keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction)
and shall 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.
SECTION 3.5 Protection of Trust Estate; Acknowledgment
of Pledge. The Issuer shall from time to time execute and
deliver all such supplements and amendments hereto and all such
financing statements, amendments thereto, continuation
statements, assignments, certificates, instruments of further
assurance and other instruments, and shall take such other action
as may be determined to be necessary or advisable in an Opinion
of Counsel to the Owner Trustee delivered to the Indenture
Trustee to:
(i) maintain or preserve the lien and security
interest (and the priority thereof) of this Indenture or
carry out more effectively the purposes hereof including by
making the
<PAGE>
necessary filings of financing statements or amendments
thereto within sixty days after the occurrence of any of the
following: (A) any change in the Issuer's name, (B) any
change in the location of the Issuer's principal place of
business and (C) any merger or consolidation or other change
in the Issuer's identity or organizational structure and by
promptly notifying the Indenture Trustee of any such
filings;
(ii) perfect, publish notice of or protect the validity
of any Grant made or to be made by this Indenture;
(iii) enforce the rights of the Indenture Trustee
and the Noteholders in any of the Collateral; or
(iv) preserve and defend title to the Trust Estate and
the rights of the Indenture Trustee and the Noteholders in
such Trust Estate against the claims of all Persons and
parties,
and the Issuer hereby designates the Indenture Trustee its agent
and attorney-in-fact to execute any financing statement,
continuation statement or other instrument required by the
Indenture Trustee pursuant to this Section 3.5.
SECTION 3.6 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 recording and filing of this Indenture, any
indentures supplemental hereto and any other requisite documents,
and with respect to the execution and filing of any financing
statements and continuation statements as are necessary to
perfect and make effective the lien and security interest of this
Indenture and reciting the details of such action, or stating
that, in the opinion of such counsel, no such action is necessary
to make such lien and security interest effective.
(b) On or before April 15 in each calendar year,
beginning April 15, 1997, 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 recording, filing, re-recording and refiling of
this Indenture, any indentures supplemental hereto and any other
requisite documents and with respect to the execution and filing
of any financing statements and continuation statements as is
necessary to maintain the lien and security interest created by
this Indenture and reciting the details of such action or stating
that in the opinion of such counsel no such action is necessary
to maintain the lien and security interest created by this
Indenture. Such Opinion of Counsel shall also describe the
recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite
documents and the execution and filing of any financing
statements and continuation statements that will, in the opinion
of such counsel, be required to maintain the lien and security
interest of this Indenture until April 15 in the following
calendar year.
<PAGE>
SECTION 3.7 Performance of Obligations; Servicing of
Receivables.
(a) The Issuer shall not take any action and shall use
its reasonable 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 otherwise expressly
provided in this Indenture, the Pooling and Servicing Agreement,
the Purchase Agreement, the Administration Agreement or such
other instrument or agreement.
(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 the Basic Documents or an Officers'
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 shall punctually perform and observe all
of its obligations and agreements contained in this Indenture,
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 under the terms of
this Indenture, the Pooling and Servicing Agreement and the
Purchase Agreement in accordance with and within the time periods
provided for herein and therein.
(d) If the Issuer shall have knowledge of the occurrence
of a Servicer Default under the Pooling and Servicing Agreement,
the Issuer shall promptly notify the Indenture Trustee and the
Rating Agencies thereof, and shall specify in such notice the
response or action, if any, the Issuer has taken or 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 Pooling and Servicing Agreement with
respect to the Receivables, the Issuer and the Indenture Trustee
shall take all reasonable steps available to them pursuant to the
Pooling and Servicing Agreement to remedy such failure.
(e) 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 that it shall not, without the prior written consent of
the Indenture Trustee or the Holders of at least a majority in
Outstanding Amount of the Notes, as applicable in accordance with
the terms thereof, amend, modify, waive, supplement, terminate or
surrender, or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the terms of any Collateral
or any of the Basic Documents, or waive timely performance or
observance by the Servicer or the Seller under the Pooling and
Servicing Agreement or the Purchase Agreement, the Administrator
under the Administration Agreement or NFC under the Purchase
Agreement; provided, however, that, notwithstanding the
foregoing, no action specified in the proviso to Section 9.2
shall be taken except in compliance with Section 9.2. If any
such amendment, modification, supplement or waiver shall be so
consented to by the Indenture Trustee or such Holders, as
applicable, the Issuer agrees,
<PAGE>
promptly following a request by the Indenture Trustee to do so,
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.
SECTION 3.8 Negative Covenants. So long as any Notes
are Outstanding, the Issuer shall not:
(a) sell, transfer, exchange or otherwise dispose of
any of the properties or assets of the Issuer, except the
Issuer may (i) collect, liquidate, sell or otherwise dispose
of Receivables (including Warranty Receivables,
Administrative Receivables and Liquidating Receivables),
(ii) make cash payments out of the Designated Accounts and
the Certificate Distribution Account and (iii) take other
actions, in each case as contemplated by the Basic
Documents;
(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 applicable state law) 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) voluntarily commence any insolvency, readjustment
of debt, marshalling of assets and liabilities or other
proceeding, or apply for an order by a court or agency or
supervisory authority for the winding-up or liquidation of
its affairs or any other event specified in Section 5.1(f);
or
(d) either (i) 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 except as may be expressly
permitted hereby, (ii) 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 a
Financed Vehicle and arising solely as a result of an action
or omission of the related Obligor), or (iii) permit the
lien of this Indenture not to constitute a valid first
priority security interest in the Trust Estate (other than
with respect to any such tax, mechanics' or other lien).
SECTION 3.9 Annual Statement as to Compliance. The
Issuer shall deliver to the indenture Trustee, with a copy to
each of the Rating Agencies, on or before February 1 of each
year, beginning February 1, 1998, an Officer's Certificate signed
by an Authorized Officer, dated as of the immediately preceding
October 31, stating that:
<PAGE>
(a) a review of the activities of the Issuer during
such fiscal year and of 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 fulfilled in
all material respects all of its obligations under this
Indenture throughout such year, or, if there has been a
default in the fulfillment of any such obligation,
specifying each such default known to such Authorized
Officer and the nature and status thereof. A copy of such
certificate may be obtained by any Noteholder by a request
in writing to the Issuer addressed to the Corporate Trust
Office of the Indenture Trustee.
SECTION 3.10 Consolidation, Merger, etc., of Issuer;
Disposition of Trust Assets.
(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 and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture
Trustee, the due and timely 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 merger or
consolidation, no Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction and such Person
for each then outstanding class of Notes;
(iv) any action as is necessary to maintain the lien
and security interest created by this Indenture shall have
been completed; and
(v) the Issuer shall have delivered to the Indenture
Trustee an Officers' Certificate and an Opinion of Counsel
addressed to the Issuer, each stating:
(A) that such consolidation or merger and such
supplemental indenture comply with this Section 3.10;
(B) that such consolidation or merger and such
supplemental indenture shall have no material adverse
tax consequence to the Issuer or any Securityholder;
and
<PAGE>
(C) that all conditions precedent herein provided
for in this Section 3.10 have been complied with, which
shall include any filing required by the Exchange Act.
(b) Except as otherwise expressly permitted by this
Indenture or the other Basic Documents, the Issuer shall not
sell, convey, exchange, transfer or otherwise dispose of any of
its properties or assets, including those included in the Trust
Estate, to any Person, unless:
(i) the Person that acquires such properties or assets
of the Issuer (A)shall be a United States citizen or a
Person organized and existing under the laws of the United
States of America or any State and (B) by an indenture
supplemental hereto, executed and delivered to the Indenture
Trustee, in form satisfactory to the Indenture Trustee:
(1) expressly assumes the 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;
(2) expressly agrees that all right, title and
interest so sold, conveyed, exchanged, transferred or
otherwise disposed of shall be subject and subordinate to
the rights of Noteholders;
(3) unless otherwise provided in such
supplemental indenture, expressly agrees to indemnify,
defend and hold harmless the Issuer against and from any
loss, liability or expense arising under or related to this
Indenture and the Notes; and
(4) expressly agrees that such Person (or if a
group of Persons, then one specified Person) shall make all
filings with the Commission (and any other appropriate
Person) required by the Exchange Act in connection with the
Notes;
(ii) immediately after giving effect to such
transaction, no Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction and such Person
for each then outstanding class of Notes;
(iv) any action as is necessary to maintain the lien
and security interest created by this Indenture shall have
been taken; and
(v) the Issuer shall have delivered to the Indenture
Trustee an Officers' Certificate and an Opinion of Counsel
addressed to the Issuer, each stating that:
<PAGE>
(A) such sale, conveyance, exchange, transfer or
disposition and such supplemental indenture comply with this
Section 3.10;
(B) such sale, conveyance, exchange, transfer or
disposition and such supplemental indenture have no material
adverse tax consequence to the Issuer or to any Noteholders
or Certificateholders; and
(C) that all conditions precedent herein provided
for in this Section 3.10 have been complied with, which
shall include 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), the Issuer
shall 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 Securityholders immediately upon the delivery
of written notice to the Indenture Trustee from the Person
acquiring such assets and properties stating that the Issuer is
to be so released.
SECTION 3.12 No Other Business. The Issuer shall not
engage in any business or activity other than acquiring, holding
and managing the Collateral and the proceeds therefrom in the
manner contemplated by the Basic Documents, issuing the
Securities, making payments on the Securities and such other
activities that are necessary, suitable, desirable or convenient
to accomplish the foregoing or are incidental thereto, as set
forth in Section 2.3 of the Trust Agreement.
SECTION 3.13 No Borrowing. The Issuer shall not issue,
incur, assume, guarantee or otherwise become liable, directly or
indirectly, for any indebtedness for money borrowed other than
indebtedness for money borrowed in respect of the Notes or in
accordance with the Basic Documents.
SECTION 3.14 Guarantees, Loans, Advances and Other
Liabilities. Except as contemplated by this Indenture or the
other Basic Documents, 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 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. <PAGE>
SECTION 3.15 Servicer's Obligations. The Issuer shall
use its best efforts to cause the Servicer to comply with its
obligations under Sections 3.10, 4.01 and 4.02 of the Pooling and
Servicing Agreement.
SECTION 3.16 Capital Expenditures. The Issuer shall not
make any expenditure (whether by long-term or operating lease or
otherwise) for capital assets (either real, personal or
intangible property) other than the purchase of the Receivables
and other property and rights from the Seller pursuant to the
Pooling and Servicing Agreement.
SECTION 3.17 Removal of Administrator. So long as any
Notes are Outstanding, the Issuer shall not remove the
Administrator without cause unless the Rating Agency Condition
for each class of Notes then outstanding shall have been
satisfied in connection with such removal.
SECTION 3.18 Restricted Payments. Except for payments
of principal or interest on or redemption of the Notes, so long
as any Notes are Outstanding, the Issuer shall not, directly or
indirectly:
(a) pay any dividend or make any distribution (by
reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer
or otherwise, in each case with respect to any ownership or
equity interest or similar security in or of the Issuer or
to the Servicer;
(b) redeem, purchase, retire or otherwise acquire for
value any such ownership or equity interest or similar
security; or
(c) set aside or otherwise segregate any amounts for
any such purpose;
provided, however, that the Issuer may make, or cause to be made,
distributions to the Servicer, the Seller, the Indenture Trustee,
the Owner Trustee and the Certificateholders as permitted by, and
to the extent funds are available for such purpose under, the
Pooling and Servicing Agreement, the Trust Agreement or the other
Basic Documents. The Issuer shall 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
agrees to give the indenture Trustee and the Rating Agencies
prompt written notice of each Event of Default hereunder, each
Servicer Default, any Insolvency Event with respect to the
Seller, each default on the part of the Seller of its obligations
under the Pooling and Servicing Agreement and each default on the
part of NFC of its obligations under the Purchase Agreement.
<PAGE>
SECTION 3.20 Further Instruments and Acts. Upon request
of the Indenture Trustee, the Issuer shall 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 Indenture Trustee's Assignment of
Administrative Receivables and Warranty Receivables. Upon
receipt of the Administrative Purchase Payment or the Warranty
Payment with respect to an Administrative Receivable or a
Warranty Receivable, as the case may be, the Indenture Trustee
shall assign, without recourse, representation or warranty to the
Servicer or the Warranty Purchaser, as applicable, all of the
Indenture Trustee's right, title and interest in and to such
repurchased Receivable, all monies due thereon, the security
interest in the related Financed Vehicle or Financed Vehicles and
any accessions thereto, the benefit of any lease assignment with
respect to the related Financed Vehicle or Financed Vehicles,
proceeds arising thereafter from any Insurance Policies with
respect to such Receivable, proceeds arising thereafter from any
Dealer Liability on such Receivable, proceeds arising thereafter
of NITC Purchase Obligations with respect to such Receivable,
proceeds arising thereafter of any Guaranties with respect to
such Receivable and the interests of the Indenture Trustee in
certain rebates of premiums and other amounts relating to the
Insurance Policies and any documents relating thereto, such
assignment being an assignment outright and not for security; and
the Servicer or the Warranty Purchaser, as applicable, shall
thereupon own such Receivable, and all such security and
documents, free of any further obligation to the Indenture
Trustee or the Securityholders with respect thereto. If in any
enforcement suit or legal proceeding it is held that the Servicer
may not enforce a Receivable on the ground that it is not a real
party in interest or a holder entitled to enforce such
Receivable, the Indenture Trustee shall, at the Servicer's
expense, take such steps as the Servicer deems necessary to
enforce the Receivable, including bringing suit in the Indenture
Trustee's name or the names of the Securityholders.
SECTION 3.22 Representations and Warranties by the
Issuer to the Indenture Trustee. The Issuer hereby represents
and warrants to the Indenture Trustee as follows:
(a) Good Title. No Receivable has been sold,
transferred, assigned or pledged by the Issuer to any Person
other than the Indenture Trustee; immediately prior to the
conveyance of the Receivables pursuant to this Indenture, the
Issuer had good and marketable title thereto, free of any Lien
(except for any Lien which may exist in accessions to the
Financed Vehicles not financed by NFC); and, upon execution and
delivery of this Indenture by the Issuer, the Indenture Trustee
shall have all of the right, title and interest of the Issuer in,
to and under the Collateral, free of any Lien (except for any
Lien which may exist in accessions to the Financed Vehicles not
financed by NFC); and
(b) All Filings Made. All filings necessary under the
UCC in any jurisdiction to give the Indenture Trustee a first
priority perfected security interest in the Receivables and, to
the extent constituting Code Collateral, the other Collateral
shall have been made. The Receivables constitute Code
Collateral.
SECTION 3.23 Dissolution upon Bankruptcy of the Seller.
The Indenture Trustee shall, upon receipt of the written notice
of an Insolvency Event described in Section 7.2 of
<PAGE>
the Trust Agreement, give prompt written notice to the
Noteholders of the occurrence of such event. Each Noteholder
shall be entitled to provide to the Owner Trustee the
instructions described in such Section 7.2 if such Noteholder
disapproves of the liquidation of the Receivables and the
termination of the Trust. If required by Section 7.2 of the
Trust Agreement, the Trust shall thereafter be terminated as
provided therein.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 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
3.2, 3.3, 3.4, 3.5, 3.8, 3.10, 3.11, 3.12, 3.13, 3.14, 3.16, 3.19
and 3.21; (v) the rights, obligations and immunities of the
Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.7 and the obligations of the
Indenture Trustee under Sections 4.2 and 4.4); and (vi) the
rights of Noteholders 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, if:
(a) either:
(1) all Notes theretofore authenticated and
delivered (other than(A) Notes that have been destroyed,
lost or stolen and that have been replaced or paid as
provided in Section 2.5 and (B) 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
3.3) have been delivered to the Indenture Trustee for
cancellation; or
(2) all Notes not theretofore delivered to the
Indenture Trustee for cancellation:
(A) have become due and payable,
(B) will be due and payable on their
respective Final Scheduled Distribution Dates within
one year, or
(C) are to be called for redemption within
one year under arrangements satisfactory to the
Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name, and at
the expense, of the Issuer,
<PAGE>
and the Issuer, in the case of (A), (B) or (C) of subsection
4.1(a)(2) above, 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
unpaid principal and accrued interest on such Notes not
theretofore delivered to the Indenture Trustee for
cancellation when due on the Final Scheduled Distribution
Date for such Notes or the Redemption Date for such Notes
(if such Notes are to be called for redemption pursuant to
Section 10.1(a)), as the case may be;
(b) the Issuer has paid or caused to be paid all other
sums payable hereunder by the Issuer; and
(c) the Issuer has delivered to the Indenture Trustee
an Officer's Certificate of the Issuer, 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 11.1(a) and each stating that all conditions
precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
SECTION 4.2 Application of Trust Money. All monies
deposited with the Indenture Trustee pursuant to Section 4.1
shall be held in trust and 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 or redemption of which such monies have been
deposited with the Indenture Trustee, of all sums due and to
become due thereon for principal and interest; but such monies
need not be segregated from other funds except to the extent
required herein or in the Pooling and Servicing Agreement or by
applicable law.
SECTION 4.3 Repayment of Monies Held by Paying Agent.
In connection with the satisfaction and discharge of this
Indenture with respect to each class of Notes, all monies then
held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to each such class
of Notes shall, upon demand of the Issuer, be paid to the
Indenture Trustee to be held and applied according to Section 3.3
and thereupon such Paying Agent shall be released from all
further liability with respect to such monies.
SECTION 4.4 Duration of Position of Indenture Trustee
for Benefit of Certificateholders. Notwithstanding (i) the
earlier payment in full of all principal and interest due to the
Noteholders under the terms of Notes of each class, (ii) the
cancellation of such Notes pursuant to Section 3.1 and (iii) the
discharge of the Indenture Trustee's duties hereunder with
respect to such Notes, the Indenture Trustee shall continue to
act in the capacity as Indenture Trustee hereunder for the
benefit of the Certificateholders and the Indenture Trustee, for
the benefit of the Certificateholders, shall comply with its
obligations under Sections 5.01(a), 8.02 and 8.03 of the
<PAGE>
Pooling and Servicing Agreement, as appropriate, until such time
as all distributions in respect of the Aggregate Certificate
Balance and interest due to the Certificateholders have been paid
in full.
ARTICLE V
DEFAULT AND REMEDIES
SECTION 5.1 Events of Default. For the purposes of
this Indenture, "Event of Default" wherever used herein, means
any one of the following events:
(a) failure to pay any interest on any Note as and
when the same becomes due and payable, and such default
shall continue unremedied for a period of five (5) days; or
(b) except as set forth in Section 5.1(c), failure to
pay any instalment of the principal of any Note as and when
the same becomes due and payable, and such default shall
continue unremedied for a period of thirty (30) days after
there shall have been given, by registered or certified
mail, to the Issuer and the Seller (or the Servicer, as
applicable) by the Indenture Trustee or to the Issuer and
the Seller (or the Servicer, as applicable) and the
indenture Trustee by the Holders of at least 25% of the
Outstanding Amount of the Notes, a written notice specifying
such default, demanding that it be remedied and stating that
such notice is a "Notice of Default" hereunder; or
(c) failure to pay in full the outstanding principal
balance of any class of Notes by the Final Scheduled
Distribution Date for such class; or
(d) default in the observance or performance in any
material respect 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
specifically dealt with elsewhere in this Section 5.1) which
failure materially and adversely affects the rights of the
Noteholders, and such default shall continue or not be cured
for a period of thirty (30) days after there shall have been
given, by registered or certified mail, to the Issuer and
the Seller (or the Servicer, as applicable) by the Indenture
Trustee or to the Issuer and the Seller (or the Servicer, as
applicable) and the Indenture Trustee by the Holders of at
least 25% of the Outstanding Amount of the Notes, a written
notice specifying such default, demanding that it be
remedied and stating that such notice is a "Notice of
Default" hereunder; or
(e) 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 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 sixty (60) consecutive days; or
<PAGE>
(f) 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 action by
the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, within five
Business Days after learning of the occurrence thereof, written
notice in the form of an Officer's Certificate of any Default
under Section 5.1(d), its status and what action the Issuer is
taking or proposes to take with respect thereto.
SECTION 5.2 Acceleration of Maturity; Rescission and
Annulment.
(a) If an Event of Default should occur and be
continuing, then and in every such case, unless the principal
amount of the Notes shall have already become due and payable,
either the Indenture Trustee or the Holders of Notes representing
not less than a majority of the Outstanding Amount of the Notes
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 the Noteholders) setting forth the Event or Events of
Default, 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.
(b) At any time after such declaration of acceleration of
maturity of the Notes has been made and before a judgment or
decree for payment of the money due thereunder has been obtained
by the Indenture Trustee as hereinafter provided in this Article
V, the Holders of Notes representing not less than a majority of
the Outstanding Amount of the Notes, by written notice to the
Issuer and the Indenture Trustee, may rescind and annul such
declaration and its consequences; provided, that no such
rescission and annulment shall extend to or affect any subsequent
or other Default or impair any right consequent thereto; and
provided further, that if the Indenture Trustee shall have
proceeded to enforce any right under this Indenture and such
proceedings shall have been discontinued or abandoned because of
such rescission and annulment or for any other reason, or such
proceedings shall have been determined adversely to the Indenture
Trustee, then and in every such case, the Indenture Trustee, the
Issuer and the Noteholders, as the case may be, shall be restored
to their respective former positions and rights hereunder, and
all rights, remedies and powers of the Indenture Trustee, the
Issuer and the Noteholders, as the case may be, shall continue as
though no such proceedings had been commenced.
SECTION 5.3 Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee.
(a) The Issuer covenants that if there shall occur an
Event of Default under Sections 5.1(a), (b) or (c) which has not
been waived pursuant to Section 5.12, the Issuer shall, upon
<PAGE>
demand of the Indenture Trustee, pay to the Indenture Trustee,
for the ratable benefit of the Noteholders in accordance with
their respective outstanding principal amounts, the entire amount
then due and payable on the Notes for principal and interest,
with interest through the date of such payment on the overdue
principal amount of each class of Notes, at the rate applicable
to such class of 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) If 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 monies 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
5.4, in its discretion, proceed to protect and enforce its rights
and the rights of the Noteholders, 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 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 applicable law.
(d) If 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
if 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, the Indenture Trustee,
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
5.3, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the entire
amount of the unpaid principal and interest owing in respect
of the Notes 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
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 trustee, except as a result of
negligence or bad faith) and of the Noteholders allowed in
such Proceedings;
<PAGE>
(ii) unless prohibited by applicable law and
regulations, to vote on behalf of the Holders of Notes in
any election of a trustee, a standby trustee or Person
performing similar functions in any such Proceedings;
(iii) to collect and receive any monies or other
property payable or deliverable on any such claims and to
distribute all amounts received with respect to the claims
of the Noteholders 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 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 to make payments to the Indenture Trustee, and,
if the Indenture Trustee shall consent to the making of payments
directly to such Noteholders, to pay to the Indenture Trustee
such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor 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 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 any plan of
reorganization, arrangement, adjustment or composition affecting
the Notes or the rights of any Holder thereof or to authorize the
Indenture Trustee to vote in respect of the claim of any
Noteholder 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 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 trustee and their respective agents and
attorneys, shall be for the ratable benefit of the Noteholders.
(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 it shall not be necessary to make any
Noteholder a party to any such Proceedings.
<PAGE>
SECTION 5.4 Remedies; Priorities.
(a) If an Event of Default shall have occurred and be
continuing and the Notes have been accelerated under Section
5.2(a), the Indenture Trustee may do one or more of the following
(subject to Section 5.5):
(i) institute Proceedings in its own name and as
trustee of an express trust for the collection of all
amounts then due and payable on the Notes or under this
Indenture with respect thereto, whether by declaration of
acceleration or otherwise, enforce any judgment obtained,
and collect from the Issuer and any other obligor upon such
Notes monies 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 or
elect to have the Issuer maintain possession of the
Receivables and continue to apply collections on such
Receivables as if there had been no declaration of
acceleration; provided, however, that the Indenture Trustee
may not sell or otherwise liquidate the Trust Estate
following an Event of Default and acceleration of the Notes,
unless (A) the Holders of all of the aggregate Outstanding
Amount of the Notes consent thereto, (B) the proceeds of
such sale or liquidation distributable to the
Securityholders are sufficient to discharge in full the
principal of and the accrued interest on the Notes and the
Aggregate Certificate Balance of and accrued interest on the
Certificates, in each case as of the date of such sale or
liquidation or (C) (i) there has been an Event of Default
under Section 5.1(a), (b) or (c) or otherwise arising from a
failure to make a required payment of principal on any
Notes, (ii) the Indenture Trustee determines that the Trust
Estate will not continue to provide sufficient funds for the
payment of principal of and interest on the Notes as and
when they would have become due if the Notes had not been
declared due and payable and (iii) the Indenture Trustee
obtains the consent of Holders of a majority of the
aggregate Outstanding Amount of the Notes. In determining
such sufficiency or insufficiency with respect to clauses
(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.
(b) If the Indenture Trustee collects any money or
property pursuant to this Article V, it shall pay out or deposit
such money or property in the following order:
<PAGE>
FIRST: to the Indenture Trustee for amounts due
under Section 6.7; and
SECOND: to the Collection Account, for distribution
pursuant to Section 9.02 of the Pooling and Servicing Agreement.
SECTION 5.5 Optional Preservation of the Trust Estate.
If the Notes have been declared to be due and payable under
Section 5.2(a) following an Event of Default and such declaration
and its consequences have not been rescinded and annulled in
accordance with Section 5.2(b), the Indenture Trustee may, but
need not, elect to take and maintain possession of the Trust
Estate. 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 take and maintain possession of the
Trust Estate. In determining whether to take and 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 5.6 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:
(i) such Holder has previously given written notice to
the Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the
Outstanding Amount of the Notes 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;
(iii) such Holder or Holders have offered to the
Indenture Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in complying with
such request;
(iv) the Indenture Trustee for 60 days after its
receipt of such notice, request and offer of indemnity has
failed to institute such Proceedings; and
(v) no direction inconsistent with such written
request has been given to the Indenture Trustee during such
60-day period by the Holders of a majority of the
Outstanding Amount of the Notes;
it being understood and intended that no Holder or Holders of
Notes shall have any right in any manner whatsoever 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 of Notes or to enforce any right under this
Indenture, except in the manner herein provided and for the
equal, ratable (on the basis of the respective aggregate
<PAGE>
amount of principal and interest, respectively, due and unpaid on
the Notes held by each Noteholder)and common benefit of all
Noteholders. For the protection and enforcement of the
provisions of this Section 5.6, each and every Noteholder shall
be entitled to such relief as can be given either at law or in
equity.
If 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 determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
SECTION 5.7 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 on such Note on or after
the respective due dates thereof expressed in such Note or in
this Indenture (or, in the case of redemption, if applicable, on
or after the Redemption Date) and to institute suit for the
enforcement of any such payment, and such right shall not be
impaired without the consent of such Holder.
SECTION 5.8 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 to their respective
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 5.9 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 shall
impair any such right or remedy or constitute a waiver of any
such 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 a
majority of the Outstanding Amount of the Notes shall, subject to
provision being made for indemnification against
<PAGE>
costs, expenses and liabilities in a form satisfactory to the
Indenture Trustee, have the right to direct the time, method and
place of conducting any 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,
however, that:
(i) such direction shall not be in conflict with
any rule of law or with this Indenture;
(ii) subject to the express terms of Section 5.4,
any direction to the indenture Trustee to sell or liquidate
the Trust Estate shall be by the Holders of Notes
representing 100% of the Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.5
have been satisfied and the indenture Trustee elects to
retain the Trust Estate pursuant to Section 5.5, then any
direction to the Indenture Trustee by Holders of Notes
representing less than 100% of the Outstanding Amount of the
Notes to sell or liquidate the Trust Estate shall be of no
force and effect; and
(iv) the Indenture Trustee may take any other
action deemed proper by the indenture Trustee that is not
inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Indenture
Trustee need not take any action that it determines might cause
it to incur any liability (a) with respect to which the Indenture
Trustee shall have reasonable grounds to believe that adequate
indemnity against such liability in not assured to it and (b)
which might materially adversely affect the rights of any
Noteholders not consenting to such action.
SECTION 5.12 Waiver of Past Defaults.
(a) Prior to the declaration of the acceleration of the
maturity of the Notes as provided in Section 5.2(a), the Holders
of not less than a majority of the Outstanding Amount of the
Notes may waive any past Default and its consequences except a
Default (i) in the payment of principal of or interest on any of
the Notes or (ii) in respect of a covenant or provision hereof
which 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 Noteholders shall be restored to
their respective former positions and rights hereunder; but no
such waiver shall extend to or affect any subsequent or other
Default or impair any right consequent thereto.
(b) 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 and for purposes of Section 8.01(b) of the Pooling
and Servicing Agreement; but no such waiver shall extend to or
affect any subsequent or other Default or impair any right
consequent thereto.
<PAGE>
SECTION 5.13 Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Note by such Holder's
acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any Proceeding for the
enforcement of any right or remedy under this Indenture, or in
any Proceeding against the Indenture Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any
party litigant in such Proceeding of an undertaking to pay the
costs of such Proceeding, and that such court may in its
discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such Proceeding,
having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this
Section 5.13 shall not apply to:
(a) any Proceeding instituted by the Indenture Trustee;
(b) any Proceeding instituted by any Noteholder, or group
of Noteholders, in each case holding in the aggregate more than
10% of the Outstanding Amount of the Notes; or
(c) any Proceeding 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 (or, in the case of redemption, on or after
the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. The
Issuer covenants (to the extent that it may lawfully do so) that
it shall 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 adversely affect the covenants or the
performance of this Indenture.
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 shall not hinder, delay or impede the execution
of any power herein granted to the Indenture Trustee, but shall
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
5.4(b).
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
agrees to 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 of their respective obligations to
the Issuer under or in connection with the Pooling and Servicing
Agreement and the Purchase Agreement or by NFC of its obligations
under or in connection with
<PAGE>
the Purchase Agreement in accordance with the terms thereof, and
to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with the
Pooling and Servicing Agreement and 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, the Servicer or NFC thereunder and the institution of
legal or administrative actions or proceedings to compel or
secure performance by the Seller, the Servicer or NFC of each of
the irrespective obligations under the Pooling and Servicing
Agreement and the Purchase 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 66-2/3% of the
Outstanding Amount of the Notes shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the
Seller or the Servicer under or in connection with the Pooling
and Servicing Agreement and the Purchase Agreement, including the
right or power to take any action to compel or secure performance
or observance by the Seller or the Servicer of each of their
obligations to the Issuer thereunder and to give any consent,
request, notice, direction, approval, extension or waiver under
the Pooling and Servicing Agreement and the Purchase Agreement,
and any right of the Issuer to take such action shall be
suspended.
(c) [Reserved.]
(d) 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 66-2/3% of the
Outstanding Amount of the Notes shall, exercise all rights,
remedies, powers, privileges and claims of the Seller against NFC
under or in connection with the Purchase Agreement, including the
right or power to take any action to compel or secure performance
or observance by NFC of each of its obligations to the Seller
thereunder and to give any consent, request, notice, direction,
approval, extension or waiver under the Purchase Agreement, and
any right of the Seller to take such action shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is
continuing, the Indenture Trustee shall exercise the rights and
powers vested in it by this Indenture and 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 such
person's own affairs.
(b) Except during the continuance of an Event of Default:
<PAGE>
(i) the Indenture Trustee undertakes to perform
such duties and only such duties as are specifically set
forth in this Indenture and the Pooling and Servicing
Agreement and no implied covenants or obligations shall be
read into this Indenture, the Pooling and Servicing
Agreement or any other Basic Document against the Indenture
Trustee; and
(ii) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Indenture Trustee and conforming to the requirements of this
Indenture; provided, however, that the Indenture Trustee
shall examine the certificates and opinions to determine
whether or not they conform to any applicable requirements
of this Indenture.
(c) The Indenture Trustee may not be relieved from
liability for its own negligent action, its own negligent failure
to act or its own wilful misconduct, except that:
(i) this Section 6.1(c) does not limit the effect
of Section 6.1(b);
(ii) the Indenture Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer unless it is proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be
liable with respect to any action it takes or omits to
take in good faith in accordance with a direction
received by it pursuant to Section 5.11.
(d) The Indenture Trustee shall not be liable for
interest on any money received by it except as the Indenture
Trustee may agree in writing with the Issuer.
(e) Money held in trust by the Indenture Trustee need not
be segregated from other funds except to the extent required by
law or the terms of this Indenture or the Pooling and Servicing
Agreement.
(f) No provision of this Indenture shall require the
Indenture Trustee 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
it shall have reasonable grounds to believe that repayments of
such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(g) The Indenture Trustee shall reimburse the Seller and
any director, officer, employee or agent of the Seller for any
contractual damages, liability or expense incurred by reason of
the Indenture Trustee's willful misfeasance, bad faith or gross
negligence (except errors in judgment) in the performance of its
duties under any of the Further Transfer and Servicing
Agreements, or by reason of reckless disregard of its obligations
and duties under any of the Further Transfer and Servicing
Agreements.
<PAGE>
(h) Every provision of this Indenture relating to the
Indenture Trustee shall be subject to the provisions of this
Section 6.1 and to the provisions of the TIA.
SECTION 6.2 Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document
believed by it to be genuine and to have been signed or presented
by the proper Person. The Indenture Trustee need not investigate
any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from
acting, it may require an Officer's Certificate from the Issuer
or an Opinion of Counsel that such action or omission is required
or permissible hereunder. The Indenture Trustee shall not be
liable for any action it takes or omits to take in good faith in
reliance on such Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys or a custodian or
nominee, and the Indenture Trustee shall not be responsible for
any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee
appointed with due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any
action it takes or omits to take in good faith which it believes
to be authorized or within its rights or powers; provided,
however, that the Indenture Trustee's conduct does not constitute
wilful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and
the advice or opinion of counsel with respect to legal matters
relating to this Indenture and the Notes shall be full and
complete authorization and protection from liability in respect
to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such
counsel.
SECTION 6.3 Indenture Trustee May Own Notes. The
Indenture Trustee in its individual or any other capacity may
become the owner or pledgee of Notes and may otherwise deal with
the Issuer, the Servicer or any of their respective Affiliates
with the same rights it would have if it were not Indenture
Trustee; provided, however, that the Indenture Trustee shall
comply with Sections 6.10 and 6.11. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with
like rights.
SECTION 6.4 Indenture Trustee's Disclaimer. The
Indenture Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture
or the Notes, it shall not be accountable for the Issuer's use of
the proceeds from the Notes, and it shall not be responsible for
any statement of the Issuer in the Indenture or in any document
issued in connection with the sale of the Notes or in the Notes
other than the Indenture Trustee's certificate of authentication.
<PAGE>
SECTION 6.5 Notice of Defaults. If a Default occurs
and is continuing and if it is known to a Responsible Officer of
the Indenture Trustee, the Indenture Trustee shall mail to each
Noteholder notice of the Default within 60 days after it occurs.
Except in the case of a Default in payment of principal of or
interest on any Note, the Indenture Trustee may withhold the
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 6.6 Reports by Indenture Trustee to Holders.
The Indenture Trustee shall deliver to each Noteholder the
information and documents set forth in Article VII, and, in
addition, all such information with respect to the Notes as may
be required, as specified by the Servicer, to enable such Holder
to prepare its federal and state income tax returns.
SECTION 6.7 Compensation; Indemnity.
(a) The Issuer shall cause the Servicer pursuant to the
Pooling and Servicing Agreement to pay to the Indenture Trustee
from time to time such compensation for its services as shall be
agreed upon in writing. 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 pursuant
to the Pooling and Servicing Agreement 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 Issuer shall cause the Servicer pursuant to the
Pooling and Servicing Agreement to indemnify the Indenture
Trustee in accordance with Section 7.01 of the Pooling and
Servicing Agreement.
(b) The Issuer's obligations to the Indenture Trustee
pursuant to this Section 6.7 shall survive the discharge of this
Indenture. When the Indenture Trustee incurs expenses after the
occurrence of a Default specified in Section 5.1(e) or (f) 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.
SECTION 6.8 Replacement of Indenture Trustee.
(a) The Indenture Trustee may at any time give notice of
its intent to resign by so notifying the Issuer; provided,
however, that no such resignation shall become effective and the
indenture Trustee shall not resign prior to the time set forth in
Section 6.8(c). The Holders of a majority in Outstanding Amount
of the Notes may remove the Indenture Trustee by so notifying the
Indenture Trustee and may appoint a successor Indenture Trustee.
Such resignation or removal shall become effective in accordance
with Section 6.8(c). The Issuer shall remove the Indenture
Trustee if:
(i) the Indenture Trustee fails to comply with
Section 6.11;
<PAGE>
(ii) the Indenture Trustee is adjudged a bankrupt
or insolvent;
(iii) a receiver or other public officer takes
charge of the Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes
incapable of acting.
(b) If the Indenture Trustee gives notice of its intent
to resign 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 Issuer shall promptly appoint and designate a
successor Indenture Trustee.
(c) A successor Indenture Trustee shall deliver a written
acceptance of its appointment and designation to the retiring
Indenture Trustee and to the Issuer.
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 and
to each of the Rating Agencies. The retiring Indenture Trustee
shall promptly transfer all property held by it as Indenture
Trustee to the successor Indenture Trustee.
(d) If a successor Indenture Trustee does not take office
within 60 days after the retiring Indenture Trustee gives notice
of its intent to resign or is removed, the retiring Trustee, the
Issuer or the Holders of a majority of the Outstanding Amount of
the Notes may petition any court of competent jurisdiction for
the appointment and designation of a successor Indenture Trustee.
(e) If the Indenture Trustee fails to comply with Section
6.11, any Noteholder may petition any court of competent
jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee.
(f) Notwithstanding the replacement of the Indenture
Trustee pursuant to this Section 6.8, the Issuer's obligations
under Section 6.7 and the Servicer's corresponding obligations
under the Pooling and Servicing Agreement shall continue for the
benefit of the retiring Indenture Trustee.
SECTION 6.9 Merger or Consolidation of Indenture
Trustee.
(a) Any corporation into which the Indenture Trustee may
be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which
the Indenture Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Indenture
Trustee, shall be the successor of the Indenture Trustee under
this Indenture; provided, however, that such corporation shall be
eligible under the provisions of Section 6.11, without the
execution or filing of any instrument or any further act on the
part of any of the parties to this Indenture, anything in this
Indenture to the contrary notwithstanding. Following such
<PAGE>
merger or consolidation, the successor Indenture Trustee shall
mail a notice of such merger or consolidation to each of the
Rating Agencies.
(b) If at the time such successor or successors by merger
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. In all such cases such certificate of authentication
shall have the same full force as is provided anywhere in the
Notes or herein with respect to the certificate of authentication
of the Indenture Trustee.
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 or any Financed Vehicle 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 Estate, and to vest in
such Person or Persons, in such capacity and for the benefit of
the Noteholders and (only to the extent expressly provided
herein) the Certificateholders, such title to the Trust Estate,
or any part hereof, and, subject to the other provisions of this
Section 6.10, 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 successor 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 6.8.
(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 the Indenture 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 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;
<PAGE>
(ii) no trustee hereunder shall be personally
liable by reason of any act or omission of any other trustee
hereunder; and
(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 Indenture and the
conditions of this Article VI. 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 Indenture Trustee or
separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically 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 Indenture
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 (unless
waived by Moody's) it shall have a long term unsecured debt
rating of Baa3 or better by Moody's Investors Service, Inc. The
Indenture Trustee shall comply with TIA Section 310(b); 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). A trustee who has resigned or been removed shall be
subject to TIA Section 311(a) to the extent indicated.
SECTION 6.13 Representations and Warranties of Indenture
Trustee. The indenture Trustee represents and warrants as of the
Closing Date that:
(a) the Indenture Trustee is a New York banking
corporation duly organized, validly existing and in good standing
under the laws of the State of New York and the eligibility
requirements set forth in Section 6.11 are satisfied with respect
to the Indenture Trustee;
<PAGE>
(b) the Indenture Trustee has full power, authority and
legal right to execute, deliver and perform this Indenture, and
has taken all necessary action to authorize the execution,
delivery and performance by it of this Indenture;
(c) the execution, delivery and performance by the
Indenture Trustee of this Indenture (i) shall not violate any
provision of any law or regulation governing the banking and
trust powers of the Indenture Trustee or any order, writ,
judgment or decree of any court, arbitrator, or governmental
authority applicable to the Indenture Trustee or any of its
assets, (ii) shall not violate any provision of the corporate
charter or by-laws of the Indenture Trustee or (iii) shall not
violate any provision of, or constitute, with or without notice
or lapse of time, a default under, or result in the creation or
imposition of any lien on any properties included in the Trust
Estate pursuant to the provisions of any mortgage, indenture,
contract, agreement or other undertaking to which it is a party,
which violation, default or lien could reasonably be expected to
have a materially adverse effect on the Indenture Trustee's
performance or ability to perform its duties under this Indenture
or on the transactions contemplated in this Indenture;
(d) the execution, delivery and performance by the
Indenture Trustee of this Indenture shall not require the
authorization, consent or approval of, the giving of notice to,
the filing or registration with, or the taking of any other
action in respect of, any governmental authority or agency
regulating the banking and corporate trust activities of the
Indenture Trustee; and
(e) this Indenture has been duly executed and delivered
by the Indenture Trustee and constitutes the legal, valid and
binding agreement of the Indenture Trustee, enforceable in
accordance with its terms.
SECTION 6.14 Indenture Trustee May Enforce Claims
Without Possession of Notes. All rights of action and claims
under this Indenture or the Notes may be prosecuted and enforced
by the Indenture Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Indenture
Trustee shall be brought in its own name as Indenture Trustee.
Any recovery of judgment shall, after provision for the payment
of the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel, be for
the ratable benefit of the Noteholders and (only to the extent
expressly provided herein) the Certificateholders in respect of
which such judgment has been obtained.
SECTION 6.15 Suit for Enforcement. If an Event of
Default shall occur and be continuing, the Indenture Trustee in
its discretion may, subject to the provisions of Section 6.1,
proceed to protect and enforce its rights and the rights of the
Noteholders under this Indenture by a Proceeding whether for the
specific performance of any covenant or agreement contained in
this Indenture or in aid of the execution of any power granted in
this Indenture or for the enforcement of any other legal,
equitable or other remedy as the Indenture Trustee, being advised
by counsel, shall deem most effectual to protect and enforce any
of the rights of the Indenture Trustee or the Noteholders.
<PAGE>
SECTION 6.16 Rights of Noteholders to Direct Indenture
Trustee. Holders of Notes evidencing not less than a majority of
the Outstanding Amount of the Notes shall have the right to
direct in writing the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee or
exercising any trust or power conferred on the Indenture Trustee;
provided, however, that subject to Section 6.1, the Indenture
Trustee shall have the right to decline to follow any such
direction if the Indenture Trustee being advised by counsel
determines that the action so directed may not lawfully be taken,
or if the Indenture Trustee in good faith shall, by a Responsible
Officer, determine that the proceedings so directed would be
illegal or subject it to personal liability or be unduly
prejudicial to the rights of Noteholders not parties to such
direction; and provided, further, that nothing in this Indenture
shall impair the right of the Indenture Trustee to take any
action deemed proper by the Indenture Trustee and which is not
inconsistent with such direction by the Noteholders.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 Issuer To Furnish Indenture Trustee Names
and Addresses of Noteholders. The Issuer shall furnish or cause
to be furnished by the Servicer to the Indenture Trustee (a) not
more than five days before each Distribution Date, a list, in
such form as the Indenture Trustee may reasonably require, of the
names and addresses of the Holders of Notes as of the close of
business on the Record Date, and (b) at such other times as the
Indenture Trustee may request in writing, within 14 days after
receipt by the Issuer of any such request, a list of similar form
and content as of a date not more than 10 days prior to the time
such list is furnished; provided, however, that so long as the
Indenture Trustee is the Note Registrar, no such list shall be
required to be furnished.
SECTION 7.2 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 7.1 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
7.1 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 312(c).
<PAGE>
SECTION 7.3 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) which 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 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
7.3(a) as may be required 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 October 31 of such year.
SECTION 7.4 Reports by Indenture Trustee.
(a) If required by TIA Section 313(a), within 60 days
after each February 1, beginning with February 1, 1998, 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 any report
delivered pursuant to this Section 7.4(a) shall, at the time of
its mailing to Noteholders, 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.
(b) On each Distribution Date, the Indenture Trustee
shall include with each payment to each Noteholder a copy of the
statement for the related Monthly Period as required pursuant to
Section 4.09 of the Pooling and Servicing Agreement.
<PAGE>
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 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 and the Pooling and Servicing
Agreement. Except as otherwise expressly provided in this
Indenture or in Article III of the Pooling and Servicing
Agreement, 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 an
Event of Default under this Indenture and any right to proceed
thereafter as provided in Article V.
SECTION 8.2 Designated Accounts; Payments.
(a) On or prior to the Closing Date, the Issuer shall
cause the Servicer to establish and maintain, in the name of the
Indenture Trustee, for the benefit of the Securityholders, the
Designated Accounts as provided in Articles IV and V of the
Pooling and Servicing Agreement.
(b) Before each Distribution Date, the Indenture Trustee
shall cause all withdrawals, deposits, transfers and
distributions provided for in Section 4.06(b) of the Pooling and
Servicing Agreement to be made. Before each Distribution Date,
the Indenture Trustee shall make the distributions from the
Collection Account provided for in Section 4.06(c) of the Pooling
and Servicing Agreement. Notwithstanding the preceding sentence,
to the extent permitted and as provided by Section 4.08 of the
Pooling and Servicing Agreement, deposits may be netted against
amounts owing to the depositor.
(c) On each Distribution Date, the Indenture Trustee
shall distribute all amounts on deposit in the Note Distribution
Account (subject to the Seller's rights under Section 5.03 of the
Pooling and Servicing Agreement to Investment Earnings) to the
Noteholders to the extent of amounts due and unpaid on the Notes
for principal and interest, in the following amounts, and in the
following order of priority:
(i) to accrued and unpaid interest on the Notes;
provided, however, that if there are not sufficient funds in
the Note Distribution Account to pay the entire amount of
accrued and unpaid interest then due on the Notes, the
amount in the Note Distribution Account shall be applied to
the payment of such interest on each of the Notes pro rata
on the basis of the respective aggregate amount of interest
due on each such Note;
(ii) unless otherwise provided in clause (iii)
below, in the following priority: (1) to the Holders of the
Class A-1 Notes until the Outstanding Amount attributable
<PAGE>
to such class is reduced to zero, (2) to the Holders of the
Class A-2 Notes until the Outstanding Amount attributable to
such class is reduced to zero and (3) to the Holders of the
Class A-3 Notes until the Outstanding Amount attributable to
such class is reduced to zero; and
(iii) if the Notes have been declared immediately
due and payable as provided in Section 5.2(a) following the
occurrence of an Event of Default, until such time as all
Events of Default have been cured or waived as provided in
Section 5.2(b), any amounts remaining in the Note
Distribution Account after the applications described in
Section 8.2(c)(i) and any amounts deposited into the Note
Distribution Account thereafter shall be applied to the
repayment of principal on each of the Notes pro rata on the
basis of the respective unpaid principal amount of each such
Note.
SECTION 8.3 General Provisions Regarding Accounts.
(a) Subject to Section 6.1(c), the Indenture Trustee
shall not in any way be held liable by reason of any
insufficiency in any of the Designated Accounts resulting from
any loss on any Eligible Investment included therein 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 their terms.
(b) If (i) the Servicer shall have failed to give
investment directions for any funds on deposit in the Designated
Accounts to the Indenture Trustee by 11:00 a.m., New York City
time (or such other time as may be agreed by the Servicer and the
Indenture Trustee) on any Business Day; or (ii) a 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 5.2(a), or, if such 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 in
accordance with Section 5.5 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 Designated
Accounts in one or more Eligible Investments selected by the
Indenture Trustee.
SECTION 8.4 Release of Trust Estate.
(a) Subject to the payment of its fees and expenses
pursuant to Section 6.7, the indenture Trustee may, and when
required by the provisions of this Indenture shall, execute
instruments to release property in the Trust Estate from the lien
of this Indenture, or convey the Indenture Trustee's interest in
the same, in a manner and under circumstances that are consistent
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 monies.
(b) The Indenture Trustee shall, at such time as there
are no Notes Outstanding and all sums due to the Indenture
Trustee pursuant to Section 6.7 have been paid, notify the Issuer
thereof in writing and upon receipt of an Issuer Request, release
any remaining portion of the Trust
<PAGE>
Estate that secured the Notes from the lien of this Indenture and
release to the Issuer or any other Person entitled thereto any
funds then on deposit in the Note Distribution Account. The
Indenture Trustee shall (i) release any remaining portion of the
Trust Estate that secured the Certificates from the lien of this
Indenture and (ii) release to the Issuer or any other Person
entitled thereto any funds then on deposit in the Reserve Account
or the Collection Account only at such time as (x) there are no
Notes Outstanding, (y) all payments in respect of the Aggregate
Certificate Balance and interest due to the Certificateholders
have been paid in full and (z) all sums due to the Indenture
Trustee pursuant to Section 6.7 have been paid.
SECTION 8.5 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 8.4(a), accompanied
by copies of any instruments involved, and the Indenture Trustee
shall also require 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 shall not materially and adversely
impair the security for the Notes or the rights of the
Noteholders 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 9.1 Supplemental Indentures Without Consent of
Noteholders.
(a) Without the consent of the Holders of any Notes 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
Trust Indenture Act 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 better to 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 additional
property to the lien of this Indenture;
(ii) to evidence the succession, in compliance
with Section 3.10 and 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;
<PAGE>
(iii) to add to the covenants of the Issuer for
the benefit of the Securityholders, 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 or to correct or
supplement any provision herein or in any supplemental
indenture which may be inconsistent with any other provision
herein, in any supplemental indenture or in any other Basic
Document;
(vi) to evidence and provide for the acceptance of
the appointment hereunder by a successor Indenture 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, and 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
Noteholders but with prior notice to the Rating Agencies, at any
time and from time to time enter into one or more indentures
supplemental hereto for the purpose of adding any provisions to,
changing in any manner, or eliminating any of the provisions of,
this Indenture or modifying in any manner the rights of the
Noteholders under this Indenture; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any
Noteholder.
SECTION 9.2 Supplemental Indentures With Consent of
Noteholders.
(a) 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 not less than a
majority of the Outstanding Amount of the Notes, by Act 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, changing in any manner, or
eliminating any of the provisions of, this Indenture or modifying
in any manner the rights of the Noteholders under this Indenture;
provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Note
affected thereby:
(i) change the due date of any instalment of
principal of or interest on any Note, or reduce the
principal amount thereof, the interest rate applicable
thereto, or the
<PAGE>
Redemption Price with respect thereto, change any place of
payment where, or the coin or currency in which, any Note or
any interest thereon is payable, or 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 (or, in the case of redemption, on or after
the Redemption Date);
(ii) reduce the percentage of the Outstanding
Amount of the Notes, the consent of the Holders of which is
required for (a) any such supplemental indenture, (b) any
waiver of compliance with certain provisions of this
Indenture, certain defaults hereunder and their consequences
as provided for in this Indenture or (c) any action
described in Sections 2.12, 3.7(e), 5.2, 5.6, 5.11, 5.12(a),
6.8, or 6.16;
(iii) modify or alter the provisions of the
proviso to the definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding
Amount of the Notes required to direct the Indenture Trustee
to sell or liquidate the Trust Estate pursuant to Section
5.4 if the proceeds of such sale would be insufficient to
pay the principal amount of and accrued but unpaid interest
on the Outstanding Notes;
(v) modify any provision of this Section 9.2 to
decrease the required minimum percentage necessary to
approve any amendments to any provisions of this Indenture
or any of the Basic Documents;
(vi) modify any of the provisions of this
Indenture in such manner as to affect the calculation of the
amount of any payment of interest or principal due on any
Note on any Distribution Date (including the calculation of
any of the individual components of such calculation), or
modify or alter the provisions of the Indenture regarding
the voting of Notes held by the Issuer, the Seller or any
Affiliate of either of them; or
(vii) 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
to the lien of this Indenture or deprive the Holder of any
Note of the security afforded by the lien of this Indenture.
(b) The Indenture Trustee may in its discretion determine
whether or not any Notes would be affected (such that the consent
of each Noteholder would be required) by any supplemental
indenture proposed pursuant to this Section 9.2 and any such
determination shall be conclusive and binding upon all of the
Noteholders, whether authenticated and delivered thereunder
before or after the date upon which such supplemental indenture
becomes effective. The Indenture Trustee shall not be liable for
any such determination made in good faith.
<PAGE>
(c) It shall be sufficient if an Act of Noteholders
approves the substance, but not the form, of any proposed
supplemental indenture.
(d) Promptly after the execution by the Issuer and the
Indenture Trustee of any supplemental indenture pursuant to this
Section 9.2, the Indenture Trustee shall mail to the Noteholders
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 9.3 Execution of Supplemental Indentures. In
executing, or permitting the additional trusts created by, any
supplemental indenture permitted by this Article IX or the
modifications thereby of the trusts created by this Indenture,
the Indenture Trustee shall be entitled to receive, and subject
to Sections 6.1 and 6.2, shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this
Indenture and that all conditions precedent to such execution
have been satisfied. 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.
SECTION 9.4 Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the
provisions hereof, this Indenture shall be and 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
Noteholders 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 9.5 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 TIA as then in effect so long as this
Indenture shall then be qualified under the TIA.
SECTION 9.6 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 of the same class.
<PAGE>
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 Redemption.
(a) The Class A-3 Notes are subject to redemption in
whole, but not in part, upon the exercise by the Servicer of its
option to purchase the Receivables pursuant to Section 9.01(a) of
the Pooling and Servicing Agreement. Such redemption shall occur
on any Distribution Date after all Class A-1 Notes and Class A-2
Notes have been paid in full. The purchase price for the Class
A-3 Notes to be redeemed shall be equal to the applicable
Redemption Price, provided the Issuer has available funds
sufficient to pay such amount. The Issuer shall furnish the
Rating Agencies notice of such redemption. If the Class A-3
Notes are to be redeemed pursuant to this Section 10.1(a), the
Issuer shall furnish notice thereof to the Indenture Trustee not
later than 25 days prior to the Redemption Date and the Issuer
shall deposit into the Note Distribution Account, before the
Redemption Date, the aggregate Redemption Price of the Class A-3
Notes to be redeemed, whereupon all such Notes shall be due and
payable on the Redemption Date.
(b) If the assets of the Issuer are sold pursuant to
Section 7.2 of the Trust Agreement, all amounts deposited in the
Note Distribution Account pursuant to Section 9.01(b) of the
Pooling and Servicing Agreement as a result thereof shall be paid
to the Noteholders. If amounts are to be so paid to the
Noteholders, the Servicer or the Issuer shall, to the extent
practicable, furnish notice of such event to the Indenture
Trustee not later than 25 days prior to the Redemption Date
whereupon all such amounts shall be payable on the Redemption
Date.
(c) Within sixty days after the redemption in full
pursuant to this Section 10.1 of the Class A-3 Notes, the
Indenture Trustee shall provide each of the Rating Agencies with
written notice stating that all of the Class A-3 Notes have been
redeemed.
SECTION 10.2 Form of Redemption Notice.
(a) Notice of redemption of the Class A-3 Notes under
Section 10.1(a) shall be given by the Indenture Trustee by
first-class mail, postage prepaid, mailed not less than five days
prior to the applicable Redemption Date to each Holder of Class
A-3 Notes of record at such Noteholder's address appearing in the
Note Register.
(b) All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the place where Class A-3 Notes are to be
surrendered for payment of the Redemption Price (which shall
be the Agency Office of the Indenture Trustee to be
maintained as provided in Section 3.2); and
<PAGE>
(iv) CUSIP number.
(c) Notice of redemption of the Class A-3 Notes shall be
given by the Indenture Trustee in the name and at the expense of
the Issuer. Failure to give notice of redemption, or any defect
therein, to any Holder of any Class A-3 Note to be redeemed shall
not impair or affect the validity of the redemption of any other
Class A-3 Note to be redeemed.
(d) Prior notice of redemption under Section 10.1(b) is
not required to be given to Noteholders.
SECTION 10.3 Notes Payable on Redemption Date. The
Redeemable Notes shall, following notice of redemption as
required by Section 10.2 (in the case of redemption pursuant to
Section 10.1(a)), on the Redemption Date cease to be Outstanding
for purposes of this Indenture and shall thereafter represent
only the right to receive the applicable Redemption Price and
(unless the Issuer shall default in the payment of such
Redemption Price) no interest shall accrue on such Redemption
Price for any period after the date to which accrued interest is
calculated for purposes of calculating such Redemption Price.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 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 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 11.1, 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 additional certificate or opinion need be
furnished. 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;
<PAGE>
(iii) a statement that, in the judgment 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.
(b) (i) Prior to the deposit with the Indenture Trustee
of any Collateral or other property or securities 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 11.1(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 60
days of such deposit) to the Issuer of the Collateral or other
property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to
the Indenture Trustee an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters
described in clause (b)(i) above, the Issuer shall also
deliver to the Indenture Trustee an Independent 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 on the basis of any such withdrawal or
release since the commencement of the then current fiscal
year of the Issuer, as set forth in the certificates
delivered pursuant to clause (i) above and this clause
(b)(ii), 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.
(iii) Other than with respect to the release of
any Warranty Receivables, Administrative Receivables or
Liquidating Receivables, 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 60 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.
(iv) 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 clause (b)(iii) above, the Issuer shall
also furnish to the Indenture Trustee an Independent
Certificate as to the same matters if the fair value of the
property or securities and of all other property, other than
Warranty Receivables, Administrative Receivables and
Liquidating Receivables, or securities released from the
lien of this Indenture since the commencement of the then
current calendar year, as set forth in the certificates
required by clause (b)(iii) above and this clause (b)(iv),
equals 10% or more of
<PAGE>
the Outstanding Amount of the Notes, but such certificate
need not be furnished in the case of any release of property
or securities if the fair value thereof as set forth in the
related Officer's Certificate is less than $25,000 or less
than one percent of the then Outstanding Amount of the
Notes.
(v) Notwithstanding Section 2.9 or any other
provision of this Section 11.1, the Issuer may (A) collect,
liquidate, sell or otherwise dispose of Receivables as and
to the extent permitted or required by the Basic Documents,
(B) make cash payments out of the Designated Accounts and
the Certificate Distribution Account as and to the extent
permitted or required by the Basic Documents and (C) take
any other action not inconsistent with the TIA.
SECTION 11.2 Form of Documents Delivered to Indenture
Trustee.
(a) 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.
(b) 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 his
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.
(c) 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.
(d) 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,
<PAGE>
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 11.3 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 or a class of
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 "Act" 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 6.1) conclusive in favor of the Indenture
Trustee and the Issuer, if made in the manner provided in this
Section 11.3.
(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 (or any one or more predecessor 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 11.4 Notices, etc., to Indenture Trustee, Issuer
and Rating Agencies. Any request, demand, authorization,
direction, notice, consent, waiver or Act of Noteholders or other
documents provided or permitted by this Indenture to be made
upon, given or furnished to or filed with the Indenture Trustee,
the Issuer or the Rating Agencies under this Indenture shall be
made upon, given or furnished to or filed with such party as
specified in Appendix B to the Pooling and Servicing Agreement.
SECTION 11.5 Notices to Noteholders; Waiver.
(a) Where this Indenture provides for notice to
Noteholders of any condition or event, such notice shall be given
as specified in Appendix B to the Pooling and Servicing
Agreement.
(b) 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
<PAGE>
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.
(c) 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 of
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.
(d) 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 an Event of Default.
SECTION 11.6 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 provided for in this
Indenture for such payments or notices. The Issuer shall furnish
to the Indenture Trustee a copy of each such agreement and the
Indenture Trustee shall cause payments to be made and notices to
be given in accordance with such agreements.
SECTION 11.7 Conflict with Trust Indenture Act.
(a) 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 TIA,
such required provision shall control.
(b) The provisions of TIA Section 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 11.8 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 11.9 Successors and Assigns.
(a) All covenants and agreements in this Indenture and
the Notes by the Issuer shall bind its successors and assigns,
whether so expressed or not.
(b) All covenants and agreements of the Indenture Trustee
in this Indenture shall bind its successors and assigns, whether
so expressed or not.
<PAGE>
SECTION 11.10 Separability. In case any provision in
this Indenture or in the Notes shall be invalid, illegal or
unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
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, the Noteholders and the Note Owners and (only to the
extent expressly provided herein) the Certificateholders and the
Certificate Owners, 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 Legal Holidays. If the date on which any
payment is due shall not be a Business Day, then (notwithstanding
any other provision of the Notes or this Indenture)payment need
not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the
date on which nominally due, and no interest shall accrue for the
period from and after any such nominal date.
SECTION 11.13 Governing Law. This Indenture shall be
construed in accordance with the laws of the State of Illinois,
without reference to its conflict of law provisions, except that
the obligations, rights and remedies of the Indenture Trustee
hereunder shall be determined in accordance with the internal
laws of the State of New York, without reference to its conflict
of law provisions.
SECTION 11.14 Counterparts. This Indenture may be
executed in any number of counterparts, each of which so executed
shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 11.15 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 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 11.16 No Recourse. 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 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) any owner of a beneficial interest in the Issuer;
or
<PAGE>
(iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Indenture Trustee or the
Owner Trustee in their individual capacities, 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 their individual
capacities (or any of their successors or assigns), 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 capacities) 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 instalment 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
Articles VI, VII and VIII of the Trust Agreement.
SECTION 11.17 No Petition. The Indenture Trustee, by
entering into this Indenture, and each Noteholder and Note Owner,
by accepting a Note (or interest therein) issued hereunder,
hereby covenant and agree that they shall not, prior to the date
which is one year and one day after the termination of this
Indenture with respect to the Issuer pursuant to Section 4.1,
acquiesce, petition or otherwise invoke or cause the Seller or
the Issuer to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case
against the Seller or 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 Seller or the Issuer or any substantial
part of its property, or ordering the winding up or liquidation
of the affairs of the Seller or the Issuer.
SECTION 11.18 Inspection. The Issuer agrees that, on
reasonable prior notice, it shall 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 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.
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee
have caused this Indenture to be duly executed by their
respective officers, thereunto duly authorized, all as of the day
and year first above written.
NAVISTAR FINANCIAL 1996-B OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By:
Name: John J. Cashin
Title: Senior Trust Officer
THE BANK OF NEW YORK,
as Indenture Trustee
By:
Name: Reyne A. Macadaeg
Title: Assistant Vice President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary Public in
and for said county and state, on this day personally appeared
John Cashin, known to me to be the person and officer whose name
is subscribed to the foregoing instrument and acknowledged to me
that the same was the act of the said Navistar Financial 1996-B
Owner Trust, a Delaware business trust, and that he executed the
same as the act of said business trust for the purpose and
consideration therein expressed, and in the capacities therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 6th day
of November, 1996.
Notary Public in and for the State of New York.
My commission expires:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary Public in
and for said county and state, on this day personally appeared
Reyne A. Macadaeg, known to me to be the person and officer whose
name is subscribed to the foregoing instrument and acknowledged
to me that the same was the act of the said The Bank of New York,
a New York banking corporation, and that she executed the same as
the act of said national banking corporation for the purpose and
consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 6th day
of November, 1996.
Notary Public in and for the State of New York.
My commission expires:
<PAGE>
EXHIBIT A
LOCATIONS OF
SCHEDULE OF RECEIVABLES
The Schedule of Receivables is on file at the offices of:
1. The Indenture Trustee
2. The Owner Trustee
3. Navistar Financial Corporation
4. Navistar Financial Retail Receivables Corporation
<PAGE>
EXHIBIT B
REGISTERED $<F1>
No. R-
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.
Unless this Note is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Issuer or its agent for
registration of transfer, exchange or payment, and any Note
issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such
other entity as is requested by an authorized representative
of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NAVISTAR FINANCIAL 1996-B OWNER TRUST
CLASS A- % ASSET BACKED NOTES
NAVISTAR FINANCIAL 1996-B OWNER TRUST, a business trust
organized and existing under the laws of the State of Delaware
(herein referred to as the "Issuer"), for value received, hereby
promises to pay to ________________, or registered assigns, the
principal sum of _____________________________ DOLLARS
($__________) payable in accordance with the Indenture, prior to
the occurrence of an Event of Default and a declaration that the
Notes are due and payable, on each Distribution Date in an amount
equal to the result obtained by multiplying (i) a fraction, the
numerator of which is the initial principal amount hereof and the
denominator of which is [aggregate principal amount for class] by
(ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Notes
pursuant to Sections 2.7, 3.1 and 8.2 of the Indenture; provided,
however, that the entire unpaid principal amount of this Note
shall be due and
<F1>
Denominations of $1,000 and integral multiples thereof.
</F1>
<PAGE>
payable on the earlier of (the "Final Scheduled Distribution
Date") and the Redemption Date, if any, pursuant to Section
10.1(a) of the Indenture. The Issuer shall 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). Interest
on this Note will accrue for each Distribution Date from and
including the most recent Distribution Date on which interest has
been paid to but excluding the then current Distribution Date or,
if no interest has yet been paid, from , 1996. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
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 are payable in
such coin or currency of the United States of America which, 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.
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.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument
to be signed, manually or in facsimile, by its Authorized
Officer.
Date:
NAVISTAR FINANCIAL 1996-B
OWNER TRUST,
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but
solely as Owner Trustee under the
Trust Agreement
By:
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to
in the within-mentioned Indenture.
THE BANK OF NEW YORK, not in its
individual capacity but solely
as Indenture Trustee
By:
Name:
Title:
<PAGE>
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of
the Issuer, designated as its Class A- % Asset Backed Notes
(herein called the "Class A- Notes"), all issued under an
Indenture, dated as of November 6, 1996 (such Indenture, as
supplemented or amended, is herein called the "Indenture"),
between the Issuer and The Bank of New York, a New York banking
corporation, as trustee (the "Indenture Trustee", which term
includes any successor trustee 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 Notes are governed by and subject to all
terms of the Indenture (which terms are incorporated herein and
made a part hereof), to which Indenture the holder of this Note
by virtue of acceptance hereof assents and by which such holder
is bound. All capitalized terms used and not otherwise defined
in this Note that are defined in the Indenture, as supplemented
or amended, shall have the meanings assigned to them in or
pursuant to the Indenture.
The Class A- Notes and all other Notes issued pursuant to
the Indenture are and will be equally and ratably secured by the
Collateral pledged as security therefor as provided in the
Indenture.
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 their individual capacities, (ii) 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 their individual
capacities, 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 their
individual capacities, 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 capacities) 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 instalment or call
owing to such entity.
<PAGE>
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 by accepting the benefits of the
Indenture such Noteholder will not, prior to the date which is
one year and one day after the termination of this Indenture with
respect to the Issuer, acquiesce, petition or otherwise invoke or
cause the Seller or the Issuer to invoke the process of any court
or government authority for the purpose of commencing or
sustaining a case against the Seller or 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 Seller or the
Issuer or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Seller or the
Issuer.
Each Noteholder, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, unless
otherwise required by appropriate taxing authorities, agrees to
treat the Notes as indebtedness secured by the Receivables for
the purpose of federal income taxes, state and local income and
franchise taxes, and any other taxes imposed upon, measured by or
based upon gross or net income.
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 shall
be overdue, and neither the Issuer, the Indenture Trustee nor 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
Noteholders under the Indenture at any time by the Issuer with
the consent of the Holders of Notes representing a majority of
the Outstanding Amount of all the Notes. The Indenture also
contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, 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 of
more Predecessor Notes) shall be conclusive and binding upon such
Holder and 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 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 the
Noteholders.
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.
<PAGE>
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 Illinois, without
reference to its conflict of law provisions, and the obligations,
rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws, except that the
obligations, rights and remedies of the Indenture Trustee
hereunder shall be determined in accordance with the internal
laws of the State of New York.
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.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, neither the Seller,
the Servicer, the Indenture Trustee nor the Owner Trustee in
their respective individual capacities, any owner of a beneficial
interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees or
successors or assigns, shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of
or interest on, or performance of, or omission to perform, any of
the covenants, obligations or indemnifications contained in this
Note or the Indenture, it being expressly understood that said
covenants, obligations and indemnifications have been made by the
Owner Trustee solely as the Owner Trustee in the assets of the
Issuer. The Holder of this Note by the 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.
<PAGE>
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, as attorney, to transfer said Note on
the books kept for registration thereof, with full power of
substitution in the premises.
Dated: <F2>
Signature Guaranteed:
<F2>
NOTE: 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 whatsoever.
</F2>
<PAGE>
EXHIBIT C
FORM OF NOTE DEPOSITORY AGREEMENT
<EX-4.4.2 Trust Agreement>
EXHIBIT 4.2
TRUST AGREEMENT
BETWEEN
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
SELLER
AND
CHASE MANHATTAN BANK DELAWARE
OWNER TRUSTEE
DATED AS OF NOVEMBER 6, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS 1
1.1 Definitions 1
ARTICLE II
ORGANIZATION 1
2.1 Name 1
2.2 Office 1
2.3 Purposes and Powers 1
2.4 Appointment of Owner Trustee 2
2.5 Initial Capital Contribution of Owner Trust Estate 2
2.6 Declaration of Trust 2
2.7 Liability of the Seller and the Certificate Owners 3
2.8 Title to Trust Property 4
2.9 Situs of Trust 4
2.10 Representations and Warranties of the Seller 4
2.11 Tax Treatment 5
ARTICLE III
THE CERTIFICATES 5
3.1 Initial Certificate Ownership 5
3.2 Form of the Certificates 5
3.3 Execution, Authentication and Delivery 6
3.4 Registration; Registration of Transfer and Exchange
of Certificates 6
3.5 Mutilated, Destroyed, Lost or Stolen Certificates 7
3.6 Persons Deemed Certificateholders 8
3.7 Access to List of Certificateholders' Names and
Addresses 8
3.8 Maintenance of Corporate Trust Office 9
3.9 Appointment of Paying Agent 9
3.10 Disposition by Seller 9
3.11 Book-Entry Certificates 10
3.12 Notices to Clearing Agency 11
3.13 Definitive Certificates 11
3.14 Seller as Certificateholder 11
ARTICLE IV
ACTIONS BY OWNER TRUSTEE 12
4.1 Prior Notice to Certificateholders with Respect to
Certain Matters 12
4.2 Action by Certificateholders with Respect to Certain
Matters 12
4.3 Action by Certificateholders with Respect to
Bankruptcy 13
<PAGE>
4.4 Restrictions on Certificateholders' Power 13
4.5 Majority Control 13
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES 13
5.1 Establishment of Certificate Distribution Account 13
5.2 Application of Trust Funds 14
5.3 Method of Payment 15
5.4 Accounting and Reports to the Certificateholders,
the Internal Revenue Service and Others 16
5.5 Signature on Returns; Tax Matters Partner 17
ARTICLE VI
THE OWNER TRUSTEE 17
6.1 Duties of Owner Trustee 17
6.2 Rights of Owner Trustee 19
6.3 Acceptance of Trusts and Duties 19
6.4 Action upon Instruction by Certificateholders 21
6.5 Furnishing of Documents 21
6.6 Representations and Warranties of Owner Trustee 21
6.7 Reliance; Advice of Counsel 22
6.8 Owner Trustee May Own Certificates and Notes 23
6.9 Compensation and Indemnity 23
6.10 Replacement of Owner Trustee 23
6.11 Merger or Consolidation of Owner Trustee 24
6.12 Appointment of Co-Trustee or Separate Trustee 25
6.13 Eligibility Requirements for Owner Trustee 26
ARTICLE VII
TERMINATION OF TRUST AGREEMENT 26
7.1 Termination of Trust Agreement 26
7.2 Dissolution upon Bankruptcy of the Seller 27
ARTICLE VIII
AMENDMENTS 28
8.1 Amendments Without Consent of Certificateholders
or Noteholders 28
8.2 Amendments With Consent of Certificateholders and
Noteholders 29
8.3 Form of Amendments 29
ARTICLE IX
MISCELLANEOUS 30
9.1 No Legal Title to Owner Trust Estate 30
9.2 Limitations on Rights of Others 30
9.3 Notices 30
9.4 Severability 30
<PAGE>
9.5 Counterparts 31
9.6 Successors and Assigns 31
9.7 No Petition Covenant 31
9.8 No Recourse 31
9.9 Headings 32
9.10 Governing Law 32
9.11 Certificate Transfer Restrictions 32
9.12 [Reserved] 32
9.13 Administrator 32
9.14 Amended and Restated Trust Agreement 33
EXHIBITS
Exhibit A-1 Form of Class B Certificate
Exhibit A-2 Form of Class C Certificate
Exhibit A-3 Form of Rule 144A Transferor Certificate
Exhibit B Form of Certificate of Trust
Exhibit C Form of Certificate Depository Agreement
Exhibit D Form of Undertaking Letter
<PAGE>
TRUST AGREEMENT, dated as of November 6, 1996 between
Navistar Financial Retail Receivables Corporation, a Delaware
corporation, as Seller, and Chase Manhattan Bank Delaware, a
Delaware banking corporation, as Owner Trustee.
The Seller and the Owner Trustee hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Certain capitalized terms
used in this Agreement shall have the respective meanings
assigned to them in Part I of Appendix A to the Pooling and
Servicing Agreement of even date herewith, among the Seller, the
Servicer and the Trust (as it may be amended and supplemented
from time to time, the "Pooling and Servicing Agreement"). All
references herein to "the Agreement" or "this Agreement" are to
this Trust Agreement as it may be amended and supplemented from
time to time, the Exhibits hereto and the capitalized terms used
herein which are defined in such Appendix A, and all references
herein to Articles, Sections and subsections are to Articles,
Sections and subsections of this Agreement unless otherwise
specified. The rules of construction set forth in Part II of
such Appendix A shall be applicable to this Agreement.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name. The Trust created hereby shall be
known as "Navistar Financial 1996-B Owner Trust" in which name
the Owner Trustee may conduct the business of the Trust, make and
execute contracts and other instruments on behalf of the Trust
and sue and be sued on behalf of the Trust.
SECTION 2.2 Office. The office of the Trust 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 Certificate Owners and the
Seller.
SECTION 2.3 Purposes and Powers. (a) The purpose of
the Trust is to engage in the following activities:
(i) to acquire, manage and hold the Receivables;
(ii) to issue the Notes pursuant to the Indenture and
the Certificates pursuant to this Agreement, and to sell,
transfer or exchange the Notes and the Certificates;
(iii) to acquire property and assets from the Seller
pursuant to the Pooling and Servicing Agreement, to make
payments or distributions on the Securities to the
Securityholders, to make deposits into and withdrawals from
the Reserve Account and other
<PAGE>
accounts established pursuant to the Basic Documents and to
pay the organizational, start-up and transactional expenses
of the Trust;
(iv) to assign, grant, transfer, pledge, mortgage and
convey the Trust Estate pursuant to the terms of the
Indenture and to hold, manage and distribute to the
Certificateholders pursuant to the terms of this Agreement
and the Pooling and Servicing Agreement any portion of the
Trust Estate released from the lien of, and remitted to the
Trust pursuant to, the Indenture;
(v) to enter into and perform its obligations and
exercise its rights 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, desirable 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 payments or distributions to the
Securityholders.
The Trust shall not engage in any activity other than in
connection with the foregoing or other than as required or
authorized by the terms of this Agreement or the Basic Documents.
SECTION 2.4 Appointment of Owner Trustee. The
Seller hereby appoints the Owner Trustee as trustee of the Trust
effective as of the date hereof, to have all the rights, powers
and duties set forth herein.
SECTION 2.5 Initial Capital Contribution of Owner
Trust Estate. The Seller hereby sells, assigns, transfers,
conveys and sets over to the Owner Trustee, as of the date
hereof, the sum of $1. The Owner Trustee hereby acknowledges
receipt in trust from the Seller, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner
Trust Estate and shall be deposited in the Certificate
Distribution Account. The Seller shall pay organizational
expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.
SECTION 2.6 Declaration of Trust. The Owner Trustee
hereby declares that it shall hold the Owner Trust Estate in
trust upon and subject to the conditions and obligations set
forth herein and in the Pooling and Servicing Agreement 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, that this
Agreement constitute the governing instrument of such business
trust and that the Certificates represent the equity interests
therein. The rights of the Certificateholders shall be
determined as set forth herein and in the Business Trust Statute
and the relationship between the parties hereto created by this
Agreement shall not constitute indebtedness for any purpose. It
is the intention of the parties hereto that, solely for purposes
of federal income taxes, state and local income and franchise
taxes, and any other taxes imposed upon, measured by, or based
upon gross or net income, the Trust shall be treated
<PAGE>
as a partnership. The parties agree that, unless otherwise
required by appropriate tax authorities, the Trust shall file or
cause to be filed annual or other necessary returns, reports and
other forms consistent with the characterization of the Trust as
partnership for such tax purposes. Effective as of the date
hereof, the Owner Trustee shall have all rights, powers and
duties set forth in this Agreement, the Pooling and Servicing
Agreement and the Business Trust Statute with respect to
accomplishing the purposes of the Trust.
SECTION 2.7 Liability of the Seller and the
Certificate Owners.
(a) The Seller shall be liable directly to and shall
indemnify the injured party for all losses, claims, damages,
liabilities and expenses of the Trust (including Expenses, to the
extent not paid out of the Owner Trust Estate) to the extent that
the Seller would be liable if the Trust were a partnership under
the Delaware Revised Uniform Limited Partnership Act in which the
Seller were a general partner; provided, however, that the Seller
shall not be liable for (i) any losses incurred by a
Certificateholder or a Certificate Owner in its capacity as an
investor in the Certificates or by a Noteholder or Note Owner in
its capacity as an investor in the Notes or (ii) any losses,
claims, damages, liabilities and expenses arising out of the
imposition by any taxing authority of any federal income taxes,
state or local income or franchise taxes, or any other taxes
imposed on or measured by gross or net income, gross or net
receipts, capital, net worth and similar items (including any
interest, penalties or additions with respect thereto) upon the
Certificateholders, the Certificate Owners, the Noteholders, the
Note Owners, the Owner Trustee or the Indenture Trustee
(including any liabilities, costs or expenses with respect
thereto) with respect to any Receivables not specifically
indemnified or represented to hereunder. In addition, any third
party creditors of the Trust (other than in connection with the
obligations described in the preceding sentence for which the
Seller shall not be liable) shall be deemed third party
beneficiaries of this subsection 2.7(a). The obligations of the
Seller under this subsection 2.7(a) shall be evidenced by the
Class C Certificates issued pursuant to Section 3.10, which for
purposes of the Business Trust Statute shall be deemed to be a
separate class of Class C Certificates from all other Class C
Certificates issued by the Trust; provided, however, that the
rights and obligations evidenced by all Class C Certificates,
regardless of class, shall, except as provided in this subsection
2.7(a) and as provided with respect to Class C Voting Interests,
be identical.
(b) No Certificateholder or Certificate Owner, other
than to the extent set forth in subsection 2.7(a) with respect to
the Seller, shall have any personal liability for any liability
or obligation of the Trust.
SECTION 2.8 Title to Trust Property. Legal title to
all 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 2.9 Situs of Trust. The Trust shall be
located and administered in the State of Delaware. 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. The Trust shall not have any employees in any state other
than Delaware; provided, however, that nothing herein shall
restrict or prohibit the
<PAGE>
Owner Trustee from having employees within or without the State
of Delaware. Payments shall be received by the Trust only in
Delaware or New York, and payments and distributions shall be
made by the Trust only from Delaware or New York. The only
office of the Trust shall be the Corporate Trust Office in
Delaware.
SECTION 2.10 Representations and Warranties of the
Seller. The Seller hereby represents and warrants to the Owner
Trustee that:
(a) 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 power and authority to own
its properties and to conduct its business as such
properties are presently owned and such business is
presently conducted and had at all relevant times, and now
has, power, authority and legal right to acquire and own the
Receivables.
(b) 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 requires such qualifications.
(c) The Seller has the 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
Issuer as part of the Trust and the Seller has duly
authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery and
performance of this Agreement have been duly authorized by
the Seller by all necessary corporate action.
(d) The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms of this
Agreement do not conflict with, result in any breach of any
of the terms and provisions of or 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 is bound, or 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 pursuant to the
Basic Documents), or violate any law or, to 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 any
of its properties.
(e) This Agreement, when duly executed and delivered,
shall constitute a legal, valid and binding obligation of
the Seller enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the
enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at
law.
(f) There are no proceedings or, to the Seller's
knowledge, investigations pending or, to the Seller's
knowledge, threatened before any court, regulatory body,
administrative
<PAGE>
agency or other tribunal or governmental instrumentality
having jurisdiction over the Seller or its properties (i)
asserting the invalidity of this Agreement or any
Certificates issued pursuant hereto or, (ii) seeking to
prevent the issuance of such Certificates or the
consummation of any of the transactions contemplated by
this Agreement or (iii) seeking any determination or ruling
that might materially and adversely affect the performance
by the Seller of its obligations under, or the validity or
enforceability of, such Certificates or this Agreement.
SECTION 2.11 Tax Treatment. The Seller and the Owner
Trustee, by entering into this Agreement, and the
Certificateholders and Certificate Owners, by acquiring any
Certificate or interest therein, (i) express their intention that
the Certificates will qualify under applicable tax law as
partnership interests in a partnership which holds the Owner
Trust Estate for their benefit, and (ii) unless otherwise
required by appropriate taxing authorities, agree to treat the
Certificates as partnership interests in such a partnership for
the purposes of federal income taxes, state and local income and
franchise taxes, and any other taxes imposed upon, measured by or
based upon gross or net income.
ARTICLE III
THE CERTIFICATES
SECTION 3.1 Initial Certificate Ownership. Upon the
formation of the Trust by the contribution by the Seller pursuant
to Section 2.5 and until the issuance of the Certificates, the
Seller shall be the sole beneficiary of the Trust.
SECTION 3.2 Form of the Certificates.
(a) The Class B Certificates shall be substantially in
the form set forth in Exhibit A-1 and shall be issued (i) in
minimum denominations of $20,000 and (ii) in integral multiples
of $1,000 in excess thereof. The Class C Certificates shall be
substantially in the form set forth in Exhibit A-2 and shall be
issued (x) in minimum denominations of $500,000 and (y) in
integral multiples of $1,000 in excess thereof, except for one
Class C Certificate which may be issued to the Seller in any
denomination. The Certificates shall be executed on behalf of
the Trust by manual or facsimile signature of a Responsible
Officer of the Owner 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, when authenticated pursuant to
Section 3.3, validly issued and entitled to the benefits of the
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.
(b) The Definitive Certificates 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 Certificates, as
evidenced by their execution of such Certificates.
<PAGE>
(c) The Certificates shall be issued in
fully-registered form. The terms of the Class B Certificates set
forth in Exhibit A-1, and the terms of the Class C Certificates
set forth in Exhibit A-2, shall form part of this Agreement.
SECTION 3.3 Execution, Authentication and Delivery.
Concurrently with the sale of the Receivables to the Trust
pursuant to the Pooling and Servicing Agreement, the Owner
Trustee shall cause Class B Certificates in an aggregate
principal amount equal to the initial Class B Certificate
Balance, and Class C Certificates in an aggregate principal
amount equal to the initial Class C Certificate Balance, 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. 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-1
or Exhibit A-2, as applicable, executed by the Owner Trustee or
The Chase Manhattan Bank, as the Owner Trustee's authenticating
agent, by manual 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 3.4 Registration; 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
3.8, 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 provided herein; provided, however,
that no Certificate may be subdivided upon registration of
transfer or exchange such that the denomination of any resulting
Certificate would have been less than the minimum authorized
denomination specified in Section 3.2(a) if such Certificate had
been issued in the initial distribution of Certificates. The
Chase Manhattan Bank shall be the initial Certificate Registrar.
Upon any resignation of a Certificate Registrar, the Owner
Trustee shall promptly appoint a successor or, if it elects not
to make such an appointment, assume the duties of Certificate
Registrar.
(b) Upon surrender for registration of transfer of any
Certificate at the office or agency maintained pursuant to
Section 3.8, the Owner Trustee shall execute on behalf of the
Trust, authenticate and deliver (or shall cause The Chase
Manhattan Bank as 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.
Notwithstanding the foregoing, such registration of transfer
shall not be effective unless the requirements of Section 9.11
shall have been complied with.
(c) At the option of a Holder, Certificates may be
exchanged for other Certificates of the same class, and of
authorized denominations of a like aggregate principal amount
upon surrender of the Certificates to be exchanged at the
Corporate Trust Office maintained pursuant to Section 3.8.
Whenever any Certificates are so surrendered for exchange, the
Owner Trustee shall execute on behalf of the Trust, authenticate
and deliver (or shall cause The Chase Manhattan Bank
<PAGE>
as its authenticating agent to authenticate and deliver) one or
more Certificates dated the date of authentication by the Owner
Trustee or any authenticating agent. Such Certificates shall be
delivered to the Holder making the exchange.
(d) 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 and such other
documents and instruments as may be required by Section 9.11.
Each Certificate surrendered for registration of transfer or
exchange shall be cancelled and subsequently destroyed or
otherwise disposed of by the Owner Trustee or Certificate
Registrar in accordance with its customary practice.
(e) 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 3.5 Mutilated, Destroyed, Lost or Stolen
Certificates.
(a) If (i) any mutilated Certificate is surrendered to
the Certificate Registrar, or the Certificate Registrar receives
evidence to its satisfaction of the destruction, loss or theft of
any Certificate, and (ii) there is delivered to the Certificate
Registrar, the Owner Trustee and the Trust such security or
indemnity as may be required by them to hold each of them
harmless, then, in the absence of notice to the Certificate
Registrar or the Owner Trustee that such Certificate has been
acquired by a bona fide purchaser, the Owner Trustee shall
execute on behalf of the Trust and the Owner Trustee shall
authenticate and deliver (or shall cause The Chase Manhattan Bank
as its authenticating agent to authenticate and deliver), in
exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a replacement Certificate in authorized
denominations of a like amount; provided, however, that if any
such destroyed, lost or stolen Certificate, but not a mutilated
Certificate, shall have become or within seven days shall be due
and payable, then instead of issuing a replacement Certificate
the Owner Trustee may pay such destroyed, lost or stolen
Certificate when so due or payable.
(b) If, after the delivery of a replacement
Certificate or distribution in respect of a destroyed, lost or
stolen Certificate pursuant to subsection 3.5(a), a bona fide
purchaser of the original Certificate in lieu of which such
replacement Certificate was issued presents for payment such
original Certificate, the Owner Trustee shall be entitled to
recover such replacement Certificate (or such distribution) from
the Person to whom it was delivered or any Person taking such
replacement Certificate from such Person to whom such replacement
Certificate was delivered or any assignee of such Person, except
a bona fide 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 Owner Trustee in
connection therewith.
(c) In connection with the issuance of any replacement
Certificate under this Section 3.5, the Owner Trustee may require
the payment by the Holder of such Certificate of a sum sufficient
to cover any tax or other governmental charge that may be imposed
in relation thereto and
<PAGE>
any other reasonable expenses (including the fees and expenses of
the Owner Trustee and the Certificate Registrar) connected
therewith.
(d) Any duplicate Certificate issued pursuant to this
Section 3.5 in replacement of any mutilated, destroyed, lost or
stolen Certificate shall constitute an original additional
contractual obligation of the Trust, whether or not the
mutilated, destroyed, lost or stolen Certificate shall be found
at any time or be enforced by anyone, and shall be entitled to
all the benefits of this Agreement equally and proportionately
with any and all other Certificates duly issued hereunder.
(e) The provisions of this Section 3.5 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 Certificates.
SECTION 3.6 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 Certificateholder
of such Certificate for the purpose of receiving distributions
pursuant to Article V and for all other purposes whatsoever, and
neither the Owner Trustee nor the Certificate Registrar shall be
bound by any notice to the contrary.
SECTION 3.7 Access to List of Certificateholders'
Names and Addresses. The Owner Trustee shall furnish or cause to
be furnished to the Servicer and the Seller, within 15 days after
receipt by the Owner Trustee of a request therefor from the
Servicer or the Seller in writing, a list, in such form as the
Servicer or the Seller may reasonably require, of the names and
addresses of the Certificateholders as of the most recent Record
Date. Each Holder, by receiving and holding a Certificate, shall
be deemed to have agreed not to hold any of the Servicer, the
Seller 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 3.8 Maintenance of Corporate Trust Office.
The Owner 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
Owner Trustee in respect of the Certificates and the Basic
Documents may be served. The Owner Trustee initially designates
the offices of The Chase Manhattan Bank, 55 Water Street, New
York, New York, as its principal office for such purposes. The
Owner Trustee shall give prompt written notice to the Seller and
to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 3.9 Appointment of Paying Agent. The Paying
Agent shall make distributions to Certificateholders from the
Certificate Distribution Account pursuant to Section 5.2 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 Certificate Distribution 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 Chase Manhattan Bank, and any co-paying agent
chosen by The
<PAGE>
Chase Manhattan Bank, and acceptable to the Owner Trustee. The
Chase Manhattan Bank shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Owner Trustee. If The Chase
Manhattan Bank 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 agree with the Owner Trustee
that as Paying Agent, such successor Paying Agent or additional
Paying Agent shall hold all sums, if any, held by it for
distribution 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 6.3, 6.6, 6.7, 6.8 and 6.9 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 3.10 Disposition by Seller. On and after the
Closing Date, the Seller shall retain beneficial and record
ownership of Class C Certificates representing at least 1% of the
Aggregate Certificate Balance. Any attempted transfer of any
Certificate that would reduce such interest of the Seller below
1% of the Aggregate Certificate Balance shall be void. The Owner
Trustee shall cause any Certificate issued to the Seller to
contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE".
Certificates issued to the Seller shall be in definitive form
only.
SECTION 3.11 Book-Entry Certificates. The Class B
Certificates, upon original issuance, shall 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. 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 with respect to a Class B Certificate shall receive a
definitive Certificate representing such Certificate Owner's
interest in such Class B Certificate, except as provided in
Section 3.13. Unless and until definitive fully registered
Certificates (the "Definitive Certificates") representing the
Class B Certificates shall have been issued to Certificate Owners
with respect to a Class B Certificate pursuant to Section 3.13:
(a) the provisions of this Section 3.11 shall be in
full force and effect;
(b) the Certificate Registrar and the Owner Trustee
shall be entitled to deal with the Clearing Agency for all
purposes of this Agreement (including the distribution of
Class B Certificate Balance and interest on the Class B
Certificates and the giving of instructions or directions
hereunder) as the sole Holder of the Class B Certificate,
and shall have no obligation to the Certificate Owners;
(c) to the extent that the provisions of this Section
3.11 conflict with any other provisions of this Agreement,
the provisions of this Section 3.11 shall control;
<PAGE>
(d) the rights of the Certificate Owners of the Class
B Certificates 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 Certificate Depository Agreement in the form attached
as Exhibit C, unless and until Definitive Certificates
representing the Class B Certificates are issued pursuant
to Section 3.13, the initial Clearing Agency shall make
book-entry transfers among the Clearing Agency Participants
and receive and transmit distributions of Class B
Certificate Balance and interest on the Class B Certificates
to such Clearing Agency Participants;
(e) whenever this Agreement requires or permits
actions to be taken based upon instructions or directions
of Holders of Class B Certificates evidencing a specified
percentage of the Class B Voting Interests, the Clearing
Agency shall be deemed to represent such percentage only to
the extent that it has received written instructions to
such effect from Certificate Owners of the Class B
Certificates and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of
Class B Voting Interests and has delivered such instructions
to the Owner Trustee. The Seller or the Owner Trustee may
set a record date for the purpose of determining the
identity of Holders of Certificates entitled to vote or to
consent to any action by vote as provided in this Agreement.
SECTION 3.12 Notices to Clearing Agency. Whenever a
notice or other communication to the Class B Certificateholders
is required under this Agreement, unless and until Definitive
Certificates shall have been issued to Certificate Owners of the
Class B Certificates pursuant to Section 3.13, the Owner Trustee
shall give all such notices and communications specified herein
to be given to Class B Certificateholders to the Clearing Agency
and shall have no further obligation to the Certificate Owners of
the Class B Certificates.
SECTION 3.13 Definitive Certificates.
(a) The Class C Certificates shall be issued in the
form of Definitive Certificates.
(b) If (i) 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 Class B Certificates, and the Administrator
is unable to locate a qualified successor, (ii) the
Administrator at its option advises the Owner Trustee 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 of the Class B Certificates representing beneficial
interests aggregating at least a majority of the Class B
Voting Interests advise 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 such
Certificate Owners, then the Clearing Agency shall notify
all Certificate Owners of the Class B Certificates and the
Owner Trustee of the occurrence of any such event and of
the availability of Definitive Certificates to Certificate
Owners of the Class B Certificates requesting the same.
Upon surrender to the Owner Trustee of the typewritten
Certificate or Certificates representing the Book-Entry
Certificates for the Class B Certificates, by the Clearing
Agency, accompanied by registration instructions, the Owner
Trustee shall execute and authenticate the Definitive
<PAGE>
Certificates for the Class B 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 for the Class B Certificates, the Owner
Trustee shall recognize the Holders of such Definitive
Certificates as Class B Certificateholders.
SECTION 3.14 Seller as Certificateholder. The Seller
in its individual or any other capacity may, subject to Section
3.10, become the owner or pledgee of Certificates and may
otherwise deal with the Owner Trustee or its Affiliates as if it
were not the Seller.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 Prior Notice to Certificateholders with
Respect to Certain Matters. The Owner Trustee shall not take
action with respect to the following matters, unless (i) the
Owner Trustee shall have notified the Certificateholders in
writing of the proposed action at least 30 days before the taking
of such action, and (ii) the Certificateholders shall not have
notified the Owner Trustee in writing prior to the 30th day 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 (other than an action to collect on a Receivable) and
the compromise of any action, claim or lawsuit brought by
or against the Trust (other than an action to collect on a
Receivable);
(b) the election by the Trust to file an amendment to
the Certificate of Trust, a conformed copy of which is
attached hereto as Exhibit B;
(c) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any
Noteholder is required;
(d) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any
Noteholder is not required and such amendment materially
adversely affects the interests of the Certificateholders;
(e) the amendment, change or modification of the
Administration Agreement, except to cure any ambiguity or
to amend or supplement any provision in a manner that would
not materially adversely affect the interests of the
Certificateholders; or
(f) the appointment pursuant to the Indenture of a
successor Note Registrar, Paying Agent or Indenture Trustee
or pursuant to this Agreement of a successor Certificate
Registrar, or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee or Certificate
Registrar of its obligations under the Indenture or this
Agreement, as applicable.
<PAGE>
SECTION 4.2 Action by Certificateholders with
Respect to Certain Matters. The Owner Trustee shall not have the
power, except upon the written direction of the
Certificateholders, to (a) remove the Administrator under the
Administration Agreement pursuant to Section 10 thereof, (b)
appoint a successor Administrator pursuant to Section 10 of the
Administration Agreement, (c) remove the Servicer under the
Pooling and Servicing Agreement pursuant to Section 8.02 thereof
or (d) except as expressly provided in the Basic Documents, sell
the Receivables or any interest therein 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 Certificateholders.
SECTION 4.3 Action by Certificateholders 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 Holders
of Certificates (including the unanimous approval of the board of
directors of the Seller) unless the Owner Trustee reasonably
believes that the Trust is insolvent.
SECTION 4.4 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 obligation of the Trust or the
Owner Trustee under this Agreement or any of the Basic Documents
or would be contrary to Section 2.3, nor shall the Owner Trustee
be obligated to follow any such direction, if given.
SECTION 4.5 Majority Control. Except as expressly
provided herein, any action that may be taken or consent that may
be given or withheld by the Certificateholders under this
Agreement shall be effective if such action is taken or such
consent is given or withheld by (a) the Holders of Class B
Certificates evidencing not less than a majority of the Class B
Voting Interests thereof and (b) the Holders of Class C
Certificates evidencing not less than a majority of the Class C
Voting Interests thereof. Except as expressly provided herein,
any written notice, instruction, direction or other document of
the Certificateholders delivered pursuant to this Agreement shall
be effective if signed by (a) Holders of Class B Certificates
evidencing not less than a majority of the Class B Voting
Interests and (b) Holders of Class C Certificates evidencing not
less than a majority of the Class C Voting Interests, in each
case, at the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1 Establishment of Certificate
Distribution Account.
(a) The Servicer, for the benefit of the
Certificateholders, shall establish and maintain at The Chase
Manhattan Bank in the name of the Owner Trustee an Eligible
Deposit Account known as the Navistar Financial 1996-B Owner
Trust Certificate Distribution Account (the "Certificate
Distribution Account"), bearing an additional designation clearly
indicating that the funds deposited therein are held for the
benefit of the Certificateholders.
(b) The Owner Trustee shall possess all right, title
and interest in and to all funds on deposit from time to time in
the Certificate Distribution Account and in all proceeds thereof.
<PAGE>
Except as otherwise provided herein or in the Pooling and
Servicing Agreement, the Certificate Distribution Account shall
be under the sole dominion and control of the Owner Trustee for
the benefit of the Certificateholders. If, at any time, the
Certificate Distribution Account ceases to be an Eligible Deposit
Account, the Servicer shall within 10 Business Days (or such
longer period, not to exceed 30 calendar days, as to which each
Rating Agency may consent) establish a new Certificate
Distribution Account as an Eligible Deposit Account and shall
cause the Owner Trustee to transfer any cash and/or any
investments in the old Certificate Distribution Account to such
new Certificate Distribution Account.
SECTION 5.2 Application of Trust Funds.
(a) On each Distribution Date, the Owner Trustee shall
(based on the information contained in the Servicer's Certificate
delivered on the related Determination Date) distribute to the
Certificateholders amounts deposited in the Certificate
Distribution Account with respect to such Distribution Date (the
"Certificate Available Amount") in the following order of
priority:
(i) first, to the Class B Certificateholders, on a pro
rata basis, to the extent of the Certificate Available
Amount, the Class B Certificateholders' Interest
Distributable Amount;
(ii) second, to the Class C Certificateholders, on a
pro rata basis, to the extent of the Certificate Available
Amount (as such amount has been reduced by the
distributions described in clause (i) above), the Class C
Certificateholders' Interest Distributable Amount;
(iii) third, to the Class B Certificateholders, on a
pro rata basis, to the extent of the Certificate Available
Amount (as such amount has been reduced by the
distributions described in clauses (i) and (ii) above), the
Class B Certificateholders' Principal Distributable Amount;
and
(iv) fourth, to the Class C Certificateholders, on a
pro rata basis, to the extent of the Certificate Available
Amount (as such amount has been reduced by the
distributions described in clauses (i), (ii) and (iii)
above), the Class C Certificateholders' Principal
Distributable Amount.
Notwithstanding the foregoing, (A) if the principal balance of
the Notes has been declared immediately due and payable and
remains accelerated at such time as the Notes have been paid in
full, or (B) the assets of the Trust have been sold or disposed
of pursuant to Article V of the Indenture or Section 7.2 of this
Agreement, then all amounts deposited in the Certificate
Distribution Account on or after such date (whether pursuant to
Section 9.02 of the Pooling and Servicing Agreement or otherwise)
shall be applied in the following order of priority:
(1) first, to the Class B Certificateholders, on
a pro rata basis, to the extent of funds available in
the Certificate Distribution Account, to pay the Class
B Certificateholders' Interest Distributable Amount;
(2) second, to the Class B Certificateholders,
on a pro rata basis, to the extent of funds available
in the Certificate Distribution Account (after giving
effect
<PAGE>
to the distributions described in clause (1) above), to
reduce the Class B Certificate Balance to zero;
(3) third, to the Class C Certificateholders, on
a pro rata basis, to the extent of funds available in
the Certificate Distribution Account (after giving
effect to the distributions described in clauses (1)
and (2) above), to pay the Class C Certificateholders'
Interest Distributable Amount; and
(4) fourth, to the Class C Certificateholders, on
a pro rata basis, to the extent of funds available in
the Certificate DistributiON Account (after giving
effect to the distributions described in clauses (1),
(2) and (3) above), to reduce the Class C Certificate
Balance to zero.
(b) On each Distribution Date, the Owner Trustee shall
send to each Certificateholder the statement described in Section
4.09(a) of the Pooling and Servicing Agreement.
(c) If any withholding tax is imposed on the Trust's
distributions (or allocations of income) to a Certificateholder,
such tax shall reduce the amount otherwise distributable to the
Certificateholder in accordance with this Section 5.2. 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 a distribution (such as a distribution to
a non-U.S. Certificateholder), the Owner Trustee may in its sole
discretion withhold such amounts in accordance with this
subsection 5.2(c). If 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.
(d) If the Indenture Trustee holds escheated funds for
payment to the Trust pursuant to Section 3.3(e) of the Indenture,
the Owner Trustee shall, upon notice from the Indenture Trustee
that such funds exist, submit on behalf of the Trust an Issuer
Order to the Indenture Trustee pursuant to Section 3.3(e) of the
Indenture instructing the Indenture Trustee to pay such funds to
or at the order of the Seller.
SECTION 5.3 Method of Payment. (a) Subject to
subsections 5.3(b) and 7.1(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 (i)
by wire transfer, in immediately available funds, to the account
of such Holder at a bank or other entity having appropriate
facilities therefor, if (x) the Certificates of such Holder are
Definitive Certificates, such Certificateholder shall have
provided to the Certificate Registrar appropriate written
instructions at least five Business Days prior to such Record
Date and either (A) the distribution required to be made to such
Holder on such Distribution Date exceeds $100,000 or (B) such
Holder holds Class C Certificates representing more
<PAGE>
than 50% of the Class C Certificate Balance as of such Record
Date, or (y) the Certificates are Book-Entry Certificates, or,
(ii) if neither clause (i)(x) nor (i)(y) is applicable, by check
mailed to such Certificateholder at the address of such Holder
appearing in the Certificate Register.
(b) (i) If the Servicer gives written notice to the
Owner Trustee to the effect that distributions required to
be made to the Class B Certificateholders on the next
succeeding Distribution Date (which Distribution Date shall
not be earlier than ten Business Days after the date of
such notice) would be sufficient to pay the Class B
Certificates in full (which notice shall set forth the
amount of such final distribution), but would not effect a
termination of the Trust under Section 7.1, then notice of
such payment specifying the Distribution Date upon which the
Class B Certificateholders shall surrender their Class B
Certificates to the Paying Agent for payment of the final
distribution and cancellation, shall be given by the Owner
Trustee by letter to Class B Certificateholders mailed
within three Business Days of receipt of notice of such
payment from the Servicer, stating: (i) the Distribution
Date upon or with respect to which the final distribution
on the Class B Certificates shall be made upon presentation
and surrender of the Class B Certificates at the office of
the Paying Agent therein designated; (ii) the amount of any
such final distribution; and (iii) that the Record Date
otherwise applicable to such Distribution Date is not
applicable with respect to the Class B Certificates,
distributions being made only upon presentation and
surrender of the Class B 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 at the time
such notice is given to Class B Certificateholders. Upon
presentation and surrender of the Class B Certificates, the
Paying Agent shall cause to be distributed to Class B
Certificateholders amounts distributable on such
Distribution Date pursuant to Section 5.2.
(ii) If all of the Class B Certificateholders shall not
surrender their Class B Certificates for cancellation
within six months after the date specified in the written
notice specified in Section 5.3(b)(i), the Owner Trustee
shall give a second written notice to the remaining Class B
Certificateholders to surrender their Class B Certificates
for cancellation and receive the final distribution with
respect thereto. If within one year after the second
notice all the Class B 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 Class B
Certificateholders concerning surrender of their Class B
Certificates, and the cost thereof shall be paid out of the
funds and other assets that shall remain subject to this
Agreement.
(iii) Within sixty days of the cancellation of all of
the Class B Certificates pursuant to Section 5.3(b)(i) or
Section 5.3(b)(ii), the Owner Trustee shall provide each of
the Rating Agencies with written notice stating that all
Class B Certificates have been so cancelled.
SECTION 5.4 Accounting and Reports to the
Certificateholders, the Internal Revenue Service and Others. The
Owner Trustee shall (a) maintain (or cause to be maintained) the
books of the Trust on the basis of a fiscal year ending October
31 on the accrual method of accounting, (b) deliver to each
Certificateholder, as may be required by the Code and applicable
Treasury
<PAGE>
Regulations or otherwise, such information as may be required to
enable each Certificateholder to prepare its federal income tax
returns, (c) file such tax returns relating to the Trust and 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, (d) cause such tax returns to be signed in the manner
required by law and (e) collect or cause to be collected any
withholding tax as described in and in accordance with subsection
5.2(c) with respect to income or distributions to
Certificateholders. In preparing and filing tax returns for the
Trust, the Owner Trustee shall allocate taxable income of the
Trust for each Monthly Period in the following manner: (A) to
the Class B Certificateholders, in an amount equal to the sum of
(1) the product of the Class B Pass Through Rate multiplied by
the Class B Certificate Balance as of the last day of such month,
and (2) the amount specified in clause (iii) of the definition of
Class B Certificateholders' Interest Distributable Amount for
such Monthly Period, (B) to the Class C Certificateholders, in an
amount equal to the sum of (1) the product of the Class C Pass
Through Rate multiplied by the Class C Certificate Balance as of
the last day of such month, and (2) the amount specified in
clause (iii) of the definition of Class C Certificateholders'
Interest Distributable Amount for such Monthly Period, (C) to the
Certificateholders, in an amount equal to the sum of (1) 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, and (2) any
Prepayment Surplus payable to Holders of the Certificates for
such month; and (D) to the Seller, if and to the extent that the
taxable income of the Trust for each month exceeds the sum of the
amounts computed under (A), (B) and (C) above; provided that in
all cases the Seller shall be allocated in respect of the Class C
Certificates retained by the Seller at least 1% of each item of
income, gain, loss, credit and deduction allocable to the
Certificates. Unless otherwise permitted or required by any
applicable law or regulation, the Owner Trustee shall allocate
amounts of taxable income of the Trust for a particular calendar
month among the Certificateholders in proportion to the principal
amount of Certificates owned by them as of the first Record Date
following the end of such month.
SECTION 5.5 Signature on Returns; Tax Matters
Partner. The Owner Trustee shall sign on behalf of the Trust any
and all 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 Seller. The Seller shall be the
"tax matters partner" of the Trust pursuant to the Code.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.1 Duties of Owner Trustee.
(a) The Owner Trustee undertakes to perform such
duties, and only such duties, as are specifically set forth in
this Agreement, the Pooling and Servicing Agreement and the other
Basic Documents, including the administration of the Trust in the
interest of the Certificateholders, subject to the Basic
Documents and in accordance with the provisions of this Agreement
and the Pooling and Servicing Agreement. No implied covenants or
obligations shall be read into this Agreement, the Pooling and
Servicing Agreement or any other Basic Document against the Owner
Trustee.
<PAGE>
(b) 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 liable for the default or failure of
the Administrator to carry out its obligations under the
Administration Agreement.
(c) In the absence of bad faith on its part, the Owner
Trustee may conclusively rely upon certificates or opinions
furnished to the Owner Trustee and conforming to the requirements
of this Agreement in determining the truth of the statements and
the correctness of the opinions contained therein; provided,
however, that the Owner Trustee shall have examined such
certificates or opinions so as to determine compliance of the
same with the requirements of this Agreement.
(d) The Owner Trustee may not be relieved from
liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection 6.1(d) shall not limit the
effect of subsection 6.1(a) or (b);
(ii) the Owner Trustee shall not be liable for any
error of judgment made in good faith by a Responsible
Officer unless it is proved that the Owner Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Owner Trustee shall not be liable with
respect to any action it takes or omits to take in good
faith in accordance with a direction received by it pursuant
to Section 4.1, 4.2 or 6.4.
(e) Subject to Sections 5.1 and 5.2, monies received
by the Owner Trustee hereunder need not be segregated in any
manner except to the extent required by law or the Pooling and
Servicing Agreement and may be deposited under such general
conditions as may be prescribed by law, and the Owner Trustee
shall not be liable for any interest thereon.
(f) The Owner Trustee shall not take any action that
(i) is inconsistent with the purposes of the Trust set forth in
Section 2.3 or (ii) would, to the actual knowledge of a
Responsible Officer of the Owner Trustee, result in the Trust's
becoming taxable as a corporation for federal income tax
purposes.
(g) The Certificateholders shall not direct the Owner
Trustee to take action that would violate the provisions of this
Section 6.1.
SECTION 6.2 Rights of Owner Trustee. The Owner
Trustee is authorized and directed to execute and deliver the
Basic Documents 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, in such form as the Seller shall
approve as evidenced conclusively by the Owner Trustee's
execution thereof. In addition to the foregoing, the Owner
Trustee is authorized, but shall not be obligated, to take all
<PAGE>
actions required of the Trust pursuant to the Basic Documents.
The Owner Trustee is further authorized from time to time to take
such action as the Administrator recommends with respect to the
Basic Documents.
SECTION 6.3 Acceptance of Trusts and Duties. Except
as otherwise provided in this Article VI, in accepting the trusts
hereby created, Chase Manhattan Bank Delaware acts solely as
Owner Trustee hereunder and not in its individual capacity and
all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Agreement or any Basic
Document shall look only to the Owner Trust Estate for payment or
satisfaction thereof. 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 also agrees to disburse all monies actually
received by it constituting part of the Owner Trust Estate upon
the terms of the Basic Documents and this Agreement. The Owner
Trustee shall not be liable or accountable hereunder or under any
Basic Document under any circumstances, except (i) for its own
negligent action, its own negligent failure to act or its own
willful misconduct or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 6.6 and expressly
made by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the
preceding sentence):
(a) the Owner Trustee shall at no time have any
responsibility or liability for or with respect to the
legality, validity and enforceability of any Receivable or
the perfection and priority of any security interest created
by any Receivable in any Financed Vehicle or the maintenance
of any such perfection and priority, or for or with respect
to the sufficiency of the Owner Trust Estate or its ability
to generate the distributions and payments to be made to
Certificateholders under this Agreement or to Noteholders
under the Indenture, including, without limitation: the
existence, condition and ownership of any Financed Vehicle;
the existence and enforceability of any insurance thereon;
the existence and contents of any Receivable on any computer
or other record thereof; the validity of the assignment of
any Receivable to the Trust or of any intervening
assignment; the completeness of any Receivable; the
performance or enforcement of any Receivable; the
compliance by the Seller or the Servicer with any warranty
or representation made under any Basic Document or in any
related document or the accuracy of any such warranty or
representation or any action of the Administrator, the
Trustee or the Servicer or any subservicer taken in the name
of the Owner Trustee;
(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 or any
Certificateholder;
(c) no provision of this Agreement or any Basic
Document shall require the Owner Trustee to expend or risk
funds or otherwise incur any financial liability in the
performance of any of its rights or powers hereunder or
under any Basic Document, if the Owner Trustee shall have
reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability
is not reasonably assured or provided to it;
<PAGE>
(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 or the Certificate Balance of and
interest on the Certificates;
(e) the Owner Trustee shall not be responsible for or
in respect of and makes no representation as to the
validity or sufficiency of any provision of this Agreement
or for the due execution hereof by the Seller or for the
form, character, genuineness, sufficiency, value or validity
of any of the Owner Trust Estate or for or in respect of
the validity or sufficiency of the Basic Documents, the
Notes, the Certificates (other than the certificate of
authentication on the Certificates) or of any Receivables or
any related documents, and the Owner Trustee shall in no
event assume or incur any liability, duty or obligation to
any Noteholder or to any Certificateholder, other than as
expressly provided for herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the
default or misconduct of the Administrator, the Indenture
Trustee, the Seller or the Servicer 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 under this Agreement or the Basic Documents that are
required to be performed by the Administrator under the
Administration Agreement, the Indenture Trustee under the
Indenture, the Servicer under the Pooling and Servicing
Agreement or NFC under the Purchase Agreement; and
(g) the Owner 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 otherwise or in relation
to this Agreement or any Basic Document, at the request,
order or direction of any of the Certificateholders, unless
such Certificateholders have offered to the Owner Trustee
security or indemnity satisfactory to it against the costs,
expenses and liabilities that may be incurred by the Owner
Trustee therein or thereby. The right of the Owner Trustee
to perform any discretionary act enumerated in this
Agreement or in any Basic Document shall not be construed
as a duty, and the Owner Trustee shall not be answerable for
other than its negligence or willful misconduct in the
performance of any such act.
SECTION 6.4 Action upon Instruction by
Certificateholders.
(a) Subject to Section 4.4, 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 Section
4.5.
(b) Notwithstanding the foregoing, the Owner Trustee
shall not be required to take any action hereunder or under any
Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such
action is likely to result in liability on the part of the Owner
Trustee or is contrary to the terms hereof or of any Basic
Document or is otherwise contrary to law.
<PAGE>
(c) Whenever the Owner Trustee is unable to decide
between alternative courses of action permitted or required by
the terms of this Agreement or any Basic Document, or is unsure
as to the application, intent, interpretation or meaning of any
provision of this Agreement or the Basic Documents, the Owner
Trustee shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Certificateholders
requesting instruction as to the course of action to be adopted,
and, to the extent the Owner Trustee acts in good faith in
accordance with any such instruction received, the Owner Trustee
shall not be liable on account of such action to any Person. If
the Owner Trustee shall not have received appropriate
instructions within ten days of such notice (or within such
shorter period of time as reasonably may be specified in such
notice or may be necessary under the circumstances) it may, but
shall be under no duty to, take or refrain from taking such
action which is consistent, in its view, with this Agreement or
the Basic Documents, and as it shall deem to be in the best
interests of the Certificateholders, and the Owner Trustee shall
have no liability to any Person for any such action or inaction.
SECTION 6.5 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 6.6 Representations and Warranties of Owner
Trustee. The Owner Trustee hereby represents and warrants to the
Seller, for the benefit of the Certificateholders, that:
(a) It is a banking corporation duly organized,
validly existing and in good standing under the laws of the
state of its incorporation. The eligibility requirements
set forth in Section 6.13 (a) - (c) are satisfied with
respect to it.
(b) It has full 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.
(c) The execution, delivery and performance by it of
this Agreement (i) shall not violate any provision of any
law or regulation governing the banking and trust powers of
the Owner Trustee or any order, writ, judgment or decree of
any court, arbitrator or governmental authority applicable
to the Owner Trustee or any of its assets, (ii) shall not
violate any provision of the corporate charter or by-laws
of the Owner Trustee, or (iii) shall not violate any
provision of, or constitute, with or without notice or lapse
of time, a default under, or result in the creation or
imposition of any lien on any properties included in the
Trust pursuant to the provisions of any mortgage,
indenture, contract, agreement or other undertaking to which
it is a party, which violation, default or lien could
reasonably be expected to have a materially adverse effect
on the Owner Trustee's performance or ability to perform
its duties as Owner Trustee under this Agreement or on the
transactions contemplated in this Agreement.
(d) The execution, delivery and performance by the
Owner Trustee of this Agreement shall not require the
authorization, consent or approval of, the giving of notice
to, the filing or registration with, or the taking of any
other action in respect of, any
<PAGE>
governmental authority or agency regulating the corporate
trust activities of Chase Manhattan Bank Delaware.
(e) This Agreement has been duly executed and
delivered by the Owner Trustee and constitutes the legal,
valid and binding agreement of the Owner Trustee,
enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the
enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at
law.
SECTION 6.7 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 and need not investigate any fact or matter in any such
document. 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 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 this Agreement or the Basic Documents, the Owner Trustee:
(i) may act directly or through its agents, attorneys, custodians
or nominees 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, attorneys, custodians or nominees if
such agents, attorneys, custodians or nominees shall have been
selected by the Owner Trustee with reasonable care; and (ii) may
consult with counsel, accountants and other skilled professionals
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 contrary to this Agreement or any Basic Document.
SECTION 6.8 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 Seller, the Administrator, the Indenture Trustee
and the Servicer in transactions in the same manner as it would
have if it were not the Owner Trustee.
SECTION 6.9 Compensation and Indemnity. The Owner
Trustee shall receive as compensation for its services hereunder
such fees as have been separately agreed upon before the date
hereof between the Seller and the Owner Trustee, and the Owner
Trustee shall be entitled to be reimbursed by the Servicer for
its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents,
custodians, nominees, representatives,
<PAGE>
experts and counsel as the Owner Trustee may employ in connection
with the exercise and performance of its rights and its duties
hereunder. The Servicer shall indemnify the Owner Trustee and
its successors, assigns, agents and servants in accordance with
the provisions of Section 7.01 of the Pooling and Servicing
Agreement. The compensation and indemnities described in this
Section 6.9 shall survive the resignation or termination of the
Owner Trustee or the termination of this Agreement. Any amounts
paid to the Owner Trustee pursuant to this Article VI shall be
deemed not to be a part of the Owner Trust Estate immediately
after such payment.
SECTION 6.10 Replacement of Owner Trustee.
(a) The Owner Trustee may give notice of its intent to
resign and be discharged from the trusts hereby created by
written notice thereof to the Administrator; provided that no
such resignation shall become effective, and the Owner Trustee
shall not resign, prior to the time set forth in Section 6.10(c).
The Administrator may appoint a successor Owner Trustee by
delivering a written instrument, in duplicate, to the resigning
Owner Trustee and the successor Owner Trustee. If no successor
Owner Trustee shall have been appointed and have accepted
appointment within 30 days after the giving of such notice, the
resigning Owner Trustee giving such notice may petition any court
of competent jurisdiction for the appointment of a successor
Owner Trustee. The Administrator shall remove the Owner Trustee
if:
(i) the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 6.13 and shall
fail to resign after written request therefor by the
Administrator;
(ii) the Owner Trustee shall be adjudged bankrupt or
insolvent;
(iii) a receiver or other public officer shall be
appointed or take charge or control of the Owner Trustee or
of its property or affairs for the purpose of
rehabilitation, conservation or liquidation; or
(iv) the Owner Trustee shall otherwise be incapable of
acting.
(b) If the Owner Trustee gives notice of its intent to
resign or is removed or if a vacancy exists in the office of
Owner Trustee for any reason, the Administrator shall promptly
appoint a successor Owner Trustee by written instrument, in
duplicate (one copy of which instrument shall be delivered to the
outgoing Owner Trustee so removed and one copy to the successor
Owner Trustee) and shall pay all fees owed to the outgoing Owner
Trustee.
(c) Any resignation or removal of the Owner Trustee
and appointment of a successor Owner Trustee pursuant to any of
the provisions of this Section 6.10 shall not become effective
and no such resignation shall be deemed to have occurred until a
written acceptance of appointment is delivered by the successor
Owner Trustee to the outgoing Owner Trustee and the Administrator
and all fees and expenses due to the outgoing Owner Trustee are
paid. Any successor Owner Trustee appointed pursuant to this
Section 6.10 shall be eligible to act in such capacity in
accordance with Section 6.13 and, following compliance with the
preceding sentence, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor under
this
<PAGE>
Agreement, with like effect as if originally named as Owner
Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating
Agencies.
(d) 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. 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.
(e) Upon acceptance of appointment by a successor
Owner Trustee pursuant to this Section 6.10, the Administrator
shall mail notice of the successor of such Owner Trustee to all
Certificateholders, the Indenture Trustee, the Noteholders and
the Rating Agencies.
SECTION 6.11 Merger or Consolidation of Owner
Trustee. Any Person into which the Owner Trustee may be merged
or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which
the Owner Trustee shall be a party, or any Person 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 Person shall be eligible pursuant to
Section 6.13, and without the execution or filing of any
instrument or any further act on the part of any of the parties
hereto; provided, however, that the Owner Trustee shall mail
notice of such merger or consolidation to the Rating Agencies.
SECTION 6.12 Appointment of Co-Trustee or Separate
Trustee.
(a) Notwithstanding any other provisions of this
Agreement, at any time, for the purpose of meeting any legal
requirement 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 as separate
trustee or trustees, of all or any part of the Owner Trust
Estate, and to vest in such Person, in such capacity, such title
to the Trust, or any part thereof, and, subject to the other
provisions of this Section 6.12, 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 15
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 successor trustee
pursuant to Section 6.13 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to
Section 6.10.
(b) Each 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 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
<PAGE>
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 (unless such other
trustee acts or fails to act at the direction of such first
trustee); 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.
(c) 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 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. 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 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.
(d) 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.
SECTION 6.13 Eligibility Requirements for Owner
Trustee. The Owner Trustee shall at all times: (a) be a
corporation satisfying the provisions of Section 3807(a) of the
Business Trust Statute; (b) be authorized to exercise corporate
trust powers; (c) have a combined capital and surplus of at least
$50,000,000 and be subject to supervision or examination by
federal or state authorities; and (d) have a long-term unsecured
debt rating of at least Baa3 by Moody's Investors Service, Inc.
or be otherwise satisfactory to Moody's Investors Service, Inc.
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 6.13, 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. If at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.13,
the Owner Trustee shall resign immediately in the manner and with
the effect specified in Section 6.10.
<PAGE>
ARTICLE VII
TERMINATION OF TRUST AGREEMENT
SECTION 7.1 Termination of Trust Agreement.
(a) This Agreement (other than Section 6.9) and the
Trust shall terminate and be of no further force or effect on the
earlier of: (i) the final distribution by the Owner Trustee of
all monies or other property or proceeds of the Owner Trust
Estate in accordance with the terms of the Indenture, the Pooling
and Servicing Agreement (including the exercise by the Servicer
of its option to purchase the Receivables pursuant to Section
9.01(a) of the Pooling and Servicing Agreement) and Article V or
(ii) at the time provided in Section 7.2. The bankruptcy,
liquidation, dissolution, death or incapacity of any
Certificateholder, other than the Seller as described in Section
7.2, 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 the Owner Trust Estate nor (z)
otherwise affect the rights, obligations and liabilities of the
parties hereto.
(b) Except as provided in Section 7.1(a), neither the
Seller nor any Certificateholder shall be entitled to revoke or
terminate the Trust or this Agreement.
(c) Notice of any termination of the Trust, except as
otherwise provided in Section 7.2, specifying the Distribution
Date upon which the Certificateholders shall surrender their
Certificates to the Paying Agent for payment of the final
distribution and cancellation, shall be given by the Owner
Trustee by letter to Certificateholders mailed within five
Business Days of receipt of notice of such termination from the
Servicer given pursuant to subsection 9.02(b) of the Pooling and
Servicing Agreement, stating: (i) the Distribution Date upon or
with respect to which the final distribution on 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 distribution; and (iii) that the Record
Date otherwise applicable to such Distribution Date is not
applicable, distributions being 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 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 5.2.
(d) If all of the Certificateholders shall not
surrender their Certificates for cancellation within six months
after the date specified in the written notice specified in
Section 7.1(c), 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.
Subject to applicable laws with respect to escheat of funds, any
funds
<PAGE>
remaining in the Trust after exhaustion of such remedies in the
preceding sentence shall be deemed property of the Seller and
distributed by the Owner Trustee to the Seller.
(e) 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.
(f) Within sixty days of the later of (i) the
cancellation of all of the Certificates pursuant to Section
7.1(c) or Section 7.1(d), or (ii) payment to the Seller of funds
remaining in the Trust pursuant to Section 7.1(d), the Owner
Trustee shall provide each of the Rating Agencies with written
notice stating that all Certificates have been so cancelled or
such funds have been so paid to the Seller.
SECTION 7.2 Dissolution upon Bankruptcy of the
Seller. Upon the occurrence of an Insolvency Event with respect
to the Seller, the Trust shall terminate, subject to the
liquidation, winding-up and dissolution procedures described
below, and provided that the rights and obligations of the
parties to this Agreement shall not terminate during such
liquidation, winding-up and dissolution. Promptly after the
occurrence of any Insolvency Event with respect to the Seller:
(i) the Seller shall give the Indenture Trustee and the Owner
Trustee written notice of such Insolvency Event, (ii) the Owner
Trustee shall, upon the receipt of such written notice from the
Seller, give prompt written notice to the Certificateholders and
the Indenture Trustee of the occurrence of such event and (iii)
pursuant to Section 3.23 of the Indenture, the Indenture Trustee
shall, upon receipt of written notice of such Insolvency Event
from the Owner Trustee or the Seller, give prompt written notice
to the Noteholders of the occurrence of such event; provided,
however, that any failure to give a notice required by this
sentence shall not prevent or delay in any manner a termination
of the Trust pursuant to the first sentence of this Section 7.2.
Ninety days after the date the Seller gives the notice described
in the preceding sentence, unless the Owner Trustee shall have
received written instructions from (a) Class B Certificateholders
whose Class B Certificates evidence not less than a majority of
the Class B Voting Interests as of the close of the preceding
Distribution Date, (b) Class C Certificateholders whose Class C
Certificates evidence not less than a majority of the Class C
Voting Interests as of the close of the preceding Distribution
Date, and (c) Noteholders whose Notes evidence not less than a
majority of the Outstanding Amount of the Notes as of the close
of the preceding Distribution Date, to the effect that such
Persons disapprove of the prospective liquidation of the assets
held by the Trust and the prospective termination of the Trust
and wish to reconstitute the Trust pursuant to terms
corresponding to the terms of this Agreement, the Owner Trustee
shall direct the Indenture Trustee to promptly sell, dispose of
or otherwise liquidate or realize upon the assets of the Trust
(other than the Designated Accounts and the Certificate
Distribution Account) in a commercially reasonable manner and on
commercially reasonable terms (which may include continuing to
hold the Receivables and receiving collections thereon). The
proceeds of any such sale, disposition or liquidation of the
assets of the Trust shall be treated as collections on the
Receivables and deposited in the Collection Account pursuant to
Section 9.02(a) of the Pooling and Servicing Agreement, and
thereupon this Agreement and the respective obligations and
responsibilities of the Seller, the Servicer, the Owner Trustee
and the Indenture Trustee shall terminate (except as otherwise
expressly provided herein).
<PAGE>
ARTICLE VIII
AMENDMENTS
SECTION 8.1 Amendments Without Consent of
Certificateholders or Noteholders. This Agreement may be amended
by the Seller and the Owner Trustee without the consent of any of
the Noteholders or the Certificateholders (but with prior notice
to each of the Rating Agencies) to (i) cure any ambiguity, (ii)
correct or supplement any provision in this Agreement that may be
defective or inconsistent with any other provision in this
Agreement or any other Basic Document, (iii) add or supplement
any credit enhancement for the benefit of the Noteholders or the
Certificateholders (provided that if any such addition shall
affect any class of Noteholders or Certificateholders differently
than any other class of Noteholders or Certificateholders, then
such addition shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any
class of the Noteholders or the Certificateholders), (iv) add to
the covenants, restrictions or obligations of the Seller or the
Owner Trustee for the benefit of the Noteholders or
Certificateholders, (v) evidence and provide for the acceptance
of the appointment of a successor trustee with respect to the
Owner Trust Estate and add to or change any provisions as shall
be necessary to facilitate the administration of the trusts
hereunder by more than one trustee pursuant to Article VI, or
(vi) add, change or eliminate any other provision of this
Agreement in any manner that shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the
interests of the Noteholders or the Certificateholders.
SECTION 8.2 Amendments With Consent of
Certificateholders and Noteholders. This Agreement may be
amended from time to time by the Seller and the Owner Trustee
with the consent of Noteholders whose Notes evidence not less
than a majority of the Outstanding Amount of the Notes as of the
close of business on the preceding Distribution Date, the consent
of Class B Certificateholders whose Class B Certificates evidence
not less than a majority of the Class B Voting Interests as of
the close of business on the preceding Distribution Date and the
consent of Class C Certificateholders whose Class C Certificates
evidence not less than a majority of the Class C Voting Interests
as of the close of business on the preceding Distribution Date
(which consent, whether given pursuant to this Section 8.2 or
pursuant to any other provision of this Agreement, shall be
conclusive and binding on such Person and on all future holders
of such Notes or Certificates and of any Notes or Certificates
issued upon the transfer thereof or in exchange thereof or in
lieu thereof whether or not notation of such consent is made upon
the Notes or Certificates) 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 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 on any Note or Certificate, the Pass
Through Rate or the Specified Reserve Account Balance, (b) reduce
the aforesaid percentage required to consent to any such
amendment or (c) amend Section 4.3 or Section 7.2, without the
consent of the Holders of all of the Notes, all of the Class B
Voting Interests with respect to Class B Certificates then
outstanding and all of the Class C Voting Interests with respect
to Class C Certificates then outstanding. The Administrator shall
furnish notice of the substance of any proposed amendment,
supplement or consent under this Section 8.2 to each of the
Rating Agencies prior to obtaining consent thereto.
SECTION 8.3 Form of Amendments.
<PAGE>
(a) Promptly after the execution of any amendment,
supplement or consent pursuant to Section 8.1 or 8.2, the Owner
Trustee shall furnish written notification of the substance of
such amendment or consent to each Certificateholder and the
Indenture Trustee.
(b) It shall not be necessary for the consent of
Certificateholders, the Noteholders or the Indenture Trustee
pursuant to Section 8.2 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 or in any other
Basic Document) and of evidencing the authorization of the
execution thereof by Certificateholders and Noteholders shall be
subject to such reasonable requirements as the Owner Trustee may
prescribe.
(c) 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.
(d) 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 and that all conditions precedent to such
execution have been satisfied. 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.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 No Legal Title to Owner Trust Estate.
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 VII. No transfer, by operation
of law or otherwise, of any right, title, and 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 9.2 Limitations on Rights of Others. Except
for Section 2.7 and Section 9.12, the provisions of this
Agreement are solely for the benefit of the Owner Trustee, the
Seller, the Certificateholders, the Administrator and, to the
extent expressly provided herein, 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 9.3 Notices. All demands, notices and
communications upon or to the Seller, the Servicer, the
Administrator, the Indenture Trustee, the Owner Trustee, the
Rating Agencies or any Certificateholder under this Agreement
shall be delivered as specified in Appendix B to the Pooling and
Servicing Agreement.
<PAGE>
SECTION 9.4 Severability. 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
enforceable to the fullest extent permitted, and if not so
permitted, 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 9.5 Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts (and by
different parties on separate counterparts), each of which when
so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument.
SECTION 9.6 Successors and Assigns. All covenants
and agreements contained herein shall be binding upon, and inure
to the benefit of, the Seller, the Owner Trustee and each
Certificateholder and their respective 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 9.7 No Petition Covenant. Notwithstanding
any prior termination of this Agreement, the Trust (or the Owner
Trustee on behalf of the Trust), and each Certificateholder or
Certificate Owner, by accepting a Certificate (or interest
therein), hereby covenant and agree that they shall not, prior to
the date which is one year and one day after the termination of
this Agreement acquiesce, petition or otherwise invoke or cause
the Seller to invoke the process of any court or governmental
authority for the purpose of commencing or sustaining a case
against the Seller 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 Seller or any substantial part of its property,
or ordering the winding up or liquidation of the affairs of the
Seller.
SECTION 9.8 No Recourse. Each Certificateholder or
Certificate Owner by accepting a Certificate (or interest
therein) acknowledges that such Person's Certificate (or interest
therein) represents beneficial interests in the Trust only and
does not represent interests in or obligations of the Seller, the
Servicer, the Administrator, the Owner Trustee, the Indenture
Trustee or any Affiliate thereof and no recourse, either directly
or indirectly, may be had against such parties or their assets,
except as may be expressly set forth or contemplated in this
Agreement, the Certificates or the Basic Documents. Except as
expressly provided in the Basic Documents, neither the Seller,
the Servicer nor the Owner Trustee in their respective individual
capacities, nor any of their respective partners, beneficiaries,
agents, officers, directors, employees or successors or assigns,
shall be personally liable for, nor shall recourse be had to any
of them for, the distribution of the Class B Certificate Balance
with respect to or interest on the Class B Certificates or Class
C Certificate Balance with respect to or interest on the Class C
Certificates, or the Owner Trustee's performance of, or omission
to perform, any of the covenants, obligations or indemnifications
contained in the Certificates or this Agreement, it being
expressly understood that said covenants and obligations have
been made by the Owner Trustee solely in its capacity as the
Owner Trustee. Each Certificateholder or Certificate Owner by
the acceptance of a Certificate (or beneficial interest therein)
shall agree that, except as expressly provided in the Basic
Documents, in the case of
<PAGE>
nonpayment of any amounts with respect to the Certificates, it
shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom.
SECTION 9.9 Headings. The headings of the various
Articles and Sections herein are for purposes of reference only
and shall not affect the meaning or interpretation of any
provision hereof.
SECTION 9.10 Governing Law. This Agreement shall be
construed in accordance with the internal 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.
SECTION 9.11 Certificate Transfer Restrictions.
(a) The Certificates may not be acquired by or for the
account of (i) an employee benefit plan (as defined in Section
3(3) of ERISA) that is subject to the provisions of Title I of
ERISA, (ii) a plan described in Section 4975(e)(1) of the Code or
(iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a "Benefit
Plan"). By accepting and holding a Certificate, the Holder
thereof and the Certificate Owner shall each be deemed to have
represented and warranted that it is not a Benefit Plan and, if
requested to do so by the Seller, the Certificateholder and the
Certificate Owner shall execute and deliver to the Owner Trustee
an Undertaking Letter in the form set forth in Exhibit D. The
Certificates are also subject to the minimum denomination
provisions of Section 3.2(a).
(b) The Certificate Registrar shall not be obligated
to accept any Class C Certificate for registration of transfer
except (i) pursuant to an effective registration statement under
the Securities Act or (ii) pursuant to an exemption from the
registration requirements of the Securities Act; provided that
(A) if such transfer is to be made in reliance on Rule 144A
promulgated under the Securities Act, the Owner Trustee shall
have received a Transferor's Certificate substantially in the
form of Exhibit A-3 or (B) if such transfer is to be made in
reliance upon any other exemption from such registration
requirements, the Owner Trustee shall have received an Opinion of
Counsel in form and substance satisfactory to the Owner Trustee.
SECTION 9.12 [Reserved].
SECTION 9.13 Administrator. The Administrator is
authorized to execute on behalf of the Trust all such documents,
reports, filings, instruments, certificates and opinions as it
shall be the duty of the Trust to prepare, file or deliver
pursuant to the Basic Documents. Upon request, the Owner Trustee
shall execute and deliver to the Administrator a power of
attorney appointing the Administrator its agent and
attorney-in-fact to execute all such documents, reports, filings,
instruments, certificates and opinions.
SECTION 9.14 Amended and Restated Trust Agreement.
This Trust Agreement is the amended and restated trust agreement
contemplated by the Trust Agreement dated as of October 28, 1996
between the Seller and the Owner Trustee.
<PAGE>
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.
CHASE MANHATTAN BANK DELAWARE
as Owner Trustee
By:
Name: John J. Cashin
Title: Senior Trust Officer
NAVISTAR FINANCIAL RETAIL
RECEIVABLES CORPORATION,
as Seller
By:
Name: R. Wayne Cain
Title: Vice President
Acknowledged and Accepted:
NAVISTAR FINANCIAL CORPORATION,
as Servicer
By:
Name: R. Wayne Cain
Title: Vice President
<PAGE>
EXHIBIT A-1
[FORM OF CLASS B CERTIFICATE]
NUMBER $ __________
R- CUSIP NO. __________
SEE REVERSE FOR CERTAIN DEFINITIONS
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, EDE & CO.,
HAS AN INTEREST HEREIN.
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE
ACCOUNT OF (i) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN
SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED, ("ERISA")) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (ii) A PLAN DESCRIBED IN
SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), OR (iii) ANY ENTITY WHOSE UNDERLYING
ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT
IN THE ENTITY. BY ACCEPTING AND HOLDING THIS CERTIFICATE,
THE HOLDER HEREOF AND THE CERTIFICATE OWNER SHALL EACH BE
DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS NOT A
BENEFIT PLAN.
Navistar Financial 1996-B Owner Trust
6.50% CLASS B ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as
defined below, the property of which includes a pool of
retail instalment sale contracts for, and retail loans
evidenced by notes secured by, new and used medium and heavy
duty trucks, buses and trailers, which contracts and loans
have been sold to the Trust by Navistar Financial Retail
Receivables Corporation.
(This Certificate does not represent an interest in or
obligation of Navistar Financial Retail Receivables
Corporation, Navistar Financial Corporation, Navistar
International Transportation Corp., Navistar International
Corporation, the Owner Trustee or any of their respective
affiliates, except to the extent described below.)
THIS CERTIFIES THAT _________________________ is the
registered owner of a nonassessable, fully-paid, fractional
undivided interest in Navistar Financial 1996-B Owner Trust (the
"Trust") formed by Navistar Financial Retail Receivables
Corporation, a Delaware corporation, (the "Seller").
The Trust was created pursuant to a trust agreement,
dated as of October 28, 1996 (as amended and restated as of
November 6, 1996 and as further amended, restated or supplemented
from time to time, the "Trust Agreement"), between the Seller and
CHASE MANHATTAN BANK DELAWARE, as owner trustee (the "Owner
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 the Trust Agreement.
This Certificate is one of the duly authorized
Certificates designated as "6.50% Class B Asset Backed
Certificates" (the "Class B Certificates"). This Class B
Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, the terms of
which are incorporated herein by reference and made a part
hereof, to which Trust Agreement the Holder of this Class B
Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Under the Trust Agreement, there shall be distributed
on the 20th day of each calendar month or, if such 20th day is
not a Business Day, the next succeeding Business Day, commencing
on November 20, 1996 (each, a "Distribution Date"), to the Person
in whose name this Class B Certificate is registered on the
related Record Date (as defined below), such Class B
Certificateholder's fractional undivided interest in the Class B
Certificateholders' Interest Distributable Amount and the Class B
Certificateholders' Principal Distributable Amount to be
distributed to Class B Certificateholders on such Distribution
Date. The entire unpaid certificate balance on this Class B
Certificate shall be due and payable on April 21, 2003 (the
"Final Scheduled Payment Date"). The "Record Date," with respect
to any Distribution Date, means the close of business on the day
immediately preceding such Distribution Date, or if Definitive
Certificates are issued, the last day of the preceding Monthly
Period.
The distributions in respect of Class B Certificate
Balance and interest on this Class B Certificate are payable in
such coin or currency of the United States of America as at the
time of distribution is legal tender for payment of public and
private debts. All distributions made by the Trust with respect
to this Class B Certificate shall be applied first to interest
due and payable on this Class B Certificate as provided above and
then to the unpaid distributions in respect of Class B
Certificate Balance of this Class B Certificate.
The Holder of this Class B Certificate acknowledges and
agrees that its rights to receive distributions in respect of
this Class B Certificate are subordinated to the rights of the
Noteholders as and to the extent described in the Pooling and
Servicing Agreement and the Indenture.
It is the intention of the Seller, the Servicer and the
Certificateholders and Certificate Owners that, solely for
purposes of federal income, state and local income and franchise
taxes and any other taxes imposed upon, measured by or based upon
gross or net income, the Trust shall be treated as a partnership.
Except as otherwise required by appropriate taxing authorities,
the Seller and the other Certificateholders and Certificate
Owners by acceptance of a Certificate (or interest therein),
agree to treat, and to take no action inconsistent with the
treatment of, the Certificates for such tax purposes as interests
in such partnership.
Each Class B Certificateholder or Certificate Owner
with respect to a Class B Certificate, by its acceptance of a
Class B Certificate or, in the case of a Certificate Owner with
respect to a Class B Certificate, a beneficial interest in a
Class B Certificate, covenants and agrees that such Class B
Certificateholder or Certificate Owner with respect to a Class B
Certificate, as the case may be, shall not, prior to the date
which is one year and one day after the termination of the Trust
Agreement, acquiesce, petition or otherwise invoke or cause the
Seller to invoke the process of any court or governmental
authority for the purpose of commencing or sustaining a case
against the Seller under any federal or state bankruptcy,
insolvency, reorganization or similar law or 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.
Distributions on this Class B Certificate shall be made
as provided in the Trust Agreement by the Owner Trustee by wire
transfer or check 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 that with respect to Class B Certificates
registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.),
distributions shall be made by wire transfer in immediately
available funds to the account designated by such nominee.
Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Class B
Certificate shall be made after due notice by the Owner Trustee
of the pendency of such distribution and only upon presentation
and surrender of this Class B Certificate at the office
maintained for such 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 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 Owner Trustee
by manual signature, this Class B Certificate shall not entitle
the Holder hereof to any benefit under the Trust Agreement or the
Pooling and Servicing Agreement or be valid for any purpose.
THIS CLASS B CERTIFICATE SHALL BE 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.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the
Trust and not in its individual capacity, has caused this Class B
Certificate to be duly executed.
Dated:
NAVISTAR FINANCIAL 1996-B OWNER
TRUST
CHASE MANHATTAN BANK DELAWARE, not
in its individual capacity but
solely as Owner Trustee
By: _________________________
Name:
Title:
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Trust Agreement.
CHASE MANHATTAN BANK DELAWARE
not in its individual
capacity but solely
as Owner Trustee
By:_________________________
Authorized Officer
OR
CHASE MANHATTAN BANK DELAWARE,
not in its individual
capacity but solely
as Owner Trustee
by The Chase Manhattan Bank,
as Authenticating Agent
By:_________________________
Authorized Officer
<PAGE>
REVERSE OF CLASS B CERTIFICATE
The Class B Certificates do not represent an obligation
of, or an interest in, the Seller, the Servicer, Navistar
International Transportation Corp., Navistar International
Corporation, the Indenture Trustee, the Owner Trustee or any
affiliates of any of them 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 Class B Certificate is not
guaranteed by any governmental agency or instrumentality and is
limited in right of payment to certain collections and recoveries
with respect to the Receivables (and certain other amounts), all
as more specifically set forth herein and in the Trust Agreement
and the Pooling and Servicing Agreement. A copy of each of the
Pooling and Servicing Agreement and the Trust 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 Class B 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 Seller and the rights of the
Certificateholders under the Trust Agreement at any time by the
Seller and the Owner Trustee with the consent of (i) the Holders
of the Notes evidencing not less than a majority of the
Outstanding Amount of the Notes, (ii) Class B Certificateholders
whose Class B Certificates evidence not less than a majority of
the Class B Voting Interests, and (iii) Class C
Certificateholders whose Class C Certificates evidence not less
than a majority of the Class C Voting Interests, each as of the
close of the preceding Distribution Date. Any such consent by
the Holder of this Class B Certificate shall be conclusive and
binding on such Holder and on all future Holders of this Class B
Certificate and of any Class B Certificate issued upon the
registration of transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this
Class B Certificate. The Trust Agreement also permits the
amendment thereof, in certain circumstances, without the consent
of the Holders of any of the Certificates or the Notes.
As provided in the Trust Agreement and subject to
certain limitations therein set forth, the transfer of this Class
B Certificate is registerable in the Certificate Register upon
surrender of this Class B Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar
maintained by the Owner Trustee in the City of New York,
accompanied by (i) 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 (ii) if requested by the Seller, the
Undertaking Letter required by Section 9.11(a) of the Trust
Agreement, and thereupon one or more new Class B Certificates of
authorized denominations evidencing the same aggregate interest
in the Trust will be issued to the designated transferee. The
initial Certificate Registrar appointed under the Trust Agreement
is The Chase Manhattan Bank, New York, New York.
The Class B Certificates are issuable only as
registered Certificates without coupons (i) in denominations of
$20,000 or (ii) integral multiples of $1,000 in excess thereof.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, Class B Certificates are
exchangeable for new Class B Certificates of authorized
denominations evidencing the same aggregate denomination, as
requested by the Holder surrendering the same; provided, however,
that no Class B Certificate may be subdivided upon registration
of transfer or exchange in a manner such that the denomination of
any resulting Class B Certificate would have been less than
$20,000 if such Class B Certificate had been issued in the
original distribution of Class B Certificates. No service charge
shall be made for any such registration of transfer or exchange,
but the Owner Trustee or 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 Class B 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 distribution to Certificateholders of all amounts
required to be distributed to them pursuant to the Trust
Agreement and the Pooling and Servicing Agreement and the
disposition of all property held as part of the Trust. The
Servicer of the Receivables may at its option purchase the assets
of the Trust other than the Designated Accounts and the
Certificate Distribution Account at a price specified in the
Pooling and Servicing Agreement, and such purchase of the
Receivables and other property of the Trust shall effect early
retirement of the Class B Certificates; provided, however, that
such right of purchase is exercisable only as of the last day of
any Monthly Period as of which the Aggregate Receivables Balance
is 10% or less of the Initial Aggregate Receivables Balance.
<PAGE>
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 Class B Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
______________________________________________________ Attorney
to transfer said Class B 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 Class B
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.
<PAGE>
EXHIBIT A-2
[FORM OF CLASS C CERTIFICATE]
NUMBER $ __________
R- CUSIP NO. __________
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE 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 CERTIFICATE, AGREES FOR THE BENEFIT OF
THE ISSUER AND THE TRANSFEROR THAT THIS CERTIFICATE 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 144") TO AN INSTITUTIONAL INVESTOR 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, SUBJECT TO RECEIPT BY THE OWNER TRUSTEE OF A
CERTIFICATE SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT
A-3 TO THE TRUST AGREEMENT, OR (2) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT, SUBJECT TO THE RECEIPT BY THE OWNER TRUSTEE OF SUCH
EVIDENCE ACCEPTABLE TO THE OWNER TRUSTEE THAT SUCH REOFFER,
RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS.
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE
ACCOUNT OF (i) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN
SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED, ("ERISA")) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (ii) A PLAN DESCRIBED IN
SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), OR (iii) ANY ENTITY WHOSE UNDERLYING
ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT
IN THE ENTITY. BY ACCEPTING AND HOLDING THIS CERTIFICATE,
THE HOLDER HEREOF AND THE CERTIFICATE OWNER SHALL EACH BE
DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS NOT A
BENEFIT PLAN.
[PURSUANT TO THE TRUST AGREEMENT, NAVISTAR FINANCIAL
RETAIL RECEIVABLES CORPORATION ("NFRRC") SHALL RETAIN
BENEFICIAL AND RECORD OWNERSHIP OF CERTIFICATES REPRESENTING
AT LEAST 1% OF THE AGGREGATE CERTIFICATE BALANCE, AND ANY
ATTEMPTED TRANSFER OF THIS CERTIFICATE THAT REDUCES THE
BENEFICIAL AND RECORD INTEREST OF NFRRC TO BELOW 1% OF THE
AGGREGATE CERTIFICATE BALANCE SHALL BE VOID.]
Navistar Financial 1996-B Owner Trust
7.45% CLASS C ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as
defined below, the property of which includes a pool of
retail instalment sale contracts for, and retail loans
evidenced by notes secured by, new and used medium and heavy
duty trucks, buses and trailers, which contracts and loans
have been sold to the Trust by Navistar Financial Retail
Receivables Corporation.
(This Certificate does not represent an interest in or
obligation of Navistar Financial Retail Receivables
Corporation, Navistar Financial Corporation, Navistar
International Transportation Corp., Navistar International
Corporation, the Owner Trustee or any of their respective
affiliates, except to the extent described below.)
THIS CERTIFIES THAT _________________________ is the
registered owner of a nonassessable, fully-paid, fractional
undivided interest in Navistar Financial 1996-B Owner Trust (the
"Trust") formed by Navistar Financial Retail Receivables
Corporation, a Delaware corporation, (the "Seller").
The Trust was created pursuant to a trust agreement,
dated as of October __, 1996 (as amended and restated as of
November 6, 1996 and as further amended, restated or supplemented
from time to time, the "Trust Agreement"), between the Seller and
CHASE MANHATTAN BANK DELAWARE, as owner trustee (the "Owner
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 the Trust Agreement.
This Certificate is one of the duly authorized
Certificates designated as "7.45% Class C Asset Backed
Certificates" (the "Class C Certificates"). This Class C
Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, the terms of
which are incorporated herein by reference and made a part
hereof, to which Trust Agreement the Holder of this Class C
Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Under the Trust Agreement, there shall be distributed
on the 20th day of each calendar month or, if such 20th day is
not a Business Day, the next succeeding Business Day, commencing
on November 20, 1996 (each, a "Distribution Date"), to the Person
in whose name this Certificate is registered on the related
Record Date (as defined below), such Certificateholder's
fractional undivided interest in the Class C Certificateholders'
Interest Distributable Amount and the Class C Certificateholders'
Principal Distributable Amount to be distributed to
Certificateholders on such Distribution Date. The entire unpaid
certificate balance on this Class C Certificate shall be due and
payable on April 21, 2003 (the "Final Scheduled Payment Date").
The "Record Date," with respect to any Distribution Date, means
the close of business on the last day of the preceding Monthly
Period.
The distributions in respect of Class C Certificate
Balance and interest on this Class C Certificate are payable in
such coin or currency of the United States of America as at the
time of distribution is legal tender for payment of public and
private debts. All distributions made by the Trust with respect
to this Class C Certificate shall be applied first to interest
due and payable on this Class C Certificate as provided above and
then to the unpaid distributions in respect of Class C
Certificate Balance of this Class C Certificate.
The Holder of this Class C Certificate acknowledges and
agrees that its rights to receive distributions in respect of
this Class C Certificate are subordinated to the rights of the
Noteholders and the Class B Certificateholders as and to the
extent described in the Pooling and Servicing Agreement, the
Indenture and the Trust Agreement.
It is the intention of the Seller, the Servicer and the
Certificateholders and Certificate Owners that, solely for
purposes of federal income, state and local income and franchise
taxes and any other taxes imposed upon, measured by or based upon
gross or net income, the Trust shall be treated as a partnership.
Except as otherwise required by appropriate taxing authorities,
the Seller and the other Certificateholders and Certificate
Owners by acceptance of a Certificate (or interest therein),
agree to treat, and to take no action inconsistent with the
treatment of, the Certificates for such tax purposes as interests
in such partnership.
Each Class C Certificateholder, by its acceptance of a
Class C Certificate, covenants and agrees that such Class C
Certificateholder shall not, prior to the date which is one year
and one day after the termination of the Trust Agreement,
acquiesce, petition or otherwise invoke or cause the Seller to
invoke the process of any court or governmental authority for the
purpose of commencing or sustaining a case against the Seller
under any federal or state bankruptcy, insolvency, reorganization
or similar law or 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.
Distributions on this Class C Certificate shall be made
as provided in the Trust Agreement by the Owner Trustee by wire
transfer or check 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 the Trust
Agreement and notwithstanding the above, the final distribution
on this Class C Certificate shall be made after due notice by the
Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Class C Certificate at the
office maintained for such 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 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 Owner Trustee
by manual signature, this Class C Certificate shall not entitle
the Holder hereof to any benefit under the Trust Agreement or the
Pooling and Servicing Agreement or be valid for any purpose.
THIS CLASS C CERTIFICATE SHALL BE 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.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the
Trust and not in its individual capacity, has caused this Class C
Certificate to be duly executed.
Dated:
NAVISTAR FINANCIAL 1996-B OWNER
TRUST
CHASE MANHATTAN BANK DELAWARE, not
in its individual capacity but
solely as Owner Trustee
By: _________________________
Name:
Title:
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class C Certificates referred to in the
within-mentioned Trust Agreement.
CHASE MANHATTAN BANK DELAWARE
not in its individual
capacity but solely
as Owner Trustee
By:_________________________
Authorized Officer
OR
CHASE MANHATTAN BANK DELAWARE,
not in its individual
capacity but solely
as Owner Trustee
by The Chase Manhattan Bank,
as Authenticating Agent
By: _________________________
Authorized Officer
<PAGE>
REVERSE OF CLASS C CERTIFICATE
The Class C Certificates do not represent an obligation
of, or an interest in, the Seller, the Servicer, Navistar
International Transportation Corp., Navistar International
Corporation, the Indenture Trustee, the Owner Trustee or any
affiliates of any of them 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 Class C Certificate is not
guaranteed by any governmental agency or instrumentality and is
limited in right of payment to certain collections and recoveries
with respect to the Receivables (and certain other amounts), all
as more specifically set forth herein and in the Trust Agreement
and the Pooling and Servicing Agreement. A copy of each of the
Pooling and Servicing Agreement and the Trust 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 Class C 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 Seller and the rights of the
Class C Certificateholders under the Trust Agreement at any time
by the Seller and the Owner Trustee with the consent of (i) the
Holders of the Notes evidencing not less than a majority of the
Outstanding Amount of the Notes, (ii) Class B Certificateholders
whose Class B Certificates evidence not less than a majority of
the Class B Voting Interests and (iii) Class C Certificateholders
whose Class C Certificates evidence not less than a majority of
the Class C Voting Interests, each as of the close of the
preceding Distribution Date. Any such consent by the Holder of
this Class C Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Class C Certificate and
of any Class C 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 Class C Certificate. The Trust
Agreement also permits the amendment thereof, in certain
circumstances, without the consent of the Holders of any of the
Certificates or the Notes.
As provided in the Trust Agreement and subject to
certain limitations therein set forth, the transfer of this Class
C Certificate is registerable in the Certificate Register upon
surrender of this Class C Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar
maintained by the Owner Trustee in the City of New York,
accompanied by (i) 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 (ii) any other documents, certificates
or opinions required to be provided pursuant to Section 9.11 of
the Trust Agreement, and thereupon one or more new Class C
Certificates of authorized denominations evidencing the same
aggregate interest in the Trust will be issued to the designated
transferee. The initial Certificate Registrar appointed under
the Trust Agreement is The Chase Manhattan Bank, New York, New
York.
The Class C Certificates are issuable only as
registered Certificates without coupons (i) in denominations of
$500,000 or (ii) integral multiples of $1,000 in excess thereof,
except for one Class C Certificate which may be issued to the
Seller. As provided in the Trust Agreement and subject to
certain limitations therein set forth, Class C Certificates are
exchangeable for new Class C Certificates of authorized
denominations evidencing the same aggregate denomination, as
requested by the Holder surrendering the same; provided, however,
that no Class C Certificate may be
<PAGE>
subdivided upon registration of transfer or exchange in a manner
such that the denomination of any resulting Class C Certificate
would have been less than $500,000 if such Class C Certificate
had been issued in the original distribution of Class C
Certificates. No service charge shall be made for any such
registration of transfer or exchange, but the Owner Trustee or
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 Class C 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 distribution to Certificateholders of all amounts
required to be distributed to them pursuant to the Trust
Agreement and the Pooling and Servicing Agreement and the
disposition of all property held as part of the Trust. The
Servicer of the Receivables may at its option purchase the assets
of the Trust other than the Designated Accounts and the
Certificate Distribution Account at a price specified in the
Pooling and Servicing Agreement, and such purchase of the
Receivables and other property of the Trust shall effect early
retirement of the Class C Certificates; provided, however, that
such right of purchase is exercisable only as of the last day of
any Monthly Period as of which the Aggregate Receivables Balance
is 10% or less of the Initial Aggregate Receivables Balance.
<PAGE>
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 Class C Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
____________________________________________________ Attorney to
transfer said Class C 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 Class C
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.
<PAGE>
EXHIBIT A-3
FORM OF RULE 144A TRANSFEROR CERTIFICATE
Chase Manhattan Bank Delaware,
as Owner Trustee
1201 Market Street
Wilmington, Delaware 19801
Dear Sirs:
This is to notify you as to the transfer of $______ initial
principal balance of 7.45% Class C Asset Backed Certificates (the
"Class C Certificates") of Navistar Financial 1996-B Owner Trust
(the "Issuer").
The undersigned is the holder of the Class C Certificates
and with this notice hereby deposits with the Owner Trustee
$_____ initial principal balance of Class C Certificates and
requests that Class C Certificates in the same initial principal
balance be issued, executed and authenticated and registered to
the purchaser on [date], as specified in the Owner Trust
Agreement, as follows:
Name: Denominations:
Address:
Taxpayer I.D. No.:
The undersigned represents and warrants that (i) the
purchaser has been informed that the sale, pledge or other
transfer is being made in reliance on Rule 144A under the
Securities Act of 1933 (the "Act") and (ii) the undersigned
reasonably believes the purchaser is a "Qualified Institutional
Buyer," within the meaning of Rule 144A, who is acquiring each of
the Class C Certificates for its own account or as a fiduciary or
agent for others (which others are also Qualified Institutional
Buyers to whom notice has been given that the sale, pledge, or
other transfer of the Class C Certificates to the purchaser is
being made in reliance on Rule 144A).
Very truly yours,
[Name of Holder of Certificates]
By:_______________________________
Name:
Title:
<PAGE>
EXHIBIT B
CERTIFICATE OF TRUST OF
Navistar Financial 1996-B Owner Trust
THIS Certificate of Trust of Navistar Financial 1996-B
Owner Trust (the "Trust"), dated as of October __, 1996 is being
duly executed and filed by CHASE MANHATTAN BANK DELAWARE, a
Delaware banking corporation, as trustee, to form a business
trust under the Delaware Business Trust Act (12 Del. C. Section
3801 et seq.).
1. Name. The name of the business trust formed
hereby is Navistar Financial 1996-B Owner Trust.
2. Delaware Trustee. The name and business address
of the trustee of the Trust in the State of Delaware is CHASE
MANHATTAN BANK DELAWARE, 1201 Market Street, Wilmington, Delaware
19801.
3. This Certificate of Trust shall be effective on
October __, 1996.
IN WITNESS WHEREOF, the undersigned, being the sole
trustee of the Trust, has executed this Certificate of Trust as
of the date first-above written.
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as trustee of the
Trust.
By: __________________________
Name:
Title:
<PAGE>
EXHIBIT C
Form of Certificate Depository Agreement
<PAGE>
EXHIBIT D
Form of Undertaking Letter
<EX-10.10.1>
EXHIBIT 10.1
PURCHASE AGREEMENT
BETWEEN
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
AND
NAVISTAR FINANCIAL CORPORATION
DATED AS OF NOVEMBER 6, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
SECTION 1.01. Definitions 1
ARTICLE II PURCHASE AND SALE OF RECEIVABLES 2
SECTION 2.01. Purchase and Sale of Receivables 2
SECTION 2.02. Receivables Purchase Price 2
SECTION 2.03. The Closing 2
ARTICLE III REPRESENTATIONS AND WARRANTIES 3
SECTION 3.01. Representations and Warranties
as to the Receivables 3
SECTION 3.02. Additional Representations
and Warranties of NFC 6
SECTION 3.03. Representations and Warranties
of NFRRC 8
ARTICLE IV CONDITIONS 9
SECTION 4.01. Conditions to Obligation of NFRRC 9
SECTION 4.02. Conditions To Obligation of NFC 10
ARTICLE V ADDITIONAL AGREEMENTS 10
SECTION 5.01. Conflicts With Further Transfer
and Servicing Agreements 10
SECTION 5.02. Protection of Title 10
SECTION 5.03. Other Liens or Interests 11
SECTION 5.04. Repurchase Events 11
SECTION 5.05. Indemnification 11
SECTION 5.06. Further Assignments 11
SECTION 5.07. Pre-Closing Collections 12
SECTION 5.08. Limitation on Transfer of
NITC Purchase Obligations 12
SECTION 5.09. Sale Treatment 12
ARTICLE VI MISCELLANEOUS PROVISIONS 12
SECTION 6.01. Amendment 12
SECTION 6.02. Survival 12
SECTION 6.03. Notices 12
SECTION 6.04. Governing Law 12
SECTION 6.05. Waivers 12
SECTION 6.06. Costs and Expenses 13
SECTION 6.07. Confidential Information 13
SECTION 6.08. Headings 13
<PAGE>
SECTION 6.09. Counterparts 13
SECTION 6.10. Severability of Provisions 13
SECTION 6.11. Further Assurances 13
SECTION 6.12. No Third-Party Beneficiaries 13
SECTION 6.13. Merger and Integration 13
Exhibit A
Form of Assignment
<PAGE>
PURCHASE AGREEMENT, dated as of November 6, 1996, between
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION, a Delaware
corporation ("NFRRC"), and NAVISTAR FINANCIAL CORPORATION, a
Delaware corporation ("NFC").
WHEREAS, NFRRC desires to purchase a portfolio of retail
instalment sale contracts for, and retail loans evidenced by
notes and secured by new and used medium and heavy duty trucks,
buses and trailers (collectively, the "Retail Notes"), together
with related rights owned by NFC;
WHEREAS, NFC is willing to sell such Retail Notes and
related rights to NFRRC;
WHEREAS, NFRRC may wish to sell or otherwise transfer such
Retail Notes and related rights, or interests therein, to a
trust, corporation, partnership or other entity (any such entity
being the "Issuer"); and
WHEREAS, the Issuer may issue debentures, notes,
participations, certificates of beneficial interest, partnership
interests or other interests or securities (collectively, any
such issued interests or securities being "Securities") to fund
its acquisition of such Retail Notes and related rights.
NOW, THEREFORE, in consideration of the foregoing, the other
good and valuable consideration and the mutual terms and
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Capitalized terms used but not
otherwise defined in this Agreement shall have the respective
meanings assigned them in Part I of Appendix A to the Pooling and
Servicing Agreement of even date herewith by and among NFC, NFRRC
and Navistar Financial 1996-B Owner Trust, as it may be amended,
supplemented or modified from time to time. All references
herein to "the Agreement" or "this Agreement" are to this
Purchase Agreement as it may be amended, supplemented or modified
from time to time, the exhibits hereto and the capitalized terms
used herein which are defined in such Appendix A, and all
references herein to Articles, Sections and subsections are to
Articles, Sections or subsections of this Agreement unless
otherwise specified. The rules of construction set forth in Part
II of such Appendix A shall be applicable to this Agreement.
<PAGE>
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
SECTION 2.01. Purchase and Sale of Receivables. On such
date as is acceptable to NFRRC and NFC by which the conditions
specified in Article IV have been satisfied (and in any event
immediately prior to consummation of the transactions
contemplated by the Further Transfer and Servicing Agreements, if
any), NFC shall sell, transfer, assign and otherwise convey to
NFRRC, without recourse, and NFRRC shall purchase, all right,
title and interest of NFC in, to and under:
(a) the Receivables listed on the Schedule of Receivables
and all monies paid thereon (including Liquidation Proceeds) and
due thereunder on and after the Cutoff Date;
(b) the security interests in the Financed Vehicles granted
by Obligors pursuant to the Receivables and, to the extent
permitted by law, any accessions thereto which are financed by
NFC;
(c) the benefits of any lease assignments with respect to
the Financed Vehicles;
(d) any proceeds from any Insurance Policies with respect
to the Receivables;
(e) any proceeds from Dealer Liability with respect to the
Receivables, proceeds from any NITC Purchase Obligations with
respect to the Receivables (subject to the limitations set forth
in Section 5.08) and proceeds from any Guaranties of Receivables;
and
(f) any proceeds of the property described in clauses (a),
(b) and (c) above.
The property described in clauses (a) through (f) is
referred to herein collectively as the "Purchased Property."
SECTION 2.02. Receivables Purchase Price. In consideration
for the Purchased Property, NFRRC shall, at the Closing (as
defined below), pay to NFC an amount equal to the Initial
Aggregate Receivables Balance (the "Receivables Purchase Price")
and NFC shall execute and deliver to NFRRC an assignment (an
"Assignment") in the form attached hereto as Exhibit A. A
portion of the Receivables Purchase Price equal to approximately
$472,811,627.03 shall be paid to NFC in immediately available
funds, and the balance of the Receivables Purchase Price shall be
recorded as an advance from NFC to NFRRC.
SECTION 2.03. The Closing. The sale and purchase of the
Receivables shall take place at such a place, on a date and at a
time mutually agreeable to NFC and NFRRC (the "Closing"), and may
occur simultaneously with the closing of transactions
contemplated by the Further Transfer and Servicing Agreements.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties as to the
Receivables. NFC makes the following representations and
warranties as to the Receivables on which NFRRC relies in
accepting the Receivables. Such representations and warranties
speak as of the date hereof, as of the Closing and as of the
closing under the Further Transfer and Servicing Agreements, and
shall survive the sale, transfer and assignment of the
Receivables to NFRRC and the subsequent assignment and transfer
pursuant to the Further Transfer and Servicing Agreements:
(a) Characteristics of Receivables. Each Receivable:
(i) was originated by (A) a Dealer for the retail sale
of one or more Financed Vehicles in the ordinary course of
such Dealer's business, was fully and properly executed by
the parties thereto, was purchased by NFC from such Dealer
under an existing agreement with NFC and was validly
assigned by such Dealer to NFC in accordance with its
terms, (B) a Distributor for the retail sale of one or more
Financed Vehicles in the ordinary course of such
Distributor's business, and was fully and properly executed
by the parties thereto, was purchased by NFC from such
Distributor under an existing agreement with NFC and was
validly assigned by such Distributor to NFC in accordance
with its terms, or (C) NFC to finance a retail purchase by a
retail customer or a refinancing of a Financed Vehicle or
Financed Vehicles by a retail customer and was fully and
properly executed by the parties thereto;
(ii) has created or shall create a valid, binding and
enforceable first priority security interest in favor of NFC
in each Financed Vehicle related thereto, which security
interest will be validly assigned by NFC to NFRRC and will
be assignable by NFRRC to a subsequent purchaser;
(iii) contains customary and enforceable provisions
such as to render the rights and remedies of the holder
thereof adequate for realization against the collateral of
the benefits of the security;
(iv) shall yield interest at the Annual Percentage
Rate; and
(v) comes from one of the following categories, which
differ in their provisions for the payment of principal and
interest: Equal Payment Fully Amortizing Receivables, Equal
Payment Skip Receivables, Equal Payment Balloon Receivables,
Level Principal Fully Amortizing Receivables, Level
Principal Skip Receivables, Level Principal Balloon
Receivables, or Other Receivables. "Equal Payment Fully
Amortizing Receivables" are Receivables that provide for
equal monthly payments that fully amortize the amount
financed over its original term to maturity. "Equal Payment
Skip Receivables" are Receivables that provide for equal
monthly payments in eleven or fewer months of each
twelve-month period that fully amortize the amount financed
over its original term to maturity. "Equal Payment Balloon
Receivables" are Receivables that provide for equal monthly
payments except that a larger payment becomes due on the
final maturity date for such Receivables. "Level Principal
Fully Amortizing Receivables" are Receivables that
<PAGE>
provide for monthly payments consisting of level principal
amounts together with accrued and unpaid interest on the
unpaid Receivable Balances. "Level Principal Skip
Receivables" are Receivables that provide for monthly
payments in eleven or fewer months of each twelve-month
period consisting of level principal amounts together with
accrued and unpaid interest on the unpaid Receivable
Balances. "Level Principal Balloon Receivables" are
Receivables that provide for monthly payments consisting of
level principal amounts together with accrued and unpaid
interest on the unpaid Receivable Balances, except that a
larger principal payment becomes due on the final maturity
date for such Receivables. "Other Receivables" are
Receivables not described above, including Receivables that
provide for level monthly payments in eleven or fewer months
of each twelve-month period that amortize a portion of the
amount financed over its original term to maturity with a
larger payment that becomes due on the final maturity date
for such Receivables.
(b) Schedule of Receivables. The information set forth in
the Schedule of Receivables is true and correct in all material
respects;
(c) Compliance With Law. All requirements of applicable
federal, state and local laws, and regulations thereunder,
including the Equal Credit Opportunity Act, the Federal Reserve
Board's Regulation "B", the Soldiers' and Sailors' Civil Relief
Act of 1940, and any applicable bulk sales or bulk transfer law
and other equal credit opportunity and disclosure laws, in
respect of any of the Receivables, have been complied with in all
material respects, and each Receivable and the sale of the
Financed Vehicle or Financed Vehicles evidenced thereby complied
at the time it was originated or made and now complies in all
material respects with all legal requirements of the jurisdiction
in which it was originated or made;
(d) Binding Obligation. Each Receivable represents the
genuine, legal, valid and binding payment obligation in writing
of the Obligor thereon, enforceable against the Obligor by the
holder thereof in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights in general and by equity,
regardless of whether such enforceability is considered in a
proceeding in equity or at law;
(e) Security Interest in Financed Vehicle. Immediately
prior to the sale, transfer and assignment thereof pursuant
hereto, each Receivable was secured by a validly perfected first
priority security interest in the Financed Vehicle or, in the
event a Receivable was secured by more than one Financed Vehicle,
in each Financed Vehicle, each in favor of NFC as secured party,
or all necessary and appropriate action had been commenced that
will result, within 100 days following the Cutoff Date, in the
valid perfection of a first priority security interest in each
Financed Vehicle in favor of NFC as secured party (in each case
except for first priority security interests which may exist in
any accessions not financed by NFC);
(f) Receivables In Force. No Receivable has been
satisfied, subordinated or rescinded, and no Financed Vehicle
securing any Receivable has been released from the Lien of the
related Receivable in whole or in part;
(g) No Waiver. Since the Cutoff Date, no provision of a
Receivable has been waived, altered or modified in any respect;
<PAGE>
(h) No Amendments. Since the Cutoff Date, no Receivable
has been amended or otherwise modified such that the total number
of the Obligor's Scheduled Payments is increased or the Initial
Receivable Balance is increased;
(i) No Defenses. No right of rescission, setoff,
counterclaim or defense has been asserted or threatened with
respect to any Receivable;
(j) No Liens. There are, to NFC's knowledge, no Liens or
claims that have been filed for work, labor or materials
affecting any Financed Vehicle securing any Receivable that are
or may be prior to, or equal or coordinate with, the security
interest in each Financed Vehicle granted by the Receivable
(except for Liens or claims which may exist in any accessions to
the Financed Vehicles not financed by NFC);
(k) No Default. There has been no default, breach,
violation or event permitting acceleration under the terms of any
Receivable, and no event has occurred and is continuing that with
notice or the lapse of time would constitute a default, breach,
violation or event permitting acceleration under the terms of any
Receivable, and NFC has not waived any of the foregoing, in each
case except for payments on any Receivables which are not more
than 60 days past due (measured from the date of any Scheduled
Payment) as of the Cutoff Date;
(l) Insurance. Each Obligor is required to maintain a
physical damage insurance policy for each Financed Vehicle of the
type that NFC requires in accordance with its customary
underwriting standards for the purchase of medium and heavy duty
truck, bus and trailer receivables, unless NFC has in accordance
with its customary procedures permitted an Obligor to self-insure
such Financed Vehicle;
(m) Good Title. No Receivable has been sold, transferred,
assigned or pledged by NFC to any Person other than NFRRC;
immediately prior to the conveyance of the Receivables pursuant
to this Agreement, NFC had good and marketable title thereto,
free of any Lien (except for any Lien which may exist in
accessions to the Financed Vehicles not financed by NFC); and,
upon execution and delivery of this Agreement by NFC, NFRRC shall
have all of the right, title and interest of NFC in and to the
Purchased Property, free of any Lien (except for any Lien which
may exist in accessions to the Financed Vehicles not financed by
NFC);
(n) Lawful Assignment. No Receivable was originated in, or
is subject to the laws of, any jurisdiction the laws of which
would make unlawful the sale, transfer and assignment of such
Receivable under this Agreement or any Further Transfer and
Servicing Agreements;
(o) All Filings Made. All filings necessary under the UCC
in any jurisdiction to give NFRRC a first priority perfected
security or ownership interest in the Purchased Property (to the
extent it constitutes Code Collateral) shall have been made, and
the Receivables constitute Code Collateral;
(p) One Original. There is only one original executed copy
of each Receivable;
(q) No Documents or Instruments. No Receivable, or
constituent part thereof, constitutes a "negotiable instrument"
or "negotiable document of title" (as such terms are used in the
UCC);
<PAGE>
(r) Maturity of Receivables. Each Receivable has an
original term to maturity of not less than 12 months and not
greater than 84 months and a remaining term to maturity of not
less than 12 months and not greater than 73 months;
(s) Annual Percentage Rate. The Annual Percentage Rate of
each Receivable is not less than 7.000%;
(t) Scheduled Payments; Delinquency. As of the Cutoff
Date, each Receivable had a first scheduled payment that was due
on or before October 31, 1996 and a final scheduled payment that
was due on or before October 31, 2002, and no Receivable had a
payment that was more than 60 days past due as of the Cutoff
Date; and as of the Closing Date, no Receivable will have a final
scheduled payment that is due later than March 31, 2003;
(u) Vehicles. Each Financed Vehicle was a new or used
medium or heavy duty truck, bus or trailer at the time the
related Obligor executed the Retail Note;
(v) Origin. Each Receivable was originated in the United
States;
(w) Beginning Receivable Balance. The Receivable Balance
of each Receivable as of the Cutoff Date shall be $1,000 or more;
(x) Concentration. The aggregate Initial Receivables
Balance of all Receivables from a single Obligor shall not be
more than 1.99% of the Initial Aggregate Receivables Balance;
(y) Selection Criteria. The Receivables included in the
Schedule of Receivables were selected on a random basis from all
Retail Notes satisfying the selection criteria described herein,
and no selection procedures believed to be adverse to NFRRC or to
holders of the Securities issued under the Further Transfer and
Servicing Agreements were utilized in selecting the Receivables
from those Retail Notes of NFC which meet the selection criteria
under this Agreement; and
(z) No Government Contracts. No Obligor under any of the
Receivables is a governmental authority of the United States or
any state or political subdivision thereof.
SECTION 3.02. Additional Representations and Warranties of
NFC. NFC hereby represents and warrants to NFRRC as of the date
hereof, as of the Closing and as of the closing under the Further
Transfer and Servicing Agreements, in its capacity as the seller
of the Receivables hereunder, that:
(a) Organization and Good Standing. NFC has been duly
organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with power and
authority to own its properties and to conduct its business as
such properties are presently owned and such business is
presently conducted, and had at all relevant times, and now has,
power, authority and legal right to acquire and own the
Receivables;
(b) Due Qualification. NFC 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
<PAGE>
the ownership or lease of property or the conduct of its business
requires or shall require such qualification;
(c) Power and Authority. NFC has the power and authority
to execute and deliver this Agreement and to carry out its terms;
NFC has full power and authority to sell and assign the property
to be sold and assigned to NFRRC, has duly authorized such sale
and assignment to NFRRC by all necessary corporate action; and
the execution, delivery and performance of this Agreement have
been duly authorized by NFC by all necessary corporate action;
(d) Valid Sale; Binding Obligation. This Agreement, when
duly executed and delivered, shall constitute a valid sale,
transfer and assignment of the Receivables, enforceable against
creditors of and purchasers from NFC; and this Agreement, when
duly executed and delivered, shall constitute a legal, valid and
binding obligation of NFC enforceable against NFC in accordance
with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights in
general and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in
equity or at law;
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms
of this Agreement shall not conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the certificate
of incorporation or by-laws of NFC, or any indenture, agreement,
mortgage, deed of trust or other instrument to which NFC is a
party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement, mortgage, deed of trust
or other instrument, other than this Agreement or any Further
Transfer and Servicing Agreement, or violate any law or, to NFC's
knowledge, any order, rule or regulation applicable to NFC of any
court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction
over NFC or any of its properties;
(f) No Proceedings. There are no proceedings or, to NFC's
knowledge, investigations pending or, to NFC's knowledge,
threatened, before any court, regulatory body, administrative
agency or other tribunal or governmental instrumentality having
jurisdiction over NFC 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, or (iii) seeking any determination or ruling that
might materially and adversely affect the performance by NFC of
its obligations under, or the validity or enforceability of, this
Agreement; and
(g) No Consent. No permit, consent, approval or
authorization of, or declaration to or filing with, any
governmental authority is required in connection with the
execution, delivery and performance by NFC of this Agreement, or
the consummation by NFC of the transactions contemplated hereby
except as expressly contemplated herein.
SECTION 3.03. Representations and Warranties of NFRRC.
NFRRC hereby represents and warrants to NFC as of the date hereof
and as of the Closing:
<PAGE>
(a) Organization and Good Standing. NFRRC has been duly
organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with power and
authority to own its properties and to conduct its business as
such properties are presently owned and such business is
presently conducted, and had at all relevant times, and now has,
power, authority and legal right to acquire and own the
Receivables;
(b) Due Qualification. NFRRC 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 requires such qualification;
(c) Power and Authority. NFRRC 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 NFRRC by all necessary corporate
action;
(d) No Violation. The consummation by NFRRC of the
transactions contemplated by this Agreement and the fulfillment
of the terms of this Agreement shall not conflict with, result in
any breach of any of the terms and provisions of or constitute
(with or without notice or lapse of time) a default under, the
certificate of incorporation or by-laws of NFRRC, or any
indenture, agreement, mortgage, deed of trust or other instrument
to which NFRRC is a party or by which it is bound, or 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 Agreement or any Further Transfer and
Servicing Agreement, or violate any law or, to NFRRC's knowledge,
any order, rule or regulation applicable to NFRRC of any court or
of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over NFRRC
or any of its properties;
(e) No Proceedings. There are no proceedings or, to
NFRRC's knowledge, investigations pending or, to NFRRC's
knowledge, threatened, before any court, regulatory body,
administrative agency or other tribunal or governmental
instrumentality having jurisdiction over NFRRC 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 or (iii) seeking any determination or ruling
that might materially and adversely affect the performance by
NFRRC of its obligations under, or the validity or enforceability
of, this Agreement;
(f) Binding Obligation. This Agreement shall constitute a
legal, valid and binding obligation of NFRRC enforceable against
NFRRC in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
or other similar laws affecting the enforcement of creditors'
rights in general and by general principles of equity, regardless
of whether such enforceability is considered in a proceeding in
equity or at law; and
(g) No Consent. No permit, consent, approval or
authorization of, or declaration to or filing with, any
governmental authority is required in connection with the
execution, delivery and performance by NFRRC of this Agreement,
or the consummation by NFRRC of the transactions contemplated
hereby except as expressly contemplated herein.
<PAGE>
ARTICLE IV
CONDITIONS
SECTION 4.01. Conditions to Obligation of NFRRC. The
obligation of NFRRC to purchase the Receivables hereunder is
subject to the satisfaction of the following conditions:
(a) Representations and Warranties True. The
representations and warranties of NFC hereunder shall be true and
correct at the Closing with the same effect as if then made, and
NFC shall have performed all obligations to be performed by it
hereunder on or prior to the Closing.
(b) No Repurchase Event. No Repurchase Event (as defined
in Section 5.04 below) shall have occurred on or prior to the
Closing.
(c) Computer Files Marked. NFC shall, at its own expense,
on or prior to the Closing, (i) indicate in its computer files
created in connection with the Receivables that the Receivables
have been sold to NFRRC pursuant to this Agreement and (ii)
deliver to NFRRC the Schedule of Receivables certified by an
officer of NFC to be true, correct and complete.
(d) Documents to be Delivered By NFC at the Closing.
(i) The Assignment. At the Closing, NFC shall execute
and deliver the Assignment.
(ii) Evidence of UCC Filing. On or prior to the
Closing, NFC shall record and file, at its own expense, a
UCC-1 financing statement in each jurisdiction in which
required by applicable law, executed by NFC as seller or
debtor, naming NFRRC as purchaser or secured party, naming
the Purchased Property as collateral, meeting the
requirements of the laws of each such jurisdiction and in
such manner as is necessary to perfect under the UCC the
sale, transfer, assignment and conveyance of the Purchased
Property (to the extent it constitutes Code Collateral) to
NFRRC. NFC shall deliver a file-stamped copy, or other
evidence satisfactory to NFRRC of such filing, to NFRRC on
or prior to the Closing.
(iii) Other Documents. At the Closing, NFC shall
provide such other documents as NFRRC may reasonably
request.
(e) Other Transactions. The transactions contemplated by
the Further Transfer and Servicing Agreements shall be
consummated on or prior to the Closing to the extent that such
transactions are intended to be substantially contemporaneous
with the transactions hereunder.
SECTION 4.02. Conditions To Obligation of NFC. The
obligation of NFC to sell the Receivables to NFRRC hereunder is
subject to the satisfaction of the following conditions:
(a) Representations and Warranties True. The
representations and warranties of NFRRC hereunder shall be true
and correct at the Closing with the same effect as if then made,
and NFRRC shall have performed all obligations to be performed by
it hereunder on or prior to the Closing.
<PAGE>
(b) Receivables Purchase Price. At the Closing, NFRRC
shall pay to NFC the Receivables Purchase Price payable on such
date, as provided in Section 2.02 of this Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
NFC agrees with NFRRC as follows:
SECTION 5.01. Conflicts With Further Transfer and Servicing
Agreements. To the extent that any provision of Sections 5.02
through 5.04 of this Agreement conflicts with any provision of
the Further Transfer and Servicing Agreements, the Further
Transfer and Servicing Agreements shall govern.
SECTION 5.02. Protection of Title.
(a) Filings. NFC shall execute and file such financing
statements and cause to be executed and filed such continuation
and other statements, all in such manner and in such places as
may be required by law fully to preserve, maintain and protect
the interest of NFRRC under this Agreement in the Receivables and
the other Purchased Property and in the proceeds thereof. NFC
shall deliver (or cause to be delivered) to NFRRC file-stamped
copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) Name Change. NFC shall not change its name, identity
or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed by
NFC in accordance with Section 5.02(a) seriously misleading
within the meaning of Section 9-402(7) of the UCC, unless it
shall have given NFRRC at least 60 days prior written notice
thereof and shall file such financing statements or amendments as
may be necessary to continue the perfection of NFRRC's security
interest in the Purchased Property.
(c) Executive Office; Maintenance of Offices. NFC shall
give NFRRC at least 60 days prior written notice of any
relocation of its principal executive office 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. NFC shall at all times maintain each office from
which it services Receivables and its principal executive office
within the United States of America.
SECTION 5.03. Other Liens or Interests. Except for the
conveyances hereunder and as contemplated by the Further Transfer
and Servicing Agreements, NFC shall not sell, pledge, assign or
transfer the Purchased Property to any other Person, or grant,
create, incur, assume or suffer to exist any Lien (except any
Lien which may exist in accessions to the Financed Vehicles not
financed by NFC) on any interest therein, and NFC shall defend
the right, title and interest of NFRRC in, to and under the
Receivables against all claims of third parties claiming through
or under NFC.
<PAGE>
SECTION 5.04. Repurchase Events. By its execution of the
Further Transfer and Servicing Agreements to which it is a party,
NFC shall be deemed to acknowledge the assignment by NFRRC of
such of its right, title and interest in, to and under this
Agreement to the Issuer as shall be provided in the Further
Transfer and Servicing Agreements. NFC hereby covenants and
agrees with NFRRC for the benefit of NFRRC and the Interested
Parties, that in the event of a breach of any of NFC's
representations and warranties contained in Section 3.01 hereof
with respect to any Receivable (a "Repurchase Event") as of the
second Accounting Date following NFC's discovery or its receipt
of notice of breach (or, at NFC's election, the first Accounting
Date following such discovery), unless such breach shall have
been cured in all material respects, NFC will repurchase such
Receivable from the Issuer (if the Issuer is then the Owner of
such Receivable) on the related Distribution Date for an amount
equal to the Warranty Payment, without further notice from NFRRC
hereunder. Upon the occurrence of a Repurchase Event with
respect to a Receivable for which NFRRC is the Owner, NFC agrees
to repurchase such Receivable from NFRRC for an amount and upon
the same terms as NFC would be obligated to repurchase such
Receivable from the Issuer if the Issuer was then the Owner
thereof, and upon payment of such amount, NFC shall have such
rights with respect to such Receivable as if NFC had purchased
such Receivable from the Issuer as the Owner thereof. It is
understood and agreed that the obligation of NFC to repurchase
any Receivable as to which a breach has occurred and is
continuing shall, if such obligation is fulfilled, constitute the
sole remedy against NFC for such breach available to NFRRC or any
Interested Party.
SECTION 5.05. Indemnification. NFC shall indemnify NFRRC
for any liability as a result of the failure of a Receivable to
be originated in compliance with all requirements of law and for
any breach of any of its representations and warranties contained
herein. This indemnity obligation shall be in addition to any
obligation that NFC may otherwise have.
SECTION 5.06. Further Assignments. NFC acknowledges that
NFRRC may, pursuant to the Further Transfer and Servicing
Agreements, sell the Receivables to the Issuer and assign its
rights hereunder to the Issuer, subject to the terms and
conditions of the Further Transfer and Servicing Agreements, and
that the Issuer may in turn further pledge, assign or transfer
its rights in the Receivables and this Agreement. NFC further
acknowledges that NFRRC may assign its rights under the Custodian
Agreement to the Issuer.
SECTION 5.07. Pre-Closing Collections. Within two Business
Days after the Closing, NFC shall transfer to the account or
accounts designated by NFRRC (or by the Issuer under the Further
Transfer and Servicing Agreements) all collections (from whatever
source) on or with respect to the Receivables and other Purchased
Property held by NFC at the time of the Closing and conveyed to
NFRRC pursuant to Section 2.01.
SECTION 5.08. Limitation on Transfer of NITC Purchase
Obligations. NFRRC acknowledges and agrees that the rights
pursuant to the NITC Purchase Obligations are personal to NFC,
and only the proceeds of such rights have been assigned to NFRRC.
NFRRC is not and is not intended to be a third-party beneficiary
of such rights and, accordingly, such rights will not be
exercisable by, enforceable by or for the benefit of, or
preserved for the benefit of, NFRRC.
SECTION 5.09. Sale Treatment. NFC intends to treat the
transfer and assignment described herein as a sale for accounting
and tax purposes. <PAGE>
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. Amendment. This Agreement may be amended
from time to time (subject to any expressly applicable amendment
provision of the Further Transfer and Servicing Agreements) by a
written amendment duly executed and delivered by NFC and NFRRC.
Prior to the execution of any such amendment, NFC shall furnish
written notification of the substance of such amendment to each
of the Rating Agencies.
SECTION 6.02. Survival. The representations, warranties
and covenants of NFC set forth in Article V of this Agreement
shall remain in full force and effect and shall survive the
Closing under Section 2.03 hereof and the closing under the
Further Transfer and Servicing Agreements.
SECTION 6.03. Notices. All demands, notices and
communications under this Agreement shall be delivered as
specified in Appendix B to the Pooling and Servicing Agreement.
SECTION 6.04. Governing Law. All questions concerning the
construction, validity and interpretation of this Agreement and
the Assignment shall be governed by and construed and enforced in
accordance with the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict provision
or rule (whether of the State of Illinois or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Illinois.
SECTION 6.05. Waivers. No failure or delay on the part of
NFRRC in exercising any power, right or remedy under this
Agreement or the Assignment shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right
or remedy preclude any other or further exercise thereof or the
exercise of any other power, right or remedy.
SECTION 6.06. Costs and Expenses. NFC agrees to pay all
reasonable out-of-pocket costs and expenses of NFRRC, including
fees and expenses of counsel, in connection with the perfection
as against third parties of NFRRC's right, title and interest in,
to and under the Receivables and the enforcement of any
obligation of NFC hereunder.
SECTION 6.07. Confidential Information. NFRRC agrees that
it shall neither use nor disclose to any person the names and
addresses of the Obligors, except in connection with the
enforcement of NFRRC's rights hereunder, under the Receivables,
under the Further Transfer and Servicing Agreements or as
required by law.
SECTION 6.08. Headings. The various headings in this
Agreement are for purposes of reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
<PAGE>
SECTION 6.09. Counterparts. This Agreement may be executed
in two or more 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.
SECTION 6.10. Severability of Provisions. If any one or
more of the covenants, agreements, provisions or terms of this
Agreement shall for any reason whatsoever be held invalid, then
such covenants, agreements, provisions or terms shall be deemed
enforceable to the fullest extent permitted, and if not so
permitted, 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 any Securities or rights
of any Owner.
SECTION 6.11. Further Assurances. NFC and NFRRC 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 other more fully to effect the purposes of this
Agreement, including the execution of any financing statements or
continuation statements relating to the Receivables for filing
under the provisions of the UCC of any applicable jurisdiction.
SECTION 6.12. No Third-Party Beneficiaries. This Agreement
shall inure to the benefit of and be binding upon the parties
hereto, the Owners and their respective successors and permitted
assigns. Except as otherwise expressly provided in this
Agreement, no other Person shall have any right or obligation
hereunder.
SECTION 6.13. Merger and Integration. Except as
specifically stated otherwise herein, this Agreement sets forth
the entire understanding of the parties relating to the subject
matter hereof, and all prior understandings, written or oral, are
superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided
herein.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the parties hereby have caused this
Agreement to be executed by their respective officers thereunto
duly authorized as of the date and year first above written.
NAVISTAR FINANCIAL CORPORATION
By: _____________________________
R. Wayne Cain
Vice President
NAVISTAR FINANCIAL RETAIL RECEIVABLES
CORPORATION
By: ______________________________
R. Wayne Cain
Vice President
<PAGE>
EXHIBIT A
FORM OF ASSIGNMENT
For value received, in accordance with the Purchase
Agreement, dated as of November 6, 1996 (the "Purchase
Agreement"), between Navistar Financial Corporation, a Delaware
corporation ("NFC"), and Navistar Financial Retail Receivables
Corporation a Delaware corporation ("NFRRC"), NFC does hereby
sell, assign, transfer and otherwise convey unto NFRRC, without
recourse, all right, title and interest of NFC in, to and under
(i) the Receivables listed on the Schedule of Receivables and all
monies paid thereon (including Liquidation Proceeds) and due
thereunder on and after the Cutoff Date; (ii) the security
interests in the Financed Vehicles granted by Obligors pursuant
to the Receivables and, to the extent permitted by law, any
accessions thereto which are financed by NFC; (iii) the benefits
of any lease assignments with respect to the Financed Vehicles;
(iv) any proceeds from any Insurance Policies with respect to the
Receivables; (v) any proceeds from Dealer Liability with respect
to the Receivables, proceeds from any NITC Purchase Obligations
with respect to the Receivables (subject to the limitations set
forth in Section 5.08 of the Purchase Agreement) and proceeds
from any Guaranties of Receivables; and (vi) any proceeds of the
property described in clauses (i), (ii) and (iii) above.
The foregoing sale does not constitute and is not intended
to result in any assumption by NFRRC of any obligation of the
undersigned to the Obligors, Dealers, insurers or any other
Person in connection with the Receivables, the agreements with
Dealers, 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 meaning assigned to them in the Purchase
Agreement.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this
Assignment to be duly executed as of November 6, 1996.
NAVISTAR FINANCIAL CORPORATION
By:
Name:
Title:
<EX-10.10.2 Pooling and Servicing Agreement>
EXHIBIT 10.2
POOLING AND SERVICING AGREEMENT
AMONG
NAVISTAR FINANCIAL CORPORATION
SERVICER
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
SELLER
AND
NAVISTAR FINANCIAL 1996-B OWNER TRUST
ISSUER
DATED AS OF NOVEMBER 6, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS 1
ARTICLE II
CONVEYANCE OF RECEIVABLES; ORIGINAL ISSUANCE OF
CERTIFICATES 1
SECTION 2.01. Conveyance of Receivables. 1
SECTION 2.02. Custody of Receivable Files. 3
SECTION 2.03. Acceptance by Issuer; Limitation on
Transfer of NITC Purchase
Obligations 3
SECTION 2.04. Representations and Warranties as to the
Receivables 4
SECTION 2.05. Repurchase of Receivables Upon Breach
of Warranty 4
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES 4
SECTION 3.01. Duties of the Servicer 4
SECTION 3.02. Collection of Receivables Payments 5
SECTION 3.03. [Reserved] 6
SECTION 3.04. Realization Upon Liquidating Receivables 6
SECTION 3.05. Maintenance of Insurance Policies 6
SECTION 3.06. Maintenance of Security Interests
in Vehicles 6
SECTION 3.07. Covenants of the Servicer 6
SECTION 3.08. Purchase of Receivables Upon Breach
of Covenant 7
SECTION 3.09. Total and Supplemental Servicing Fees;
Payment of Certain Expenses by Servicer 7
SECTION 3.10. Servicer's Certificate 7
SECTION 3.11. Application of Collections 8
ARTICLE IV
SERVICER'S COVENANTS; DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS 8
SECTION 4.01. Annual Statement as to Compliance:
Notice of Servicer Default 8
SECTION 4.02. Annual Independent Accountants' Report 9
<PAGE>
SECTION 4.03. Access to Certain Documentation and
Information Regarding Receivables 9
SECTION 4.04. Amendments to Schedule of Receivables 10
SECTION 4.05. Assignment of Administrative Receivables
and Warranty Receivables 10
SECTION 4.06. Distributions 11
SECTION 4.07. Reserve Account 12
SECTION 4.08. Net Deposits 13
SECTION 4.09. Statements to Securityholders 13
SECTION 4.10. Information Provided to Rating Agencies 15
ARTICLE V
CERTIFICATEHOLDER AND NOTEHOLDER STATEMENTS AND ACCOUNTS;
COLLECTIONS, DEPOSITS AND INVESTMENTS; ADVANCES 15
SECTION 5.01. Establishment of Accounts 15
SECTION 5.02. Collections 18
SECTION 5.03. Investment Earnings and Supplemental
Servicing Fees 19
SECTION 5.04. Monthly Advances 19
SECTION 5.05. Additional Deposits 19
ARTICLE VI
THE SELLER; REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE SERVICER 20
SECTION 6.01. Representations and Warranties of
the Seller and the Servicer 20
SECTION 6.02. Liability of Seller 22
SECTION 6.03. Merger or Consolidation of, or
Assumption of the Obligations
of, Seller; Amendment of Certificate of
Incorporation 22
SECTION 6.04. Limitation on Liability of Seller
and Others 23
SECTION 6.05. Seller May Own Securities 23
ARTICLE VII
LIABILITIES OF SERVICER AND OTHERS 23
SECTION 7.01. Liability of Servicer; Indemnities 23
SECTION 7.02. Merger or Consolidation of, or
Assumption of the Obligations
of, the Servicer 24
SECTION 7.03. Limitation on Liability of Servicer
and Others 25
SECTION 7.04. Delegation of Duties 25
SECTION 7.05. Servicer Not to Resign 26
ARTICLE VIII
DEFAULT 26
<PAGE>
SECTION 8.01. Servicer Defaults 26
SECTION 8.02. Consequences of a Servicer Default 27
SECTION 8.03. Indenture Trustee to Act; Appointment
of Successor 27
SECTION 8.04. Notification to Securityholders 28
SECTION 8.05. Waiver of Past Defaults 28
SECTION 8.06. Repayment of Advances 28
ARTICLE IX
TERMINATION 29
SECTION 9.01. Optional Purchase of All Receivables 29
SECTION 9.02. Sale of Assets; Termination 29
ARTICLE X
MISCELLANEOUS PROVISIONS 31
SECTION 10.01. Amendment 31
SECTION 10.02. Protection of Title to Owner
Trust Estate 32
SECTION 10.03. Notices 34
SECTION 10.04. Governing Law 34
SECTION 10.05. Severability of Provisions 34
SECTION 10.06. Assignment 34
SECTION 10.07. Third-Party Beneficiaries 35
SECTION 10.08. Separate Counterparts 35
SECTION 10.09. Headings and Cross-References 35
SECTION 10.10. Assignment to Indenture Trustee 35
SECTION 10.11. No Petition Covenants 35
SECTION 10.12. Limitation of Liability of the Trustees 35
SECTION 10.13. Business Day Certificate 36
<PAGE>
EXHIBIT A
Form of Assignment
EXHIBIT B
Locations of Schedule of Receivables
APPENDIX A
Defined Terms and Rules of Construction
APPENDIX B
Notice Addresses and Procedures
<PAGE>
THIS POOLING AND SERVICING AGREEMENT is made as of November
6, 1996 by and among Navistar Financial Corporation, a Delaware
corporation ("NFC" and, in its capacity as Servicer hereunder,
the "Servicer"), Navistar Financial Retail Receivables
Corporation, a Delaware corporation ("NFRRC" and, in its capacity
as the Seller hereunder, the "Seller"), and Navistar Financial
1996-B Owner Trust, a Delaware business trust (the "Issuer").
WHEREAS, NFC has sold the Receivables to the Seller pursuant
to the Purchase Agreement.
WHEREAS, the Seller desires to sell the Receivables to the
Issuer in exchange for the Securities pursuant to the terms of
this Agreement, and the Servicer desires to perform the servicing
obligations set forth herein for and in consideration of the fees
and other benefits set forth in this Agreement.
WHEREAS, the Seller and the Issuer wish to set forth the
terms pursuant to which the Receivables are to be sold by the
Seller to the Issuer and serviced by the Servicer.
NOW, THEREFORE, in consideration of the foregoing, the other
good and valuable consideration and the mutual terms and
covenants contained herein, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01. Definitions. Certain capitalized terms used
in the above recitals and in this Agreement are defined in and
shall have the respective meanings assigned them in Part I of
Appendix A to this Agreement. All references herein to "the
Agreement" or "this Agreement" are to this Pooling and Servicing
Agreement as it may be amended, supplemented or modified from
time to time, the exhibits hereto and the capitalized terms used
herein which are defined in such Appendix A, and all references
herein to Articles, Sections and subsections are to Articles,
Sections or subsections of this Agreement unless otherwise
specified. The rules of construction set forth in Part II of
such Appendix A shall be applicable to this Agreement.
ARTICLE II
CONVEYANCE OF RECEIVABLES; ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Receivables. In consideration
of the Issuer's delivery of the Securities to, or upon the order
of, the Seller, the Seller does hereby enter into this Agreement
and agree to fulfill all of its obligations hereunder and to
sell, transfer, assign and otherwise convey to the Issuer,
without recourse, pursuant to an assignment in the form attached
hereto as Exhibit A, all right, title and interest of the Seller
in, to and under:
<PAGE>
(a) the Receivables listed on the Schedule of Receivables
and all monies paid thereon (including Liquidation Proceeds) and
due thereunder on and after the Cutoff Date;
(b) the security interests in the Financed Vehicles granted
by Obligors pursuant to the Receivables and, to the extent
permitted by law, any accessions thereto which are financed by
NFC;
(c) the benefits of any lease assignments with respect to
the Financed Vehicles;
(d) any proceeds from any Insurance Policies with respect
to the Receivables;
(e) any proceeds from Dealer Liability with respect to the
Receivables, proceeds from any NITC Purchase Obligations with
respect to the Receivables (subject to the limitations set forth
in Section 2.03) and proceeds from any Guaranties of Receivables;
(f) the Purchase Agreement and the Custodian Agreement,
including the right of the Seller to cause NFC to perform its
obligations thereunder (including the obligation to repurchase
Receivables under certain circumstances); and
(g) any proceeds of the property described in clauses (a),
(b), (c) and (f) above.
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 Purchased Property 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. Within two Business Days after the Closing Date,
the Seller shall cause to be deposited into the Collection
Account all collections (from whatever source) on or with respect
to the Purchased Property received by the Seller pursuant to
Section 5.07 of the Purchase Agreement. The Seller and the
Servicer intend to treat such transfer and assignment as a sale
for accounting and tax purposes. Notwithstanding the foregoing,
in the event a court of competent jurisdiction determines that
such transfer and assignment did not constitute such a sale or
that such beneficial interest is a part of the Seller's estate,
then (i) the Seller shall be deemed to have granted to the Issuer
a first priority perfected security interest in all of the
Seller's right title and interest in, to and under the assets
conveyed pursuant to this Agreement, and the Seller hereby grants
such security interest and (ii) the assets conveyed pursuant to
this Agreement shall be deemed to include all rights, powers and
options (but none of the obligations, if any) of the Seller under
any agreement or instrument included in the assets conveyed
pursuant to this Agreement, including the immediate and
continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect of the Receivables
included in the assets conveyed pursuant to this Agreement and
all other monies payable under the Receivables conveyed pursuant
to this Agreement, 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
Seller or otherwise and generally to do and receive anything that
the Seller is or may be entitled to do or receive under or with
respect to the assets conveyed pursuant
<PAGE>
to this Agreement. For purposes of such grant, this Agreement
shall constitute a security agreement under the UCC.
SECTION 2.02. Custody of Receivable Files. In connection
with the sale, transfer and assignment of the Receivables to the
Seller pursuant to the Purchase Agreement, the Seller,
simultaneously with the execution and delivery of this Agreement,
shall enter into the Custodian Agreement with the Custodian,
pursuant to which the Seller shall revocably appoint the
Custodian, and the Custodian shall accept such appointment, to
act as the agent of the Seller as Custodian of the following
documents or instruments which shall be constructively delivered
to the Owner Trustee with respect to each Receivable:
(a) the fully executed original of the Retail Note for such
Receivable;
(b) documents evidencing or related to any Insurance
Policy;
(c) the original credit application of each Obligor, fully
executed by each such Obligor on NFC's customary form, or on a
form approved by NFC, for such application;
(d) where permitted by law, the original certificate of
title (when received) and otherwise such documents, if any, that
NFC keeps on file in accordance with its customary procedures
indicating that the Financed Vehicle is owned by the Obligor and
subject to the interest of NFC as first lienholder or secured
party; and
(e) any and all other documents that NFC keeps on file in
accordance with its customary procedures relating to the
individual Receivable, Obligor or Financed Vehicle.
Pursuant to Section 2.01(f), the rights of the Seller under the
Custodian Agreement are being assigned to the Issuer.
SECTION 2.03. Acceptance by Issuer; Limitation on Transfer
of NITC Purchase Obligations. The Issuer does hereby accept all
consideration conveyed by the Seller pursuant to Section 2.01,
and declares that the Issuer shall hold such consideration upon
the trust set forth in the Trust Agreement for the benefit of
Certificateholders, subject to the terms and conditions of the
Trust Agreement, Indenture and this Agreement; provided, however,
that the Issuer acknowledges and agrees that (a) the rights
pursuant to the NITC Purchase Obligations are personal to NFC,
and only the proceeds of such rights are being assigned to the
Issuer pursuant to the terms hereof, (b) the Issuer is not or is
not intended to be a third-party beneficiary of such rights, and
(c) accordingly such rights are not exercisable by, enforceable
by or for the benefit of, or preserved for the benefit of, the
Issuer. The Issuer hereby agrees and accepts the appointment and
authorization of NFC as Servicer under Section 3.01. The parties
agree that this Agreement, the Indenture and the Trust Agreement
constitute the Further Transfer and Servicing Agreements for
purposes of the Purchase Agreement.
<PAGE>
SECTION 2.04. Representations and Warranties as to the
Receivables. Pursuant to Section 2.01(f), the Seller assigns to
the Issuer all of its right, title and interest in, to and under
the Purchase Agreement. Such assigned right, title and interest
includes the representations and warranties of NFC made to the
Seller pursuant to Section 3.01 of the Purchase Agreement. The
Seller hereby represents and warrants to the Issuer that the
Seller has taken no action which would cause such representations
and warranties to be false in any material respect as of the
Closing Date. The Seller further acknowledges that the Issuer
relies on the representations and warranties of the Seller under
this Agreement and of NFC under the Purchase Agreement in
accepting the Receivables in trust and executing and delivering
the Securities. The foregoing representation and warranty speaks
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.
SECTION 2.05. Repurchase of Receivables Upon Breach of
Warranty. Upon discovery by the Seller, the Servicer or either
Trustee of a breach of any of the representations and warranties
in Section 3.01 of the Purchase Agreement (and, with respect to
subsection 3.01(j) of the Purchase Agreement, irrespective of any
limitation regarding knowledge of NFC) or in Section 2.04 or
Section 6.01 of this Agreement that materially and adversely
affects the interests of the Securityholders in any Receivable,
the party discovering such breach shall give prompt written
notice thereof to the others. As of the second Accounting Date
following its discovery or its receipt of notice of breach (or,
at the Seller's election, the first Accounting Date following
such discovery), unless such breach shall have been cured in all
material respects, in the event of a breach of the
representations and warranties made by the Seller in Section 2.04
or Section 6.01, the Seller shall repurchase such Receivable from
the Issuer on the related Distribution Date. The Owner Trustee
shall have no affirmative duty to conduct any investigation as to
the occurrence of any event requiring the repurchase of any
Receivable pursuant to this Section 2.05.
The repurchase price to be paid by any Warranty
Purchaser shall be an amount equal to the Warranty Payment. It
is understood and agreed that the obligation of the Warranty
Purchaser to repurchase any Receivable as to which a breach has
occurred and is continuing shall, if such repurchase obligations
are fulfilled, constitute the sole remedy against the Seller, the
Servicer or NFC for such breach available to any Interested
Party. The Servicer acknowledges its obligations to repurchase
Administrative Receivables from the Issuer pursuant to Section
3.08 hereof and to repurchase Warranty Receivables pursuant to
Section 5.04 of the Purchase Agreement.
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.01. Duties of the Servicer. The Servicer is
hereby appointed and authorized to act as agent for the Owner of
the Receivables and in such capacity 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 comparable medium and
heavy duty truck, bus and trailer receivables that it services
for itself or others. The Servicer hereby accepts such
appointment and authorization and agrees to perform the duties of
Servicer with respect to the
<PAGE>
Receivables set forth herein. The Servicer's duties shall
include collection and posting of all payments, responding to
inquiries of Obligors on the Receivables, investigating
delinquencies, sending payment coupons to Obligors, reporting tax
information to Obligors, policing the collateral, accounting for
collections and furnishing monthly and annual statements to the
Owner of any Receivables with respect to distributions,
generating federal income tax information and performing the
other duties specified herein. Subject to the provisions of
Section 3.02, the Servicer shall follow its customary standards,
policies and procedures and shall have full power and authority,
acting alone, to do any and all things in connection with such
managing, servicing, administration and collection that it may
deem necessary or desirable.
Without limiting the generality of the foregoing, the
Servicer is hereby authorized and empowered by the Owner of the
Receivables, pursuant to this Section 3.01, to execute and
deliver, on behalf of all Interested Parties, or any of them, any
and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable
instruments, with respect to the Receivables and the Financed
Vehicles. The Servicer is hereby authorized to commence in the
name of the Owner of such Receivable or, to the extent necessary,
in its own name, a legal proceeding to enforce a Liquidating
Receivable as contemplated by Section 3.04, to enforce all
obligations of NFC and NFRRC, in its capacity as the Seller or
otherwise, under each of the Purchase Agreement and the Further
Transfer and Servicing Agreements or to commence or participate
in a legal proceeding (including a bankruptcy proceeding)
relating to or involving a Receivable or a Liquidating
Receivable. If the Servicer commences or participates in such a
legal proceeding in its own name, the Owner of such Receivable
shall thereupon be deemed to have automatically assigned such
Receivable to the Servicer for purposes of commencing or
participating in any such proceeding as a party or claimant, the
Servicer is hereby authorized and empowered by the Owner of a
Receivable to execute and deliver in the Servicer's name any
notices, demands, claims, complaints, responses, affidavits or
other documents or instruments in connection with any such
proceeding. Any Owner of Receivables, upon the written request
of the Servicer, shall furnish the Servicer with any powers of
attorney and other documents and take any other steps which the
Servicer may deem necessary or appropriate to enable the Servicer
to carry out its servicing and administrative duties under this
Agreement and the other Further Transfer and Servicing
Agreements. Except to the extent required by the preceding two
sentences, the authority and rights granted to the Servicer in
this Section 3.01 shall be nonexclusive and shall not be
construed to be in derogation of the retention by the Owner of a
Receivable of equivalent authority and rights.
SECTION 3.02. Collection of Receivables 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 practices, policies and procedures as it follows with
respect to comparable medium and heavy duty truck, bus and
trailer receivables that it services for itself or others.
Except as provided in subsection 3.07(c), the Servicer is hereby
authorized to grant extensions, rebates or adjustments on a
Receivable without the prior consent of the Owner of such
Receivable and to rewrite, in its ordinary course of business, a
Receivable to reflect the Full Prepayment of a Receivable with
respect to any Financed Vehicle without the prior consent of the
Owner of such Receivable. The Servicer is authorized in its
<PAGE>
discretion to waive any prepayment charge, late payment charge or
any other fees that may be collected in the ordinary course of
servicing such Receivable.
SECTION 3.03. [Reserved].
SECTION 3.04. Realization Upon Liquidating Receivables.
The Servicer shall use reasonable efforts, consistent with its
customary servicing procedures, to repossess or otherwise
comparably convert the ownership of each Financed Vehicle that it
has reasonably determined should be repossessed or otherwise
converted following a default under the Receivable secured by
each such Financed Vehicle. The Servicer is authorized to follow
such practices, policies and procedures as it shall deem
necessary or advisable and as shall be customary and usual in its
servicing of medium and heavy duty truck, bus and trailer
receivables that it services for itself or others, which
practices, policies and procedures may include reasonable efforts
to realize upon or obtain benefits of any lease assignments,
proceeds from any Dealer Liability, proceeds from any NITC
Purchase Obligations, proceeds from any Insurance Policies and
proceeds from any Guaranties, in each case with respect to the
Receivables, selling the related Financed Vehicle or Financed
Vehicles at public or private sale or sales and other actions by
the Servicer in order to realize upon such a Receivable. The
foregoing is 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 any repair or towards
the repossession of such Financed Vehicle unless it shall
determine in its discretion that such repair and/or repossession
shall increase the proceeds of liquidation of the related
Receivable by an amount greater than the amount of such expenses.
The Servicer shall be entitled to receive Liquidation Expenses
with respect to each Liquidating Receivable at such time as the
Receivable becomes a Liquidating Receivable in accordance with
subsection 4.06(b)(ii).
SECTION 3.05. Maintenance of Insurance Policies. The
Servicer shall, in accordance with its customary servicing
procedures, require that each Obligor shall have obtained
physical damage insurance covering each Financed Vehicle as of
the execution of the related Receivable, unless the Servicer has
in accordance with its customary procedures permitted an Obligor
to self-insure the Financed Vehicle or Financed Vehicles securing
such Receivable. The Servicer shall, in accordance with its
customary servicing procedures, monitor such physical damage
insurance with respect to each Financed Vehicle that secures each
Receivable.
SECTION 3.06. Maintenance of Security Interests in
Vehicles. The Servicer shall, in accordance with its customary
servicing procedures and at its own expense, take such steps as
are necessary to maintain perfection of the first priority
security interest created by each Receivable in the related
Financed Vehicle or Financed Vehicles. The Owner of each
Receivable hereby authorizes the Servicer to re-perfect such
security interest as necessary because of the relocation of a
Financed Vehicle or for any other reason.
SECTION 3.07. Covenants of the Servicer. As of the Closing
Date, the Servicer hereby makes the following covenants on which
the Issuer is relying in acquiring the Receivables hereunder
<PAGE>
and issuing the Securities under the other Further Transfer and
Servicing Agreements. The Servicer covenants that from and after
the Closing Date:
(a) Liens in Force. Except as contemplated in this
Agreement, the Servicer shall not release in whole or in part any
Financed Vehicle from the security interest securing the related
Receivable;
(b) No Impairment. The Servicer shall do nothing to impair
the rights of NFRRC or any Interested Party in and to the
Receivables; and
(c) No Modifications. The Servicer shall not amend or
otherwise modify any Receivable such that the Initial Receivable
Balance, the Annual Percentage Rate or the total number of
Scheduled Payments is altered or such that the final scheduled
payment on such Receivable will be due later than March 31, 2003.
SECTION 3.08. Purchase of Receivables Upon Breach of
Covenant. Upon discovery by any of the Seller, the Servicer or
any party under the Further Transfer and Servicing Agreements of
a breach of any of the covenants set forth in Sections 3.06
and 3.07, the party discovering such breach shall give prompt
written notice thereof to the others. As of the second
Accounting Date following its discovery or receipt of notice of
such breach (or, at the Servicer's election, the first Accounting
Date so following), the Servicer shall, unless it shall have
cured such breach in all material respects, purchase from the
Owner thereof any Receivable materially and adversely affected by
such breach as determined by such Owner and, on the related
Distribution Date, the Servicer shall pay the Administrative
Purchase Payment. It is understood and agreed that the obligation
of the Servicer to purchase any Receivable with respect to which
such a breach has occurred and is continuing shall, if such
obligation is fulfilled, constitute the sole remedy against the
Servicer for such breach available to the Seller or any
Interested Party. Each of the Owner Trustee and the Indenture
Trustee shall have no affirmative duty to conduct any
investigation as to the occurrence of any event requiring the
repurchase of any Receivable pursuant to this Section 3.08.
SECTION 3.09. Total and Supplemental Servicing Fees;
Payment of Certain Expenses by Servicer. The Servicer is
entitled to receive the Total Servicing Fee and Supplemental
Servicing Fees out of collections in respect of the Receivables
as provided herein. Subject to any limitations on the Servicer's
liability hereunder, 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 Issuer,
any trustees 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, but excluding federal, state and local
income and franchise taxes, if any, of the Issuer or any
Securityholder).
SECTION 3.10. Servicer's Certificate. Not later than 10:00
a.m. (Chicago, Illinois time) on each Determination Date, the
Servicer shall deliver to each Trustee and the Rating Agencies a
Servicer's Certificate with respect to the immediately preceding
Monthly Period executed by the
<PAGE>
President or any Vice President of the Servicer containing all
information necessary to each such party for making the
calculations, withdrawals, deposits, transfers and distributions
required by Section 4.06, and all information required to be
provided to Certificateholders and Noteholders under subsection
4.09(a). Receivables to be purchased by the Servicer under
Section 3.08 hereof or Section 5.04 of the Purchase Agreement as
of the last day of any Monthly Period shall be identified by
Receivable number (as set forth in the Schedule of Receivables).
With respect to any Receivables for which the Seller is the
Owner, the Servicer shall deliver to the Seller such accountings
relating to such Receivables and the actions of the Servicer with
respect thereto as the Seller may reasonably request.
SECTION 3.11. Application of Collections. For the purposes
of this Agreement, as of each Accounting Date, all collections
for the related Monthly Period with respect to each Receivable
shall be applied by the Servicer as follows:
(a) All payments by or on behalf of the Obligor (excluding
Supplemental Servicing Fees and Investment Earnings) shall be
applied (i) first to reduce Outstanding Monthly Advances, if any,
with respect to such Receivable, as described in Section 5.04,
(ii) second, to the Scheduled Payment for such Monthly Period
with respect to such Receivable, and (iii) third, the remainder
shall constitute, with respect to such Receivable, a Full
Prepayment or Partial Prepayment; and
(b) A Partial Prepayment made on a Receivable is applied to
reduce the final Scheduled Payment and will thereafter, to the
extent the Partial Prepayment exceeds the final Scheduled
Payment, reduce Scheduled Payments in reverse chronological order
beginning with the penultimate Scheduled Payment. The Rebate
related to such Partial Prepayment will reduce the final
Scheduled Payment and will thereafter, to the extent the Rebate
exceeds the final Scheduled Payment, reduce Scheduled Payments in
reverse chronological order beginning with the penultimate
Scheduled Payment.
ARTICLE IV
SERVICER'S COVENANTS; DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS
SECTION 4.01. Annual Statement as to Compliance: Notice of
Servicer Default.
(a) The Servicer shall deliver to each Trustee, on or
before February 1 of each year, beginning February 1, 1998, an
officer's certificate signed by the President or any Vice
President of the Servicer, dated as of the immediately preceding
October 31, stating that (i) a review of the activities of the
Servicer during the preceding 12-month period (or, with respect
to the first such certificate, such period as shall have elapsed
from the Closing Date to the date of such certificate) and of its
performance under this Agreement has been made under such
officer's supervision, and (ii) to such officer's knowledge,
based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such period, or, if
there has been a default in the fulfillment of any
<PAGE>
such obligation, specifying each such default known to such
officer and the nature and status thereof. A copy of such
certificate may be obtained by any Noteholder or any
Certificateholder by a request in writing to the Issuer addressed
to the Corporate Trust Office of the Indenture Trustee or the
Owner Trustee, respectively.
(b) The Servicer shall deliver to each Trustee and to 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 which 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 each Trustee, the Servicer and 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 which with the
giving of notice or lapse of time, or both, would become a
Servicer Default under clause (b) of Section 8.01.
SECTION 4.02. Annual Independent Accountants' Report.
(a) The Servicer shall cause a firm of independent
accountants, who may also render other services to the Servicer
or the Seller, to deliver to each Trustee and the Rating
Agencies, on or before February 1 of each year, beginning
February 1, 1998 with respect to the twelve months ended on the
immediately preceding October 31 (or, with respect to the first
such report, such period as shall have elapsed from the Closing
Date to the date of such certificate), a report (the
"Accountants' Report") addressed to the board of directors of the
Servicer and to each Trustee, to the effect that such firm has
audited the financial statements of the Servicer and issued its
report thereon and that such audit (i) was made in accordance
with generally accepted auditing standards, (ii) included tests
relating to Retail Notes serviced for others in accordance with
the requirements of the Uniform Single Audit Program for Mortgage
Bankers (the "Program"), to the extent the procedures in the
Program are applicable to the servicing obligations set forth in
this Agreement and (iii) except as described in the report,
disclosed no exceptions or errors in the records relating to
Retail Notes serviced for others that, in the firm's opinion,
paragraph four of the Program requires such firm to report.
(b) The Accountants' Report shall also indicate that the
firm is independent of the Seller and the Servicer within the
meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
(c) A copy of the Accountants' Report may be obtained by
any Noteholder or any Certificateholder by a request in writing
to the Issuer addressed to the Corporate Trust Office of the
Indenture Trustee or the Owner Trustee, respectively.
SECTION 4.03. Access to Certain Documentation and
Information Regarding Receivables. The Servicer shall provide to
each Trustee reasonable access to the documentation regarding the
Receivables. The Servicer shall provide such access to any
Securityholder only in such cases where a Securityholder is
required by applicable statutes or regulations to review such
<PAGE>
documentation. In each case, such access shall be afforded
without charge but only upon reasonable request and during normal
business hours at offices of the Servicer designated by the
Servicer. Nothing in this Section 4.03 shall derogate from the
obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding Obligors, and the
failure of the Servicer to provide access as provided in this
Section 4.03 as a result of such obligation shall not constitute
a breach of this Section 4.03.
SECTION 4.04. Amendments to Schedule of Receivables. If
the Servicer, during a Monthly Period, assigns to a Receivable an
account number that differs from the account number previously
identifying such Receivable on the Schedule of Receivables, the
Servicer shall deliver to the Seller and each Trustee on or
before the Distribution Date related to such Monthly Period an
amendment to the Schedule of Receivables to report the newly
assigned account number. Each such amendment shall list all new
account numbers assigned to Receivables during such Monthly
Period and shall show by cross reference the prior account
numbers identifying such Receivables on the Schedule of
Receivables.
SECTION 4.05. Assignment of Administrative Receivables and
Warranty Receivables. Upon receipt of the Administrative
Purchase Payment or the Warranty Payment with respect to an
Administrative Receivable or a Warranty Receivable, respectively,
each Trustee shall assign, without recourse, representation or
warranty, to the Servicer or the Warranty Purchaser, as
applicable, all of such Person's right, title and interest in, to
and under (a) such Administrative Receivable or Warranty
Receivable and all monies due thereon, (b) the security interests
in the related Financed Vehicle and, to the extent permitted by
law, any accessions thereto which are financed by NFC, (c)
benefits of any lease assignments with respect to the Financed
Vehicles, (d) proceeds from any Insurance Policies with respect
to such Receivable, (e) proceeds from Dealer Liability with
respect to such Receivable, proceeds from any NITC Purchase
Obligations with respect to such Receivable and proceeds from any
Guaranties of such Receivable, (f) the interests of such Person
or the Issuer, as applicable, in certain rebates of premiums and
other amounts relating to the Insurance Policies and any document
relating thereto and (g) the rights of such Person under the
Purchase Agreement and the Custodian Agreement with respect to
such Receivable, such assignment being an assignment outright and
not for security. Upon the assignment of such Receivable
described in the preceding sentence, the Servicer or the Warranty
Purchaser, as applicable, shall own such Receivable, and all such
security and documents, free of any further obligations to either
Trustee or the Securityholders with respect thereto. If in any
Proceeding it is held that the Servicer may not enforce a
Receivable on the ground that it is not a real party in interest
or a holder entitled to enforce the Receivable, the applicable
Trustee shall, at the Servicer's expense, take such steps as the
Servicer deems necessary to enforce the Receivable, including
bringing suit in the name of such Person or the names of the
Securityholders.
<PAGE>
SECTION 4.06. Distributions.
(a) On or before the day preceding each Determination Date,
with respect to the preceding Monthly Period and the related
Distribution Date, the Servicer shall calculate the Total
Available Amount, Collected Interest, Collected Principal, the
Total Servicing Fee, the Aggregate Noteholders' Interest
Distributable Amount, the Aggregate Noteholders' Principal
Distributable Amount, the Certificateholders' Interest
Distributable Amount, the Class B Certificateholders' Interest
Distributable Amount, the Class C Certificateholders' Interest
Distributable Amount, the Certificateholders' Principal
Distributable Amount, the Class B Certificateholders' Principal
Distributable Amount, the Class C Certificateholders' Principal
Distributable Amount and all other amounts required to determine
the amounts to be deposited in or paid from each of the
Collection Account, the Note Distribution Account, the
Certificate Distribution Account and the Reserve Account on the
next succeeding Distribution Date.
(b) On or before the day preceding each Distribution Date,
the Indenture Trustee shall cause to be made the following
withdrawals, deposits, transfers and distributions in the amounts
set forth in the Servicer's Certificate for such Distribution
Date pursuant to Section 3.10:
(i) from the Collection Account to the Servicer, in
immediately available funds, reimbursement of Outstanding
Monthly Advances pursuant to Section 5.04, payments of
Liquidation Expenses with respect to Receivables which
became Liquidating Receivables during the related Monthly
Period pursuant to Section 3.04 and any unpaid Liquidation
Expenses from prior periods; and
(ii) from the Reserve Account to the Collection
Account, the lesser of (A) the amount of cash or other
immediately available funds therein on the day preceding
such Distribution Date and (B) the amount, if any, by which
(I) the sum of the Total Servicing Fee, the Aggregate
Noteholders' Interest Distributable Amount, the
Certificateholders' Interest Distributable Amount, the
Aggregate Noteholders' Principal Distributable Amount and
the Certificateholders' Principal Distributable Amount
exceeds (II) the Available Amount for such Distribution
Date.
(c) Except as otherwise provided in Section 4.06(d), before
12:00 noon, New York City time, on the day preceding each
Distribution Date the Indenture Trustee (based on the information
contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 3.10) shall make the
following distributions from the Collection Account (after the
withdrawals, deposits and transfers specified in Section 4.06(b)
have been made) in the following order of priority:
(i) first, to the Servicer, to the extent of the Total
Available Amount, the Total Servicing Fee;
<PAGE>
(ii) second, to the Note Distribution Account, to the
extent of the Total Available Amount (as such amount has
been reduced by the distributions described in clause (i)
above), the Aggregate Noteholders' Interest Distributable
Amount;
(iii) third, to the Certificate Distribution
Account, to the extent of the Total Available Amount (as
such amount has been reduced by the distributions described
in clauses (i) and (ii) above), the Certificateholders'
Interest Distributable Amount;
(iv) fourth, to the Note Distribution Account, to the
extent of the Total Available Amount (as such amount has
been reduced by the distributions described in clauses (i),
(ii) and (iii) above), the Aggregate Noteholders' Principal
Distributable Amount;
(v) fifth, to the Certificate Distribution Account, to
the extent of the Total Available Amount (as such amount has been
reduced by the distributions described in clauses (i) through
(iv), inclusive, above), the Certificateholders' Principal
Distributable Amount; and
(vi) sixth, to the Reserve Account, any portion of the
Total Available Amount remaining after the distributions
described in clauses (i) through (v), inclusive, above.
(d) Notwithstanding the foregoing, at any time that the
Notes have not been paid in full and the principal balance of the
Notes has been declared immediately due and payable following the
occurrence of an Event of Default pursuant to Section 5.2 of the
Indenture, then until such time as the Notes have been paid in
full and the Indenture has been discharged with respect to the
Notes or all Events of Default have been cured or waived as
provided in Section 5.2(b) of the Indenture, no amounts shall be
deposited in or distributed to the Certificate Distribution
Account. Any such amounts otherwise distributable to the
Certificate Distribution Account shall be deposited instead to
the Note Distribution Account as payments of principal on the
Notes.
SECTION 4.07. Reserve Account.
(a) The Servicer, for the benefit of the Securityholders,
shall establish and maintain in the name of the Indenture Trustee
an Eligible Deposit Account known as the Navistar Financial
1996-B Owner Trust Reserve Account (the "Reserve Account") to
include the money and other property deposited and held therein
pursuant to this Section 4.07(a), Section 4.07(c), and Section
4.06(c). On the Closing Date, the Seller shall deposit the
Reserve Account Initial Deposit into the Reserve Account. The
Reserve Account shall be the property of the Issuer subject to
the rights of the Indenture Trustee in the Reserve Account
Property.
(b) If the amount on deposit in the Reserve Account on any
Distribution Date (after giving effect to all deposits therein or
withdrawals therefrom on such Distribution Date) exceeds the
Specified Reserve Account Balance for such Distribution Date, the
Servicer shall instruct the Indenture Trustee to distribute an
amount equal to any such excess to the Seller. The Seller may at
<PAGE>
any time, without consent of the Securityholders, sell, transfer,
convey or assign in any manner its rights to and interests in
distributions from the Reserve Account, including interest
earnings thereon, provided that certain conditions are satisfied,
including: (i) such action will not result in a reduction or
withdrawal of the rating of any class of Notes or Certificates,
(ii) the Seller provides to the Owner Trustee and the Indenture
Trustee an opinion of independent counsel that such action will
not cause the Trust to be treated as an association (or publicly
traded partnership) taxable as a corporation for Federal income
tax purposes, and (iii) such transferee or assignee agrees to
take positions for tax purposes consistent with the tax positions
agreed to be taken by the Seller.
(c) If the Servicer, pursuant to Section 5.04, determines
on any Determination Date that it is required to make a Monthly
Advance and does not do so from its own funds, the Servicer shall
instruct the Indenture Trustee to withdraw funds from the Reserve
Account and deposit them in the Collection Account to cover any
shortfall. Such payment shall be deemed to have been made by the
Servicer pursuant to Section 5.04 for purposes of making
distributions pursuant to this Agreement, but shall not otherwise
satisfy the Servicer's obligation to deliver the amount of the
Monthly Advances to the Collection Account, and the Servicer
shall within two Business Days replace any funds in the Reserve
Account so used. The Servicer shall not be entitled to
reimbursement for any such deemed Monthly Advances unless and
until the Servicer shall have replaced such funds in the Reserve
Account.
SECTION 4.08. Net Deposits. At any time that (i) NFC shall
be the Servicer and (ii) the Servicer shall be permitted by
Section 5.02 to remit collections on a basis other than a daily
basis, the Servicer, the Seller and each Trustee may make any
remittances pursuant to this Article IV net of amounts to be
distributed by the applicable recipient to such remitting party.
Nonetheless, each such party shall account for all of the above
described remittances and distributions as if the amounts were
deposited and/or transferred separately.
SECTION 4.09. Statements to Securityholders.
(a) On each Distribution Date, the Owner Trustee shall
include with each distribution to each Certificateholder, and the
Indenture Trustee shall include with each distribution to each
Noteholder, a statement (which statement shall also be provided
to the Rating Agencies) based on information in the Servicer's
Certificate furnished pursuant to Section 3.10. Each such
statement to be delivered to Certificateholders shall set forth
the following information as to the Certificates with respect to
such Distribution Date or the preceding Monthly Period, as
applicable. Each such statement to be delivered to Noteholders
shall set forth the following information as to the Notes with
respect to such Distribution Date or the preceding Monthly
Period:
(i) the amount of the distribution allocable to
interest on or with respect to each class of Securities;
(ii) the Aggregate Receivables Balance as of the close
of business on the last day of such Monthly Period;
<PAGE>
(iii) the amount of Outstanding Monthly Advances
with respect to all Receivables on such Distribution Date;
(iv) the amount of the Total Servicing Fee paid or
payable to the Servicer with respect to the related Monthly
Period;
(v) the amount of Aggregate Losses for the related
Monthly Period;
(vi) the Delinquency Percentage for the related Monthly
Period;
(vii) the sum of all Administrative Purchase
Payments and all Warranty Payments made for the related
Monthly Period;
(viii) the amount of the distribution allocable to
principal of each class of Notes and to the Certificate
Balance of each class of Certificates;
(ix) the Note Principal Balance and the Note Pool
Factor for each class of Notes, and the Certificate Balance
and the Certificate Pool Factor for each class of
Certificates, each after giving effect to all payments
reported under (viii) above on such date;
(x) the amounts, if any, paid to the Servicer or
distributed to Securityholders from amounts on deposit in
the Reserve Account;
(xi) the amount of the Noteholders' Interest Carryover
Shortfall, the Noteholders' Principal Carryover Shortfall,
the Certificateholders' Interest Carryover Shortfall, the
Class B Certificateholders' Interest Carryover Shortfall,
the Class C Certificateholders' Interest Carryover
Shortfall, the Certificateholders' Principal Carryover
Shortfall, the Class B Certificateholders' Principal
Carryover Shortfall and the Class C Certificateholders'
Principal Carryover Shortfall, if any, and the change in
such amounts from the preceding Distribution Date; and
(xii) the balance (if any) of the Reserve Account
on such date, after giving effect to distributions, withdrawals,
transfers and deposits made on such date, and the change in such
balance from that of the prior Distribution Date.
Each amount set forth pursuant to clauses (i), (iv), (viii), (x)
and (xi) above shall be expressed as a dollar amount per $1,000
of initial Note Principal Balance or the initial Certificate
Balance, as applicable. In lieu of preparing and delivering a
separate statement to Securityholders pursuant to this Section, a
Trustee may deliver a copy of the Servicer's Certificate
furnished pursuant to Section 3.10.
(b) Within the prescribed period of time for tax reporting
purposes after the end of each calendar year during the term of
this Agreement, the Servicer shall prepare and execute and the
<PAGE>
Indenture Trustee and the Owner Trustee shall mail to each Person
who at any time during such calendar year shall have been a
holder of Notes or Certificates, respectively, and received any
payments thereon, a statement prepared and supplied by the
Servicer containing the sum of the amounts set forth in each of
clauses (i), (iv), (viii), (x) and (xi), for such calendar year
or, if such Person shall have been a Securityholder during a
portion of such calendar year and received any payments thereon,
for the applicable portion of such year, for the purposes of
such Securityholder's preparation of federal income tax returns.
SECTION 4.10. Information Provided to Rating Agencies. In
addition to receiving any information or documents required to be
delivered to any Rating Agency pursuant to any Basic Document,
each Rating Agency may request in writing to the Servicer, and
the Servicer shall deliver, reasonable additional information
necessary to the Rating Agencies to monitor the Securities.
Promptly, but in no event later than five Business Days, after
obtaining knowledge of an Insolvency Event with respect to the
Servicer, the Seller or the Trust, the Servicer shall deliver to
each of the Ratings Agencies notice of such Insolvency Event.
Failure by the Servicer to comply with the terms of this Section
4.10 shall not constitute a "Servicer Default", an "Event of
Default" or a default under any Basic Document.
ARTICLE V
CERTIFICATEHOLDER AND NOTEHOLDER STATEMENTS AND ACCOUNTS;
COLLECTIONS, DEPOSITS AND INVESTMENTS; ADVANCES
SECTION 5.01. Establishment of Accounts.
(a) (i) The Servicer, for the benefit of the
Securityholders, shall establish and maintain in the name of the
Indenture Trustee an Eligible Deposit Account known as the
Navistar Financial 1996-B Owner Trust Collection Account (the
"Collection Account"), bearing an additional designation clearly
indicating that the funds deposited therein are held for the
benefit of the Securityholders.
(ii) The Servicer, for the benefit of the Noteholders,
shall establish and maintain in the name of the Indenture Trustee
an Eligible Deposit Account known as the Navistar Financial
1996-B Owner Trust Note Distribution Account (the "Note
Distribution Account"), bearing an additional designation clearly
indicating that the funds deposited therein are held for the
benefit of the Noteholders.
(iii) Pursuant to the Trust Agreement, the
Servicer, for the benefit of the Certificateholders, shall
establish and maintain at The Chase Manhattan Bank in the name of
the Owner Trustee an Eligible Deposit Account known as the
Navistar Financial 1996-B Owner Trust Certificate Distribution
Account (the "Certificate Distribution Account") bearing an
additional designation clearly indicating that the funds
deposited therein are held for the benefit of the
Certificateholders.
<PAGE>
(b) (i) Each of the Designated Accounts shall be initially
established with the Indenture Trustee and shall be maintained
with the Indenture Trustee so long as (A) the short-term
unsecured debt obligations of the Indenture Trustee have the
Required Deposit Rating or (B) each of the Designated Accounts
are maintained in the corporate trust department of the Indenture
Trustee. All amounts held in such accounts (including amounts,
if any, which the Servicer is required to remit daily to the
Collection Account pursuant to Section 5.02) shall, to the extent
permitted by applicable laws, rules and regulations, be invested,
at the written direction of the Servicer, by such bank or trust
company in Eligible Investments; provided, that funds in the
Collection Account in an amount not in excess of 20% of the
Aggregate Receivables Balance as of the preceding Accounting Date
may be invested in investments which have a rating from Standard
& Poor's Ratings Services of "A-1" rather than "A-1+", if such
investments otherwise constitute Eligible Investments. Such
written direction shall constitute certification by the Servicer
that any such investment is authorized by this Section 5.01.
Funds deposited in the Reserve Account shall be invested in
Eligible Investments which mature prior to the next Distribution
Date except, and then only to the extent, as shall be otherwise
permitted by the Rating Agencies. Investments in Eligible
Investments shall be made in the name of the Indenture Trustee or
its nominee, and such investments shall not be sold or disposed
of prior to their maturity. Should the short-term unsecured debt
obligations of the Indenture Trustee (or any other bank or trust
company with which the Designated Accounts are maintained) no
longer have the Required Deposit Rating, then the Servicer shall
within 10 Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency shall consent),
with the Indenture Trustee's assistance as necessary, cause the
Designated Accounts (A) to be moved to 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 corporate
trust department of the Indenture Trustee. Investment Earnings
on funds deposited in the Designated Accounts shall be payable to
the Seller except when the Indenture Trustee is acting as
successor Servicer in which case such Investment Earnings shall
be payable to the Indenture Trustee as successor Servicer.
(ii) With respect to the Designated Account Property,
the Indenture Trustee agrees, by its acceptance hereof, that:
(A) any Designated Account Property that is held
in deposit accounts shall be held solely in Eligible
Deposit Accounts; and each such Eligible Deposit
Account shall be subject to the exclusive custody and
control of the Indenture Trustee, and the Indenture
Trustee shall have sole signature authority with
respect thereto;
(B) prior to the Revised Article 8 Effective
Date, any Designated Account Property that constitutes
Physical Property shall be delivered to the Indenture
Trustee in accordance with paragraph (i) of the
definition of "Delivery" and shall be held, pending
maturity or disposition, solely by the Indenture
Trustee or a financial intermediary (as such term is
defined in Section 8-313(4) of the UCC) acting solely
for the Indenture Trustee;
<PAGE>
(C) prior to the Revised Article 8 Effective
Date, any Designated Account Property that is an
"uncertificated security" under Article 8 of the UCC
and that is not a Federal Book-Entry Security shall be
delivered to the Indenture Trustee in accordance with
paragraph (ii) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee, pending
maturity or disposition, through continued registration
of the Indenture Trustee's (or its nominee's) ownership
of such security;
(D) prior to the TRADES Effective Date, any
Designated Account Property that is a Federal
Book-Entry Security shall be delivered in accordance
with paragraph (iii) of the definition of "Delivery"
and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued
book-entry registration of such Designated Account
Property as described in such paragraph;
(E) on and after the Revised Article 8
Effective Date (with respect to any Designated Account
Property that constitutes a Security Entitlement or an
Uncertificated Security) and on and after the TRADES
Effective Date (with respect to any Designated Account
Property that constitutes a Federal Book-Entry
Security), the Indenture Trustee shall maintain Control
over each Designated Account in which any such
Designated Account Property is held;
(F) on and after the Revised Article 8
Effective Date (with respect to any Designated Account
Property that constitutes either a Security Certificate
or any other Designated Account Property that
constitutes Physical Property and that is not a
Security Entitlement), transfer of such Security
Certificate or other Designated Account Property to the
Indenture Trustee or its nominee or custodian by
physical delivery to the Indenture Trustee or its
nominee or custodian endorsed to, or registered in the
name of, the Indenture Trustee or its nominee or
custodian or endorsed in blank; and
(G) the Indenture Trustee shall maintain each
item of Designated Account Property in the particular
Designated Account in which such item originated and
shall not commingle items from different Designated
Accounts.
(iii) 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 Designated
Accounts for the purpose of permitting the Servicer or the Owner
Trustee to carry out its respective duties hereunder or
permitting the Indenture Trustee to carry out its duties under
the Indenture.
(iv) The Indenture Trustee shall possess all right,
title and interest in and to all funds on deposit from time to
time in the Designated Accounts and in all proceeds thereof
(except Investment Earnings). Except as otherwise provided herein
or in the Indenture, the Designated
<PAGE>
Accounts shall be under the sole dominion and control of the
Indenture Trustee for the benefit of the Securityholders.
(v) The Servicer shall not direct the Indenture
Trustee to make any investment of any funds or to sell any
investment held in any of the Designated Accounts unless the
security interest granted and perfected in such account shall
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) Pursuant to the Trust Agreement, the Owner Trustee
shall possess all right, title and interest in and to all funds
on deposit from time to time in the Certificate Distribution
Account and in all proceeds thereof. Except as otherwise provided
herein or in the Trust Agreement, the Certificate Distribution
Account shall be under the sole dominion and control of the Owner
Trustee for the benefit of the Certificateholders. If, at any
time, the Certificate Distribution Account ceases to be an
Eligible Deposit Account, the Servicer shall within 10 Business
Days (or such longer period, not to exceed 30 calendar days, as
to which each Rating Agency may consent) establish a new
Certificate Distribution Account as an Eligible Deposit Account
and shall cause the Owner Trustee to transfer any cash and/or any
investments in the old Certificate Distribution Account to such
new Certificate Distribution Account.
(d) The Indenture Trustee, the Owner Trustee and each other
Eligible Deposit Institution with whom a Designated Account or
the Certificate Deposit Account is maintained waives any right of
set-off, counterclaim, security interest or bankers' lien to
which it might otherwise be entitled.
SECTION 5.02. Collections. The Servicer shall remit to the
Collection Account all payments by or on behalf of the Obligors
on the Receivables, all Insurance Proceeds, all Liquidation
Proceeds, proceeds from any Dealer Liability, proceeds from any
NITC Purchase Obligations and proceeds from any Guaranties within
two Business Days after receipt thereof. Notwithstanding the
foregoing, the Servicer shall not be required to remit such
collections within such two Business Days but may remit
collections received during a Monthly Period to the Collection
Account in immediately available funds on the Business Day
immediately preceding the related Distribution Date but only for
so long as (i) NFC is the Servicer, (ii) (x) the Servicer
satisfies the requirements for monthly remittances established by
the Rating Agencies initially rating the Securities, and upon the
satisfaction of such requirements, the Rating Agencies which
initially rated the Securities reaffirm the rating of the
Securities at the level at which they would be rated if
collections were remitted within two Business Days, or (y) the
short-term unsecured debt obligations of NFC are rated at least
A-1+ by Standard & Poor's Ratings Services and P-1 by Moody's
Investors Service, Inc., and (iii) a Servicer Default shall not
have occurred and be continuing. The Indenture Trustee shall not
be deemed to have knowledge of any event or circumstance under
clause (iii) of the immediately preceding sentence that would
require remittance within two Business Days by the Servicer to
the Collection Account unless the Indenture Trustee has received
notice of such event
<PAGE>
or circumstance from the Seller or the Servicer in an Officer's
Certificate or from Noteholders whose Notes evidence not less
than 25% of the Outstanding Amount of the Notes as of the close
of the preceding Distribution Date or from Certificateholders
whose Certificates evidence not less the 25% of the Voting
Interests thereof or unless a Responsible Officer in the
Corporate Trust Office with knowledge hereof and 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. Investment Earnings and Supplemental
Servicing Fees. Except as otherwise provided in Section
5.01(b)(1) hereof, the Servicer shall be entitled to receive all
Supplemental Servicing Fees, and the Seller shall be entitled to
receive all Investment Earnings, when and as paid without any
obligation to (a) either Trustee, (b) with respect to the
Supplemental Servicing Fees, the Seller or (c) with respect to
the Investment Earnings, the Servicer, in respect thereof.
Neither the Servicer nor the Seller will have any obligation to
deposit any such amount in any account established hereunder. To
the extent that any such amount shall be held in any account held
by either Trustee, or otherwise established hereunder, such
amount will be withdrawn therefrom and paid to the Servicer or
the Seller, as applicable, upon presentation of a certificate
signed by a Responsible Officer of such Person setting forth, in
reasonable detail, the amount of such Supplemental Servicing Fees
or such Investment Earnings, respectively.
SECTION 5.04. Monthly Advances. Subject to the following
sentence, as of each Accounting Date, if the payments during the
related Monthly Period by or on behalf of the Obligor on a
Receivable (other than an Administrative Receivable, a Warranty
Receivable or a Liquidating Receivable) after application under
subsection 3.11(a) shall be less than the Scheduled Payment,
whether as a result of any extension granted to the Obligor or
otherwise, then the Servicer shall, subject to the following
sentence, advance any such shortfall (such amount, a "Monthly
Advance"). The Servicer shall be obligated to make a Monthly
Advance in respect of a Receivable only to the extent that the
Servicer, in its sole discretion, shall determine that such
advance shall be recoverable (in accordance with the two
immediately following sentences) from subsequent collections or
recoveries on such Receivable. Subject to Section 4.07(c), the
Servicer shall be reimbursed for Outstanding Monthly Advances
with respect to a Receivable from the following sources with
respect to such Receivable, in each case as set forth in this
Agreement: (i) subsequent payments by or on behalf of the
Obligor, (ii) collections of Liquidation Proceeds, (iii) the
Administrative Purchase Payment and (iv) the Warranty Payment.
At such time as the Servicer shall determine that any Outstanding
Monthly Advances with respect to any Receivable shall not be
recoverable from payments with respect to such Receivable, the
Servicer shall be reimbursed from any collections made on other
Receivables held by the Issuer.
SECTION 5.05. Additional Deposits. The Servicer shall
deposit in the Collection Account the aggregate Monthly Advances
pursuant to Section 5.04. The Servicer and the Seller shall
deposit in the Collection Account the aggregate Administrative
Purchase Payments and Warranty Payments with respect to
Administrative Receivables and Warranty Receivables,
<PAGE>
respectively. All such deposits with respect to a Monthly Period
shall be made in immediately available funds on the day before
the Distribution Date related to such Monthly Period.
ARTICLE VI
THE SELLER; REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE SERVICER
SECTION 6.01. Representations and Warranties of the Seller
and the Servicer. The Seller and the Servicer each make the
following representations and warranties as to itself on which
the Issuer is relying in acquiring the Receivables hereunder and
issuing the Securities under the other Further Transfer and
Servicing Agreements. The following representations and
warranties are made severally by each of the Seller and the
Servicer (for purposes of this Section 6.01, each, a "Party") and
speak as of the Closing Date but shall survive the sale, transfer
and assignment of the Receivables to the Issuer.
(a) Representations and Warranties as to each Party.
(i) Organization and Good Standing. Such Party has
been duly organized and is validly existing as a corporation
in good standing under the laws of the State of Delaware,
with power and authority to own its properties and to
conduct its business as such properties are presently owned
and such business is presently conducted, and had at all
relevant times, and now has, power, authority and legal
right (A) in the case of the Seller, to acquire and own the
Receivables and (B) in the case of the Servicer, to service
the Receivables as provided in this Agreement;
(ii) Due Qualification. Such Party 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 (including, in the
case of the Servicer, the servicing of the Receivables as
required by this Agreement) requires or shall require such
qualification;
(iii) Power and Authority. Such Party (A) has the
power and authority to execute and deliver the Further
Transfer and Servicing Agreements to which it is a party (as
used in this Section 6.01(a), the "applicable Further
Transfer and Servicing Agreements") and to carry out the
respective terms of such agreements and, (B) in the case of
the Seller, has the power and authority to sell and assign
the property to be sold and assigned to and deposited with
the Issuer as part of the Owner Trust Estate and has duly
authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery
and performance by such Party of the applicable Further
Transfer and Servicing Agreements have been duly
authorized by such Party by all necessary corporate action;
<PAGE>
(iv) Binding Obligations. The applicable Further
Transfer and Servicing Agreements, when duly executed and
delivered, shall constitute a legal, valid and binding
obligation of such Party enforceable against such Party in
accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of
creditors' rights in general and by general principles of
equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law;
(v) No Violation. The consummation by such Party of
the transactions contemplated by the applicable Further
Transfer and Servicing Agreements and the fulfillment of the
terms of such agreements by such Party shall not conflict
with, result in any breach of any of the terms and
provisions of or constitute (with or without notice or lapse
of time) a default under, the certificate of incorporation
or by-laws of such Party, or any indenture, agreement or
other instrument to which such Party is a party or by which
it is bound, or 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 applicable Further Transfer and Servicing Agreements, or
violate any law or, to such Party's knowledge, any order,
rule or regulation applicable to such Party of any court or
of any federal or state regulatory body, administrative
agency or other governmental instrumentality having
jurisdiction over such Party or any of its properties; and
(vi) No Proceedings. There are no proceedings or, to
such Party's knowledge, investigations pending or, to such
Party's knowledge, threatened before any court, regulatory
body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over such
Party or its properties (i) asserting the invalidity of the
applicable Further Transfer and Servicing Agreements, any
Securities issued pursuant thereto and, in the case of the
Seller, the Custodian Agreement or the Administration
Agreement, (ii) seeking to prevent the issuance of such
Securities or the consummation of any of the transactions
contemplated by the applicable Further Transfer and
Servicing Agreements and, in the case of the Seller, the
Custodian Agreement or the Administration Agreement, or
(iii) seeking any determination or ruling that might
materially and adversely affect the performance by such
Party of its obligations under, or the validity or
enforceability of, such Securities, the applicable Further
Transfer and Servicing Agreements or, in the case of the
Seller, the Custodian Agreement or the Administration
Agreement.
(b) Representations and Warranties of the Seller Only.
(i) Good Title. No Receivable has been sold,
transferred, assigned or pledged by the Seller to any Person
other than the Issuer; immediately prior to the conveyance
of the Receivables pursuant to this Agreement the Seller had
good and marketable title thereto, free of any Lien (except
for any Lien which may have existed in accessions to the
Financed Vehicles not financed by NFC); and, upon execution
and delivery of this Agreement by the Seller, the Issuer
shall have all of the right, title and interest of the
Seller in, to and under the
<PAGE>
Purchased Property free of any Lien (except for any Lien
which may exist in accessions to the Financed Vehicles not
financed by NFC);
(ii) All Filings Made. All filings (including UCC
filings) necessary in any jurisdiction to give the Issuer a
first priority perfected security or ownership interest in
the Purchased Property (to the extent it constitutes Code
Collateral) shall have been made, and the Receivables
constitute Code Collateral; and
(iii) Valid Sale. This Agreement, when duly
executed and delivered, shall constitute a valid sale,
transfer and assignment of the Purchased Property,
enforceable against creditors of and purchasers from the
Seller.
(c) Representations and Warranties of the Servicer Only.
(i) Liquidation Expenses. The amounts defined as
"Liquidation Expenses" are a reasonable estimate of such
expenses, reasonably related to the Servicer's experience
for such expenses in servicing comparable medium and heavy
duty truck, bus and trailer receivables.
(ii) Purchase Agreement Representations. The
representations and warranties in Sections 3.01 and 3.02 of
the Purchase Agreement are true as of the Closing
thereunder.
SECTION 6.02. Liability of Seller. The Seller shall be
liable in accordance with this Agreement only to the extent of
the obligations in this Agreement specifically undertaken by the
Seller.
SECTION 6.03. Merger or Consolidation of, or Assumption of
the Obligations of, Seller; Amendment of Certificate of
Incorporation.
(a) Any corporation (i) into which the Seller may be merged
or consolidated, (ii) resulting from any merger or consolidation
to which the Seller shall be a party, (iii) succeeding to the
business of the Seller, or (iv) more than 50% of the voting stock
of which is owned directly or indirectly by NIC, which
corporation in any of the foregoing cases executes an agreement
of assumption to perform every obligation of the Seller under
this Agreement, shall 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.
The Seller shall provide 10 days' prior notice of any merger,
consolidation or succession pursuant to this Section 6.03 to the
Rating Agencies.
(b) The Seller hereby agrees that during the term of this
Agreement it shall not amend Articles Third, Fourth, Fifth,
Twelfth or Fourteenth of its Restated Certificate of
Incorporation without obtaining the prior written consent of the
Rating Agencies or without obtaining the prior written consent of
Noteholders whose Notes evidence not less than a majority of the
Outstanding Amount of the Notes as of the close of the preceding
Distribution Date and the prior written consent
<PAGE>
of the Certificateholders whose Certificates evidence a majority
of the Voting Interests of such Certificates as of the close of
the preceding Distribution Date.
SECTION 6.04. Limitation on Liability of Seller and Others.
The Seller and any director or officer or 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. The Seller shall not be under any obligation to
appear in, prosecute or defend any legal action that is not
incidental to its obligations as Seller of the Receivables under
this Agreement and that in its opinion may involve it in any
expense or liability.
SECTION 6.05. Seller May Own Securities. Each of the
Seller and any Person controlling, controlled by or under common
control with the Seller may in its individual or any other
capacity become the owner or pledgee of Securities with the same
rights as it would have if it were not the Seller or an Affiliate
thereof except as otherwise specifically provided herein. Except
as otherwise provided herein, Securities 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 such Securities.
ARTICLE VII
LIABILITIES OF SERVICER AND OTHERS
SECTION 7.01. Liability of Servicer; Indemnities.
(a) The Servicer shall be liable in accordance with this
Agreement only to the extent of the obligations in this Agreement
specifically undertaken by the Servicer. Such obligations shall
include the following:
(i) The Servicer shall defend, indemnify and hold
harmless each Trustee, the Issuer and the Securityholders
from and against any and all costs, expenses, losses,
damages, claims and liabilities arising out of or resulting
from the use, ownership or operation by the Servicer or any
Affiliate thereof of any Financed Vehicle;
(ii) The Servicer shall indemnify, defend and hold
harmless each Trustee and the Issuer from and against any
taxes that may at any time be asserted against any such
Person with respect to the transactions contemplated in this
Agreement, including any sales, gross receipts, general
corporation, tangible personal property, privilege or
license taxes (but not including any taxes asserted with
respect to, and as of the date of, the sale of the
Receivables to the Issuer or the issuance and original sale
of the Securities, or asserted with respect to ownership of
the Receivables, or federal or other income taxes arising
out of distributions on the Securities, or any fees or other
compensation payable to any such Person) and costs and
expenses in defending against the same;
<PAGE>
(iii) The Servicer shall indemnify, defend and hold
harmless each Trustee, the Issuer and the Securityholders
from and against any and all costs, expenses, losses,
claims, damages, and liabilities to the extent that such
cost, expense, loss, claim, damage, or liability arose out
of, or was imposed upon such Trustee, the Issuer or the
Securityholders through the negligence, willful misfeasance
or bad faith of the Servicer in the performance of its
duties under this Agreement and any other Transfer and
Servicing Agreements or by reason of reckless disregard of
its obligations and duties under any of the Transfer and
Servicing Agreements; and
(iv) The Servicer (other than the Indenture Trustee in
its capacity as successor Servicer pursuant to Section 8.02
hereof) shall indemnify, defend and hold harmless each
Trustee and their respective agents, officers, directors and
servants, from and against all costs, expenses, losses,
claims, damages and liabilities arising out of or incurred
in connection with (x) in the case of the Owner Trustee, the
Indenture Trustee's performance of its duties under the
Basic Documents, (y) in the case of the Indenture Trustee,
the Owner Trustee's performance of its duties under the
Basic Documents or (z) the acceptance, administration or
performance by, or action or inaction of, the applicable
Trustee of the trusts and duties contained in this
Agreement, the Basic Documents, the Indenture (in the case
of the Indenture Trustee), including the administration of
the Trust Estate, and the Trust Agreement (in the case of
the Owner Trustee), including the administration of the
Owner Trust Estate, except in each case to the extent that
such cost, expense, loss, claim, damage or liability: (A)
is due to the willful misfeasance, bad faith or negligence
(except for errors in judgment) of the Person seeking to be
indemnified, (B) to the extent otherwise payable to the
Indenture Trustee, arises from the Indenture Trustee's
breach of any of its representations or warranties in
Section 6.13 of the Indenture or (C) to the extent otherwise
payable to the Owner Trustee, arises from the Owner
Trustee's breach of any of its representations or warranties
set forth in Section 6.6 of the Trust Agreement.
(b) Indemnification under this Section 7.01 shall survive
the resignation or removal of the Owner Trustee or the Indenture
Trustee or the termination of this Agreement and shall include
reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer has made any indemnity payments
pursuant to this Section 7.01 and the recipient thereafter
collects any of such amounts from others, the recipient shall
promptly repay such amounts collected to the Servicer, without
interest.
SECTION 7.02. Merger or Consolidation of, or Assumption of
the Obligations of, the Servicer. Any corporation (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) more than 50% of the voting stock of which is owned
directly or indirectly by NIC and which is otherwise servicing
the Seller's receivables, which corporation in any of the
foregoing cases executes an agreement of assumption to perform
every obligation of the Servicer under this Agreement shall 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
<PAGE>
Agreement, notwithstanding anything in this Agreement to the
contrary. The Servicer shall provide notice of any merger,
consolidation or succession pursuant to this Section 7.02 to the
Rating Agencies.
SECTION 7.03. Limitation on Liability of Servicer and
Others.
(a) Neither the Servicer nor any of the directors or
officers or employees or agents of the Servicer shall be under
any liability to the Issuer or the Securityholders, except as
specifically provided in this Agreement, for any action taken or
for refraining from the taking of any action pursuant to the
Further Transfer and Servicing Agreements 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 (except errors in judgment) in the
performance of duties or by reason of reckless disregard of
obligations and duties under the Further Transfer and Servicing
Agreements. The Servicer and any director, officer or 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) [Reserved]
(c) Except as provided in this Agreement, the Servicer
shall not be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its duties to
service the Receivables in accordance with this Agreement and
that in its opinion may involve it in 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 Securityholders under this
Agreement and the Noteholders and (to the extent expressly
provided therein) the Certificateholders under the Indenture and
the interests of the Certificateholders under the Trust
Agreement. In such event, the legal expenses and costs for such
action and any liability resulting therefrom shall be expenses,
costs and liabilities of the Issuer and the Servicer shall be
entitled to be reimbursed therefor.
(d) The Applicable Trustee shall distribute out of the
Collection Account on a Distribution Date any amounts permitted
for reimbursement pursuant to subsection 7.03(c) which have not
been previously reimbursed after any deposit to the Reserve
Account pursuant to Section 4.06(c)(vi) and before any
distribution to the Seller pursuant to Section 4.07(b); provided,
however, that the Applicable Trustee shall not distribute such
amounts if the amount on deposit in the Reserve Account (after
giving effect to all deposits and withdrawals pursuant to
Sections 4.06(b) and (c) and Section 4.07(c), on such
Distribution Date) is greater than zero but less than the
Specified Reserve Account Balance for such Distribution Date.
SECTION 7.04. Delegation of Duties. So long as NFC acts as
Servicer, the Servicer may, at any time without notice or
consent, delegate any duties under this Agreement to any
corporation more than 50% of the voting stock of which is owned,
directly or indirectly, by NIC.
<PAGE>
The Servicer may at any time perform specific duties as Servicer
through sub-contractors who are in the business of servicing
medium and heavy duty truck, bus and trailer receivables;
provided, however, that no such delegation shall relieve the
Servicer of its responsibility with respect to such duties.
SECTION 7.05. Servicer Not to Resign. Subject to the
provisions of Section 8.02, the Servicer shall not resign from
the obligations and duties imposed on it by this Agreement as
Servicer except upon determination that the performance of its
duties under this Agreement is no longer permissible under
applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to each Trustee. No such
resignation shall become effective until the Indenture Trustee or
a successor Servicer shall have assumed the responsibilities and
obligations of the Servicer in accordance with Section 8.02.
ARTICLE VIII
DEFAULT
SECTION 8.01. Servicer Defaults. Each of the following
shall constitute a "Servicer Default":
(a) any failure by the Servicer to deliver to the Indenture
Trustee for deposit in any of the Designated Accounts or to the
Owner Trustee for deposit in the Certificate Distribution Account
any required payment or to direct the Indenture Trustee to make
any required distributions therefrom, which failure continues
unremedied for a period of five Business Days after written
notice is received by the Servicer from the applicable Trustee or
after discovery of such failure by an officer of the Servicer;
(b) failure on the part of the Seller or the Servicer to
duly observe or perform in any material respect any other
covenants or agreements of the Seller or the Servicer set forth
in the Purchase Agreement, this Agreement or any of the other
Further Transfer and Servicing Agreements which failure (i)
materially and adversely affects the rights of Securityholders,
and (ii) continues unremedied for a period of 60 days after the
date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Seller or the
Servicer, as applicable, by either Trustee, or to the Seller or
the Servicer, as applicable, and to either Trustee by Noteholders
whose Notes evidence not less than 25% of the Outstanding Amount
of the Notes as of the close of the preceding Distribution Date
(or, if the Notes have been paid in full, by Certificateholders
whose Certificates evidence not less than 25% of the Voting
Interests as of the close of the preceding Distribution Date);
(c) 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 conservator, receiver or liquidator for the
Seller or the Servicer, in any 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
<PAGE>
continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days; or
(d) the consent by the Seller or the Servicer to the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings of or relating to the Seller
or the Servicer or of or relating to substantially all of their
respective property; or the Seller or the Servicer 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.
SECTION 8.02. Consequences of a Servicer Default. If a
Servicer Default shall occur and be continuing, either the
Indenture Trustee or the Noteholders whose Notes evidence not
less than a majority of the Outstanding Amount of the Notes as of
the close of the preceding Distribution Date (or, if the Notes
have been paid in full and the Indenture has been discharged in
accordance with its terms, by the Owner Trustee or
Certificateholders whose Certificates evidence not less than a
majority of the Voting Interests as of the close of the preceding
Distribution Date) by notice then given in writing to the
Servicer and the Owner Trustee (and to the Indenture Trustee if
given by the Securityholders) may, in addition to other rights
and remedies available in a court of law or equity to damages,
injunctive relief and specific performance, 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 Securities or the Receivables or otherwise,
shall pass to and be vested in the Indenture Trustee pursuant to
and under this Section 8.02. The Indenture Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the
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 Servicer agrees to cooperate with either Trustee
in effecting the termination of the responsibilities and rights
of the Servicer under this Agreement, including the transfer to
either Trustee for administration by it of all cash amounts that
shall at the time be held by the Servicer for deposit, or that
shall have been deposited by the Servicer in the Collection
Account, the Note Distribution Account or the Certificate
Distribution Account or thereafter received with respect to the
Receivables that shall at that time be held by the Servicer. In
addition to any other amounts that are then payable to the
Servicer under this Agreement, the Servicer shall be entitled to
receive from the successor Servicer reimbursements for any
Outstanding Monthly Advances made during the period prior to the
notice pursuant to this Section 8.02 which terminates the
obligation and rights of the Servicer under this Agreement.
SECTION 8.03. Indenture Trustee to Act; Appointment of
Successor. On and after the time the Servicer receives a notice
of termination pursuant to Section 8.02, the Indenture Trustee
shall be the successor in all respects to the Servicer in its
capacity as servicer under this Agreement and the transactions
set forth or provided for in this Agreement, and shall be subject
to all the responsibilities, restrictions, duties and liabilities
relating thereto placed on the Servicer by the terms
<PAGE>
and provisions of this Agreement; provided, however, that the
predecessor Servicer shall remain liable for, and the successor
Servicer shall have no liability for, any indemnification
obligations of the Servicer arising as a result of acts,
omissions or occurrences during the period in which the
predecessor Servicer was the Servicer; and provided, further,
that NFC shall remain liable for all such indemnification
obligations of the Servicer without regard to whether it is still
Servicer hereunder. As compensation therefor, the Indenture
Trustee shall be entitled to such compensation (whether payable
out of the Collection Account or otherwise) as the Servicer would
have been entitled to under this Agreement if no such notice of
termination had been given including, but not limited to, the
Total Servicing Fee and Supplemental Servicing Fees and shall be
entitled to Investment Earnings as set forth in Section
5.01(b)(i) hereof. Notwithstanding the above, the Indenture
Trustee may, if it shall be unwilling so to act, or shall, if it
is legally unable so to act, appoint, or petition a court of
competent jurisdiction to appoint, a successor (i) having a net
worth of not less than $100,000,000 and (ii) whose regular
business includes the servicing of medium and heavy duty bus,
truck and trailer receivables, as the successor to the Servicer
under this Agreement in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer under
this Agreement. In connection with such appointment and
assumption, the Indenture Trustee may make such arrangements for
the compensation of such successor out of payments on Receivables
as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted the
Servicer under this Agreement. The Indenture Trustee and such
successor shall take such action, consistent with this Agreement,
as shall be necessary to effectuate any such succession.
SECTION 8.04. Notification to Securityholders. Upon any
termination of, or appointment of a successor to, the Servicer
pursuant to this Article VIII, the Indenture Trustee shall give
prompt written notice thereof to the Noteholders and the Rating
Agencies and the Owner Trustee shall give prompt written notice
thereof to the Certificateholders.
SECTION 8.05. Waiver of Past Defaults. Noteholders whose
Notes evidence not less than a majority of the Outstanding Amount
of the Notes as of the close of the preceding Distribution Date
(or, if all of the Notes have been paid in full and the Indenture
has been discharged in accordance with its terms, Class B
Certificateholders whose Class B Certificates evidence not less
than a majority of the Class B Voting Interests as of the close
of the preceding Distribution Date and Class C Certificateholders
whose Class C Certificates evidence not less than a majority of
the Class C Voting Interests as of the close of the preceding
Distribution Date) may, on behalf of all Securityholders, 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 any of the accounts 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
thereon.
SECTION 8.06. Repayment of Advances. If the identity of
the Servicer shall change, the predecessor Servicer shall be
entitled to receive, to the extent of available funds,
reimbursement
<PAGE>
for Outstanding Monthly Advances pursuant to Section 5.04 in the
manner specified in Section 4.06, with respect to all Monthly
Advances made by such predecessor Servicer.
ARTICLE IX
TERMINATION
SECTION 9.01. Optional Purchase of All Receivables. On the
last day of any Monthly Period as of which the Aggregate
Receivables Balance is 10% or less of the Initial Aggregate
Receivables Balance and both the Class A-1 Notes and the Class
A-2 Notes have been paid in full, the Servicer shall have the
option to purchase the assets of the Trust other than the
Designated Accounts and the Certificate Distribution Account. If
the Servicer's long term unsecured debt rating from Moody's
Investors Service, Inc. is equal to or higher than Baa3 at the
time that it seeks to exercise such option, then to exercise such
option, the Servicer shall deposit in the Collection Account an
amount equal to the aggregate Administrative Purchase Payments
for the Receivables (including Liquidating Receivables), plus the
appraised value of any such other property held by the Trust
(less the Liquidation Expenses to be incurred in connection with
the recovery thereof), such value to be determined by an
appraiser mutually agreed upon by the Servicer and each Trustee.
If the Servicer's long term unsecured debt rating from Moody's
Investors Service, Inc. is less than Baa3 at the time that it
seeks to exercise such option, then to exercise such option, the
Servicer shall deposit in the Collection Account an amount equal
to the appraised value of the Receivables (including Liquidating
Receivables), plus the appraised value of any such other property
held by the Trust (less the Liquidation Expenses to be incurred
in connection with the recovery thereof), such values to be
determined by an appraiser mutually agreed upon by the Servicer
and each Trustee; provided, that such amount (when added to any
funds then on deposit in the Designated Accounts and the
Certificate Distribution Account) must be at least equal to the
aggregate Redemption Price of the outstanding Notes to be
redeemed with such proceeds plus the sum of the Aggregate
Certificate Balance and the Certificateholders' Interest
Distributable Amount for the Distribution Date related to the
Monthly Period in which such option is exercised. Thereupon, the
Servicer shall succeed to all interests in and to the Trust
(other than the Designated Accounts and the Certificate
Distribution Account).
SECTION 9.02. Sale of Assets; Termination.
(a) Upon any sale or other disposition of the assets of the
Trust pursuant to Section 7.2 of the Trust Agreement (an
"Insolvency Sale") or Article V of the Indenture (an "Event of
Default Sale"), the Servicer shall instruct the Applicable
Trustee to deposit the proceeds from such Insolvency Sale or
other disposition after all payments and reserves therefrom have
been made or, with respect to an Event of Default Sale, the
amount specified in clause SECOND of Section 5.4(b) of the
Indenture (in either case, the "Insolvency Proceeds") in the
Collection Account. On the day preceding the Distribution Date
on which the Insolvency Proceeds are deposited in the Collection
Account (or, if such proceeds are not so deposited on the day
preceding a Distribution Date, on the day preceding the
Distribution Date immediately following such deposit), the
Servicer shall instruct
<PAGE>
the Applicable Trustee to make the following deposits (after the
application on the day preceding such Distribution Date of the
Available Amount and funds on deposit in the Reserve Account
pursuant to Sections 4.06 and 4.07) from the Insolvency Proceeds
and any funds remaining on deposit in the Reserve Account
(including the proceeds of any sale of investments therein as
described in the following sentence) in the following priority:
(i) to the Note Distribution Account, any portion of
the Aggregate Noteholders' Interest Distributable Amount not
otherwise deposited into the Note Distribution Account on
the day preceding such Distribution Date;
(ii) to the Note Distribution Account, the Aggregate
Note Principal Balance (after giving effect to the reduction
in the Aggregate Note Principal Balance to result from the
deposits made in the Note Distribution Account on the day
preceding such Distribution Date and on the day preceding
each prior Distribution Date);
(iii) to the Certificate Distribution Account, any
portion of the Certificateholders' Interest Distributable
Amount not otherwise deposited into the Certificate
Distribution Account on the day preceding such Distribution
Date; and
(iv) to the Certificate Distribution Account, the
Aggregate Certificate Balance (after giving effect to the
reduction in the Aggregate Certificate Balance to result
from the deposits made in the Certificate Distribution
Account on the day preceding such Distribution Date).
Subject to Section 5.01(b), any investments on deposit in the
Reserve Account which shall not mature on or before the day
preceding such Distribution Date shall be sold by the Indenture
Trustee at such time as shall result in the Indenture Trustee
receiving the proceeds from such sale not later than the day
immediately preceding such Distribution Date. Any Insolvency
Proceeds remaining after the deposits described above shall be
paid to the Seller.
(b) Notice of any termination of the Trust shall be given
by the Servicer to each Trustee as soon as practicable after the
Servicer has received notice thereof.
(c) Following the satisfaction and discharge of the
Indenture with respect to the Notes, and the payment in full of
the principal and interest on the Notes, the Certificateholders
shall succeed to the rights of the Noteholders hereunder and the
Owner Trustee shall succeed to the rights of, and assume the
obligations of, the Indenture Trustee pursuant to this Agreement
(subject to the continuing obligations of the Indenture Trustee
set forth in Section 4.4 of the Indenture).
(d) After payment to each Trustee, the Securityholders and
the Servicer of all amounts required to be paid under this
Agreement, the Indenture and the Trust Agreement, any amounts on
deposit in the Reserve Account and the Collection Account (after
all other distributions required to
<PAGE>
be made from such accounts have been made) shall be paid to the
Seller and any other assets remaining in the Trust shall be
distributed to the Seller.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
(a) This Agreement may be amended by the Seller, the
Servicer and the Owner Trustee with the consent of the Indenture
Trustee, but without the consent of any of the Securityholders,
(i) to cure any ambiguity, (ii) to correct or supplement any
provision in this Agreement that may be defective or inconsistent
with any other provision in this Agreement or any other Basic
Document, (iii) to add or supplement any credit enhancement for
the benefit of the Noteholders of any class or the
Certificateholders provided that if any such addition shall
affect any class of Noteholders or Certificateholders differently
than any other class of Noteholders or Certificateholders,
respectively, then such addition shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the
interests of any class of Noteholders or the Certificateholders,
(iv) add to the covenants, restrictions or obligations of the
Seller, the Servicer, or either Trustee or (v) add, change or
eliminate any other provision of this Agreement in any manner
that shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of the
Securityholders.
(b) This Agreement may also be amended from time to time by
the Seller, the Servicer and the Owner Trustee with the consent
of the Indenture Trustee, the consent of Noteholders whose Notes
evidence not less than a majority of the Outstanding Amount of
the Notes as of the close of the preceding Distribution Date, the
consent of Class B Certificateholders whose Class B Certificates
evidence not less than a majority of the Class B Voting Interests
as of the close of the preceding Distribution Date and the
consent of the Class C Certificateholders whose Class C
Certificates evidence not less than a majority of the Class C
Voting Interests as of the close of the preceding Distribution
Date (which consent, whether given pursuant to this Section 10.01
or pursuant to any other provision of this Agreement, shall be
conclusive and binding on such Person and on all future holders
of such Security and of any Security issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon the Security) 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 Securityholders;
provided, however, that no such amendment shall (i)(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 Security,
the Interest Rate for any class of Notes, the Pass Through Rate
for any class of Certificates or the Specified Reserve Account
Balance or (b) reduce the aforesaid percentage required to
consent to any such amendment, without the consent of the holders
of all Securities then outstanding or (ii) amend any provision of
this Agreement (including, Section 10.06) which requires actions
taken under such provision to have the consent of Noteholders
whose Notes evidence greater than a majority of the Outstanding
Amount of the Notes as of the preceding Distribution Date, of
<PAGE>
Class B Certificateholders whose Class B Certificates evidence
greater than a majority of the Class B Voting Interests as of the
close of the preceding Distribution Date or of Class C
Certificateholders whose Class C Certificates evidence greater
than a majority of the Class C Voting Interests as of the close
of the preceding Distribution Date, in each case without the
consent of the Indenture Trustee and the numbers of
Securityholders described in such Section.
(c) Prior to the execution of any such amendment or
consent, the Indenture Trustee shall furnish written notification
of the substance of such amendment or consent to the Rating
Agencies.
(d) 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 and the Indenture Trustee shall furnish written
notification to each Noteholder.
(e) It shall not be necessary for the consent of
Securityholders pursuant to subsection 10.01(b) 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 Securityholders provided for in this Agreement) and
of evidencing the authorization of the execution thereof by
Securityholders shall be subject to such reasonable requirements
as either Trustee may prescribe, including the establishment of
record dates pursuant to paragraph number 2 of the Depository
Agreements.
(f) Prior to the execution of any amendment to this
Agreement, each Trustee shall be entitled to receive and rely
upon the Opinion of Counsel referred to in subsection 10.02(i)
and an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and that
all conditions precedent to the execution and delivery of such
amendment have been satisfied. Each Trustee may, but shall not
be obligated to, enter into any such amendment which affects such
Trustee's own rights, duties or immunities under this Agreement
or otherwise.
(g) Each of NFC and the Seller agrees that such Person
shall not amend or agree to any amendment of the Purchase
Agreement unless such amendment would be permissible under the
terms of this Section 10.01 as if this Section 10.01 were
contained in the Purchase Agreement.
SECTION 10.02. Protection of Title to Owner Trust Estate.
(a) The Seller or the Servicer or both shall execute and
file such financing statements and cause to be executed and filed
such continuation and other 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 Securityholders and the Trustees
under this Agreement in the Receivables. The Seller or the
Servicer or both shall deliver (or cause to be delivered) to each
Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following
such filing.
(b) Neither the Seller nor the Servicer shall change its
name, identity or corporate structure in any manner that would,
could or might make any financing statement or continuation
<PAGE>
statement filed in accordance with paragraph (a) above seriously
misleading within the meaning of Section 9-402(7) of the UCC,
unless it shall have given each Trustee at least 60 days prior
written notice thereof.
(c) Each of the Seller and the Servicer shall give each
Trustee at least 60 days prior written notice of any relocation
of its principal executive office 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. The
Servicer shall at all times maintain each office from which it
services 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 extensions of any scheduled
payments made not less than 45 days prior thereto, 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, the Note Distribution Account and the
Certificate Distribution Account.
(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 Issuer, the Servicer's master computer records
(including any back-up archives) that refer to any Receivable
indicate clearly that the Receivable is owned 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 or
repurchased by the Seller or purchased by the Servicer.
(f) If at any time the Seller or the Servicer proposes to
sell, grant a security interest in, or otherwise transfer any
interest in medium and heavy duty truck, bus and trailer
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 (including any restored from back-up archives) that,
if they refer in any manner whatsoever to any Receivable,
indicate clearly that such Receivable has been sold and is owned
by the Issuer unless such Receivable has been paid in full or
repurchased by the Seller or purchased by the Servicer.
(g) The Servicer shall permit each Trustee and their
respective agents at any time to inspect, audit and make copies
of and abstracts from the Servicer's records regarding any
Receivables then or previously included in the Owner Trust
Estate.
(h) The Servicer shall furnish to each Trustee at any time
upon request a list of all Receivables then held as part of the
Trust, together with a reconciliation of such list to the
Schedule of Receivables and to each of the Servicer's
Certificates furnished before such request indicating removal of
Receivables from the Trust. Upon request, the Servicer shall
furnish a copy of any such list to the Seller. Each Trustee and
the Seller shall hold any such list and the Schedule of
<PAGE>
Receivables for examination by interested parties during normal
business hours at their respective offices located at the
addresses set forth in Section 10.03.
(i) The Servicer shall deliver to each Trustee promptly
after the execution and delivery of this Agreement and of each
amendment thereto, an Opinion of Counsel either (a) stating that,
in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of each
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) stating that, in the opinion of such
counsel, no such action is necessary to preserve and protect such
interest.
(j) To the extent required by law, the Seller shall cause
the Securities to be registered with the Securities and Exchange
Commission pursuant to Section 12(b) or Section 12(g) of the
Exchange Act within the time periods specified in such sections.
SECTION 10.03. Notices. All demands, notices and
communications upon or to the Seller, the Servicer, either
Trustee or the Rating Agencies under this Agreement shall be
delivered as specified in Appendix B hereto.
SECTION 10.04. Governing Law. All questions concerning the
construction, validity and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the
internal laws of the State of Illinois, without giving effect to
any choice of law or conflict provision or rule (whether of the
State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State
of Illinois; provided, however that the duties and immunities of
the Owner Trustee hereunder shall be governed by the laws of the
State of Delaware.
SECTION 10.05. 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 10.06. Assignment. Notwithstanding anything to the
contrary contained in this Agreement, this Agreement may not be
assigned by the Seller without the prior written consent of
Noteholders whose Notes evidence not less than 66% of the
Outstanding Amount of the Notes as of the close of the preceding
Distribution Date, of Class B Certificateholders whose Class B
Certificates evidence not less than 66% of the Class B Voting
Interests as of the close of the preceding Distribution Date and
of Class C Certificateholders whose Class C Certificates evidence
not less than 66% of the Class C Voting Interests as of the close
of the preceding Distribution Date. The Seller shall provide
notice of any such assignment to the Rating Agencies.
<PAGE>
SECTION 10.07. Third-Party Beneficiaries. This Agreement
shall inure to the benefit of and be binding upon the parties
hereto, the Securityholders and the Trustees and their respective
successors and permitted assigns. Except as otherwise provided
in Section 7.01 or in this Article X, no other Person shall have
any right or obligation hereunder.
SECTION 10.08. 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 10.09. 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.
SECTION 10.10. Assignment to Indenture Trustee. 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 and (only to the extent expressly provided in the
Indenture) the Certificateholders of all right, title and
interest of the Issuer in, to and under the Purchased Property
and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
SECTION 10.11. No Petition Covenants. 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 final distribution with respect to the Securities to the Note
Distribution Account or the Certificate Distribution Account, as
applicable, 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.
SECTION 10.12. Limitation of Liability of the Trustees.
(a) Notwithstanding anything contained herein to the
contrary, this Agreement has been acknowledged and accepted by
The Bank of New York not in its individual capacity but solely as
Indenture Trustee and in no event shall The Bank of New York 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.
(b) Notwithstanding anything contained herein to the
contrary, this Agreement has been executed by Chase Manhattan
Bank Delaware not in its individual capacity but solely in its
capacity as Owner Trustee of the Issuer and in no event shall
Chase Manhattan Bank Delaware in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner
Trustee of
<PAGE>
the Issuer 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. 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 Article VI of the Trust Agreement.
SECTION 10.13. Business Day Certificate.
On the Closing Date (with respect to the remainder of
calendar year 1996) and thereafter, within 15 days prior to the
end of each calendar year while this Agreement remains in effect
(with respect to the next succeeding calendar year), the Servicer
shall deliver to either Trustee, following receipt of a written
request by such Trustee, an Officers' Certificate specifying the
days on which banking institutions in Chicago, Illinois are
authorized or obligated by law or executive order to be closed.
* * * * *
<PAGE>
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.
NAVISTAR FINANCIAL 1996-B OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but
solely as Owner Trustee on behalf of
the Trust,
By: ____________________________
Name: John J. Cashin
Title: Senior Trust Officer
NAVISTAR FINANCIAL RETAIL RECEIVABLES
CORPORATION, as Seller
By: _________________________________
Name: R. Wayne Cain
Title: Vice President
NAVISTAR FINANCIAL CORPORATION,
as Servicer
By: _________________________________
Name: R. Wayne Cain
Title: Vice President
Acknowledged and Accepted:
THE BANK OF NEW YORK, not in
its individual capacity
but solely as Indenture Trustee,
By: ______________________________
Name: Reyne A. Macadaeg
Title: Vice President
<PAGE>
EXHIBIT A
Form of Assignment
For value received, in accordance with the Pooling and
Servicing Agreement, dated as of November 6, 1996 (the "Pooling
and Servicing Agreement"), among Navistar Financial Corporation,
a Delaware corporation ("NFC"), Navistar Financial Retail
Receivables Corporation, a Delaware corporation (the "Seller")
and Navistar Financial 1996-B Owner Trust (the "Issuer"), the
Seller does hereby sell, assign, transfer and otherwise convey
unto the Issuer, without recourse, all right, title and interest
of the Seller in, to and under (i) the Receivables listed on the
Schedule of Receivables and all monies paid thereon (including
Liquidation Proceeds) and due thereunder on and after the Cutoff
Date; (ii) the security interests in the Financed Vehicles
granted by Obligors pursuant to the Receivables and, to the
extent permitted by law, any accessions thereto which are
financed by NFC; (iii) the benefits of any lease assignments with
respect to the Financed Vehicles; (iv) any proceeds from any
Insurance Policies with respect to the Receivables; (v) any
proceeds from Dealer Liability with respect to the Receivables,
proceeds from any NITC Purchase Obligations with respect to the
Receivables (subject to the limitations set forth in Section 2.03
of the Pooling and Servicing Agreement) and proceeds from any
Guaranties of Receivables; (vi) the Purchase Agreement and the
Custodian Agreement, including the right of the Seller to cause
NFC to perform its obligations thereunder (including the
obligation to repurchase Receivables under certain circumstances)
and (vii) any proceeds of the property described in clauses (i),
(ii), (iii) and (vi) above.
The foregoing sale does not constitute and is not intended
to result in any assumption by the Issuer of any obligation of
the undersigned to the Obligors, Dealers, insurers or any other
Person in connection with the Receivables, the agreements with
Dealers, 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 Pooling and Servicing Agreement and
is to be governed by the Pooling and Servicing Agreement.
Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Pooling and
Servicing Agreement.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this
Assignment to be duly executed as of November 6, 1996.
NAVISTAR FINANCIAL RETAIL RECEIVABLES
CORPORATION
By: ______________________________
Name: R. Wayne Cain
Title: Vice President
<PAGE>
EXHIBIT B
Locations of Schedule of Receivables
The Schedule of Receivables is
on file at the offices of:
1. The Indenture Trustee
2. The Owner Trustee
3. Navistar Financial Corporation
4. Navistar Financial Retail Receivables Corporation
<PAGE>
APPENDIX A
PART I - DEFINITIONS
All terms defined in this Appendix shall have the defined
meanings when used in the Basic Documents, unless otherwise
defined therein.
Accountants' Report: The report described in Section 4.02
of the Pooling and Servicing Agreement.
Accounting Date: With respect to a Distribution Date, the
last day of the related Monthly Period, or, with respect to any
initial Distribution Date that occurs in the same calendar month
as the Closing Date, at the close of business on the Closing
Date.
Act: An Act as specified in Section 11.3(a) of the
Indenture.
Actual Payment: With respect to a Distribution Date and to
a Receivable, all payments received by the Servicer from or for
the account of the Obligor during the related Monthly Period
(and, in the case of the first Monthly Period, all payments
received by the Servicer from or for the account of the Obligor
on or after the Cutoff Date) except for any Overdue Payments or
Supplemental Servicing Fees.
Administration Agreement: That certain Administration
Agreement, dated as of November 6, 1996 among NFC, as
Administrator, the Trust and the Indenture Trustee, as amended
and supplemented from time to time.
Administrative Purchase Payment: With respect to a
Distribution Date and to an Administrative Receivable purchased
as of the related Accounting Date, a release of all claims for
reimbursement of Monthly Advances made on such Administrative
Receivable plus a payment equal to the sum of (i) the sum of the
Scheduled Payments on such Administrative Receivable due after
the Accounting Date minus the Rebate, (ii) any reimbursement made
pursuant to the last sentence of Section 5.04 of the Pooling and
Servicing Agreement with respect to such Receivable, and (iii)
all past due Scheduled Payments with respect to which a Monthly
Advance has not been made.
Administrative Receivable: A Receivable which the Servicer
is required to purchase as of an Accounting Date pursuant to
Section 3.08 of the Pooling and Servicing Agreement or which the
Servicer has elected to repurchase as of an Accounting Date
pursuant to Section 9.01 of the Pooling and Servicing Agreement.
Administrator: NFC or any successor Administrator under the
Administration Agreement.
Affiliate: With respect to any specified Person, any other
Person controlling, 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,
<PAGE>
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agency Office: The office of the Issuer maintained pursuant
Section 3.2 of the Indenture.
Aggregate Certificate Balance: With respect to any date,
the sum of the Class B Certificate Balance and the Class C
Certificate Balance as of such date.
Aggregate Losses: With respect to a Monthly Period, the sum
of (i) the aggregate of the Receivable Balances of all
Receivables newly designated during such Monthly Period as
Liquidating Receivables, plus (ii) the aggregate principal
portion of Scheduled Payments due but not received with respect
to all such Receivables prior to the date any such Receivable was
designated a Liquidating Receivable minus (iii) Liquidation
Proceeds collected during such Monthly Period with respect to all
Liquidating Receivables.
Aggregate Noteholders' Interest Distributable Amount: With
respect to a Distribution Date, the sum of the Noteholders'
Interest Distributable Amounts for all classes of Notes and the
Noteholders' Interest Carryover Shortfall as of the preceding
Distribution Date.
Aggregate Noteholders' Principal Distributable Amount: With
respect to a Distribution Date, the sum of the Noteholders'
Principal Distributable Amounts for all classes of Notes and the
Noteholders' Principal Carryover Shortfall as of the preceding
Distribution Date.
Aggregate Note Principal Balance: With respect to the close
of a Distribution Date, the sum of the Note Principal Balances
for all classes of Notes.
Aggregate Receivables Balance: As of any date, the sum of
the Receivable Balances of all outstanding Receivables (other
than Liquidating Receivables) held by the Trust on such date.
Annual Percentage Rate: With respect to a Receivable, the
annual rate of finance charges stated in such Receivable.
Applicable Trustee: So long as the Aggregate Note Principal
Balance is greater than zero and the Indenture has not been
discharged in accordance with its terms, the Indenture Trustee,
and thereafter, the Owner Trustee.
Authorized Officer: 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 and who is identified
on the list of Authorized Officers delivered by the Owner Trustee
to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter) and, so
long as the Administration Agreement is in effect, any Vice
President or more senior officer of the Administrator who is
authorized to act for the Administrator in matters relating to
the Issuer and to be acted upon by the Administrator pursuant to
the Administration Agreement and who is identified on the list of
Authorized Officers delivered by the Administrator to the
Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter).
<PAGE>
Available Amount: With respect to a Distribution Date, the
sum of the Collected Interest and the Collected Principal for
such Distribution Date.
Basic Documents: The Certificate of Trust, the Trust
Agreement, the Purchase Agreement, the Pooling and Servicing
Agreement, the Custodian Agreement, the Administration Agreement,
the Indenture, the Note Depository Agreement, the Certificate
Depository Agreement and the other documents and certificates
delivered in connection therewith.
Basic Servicing Fee: With respect to a Monthly Period, the
fee payable to the Servicer for services rendered during such
Monthly Period, which shall be equal to one-twelfth of the Basic
Servicing Fee Rate multiplied by the Aggregate Receivables
Balance as of the first day of such Monthly Period.
Basic Servicing Fee Rate: 1.0% per annum.
Book-Entry Certificates: A beneficial interest in the
Certificates, ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section
3.11 of the Trust Agreement.
Book-Entry Notes: A beneficial interest in the Notes,
ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 2.10 of the
Indenture.
Business Day: Any day other than a Saturday, a Sunday or
any other day on which banking institutions in New York, New York
or Chicago, Illinois may, or are required to, remain closed.
Business Trust Statute: Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as the same may
be amended from time to time.
Certificate: Any one of the Class B Certificates or Class C
Certificates.
Certificate Depository Agreement: The Agreement, dated as
of the Closing Date, among the Trust, the Administrator and The
Depository Trust Company (as the initial Clearing Agency),
relating to the Certificates and substantially in the form set
forth in Exhibit C to the Trust Agreement, as the same may be
amended and supplemented from time to time.
Certificate Distribution Account: The account designated as
such, established and maintained pursuant to Section 5.1(a) of
the Trust Agreement.
Certificate Lockout Event: A Certificate Lockout Event
shall be deemed to have occurred if as of any Distribution Date,
the product of (a) twelve and (b) the percentage equivalent of a
fraction, the numerator of which is equal to the sum of the
Aggregate Losses minus Liquidation Proceeds with respect to each
of the latest six consecutive Monthly Periods ended prior to such
Distribution Date, and the denominator of which is the sum of the
Remaining Gross Balances of all outstanding Receivables as of the
last day of each of the latest six consecutive Monthly Periods
ended prior to such Distribution Date, exceeds 6.0%.
<PAGE>
Certificate of Trust: The certificate of trust of the
Issuer substantially in the form of Exhibit B to the Trust
Agreement to be filed for the Trust pursuant to Section 3810(a)
of the Business Trust Statute.
Certificate Owner: With respect to a Book-Entry
Certificate, the Person who is the beneficial 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 as a Clearing Agency Participant
or as an Indirect Participant, in each case in accordance with
the rules of such Clearing Agency).
Certificate Pool Factor: With respect to any Distribution
Date, (i) for the Class B Certificates, a seven-digit decimal
figure computed by the Servicer equal to the remaining Class B
Certificate Balance as of the close of such Distribution Date
divided by the initial Class B Certificate Balance and (ii) for
the Class C Certificates, a seven-digit decimal figure computed
by the Servicer equal to the remaining Class C Certificate
Balance as of the close of such Distribution Date divided by the
initial Class C Certificate Balance.
Certificate Purchase Agreement: The Certificate Purchase
Agreement, dated October 23, 1996, among Chase Securities Inc.,
the Servicer and the Seller with respect to the sale of the Class
C Certificates.
Certificate Register: The register of Certificates
specified in Section 3.4 of the Trust Agreement.
Certificate Registrar: The registrar at any time of the
Certificate Register, appointed pursuant to Section 3.4(a) of the
Trust Agreement.
Certificateholder: A Class B Certificateholder or a Class C
Certificateholder.
Certificateholders' Interest Distributable Amount: With
respect to any Distribution Date, the sum of (i) the Class B
Certificateholders' Interest Distributable Amount for such
Distribution Date, and (ii) the Class C Certificateholders'
Interest Distributable Amount for such Distribution Date.
Certificateholders' Principal Distributable Amount: With
respect to any Distribution Date, the sum of (i) the Class B
Certificateholders' Principal Distributable Amount with respect
to such Distribution Date and (ii) the Class C
Certificateholders' Principal Distributable Amount with respect
to such Distribution Date.
Class A-1 Notes: The Class A-1 5.49% Asset Backed Notes in
the aggregate principal amount of $106,500,000.00 issued pursuant
to the Indenture.
Class A-2 Notes: The Class A-2 5.93% Asset Backed Notes in
the aggregate principal amount of $111,900,000.00 issued pursuant
to the Indenture.
<PAGE>
Class A-3 Notes: The Class A-3 6.33% Asset Backed Notes in
the aggregate principal amount of $236,500,000 issued pursuant to
the Indenture.
Class B Certificate: Any one of the 6.50% Class B Asset
Backed Certificates executed by the Owner Trustee and
authenticated by the Owner Trustee in substantially the form set
forth in Exhibit A-1 to the Trust Agreement.
Class B Certificate Balance: Initially, as of the Closing
Date, $17,028,000 (approximately 3.5% of the Initial Aggregate
Receivables Balance) and, on any Distribution Date thereafter,
the initial Class B Certificate Balance, reduced by the sum of
(i) all distributions in respect of the Class B Certificate
Balance actually made on or prior to such date to the Class B
Certificateholders and (ii) the Class B Certificate Reduction
Amount as of the preceding Distribution Date.
Class B Certificate Reduction Amount: As of any
Distribution Date, the amount, if any, by which (i) the sum of
(a) the Noteholders' Principal Carryover Shortfall as of such
Distribution Date, and (b) the Class B Certificateholders'
Principal Carryover Shortfall as of such Distribution Date
exceeds (ii) the excess, if any, of (a) the initial Class C
Certificate Balance over (b) the sum of all distributions in
respect of the Class C Certificate Balance actually made on or
prior to such Distribution Date to Class C Certificateholders.
Class B Certificateholder: A Person in whose name a Class B
Certificate is registered pursuant to the terms of the Trust
Agreement.
Class B Certificateholders' Interest Carryover Shortfall:
As of the close of any Distribution Date, the excess, if any, of
(i) the Class B Certificateholders' Interest Distributable Amount
for such Distribution Date over (ii) the amount that was actually
deposited in the Certificate Distribution Account on the day
preceding such current Distribution Date in respect of the
Certificateholders' Interest Distributable Amount.
Class B Certificateholders' Interest Distributable Amount:
With respect to any Distribution Date, the sum of (i) the Class B
Certificateholders' Monthly Interest Distributable Amount for
such Distribution Date, (ii) the Class B Certificateholders'
Interest Carryover Shortfall, if any, as of the close of the
preceding Distribution Date and (iii) one-twelfth of the Class B
Pass Through Rate multiplied by the Class B Certificate Reduction
Amount as of the preceding Distribution Date.
Class B Certificateholders' Monthly Interest Distributable
Amount: With respect to any Distribution Date, interest equal to
one-twelfth of the Class B Pass Through Rate multiplied by the
Class B Certificate Balance as of the close of the preceding
Distribution Date (or, in the case of the first Distribution
Date, based on the Class B Certificate Balance and pro-rated for
the number of days from the Closing Date to but excluding such
Distribution Date).
Class B Certificateholders' Monthly Principal Distributable
Amount: With respect to any Distribution Date, the lesser of (i)
the Class B Certificateholders' Percentage of the Principal
Distributable Amount for such Distribution Date and (ii) the
Class B Certificate Balance as of the
<PAGE>
close of the preceding Distribution Date (or, in the case of the
first Distribution Date, the Class B Certificate Balance as of
the Closing Date).
Class B Certificateholders' Percentage: With respect to (i)
each Distribution Date preceding or constituting the Distribution
Date on which the Notes are paid in full, the product of (a) the
percentage equivalent of a fraction, (1) the numerator of which
is the initial Class B Certificate Balance and (2) the
denominator of which is the initial Aggregate Certificate Balance
multiplied by (b) 100% minus the Noteholders' Percentage for such
Distribution Date, and (ii) each Distribution Date occurring
after the Distribution Date on which the Notes are paid in full,
the percentage equivalent of a fraction, (a) the numerator of
which is the initial Class B Certificate Balance and (b) the
denominator of which is the initial Aggregate Certificate
Balance; provided, however, that if the amount on deposit in the
Reserve Account is less than 1.00% of the Initial Aggregate
Receivables Balance on any Distribution Date on or after the
Notes have been paid in full, the Class B Certificateholders'
Percentage shall be equal to the excess, if any, of 100% over the
Noteholders' Percentage until the Class B Certificates are paid
in full or the amount on deposit in the Reserve Account exceeds
the Specified Reserve Account Balance; and provided, further,
that from and after the occurrence of a Certificate Lockout
Event, the Class B Certificateholders' Percentage shall be equal
to 100% minus the Noteholders' Percentage until the Class B
Certificates are paid in full.
Class B Certificateholders' Principal Carryover Shortfall:
With respect to the close of any Distribution Date, the excess,
if any, of (i) the Class B Certificateholders' Principal
Distributable Amount with respect to such Distribution Date, over
(ii) the amount that was actually deposited in the Certificate
Distribution Account on the day preceding such current
Distribution Date in respect of the Certificateholders' Principal
Distributable Amount.
Class B Certificateholders' Principal Distributable Amount:
With respect to any Distribution Date, the sum of the Class B
Certificateholders' Monthly Principal Distributable Amount for
such Distribution Date and any outstanding Class B
Certificateholders' Principal Carryover Shortfall as of the close
of the preceding Distribution Date. In addition, on the Final
Scheduled Distribution Date with respect to the Class B
Certificates, the amount required to be distributed to Class B
Certificateholders in respect of the Class B Certificate Balance
shall include the lesser of (i) the Class B Certificateholders'
Percentage of the sum of the principal portion of any Scheduled
Payments of principal due and remaining unpaid on each
Receivable, in each case in the Trust as of the last day of the
related Monthly Period, and (ii) the amount that is necessary
(after giving effect to the other amounts to be deposited in the
Certificate Distribution Account on the day preceding such
Distribution Date and allocable to payments in respect of the
Class B Certificate Balance) to reduce the Class B Certificate
Balance to zero, in either case after giving effect to any
required distribution of the Aggregate Noteholders' Principal
Distributable Amount to the Note Distribution Account. In
addition, on any Distribution Date on which, after giving effect
to all distributions to the Servicer and the Securityholders on
such Distribution Date, (i) the outstanding principal balance of
the Notes is zero and (ii) the amount on deposit in the Reserve
Account is equal to or greater than the Aggregate Certificate
Balance, the Class B Certificateholders' Principal Distributable
Amount shall include an amount equal to the remaining Class B
Certificate Balance.
Class B Pass Through Rate: 6.50% per annum.
<PAGE>
Class B Voting Interests: As of any date, the aggregate
Class B Certificate Balance of all Class B Certificates
outstanding; provided, however, that Class B Certificates owned
by the Issuer, 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 Owner
Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only
Class B Certificates that a Responsible Officer of the Owner
Trustee knows to be so owned shall be so disregarded. Class B
Certificates so owned that have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the
satisfaction of the Owner Trustee the pledgor's right so to act
with respect to such Class B Certificates and that the pledgee is
not the Issuer, the Seller or any Affiliate of any of the
foregoing Persons.
Class C Certificate: Any one of the Class C 7.45% Asset
Backed Certificates executed by the Owner Trustee and
authenticated by the Owner Trustee in substantially the form set
forth in Exhibit A-2 to the Trust Agreement.
Class C Certificate Balance: Initially, as of the Closing
Date, $14,579,362.75 (approximately 3.0% of the Initial Aggregate
Receivables Balance) and, on any Distribution Date thereafter,
the initial Class C Certificate Balance, reduced by the sum of
(i) all Distributions in respect of the Class C Certificate
Balance actually made on or prior to such date to Class C
Certificateholders and (ii) the Class C Certificate Reduction
Amount as of the preceding Distribution Date.
Class C Certificate Reduction Amount: As of any
Distribution Date, the amount equal to the lesser of (i) the sum
of (a) the Noteholders' Principal Carryover Shortfall as of such
Distribution Date, (b) the Class B Certificateholders' Principal
Carryover Shortfall as of such Distribution Date, and (c) the
Class C Certificateholders' Principal Carryover Shortfall as of
such Distribution Date, and (ii) the excess, if any, of (a) the
initial Class C Certificate Balance over (b) the sum of all
distributions in respect of the Class C Certificate Balance
actually made on or prior to such Distribution Date to Class C
Certificateholders.
Class C Certificateholder: A Person in whose name a Class C
Certificate is registered pursuant to the terms of the Trust
Agreement.
Class C Certificateholders' Interest Carryover Shortfall:
As of the close of any Distribution Date, the excess of (a) the
Certificateholders' Interest Distributable Amount for such
Distribution Date over (ii) the sum of the amount that was
actually deposited in the Certificate Distribution Account on the
day preceding such current Distribution Date in respect of the
Certificateholders' Interest Distributable Amount and the Class B
Certificateholders' Interest Carryover Shortfall for such
Distribution Date.
Class C Certificateholders' Interest Distributable Amount:
With respect to any Distribution Date, the sum of (i) the Class C
Certificateholders' Monthly Interest Distributable Amount for
such Distribution Date, (ii) the Class C Certificateholders'
Interest Carryover Shortfall as of the close of the preceding
Distribution Date and (iii) one-twelfth of the Class C Pass
Through Rate multiplied by the Class C Certificate Reduction
Amount as of the preceding Distribution Date.
<PAGE>
Class C Certificateholders' Monthly Interest Distributable
Amount: With respect to any Distribution Date, interest equal to
one-twelfth of the Class C Pass Through Rate multiplied by the
Class C Certificate Balance as of the close of the preceding
Distribution Date (or, in the case of the first Distribution
Date, based on the Class C Certificate Balance as of the Closing
Date and pro-rated for the number of days from the Closing Date
to but excluding such Distribution Date).
Class C Certificateholders' Monthly Principal Distributable
Amount: With respect to any Distribution Date, the lesser of (i)
the Class C Certificateholders' Percentage of the Principal
Distributable Amount for such Distribution Date and (ii) the
Class C Certificate Balance as of the close of the preceding
Distribution Date (or, in the case of the first Distribution
Date, the Class C Certificate Balance as of the Closing Date).
Class C Certificateholders' Percentage: With respect to (i)
each Distribution Date preceding or constituting the Distribution
Date on which the Notes are paid in full, 100% minus the sum of
the Noteholders' Percentage for such Distribution Date and the
Class B Certificateholders' Percentage for such Distribution
Date, and (ii) each Distribution Date occurring after the
Distribution Date on which the Notes are paid in full, 100% minus
the Class B Certificateholders' Percentage for such Distribution
Date.
Class C Certificateholders' Principal Carryover Shortfall:
With respect to the close of any Distribution Date, the excess of
(i) the Certificateholders' Principal Distributable Amount with
respect to such Distribution Date over (ii) the sum of the amount
that was actually deposited in the Certificate Distribution
Account on the day preceding such current Distribution Date in
respect of the Certificateholders' Principal Distributable Amount
and the Class B Certificateholders' Principal Carryover Shortfall
for such Distribution Date.
Class C Certificateholders' Principal Distributable Amount:
With respect to any Distribution Date, the sum of the Class C
Certificateholders' Monthly Principal Distributable Amount for
such Distribution Date and any outstanding Class C
Certificateholders' Principal Carryover Shortfall as of the close
of the preceding Distribution Date. In addition, on the Final
Scheduled Distribution Date with respect to the Class C
Certificates, the amount required to be distributed to Class C
Certificateholders in respect of the Class C Certificate Balance
shall include the lesser of (i) the Class C Certificateholders'
Percentage of the sum of the principal portion of any Scheduled
Payments of principal due and remaining unpaid on each
Receivable, in each case in the Trust as of the last day of the
related Monthly Period, and (ii) the amount that is necessary
(after giving effect to the other amounts to be deposited in the
Certificate Distribution Account on the day preceding such
Distribution Date and allocable to payments in respect of the
Class C Certificate Balance) to reduce the Class C Certificate
Balance to zero, in either case after giving effect to any
required distribution of the Aggregate Noteholders' Principal
Distributable Amount to the Note Distribution Account and any
required distribution of the Class B Certificateholders'
Principal Distributable Amount to the Class B Certificateholders.
In addition, on any Distribution Date on which, after giving
effect to all distributions to the Servicer and the
Securityholders on such Distribution Date, (i) the outstanding
principal balance of the Notes is zero and (ii) the amount on
deposit in the Reserve Account is equal to or greater that the
Aggregate Certificate Balance, the Class C
<PAGE>
Certificateholders' Principal Distributable Amount shall include
an amount equal to the remaining Class C Certificate Balance.
Class C Pass Through Rate: 7.45% per annum.
Class C Voting Interests: As of any date, the aggregate
Class C Certificate Balance of all Class C Certificates
outstanding; provided, however, that Class C Certificates owned
by the Issuer, 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 Owner
Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only
Class C Certificates that a Responsible Officer of the Owner
Trustee knows to be so owned shall be so disregarded. Class C
Certificates so owned that have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the
satisfaction of the Owner Trustee the pledgor's right so to act
with respect to such Class C Certificates and that the pledgee is
not the Issuer, the Seller or any Affiliate of any of the
foregoing Persons.
Clearing Agency: An organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
Clearing Agency Participant: A securities broker, dealer,
bank, trust company, clearing corporation or 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: November 6, 1996.
Code: The Internal Revenue Code of 1986, as amended from
time to time, and the Treasury Regulations promulgated
thereunder.
Code Collateral: Any property a security interest in which
may be perfected by filing under the applicable UCC.
Collateral: The collateral specified in the Granting Clause
of the Indenture.
Collected Interest: With respect to any Distribution Date,
the sum of the following amounts with respect to the related
Monthly Period, in each case computed in accordance with the
actuarial method: (i) that portion of all collections on
Receivables (other than Liquidating Receivables) allocable to
interest or Prepayment Surplus, (ii) that portion of all
Liquidation Proceeds allocable to interest in accordance with the
Servicer's customary servicing procedures, (iii) that portion of
all Monthly Advances allocable to interest and (iv) that portion
of all Warranty Payments, Administrative Purchase Payments or the
Optional Purchase Proceeds allocable to accrued interest or
Prepayment Surplus; less an amount equal to the sum of (x) all
amounts received on any Receivable (other than a Liquidating
Receivable) to the extent of the aggregate Outstanding Monthly
Advances of interest with respect to such Receivable and (y)
Liquidation Proceeds with respect to a particular Receivable to
the extent of the Outstanding Monthly Advances of interest
thereon.
<PAGE>
Collected Principal: With respect to any Distribution Date,
the sum of the following amounts with respect to the related
Monthly Period in each case computed in accordance with the
actuarial method: (i) that portion of all collections on
Receivables (other than Liquidating Receivables) allocable to
principal, (ii) that portion of Liquidation Proceeds allocable to
principal in accordance with the Servicer's customary servicing
procedures, (iii) that portion of all Monthly Advances allocable
to principal, (iv) that portion of all Warranty Payments,
Administrative Purchase Payments or the Optional Purchase
Proceeds allocable to principal, and (v) that portion of all
Prepayments allocable to principal; less an amount equal to the
sum of (x) amounts received on any Receivable (other than a
Liquidating Receivable) to the extent of the aggregate
Outstanding Monthly Advances of principal with respect to such
Receivable and (y) Liquidation Proceeds with respect to a
particular Receivable to the extent of the Outstanding Monthly
Advances of principal and amounts representing reimbursement for
Liquidation Expenses with respect to such Receivables pursuant to
subsection 4.06(b)(i) of the Pooling and Servicing Agreement.
Collection Account: The account designated as such,
established and maintained pursuant to Section 5.01(a)(i) of the
Pooling and Servicing Agreement.
Control: the Indenture Trustee shall have obtained
"Control" over a Security Entitlement if:
(i) (a) the Indenture Trustee is the Securities
Intermediary for the Designated Account in which such
Security Entitlement is held, or
(b) the Indenture Trustee
(1) is registered on the records of the
Securities Intermediary as the person having such
a Security Entitlement against the Securities
Intermediary, or
(2) has obtained the agreement, in writing, of
the Securities Intermediary for such Security
Entitlement that it will comply with orders of the
Indenture Trustee regarding the sale or redemption
of the Security Entitlement without further
consent of any other person,
and
(ii) the Securities Intermediary for such Security
Entitlement
(a) is the registered owner of the related Financial
Asset,
(b) is the holder of the Security Certificate for the
related Financial Asset, or
(c) holds its interest in the related Financial Asset
directly through a clearing corporation (as defined in
Revised Article 8).
<PAGE>
Corporate Trust Office: With respect to the Indenture
Trustee or the Owner Trustee, the principal office at which at
any particular time the corporate trust business of the Indenture
Trustee or Owner Trustee, respectively, shall be administered,
which offices at the Closing Date are located, in the case of the
Indenture Trustee, at The Bank of New York, 101 Barclay Street,
New York, New York, 10286, Attn: Corporate Trust Administration,
and in the case of the Owner Trustee, at Chase Manhattan Bank
Delaware, 1201 Market Street, Wilmington, Delaware 19801, Attn:
Corporate Trustee Administration.
Custodian: NFC, as Servicer, or another custodian named
from time to time in the Custodian Agreement.
Custodian Agreement: The Custodian Agreement, dated as of
November 6, 1996 between the Custodian and the Seller, as amended
or supplemented from time to time.
Cutoff Date: October 1, 1996.
Dealer: (i) A Person with whom NITC has a valid dealer
sales/maintenance agreement to sell NITC vehicles, (ii) a Person
with whom NFC has an agreement to extend new or used truck floor
plan financing terms or (iii) a truck, bus, or trailer equipment
manufacturer with whom NITC has a valid agreement to sell NITC
vehicles.
Dealer Liability: With respect to a Receivable, all rights,
claims and actions of NFC against the Dealer which originated the
Receivable or which sold the Financed Vehicles(s) which gave rise
to such Receivable and any successor Dealer for recourse or
reimbursement of any losses, costs or expenses arising as a
result of a default by the Obligor on such Receivable.
Default: Any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
Definitive Certificates: The Certificates specified in
Section 3.13 of the Trust Agreement.
Definitive Notes: The Notes specified in Section 2.12 of
the Indenture.
Delinquency Percentage: With respect to a Distribution
Date, the aggregate Remaining Gross Balances of all outstanding
Receivables which are 61 days or more past due as of the last day
of the related Monthly Period, as determined in accordance with
the Servicer's normal practices, expressed as a percentage of the
aggregate Remaining Gross Balances of all outstanding Receivables
on the last day of such Monthly Period.
Delivery: When used with respect to Designated Account
Property, "Delivery" means:
(i) with respect to Physical Property other than a
certificated security, transfer thereof to the Indenture
Trustee or its nominee or custodian by physical delivery to
the Indenture Trustee or its nominee or custodian endorsed
to, or registered in the name of, the Indenture Trustee or
its nominee or custodian or endorsed in blank, and, with
respect to a
<PAGE>
certificated security (as defined in Section 8-102 of the
UCC) transfer thereof (a) by delivery of such certificated
security endorsed to, or registered in the name of, the
Indenture Trustee or its nominee or custodian or endorsed in
blank to a financial intermediary (as defined in Section
8-313(4) of the UCC) and the making by such financial
intermediary of entries on its books and records identifying
such certificated securities as belonging to the Indenture
Trustee or its nominee or custodian and the sending by such
financial intermediary of a confirmation of the transfer to
the Indenture Trustee or its nominee or custodian of such
certificated security, or (b) by delivery thereof to a
"clearing corporation" (as defined in Section 8-102(3) 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 financial 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 financial intermediary, the maintenance of such
certificated securities by such clearing corporation or a
"custodian bank" (as defined in Section 8-102(4) of the UCC)
or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a
confirmation by the financial intermediary of the transfer
to the Indenture Trustee or its nominee or custodian of such
securities and the making by such financial intermediary of
entries on its books and records identifying such
certificated securities as belonging to the Indenture
Trustee or its nominee or custodian, and, in any event, any
such Physical Property in registered form shall be in the
name of the Indenture Trustee or its nominee or custodian;
and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer
of ownership of any such Designated Account Property to the
Indenture Trustee or its nominee or custodian, consistent
with changes in applicable law or regulations or the
interpretation thereof;
(ii) with respect to any such Designated Account
Property that is an Uncertificated Security and that is not
a Federal Book-Entry Security, registration on the books and
records of the issuer thereof in the name of the financial
intermediary, the sending of a confirmation by the financial
intermediary of the transfer to the Indenture Trustee or its
nominee or custodian of such uncertificated security and the
making by such financial intermediary of entries on its
books and records identifying such uncertificated
certificates as belonging to the Indenture Trustee or its
nominee or custodian; and
(iii) with respect to any Federal Book-Entry
Security, 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
Designated Account Property to an appropriate book-entry
account maintained with a Federal Reserve Bank by a
financial intermediary which is also a "depository" pursuant
to applicable Federal regulations and issuance by such
financial intermediary of a deposit advice or other written
confirmation of such book-entry registration to the
Indenture Trustee or its nominee or custodian of the
transfer to the Indenture Trustee or its nominee or
custodian of such book-entry securities; the making by such
financial 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 Indenture Trustee or its
nominee or custodian and indicating that such custodian
holds such Designated Account Property solely as agent for
the Indenture
<PAGE>
Trustee or its nominee or custodian; the making by the
Indenture Trustee of entries in its books and records
establishing that it holds such Designated Account Property
solely as Indenture Trustee under the terms of Section 5.01
of the Pooling and Servicing Agreement; and such additional
or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any
such Designated Account Property to the Indenture Trustee or
its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof.
Designated Account Property: The Designated Accounts, all
amounts and investments held from time to time in any
Designated Account (whether in the form of deposit accounts,
Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Account
Initial Deposit, and all proceeds of the foregoing.
Designated Accounts: The Collection Account, the Note
Distribution Account and the Reserve Account, collectively.
Determination Date: The day that is two Business Days prior
to the Distribution Date.
Distribution Date: With respect to a Monthly Period, the
20th day of the next succeeding calendar month or, if such 20th
day is not a Business Day, the next succeeding Business Day,
commencing November 20, 1996.
Distributor: A distributor of vehicles and equipment not
manufactured by NITC.
Eligible Deposit Account: Either (i) a segregated account
with an Eligible Institution or (ii) a segregated trust account
with the corporate trust department of a depository institution
organized under the laws of the United States of America or any
one of the states thereof or the District of Columbia (or any
domestic branch of a foreign bank), having corporate trust powers
and acting as trustee for funds deposited in such account so long
as any of the securities of such depository institution have a
credit rating from each Rating Agency in one of its generic
rating categories for long-term unsecured debt which signifies
investment grade.
Eligible Institution: A depository institution organized
under the laws of the United States of America or any one of the
states thereof or the District of Columbia (or any domestic
branch of a foreign bank), (A) which has either (1) a long-term
unsecured debt rating of at least "AAA" from Standard & Poor's
Ratings Services and "A2" from Moody's Investors Service, Inc. or
(2) a short-term unsecured debt or certificate of deposit rating
of at least "A-1+" from Standard & Poor's Ratings Services and
"P-1" from Moody's Investors Service, Inc., (B) whose deposits
are insured by the FDIC and (C) having a combined capital and
surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition.
<PAGE>
Eligible Investments: Book-entry securities, negotiable
instruments or securities represented by instruments in bearer or
registered form which evidence:
(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 for short-term unsecured
debt obligations or certificates of deposit 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 for short-term unsecured debt
obligations or certificates of deposit granted thereby;
(iv) investments in money market or common trust funds
having a rating from each of the Rating Agencies in the
highest investment category for short-term unsecured debt
obligations or certificates of deposit granted thereby
(including funds for which the Indenture Trustee or the
Owner Trustee or any of their respective affiliates is
investment manager or advisor, so long as such fund shall
have such rating);
(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) a depository
institution or trust company (acting as principal) described
in clause (ii) or (B) a depository institution or trust
company the deposits of which are insured by FDIC;
(vii) commercial paper master notes 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 for short-term unsecured debt
obligations; and
(viii) any other investment permitted by each of the
Rating Agencies;
<PAGE>
in each case, other than as permitted by the Rating Agencies,
maturing not later than the Business Day immediately preceding
the next Distribution Date.
ERISA: The Employee Retirement Income Security Act of 1974,
as amended.
Event of Default: An event described in Section 5.1 of the
Indenture.
Exchange Act: The Securities Exchange Act of 1934, as
amended.
Executive Officer: 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.
Expenses: The expenses described in Section 6.9 of the
Trust Agreement.
FDIC: Federal Deposit Insurance Corporation or any
successor agency.
Federal Book-Entry Security: An obligation issued by the
U.S. Treasury, the Federal Home Loan Mortgage Corporation or the
Federal National Mortgage Association, or any other direct
obligation of, or obligation fully guaranteed as to timely
payment of principal and interest by, the United States of
America, that is a book-entry security held through the Federal
Reserve System pursuant to Federal book-entry regulations.
Final Scheduled Distribution Date: With respect to a class
of Securities, the date set forth below opposite such Securities:
Class A-1 Notes: November 20, 1997
Class A-2 Notes: November 22, 1999
Class A-3 Notes: April 21, 2003
Class B Certificates: April 21, 2003
Class C Certificates: April 21, 2003
Financed Vehicle: A new or used medium or heavy duty truck,
bus or trailer, together with any accessions thereto which were
financed by NFC, securing an Obligor's indebtedness under a
Receivable. A Receivable may be secured by one or more Financed
Vehicles.
Financial Asset: Has the meaning given such term in Revised
Article 8. As used herein, the Financial Asset "related to" a
Security Entitlement is the Financial Asset in which the
entitlement holder (as defined in Revised Article 8) holding such
Security Entitlement has the rights and property interest
specified in Revised Article 8.
Full Prepayment: With respect to a Distribution Date, that
portion of an Actual Payment (other than the Scheduled Payment),
which with respect to (i) any Receivable, is sufficient to prepay
such Receivable in full (after application of the Scheduled
Payment), or (ii) a Receivable secured
<PAGE>
by multiple Financed Vehicles, equals the unpaid principal amount
of the Receivable relating to any Financed Vehicle, as determined
by the Servicer in accordance with its customary servicing
procedures.
Further Transfer and Servicing Agreements: The Pooling and
Servicing Agreement, the Trust Agreement and the Indenture.
Grant: To 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 the 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.
Guaranties: With respect to any Receivable, personal or
commercial guaranties of an Obligor's performance with respect
thereto.
Holder: The Person in whose name a Note or Certificate is
registered on the Note Register or the Certificate Register, as
applicable.
Indemnified Parties: The Persons specified in Section 6.9
of the Trust Agreement.
Indenture: The Indenture, dated as of November 6, 1996
between the Issuer and the Indenture Trustee, as amended and
supplemented from time to time.
Indenture Trustee: The Bank of New York, a New York banking
corporation, not in its individual capacity but solely as trustee
under the Indenture, or any successor trustee under the
Indenture.
Independent: When used with respect to any specified
Person, that the Person (i) is in fact independent of the Issuer,
any other obligor upon the Notes, the Seller and any Affiliate of
any of the foregoing Persons, (ii) does not have any direct
financial interest or any material indirect financial interest in
the Issuer, any such other obligor, the Seller or any Affiliate
of any of the foregoing Persons and (iii) is not connected with
the Issuer, any such other obligor, the Seller or any Affiliate
of any of the foregoing Persons as an officer, employee,
promoter, underwriter, trustee, partner, director or person
performing similar functions.
Independent Certificate: A certificate or opinion to be
delivered to the Indenture Trustee under the circumstances
described in, and otherwise complying with, the applicable
requirements of Section 11.1 of the Indenture, 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
<PAGE>
opinion or certificate shall state that the signer has read the
definition of "Independent" in the Indenture and that the signer
is Independent within the meaning thereof.
Indirect Participant: A securities broker, dealer, bank,
trust company or other Person that clears through or maintains a
custodial relationship with a Clearing Agency Participant, either
directly or indirectly.
Initial Aggregate Receivables Balance: $486,507,362.75,
which represents the aggregate of the Initial Receivable Balances
under all of the Receivables.
Initial Gross Receivable Balance: With respect to any
Receivable as of the Cutoff Date, the Initial Receivable Balance
plus, in the case of Receivables classified by the Servicer as
"finance charge - included contracts," the finance charges
included in the Scheduled Payments due on or after the Cutoff
Date.
Initial Receivable Balance: With respect to a Receivable,
the aggregate principal amount advanced under such Receivable
toward the purchase price of the Financed Vehicle or Financed
Vehicles, including insurance premiums, service and warranty
contracts, federal excise and sales taxes and other items
customarily financed as part of a Retail Note and related costs,
less payments received from the Obligor prior to the Cutoff Date
allocable on the basis of the actuarial method to principal.
Insolvency Event: With respect to a specified Person, (i)
the entry of a decree or order by a court, agency or supervisory
authority having jurisdiction in the premises for the appointment
of a conservator, receiver or liquidator for such Person, in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or
liquidation of such Person's affairs, and the continuance of any
such decree or order unstayed and in effect for a period of 60
consecutive days; (ii) the consent by such Person to the
appointment of a conservator, receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to such Person
or of or relating to substantially all of such Person's property,
or (iii) such Person 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.
Insurance Policy: With respect to a Receivable, an
insurance policy covering physical damage, credit life, credit
disability, theft, mechanical breakdown or similar event to each
Financed Vehicle securing such Receivable.
Insurance Proceeds: With respect to any Receivable,
proceeds of any Insurance Policy with respect to such Receivable.
Interest Rate: With respect to the Class A-1 Notes, 5.49%
per annum, with respect to the Class A-2 Notes, 5.93% per annum,
and with respect to the Class A-3 Notes, 6.33% per annum.
<PAGE>
Interested Parties: The Issuer and each other party
identified or described in the Purchase Agreement or the Further
Transfer and Servicing Agreements as having an interest as owner,
trustee, secured party or Securityholder with respect to the
Purchased Property.
Investment Earnings: Investment earnings on funds deposited
in the Designated Accounts, net of losses and investment
expenses, during the applicable Monthly Period.
Issuer: The party named as such in the Pooling and
Servicing Agreement and in the Indenture until a successor
replaces it and, thereafter, 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: 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.
Lien: Any security interest, lien, charge, pledge, equity
or encumbrance of any kind other than liens for taxes not yet due
and payable, mechanics' liens, any liens that attach by operation
of law, and any liens being contested by appropriate measures.
Liquidating Receivable: A Receivable (i) as to which the
Servicer (a) has reasonably determined, in accordance with its
customary servicing procedures, that eventual payment of amounts
owing on such Receivable is unlikely, or (b) has repossessed the
Financed Vehicle or all Financed Vehicles securing the Receivable
or (ii) as to which any related Scheduled Payment is at least 210
days overdue.
Liquidation Expenses: With respect to a Liquidating
Receivable, an amount not to exceed $750 (or such greater amount
as the Servicer determines necessary in accordance with its
customary procedures to refurbish and dispose of a repossessed
Financed Vehicle) as an allowance for amounts charged to the
account of the Obligor, in keeping with the Servicer's customary
procedures, for repossession, refurbishment and disposition of
the Financed Vehicle including out-of-pocket costs related to the
liquidation.
Liquidation Proceeds: With respect to a Liquidating
Receivable, all amounts realized with respect to such
Receivables, including benefits of any lease assignments,
Insurance Proceeds, proceeds from any Dealer Liability, proceeds
from any NITC Purchase Obligations and proceeds from any
Guaranties, net of amounts that are required to be refunded to
the Obligor on such Receivable.
Monthly Advance: The amount, as of an Accounting Date,
which the Servicer is required to advance on the respective
Receivable pursuant to Section 5.04 of the Pooling and Servicing
Agreement.
Monthly Period: With respect to a Determination Date, a
Record Date and a Distribution Date, the calendar month preceding
the month in which such date occurs. With respect to an
Accounting Date, the calendar month in which such Accounting Date
occurs.
<PAGE>
NIC: Navistar International Corporation, a Delaware
corporation, and its successors.
NFC: Navistar Financial Corporation, a Delaware
corporation, and its successors.
NFRRC: Navistar Financial Retail Receivables Corporation, a
Delaware corporation, and its successors.
NITC: Navistar International Transportation Corp., a
Delaware corporation, and its successors.
NITC Purchase Obligations: Certain obligations of NITC,
subject to limitations, to purchase Financed Vehicles securing
Liquidating Receivables pursuant to Article VI, "NFC/NITC Retail
Repossession Purchase and Remarketing Agreement" and other
provisions of the Master Intercompany Agreement by and between
NFC and NITC dated as of April 26, 1993, as such Master
Intercompany Agreement may be amended, supplemented, restated or
otherwise modified.
Noteholders: Holders of record of the Notes pursuant to the
Indenture and, with respect to any class of Notes, holders of
record of such class of Notes pursuant to the Indenture.
Noteholders' Interest Carryover Shortfall: As of the close
of any Distribution Date, the excess of the Aggregate
Noteholders' Interest Distributable Amount for such Distribution
Date over the amount that was actually deposited in the Note
Distribution Account on the day preceding such current
Distribution Date in respect of interest.
Noteholders' Interest Distributable Amount: With respect to
any class of Notes and any Distribution Date, the product of (i)
the outstanding principal balance of such class of Notes on the
preceding Distribution Date after giving effect to all payments
of principal in respect of such class of Notes on such preceding
Distribution Date (or, in the case of the first Distribution
Date, the outstanding principal balance on the Closing Date) and
(ii) the product of the Interest Rate for such class and a
fraction, the numerator of which is 30, and the denominator of
which is 360 (but, in the case of the first Distribution Date,
pro-rated for the number of days from the Closing Date to but
excluding such Distribution Date).
Noteholders' Percentage: Means (i) 100% for each
Distribution Date occurring before the Distribution Date on which
the Class A-1 Notes have been paid in full, (ii) 93.5% (or such
greater percentage as would be necessary to pay the Class A-1
Notes in full and allocate the Principal Distributable Amount
with respect to such Distribution Date remaining after payment of
the Class A-1 Notes, if any, 93.5% to the Notes) on such
Distribution Date, (iii) 93.5% for each Distribution Date
occurring after such Distribution Date and before the
Distribution Date on which the principal balance of the Class A-2
Notes and the Class A-3 Notes is paid in full, (iv) 93.5% (or
such lesser percentage as would be sufficient to cause the
principal balance of the Class A-2 Notes and the Class A-3 Notes
to be paid in full) on the Distribution Date on which the Notes
are paid in full, and (v) 0% for each Distribution Date occurring
after the Distribution Date on which the Notes are paid in full;
provided, however, that if the amount on deposit in the Reserve
Account is less than 1.00% of the Initial Aggregate Receivables
Balance on any Distribution Date, the Noteholders' Percentage
means
<PAGE>
100% (or, with respect to any Distribution Date, such lesser
percentage as would be sufficient to cause the Notes to be paid
in full on such Distribution Date) until the Notes are paid in
full or the amount on deposit in the Reserve Account exceeds the
Specified Reserve Account Balance; and, provided, further, that
from and after the occurrence of a Certificate Lockout Event, the
Noteholders' Percentage means 100% (or, with respect to any
Distribution Date, such lesser percentage as would be sufficient
to cause the Notes to be paid in full on such Distribution Date)
until the Notes are paid in full.
Noteholders' Principal Carryover Shortfall: As of the close
of any Distribution Date, the excess of Aggregate Noteholders'
Principal Distributable Amount for such Distribution Date over
the amount that was actually deposited in the Note Distribution
Account on the day preceding such current Distribution Date in
respect of principal.
Noteholders' Principal Distributable Amount: With respect
to a class of Notes on a Distribution Date, the lesser of (i) the
remainder of (A) the Noteholders' Percentage of the Principal
Distributable Amount minus (B) the Noteholders' Principal
Distributable Amount for each class of Notes then having priority
of payment and (ii) the Note Principal Balance with respect to
such class of Notes (after giving effect to the distribution to
the Noteholders of amounts deposited in the Note Distribution
Account on the previous Distribution Date). In addition, on the
Final Scheduled Distribution Date for any class of Notes, the
Noteholders' Principal Distributable Amount for such Notes shall
include the amount necessary to reduce the Note Principal Balance
for such class of Notes to zero.
Note Depository: The depositary from time to time selected
by the Indenture Trustee on behalf of the Trust in whose name the
Notes are registered prior to the issue of Definitive Notes. The
first Note Depository shall be Cede & Co., the nominee of the
initial Clearing Agency.
Note Depository Agreement: The agreement, dated as of the
Closing Date, among the Issuer, the Indenture Trustee and The
Depository Trust Company, as the initial Clearing Agency relating
to the Notes, substantially in the form of Exhibit C to the
Indenture, as the same may be amended and supplemented from time
to time.
Note Distribution Account: The account designated as such,
established and maintained pursuant to Section 5.01(a)(ii) of the
Pooling and Servicing Agreement.
Note Owner: With respect to a Book-Entry Note, the 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 Pool Factor: With respect to any class of Notes and
any Distribution Date, a seven-digit decimal figure computed by
the Servicer which is equal to the Note Principal Balance for
such class as of the close of such Distribution Date divided by
the initial Note Principal Balance for such class.
<PAGE>
Note Principal Balance: With respect to any class of Notes
and any Distribution Date, the initial aggregate principal
balance of such class of Notes, reduced by all previous payments
to the Noteholders of such class in respect of principal of such
Notes.
Note Register: With respect to any class of Notes, the
register of such Notes specified in Section 2.4 of the Indenture.
Note Registrar: The registrar at any time of the Note
Register, appointed pursuant to Section 2.4 of the Indenture.
Notes: Collectively, the Class A-1 Notes, the Class A-2
Notes and the Class A-3 Notes.
Obligor: With respect to any Receivable, the purchaser or
any co-purchaser of the related Financed Vehicle or Financed
Vehicles or any other Person, other than the maker of any
Guaranty, who owes payments under a Receivable.
Officer's Certificate: A certificate signed by any
Authorized Officer of the Issuer, under the circumstances
described in, and otherwise complying with, the applicable
requirements of Section 11.1 of the Indenture, and delivered to
the Indenture Trustee. Unless otherwise specified, any reference
in the Indenture to an officer's certificate shall be to an
Officer's Certificate of any Authorized Officer of the Issuer.
Opinion of Counsel: A written opinion of counsel, who may,
except as otherwise expressly provided, be an employee of the
Seller or the Servicer. In addition, for purposes of the
Indenture: (i) such counsel shall be satisfactory to the
Indenture Trustee; (ii) the opinion shall be addressed to the
Indenture Trustee as Trustee and (iii) the opinion shall comply
with any applicable requirements of Section 11.1 of the Indenture
and shall be in form and substance satisfactory to the Indenture
Trustee.
Optional Purchase Percentage: 10%.
Optional Purchase Proceeds: The amount specified in the
second sentence of subsection 9.01(a) of the Pooling and
Servicing Agreement.
Outstanding: With respect to the Notes, as of the date of
determination, all Notes theretofore authenticated and delivered
under the Indenture except:
(i) Notes theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for
cancellation;
(ii) 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; provided, however, that if such
Notes are to be redeemed, notice of such redemption has been
duly given pursuant to the Indenture or provision therefor,
satisfactory to the Indenture Trustee, has been made; and
<PAGE>
(iii) Notes in exchange for or in lieu of other
Notes which 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 bona
fide purchaser;
provided, however, that in determining whether the Holders of the
requisite Outstanding Amount of the 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 pledgor'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: As of any date, the aggregate principal
amount of all Notes, or a class of Notes, as applicable,
Outstanding at such date.
Outstanding Monthly Advances: As of an Accounting Date with
respect to a Receivable, the sum of all Monthly Advances made as
of or prior to such Accounting Date minus all payments or
collections as of or prior to such Accounting Date which are
specified in Section 5.04 of the Pooling and Servicing Agreement
as reducing Outstanding Monthly Advances with respect to such
Receivable.
Overdue Payment: With respect to a Distribution Date and to
a Receivable, all payments received during the related Monthly
Period in excess of any Supplemental Servicing Fees, to the
extent of the Outstanding Monthly Advances relating to such
Receivable.
Owner: For purposes of the Purchase Agreement, the
Custodian Agreement and the Pooling and Servicing Agreement, the
"Owner" of a Receivable means (i) NFRRC until the execution and
delivery of the Further Transfer and Servicing Agreements and
(ii) thereafter, the Issuer; provided, that NFC or NFRRC, as
applicable, shall be the "Owner" of any Receivable from and after
the time that such Person shall acquire such Receivable, whether
pursuant to Section 5.04 of the Purchase Agreement, Section 3.08
of the Pooling and Servicing Agreement, any other provision of
the Further Transfer and Servicing Agreements or otherwise.
Owner Trust Estate: 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 Pooling and Servicing Agreement,
all funds on deposit from time to time in the Collection Account
and the Certificate Distribution Account and all other property
of the Trust from time to time, including any rights of the Owner
Trustee and the Trust pursuant to the Pooling and Servicing
Agreement and the Administration Agreement.
<PAGE>
Owner Trustee: Chase Manhattan Bank Delaware, a Delaware
banking corporation, not in its individual capacity but solely as
trustee under the Trust Agreement, or any successor trustee under
the Trust Agreement.
Partial Prepayment: With respect to a Distribution Date and
to any Receivable, the portion of an Actual Payment in excess of
the Scheduled Payment which equals one or more future Scheduled
Payments but does not constitute a Full Prepayment and results in
a Rebate in accordance with the Servicer's customary procedures.
Party: A Party as defined in Section 6.01 of the Pooling
and Servicing Agreement.
Pass Through Rates: Collectively, the Class B Pass Through
Rate and the Class C Pass Through Rate.
Paying Agent: With respect to the Indenture, the Indenture
Trustee or any other Person that meets the eligibility standards
for the Indenture Trustee specified in Section 6.11 of the
Indenture and is authorized by the Issuer to make the payments to
and distributions from the Collection Account and the Note
Distribution Account, including payment of principal of or
interest on the Notes on behalf of the Issuer. With respect to
the Trust Agreement, any paying agent or co-paying agent
appointed pursuant to Section 3.9 of the Trust Agreement that
meets the eligibility standards for the Owner Trustee specified
in Section 6.13 of the Trust Agreement, and initially The Chase
Manhattan Bank.
Person: Any legal person, including any individual,
corporation, limited liability company, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.
Physical Property: Means (i) 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 and (ii) certificated securities (as defined in Section
8-102 of the UCC).
Pooling and Servicing Agreement: The Pooling and Servicing
Agreement, dated as of November 6, 1996, among NFC, the Seller
and the Issuer, as amended and supplemented from time to time.
Predecessor Note: 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 2.5 of the Indenture in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
Prepayment: With respect to a Distribution Date and to a
Receivable, the portion of an Actual Payment in excess of the
Scheduled Payment.
<PAGE>
Prepayment Surplus: With respect to any Distribution Date
on which a Prepayment is to be applied with respect to a
Receivable, that portion of such Prepayment, net of any Rebate to
the Obligor of the portion of the Scheduled Payments attributable
to unearned finance charges, which is not allocable to principal
in accordance with the actuarial method.
Principal Distributable Amount: With respect to any
Distribution Date, the sum of: (i) the principal portion of all
Scheduled Payments due with respect to the related Monthly Period
on the Receivables held by the Trust (other than Liquidating
Receivables), (ii) the principal portion of all Prepayments
received during the related Monthly Period (except to the extent
included in (i) above) and (iii) the Receivable Balance of each
Receivable that the Servicer purchased, the Seller repurchased or
that became a Liquidating Receivable during the related Monthly
Period (except to the extent included in (i) or (ii) above).
Proceeding: Any suit in equity, action at law or other
judicial or administrative proceeding.
Program: As defined in subsection 4.02(a) of the Pooling
and Servicing Agreement.
Purchase Agreement: The Purchase Agreement, dated as of
November 6, 1996, between NFC and the Seller, as amended and
supplemented from time to time.
Purchased Property: The property described in Section 2.01
of the Purchase Agreement.
Rating Agencies: As of any date, the nationally recognized
statistical rating organizations requested by the Seller to
provide ratings on the Securities which are rating the Securities
on such date.
Rating Agency Condition: With respect to any action, the
condition that each Rating Agency shall have been given at least
10 days (or such shorter period as is acceptable to each Rating
Agency) prior notice thereof and that each of the Rating Agencies
shall have notified the Seller, the Servicer and the Issuer in
writing that such action shall not result in a downgrade or
withdrawal of the then current rating of the Securities.
Rebate: With respect to a given date and to a Receivable,
the rebate under such Receivable that is or would be payable to
the Obligor for unearned finance charges or any other charges
that are or would be subject to a rebate to the Obligor upon the
payment of a Partial Prepayment or a Full Prepayment.
Receivable: A Retail Note secured by one or more Financed
Vehicles that is included in the Schedule of Receivables and all
rights and obligations thereunder.
Receivable Balance: With respect to any Receivable, as of
an Accounting Date, the Initial Receivable Balance minus the sum
of the following amounts, in each case computed in accordance
with the actuarial method: (i) that portion of all Scheduled
Payments allocated to principal due on or after the Cutoff Date
and on or prior to the Accounting Date, (ii) that portion of all
Warranty Payments or Administrative Purchase Payments allocated
to principal, (iii) that portion of all
<PAGE>
Prepayments allocated to principal, and (iv) that portion of the
following received and allocated to principal by the Servicer:
benefits of any lease assignments, proceeds from any Insurance
Policies, Liquidation Proceeds, proceeds from any Dealer
Liability, proceeds from any NITC Purchase Obligations and
proceeds from any Guaranties.
Receivable File: The documents listed in Section 2.02 of
the Pooling and Servicing Agreement pertaining to a particular
Receivable.
Receivables Purchase Price: The amount described in Section
2.02 of the Purchase Agreement.
Record Date: (i) with respect to the Notes and with respect
to any Distribution Date, the close of business on the day
immediately preceding such Distribution Date, or if Definitive
Notes are issued, the last day of the preceding Monthly Period;
and (ii) with respect to the Certificates and with respect to any
Distribution Date, the close of business on the day immediately
preceding such Distribution Date, or if Definitive Certificates
are issued, the last day of the preceding Monthly Period.
Redemption Date: The Distribution Date specified by the
Servicer or the Issuer pursuant to Section 10.1(a) or (b) of the
Indenture, as applicable.
Redemption Price: (A) in the case of a redemption of the
Notes pursuant to Section 10.1(a) of the Indenture, an amount
equal to the aggregate of the Outstanding Amount of the Notes,
together with all accrued and unpaid interest thereon as of the
Redemption Date or (B) in the case of a payment made to
Noteholders pursuant to Section 10.1(b) of the Indenture, the
amount on deposit in the Note Distribution Account, but not in
excess of the amount specified in clause (A) above;
Registered Holder: The Person in whose name a Note is
registered on the Note Register on the applicable Record Date.
Remaining Gross Balance: With respect to any Receivable
(other than a Liquidating Receivable) and as of an Accounting
Date, the Initial Gross Receivable Balance thereof minus the sum
of (i) the portion of all Actual Payments with respect to such
Receivable, (ii) any Warranty Payment or Administrative Purchase
Payment with respect to any such Receivable, (iii) any
Prepayments applied to reduce the Initial Gross Receivable
Balance of any such Receivable and (iv) proceeds from any
Insurance Policies with respect to such Receivable, plus for any
Receivable not classified by the Servicer as a "finance charge -
included contract," the portion of the payments specified in the
preceding clauses (i), (ii), (iii) or (iv) above allocable in
accordance with the actuarial method to finance charges;
provided, however, that the Remaining Gross Balance of any
Receivable that has been designated a Liquidating Receivable
during the related Monthly Period shall equal zero.
Repurchase Event: A Repurchase Event described in Section
5.04 of the Purchase Agreement.
<PAGE>
Required Deposit Rating: A rating on short-term unsecured
debt obligations of P-1 by Moody's Investors Service, Inc. and
A-1+ by Standard & Poor's Ratings Services. Any requirement that
short-term unsecured debt obligations have the "Required Deposit
Rating" means that such short-term unsecured debt obligations
have the foregoing required ratings from each of such rating
agencies.
Reserve Account: The account designated as such,
established and maintained pursuant to Section 4.07(a) of the
Pooling and Servicing Agreement.
Reserve Account Initial Deposit: Cash or Eligible
Investments having a value of at least $12,162,684.06, which
shall be deposited into the Reserve Account on the Closing Date
pursuant to Section 4.07(a) of the Pooling and Servicing
Agreement.
Reserve Account Property: As defined in the Granting Clause
of the Indenture.
Responsible Officer: With respect to the Indenture Trustee
or the Owner Trustee, any officer within the Corporate Trust
Office of such trustee, and, with respect to the Servicer, the
President, any Vice President, Assistant Vice President,
Secretary, Assistant Secretary or any other officer or assistant
officer of such Person 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.
Retail Note: A retail instalment sale contract for, or
retail loan evidenced by a note and secured by, one or more new
or used medium or heavy duty trucks, buses or trailers.
Retained Certificates: The Class C Certificates retained by
the Seller pursuant to Section 3.10 of the Trust Agreement, with
an initial certificate balance of $317,362.75.
Revised Article 8: Revised Article 8 (1994 Version) (and
corresponding amendments to Article 9) as promulgated in 1994 by
the National Conference of Commissioners on Uniform State Laws.
From and after the Revised Article 8 Effective Date, "Revised
Article 8" means such version in the form in which it is adopted
in the State of New York.
Revised Article 8 Effective Date: The date (if any) on which
Revised Article 8 (with such changes thereto as shall be
effected by the State of New York) becomes effective in the State
of New York.
Schedule of Receivables: The schedule of all Receivables
originally held as part of the Trust, annexed to the Pooling and
Servicing Agreement and on file at the locations listed on
Exhibit B to the Pooling and Servicing Agreement, as it may be
amended from time to time in accordance with the Pooling and
Servicing Agreement.
Scheduled Payment: A payment which (i) is in the amount
required under the terms of a Receivable in effect as of the
Cutoff Date, except, in the case of any Receivable secured by
more
<PAGE>
than one Financed Vehicle, including any changes in the terms of
such Receivable resulting from a Full Prepayment with respect to
any Financed Vehicle related thereto, (ii) is payable by the
Obligor and (iii) includes finance charges equivalent to the
Annual Percentage Rate. When Scheduled Payment is used with
reference to a Distribution Date, it means the payment which is
due in the related Monthly Period; provided, however, that in the
case of the first Monthly Period, the Scheduled Payment shall
include all such payments due from the Obligor on or after the
Cutoff Date.
Secretary of State: The Secretary of State of the State of
Delaware.
Securities: The Notes and the Certificates.
Securities Act: The Securities Act of 1933, as amended.
Security Certificate: Has the meaning given such term in
Revised Article 8.
Security Entitlement: Has the meaning given such term in
Revised Article 8.
Securityholder: Any of the Noteholders or
Certificateholders.
Seller: The Person executing the Pooling and Servicing
Agreement as the Seller, or its successor in interest pursuant to
Section 6.03 of the Pooling and Servicing Agreement.
Servicer: The Person executing the Pooling and Servicing
Agreement as the Servicer, or its successor in interest pursuant
to Section 7.02 of the Pooling and Servicing Agreement.
Servicer Default: An event described in Section 8.01 of the
Pooling and Servicing Agreement.
Servicer's Certificate: A certificate, completed by and
executed on behalf of the Servicer, in accordance with Section
3.10 of the Pooling and Servicing Agreement.
Specified Reserve Account Balance: With respect to any
Distribution Date, the lesser of (i) the sum of the aggregate
Note Principal Balance for all Classes of Notes and the Aggregate
Certificate Balance as of such Distribution Date, and (ii) the
greater of:
(a) 2.5% of the Aggregate Receivables Balance as
of the close of business on the last day of
the related Monthly Period, except that if on
any Distribution Date (i) the product
(expressed as a percentage) of (A) twelve and (B) a
fraction, the numerator of which is equal to
the sum of the Aggregate Losses plus
Liquidation Proceeds for each of the Monthly
Periods which are the fifth, fourth and third Monthly
Periods preceding the Monthly Period in which
such Distribution Date occurs, minus the sum
of the Liquidation Proceeds for the Monthly
Periods which are the first, second and third Monthly
Periods preceding the Monthly Period in which
such Distribution Date occurs, and the
denominator of which is the sum of the
Remaining Gross Balances of all outstanding Receivables
as of the last day of each
<PAGE>
of the sixth, fifth and fourth Monthly Periods
preceding the Monthly Period in which such Distribution
Date occurs, exceeds 1.5% or (ii) the average of the
Delinquency Percentages for the preceding three months
exceeds 2.0%, then the percentage of the Aggregate
Receivables Balance referred to in this clause (a)
shall be equal to 7.5%; and
(b) 2.0% of the Initial Aggregate Receivables Balance.
State: Any one of the 50 States of the United States of
America or the District of Columbia.
Supplemental Servicing Fee: All late fees, prepayment
charges and other administrative fees and expenses or similar
charges allowed by applicable law with respect to Receivables,
collected (from whatever source) on the Receivables held by the
Trust during the applicable Monthly Period.
Temporary Notes: The Notes specified in Section 2.3 of the
Indenture.
Total Available Amount: With respect to a Distribution
Date, the sum of the Available Amount and the amount of all cash
and other immediately available funds in the Reserve Account
immediately prior to such date.
Total Servicing Fee: The sum of the Basic Servicing Fee and
any unpaid Basic Servicing Fees from all prior Distribution
Dates.
TRADES: Regulations promulgated by the U.S. Department of
the Treasury governing book-entry Treasury bonds, notes and
bills, 31 C.F.R. Part 357, which replace prior Treasury
regulations and which designate Revised Article 8 as the
applicable governing law.
TRADES Effective Date: With respect to a Federal Book-Entry
Security, the date (which is January 1, 1997, in the case of
securities issued by the U.S. Treasury) on which TRADES or an
equivalent set of regulations becomes effective.
Transfer and Servicing Agreements: The Purchase Agreement,
the Pooling and Servicing Agreement, the Trust Agreement, the
Indenture, the Administration Agreement and the Custodian
Agreement.
Treasury Regulations: The 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: Navistar Financial 1996-B Owner Trust, a Delaware
business trust created by the Trust Agreement.
Trust Agreement: The Trust Agreement, dated as of November
6, 1996, between the Seller and the Owner Trustee, as amended and
supplemented from time to time; such agreement being the
<PAGE>
Amended and Restated Trust Agreement contemplated by the Trust
Agreement dated October 28, 1996 between the Seller and the Owner
Trustee.
Trust Estate: 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 all property and interests Granted to the
Indenture Trustee), including all proceeds thereof, and the
Reserve Account and the Reserve Account Property pledged to the
Indenture Trustee pursuant to the Indenture.
Trust Indenture Act or TIA: The Trust Indenture Act of 1939
as in force on the date hereof, unless otherwise specifically
provided.
Trustees: The Owner Trustee and the Indenture Trustee.
UCC: The Uniform Commercial Code as in effect in the
relevant jurisdiction.
Uncertificated Security: As of any date, has the meaning
given to such term under the applicable UCC as in effect on such
date.
Undertaking Letter: The Letter referred to in Sections 3.4
and 9.11 of the Trust Agreement.
Underwriting Agreement: The Underwriting Agreement, dated
October 23, 1996, among Chase Securities Inc., as representative
of the several underwriters party thereto, the Servicer and the
Seller with respect to the sale of the Notes and the Class B
Certificates.
Warranty Payment: With respect to a Distribution Date and
to a Warranty Receivable repurchased as of the related Accounting
Date, the sum of (i) the sum of all remaining Scheduled Payments
on such Warranty Receivable due after the Accounting Date, (ii)
all past due Scheduled Payments with respect to which a Monthly
Advance has not been made, (iii) any reimbursement made pursuant
to the last sentence of Section 5.04 of the Pooling and Servicing
Agreement with respect to such Warranty Receivable, and (iv) all
Outstanding Monthly Advances made on such Warranty Receivable,
minus (x) the rebate, calculated in accordance with the actuarial
method, that would be payable to the Obligor on such Warranty
Receivable were the Obligor to prepay such Receivable in full on
such day and (y) any Liquidation Proceeds (to the extent applied
to reduce the Receivable Balance of such Warranty Receivable)
previously received with respect to such Warranty Receivable.
Warranty Purchaser: Either (i) the Seller pursuant to
Section 2.05 of the Pooling and Servicing Agreement or (ii) NFC
pursuant to Section 5.04 of the Purchase Agreement.
Warranty Receivable: A Receivable which the Warranty
Purchaser has become obligated to repurchase pursuant to Section
2.05 of the Pooling and Servicing Agreement or Section 5.04 of
the Purchase Agreement.
<PAGE>
PART II - RULES OF CONSTRUCTION
(a) Accounting Terms. As used in this Appendix or the
Basic Documents, accounting terms which are not defined, and
accounting terms partly defined, herein or therein shall have the
respective meanings given to them under generally accepted
accounting principles. To the extent that the definitions of
accounting terms in this Appendix or the Basic Documents are
inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this
Appendix or the Basic Documents will control.
(b) "Hereof," etc. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this
Appendix or any Basic Document will refer to this Appendix or
such Basic Document as a whole and not to any particular
provision of this Appendix or such Basic Document; and Section,
Schedule and Exhibit references contained in this Appendix or any
Basic Document are references to Sections, Schedules and Exhibits
in or to this Appendix or such Basic Document unless otherwise
specified. The word "or" is not exclusive.
(c) Reference to Distribution Dates. With respect to any
Distribution Date, the "related Monthly Period," and the "related
Record Date," will mean the Monthly Period and Record Date,
respectively, immediately preceding such Distribution Date, and
the relationships among Monthly Periods and Record Dates will be
correlative to the foregoing relationships.
(d) Number and Gender. Each defined term used in this
Appendix or the Basic Documents has a comparable meaning when
used in its plural or singular form. Each gender-specific term
used in this Appendix or the Basic Documents has a comparable
meaning whether used in a masculine, feminine or gender-neutral
form.
(e) Including. Whenever the term "including" (whether or
not that term is followed by the phrase "but not limited to" or
"without limitation" or words of similar effect) is used in this
Appendix or the Basic Documents in connection with a listing of
items within a particular classification, that listing will be
interpreted to be illustrative only and will not be interpreted
as a limitation on, or exclusive listing of, the items within
that classification.
<PAGE>
APPENDIX B
Notice Addresses and Procedures
All requests, demands, directions, consents, waivers,
notices, authorizations and communications provided or permitted
under any Basic Document to be made upon, given or furnished to
or filed with the Seller, the Servicer, the Administrator, the
Indenture Trustee, the Issuer, the Owner Trustee or the Rating
Agencies shall be in writing, personally delivered, sent by
facsimile with a copy to follow via first class mail 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, at the following address:
Navistar Financial Retail Receivables Corporation
c/o Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
with a copy to:
Navistar Financial Retail Receivables Corporation
2850 West Golf Road
Rolling Meadows, Illinois 60008
Attention: General Counsel
(b) in the case of the Servicer or the Custodian, at the
following address:
Navistar Financial Corporation
2850 West Golf Road
Rolling Meadows, Illinois 60008
Attention: Treasurer
with a copy to:
Navistar Financial Corporation
2850 West Golf Road
Rolling Meadows, Illinois 60008
Attention: General Counsel
(c) in the case of the Indenture Trustee, at its Corporate
Trust Office
<PAGE>
(d) in the case of the Issuer or the Owner Trustee, to the
Owner Trustee at its Corporate Trust Office, with copies to:
Navistar Financial Retail Receivables Corporation
c/o Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
and:
Navistar Financial Retail Receivables Corporation
2850 West Golf Road
Rolling Meadows, Illinois 60008
Attention: General Counsel
The Issuer shall promptly transmit any notice received
by it from the Noteholders to the Indenture Trustee and
the Indenture Trustee shall likewise promptly transmit
any notice received by it from the Noteholders to the
Issuer.
(e) in the case of Moody's Investors Service, Inc., 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 Ratings Services, to
Standard & Poor's Ratings Services
26 Broadway (15th Floor)
New York, New York 10004
Attention: Asset Backed Surveillance Department
or at such other address as shall be designated by such party in
a written notice to the other parties to this Agreement.
Where any Basic Document provides for notice to
Securityholders of any condition or event, such notice shall be
sufficiently given (unless otherwise herein expressly provided)
if it is in writing and mailed, first-class, postage prepaid to
each Securityholder affected by such condition or event, at such
Person's address as it appears on the Note Register or
Certificate Register, as applicable, not later than the latest
date, and not earlier than the earliest date, prescribed in such
Basic Document for the giving of such notice. If notice to
Securityholders is given by mail, neither the failure to mail
such notice nor any defect in any notice so mailed to any
particular Securityholder shall affect the sufficiency of such
notice with respect to other Securityholders, and any notice that
<PAGE>
is mailed in the manner herein provided shall conclusively be
presumed to have been duly given regardless of whether such
notice is in fact actually received.
<EX-99.10.3 Custodian Agreement>
EXHIBIT 10.3
CUSTODIAN AGREEMENT
BETWEEN
NAVISTAR FINANCIAL CORPORATION
CUSTODIAN
AND
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
SELLER
DATED AS OF NOVEMBER 6, 1996
<PAGE>
THIS CUSTODIAN AGREEMENT, dated as of November 6,
1996 is made between Navistar Financial Corporation, a Delaware
corporation, as Custodian (the "CUSTODIAN"), and Navistar
Financial Retail Receivables Corporation, a Delaware corporation
(the "SELLER").
WHEREAS, simultaneously herewith Navistar Financial
Corporation (in its capacity as seller, "NFC") and the Seller
are entering into a Purchase Agreement of even date herewith
(the "PURCHASE AGREEMENT"), pursuant to which NFC shall sell,
transfer and assign to the Seller without recourse all of its
right, title and interest in and to the Receivables and certain
related rights and interests therein;
WHEREAS, the Purchase Agreement contemplates that the
Seller may enter into the Further Transfer and Servicing
Agreements with the Issuer, pursuant to which the Seller shall
sell, transfer and assign to the Issuer without recourse, all of
the Seller's right, title and interest in, to and under, among
other things, (a) the Receivables and (b) the custodian agreement
to be entered into simultaneously with the Further Transfer and
Servicing Agreements, pursuant to which the Seller shall
revocably appoint the Custodian as custodian of the Receivables
Files pertaining to the Receivables; and
WHEREAS, in connection with any such sale, transfer
and assignment, the Seller desires for the Custodian to act as
custodian of the Receivables for the benefit of the Issuer.
NOW, THEREFORE, 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:
1. CERTAIN DEFINITIONS. Capitalized terms used
but not otherwise defined herein shall have the respective
meanings assigned them in Part I of APPENDIX A to the Pooling
and Servicing Agreement of even date herewith among the Issuer,
the Seller and Navistar Financial Corporation, as Servicer (as
it may be amended, supplemented or modified from time to time,
the "POOLING AND SERVICING AGREEMENT"). All references herein to
"the Agreement" or "this Agreement" are to this Custodian
Agreement as it may be amended, supplemented or modified from
time to time, the exhibits hereto and the capitalized terms used
herein which are defined in such APPENDIX A, and all references
herein to Sections and subsections are to Sections and
subsections of this Agreement unless otherwise specified. The
rules of construction set forth in Part II of such APPENDIX A
shall be applicable to this Agreement.
2. APPOINTMENT OF CUSTODIAN; ACKNOWLEDGEMENT OF
RECEIPT. Subject to the terms and conditions hereof, the Seller
hereby appoints the Custodian, and the Custodian hereby accepts
such appointment, to act as agent of the Seller as Custodian to
maintain custody of the Receivable Files pertaining to the
Receivables for which from time to time the Seller is the Holder
thereof. The Custodian hereby acknowledges that the Seller may
sell, transfer and assign all of its right, title and interest
under this Agreement to the Issuer pursuant to the Further
Transfer and Servicing Agreements. The Custodian hereby agrees,
in connection with any such sale, transfer and assignment, to
act as Custodian for the benefit of the Issuer with respect to
those Receivables of which from time to time the Issuer is the
Holder. In performing its duties hereunder, the Custodian
agrees to act with reasonable care, using that degree of skill
and attention that the Custodian exercises with respect to
receivable files relating to comparable medium and heavy duty
truck, bus and trailer receivables that the Custodian services
and holds for itself or others. The Custodian hereby
acknowledges receipt of the Receivable File for each Receivable
listed on the Schedule of Receivables.
3. MAINTENANCE AT OFFICE. The Custodian agrees to
maintain each Receivable File at its principal office at
Navistar Financial Corporation, 2850 West Golf Road, Rolling
Meadows, Illinois 60008, or at such other office of the
Custodian as shall from time to time be identified to the Holder
of the related Receivable upon 30 days' prior written notice.
4. DUTIES OF CUSTODIAN.
(a) SAFEKEEPING. The Custodian shall hold each
Receivable File described herein on behalf of the Holder of the
related Receivable for the use and benefit of such Holder and,
if applicable, Interested Parties and shall maintain such
accurate and complete accounts, records and computer systems
pertaining to each Receivable File described herein as shall
enable the Seller and the Issuer to comply with their respective
obligations under the Purchase Agreement and the Further
Transfer and Servicing Agreements. Each Receivable shall be
identified as such on the books and records of the Custodian to
the extent the Custodian reasonably determines to be necessary
to comply with the terms and conditions of the Purchase
Agreement and, if applicable, the Further Transfer and Servicing
Agreements. The Custodian shall conduct, or cause to be
conducted, periodic physical inspections 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 and the Custodian to verify the accuracy of the
Custodian's inventory and record keeping. The Custodian shall
promptly report to the Holder of a Receivable any failure on its
part to hold the related Receivable File described herein and
maintain its accounts, records and computer systems as herein
provided and promptly take appropriate action to remedy any such
failure.
(b) ACCESS TO RECORDS. Subject only to the
Custodian's security requirements applicable to its own
employees having access to similar records held by the
Custodian, the Custodian shall permit the Holder of a Receivable
or its duly authorized representatives, attorneys or auditors to
inspect the related Receivable File described herein and the
related accounts, records and computer systems maintained by the
Custodian pursuant hereto at such times as such Holder may
reasonably request.
(c) RELEASE OF DOCUMENTS. The Custodian shall
release any Receivable (and its related Receivable File) in the
Receivable Files described herein to the Seller, the Servicer or
the Issuer, as appropriate, under the circumstances provided in
the Purchase Agreement and the Further Transfer and Servicing
Agreements.
(d) ADMINISTRATION; REPORTS. In general, the
Custodian shall attend to all non-discretionary details in
connection with maintaining custody of the Receivable Files
described herein. In addition, the Custodian shall assist the
Issuer generally in the preparation of routine reports to the
holders of Securities, if any, or to regulatory bodies, to the
extent necessitated by the Custodian's custody of the Receivable
Files described herein.
5. INSTRUCTIONS; AUTHORITY TO ACT. The Custodian
shall be deemed to have received proper instructions from the
Issuer with respect to the Receivable Files described herein
upon its receipt of written instructions signed by an Authorized
Officer. A certified copy of a by-law or of a resolution of the
appropriate governing body of the Issuer (or, as appropriate,
the Owner Trustee on behalf of the Issuer) may be received and
accepted by the Custodian as conclusive evidence of the authority
of any such officer to act and may be considered as in full
force and effect until receipt of written notice to the
contrary. Such instructions may be general or specific in
terms.
6. INDEMNIFICATION BY THE CUSTODIAN. The
Custodian agrees to indemnify the Issuer and each Trustee with
respect to any Securities for any and all liabilities,
obligations, losses, damage, payments, costs or expenses of any
kind whatsoever that may be imposed on, incurred or asserted
against the Issuer or any such Trustee as the result of any act
or omission in any way relating to the maintenance and custody
by the Custodian of the Receivable Files described herein;
PROVIDED, HOWEVER, that the Custodian shall not be liable to the
Issuer or any such Trustee, respectively, for any portion of any
such amount resulting from the willful misfeasance, bad faith or
gross negligence of the Issuer or any such Trustee,
respectively.
7. ADVICE OF COUNSEL. The Custodian, the Seller
and, upon execution of the Further Transfer and Servicing
Agreements, the Issuer further agree that the Custodian shall be
entitled to rely and act upon advice of counsel with respect to
its performance hereunder and shall be without liability for any
action reasonably taken pursuant to such advice, provided that
such action is not in violation of applicable federal or state
law.
8. EFFECTIVE PERIOD, TERMINATION, AND AMENDMENT;
INTERPRETIVE AND ADDITIONAL PROVISIONS. This Agreement shall
become effective as of the date hereof, shall continue in full
force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto
and may be terminated by either party by written notice to the
other party, such termination to take effect no sooner than sixty
(60) days after the date of such notice. Notwithstanding the
foregoing, if Navistar Financial Corporation resigns as Servicer
under the Further Transfer and Servicing Agreements or if all of
the rights and obligations of the Servicer have been terminated
under the Further Transfer and Servicing Agreements, this
Agreement may be terminated by the Issuer or by any Persons to
whom the Issuer has assigned its rights hereunder. As soon as
practicable after the termination of this Agreement, the
Custodian shall deliver the Receivable Files described herein to
the Issuer or the Issuer's agent at such place or places as the
Issuer may reasonably designate.
9. GOVERNING LAW. All questions concerning the
construction, validity and interpretation of this Agreement
shall be governed by and construed and enforced in accordance
with the internal laws of the State of Illinois, without giving
effect to any choice of law or conflict provision or rule
(whether of the State of Illinois or any other jurisdiction) that
would cause the application of the laws of any jurisdiction
other than the State of Illinois.
10. NOTICES. All demands, notices and
communications upon or to the Custodian or the Seller under this
Agreement shall be delivered as specified in APPENDIX B to the
Pooling and Servicing Agreement.
11. BINDING EFFECT. This Agreement shall be
binding upon and shall inure to the benefit of the Seller, the
Issuer, the Custodian and their respective successors and
assigns, including the Issuer.
12. 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.
13. ASSIGNMENT. Notwithstanding anything to the
contrary contained in this Agreement, this Agreement may not be
assigned by the Custodian without the prior written consent of
the Seller or any Persons to whom the Seller has assigned its
rights hereunder, as applicable.
14. HEADINGS. The headings of the various Sections
herein are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
15. COUNTERPARTS. This Agreement may be executed
by the parties 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.
16. NO THIRD-PARTY BENEFICIARIES. This Agreement
shall inure to the benefit of and be binding upon the parties
hereto, the Owners and their respective successors and permitted
assigns. Except as otherwise expressly provided in this
Agreement, no other Person shall have any right or obligation
hereunder.
17. MERGER AND INTEGRATION. Except as specifically
stated otherwise herein, this Agreement sets forth the entire
understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, are
superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided
herein.
* * * * *
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has
caused this Agreement to be in its name and on its behalf by a
duly authorized officer as of the day and year first above
written.
NAVISTAR FINANCIAL RETAIL
RECEIVABLES CORPORATION
By:
Name: R. Wayne Cain
Title: Vice President
NAVISTAR FINANCIAL CORPORATION,
as Custodian
By:
Name: R. Wayne Cain
Title: Vice President
<EX-99.10.4 Administration Agreement>
EXHIBIT 10.4
ADMINISTRATION AGREEMENT
AMONG
NAVISTAR FINANCIAL 1996-B OWNER TRUST
ISSUER
AND
NAVISTAR FINANCIAL CORPORATION
ADMINISTRATOR
AND
THE BANK OF NEW YORK
INDENTURE TRUSTEE
DATED AS OF NOVEMBER 6, 1996
<PAGE>
ADMINISTRATION AGREEMENT, dated as of November 6, 1996
among NAVISTAR FINANCIAL 1996-B OWNER TRUST, a Delaware business
trust (the "Issuer"), NAVISTAR FINANCIAL CORPORATION, a Delaware
corporation, as administrator (the "Administrator"), and THE BANK
OF NEW YORK, a New York banking corporation, not in its
individual capacity but solely as Indenture Trustee (the
"Indenture Trustee").
W I T N E S S E T H :
WHEREAS, the Issuer is issuing Notes pursuant to an
Indenture, dated as of November 6, 1996 (as amended and
supplemented from time to time, the "Indenture"), between the
Issuer and the Indenture Trustee;
WHEREAS, the Issuer has entered into (or assumed)
certain agreements in connection with the issuance of the Notes
and the Certificates, including (i) the Pooling and Servicing
Agreement, (ii) the Note Depository Agreement, (iii) the
Certificate Depository Agreement and (iv) the Indenture;
WHEREAS, pursuant to the Basic Documents, the Issuer
and Chase Manhattan Bank Delaware, as Owner Trustee, are required
to perform certain duties in connection with (a) the Notes and
the Collateral and (b) the Certificates;
WHEREAS, the Issuer and the Owner Trustee desire to
have the Administrator perform certain of the duties of the
Issuer and the Owner Trustee referred to in the preceding clause,
and to provide such additional services consistent with the terms
of this Agreement and the Basic Documents as the Issuer and the
Owner Trustee may from time to time request;
WHEREAS, the Administrator has the capacity to provide
the services required hereby and is willing to perform such
services for the Issuer and the Owner Trustee on the terms set
forth herein;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained, the parties agree as
follows:
1. Certain Definitions. Capitalized terms used but
not otherwise defined herein shall have the respective meanings
assigned them in Part I of Appendix A to the Pooling and
Servicing Agreement of even date herewith among the Issuer,
Navistar Financial Retail Receivables Corporation and Navistar
Financial Corporation, as Servicer (as it may be amended,
supplemented or modified from time to time, the "Pooling and
Servicing Agreement"). All references herein to "the Agreement"
or "this Agreement" are to this Administration Agreement as it
may be amended, supplemented or modified from time to time, the
exhibits hereto and the capitalized terms used herein which are
defined in such Appendix A, and all references herein to Sections
and subsections are to Sections and subsections of this Agreement
unless otherwise specified. The rules of construction set forth
in Part II of such Appendix A shall be applicable to this
Agreement.
<PAGE>
2. Duties of the Administrator.
(a) Duties with Respect to the Depository Agreements
and the Indenture. (i) The Administrator agrees to perform all
its duties as Administrator and the duties of the Issuer and the
Owner Trustee under the Indenture and the Depository Agreements.
In addition, the Administrator shall consult with the Owner
Trustee regarding the duties of the Issuer and the Owner Trustee
under the Indenture and the Depository Agreements. The
Administrator shall monitor the performance of the Issuer and
shall advise the Owner Trustee when action is necessary to comply
with the duties of the Issuer and the Owner Trustee under the
Indenture and the Depository Agreements. The Administrator 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, notices
and opinions as it shall be the duty of the Issuer or the Owner
Trustee, as applicable, to prepare, file or deliver pursuant to
the Indenture and the Depository Agreements.
In furtherance of the foregoing, the Administrator shall take all
appropriate action that it is the duty of the Issuer or the Owner
Trustee to take pursuant to the Indenture including such of the
foregoing as are required with respect to the following matters
under the Indenture (references are to sections of the
Indenture):
(A) the preparation of or obtaining of the documents
and instruments required for authentication of the Notes and
delivery of the same to the Indenture Trustee (Section 2.2);
(B) causing the Note Register to be kept 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 2.4);
(C) the notification of Noteholders of the final
principal payment on their Notes (Section 2.7(e));
(D) the preparation, obtaining or filing of the
instruments, opinions and certificates and other documents
required for the release of collateral (Section 2.9);
(E) the preparation of Definitive Notes and arranging
the delivery thereof (Section 2.12);
(F) the maintenance of an office in the Borough of
Manhattan, the City of New York, for registration of
transfer or exchange of Notes (Section 3.2);
(G) 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
3.3(c));
(H) the direction to the Indenture Trustee to deposit
monies with Paying Agents, if any, other than the Indenture
Trustee (Section 3.3(b));
(I) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which
such qualification is or shall be necessary to protect the
validity
<PAGE>
and enforceability of the Indenture, the Notes, the
Collateral and each other instrument and agreement included
in the Trust Estate (Section 3.4);
(J) the preparation of all supplements, amendments,
financing statements, continuation statements, instruments
of further assurance and other instruments, in accordance
with Section 3.5 of the Indenture, necessary to protect the
Trust Estate (Section 3.5);
(K) the delivery of the Opinion of Counsel on the
Closing Date, in accordance with Section 3.6(a) of the
Indenture, as to the Trust Estate, and the annual delivery
of the Opinion of Counsel, the Officers' Certificate and
certain other statements, in accordance with Sections 3.6(b)
and 3.9 of the Indenture, as to compliance with the
Indenture (Sections 3.6 and 3.9);
(L) the identification to the Indenture Trustee in an
Officers' Certificate of a Person with whom the Issuer has
contracted to perform its duties under the Indenture
(Section 3.7(b));
(M) the notification of the Indenture Trustee and the
Rating Agencies of a Servicer Default pursuant to the
Pooling and Servicing Agreement and, if such Servicer
Default arises from the failure of the Servicer to perform
any of its duties under the Pooling and Servicing Agreement,
the taking of all reasonable steps available to remedy such
failure (Section 3.7(d));
(N) the preparation and obtaining of documents and
instruments required for the release of the Issuer from its
obligations under the Indenture (Section 3.11(b));
(O) the delivery of notice to the Indenture Trustee of
each Event of Default under the Indenture, each Servicer
Default, any Insolvency Event with respect to the Seller,
each default by the Seller under the Pooling and Servicing
Agreement and each default by NFC under the Purchase
Agreement (Section 3.19);
(P) the monitoring of the Issuer's obligations as to
the satisfaction and discharge of the Indenture and the
preparation of an Officers' Certificate and the obtaining of
the Opinion of Counsel and the Independent Certificate
relating thereto (Section 4.1);
(Q) the compliance with any written directive of the
Indenture Trustee with respect to the sale of the Trust
Estate in a commercially reasonable manner if an Event of
Default shall have occurred and be continuing (Section 5.4);
(R) the preparation and delivery of notice to
Noteholders of the removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee (Section 6.8);
(S) the preparation of any written instruments
required to confirm more fully the authority of any
co-trustee or separate trustee and any written instruments
necessary in connection with the resignation or removal of
any co-trustee or separate trustee (Sections 6.8 and 6.10);
<PAGE>
(T) the furnishing of the Indenture Trustee with the
names and addresses of Noteholders during any period when
the Indenture Trustee is not the Note Registrar (Section
7.1);
(U) the preparation and, after execution by the
Issuer, the filing with the Commission, any applicable state
agencies and the Indenture Trustee of documents required to
be filed on a periodic basis with, and summaries thereof as
may be required by rules and regulations prescribed by, the
Commission and any applicable state agencies and the
transmission of such summaries, as necessary, to the
Noteholders (Section 7.3);
(V) the preparation of an Issuer Request and Officer's
Certificate and the obtaining of an Opinion of Counsel
and Independent Certificates, if necessary, for the
release of the Trust Estate (Sections 8.4 and 8.5);
(W) the preparation of Issuer Orders and the obtaining
of Opinions of Counsel with respect to the execution of
supplemental indentures and the mailing to the Noteholders
of notices with respect to such supplemental indentures
(Sections 9.1, 9.2 and 9.3);
(X) the execution and delivery of new Notes conforming
to any supplemental indenture (Section 9.6);
(Y) the notification of Noteholders and the Rating
Agencies of redemption of the Notes or the duty to cause the
Indenture Trustee to provide such notification (Sections
10.1 and 10.2);
(Z) the preparation of 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
11.1(a));
(AA) the preparation and delivery of Officers'
Certificates and the obtaining of Independent Certificates,
if necessary, for the release of property from the lien of
the Indenture (Section 11.1(b));
(BB) the notice or other communication to the Rating
Agencies, upon the failure of the Indenture Trustee to give
such notice or other communication pursuant to Section 11.4
(Section 11.4);
(CC) the preparation and delivery to Noteholders and
the Indenture Trustee of any agreements with respect to
alternate payment and notice provisions (Section 11.6); and
(DD) the recording of the Indenture, if applicable
(Section 11.15).
(ii) In addition, the Administrator will indemnify the
Owner Trustee and its agents for, and hold them harmless against,
any losses, liability or expense incurred without negligence or
bad faith on their part, arising out of or in connection with the
acceptance or administration of the transactions contemplated by
the Trust Agreement, including the reasonable
<PAGE>
costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any
of their powers or duties under the Trust Agreement.
(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, notices 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 7 of this Agreement, and in
accordance with the 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 if any
withholding tax is imposed on the Trust's payments to a
Certificateholder as contemplated in Section 5.2(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 Owner Trustee
set forth in Sections 5.2(d), 5.4(a), (b), (c) and (d) and the
last two sentences of Section 5.4, and Section 5.5 of the Trust
Agreement with respect to, among other things, accounting and
reports to Certificateholders; provided, however, that the Owner
Trustee shall retain responsibility for the distribution to the
Certificateholders of the Schedule K-1's necessary to enable each
Certificateholder to prepare its federal and state income tax
returns.
(iv) The Administrator may satisfy any obligations it
may have with respect to clauses (ii) and (iii) above by
retaining, at the expense of the Trust payable by the
Administrator, a firm of independent public accountants
acceptable to the Owner Trustee which shall perform the
obligations of the Administrator thereunder. Such accountants or
the Administrator shall provide the Owner Trustee on or before
November 20, 1996 with a letter specifying whether any
withholding tax specified in the preceding clause (ii) is then
required and, if required, specifying the procedures to be
followed to comply with the Code. Such accountants or the
Administrator shall update such letter if and to the extent it
shall no longer be accurate.
(v) The Administrator shall perform the duties of the
Administrator specified in Section 6.10 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
<PAGE>
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 Persons that are not Affiliates of the
Administrator.
(vii) The Administrator hereby agrees to execute on
behalf of the Issuer 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.
(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. For the purpose of
the preceding sentence, "non-ministerial matters" shall include:
(A) the amendment of or 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;
(C) the amendment, change or modification of any of
the Basic Documents;
(D) the appointment of successor Note Registrars,
successor Paying Agents and successor Indenture Trustees
pursuant to the Indenture or the appointment of successor
Administrators or successor Servicers, or the consent to the
assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations 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 5.4 of
the Indenture or (z) take any other action that the Issuer
directs the Administrator not to take on its behalf.
3. Successor Servicer and Administrator. The Issuer
shall undertake, as promptly as possible after the giving of
notice of termination to the Servicer of the Servicer's rights
and powers pursuant to Section 8.02 of the Pooling and Servicing
Agreement, to enforce the provisions of Sections 8.02, 8.03 and
8.04 of the Pooling and Servicing Agreement with respect to the
appointment of a successor Servicer. Such successor Servicer
shall, upon compliance with Sections 10(e)(ii) and (iii), become
the successor Administrator hereunder.
4. 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 Seller at any time during normal business hours.
<PAGE>
5. Compensation. As compensation for the performance
of the Administrator's obligations under this Agreement and as
reimbursement for its expenses related thereto, the Servicer
shall pay the Administrator a monthly fee in the amount of
$1,500.
6. 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.
7. 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 or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by the
Issuer, the Administrator shall have no authority to act for or
represent the Issuer or the Owner Trustee in any way and shall
not otherwise be deemed an agent of the Issuer or the Owner
Trustee.
8. No Joint Venture. Nothing contained in this
Agreement (i) shall constitute the Administrator and either of
the Issuer or the Owner Trustee as members of any partnership,
joint venture, association, syndicate, unincorporated business or
other separate entity, (ii) shall be construed to impose any
liability as such on any of them or (iii) shall 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.
9. Other Activities of Administrator. Nothing herein
shall prevent the Administrator or its Affiliates from engaging
in other businesses or, in its sole discretion, from acting in a
similar capacity as an administrator for any other person or
entity even though such person or entity may engage in business
activities similar to those of the Issuer, the Owner Trustee or
the Indenture Trustee.
10. Term of Agreement; Resignation and Removal of
Administrator.
(a) This Agreement shall continue in force until the
dissolution of the Issuer, upon which event this Agreement shall
automatically terminate.
(b) Subject to Section 10(e), the Administrator may
resign its duties hereunder by providing the Issuer with at least
60 days' prior written notice.
(c) Subject to Section 10(e), the Issuer may remove
the Administrator without cause by providing the Administrator
with at least 60 days' prior written notice.
(d) Subject to Section 10(e), 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 default in the performance
of any of its duties under this Agreement and, after notice
from the Issuer of such default, shall not cure such default
within ten days (or, if such default cannot be cured in such
time, shall not give within ten days such assurance of cure
as shall be reasonably satisfactory to the Issuer);
<PAGE>
(ii) a court having jurisdiction in the premises shall
enter a decree or order for relief, and such decree or order
shall not have been vacated within 60 days, in respect of
the Administrator in any involuntary case under any
applicable bankruptcy, insolvency or other similar law now
or hereafter in effect or appoint a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar
official for the Administrator or any substantial part of
its property or order the winding-up or liquidation of its
affairs; or
(iii) the Administrator shall commence a voluntary
case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, shall consent to the
entry of an order for relief in an involuntary case under
any such law, or shall consent to the appointment of a
receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official for the Administrator or
any substantial part of its property, shall consent to the
taking of possession by any such official of any substantial
part of its property, shall make any general assignment for
the benefit of creditors or shall fail generally to pay its
debts as they become due.
The Administrator agrees that if any of the events
specified in clauses (ii) or (iii) of this Section 10(d) shall
occur, it shall give written notice thereof to the Issuer and the
Indenture Trustee within seven days after the happening of such
event.
(e) No resignation or removal of the Administrator
pursuant to this Section 10 shall be effective until (i) a
successor Administrator shall have been appointed by the Issuer,
(ii) such successor Administrator shall have agreed in writing to
be bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder, and (iii) the Rating Agency
Condition has been satisfied with respect to such proposed
appointment.
11. Action upon Termination, Resignation or Removal.
Promptly upon the effective date of termination of this Agreement
pursuant to Section 10(a) or the resignation or removal of the
Administrator pursuant to Section 10(b) or (c), respectively, the
Administrator shall be entitled to be paid all fees and
reimbursable expenses accruing to it to the effective date of
such termination, resignation or removal. The Administrator
shall forthwith upon such termination pursuant to Section 10(a)
deliver to 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 10(b) or (c), respectively, 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.
12. Notices. All demands, notices and communications
upon or to the Issuer, either Trustee, the Administrator or the
Rating Agencies under this Agreement shall be delivered as
specified in Appendix B to the Pooling and Servicing Agreement.
13. Amendments.
(a) This Agreement may be amended from time to time
with prior notice to the Rating Agencies by a written amendment
duly executed and delivered by the Issuer, the Administrator and
the Indenture Trustee, with the written consent of the Owner
Trustee, without the consent of the Securityholders, for any of
the following purposes:
<PAGE>
(i) to add provisions hereof for the benefit of the
Securityholders or to surrender any right or power herein
conferred upon the Administrator;
(ii) to cure any ambiguity or to correct or supplement
any provision herein which may be inconsistent with any other
provision herein or in any other Basic Document;
(iii) to evidence and provide for the appointment
of a successor Administrator hereunder and to add to or change
any of the provisions of this Agreement as shall be necessary to
facilitate such succession; and
(iv) to add any provisions to, or change in any manner
or eliminate any of the provisions of, this Agreement, or modify
in any manner the rights of the Securityholders; provided,
however, that such amendment under this Section 13(a)(iv) shall
not, as evidenced by an Opinion of Counsel, materially and
adversely affect in any material respect the interest of any
Securityholder.
Prior to the execution of any amendment pursuant to this Section
13(a), the Administrator shall furnish written notification of
the substance of such amendment to each of the Rating Agencies.
(b) This Agreement may also be amended by the Issuer,
the Administrator and the Indenture Trustee with prior notice to
the Rating Agencies and with the written consent of the Owner
Trustee and the holders of Notes evidencing at least a majority
in the Outstanding Amount of the Notes as of the close of the
immediately preceding Distribution Date, the holders of Class B
Certificates evidencing at least a majority of the Class B Voting
Interests as of the close of the immediately preceding
Distribution Date and the holders of Class C Certificates
evidencing at least a majority of the Class C Voting Interests as
of the close of the immediately preceding Distribution Date for
the purpose of adding any provisions to, changing in any manner
or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of Securityholders; provided,
however, that no such amendment may (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that are
required to be made for the benefit of the Securityholders, (ii)
reduce the percentage of the holders of Securities which are
required to consent to any amendment of this Agreement or (iii)
modify or alter any provision of this Section 13, except to
provide that certain additional provisions of this Agreement and
the Basic Documents cannot be modified or waived without the
consent of each Securityholder affected thereby, without, in any
such case, the consent of the holders of all the outstanding
Securities.
(c) Notwithstanding Sections 13(a) and (b), the
Administrator may not amend this Agreement without the permission
of the Seller, which permission shall not be unreasonably
withheld.
14. Successors and Assigns. This Agreement may not be
assigned by the Administrator unless such assignment is
previously consented to in writing by the Issuer and the Owner
Trustee and subject to the satisfaction of the Rating Agency
Condition in respect thereof. 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 or the Owner 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 such 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.
15. GOVERNING LAW. All questions concerning the
construction, validity and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the
internal laws of the State of Illinois, without giving effect to
any choice of law or conflict provision or rule (whether of the
State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State
of Illinois.
16. Headings. The section headings hereof have been
inserted for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
17. Separate Counterparts. This Agreement may be
executed by the parties 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.
18. Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement
shall for any reason whatsoever be 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.
19. Not Applicable to Navistar Financial Corporation
in Other Capacities. Nothing in this Agreement shall affect any
obligation Navistar Financial Corporation may have in any other
capacity.
20. Limitation of Liability of Owner Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein
to the contrary, this instrument has been executed on behalf of
the Issuer by Chase Manhattan Bank Delaware, not in its
individual capacity but solely as Owner Trustee on behalf of the
Trust and in no event shall Chase Manhattan Bank Delaware 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. For all purposes of this Agreement, 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 of the Trust
Agreement.
(b) Notwithstanding anything contained herein to the
contrary, this Agreement has been executed by The Bank of New
York, not in its individual capacity but solely in its capacity
as Indenture Trustee and in no event shall The Bank of New York
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.
<PAGE>
21. Third-Party Beneficiary. Each of the Seller,
only to the extent provided in Section 13(c), and the Owner
Trustee is a third-party beneficiary to this Agreement and is
entitled to the rights and benefits hereunder and may enforce the
provisions hereof as if it were a party hereto.
22. Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire
understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, are
superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided
herein.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed by their respective officers as of
the day and year first above written.
NAVISTAR FINANCIAL 1996-B OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity, but
solely as Owner Trustee on behalf of
the Trust
By:
Name: John J. Cashin
Title: Senior Trust Officer
THE BANK OF NEW YORK, as Indenture Trustee
By:
Name: Reyne A. Macadaeg
Title: Vice President
NAVISTAR FINANCIAL CORPORATION,
as Administrator
By:
Name: R. Wayne Cain
Title: Vice President
