NAVISTAR FINANCIAL SECURITIES CORPORATION
Seller
NAVISTAR FINANCIAL CORPORATION
Servicer
and
THE BANK OF NEW YORK
Master Trust Trustee
on behalf of the Series 1998-1 Certificateholders
__________________________________
SERIES 1998-1 SUPPLEMENT
Dated as of July 17, 1998
to
POOLING AND SERVICING AGREEMENT
Dated as of June 8, 1995
__________________________________
Class A, Floating Rate
Dealer Note Asset Backed Certificates, Series 1998-1
DEALER NOTE MASTER TRUST
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TABLE OF CONTENTS
ARTICLE I CREATION OF SERIES 1998-1 AND THE SERIES 1998-1
CERTIFICATES;ACCEPTANCE OF CLASS A-6 CERTIFICATE.......................1
SECTION 1.01 Designation...............................................1
SECTION 1.02 Acceptance of Class A-6 Investor Certificate..............1
ARTICLE II DEFINITIONS.......................................................2
SECTION 2.01 Definitions...............................................2
ARTICLE III SERVICING FEE...................................................15
SECTION 3.01 Servicing Compensation...................................15
ARTICLE IV RIGHTS OF SERIES 1998-1 CERTIFICATEHOLDERS AND ALLOCATION AND
APPLICATION OF COLLECTIONS.....................................16
SECTION 4.01 Rights of the Series 1998-1 Certificateholders...........16
SECTION 4.02 Establishment of Series Principal Account, Spread Account
and Liquidity Reserve Account............................16
SECTION 4.03 Application of Class A-6 Investor Certificate Collections
Prior to the 1990 Trust Termination Date.................18
SECTION 4.04 Application of Available Certificateholder Interest
Collections After the 1990 Trust Termination Date........19
SECTION 4.05 Application of Available Seller's Finance Charge
Collections, Spread Account and Liquidity Reserve Account
to Deficiency Amount.....................................20
SECTION 4.06 Investor Charge-Offs.....................................21
SECTION 4.07 Application of Seller's Finance Charge Collections After
the 1990 Trust Termination Date..........................21
SECTION 4.08 Application of Series Allocable Principal Collections
After the 1990 Trust Termination Date....................22
SECTION 4.09 Shared Principal Collections.............................24
SECTION 4.10 Distributions to Series 1998-1 Certificateholders........24
SECTION 4.11 Accumulation Period Length; Accumulation Period
Commencement Date........................................25
SECTION 4.12 Partial Month Due Period.................................25
SECTION 4.13 Additional Rights upon the Occurrence of Certain Events..26
SECTION 4.14 Voting of the Master Trust's Interests in the 1990 Trust.26
ARTICLE VDISTRIBUTIONS AND REPORTS TO SERIES 1998-1 CERTIFICATEHOLDERS......26
SECTION 5.01 Distributions............................................26
SECTION 5.02 Monthly and Annual Certificateholders' Statement.........27
ARTICLE VIEARLY AMORTIZATION EVENTS.........................................29
SECTION 6.01 Additional Early Amortization Events.....................29
ARTICLE VIIOTHER SERIES PROVISIONS..........................................32
SECTION 7.01 Conveyance of Dealer Notes...............................32
SECTION 7.02 Tax Treatment............................................32
ARTICLE VIIIFINAL DISTRIBUTIONS.............................................32
SECTION 8.01 Sale of Investors' Interest Pursuant to Section 2.07 of
the Agreement; Distributions Pursuant to Section 2.03
or 12.03 of the Agreement................................32
SECTION 8.02 Distribution of Proceeds of Sale, Disposition or
Liquidation of the Dealer Notes Pursuant to Section 9.02
of the Agreement.........................................33
SECTION 8.03 Early Distribution Upon the Occurrence of
an Early Amortization Event..............................34
ARTICLE IXMISCELLANEOUS PROVISIONS..........................................34
SECTION 9.01 Ratification of Agreement................................34
SECTION 9.02 Counterparts.............................................34
SECTION 9.03 GOVERNING LAW............................................34
SECTION 9.04 Amendments and Supplements...............................34
SIGNATURES..................................................................42
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EXHIBITS
Exhibit A - Form of Investor Certificate
Exhibit B-1 - Form of Monthly Servicer and Settlement Statement
Exhibit B-2 - Form of Monthly Servicer and Settlement Statement
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SERIES 1998-1 SUPPLEMENT
TO POOLING AND SERVICING AGREEMENT
SERIES 1998-1 SUPPLEMENT dated as of July 17, 1998 (the "Series
Supplement"), by and among NAVISTAR FINANCIAL SECURITIES CORPORATION, a
Delaware corporation, as Seller (the "Seller"), NAVISTAR FINANCIAL
CORPORATION, a Delaware corporation, as Servicer (the "Servicer"), and THE
BANK OF NEW YORK, a New York banking corporation, as trustee (together with
its successors in trust thereunder as provided in the Agreement referred to
below, the "Master Trust Trustee") under the Pooling and Servicing Agreement,
dated as of June 8, 1995 (as amended and supplemented, the "Agreement") among
the Seller, the Servicer, the Master Trust Trustee and The Chase Manhattan
Bank (formerly know as Chemical Bank), as trustee under the 1990 Trust
Agreement.
Section 6.09 of the Agreement provides that the Seller may from
time to time direct the Master Trust Trustee to issue, on behalf of the
Master Trust, one or more new Series of Investor Certificates representing
fractional undivided interests in the Master Trust. The Principal Terms of
any new Series are to be set forth in a Supplement to the Agreement.
Pursuant to this Series Supplement, the Seller and the Master
Trust Trustee shall create a new Series of Investor Certificates and specify
the Principal Terms thereof.
ARTICLE I
CREATION OF SERIES 1998-1 AND
THE SERIES 1998-1 CERTIFICATES;
ACCEPTANCE OF CLASS A-6 CERTIFICATE
SECTION I.1 Designation.
(a) There is hereby created a new Series pursuant to the
Agreement and this Series Supplement to be known as the "Series 1998-1." The
interest of the Investor Certificateholders in Series 1998-1 shall be
represented by the Series 1998-1 Certificates.
(b) If any term or provision contained herein shall conflict
with or be inconsistent with any term or provision contained in the
Agreement, the terms and provisions of this Series Supplement shall govern
with respect to Series 1998-1.
SECTION I.2 Acceptance of Class A-6 Investor Certificate.
(a) By execution of this Series Supplement, as amended in
Section 2.03(a) of the Agreement, the Master Trust Trustee hereby delivers
the 1990 Trust Seller Certificate to the 1990 Trustee and accepts in exchange
therefor the newly issued Class A-6 Investor Certificate and the reissued
1990 Trust Seller Certificate. If the original sale, transfer, assignment,
set-over or conveyance of the 1990 Trust Seller Certificate to the Master
Trust is deemed to create a security interest in such property, the Master
Trust shall have a security interest in the Class A-6 Investor Certificate
and the reissued 1990 Trust Seller Certificate (which shall be deemed to be a
first perfected security interest) and the Seller agrees that the Agreement,
including this Series Supplement, shall constitute a security agreement under
applicable law.
(b) As provided in Section 2.03(a) of the Agreement, the Master
Trust Trustee agrees to maintain physical possession thereof.
ARTICLE II
DEFINITIONS
SECTION II.1 Definitions.
(a) Whenever used in this Series Supplement, the following
words and phrases shall have the following meanings:
"1990 Trust Spread Account" shall mean the Spread Account
established and maintained pursuant to the 1990 Trust Agreement.
"Accumulation Period" shall mean, unless an Early Amortization
Event shall have occurred prior thereto, the period commencing on the
Accumulation Period Commencement Date and ending upon the first to occur of
(a) the commencement of an Early Amortization Period and (b) the payment of
the Invested Amount in full.
"Accumulation Period Commencement Date" shall mean the first day
of the nth full Due Period prior to the Expected Payment Date where n is the
number of Due Periods in the Accumulation Period Length; provided, however,
that the Accumulation Period Commencement Date shall be the Specified
Accumulation Period Commencement Date if, on the Specified Accumulation
Period Commencement Date, any other outstanding Series shall have entered
into an investment period or an early amortization period; and provided
further that, if the Accumulation Period Length and the Accumulation Period
Commencement Date have been determined pursuant to Section 4.11 but the
Accumulation Period has not commenced and any other outstanding Series shall
enter into an investment period or an early amortization period, the
Accumulation Period Commencement Date shall be the date that such outstanding
Series shall have entered into an investment period or an early amortization
period.
"Accumulation Period Length" shall mean a period which is between
one and nine Due Periods and which is determined by the Servicer pursuant to
Section 4.11.
"Adjusted Invested Amount" shall mean, with respect to any
Distribution Date, an amount (which shall never be less than zero) equal to
the Initial Invested Amount, plus the Available Subordinated Amount as of the
end of the related Transfer Date, minus the aggregate amount of Investor
Charge-Offs not reimbursed on or prior to such Distribution Date, minus the
aggregate Early Distribution Amounts paid or deemed paid on or prior such
Distribution Date.
"Amortizing Due Period" shall have the meaning specified in
Section 4.12.
"Available Certificateholder Interest Collections" shall mean,
with respect to any Due Period commencing after the 1990 Trust Termination
Date, the sum of (a) Investor Finance Charge Collections for such Due Period
and (b) Investment Income for the related Distribution Period.
"Available Draw Funds" shall have the meaning specified in
Section 4.05(b).
"Available Seller's Finance Charge Collections" shall mean, with
respect to any Due Period commencing after the 1990 Trust Termination Date,
an amount equal to the product of (a) the excess of (i) the Seller's
Percentage for such Due Period over (ii) the result (if positive) of the
Excess Seller's Percentage for such Due Period minus the Required Excess
Seller Interest Percentage and (b) Series Allocable Finance Charge
Collections for such Due Period; provided, however, that Available Seller's
Finance Charge Collections shall be zero for any Due Period to the extent the
Available Subordinated Amount equals or is reduced to zero on the Transfer
Date related to such Due Period.
"Available Seller's Principal Collections" shall mean, with
respect to any Business Day after the 1990 Trust Termination Date, an amount
equal to the product of (a) the excess of (i) the Seller's Percentage for the
Due Period in which such Business Day occurs over (ii) the Excess Seller's
Percentage for such Due Period and (b) Series Allocable Principal Collections
for such Business Day; provided, however, that Available Seller's Principal
Collections shall be zero for any Business Day to the extent the Available
Subordinated Amount equals or is reduced to zero on the Transfer Date
immediately preceding such Business Day.
"Available Subordinated Amount" shall mean (a) for each Transfer
Date related to a Due Period commencing prior to the 1990 Trust Termination
Date, zero, (b) on the Transfer Date related to the first Due Period after
the 1990 Trust Termination Date (before giving effect to all adjustments in
the Available Subordinated Amount on such Transfer Date), the product of
(i) the Subordinated Percentage and (ii) the Invested Amount as of the
preceding Distribution Date, and (c) for each Transfer Date thereafter
(before giving effect to all adjustments in the Available Subordinated Amount
thereto on such Transfer Date), the lesser of (i) the Maximum Subordinated
Amount as of such Transfer Date and (ii) the Available Subordinated Amount as
of the end of the preceding Transfer Date.
"Average Coverage Differential" shall be determined, on any
Determination Date, by reference to the Coverage Differentials for each of
the related Due Period and the three immediately preceding Due Periods, and
shall equal the sum of the three highest such Coverage Differentials divided
by three. Average Coverage Differential shall be expressed as a percentage,
and shall be rounded to the nearest one-hundredth of a percentage point.
"Business Day" shall mean, with respect to Series 1998-1, any day
other than a Saturday, a Sunday, or a day on which banking institutions in
New York, New York, Chicago, Illinois, or the city in which the Corporate
Trust Office is located, or in connection with the determination of LIBOR,
London, England, are authorized or obligated by law or executive order to be
closed or remain closed.
"Certificate Rate" shall mean the interest rate on the Series
1998-1 Certificates, which shall be calculated on the basis of actual days
elapsed and a 360-day year and for the Initial Distribution Period and for
each Distribution Period thereafter will equal LIBOR as of the related LIBOR
Determination Date plus 0.16%.
"Class A-6 Investor Certificate" shall mean the Class A-6
Floating Rate Pass-through Certificate issued by the 1990 Trust to the Master
Trust in connection with the issuance of the Series 1998-1 Certificates.
"Class A-6 Investor Certificate Collections" shall mean, with
respect to any Due Period, the sum of Class A-6 Investor Certificate Interest
Collections and Class A-6 Investor Certificate Principal Collections for such
Due Period.
"Class A-6 Investor Certificate Interest Collections" shall mean,
with respect to any Due Period, all interest payments received by the Master
Trust on the Distribution Date related to such Due Period in respect of the
Class A-6 Investor Certificate.
"Class A-6 Investor Certificate Principal Collections" shall
mean, with respect to any Due Period, all principal payments received by the
Master Trust on the Distribution Date related to such Due Period in respect
of the Class A-6 Investor Certificate.
"Closing Date" shall mean July 17, 1998.
"Common Depository" shall mean Cede & Co.
"Controlled Amortization Amount" shall mean an amount equal to
the result of (a) the Invested Amount as of the Distribution Date preceding
the Specified Accumulation Period Commencement Date divided by (b) the
Accumulation Period Length.
"Controlled Deposit Amount" shall mean, with respect to any Due
Period occurring during the Accumulation Period, the excess, if any, of (a)
the product of (i) the Controlled Amortization Amount and (ii) the number of
Due Periods, including such Due Period, that have elapsed with respect to the
Accumulation Period (but not in excess of the Accumulation Period Length)
over (b) the amount on deposit in the Series Principal Account at the close
of business on the last Business Day of the preceding Due Period; provided,
however, that, notwithstanding the foregoing, the Seller may, in its sole
discretion, increase the Controlled Deposit Amount at any time and from time
to time.
"Coverage Differential" shall mean, with respect to any Due
Period, the result of (a) the Portfolio Yield for such Due Period minus (b)
the sum of (i) the Certificate Rate for the related Distribution Period and
(ii) one percent (1%). Coverage Differential shall be expressed as a
percentage, and shall be rounded to the nearest one-hundredth of a percentage
point.
"Deficiency Amount" shall have the meaning specified in Section
4.05(a).
"Draw Amount" shall mean, with respect to any Transfer Date, the
least of (a) the Deficiency Amount for such Transfer Date, (b) the Available
Subordinated Amount as of the end of the preceding Transfer Date and (c)
Available Draw Funds for such Transfer Date.
"Early Amortization Event" shall mean, with respect to Series
1998-1, any event specified in Section 9.01(c) of the Agreement, together
with any additional Early Amortization Event specified in Section 6.01 of
this Series Supplement, but shall not mean any other event specified in
Section 9.01 of the Agreement.
"Early Amortization Period" shall mean an Early Amortization
Period with respect to Series 1998-1 that occurs as a result of any event
specified in Section 9.01(c) of the Agreement or any Early Amortization Event
specified in Section 6.01 of this Series Supplement.
"Early Amortization Period Shortfall Amount" shall have the
meaning specified in Section 4.08(e).
"Early Distribution" shall have the meaning specified in Section
8.03.
"Early Distribution Amount" shall have the meaning specified in
Section 8.03.
"Early Distribution Date" shall have the meaning specified in
Section 8.03.
"Eligible Investments" shall mean
(a) book-entry securities, negotiable instruments or securities
represented by instruments in bearer or registered form having (except
in the case of clause (iv) below) remaining maturities occurring not
later than the Distribution Date next succeeding the Master Trust
Trustee's acquisition thereof, except as otherwise described herein,
that evidence:
(i) direct obligations of, and obligations fully
guaranteed as to timely payment by, the United States of
America;
(ii) demand deposits, time deposits or certificates of
deposit of, or bankers' acceptances issued by, 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 Master Trust's 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 or entity other than such depository
institution or trust company) of such depository
institution or trust company shall have a credit rating not
lower than the highest investment category for short term
unsecured debt obligations granted by the applicable Rating
Agency from each Rating Agency then Rating the affected
Series of Investor Certificates;
(iii) commercial paper having, at the time of the Master
Trust's investment or contractual commitment to invest
therein, a rating not lower than the highest investment
category for short term unsecured debt obligations granted
by the applicable Rating Agency from each Rating Agency
then Rating the affected Series of Investor Certificates;
(iv) investments in money market funds or common trust
funds having a rating not lower than the highest investment
category for short term unsecured debt obligations granted
by the applicable Rating Agency from each Rating Agency
then Rating the affected Series of Investor Certificates or
otherwise approved in writing by each of such Rating
Agencies (including funds for which the Master Trust
Trustee or the 1990 Trust Trustee or any of their
respective affiliates is investment manager or advisor, so
long as such fund shall have such rating);
(v) repurchase obligations (x) with respect to any
security that is a direct obligation of, or fully
guaranteed by, the United States of America or any agency
or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of
America, in either case, entered into with a depository
institution or trust company (acting as principal)
described in clause (ii) or (y) the counterparty for which
has a rating not lower than the highest investment category
for short term unsecured debt obligations granted by the
applicable Rating Agency from each Rating Agency then
Rating the affected Series of Investor Certificates, the
collateral for which is held by a custodial bank for the
benefit of the Trust or the Indenture Trustee, is marked to
market daily and is maintained in an amount that exceeds
the amounts of such repurchase obligation, and which
required liquidation of the collateral immediately upon the
amount of such collateral being less than the amount of
such repurchase obligation (unless the counterparty
immediately satisfies the repurchase obligation upon being
notified of such shortfall); or
(vi) commercial paper master notes where the issuer has,
at the time of the Master Trust's investment or contractual
commitment to invest therein, a rating not lower than the
highest investment category for short term unsecured debt
obligations granted by the applicable Rating Agency from
each Rating Agency then Rating the Series 1998-1; and
(b) any other investment consisting of a financial asset that by
its terms converts to cash within a finite period of time,
provided that the Rating Agency Condition is satisfied.
Unless the Rating Agency Condition is satisfied, Eligible
Investments of funds in the Series Principal Account and the Liquidity
Reserve Account will be subject to the following additional restrictions: (x)
no more than the greater of (A) $1,000,000 and (B) 20% of the aggregate
Eligible Investments in all such accounts collectively shall be obligations
of or investments in any single issuer (except that such 20% limitation shall
not apply to Eligible Investments of the type specified in clause (a)(i));
and (y) each Eligible Investment shall be denominated and be payable solely
in U.S. dollars, shall bear interest at a specified rate that is, or is based
upon, LIBOR or a commercial paper rate, shall entitle the holder to a fixed
principal amount at maturity and shall have a yield that is not inversely or
disproportionately affected by changes in interest rates.
"Excess Seller's Percentage" shall mean, with respect to any Due
Period commencing after the 1990 Trust Termination Date, a percentage (which
percentage shall never be less than 0% nor more than 100%) equal to the
excess of (a) the Seller's Percentage for such Due Period, over (b) the
percentage equivalent (which percentage shall never be less than 0% nor more
than 100%) of a fraction, the numerator of which is the Available
Subordinated Amount as of the end of the related Transfer Date and the
denominator of which is the product of (x) the sum of the aggregate principal
amount of Dealer Notes in the Master Trust and the aggregate principal amount
of funds on deposit in the Excess Funding Account, both as of the end of the
immediately preceding Due Period and (y) the Series 1998-1 Allocation
Percentage for the Due Period for which the Excess Seller's Percentage is
being calculated.
"Excess Seller's Principal Collections" shall mean, with respect
to any Business Day during a Due Period commencing after the 1990 Trust
Termination Date, the product of (a) Series Allocable Principal Collections
for such Business Day and (b) the Excess Seller's Percentage for such Due
Period.
"Expected Payment Date" shall mean the July 2008 Distribution
Date.
"Floating Allocation Percentage" shall mean, with respect to any
Due Period commencing after the 1990 Trust Termination Date, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is the Invested Amount as of the immediately preceding
Distribution Date (after giving effect to all increases and reductions
thereof on such Distribution Date) and the denominator of which is the
product of (a) the sum of the aggregate principal amount of Dealer Notes in
the Master Trust and the aggregate principal amount of funds on deposit in
the Excess Funding Account, both as of the end of the immediately preceding
Due Period, and (b) the Series 1998-1 Allocation Percentage for the Due
Period for which the Floating Allocation Percentage is being calculated.
"Initial Distribution Period" shall mean the period from July 17,
1998 through August 24, 1998.
"Initial Invested Amount" shall mean $200,000,000.
"Initial Spread Account Required Amount" shall mean the Projected
Spread as of the 1990 Trust Termination Date.
"Invested Amount" shall mean, with respect to any Distribution
Date, an amount (which shall never be less than zero) equal to the Initial
Invested Amount, minus the sum of (a) the aggregate amount of payments of
principal in respect of the Series 1998-1 Certificates made to Series 1998-1
Certificateholders on or prior to such Distribution Date, (b) the aggregate
amount of Investor Charge-Offs not reimbursed pursuant to Section 4.04(a)(iv)
on or prior to such Distribution Date, (c) the aggregate amount of Series
Principal Account Losses on or prior to such Distribution Date and (d) the
aggregate Early Distribution Amounts paid or deemed paid on or prior to such
Distribution Date.
"Investment Income" shall mean, for any Distribution Period with
respect to Series 1998-1, the sum of (i) income during such Distribution
Period from the investment of funds on deposit in the Series Principal
Account and the Spread Account and (ii) the product of (a) the Series
Allocation Percentage for such Distribution Period and (b) income from the
investment of funds on deposit in the Collections Account and the Excess
Funding Account.
"Investor Charge-Off" shall have the meaning specified in Section
4.06.
"Investor Dealer Note Losses" shall mean, with respect to any Due
Period commencing after the 1990 Trust Termination Date, the product of (a)
the Floating Allocation Percentage for such Due Period and (b) Series
Allocable Dealer Note Losses for such Due Period.
"Investor Finance Charge Collections" shall mean, with respect to
any Due Period commencing after the 1990 Trust Termination Date, an amount
equal to the product of (a) the Floating Allocation Percentage for such Due
Period and (b) Series Allocable Finance Charge Collections for such Due
Period.
"Investor Principal Collections" shall mean, with respect to any
Business Day after the 1990 Trust Termination Date, the sum of (a) the
product of (i) with respect to the Revolving Period, the Floating Allocation
Percentage and with respect to the Accumulation Period or any Early
Amortization Period, the Principal Allocation Percentage, in either case for
the Due Period in which such Business Day occurs and (ii) Series Allocable
Principal Collections for such Business Day and (b) on any Transfer Date, the
amount, if any, of Available Certificateholder Interest Collections treated
as Investor Principal Collections pursuant to Sections 4.04(a)(iii) and (iv).
"Investor Servicing Fee" shall have the meaning specified in
Section 3.01.
"LIBOR" shall mean (a) prior to the 1990 Trust Termination Date,
the one-month London interbank offered rate as determined by the 1990 Trust
Trustee in accordance with the 1990 Trust Agreement and (b) after the 1990
Trust Termination Date, the interest rate determined by the Master Trust
Trustee in accordance with the following provisions:
(i) On each LIBOR Determination Date, LIBOR will be determined
on the basis of the offered rates for deposits in United States Dollars
having a one month maturity, which appear on the Reuters Screen LIBO
Page as of 11:00 A.M., London time, on such LIBOR Determination Date.
Such posted offered rates are for value on the second Business Day
after which dealings in deposits in United States Dollars are
transacted in the London interbank market. If at least two such
offered rates appear on the Reuters Screen LIBO Page, the rate in
respect of such LIBOR Determination Date will be the arithmetic mean
(rounded, if necessary, to the nearest one hundred-thousandth of a
percent) of such offered rates as determined by the Master Trust
Trustee. If fewer than two offered rates appear, LIBOR in respect of
such LIBOR Determination Date will be determined as if the parties had
specified the rate described in (ii) below.
(ii) On any LIBOR Determination Date on which fewer than two
offered rates appear on the Reuters Screen LIBO Page as specified in
(i) above, LIBOR will be determined on the basis of the rates at which
deposits in United States Dollars are offered by the Reference Banks at
approximately 11:00 A.M., London time, on such LIBOR Determination Date
to prime banks in the London interbank market, having a one month
maturity, such deposits commencing on the second Business Day
immediately following such LIBOR Determination Date and in a principal
amount of not less than U.S. $1,000,000 that is representative for a
single transaction in such market at such time. The Master Trust
Trustee will request the principal London office of each of such
Reference Banks to provide a quotation of its rate. If at least two
such quotations are provided, LIBOR in respect of such LIBOR
Determination Date will be the arithmetic mean (rounded, if necessary,
to the nearest one hundred-thousandth of a percent) of such
quotations. If fewer than two quotations are provided, LIBOR in
respect of such LIBOR Determination Date will be the arithmetic mean
(rounded, if necessary, to the nearest one hundred-thousandth of a
percent) of the rates quoted by three major banks in The City of New
York selected by the Master Trust Trustee at approximately 11:00 A.M.,
New York City time, on such LIBOR Determination Date for loans in
United States Dollars to leading European banks, having a one month
maturity, such loans commencing on the second Business Day immediately
following such LIBOR Determination Date and in a principal amount of
not less than U.S. $1,000,000 that is representative for a single
transaction in such market at such time, provided, however, that if the
banks in The City of New York selected as aforesaid by the Master Trust
Trustee are not quoting as mentioned in this sentence, LIBOR with
respect to such LIBOR Determination Date will be LIBOR in effect
immediately prior to such LIBOR Determination Date.
"LIBOR Determination Date" shall mean, with respect to any
Distribution Period, the date which is two Business Days prior to the start
of such Distribution Period, which with respect to the Initial Distribution
Period is July 15, 1998.
"Liquidity Reserve Account" shall have the meaning specified in
Section 4.02(c)(i).
"Maximum Subordinated Amount" shall mean, with respect to any
Transfer Date related to a Due Period commencing after the 1990 Trust
Termination Date, the product of (a) the Invested Amount as of the preceding
Distribution Date and (b) the Subordinated Percentage; provided, however,
that with respect to a Transfer Date related to a Due Period occurring during
an Early Amortization Period, the Maximum Subordinated Amount shall not
decline until the Invested Amount equals the Maximum Subordinated Amount, and
thereafter the Maximum Subordinated Amount shall equal the Invested Amount.
"Minimum Series 1998-1 Seller's Interest" shall mean, with
respect to any Business Day after the 1990 Trust Termination Date, the sum of
(a) the Available Subordinated Amount as of the end of the preceding Transfer
Date and (b) the Required Excess Seller Interest as of the end of the
preceding Distribution Date.
"Monthly Interest" shall mean, with respect to each Transfer Date
related to a Distribution Period, an amount equal to the product of (a) the
Certificate Rate for such Distribution Period and (b) the Invested Amount as
of the preceding Distribution Date (or the Initial Invested Amount with
respect to the first Transfer Date) and (c) a fraction, which (i) with
respect to the first Transfer Date, shall be equal to 39 divided by 360 and
(ii) with respect to each subsequent Transfer Date, shall be equal to the
actual number of days in the related Distribution Period divided by 360.
"Monthly Servicing Fee" shall have the meaning specified in
Section 3.01.
"New Vehicle Monthly Interest Rate" shall mean, with respect to
any Due Period, the product of (a) the per annum rate of interest and finance
charges billed by NFC during such Due Period on New Vehicle Dealer Notes and
(b) the quotient of (i) the number of days during such Due Period and (ii)
the actual number of days in the related calendar year.
"Portfolio Yield" shall mean, with respect to any Due Period, the
product of (a) the quotient of (i) Finance Charges for such Due Period and
(ii) the daily average principal amount of Dealer Notes outstanding during
such Due Period and (b) a fraction, the numerator of which is 365 and the
denominator of which is the actual number of days elapsed during such Due
Period. Portfolio Yield shall be expressed as a percentage, and shall be
rounded to the nearest one-hundredth of a percentage point.
"Principal Allocation Percentage" shall mean, with respect to any
Due Period commencing on or after the 1990 Trust Termination Date and
occurring during the Accumulation Period or any Early Amortization Period,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is the Invested Amount as of the end of the
Revolving Period and the denominator of which is equal to the product of (a)
the sum of the aggregate amount of Dealer Notes in the Master Trust and the
aggregate principal amount of funds on deposit in the Excess Funding Account,
both as of the end of the Revolving Period and (b) the Series 1998-1
Allocation Percentage for the Due Period for which the Principal Allocation
Percentage is being calculated.
"Principal Shortfall" shall mean, with respect to Series 1998-1,
the Series 1998-1 Principal Shortfall.
"Projected Dealer Note Income" shall mean, on any Transfer Date
after the 1990 Trust Termination Date, an amount equal to the sum of (a) the
product of (i) the principal amount of Dealer Notes financing new vehicles
outstanding on such Transfer Date, (ii) the New Vehicle Monthly Interest Rate
for the Due Period in which such Transfer Date occurs and (iii) the Series
1998-1 Allocation Percentage for such Due Period and (b) the product of (i)
the principal amount of Dealer Notes financing used vehicles outstanding on
such Transfer Date, (ii) the Used Vehicle Monthly Interest Rate for such Due
Period and (iii) the Series 1998-1 Allocation Percentage for such Due Period.
"Projected Monthly Interest" shall mean, on any LIBOR
Determination Date after the 1990 Trust Termination Date with respect to the
related Distribution Period, an amount equal to the product of (a) the
Certificate Rate for such Distribution Period, (b) the Invested Amount as of
the immediately preceding Distribution Date (minus the aggregate Early
Distribution Amounts paid or deemed paid since such immediately preceding
Determination Date) and (c) the result of (i) the actual number of days in
such Distribution Period divided by (ii) 360.
"Projected Monthly Servicing Fee" shall mean, on any Transfer
Date after the 1990 Trust Termination Date with respect to the Due Period in
which such Transfer Date occurs, an amount equal to one-twelfth of the
product of (a) 1%, (b) the aggregate principal amount of Dealer Notes as of
such Transfer Date, (c) the Series 1998-1 Allocation Percentage for the Due
Period related to such Transfer Date and (d) the Floating Allocation
Percentage for the Due Period related to such Transfer Date.
"Projected Spread" shall mean, on any Transfer Date after the
1990 Trust Termination Date with respect to the Distribution Period next
following the Distribution Period to which such Transfer Date relates, the
sum of (a) the positive amount, if any, by which (i) the sum of (A) Projected
Monthly Interest for such Distribution Period, and (B) the Projected Monthly
Servicing Fee for the Due Period in which such Transfer Date occurs exceeds
(ii) the Projected Dealer Note Income as of such Transfer Date and (b) 1.25%
of the Invested Amount as of the preceding Distribution Date.
"Reassignment Amount" shall mean, with respect to any
Distribution Date, after giving effect to any deposits and distributions
otherwise to be made on such Distribution Date, the sum of (a) the Invested
Amount on such Distribution Date, and (b) accrued and unpaid interest thereon.
"Reference Banks" shall mean the principal London offices of
Xxxxxx Guaranty Trust Company of New York, Swiss Bank Corporation and
Barclays Bank PLC.
"Remaining Available Seller's Principal Calculations" shall have
the meaning specified in Section 4.08(d).
"Required Excess Seller Interest" shall mean, with respect to any
Business Day, 3.0% of the Invested Amount as of the end of the preceding
Distribution Date (and such percentage shall be the "Required Excess Seller
Interest Percentage").
"Required Subordinated Amount" shall mean, with respect to any
Transfer Date related to a Due Period commencing after the 1990 Trust
Termination Date, an amount equal to 87.1% of the Maximum Subordinated Amount
as of such Transfer Date.
"Revolving Due Period" shall have the meaning specified in
Section 4.12.
"Revolving Period" shall mean, unless an Early Amortization Event
shall have occurred prior thereto, the period beginning on the 1990 Trust
Termination Date and ending on the earlier of (a) the close of business on
the Business Day immediately preceding the Accumulation Period Commencement
Date and (b) the close of business on the Business Day immediately preceding
the day on which an Early Amortization Event occurs.
"Seller's Percentage" shall mean, with respect to any Due Period
commencing after the 1990 Trust Termination Date, 100% minus (a) the Floating
Allocation Percentage for such Due Period, when used with respect to Finance
Charge Collections and Dealer Note Losses at all times or Principal
Collections during the Revolving Period, and (b) the Principal Allocation
Percentage for such Due Period, when used with respect to Principal
Collections during the Accumulation Period or any Early Amortization Period.
"Seller's Principal Collections" shall mean, with respect to any
Business Day after the 1990 Trust Termination Date, an amount equal to the
sum of (a) Available Seller's Principal Collections for such Business Day and
(b) Excess Seller's Principal Collections for such Business Day.
"Series 1998-1" shall mean the Series of Investor Certificates,
the terms of which are specified in this Series Supplement.
"Series 1998-1 Accounts" shall mean, collectively, the Series
Principal Account, the Distribution Account maintained for the Series 1998-1
Certificateholders, the Liquidity Reserve Account and the Spread Account.
"Series 1998-1 Accumulation Period Principal Shortfall" shall
mean, with respect to any Business Day occurring during the Accumulation
Period, the excess, if any, of the Controlled Deposit Amount for the Due
Period in which such Business Day occurs over the amount of Investor
Principal Collections deposited in the Series Principal Account on such
Business Day when added to the amount of Investor Principal Collections
previously deposited in the Series Principal Account during such Due Period.
"Series 1998-1 Allocation Percentage" shall mean the Series
Allocation Percentage with respect to Series 1998-1.
"Series 1998-1 Certificateholders" shall mean the holders of
Series 1998-1 Certificates.
"Series 1998-1 Certificateholders' Interest" shall mean that
portion of the Certificateholders' Interest evidenced by the Series 1998-1
Certificates.
"Series 1998-1 Certificates" shall mean any one of the
certificates executed by the Seller and authenticated by the Master Trust
Trustee, substantially in the form of Exhibit A.
"Series 1998-1 Principal Shortfall" shall equal either (a) with
respect to any Business Day occurring during the Accumulation Period, the
Series 1998-1 Accumulation Period Principal Shortfall or (b) with respect to
any Business Day during any Early Amortization Period, the excess, if any, of
the Invested Amount (reduced by (i) amounts on deposit in the Series
Principal Account and (ii) the aggregate amount of Series Principal Account
Losses for the Distribution Period in which such Business Day occurs) as of
the immediately preceding Distribution Date over Investor Principal
Collections for such Business Day.
"Series 1998-1 Rating Agency Condition" shall mean, with respect
to any action, that each Rating Agency shall have notified the Seller, the
Servicer, and the Master Trust Trustee in writing that such action will not
result in a reduction or withdrawal of the rating of the Series 1998-1
Certificates with respect to which it is a Rating Agency.
"Series 1998-1 Shared Principal Collections" shall have the
meaning specified in Section 4.09(b).
"Series 1998-1 Shared Seller Principal Collections" shall have
the meaning specified in Section 4.08(d)(iv).
"Series Allocable Dealer Note Losses" shall mean, with respect to
any Due Period commencing after the 1990 Trust Termination Date, the product
of (a) the Series 1998-1 Allocation Percentage for such Due Period and (b)
Dealer Note Losses for such Due Period.
"Series Allocable Finance Charge Collections" shall mean, with
respect to any Due Period, the product of (a) the Series 1998-1 Allocation
Percentage for such Due Period and (b) the amount of Finance Charge
Collections for such Due Period.
"Series Allocable Principal Collections" shall mean, with respect
to any Business Day, the sum of (a) the product of (i) the Series 1998-1
Allocation Percentage for the related Due Period and (ii) the amount of
Principal Collections deposited in the Collections Account on such Business
Day and (b) if the Accumulation Period Commencement Date occurs on such
Business Day, the product of (i) the Series 1998-1 Allocation Percentage for
such Due Period and (ii) the amount of funds on deposit in the Excess Funding
Account on such Accumulation Period Commencement Date.
"Series Invested Amount" shall mean, with respect to Series
1998-1, the Invested Amount.
"Series Principal Account" shall have the meaning specified in
Section 4.02(a)(i).
"Series Principal Account Losses" shall mean losses of principal
on investment of funds in the Series Principal Account.
"Series Termination Date" shall mean the July 2011 Distribution
Date.
"Special Issuer" means a trust the assets of which consist solely
of Investor Certificates issued by the Master Trust and of one or more
liquidity swap arrangements for the benefit of investors in such Special
Issuer.
"Special Structured Notes" means any security issued by a Special
Issuer.
"Specified Accumulation Period Commencement Date" shall mean
October 1, 2007.
"Spread Account" shall have the meaning specified in Section
4.02(b)(i).
Transfer Date, the amount, if any, by which the Projected Spread exceeds the
amount of funds on deposit in the Spread Account.
"Subject Month" shall have the meaning specified in Section 4.12.
"Subordinated Percentage" shall mean 15.5%.
"Turnover" shall have the meaning specified in Section 6.01(k).
"Used Vehicle Monthly Interest Rate" shall mean, with respect to
any Due Period, the product of (i) the per annum rate of interest and finance
charges billed by NFC during such Due Period on Used Vehicle Dealer Notes and
(ii) the quotient of (a) a-number equal to the number of days during such Due
Period and (b) the actual number of days in the related calendar year.
(b) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the term "Rating Agency" shall mean, whenever
used in this Series Supplement or the Agreement with respect to Series
1998-1, Xxxxx'x and Standard & Poor's. As used in this Series Supplement and
in the Agreement with respect to Series 1998-1, "highest investment category"
shall mean (i) in the case of Standard & Poor's, A-1+, AAA, AAAm, or AAAm-G,
as applicable, and (ii) in the case of Xxxxx'x, P-1 or Aaa, as applicable.
(c) All capitalized terms used herein and not otherwise defined
herein have the same meanings ascribed to them in the Agreement.
(d) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Series Supplement shall refer to this Series
Supplement as a whole and not to any particular provision of this Series
Supplement; references to any Article, Section or Exhibit are references to
Articles, Sections and Exhibits in or to this Series Supplement unless
otherwise specified; and the term "including" means "including without
limitation."
(e) As used in this Series Supplement, references to the
Available Subordinated Amount "as of the end" of a Transfer Date shall mean
the Available Subordinated Amount as of such Transfer Date, after giving
effect to all increases and reductions thereof pursuant to Article IV
hereof.
(f) As used in this Series Supplement, accounting terms which
are not defined, and accounting terms partly defined, herein shall have the
respective meanings given to them under generally accepted accounting
principles as in effect on the date hereof. To the extent that the
definitions of accounting terms in this Series Supplement are inconsistent
with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Series Supplement will control.
(g) With respect to any Distribution Date or Transfer Date, the
"related Due Period" and the "related Distribution Period" will mean the Due
Period and Distribution Period, respectively, immediately preceding such
Distribution Date or Transfer Date, and the relationships between Due Periods
and Distribution Periods will be correlative to the foregoing relationships.
With respect to any LIBOR Determination Date, the "related Distribution
Period" will mean the Distribution Period beginning on the Distribution Date
immediately following such LIBOR Determination Date.
(h) Each defined term used in this Series Supplement has a
comparable meaning when used in its plural or singular form. Each
gender-specific term used in this Series Supplement has a comparable meaning
whether used in a masculine, feminine or gender-neutral form.
ARTICLE III
SERVICING FEE
SECTION III.1 Servicing Compensation. The monthly servicing fee (the
"Monthly Servicing Fee") shall be payable to the Servicer, in arrears, on
each Distribution Date in respect of a Due Period (or portion thereof)
commencing after the 1990 Trust Termination Date and occurring prior to the
earlier of the first Distribution Date following the Series Termination Date
and the first Distribution Date on which the Invested Amount is zero, in an
amount equal to one-twelfth of the result of (a) 1% multiplied by (b) the
aggregate principal amount of Dealer Notes outstanding as of the last day of
such Due Period and multiplied by (c) the Series 1998-1 Allocation Percentage
with respect to such Due Period. The share of the Monthly Servicing Fee
allocable to the Series 1998-1 Certificateholders with respect to any
Transfer Date (the "Investor Servicing Fee") shall be equal to the product of
(a) the Monthly Servicing Fee and (b) the Floating Allocation Percentage with
respect to such Due Period. The remainder of the Monthly Servicing Fee shall
be paid by the Seller and in no event shall the Master Trust, the Master
Trust Trustee or the Series 1998-1 Certificateholders be liable for the share
of the Monthly Servicing Fee to be paid by the Seller; and the remainder of
the Servicing Fee shall be paid by the Seller and the Investor
Certificateholders of other Series and the Series 1998-1 Certificateholders
shall in no event be liable for the share of the Servicing Fee to be paid by
the Seller or the Investor Certificateholders of other Series. The Investor
Servicing Fee shall be payable to the Servicer solely to the extent amounts
are available for distribution in accordance with the terms of this Series
Supplement.
The Servicer will be permitted, in its sole discretion, to waive
the Monthly Servicing Fee for any Distribution Date by notice to the Master
Trust Trustee on or before the related Determination Date; provided, however,
that the Servicer believes that sufficient Series Allocable Finance Charge
Collections will be available on any future Distribution Date to pay the
Investor Servicing Fee relating to the waived Monthly Servicing Fee. If the
Servicer so waives the Monthly Servicing Fee for any Distribution Date, the
Monthly Servicing Fee and the Investor Servicing Fee for such Distribution
Date shall be deemed to be zero for all purposes of this Series Supplement
and the Agreement; provided, however, that such Investor Servicing Fee shall
be paid on a future date solely to the extent amounts are available therefor
pursuant to Section 4.04(a)(vi); and provided further that, to the extent any
such waived Investor Servicing Fee is so paid, the related portion of the
Monthly Servicing Fee to be paid by the Seller shall be paid by the Seller to
the Servicer.
ARTICLE IV
RIGHTS OF SERIES 1998-1 CERTIFICATEHOLDERS
AND ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION IV.1 Rights of the Series 1998-1 Certificateholders.
The Series 1998-1 Certificates shall represent fractional undivided interests
in the Master Trust, consisting of the right to receive, to the extent
necessary to make the required payments with respect to the Series 1998-1
Certificates at the times and in the amounts specified in this Series
Supplement, Collections allocated to Series 1998-1 pursuant to Article IV of
the Agreement and this Article IV, funds on deposit in the Collections
Account and the Excess Funding Account allocable to Series 1998-1
Certificateholders pursuant to Article IV of the Agreement and this Article
IV, and funds on deposit in the Series 1998-1 Accounts (collectively, the
"Series 1998-1 Certificateholders' Interest"), it being understood that the
Series 1998-1 Certificates shall not represent any interest in any Series
Account or Enhancement for the benefit of any other Series or Class. The
Servicer shall apply, or instruct the Master Trust Trustee to apply, all
funds on deposit in the Collections Account and Excess Funding Account
allocable to the Series 1998-1 Certificates, and all funds on deposit in the
Series Principal Account, the Spread Account and the Distribution Account
maintained for the Series 1998-1 Certificateholders, as described in this
Article IV.
SECTION IV.2 Establishment of Series Principal Account, Spread Account
and Liquidity Reserve Account.
(a) Series Principal Account.
(i) On or prior to the commencement of an Early
Amortization Period or the Accumulation Period, the Master Trustee, for
the benefit of the Series 1998-1 Certificateholders, shall establish
and maintain in the name of the Master Trust an Eligible Deposit
Account bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Series 1998-1
Certificateholders (the "Series Principal Account"). The Master Trust
Trustee shall possess all right, title and interest in all funds on
deposit from time to time in the Series Principal Account and in all
proceeds thereof. Pursuant to authority granted to it pursuant to
Section 3.01(b) of the Agreement, the Servicer shall have the revocable
power to instruct the Master Trust Trustee to withdraw funds from the
Series Principal Account for the purpose of carrying out the duties of
the Servicer under this Series Supplement and the Agreement. The
Servicer at all times shall maintain accurate records reflecting each
transaction in the Series Principal Account.
(ii) Funds on deposit in the Series Principal Account
overnight or for a longer period shall at all times be invested in
Eligible Investments at the direction of the Servicer or its agent,
subject to the restrictions set forth in the Agreement and subject to
the requirement that each such Eligible Investment shall have a stated
maturity on or prior to the following Transfer Date (or such longer
maturity as shall be allowed upon satisfaction of the Series 1998-1
Rating Agency Condition). Net interest and earnings (less investment
expenses) on funds on deposit in the Series Principal Account, if any,
shall be allocated and distributed as provided in Section 4.03(a) or
Section 4.04, as applicable.
(b) Spread Account.
(i) On or prior to the 1990 Trust Termination Date, the
Master Trust Trustee, for the benefit of the Series 1998-1
Certificateholders, shall cause to be established and maintained in the
name of the Master Trust, an Eligible Deposit Account bearing a
designation clearly indicating that the funds deposited therein are
held for the benefit of the Series 1998-1 Certificateholders (the
"Spread Account"). The Master Trust Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the
Spread Account and in all proceeds thereof. Pursuant to authority
granted to it pursuant to Section 3.01(b) of the Agreement, the
Servicer shall have the revocable power to instruct the Master Trust
Trustee to withdraw funds from the Spread Account for the purpose of
carrying out the duties of the Servicer under this Series Supplement
and the Agreement. The Servicer at all times shall maintain accurate
records reflecting each transaction in the Spread Account. As of the
1990 Trust Termination Date, the Servicer shall cause to be deposited
in the Spread Account an amount equal to the lesser of (A) the
Projected Spread as of the immediately preceding Transfer Date and (B)
the amount of funds on deposit in the 1990 Trust Spread Account
multiplied by a fraction, the numerator of which is the Projected
Spread as of the immediately preceding Transfer Date, and the
denominator of which is the projected spreads as of the immediately
preceding Transfer Date for all outstanding Series which have spread
accounts.
(ii) Funds on deposit in the Spread Account overnight or
for a longer period shall at all times be invested in Eligible
Investments at the direction of the Servicer or its agent, subject to
the restrictions set forth in the Agreement and subject to the
requirement that each such Eligible Investment shall have a stated
maturity on or prior to the following Transfer Date. Net interest and
earnings (less investment expenses) on funds on deposit in the Spread
Account, if any, shall be allocated and distributed as provided in
Section 4.04.
(iii) On any Transfer Date related to a Due Period
commencing after the 1990 Trust Termination Date on which the amount of
funds on deposit in the Spread Account is greater than the Projected
Spread on such Transfer Date, the Servicer shall withdraw the amount of
such excess from the Spread Account and allocate and pay such excess to
the Seller.
(iv) Upon the commencement of and during an Early
Amortization Period, the Master Trust Trustee will deposit all funds in
the Spread Account into the Liquidity Reserve Account, and no
additional funds shall be deposited into the Spread Account.
(c) Liquidity Reserve Account.
(i) The Master Trust Trustee, for the benefit of the
Seller, shall establish on or prior to the commencement of an Early
Amortization Period and maintain or cause to be established and
maintained in the name of the Master Trust Trustee, an Eligible Deposit
Account bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Seller (the
"Liquidity Reserve Account"). The Seller shall possess all right,
title and interest in all funds on deposit from time to time in the
Liquidity Reserve Account and in all proceeds thereof; provided,
however, that no funds on deposit in the Liquidity Reserve Account
shall be paid to the Seller if such payment would reduce the funds in
such account below an amount equal to the Available Subordinated
Amount. Pursuant to authority granted to it pursuant to Section
3.01(b) of the Agreement, the Servicer shall have the revocable power
to instruct the Master Trust Trustee to withdraw funds from the
Liquidity Reserve Account for the purpose of fulfilling the obligations
of the Seller under this Series Supplement and the Agreement. The
Servicer at all times shall maintain accurate records reflecting
transactions in the Liquidity Reserve Account.
(ii) Funds on deposit in the Liquidity Reserve Account
overnight or for a longer period shall at all times be invested in
Eligible Investments at the direction of the Seller or its agent,
subject to the restrictions set forth in the Agreement. Any Eligible
Investment with a stated maturity shall mature on or prior to the
following Transfer Date. All net interest and earnings (less
investment expenses) on funds on deposit in the Liquidity Reserve
Account, if any, shall be paid to the Seller. On any Transfer Date
commencing after the 1990 Trust Termination Date on which the amount on
deposit in the Liquidity Reserve Account exceeds the Available
Subordinated Amount as of the end of such Transfer Date, the Servicer
shall withdraw the amount of such excess from the Liquidity Reserve
Account and allocate and pay such excess to the Seller.
(d) Replacement Series 1998-1 Accounts. If, at any time, any
of the Series 1998-1 Accounts ceases to be an Eligible Deposit Account, the
Master Trust Trustee (or the Servicer on its behalf) shall upon the earlier
of (a) 30 calendar days, or (b) the next Determination Date, establish a new
Series 1998-1 Account meeting the conditions specified in paragraphs (a),
(b), (c) or (d) above, as applicable, as an Eligible Deposit Account and
shall transfer any cash and/or any investments to such new Series 1998-1
Account. Neither the Seller, the Servicer nor any person or entity claiming
by, through or under the Seller, the Servicer or any such person or entity
shall have any right, title or interest in, or any right to withdraw any
amount from, any Series 1998-1 Account, except as expressly provided herein.
SECTION IV.3 Application of Class A-6 Investor Certificate Collections
Prior to the 1990 Trust Termination Date.
(a) Class A-6 Investor Certificate Interest Collections. On
each Distribution Date related to a Due Period commencing prior to the 1990
Trust Termination Date, the Master Trust Trustee, acting in accordance with
instructions from the Servicer, shall apply Class A-6 Investor Certificate
Interest Collections for such Due Period and Investment Income for the
related Distribution Period in the following amounts and in the following
order of priority:
(i) Monthly Interest. An amount equal to Monthly
Interest for the related Distribution Period plus any Monthly Interest
due with respect to any prior Distribution Period not previously
distributed to the Series 1998-1 Certificateholders on a prior
Distribution Date, plus to the extent permitted by law, interest at the
Certificate Rate that has accrued on Monthly Interest that was due
pursuant to this clause (i) but was not previously distributed to the
Series 1998-1 Certificateholders on a prior Distribution Date shall be
deposited in the Distribution Account.
(ii) Allocation to Seller. Any remaining Class A-6
Investor Certificate Interest Collections for the related Due Period
and Investment Income for the related Distribution Period shall be
allocated and paid to the Seller.
(b) Class A-6 Investor Certificate Principal Collections. On
each Transfer Date related to a Due Period commencing prior to the 1990 Trust
Termination Date and occurring during an Early Amortization Period, the
Master Trust Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Collections Account and apply Class A-6
Investor Certificate Principal Collections, if any, for the related Due
Period in the following amounts and in the following order of priority:
(i) Invested Amount. An amount equal to the excess of
the Invested Amount over the amount of all previous deposits to the
Series Principal Account pursuant to this Section 4.03(b)(i) shall be
deposited in the Series Principal Account.
(ii) Allocation to Seller. Any remaining Class A-6
Investor Certificate Principal Collections for such Due Period shall be
allocated and paid to the Seller.
SECTION IV.4 Application of Available Certificateholder Interest
Collections After the 1990 Trust Termination Date.
(a) Application of Available Certificateholder Interest
Collections. On each Transfer Date related to a Due Period commencing after
the 1990 Trust Termination Date, the Master Trust Trustee, acting in
accordance with instructions from the Servicer, shall apply Available
Certificateholder Interest Collections for such Due Period in the following
amounts and in the following order of priority:
(i) Investor Servicing Fee. An amount equal to the
Investor Servicing Fee for such Due Period (unless such amount has been
netted against deposits to the Collections Account or waived) shall be
allocated and paid to the Servicer.
(ii) Monthly Interest. An amount equal to Monthly
Interest for the Distribution Period, plus any Monthly Interest due
with respect to any prior Distribution Period but not previously
distributed to the Series 1998-1 Certificateholders on a prior
Distribution Date, plus to the extent permitted by law, additional
interest at the Certificate Rate for such Distribution Period that has
accrued on Monthly Interest that was due pursuant to this clause (ii)
but was not previously distributed to the Series 1998-1
Certificateholders on a prior Distribution Date shall be deposited in
the Distribution Account.
(iii) Investor Dealer Note Losses. An amount equal to the
Investor Dealer Note Losses, if any, for such Due Period shall be
reimbursed by being treated as Investor Principal Collections for such
Transfer Date.
(iv) Reimbursement of Investor Charge-Offs. An amount
equal to the aggregate amount of unreimbursed Investor Charge-Offs, if
any, for any prior Due Period shall be reimbursed by being treated as
Investor Principal Collections for such Transfer Date.
(v) Spread Account Deposit Amount. An amount equal to
the Spread Account Deposit Amount, if any, for such Transfer Date shall
be deposited into the Spread Account.
(vi) Deferred Investor Servicing Fee. An amount equal to
the aggregate outstanding amounts of the Investor Servicing Fee which
have been previously waived pursuant to Section 3.01 (unless such
amounts have been waived again) shall be allocated and paid to the
Servicer.
(vii) Reinstatement of Available Subordinated Amount. An
amount equal to the excess, if any, of the Maximum Subordinated Amount
as of the end of the preceding Transfer Date over the Available
Subordinated Amount as of the end of the preceding Transfer Date shall
be (A) during the Revolving Period or the Accumulation Period,
allocated and paid to the Seller or (B) during an Early Amortization
Period, deposited in the Liquidity Reserve Account, and in either case
(A) or (B) the Available Subordinated Amount shall be reinstated by the
amount of such payment or deposit.
(viii) Excess Interest Collections. Any remaining
Available Certificateholder Interest Collections shall be treated as
Excess Interest Collections, and applied pursuant to Section 4.03(f) of
the Agreement.
If Available Certificateholder Interest Collections are not sufficient to
satisfy each of the applications described in clauses (i) through (vii) above
on any Transfer Date, then Excess Interest Collections from other Series
allocable to Series 1998-1 will be applied as Available Certificateholder
Interest Collections in the priority and the manner described in clauses (i)
through (vii) above. If Excess Interest Collections are less than the
shortfalls for all Series that provide for allocations of Excess Interest
Collections, such Excess Interest Collections shall be allocable to
shortfalls for Series 1998-1 and any other Series that so provides pro rata
based on the relative amounts of each Series' shortfall.
SECTION IV.5 Application of Available Seller's Finance Charge
Collections, Spread Account and Liquidity Reserve Account to Deficiency
Amount.
(a) On each Transfer Date commencing after the 1990 Trust
Termination Date, the Servicer shall determine the amount (the "Deficiency
Amount"), if any, by which the amount of the entire allocations required on
such Transfer Date by Sections 4.04(a)(i) through (iv) exceeds the amount of
Available Certificateholder Interest Collections for such Due Period and
Excess Interest Collections allocated to Series 1998-1 on such Transfer Date,
if any, for the related Due Period.
(b) If the Deficiency Amount for any Transfer Date is greater
than zero, the Master Trust Trustee, acting in accordance with instructions
from the Servicer, shall apply available funds from the following sources in
the following order of priority in the same manner as Available
Certificateholder Interest Collections, each of which applications shall
reduce such Deficiency Amount (all such available funds being the "Available
Draw Funds" for such Transfer Date):
(i) Available Seller's Finance Charge Collections;
(ii) funds on deposit in the Spread Account;
(iii) for any Transfer Date occurring during any Early
Amortization Period, funds on deposit in the Liquidity Reserve Account;
provided, however, that the amount applied pursuant to this Section 4.05(b)
shall not exceed the Draw Amount. The Available Subordinated Amount shall be
reduced by the aggregate amount of Available Draw Funds applied pursuant to
this Section 4.05(b).
(c) If all of the amounts applied pursuant to Section 4.05(a)
and (b) are insufficient to make the entire application described in Section
4.04(a)(iii), the Available Subordinated Amount shall be reduced (but not
below zero) by the amount of such deficiency and any remaining Investor
Dealer Note Losses shall be deemed to be reimbursed to the extent of such
reduction.
SECTION IV.6 Investor Charge-Offs. If, for any Transfer Date on which
the Available Subordinated Amount equals or is reduced to zero (after giving
effect to the allocations, distributions, withdrawals and deposits to be made
on such Transfer Date) and the Deficiency Amount for such Transfer Date (as
reduced by the applications required by Section 4.05 of this Series
Supplement) is greater than zero, the Invested Amount shall be reduced by the
lesser of (i) such remaining Deficiency Amount for such Transfer Date and
(ii) the amount of Investor Dealer Note Losses for the related Due Period
remaining unreimbursed after all applications of funds or reductions of the
Available Subordinated Amount pursuant to Sections 4.04 and 4.05 (such lesser
amount being an "Investor Charge-Off").
SECTION IV.7 Application of Seller's Finance Charge Collections After
the 1990 Trust Termination Date.
(a) Application of Available Seller's Finance Charge
Collections. On each Transfer Date related to a Due Period commencing after
the 1990 Trust Termination Date, the Master Trust Trustee, acting in
accordance with instructions from the Servicer, shall withdraw and apply from
the Collections Account to the extent of Available Seller's Finance Charge
Collections for such Due Period, the following amounts in the following order
of priority:
(i) On each Transfer Date related to a Due Period for
which a Deficiency Amount exists, the amount required by Section
4.05(b)(i) shall be applied as specified in Section 4.05(b).
(ii) On each Transfer Date related to a Due Period
occurring during an Early Amortization Period, the amount, if any, by
which the Available Subordinated Amount as of the end of such Transfer
Date exceeds the amount of funds on deposit in the Liquidity Reserve
Account shall be deposited in the Liquidity Reserve Account.
(iii) On each Transfer Date on which the full Spread
Account Deposit Amount was not deposited in the Spread Account pursuant
to Section 4.04(a)(v), an amount equal to the shortfall in such Spread
Account Deposit Amount shall be deposited in the Spread Account.
(iv) Any remaining Available Seller's Finance Charge
Collections for the related Due Period shall be allocated and paid to
the Seller.
(b) Application of Series Allocable Finance Charge Collections
to the Seller. On each Transfer Date related to a Due Period commencing
after the 1990 Trust Termination Date, the Master Trust Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Collections Account and allocate and pay to the Seller an amount equal to the
product of (i) the result of the Excess Seller's Percentage for such Due
Period minus the Required Excess Seller Interest Percentage and (ii) Series
Allocable Finance Charge Collections for such Due Period.
SECTION IV.8 Application of Series Allocable Principal Collections
After the 1990 Trust Termination Date. On each Business Day after the 1990
Trust Termination Date, the Master Trust Trustee, acting in accordance with
instructions from the Servicer, shall withdraw Series Allocable Principal
Collections for such Business Day from the Collections Account and apply such
funds in the following amounts:
(a) Investor Principal Collections During Revolving Period.
During the Revolving Period, an amount equal to Investor Principal
Collections for such Business Day shall be treated as Shared Principal
Collections, and applied, pursuant to the written direction of the Servicer,
pursuant to Section 4.03(e) of the Agreement.
(b) Investor Principal Collections during Accumulation Period
or Early Amortization Period. During the Accumulation Period or any Early
Amortization Period, Investor Principal Collections for such Business Day
shall be allocated to the Series 1998-1 Certificateholders and deposited into
the Series Principal Account to the extent the Invested Amount as of the
preceding Distribution Date exceeds the amount of funds on deposit in the
Series Principal Account on such Business Day; provided, however, that for
each Business Day of a Due Period occurring during the Accumulation Period,
the amount of Investor Principal Collections deposited in the Series
Principal Account on such Business Day, when added to the amount of Investor
Principal Collections previously deposited in the Series Principal Account
during such Due Period, shall not exceed the Controlled Deposit Amount for
such Due Period. Any Investor Principal Collections remaining after the
applications described in the preceding sentence shall be treated as Shared
Principal Collections, and applied, pursuant to the written direction of the
Servicer, pursuant to Section 4.03(e) of the Agreement.
(c) Seller's Principal Collections During the Revolving Period
During the Revolving Period, all Seller's Principal Collections for such
Business Day shall be deemed to be Series 1998-1 Shared Seller Principal
Collections and shall be allocated as provided in Section 4.08(d)(iii).
(d) Seller's Principal Collections During Accumulation Period
or Early Amortization Period; Shared Seller Principal Collections.
(i) During the Accumulation Period, Available Seller's
Principal Collections for such Business Day shall be deemed to be
"Remaining Available Seller's Principal Collections," which shall be
included in Series 1998-1 Shared Seller Principal Collections and
allocated as provided in clause (iii) below. During the Accumulation
Period, Excess Seller's Principal Collections shall be included in
Series 1998-1 Shared Seller Principal Collections and allocated as
provided in clause (iii) below.
(ii) During any Early Amortization Period Available
Seller's Principal Collections for such Business Day shall be deposited
in the Liquidity Reserve Account to the extent the Available
Subordinated Amount as of the end of the immediately preceding Transfer
Date exceeds the amount of funds on deposit in the Liquidity Reserve
Account (including amounts deposited pursuant to Section 4.07(a)(ii)).
The amount required to be deposited pursuant to the preceding sentence
shall be reduced by the amount of Available Seller's Finance Charge
Collections deposited in the Liquidity Reserve Account on such Business
Day. Any remaining Available Seller's Principal Collections for such
Business Day shall be deemed to be "Remaining Available Seller's
Principal Collections." During any Early Amortization Period, all
Excess Seller's Principal Collections, all Remaining Available Seller's
Principal Collections and all shared seller principal collections of
any other Series that provides for shared seller principal collections
not allocated in respect of principal shortfalls shall be allocated and
paid to the Seller or deposited in the Excess Funding Account to the
extent necessary to maintain the Master Trust Seller's Interest at an
amount equal to (or, in the Seller's discretion, greater than) the
Minimum Master Trust Seller's Interest.
(iii) During the Revolving Period or the Accumulation
Period, Series 1998-1 Shared Seller Principal Collections, if any, and
shared seller principal collections for any other Series that provides
for shared seller principal collections shall be determined on each
business day and allocated in the following priority: (i) to the
1998-1 Series to the extent of any Series 1998-1 Accumulation Period
Principal Shortfall and to any other Series to the extent such Series
provides for the use of shared seller principal collections in respect
of principal shortfalls, (ii) to the Excess Funding Account to the
extent necessary to maintain the Master Trust Seller's Interest at an
amount equal to (or, in the discretion of the Seller, greater than) the
Minimum Master Trust Seller's Interest and (iii) to the Seller. If
shared seller principal collections for all Series, including Series
1998-1 Shared Seller Principal Collections, are less than the
shortfalls for which shared seller principal collections may be used,
including any Series 1998-1 Accumulation Period Principal Shortfall,
then such shared seller principal collections will be allocated to all
such shortfalls, including any Series 1998-1 Accumulation Period
Principal Shortfall, pro rata based on the relative amounts of each
such shortfall.
(iv) "Series 1998-1 Shared Seller Principal Collections"
means on each business day (i) during a Revolving Period, all Available
Seller's Principal Collections and all Excess Seller's Principal
Collections and (ii) during an Accumulation Period, all Remaining
Available Seller's Principal Collections and all Excess Seller's
Principal Collections. There shall be no Series 1998-1 Shared Seller
Principal Collections during any Early Amortization Period.
(e) If on any Distribution Date during an Early Amortization
Period after the application of all funds to be allocated or distributed on
such date the excess, if any, of (x) the Invested Amount over (y) the amount
in the Series Principal Account (the "Early Amortization Period Shortfall
Amount") is less than or equal to the aggregate amount of funds contained in
the Liquidity Reserve Account then funds shall be withdrawn in an amount
equal to the Early Amortization Period Shortfall Amount and shall be
deposited in the Series Principal Account.
SECTION IV.9 Shared Principal Collections.
(a) That portion of Shared Principal Collections for any
Business Day equal to the amount of Series 1998-1 Shared Principal
Collections for such Business Day will be allocated to Series 1998-1 and will
be applied in the same manner as Investor Principal Collections pursuant to
Section 4.08(b) and otherwise will be deposited in the Excess Funding Account
to the extent necessary to maintain the Master Trust Seller's Interest at an
amount equal to (or, in the discretion of the Seller, greater than) the
Minimum Master Trust Seller's Interest or allocated to the Seller.
(b) "Series 1998-1 Shared Principal Collections," with respect
to any Business Day commencing after the 1990 Trust Termination Date, shall
mean an amount equal to the Series 1998-1 Principal Shortfall for such
Business Day; provided, however, that, if the aggregate amount of Shared
Principal Collections for all Series for such Business Day is less than the
aggregate amount of Principal Shortfalls for all Series for such Business
Day, then Series 1998-1 Shared Principal Collections for such Business Day
shall equal the product of (x) Shared Principal Collections for all Series
for such Business Day and (y) a fraction, the numerator of which is the
Series 1998-1 Principal Shortfall for such Business Day and denominator of
which is the aggregate amount of Principal Shortfalls for all Series for such
Business Day.
SECTION IV.10 Distributions to Series 1998-1 Certificateholders. On
each Transfer Date, after all allocations to the Distribution Account and the
Series Principal Account for the related Transfer Date have been made, the
Master Trust Trustee, acting in accordance with instructions from the
Servicer, shall transfer to the Distribution Account the funds on deposit in
the Series Principal Account and shall make, without duplication, the
following distributions from the Distribution Account:
(a) Interest Distributions. On each Distribution Date
(including the Expected Payment Date), Monthly Interest will be distributed
to the Series 1998-1 Certificateholders as accrued interest on the 1998-1
Certificates. To the extent any interest is due but not distributed on any
such Distribution Date, such amount will be distributed on the following
Distribution Date, along with, to the extent permitted by law, interest at
the Certificate Rate on such amount.
(b) Expected Payment Date. On the Expected Payment Date, in
addition to the amount described in (a) above, amounts on deposit in the
Series Principal Account will be distributed as principal (up to a maximum of
the Invested Amount on such Distribution Date) on the Series 1998-1
Certificates.
(c) Early Amortization Period. On each Distribution Date
related to a Due Period occurring during an Early Amortization Period, in
addition to the amount described in (a) above, amounts on deposit in the
Series Principal Account will be distributed as principal (up to a maximum of
the Invested Amount on such Distribution Date) on the Series 1998-1
Certificates.
SECTION IV.11 Accumulation Period Length; Accumulation Period
Commencement Date. On or prior to the first Due Period which is nine months
prior to the Due Period related to the Distribution Date which is the
Expected Payment Date, the Servicer shall determine in its sole discretion
the Accumulation Period Length and the Accumulation Period Commencement Date
and, promptly following such determination, the Servicer shall notify the
Master Trust Trustee and the Rating Agencies in writing of such determination.
SECTION IV.12 Partial Month Due Period. The allocation and
distribution provisions in this Series Supplement are based upon the
assumptions that each Due Period will be a calendar month and that each Due
Period will have a unique related Transfer Date and Distribution Date.
However, under certain circumstances (such as the occurrence of an Early
Amortization Event, the Revolving Period could end on a date other than the
last day of a calendar month (the period from the first day of such month
(the "Subject Month") to and including the date of such occurrence being
referred to herein as the "Revolving Due Period"), and an Early Amortization
Period could commence on a date other than the first day of a calendar month
(the period from such other date until the last day of the Subject Month
being the "Amortizing Due Period"). If such a circumstance occurs, then the
Servicer, the Seller and the Master Trust Trustee shall observe the following
rules:
(i) the Transfer Date for both the Revolving Due Period
and the Amortizing Due Period shall be the date on which the Transfer
Date would have occurred if the Subject Month had been an ordinary Due
Period;
(ii) the allocations and distributions of Finance Charge
Collections (and all items derived from Finance Charge Collections,
such as Available Certificateholder Interest Collections and Available
Seller's Finance Charge Collections) and Dealer Note Losses occurring
during the Subject Month shall be made as if the Subject Month were one
Due Period, without any distinction between the Revolving Due Period
and the Amortizing Due Period; and
(iii) two separate sets of allocations and distributions of
Principal Collections (and all items derived from Principal
Collections, such as Investor Principal Collections and Seller's
Principal Collections) shall be made on such Transfer Date, according
to whether such Principal Collections were received during the
Revolving Due Period (in which case allocations and distributions shall
be made as provided in Sections 4.08(a) and (c)) or the Amortizing Due
Period (in which case allocations and distributions shall be made as
provided in Sections 4.08(b) and (d)).
SECTION IV.13 Additional Rights upon the Occurrence of Certain
Events. Notwithstanding the provisions of Section 9.02(a) of the Agreement,
if any insolvency event occurs with respect to the Seller, Navistar
International Corporation, Navistar International Transportation Corp. or
Navistar Financial Corporation on the day of such insolvency event, the
Seller will (subject to the actions of the Certificateholders) immediately
cease to transfer Dealer Notes to the 1990 Trust or the Master Trust, as
applicable, and promptly give notice to the Master Trust Trustee of such
insolvency event. Under the terms of the Pooling and Servicing Agreement, if
an insolvency event occurs with respect to the Seller after the 1990 Trust
Termination Date but prior to the date on which the Series 1998-1
Certificates issued by the Master Trust have been paid in full, then within
15 days the Master Trust Trustee will publish a notice of such insolvency
event stating that the Master Trust Trustee intends to sell, liquidate or
otherwise dispose of the Dealer Notes in a commercially reasonable manner and
on commercially reasonable terms, unless within a specified period of time
Certificate holders representing more than 50% of the aggregate series
invested amount of the certificates of each such Series and each person
holding a Supplemental Certificate, instruct the Master Trust Trustee not to
sell, dispose of or otherwise liquidate the Dealer Notes and to continue
transferring Dealer Notes as before such insolvency event.
SECTION IV.14 Voting of the Master Trust's Interests in the 1990
Trust. The Master Trust Trustee, acting at the direction of the Servicer,
will have the right, without the consent of the Certificateholders, to vote,
or to consent or withhold consent with respect to, the Class A-6 Investor
Certificate and any other Investor Certificate on any matter for which votes
or consents are solicited under the 1990 Trust Agreement, provided that (i)
such action will not, as evidenced by an officer's certificate of the
Servicer, have a material adverse effect on the Certificateholders of any
Series and (ii) each Rating Agency has been given written notice of the
substance of such amendment at least five Business Days prior to the
effectiveness thereof. The Master Trust Trustee will also have the right,
with the consent of the Applicable Voting Percentage of the
Certificateholders, to vote, or to consent or withhold consent, with respect
to the Class A-6 Investor Certificate and any other Investor Certificate on
any matter for which votes or consents are solicited under the 1990 Trust
Agreement.
"Applicable Voting Percentage" means, with respect to any matter for
which votes or consents are solicited under the 1990 Trust Agreement,
the percentage of votes or consents of the Investor Certificates needed
to pass the proposed matter.
ARTICLE V
DISTRIBUTIONS AND REPORTS
TO SERIES 1998-1 CERTIFICATEHOLDERS
SECTION V.1 Distributions.
(a) The Paying Agent shall distribute (in accordance with the
Monthly Servicer Certificate and Settlement Statement delivered by the
Servicer to the Master Trust Trustee and the Paying Agent pursuant to Section
3.04(d) of the Agreement) to each Series 1998-1 Certificateholder of record
on the preceding Record Date (other than as provided in Section 12.02 of the
Agreement respecting a final distribution) on each Distribution Date such
Certificateholder's pro rata share (based on the aggregate fractional
undivided interests represented by the Series 1998-1 Certificates held by
such Certificateholder) of the amounts on deposit in the Series 1998-1
Accounts as is payable to the Series 1998-1 Certificateholders on such
Distribution Date pursuant to Sections 4.10 (a), (b) and (c).
(b) Except as provided in Section 12.03 of the Agreement with
respect to a final distribution, distributions to Series 1998-1
Certificateholders hereunder shall be made by check mailed to each Series
1998-1 Certificateholder at such Certificateholder's address appearing in the
Certificate Register without presentation or surrender of any Series 1998-1
Certificate or the making of any notation thereon; provided, however, that,
with respect to Series 1998-1 Certificates registered in the name of a Common
Depository, such distributions shall be made to such Common Depository in
immediately available funds.
SECTION V.2 Monthly and Annual Certificateholders' Statement.
(a) Monthly Series 1998-1 Certificateholders' Statement. At
least two Business Days prior to each Distribution Date, the Servicer will
provide to the Master Trust Trustee and the Paying Agent, and on each
Distribution Date, the Paying Agent shall forward to each Series 1998-1
Certificateholder a Monthly Servicer Certificate and Settlement Statement
substantially in the form of Exhibit B-1 prior to the 1990 Trust Termination
Date or substantially in the form of Exhibit B-2 after the 1990 Trust
Termination Date, in each case with such changes as the Servicer shall deem
necessary or appropriate, prepared by the Servicer and delivered to the
Master Trust Trustee setting forth, among other things, the following
information which, prior to the 1990 Trust Termination Date, will include
only the amounts specified in (iii), (iv), (v), (xi), (xiv), (xv) and (xvi)
below, and which, in the case of (i), (ii), (iii), (viii), and (ix) below,
shall be stated on the basis of an original principal amount of $1,000 per
Series 1998-1 Certificate:
(i) the aggregate amount of Collections, including the
aggregate amount of Finance Charge Collections and the aggregate amount
of Principal Collections for the related Due Period;
(ii) the Series 1998-1 Allocation Percentage, the Floating
Allocation Percentage and the Principal Allocation Percentage (if
applicable) for the related Due Period;
(iii) the total amount to be distributed on the Series
1998-1 Certificates on such Distribution Date;
(iv) the amount, if any, of such distribution allocable to
the Invested Amount;
(v) the amount, if any, of such distribution allocable to
interest on the Series 1998-1 Certificates;
(vi) Dealer Note Losses for the related Due Period;
(vii) the Draw Amount as of the related Transfer Date, if any;
(viii) the amount of the Investor Charge-Offs and the
amount of reimbursement thereof as of the related Transfer Date;
(ix) the amount of the Investor Servicing Fee to be paid
on such Distribution Date;
(x) the Controlled Deposit Amount for the related Due
Period (if applicable);
(xi) the Invested Amount (after giving effect to all
distributions that will occur on such Distribution Date);
(xii) the aggregate amount of Dealer Notes and funds on
deposit in each of the Excess Funding Account, Series Principal Account
and Spread Account as of the end of the last day of the related Due
Period (after giving effect to payments and adjustments made pursuant
to Article IV of this Series Supplement and of the Agreement);
(xiii) the Available Subordinated Amount as of the end
of the related Transfer Date;
(xiv) with respect to Eligible Investments in the Series
Principal Account, the Excess Funding Account and the Liquidity Reserve
Account, as of the last day of the related Due Period, the aggregate
amount of funds invested in Eligible Investments in each such Series
Account, a brief description of each such Eligible Investment and
amount invested in each such Eligible Investment, the rate of interest
applicable to each such Eligible Investment and the rating of each such
Eligible Investment;
(xv) the Dealers with the five largest aggregate
outstanding principal amounts of Dealer Notes in the 1990 Trust or the
Master Trust, as the case may be, as of the end of the related Due
Period;
(xvi) the aggregate outstanding principal amount of Dealer
Notes issued to finance OEM Vehicles as of the end of the related Due
Period;
(xvii) the percentages and all other information
calculated pursuant to Section 6.01 to determine whether an Early
Amortization Event has occurred;
(xviii) the amount of Excess Interest Collections and
Investor Principal Collections treated as Shared Principal Collections,
each for the related Due Period, and the amount of such Excess Interest
Collections and Shared Principal Collections allocated to other Series;
and
(xix) the amount of Remaining Available Seller's Principal
Collections, the amount of Excess Seller's Principal Collections and
Remaining Available Seller's Principal Collections treated as Series
1998-1 Shared Seller Principal Collections, the amount of Shared Seller
Principal Collections from other Series, and the amount of Shared
Seller Principal Collections allocated to Series 1998-1 and to other
Series, each for the related Due Period.
(b) On each Distribution Date related to a Due Period
commencing prior to the 1990 Trust Termination Date, the Master Trust Trustee
shall furnish to the Paying Agent and the Paying Agent shall forward to each
Series 1998-1 Certificateholder the statement to be delivered pursuant to
Section 5.02(a) of the 1990 Trust Agreement.
(c) A copy of each statement provided pursuant to subsections
(a) and (b) will be made available for inspection at the Corporate Trust
Office.
(d) Annual Certificateholder's Tax Statement. On or about
January 31 of each calendar year, beginning with calendar year 1999, the
Master Trust Trustee shall furnish to the Servicer and Paying Agent a list of
each Person who at any time during the preceding calendar year was a Series
1998-1 Certificateholder and received any payment thereon and the dates such
Person held a Series 1998-1 Certificate, and the Paying Agent shall furnish
to each such Series 1998-1 Certificateholder a statement prepared by the
Paying Agent containing the information prepared by the Master Trust Trustee
which is required to be contained in the statement to Series 1998-1
Certificateholders as set forth in Sections 5.02(a)(iii)-(a)(v) above,
aggregated for such calendar year or the applicable portion thereof during
which such Person was a Series 1998-1 Certificateholder, together with such
other customary information as the Master Trust Trustee or the Servicer
deems necessary or desirable to enable the Series 1998-1 Certificateholders
to prepare their tax returns, including information (to be supplied by the
Servicer to the Master Trust Trustee) regarding original issue discount on
the Series 1998-1 Certificates, if any. Such obligation of the Paying Agent
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Master Trust Trustee pursuant
to any requirements of the Internal Revenue Code as from time to time in
effect.
ARTICLE VI
EARLY AMORTIZATION EVENTS
SECTION VI.1 Additional Early Amortization Events. The occurrence of
any of the following events shall, immediately upon the occurrence thereof
without notice or other action on the part of the Master Trust Trustee or the
Series 1998-1 Certificateholders, be deemed to be an Early Amortization Event
solely with respect to Series 1998-1:
(a) the Invested Amount is not reduced to zero by the Expected
Payment Date;
(b) the United States government or any agency or
instrumentality thereof files a notice of a lien under Internal Revenue Code
ss.6323 or any similar statutory provision (including, but not limited to,
ss.302(f) orss.4068 of ERISA) on the assets of NFC or NFSC which is or may in
the future be prior to the lien of the Master Trust Trustee or the assets of
the Master Trust (including, without limitation, proceeds of the Dealer
Notes);
(c) failure on the part of the Seller (i) to make any payment,
distribution or deposit required under the Agreement within five business
days of the date required or (ii) to observe or perform in any material
respect any other material covenants or agreements of the Seller, which
continues unremedied for a period of 60 days after written notice of such
failure shall have been given to the Seller;
(d) any representation or warranty made by the Seller pursuant
to the Agreement or any information contained in the schedule of Dealer Notes
delivered thereunder or this Series Supplement shall prove to have been
incorrect in any material respect when made or when delivered, which
representation, warranty or schedule, or the circumstances or condition that
caused such representation, warranty or schedule to be incorrect, continues
to be incorrect or uncured in any material respect for a period of 60 days
after written notice of such incorrectness shall have been given to the
Seller and as a result of which the interests of the Series 1998-1
Certificateholders are materially and adversely affected, except that an
Early Amortization Event shall not be deemed to occur if the Seller has
repurchased the related Dealer Notes or all such Dealer Notes, if applicable,
during such period in accordance with the provisions of the Agreement;
(e) after the 1990 Trust Termination Date, the Seller shall
become legally unable for any reason to transfer Dealer Notes to the Master
Trust in accordance with the provisions of the Agreement;
(f) on any Transfer Date related to a Due Period commencing
after the 1990 Trust Termination Date, the Available Subordinated Amount for
such Transfer Date will be reduced to an amount less than the Required
Subordinated Amount;
(g) any Servicer Termination Event shall occur (i) which would
have a material adverse effect on the Series 1998-1 Certificateholders and
(ii) for which the Servicer has received a notice of termination;
(h) the delivery by the Seller to the Master Trust Trustee,
after the 1990 Trust Termination Date, of a notice stating that the Seller
will no longer continue to sell Dealer Notes to the Master Trust commencing
on the date specified in such notice;
(i) after the 1990 Trust Termination Date, the Average Coverage
Differential shall be equal to or less than negative two percent (-2.00%) on
each of three consecutive Determination Dates;
(j) at the end of any Due Period commencing after the 1990
Trust Termination Date, the Master Trust Seller's Interest is reduced to an
amount less than the Master Trust Minimum Seller's Interest and the Seller
has failed to assign additional Dealer Notes to the Master Trust in the
amount of such deficiency within ten Business Days following the end of such
Due Period;
(k) on any Determination Date after the 1990 Trust Termination
Date, the quotient of (i) the product of (a) the sum of Dealer Note
Collections for each of the related Due Period and the two immediately
preceding Due Periods and (b) four divided by (ii) the daily average
principal amount of Dealer Notes outstanding during such Due Periods
("Turnover") is less than 1.7;
(l) on any Determination Date after the 1990 Trust Termination
Date, the quotient of (i) the sum of Dealer Note Losses for each of the
related Due Period and the five immediately preceding Due Periods and
(ii) the sum of Principal Collections for each of the related Due Period and
the five immediately preceding Due Periods, is greater than or equal to one
percent (1.00%);
(m) at any time prior to the 1990 Trust Termination Date, a
1990 Trust Amortization Event occurs under the 1990 Trust with respect to the
Class A-6 Investor Certificate (other than a 1990 Trust Amortization Event
that also constitutes an Early Amortization Event under the Master Trust),
the Seller is required to repurchase the Class A-6 Investor Certificate under
Section 2.06 of the 1990 Trust Agreement, or the Scheduled Class Amortization
Date occurs with respect to the Class A-6 Investor Certificate;
(n) any of the Seller, NITC, NIC or NFC shall file a petition
commencing a voluntary case under any chapter of the federal bankruptcy laws;
or the Seller or NFC shall file a petition or answer or consent seeking
reorganization, arrangement, adjustment or composition under any other
similar applicable federal law, or shall consent to the filing of any such
petition, answer or consent; or the Seller, NITC, NIC or NFC shall appoint,
or consent to the appointment of a custodian, receiver, liquidator, trustee,
assignee, sequestrator or other similar official in bankruptcy or insolvency
of it or of any substantial part of its property; or the Seller, NITC, NIC or
NFC shall make an assignment for the benefit of creditors, or shall admit in
writing its inability to pay its debts generally as they become due;
(o) any order for relief against any of the Seller, NITC, NIC
or NFC shall have been entered by a court having jurisdiction in the premises
under any chapter of the federal bankruptcy laws, and such order shall have
continued undischarged or unstayed for a period of 120 days; or a decree or
order by a court having jurisdiction in the premises shall have been entered
approving as properly filed a petition seeking reorganization, arrangement,
adjustment, or composition of the Seller, NITC, NIC or NFC under any other
similar applicable federal law, and such decree or order shall have continued
undischarged or unstayed for a period of 120 days; or a decree or order of a
court having jurisdiction in the premises for the appointment of a custodian,
receiver, liquidator, trustee, assignee, sequestrator or other similar
official in bankruptcy or insolvency of the Seller, NITC, NIC or NFC of any
substantial part of their property, or for the winding up or liquidation of
their affairs, shall have been entered, and such decree or order shall have
remained in force undischarged or unstayed for a period of 120 days; and
(p) after the 1990 Trust Termination Date, failure on the part
of NITC to make a deposit in the Interest Deposit Account required by the
terms of the Interest Deposit Agreement on or before the date occurring five
Business Days after the date such deposit is required by the Interest Deposit
Agreement to be made.
ARTICLE VII
OTHER SERIES PROVISIONS
SECTION VII.1 Conveyance of Dealer Notes. Upon the date on which each
other Series is either no longer outstanding or the fully funded date has
occurred with respect thereto, the Master Trust Trustee shall sell, assign
and convey to the Seller or its designee, without recourse, representations
or warranty, all right, title and interest of the Master Trust in the Dealer
Notes, whether then existing or thereafter created, all security interests
in the Financed Vehicles with respect thereto, all monies due or to become
due and all amounts received with respect thereto and all proceeds thereof
except for amounts on deposit in the Collections Account that are allocable
to Investor Certificates and amounts on deposit in any Series Account. The
Master Trust Trustee shall execute and deliver such instruments of transfer
and assignment, in each case without recourse, as shall be reasonably
requested by the Seller to vest in the Seller or its designee all right,
title and interest which the Master Trust had in all such property.
SECTION VII.2 Tax Treatment. The Seller has entered into the
Agreement and this Series Supplement and the Series 1998-1 Certificates have
been issued with the intention that the Series 1998-1 Certificates will
qualify under applicable tax law as indebtedness secured by the Master Trust
assets attributable to the Series 1998-1 Certificates. The Seller and each
Series 1998-1 Certificateholder and Certificate Owner, by the acceptance of
its Series 1998-1 Certificate or Book-Entry Certificate, as applicable,
agrees to treat the Series 1998-1 Certificates as indebtedness secured by the
Master Trust assets attributable to the Series 1998-1 Certificates, for
Federal income taxes, state and local income and franchise taxes and any
other taxes imposed on or measured by income in whole or in part.
ARTICLE VIII
FINAL DISTRIBUTIONS
SECTION VIII.1 Sale of Investors' Interest Pursuant to Section 2.07 of
the Agreement; Distributions Pursuant to Section 2.03 or 12.03 of the
Agreement.
(a) The amount to be paid by the Seller to the Collections
Account with respect to Series 1998-1 in connection with a purchase of the
Certificateholders' Interest pursuant to Section 2.07 of the Agreement shall
equal the Reassignment Amount for the Distribution Date on which such
purchase occurs.
(b) With respect to the Reassignment Amount, if any, deposited
into the Collections Account pursuant to this Section 8.01 of this Series
Supplement or Section 2.07 of the Agreement or any proceeds deposited into
the Collections Account pursuant to Section 12.03(c) of the Agreement, the
Master Trust Trustee shall, not later than 12:00 noon, New York City time, on
the Distribution Date on which such amounts are deposited (or, if such date
is not a Distribution Date, on the immediately following Distribution Date)
(in the priority set forth below): (i) first, deposit the Invested Amount on
such Distribution Date into the Series Principal Account, (ii) second,
deposit the amount of accrued and unpaid interest on the unpaid balance of
the Series 1998-1 Certificates in the Distribution Account, and (iii) third,
pay the remainder of any such Reassignment Amounts to the Seller.
(c) Notwithstanding any other provision to the contrary in this
Series Supplement or the Agreement, the entire amount deposited in the Series
Principal Account on a Distribution Date pursuant to Section 8.01(b) and all
other amounts on deposit therein shall be distributed in full to the Series
1998-1 Certificateholders on such Distribution Date and any distribution made
pursuant to this paragraph (c) shall be deemed to be a final distribution
pursuant to Section 12.03 of the Agreement with respect to Series 1998-1.
SECTION VIII.2 Distribution of Proceeds of Sale, Disposition or
Liquidation of the Dealer Notes Pursuant to Section 9.02 of the Agreement.
(a) Not later than 12:00 noon, New York City time, on the
Distribution Date following the date on which the Insolvency Proceeds are
deposited into the Collections Account pursuant to Section 9.02(b) of the
Agreement, the Master Trust Trustee shall first (in each case, after giving
effect to any deposits and distributions otherwise to be made on such
Distribution Date) deduct an amount equal to the Invested Amount on such
Distribution Date from the portion of the Insolvency Proceeds allocated to
Series Allocable Principal Collections and deposit such amount in the Series
Principal Account; provided that the amount of such deposit shall not exceed
the product of (x) the portion of the Insolvency Proceeds allocated to Series
Allocable Principal Collections and (y) 100% minus the Excess Seller's
Percentage with respect to the related Due Period. The remainder of the
portion of the Insolvency Proceeds allocated to Series Allocable Principal
Collections shall be allocated to the Master Trust Seller's Interest and
shall be distributed on such Distribution Date to the Seller.
(b) Not later than 12:00 noon, New York City time, on such
Distribution Date, the Master Trust Trustee shall first (in each case, after
giving effect to any deposits and distributions otherwise to be made on such
Distribution Date) deduct an amount equal to the sum of (i) Monthly Interest
for such Distribution Date, (ii) any Monthly Interest previously due but not
distributed on a prior Distribution Date and (iii) to the extent permitted by
law, interest at the Certificate Rate on Monthly Interest that was due but
not previously distributed to the Series 1998-1 Certificateholders on a prior
Distribution Date, from the portion of the Insolvency Proceeds allocated to
Series Allocable Finance Charge Collections and deposit such amount in the
Distribution Account; provided that the amount of such distribution shall not
exceed the product of (x) the portion of the Insolvency Proceeds allocated to
Series Allocable Finance Charge Collections and (y) 100% minus the Excess
Seller's Percentage with respect to the related Due Period. The remainder of
the portion of the Insolvency Proceeds allocated to Series Allocable Finance
Charge Collections shall be allocated to the Master Trust Seller's Interest
and shall be distributed on such Distribution Date to the Seller.
(c) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the Series
Principal Account and the Distribution Account pursuant to this Section 8.02
and all other amounts on deposit therein shall be distributed in full to the
Series 1998-1 Certificateholders on the Distribution Date on which funds are
deposited pursuant to this Section 8.02 (or, if not so deposited on a
Distribution Date, on the immediately following Distribution Date) and any
distribution made pursuant to this Section 8.02 shall be deemed to be a final
distribution pursuant to Section 12.03 of the Agreement with respect to
Series 1998-1.
SECTION VIII.3 Early Distribution Upon the Occurrence of an Early
Amortization Event. Upon the occurrence of an Early Amortization Event, an
Early Distribution will be deemed to have occurred immediately prior to the
end of the last day of the Revolving Period (the "Early Distribution Date")
with respect to a portion (the "Early Distribution Amount") of the Invested
Amount of the Series 1998-1 Certificates equal to the principal amount, if
any of the Special Structured Notes held in the Excess Funding Account. An
"Early Distribution" with respect to the Series 1998-1 Certificates means
that principal in respect of the Series 1998-1 Certificates held by the
Special Issuer, in an amount equal to the principal amount of Special
Structured Notes held in the Excess Funding Account, will be deemed to be
paid to the Special Issuer in exchange for the cancellation of such Special
Structured Notes. The effect of such Early Distribution will be to reduce,
simultaneously, the Invested Amount of the Series 1998-1 Certificates and the
amount of Eligible Investments in the Excess Funding Account, each in an
amount equal to the Early Distribution Amount. If less than all of the
Invested Amount is the subject of an Early Distribution, a new Series 1998-1
Certificate representing the Invested Amount which was not subject to such
Early Distribution shall be issued to the applicable Series 1998-1
Certificateholder without cost to such holder within 10 days after surrender
of its Series 1998-1 Certificate to the Master Trust Trustee.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION IX.1 Ratification of Agreement. As supplemented by this
Series Supplement, the Agreement is in all respects ratified and confirmed
and the Agreement as so supplemented by this Series Supplement shall be read,
taken and construed as one and the same instrument.
SECTION IX.2 Counterparts. This Series Supplement 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 IX.3 GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE
CONSTRUED, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, EXCEPT THAT
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE MASTER TRUST TRUSTEE SHALL BE
DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS.
SECTION IX.4 Amendments and Supplements. In the event additional
classes of Investor Certificates ("Additional Certificates") payable out of
Series Allocable Principal Collections and Series Allocable Finance Charge
Collections allocated to the Series 1998-1 Certificates on the basis of the
Series 1998-1 Allocation Percentage are issued, or the terms of such
Additional Certificates are amended or supplemented, which requires amendment
to or supplement of this Series Supplement, the Agreement and the other
related documents, notwithstanding anything in this Series Supplement or the
Agreement to the contrary, such amendments or supplements may be made without
the consent of the Holders of the Series 1998-1 Certificates provided that
the Rating Agency Condition shall have been satisfied with respect to such
amendments or supplements.
[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Seller, the Servicer and the Master
Trust Trustee have caused this Series Supplement to be duly executed by their
respective officers as of the day and year first above written.
NAVISTAR FINANCIAL SECURITIES CORPORATION
as Seller
By: /s/R. Xxxxx Xxxx
R. Xxxxx Xxxx
Vice President and Treasurer
NAVISTAR FINANCIAL CORPORATION
as Servicer
By: /s/R. Xxxxx Xxxx
R. Xxxxx Xxxx
Vice President and Treasurer
THE BANK OF NEW YORK
as Master Trust Trustee
By: ______________________________________
Name: ___________________________________
Title: ____________________________________
