Exhibit 10.3

EXECUTION VERSION

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT, effective as of October 5, 2012 (this
“Agreement”), is entered into by and among Navistar International Corporation, a
Delaware corporation (the “Company”), and other persons and entities signatory
hereto (each, a “Holder” and together, the “Holders”).

ARTICLE I

DEFINITIONS

Section 1.01 Definitions. The following terms shall have the meanings ascribed
to them below:

“Agreement” means this Agreement, as amended, modified or supplemented from time
to time, in accordance with the terms hereof, together with any exhibits,
schedules or other attachments thereto.

“Board” has the meaning set forth in Section 2.06(a).

“Business Day” means any day other than a Saturday, Sunday or a day on which
banks in New York, New York are authorized or obligated by applicable law or
executive order to close or are otherwise generally closed.

“Commission” means the United States Securities and Exchange Commission or any
other federal agency at the time administering either the Securities Act or the
Exchange Act.

“Common Stock” means the Company’s common stock of $0.10 par value (and any
other securities into which or for which the Common Stock may be converted or
exchanged pursuant to a dividend, stock split, plan of recapitalization,
reorganization, merger, sale of assets or otherwise).

“Company” has the meaning set forth in the preamble to this Agreement.

“Covered Person” has the meaning set forth in Section 3.01.

“Damages” has the meaning set forth in Section 3.01.

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“Demand Registration” has the meaning set forth in Section 2.01(a).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.

“Holder” and “Holders” has the meaning set forth in the preamble to this
Agreement, and shall include any Permitted Transferee that becomes a Holder
pursuant to Section 4.04.

“Holders’ Counsel” has the meaning set forth in Section 2.03.

“Indemnified Party” has the meaning set forth in Section 3.03.

“Indemnifying Party” has the meaning set forth in Section 3.03.

“FINRA” means the Financial Industry Regulatory Authority, Inc.

“Participating Holders” shall mean Holders participating in the registration
relating to the Registrable Securities.

“Permitted Transferee” has the meaning set forth in Section 4.04.

“Person” shall mean any individual, corporation, partnership, firm, limited
liability company, joint venture, trust, association, unincorporated
organization, university, group, joint-stock company or other entity.

“Piggyback Registration” has the meaning set forth in Section 2.02(a).

“register”, “registered” and “registration” shall mean any registration effected
by preparing and (a) filing a Registration Statement in compliance with the
Securities Act (and any post-effective amendments filed or required to be filed)
and the declaration or ordering of effectiveness of such Registration Statement,
or (b) filing a prospectus and/or prospectus supplement in respect of an
appropriate effective Registration Statement.

“Registrable Securities” means, subject to the last sentence of this definition,
the shares of Common Stock (x) beneficially owned by any of the Holders prior to
the date of this Agreement and (y) acquired by any Holder by way of a dividend,
stock split, recapitalization, plan of reorganization, merger, sale of assets or
otherwise. As to any particular Registrable Securities, such securities shall
cease to be Registrable Securities when (i) they are sold or

 

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otherwise transferred pursuant to an effective registration statement under the
Securities Act, (ii) they have been sold under Rule 144 (or any similar
provision then in force) under the Securities Act, (iii) they have been sold or
otherwise transferred to any Person other than to a Holder or Permitted
Transferee, (iv) they may immediately be sold under Rule 144 (or any similar
provision then in force) under the Securities Act or (v) such shares of Common
Stock shall have ceased to be outstanding.

“Registration Expenses” has the meaning set forth in Section 2.03.

“Registration Request” has the meaning set forth in Section 2.01(a).

“Registration Statement” means any registration statement of the Company on an
appropriate registration form under the Securities Act that covers any of the
Registrable Securities, including the prospectus, amendments and supplements
thereto, and all exhibits and material incorporated by reference therein.

“Request Date” means the date of the applicable Request Notice.

“Request Notice” has the meaning set forth in Section 2.01(a).

“Requesting Holder” has the meaning set forth in Section 2.01(a).

“Scheduled Black-out Period” means, for each fiscal quarter of the Company, the
period commencing on (and including) the tenth calendar day before the end of
the quarter and ending on (and including) the third Business Day after the date
of release for publication of the Company’s summary statements of sales and
earnings for such fiscal quarter (or, in the case of the fourth quarter, the
summary statement of sales and earnings for the fiscal year then ended).

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

“Suspension Notice” has the meaning set forth in Section 2.06(a).

“Underwriter” means a securities dealer who purchases any Registrable Securities
as principal in an underwritten offering and not as part of such dealer’s
market-making activities.

“Underwriters’ Maximum Number” means, for any Demand Registration or Piggyback
Registration, that number of securities to which such registration should, in
the opinion of the managing Underwriter(s) of such registration, in the light of
marketing factors (including an adverse effect on the per share offering price),
be limited.

 

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ARTICLE II

REGISTRATION RIGHTS

Section 2.01 Demand For Registration; Underwritten Offering.

(a) Requests for Registration. Subject to the blackout provisions contained in
Section 2.06 and the limitations set forth in this Section 2.01, a Holder or
group of Holders (such Holder or group of Holders, the “Requesting Holder(s)”)
shall have the right to require the Company to effect a registration with
respect to Registrable Securities beneficially owned by such Requesting
Holder(s) for an underwritten registration under the Securities Act (a
“Registration Request”) by delivering a written request therefor (a “Request
Notice”) to the Company specifying the number of Registrable Securities to be
included in such underwritten registration by the Requesting Holder(s). In no
event shall the Requesting Holder(s) make a Registration Request under this
Section 2.01(a) to offer in the aggregate less 1,000,000 shares of Registrable
Securities. Any registration requested by a Holder or Holders pursuant to this
Section 2.01(a) is referred to in this Agreement as a “Demand Registration”. The
Company shall not be obliged under this Section 2.01(a) to effect more than one
(1) Demand Registration during any twelve-month period or three (3) Demand
Registrations in total. For the avoidance of doubt, the Company, at its sole
option, may elect to utilize an existing Registration Statement for the purpose
of registering any Registrable Securities covered by a Demand Registration.

(b) Underwriting. The offering of the Registrable Securities pursuant to such
Demand Registration shall be in the form of an underwritten public offering
only. The Company shall select an investment banking firm of national standing
to be the managing Underwriter for the offering, which firm shall be reasonably
acceptable to the Requesting Holder(s). The Company and the Requesting Holder(s)
shall enter into an underwriting agreement in customary form with the managing
Underwriter, which underwriting agreement shall have substantially the same
indemnification provisions as set forth in this Agreement.

(c) Priority on Demand Registration. If, in connection with a Demand
Registration, the managing Underwriter(s) give written advice to the Company of
an Underwriters’ Maximum Number, then the Company shall so advise all Requesting
Holder(s) and the Company will be obligated and required to include in such
registration only the Underwriters’ Maximum Number, which securities will be so
included in the following order of priority: (i) first, Registrable Securities
of the Requesting Holder(s), pro rata on the basis of the aggregate number of
Registrable Securities owned by all Requesting Holder(s) who have delivered
written requests for registration pursuant to this Section 2.01 (provided, that
if the aggregate number of Registrable Securities of the Requesting Holder(s)to
be included in the Demand Registration is less than 75% of the number requested
to be so included by such Requesting Holder(s), the Requesting Holder(s) may
withdraw such Demand Request by giving

 

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notice to the Company within three (3) days; if withdrawn, the Demand Request
shall be deemed not to have been made for all purposes of this Agreement),
(ii) second, any shares of Common Stock to be sold by the Company and
(iii) third, any shares of Common Stock requested to be included pursuant to the
exercise of other contractual registration rights granted by the Company (other
than Holders), pro rata among such holders (if applicable) on the basis of the
aggregate number of securities requested to be included by such holders.

(d) Effected Demand Registration. An offering pursuant to Section 2.01(a) shall
not be counted as a Demand Registration unless such offering is completed;
provided, however, that if the offering contemplated by a Request Notice does
not close within 90 days of the effectiveness of registration, despite the
commercially reasonable efforts of the Company, such offering shall be counted
as Demand Registration, and the Company shall have no further obligations to
effect such offering.

Section 2.02 Piggyback Registration.

(a) Notice of Piggyback Registration. If the Company proposes to register any of
its equity securities under the Securities Act either for the Company’s own
account or for the account of any of its stockholders (other than for Holder(s)
pursuant to Section 2.01 or pursuant to registrations on Form S-4 or any
successor form, on Form S-8 or any successor form relating solely to securities
issued pursuant to any benefit plan, an offering of securities solely to
then-existing stockholders of the Company, a dividend reinvestment plan, an
exchange offer or a registration on any registration form which does not permit
secondary sales or does not include substantially the same information as would
be required to be included in a Registration Statement) (each such registration
not withdrawn or abandoned prior to the effective date thereof being herein
called a “Piggyback Registration”), the Company will give written notice to all
Holders of such proposal not later than the twentieth (20th) day prior to the
anticipated filing date of such Piggyback Registration.

(b) Piggyback Rights. Subject to the provisions contained in Section 2.02(c),
the Company will be obligated and required to use commercially reasonable
efforts to include in each Piggyback Registration such Registrable Securities as
requested in a written notice from any Holder delivered to the Company no later
than ten (10) days following delivery of the notice from the Company specified
in Section 2.02(a).

(c) Priority on Piggyback Registrations. If a Piggyback Registration is an
underwritten registration, and the managing Underwriter(s) shall give written
advice to the Company of an Underwriters’ Maximum Number, then securities will
be included in the following order of priority: (i) equity securities proposed
to be included in such Piggyback Registration by the Company for its own
account, or on the account of such holder or holders for whom or for which the
registration was originally being effected pursuant to demand or other
registration rights, as applicable, and (ii) if the Underwriters’ Maximum Number
exceeds the number of securities proposed to be included pursuant to clause (i),
then such excess, up to the Underwriters’ Maximum Number, shall be allocated pro
rata to Participating Holders and any holders of other piggyback registration
rights on the basis of the number of securities requested to be included therein
by each such Person.

 

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(d) Selection of Underwriter(s). If the Piggyback Registration is proposed to be
underwritten, the Company will so advise the Holders in the notice referred to
in Section 2.02(a). In such event, the right of any Holder to registration
pursuant to this Section 2.02 will be conditioned upon such holder’s
participation in such underwriting and the inclusion of such holder’s
Registrable Securities in the underwriting. The Company, or the holder or
holders for whom or for which such registration was originally being effected
pursuant to demand or other registration rights, as applicable, shall have the
sole right to select the managing Underwriter(s) in any such underwritten
Piggyback Registration.

Section 2.03 Registration Expenses. In connection with registrations pursuant to
Section 2.01 or 2.02 hereof, the Company shall pay the following registration
costs and expenses incurred in connection with the registration thereunder (the
“Registration Expenses”): (i) registration and filing fees and expenses,
including, without limitation, those related to filings with the Commission,
(ii) fees and expenses of compliance with state securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities), (iii) reasonable processing,
duplicating and printing expenses, including, without limitation, expenses of
printing any prospectuses or issuer free writing prospectuses reasonably
requested by any Participating Holder, (iv) the Company’s internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties, the expense of any liability
insurance and the expense of any annual audit or quarterly review), (v) fees and
expenses incurred in connection with listing the Registrable Securities for
trading on a national securities exchange, including, without limitation, fees
and expenses of The New York Stock Exchange, (vi) fees and expenses, if any,
incurred with respect to any filing with FINRA, (vii) fees and expenses and
disbursements of counsel for the Company and fees and expenses for independent
certified public accountants retained by the Company (including, without
limitation, the expenses of any comfort letters or costs associated with the
delivery by independent certified public accountants of a comfort letter or
comfort letters requested), and (viii) fees and expenses of any special experts
retained by the Company in connection with such registration. Each Participating
Holder shall be responsible for any underwriting fees, discounts or commissions
as well as the fees and expenses and disbursements of counsel for any
Participating Holder (“Holders’ Counsel”) attributable to the sale of
Registrable Securities pursuant to a Registration Statement.

Section 2.04 Registration Procedures. In the case of each registration effected
by the Company pursuant to this Agreement, the Company shall keep each
Participating Holder advised in writing as to the initiation of each
registration and as to the completion thereof. In connection with any such
registration (in each case, to the extent applicable):

(a) The Company shall provide the Participating Holders and their counsel with a
reasonable opportunity to review, and comment on, the Registration Statement
with respect to Registrable Securities prior to the filing thereof with the
Commission, and the Company shall consider and respond to all such comments in
good faith. The Company shall prepare and file

 

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with the Commission a Registration Statement with respect to such Registrable
Securities and use its commercially reasonable efforts to cause such
Registration Statement to become effective, or prepare and file with the
Commission a prospectus supplement with respect to such Registrable Securities
pursuant to an effective Registration Statement and, upon the request of the
holders of a majority of the Registrable Securities registered thereunder, keep
such Registration Statement effective or such prospectus supplement current,
until the earlier of (A) the date on which all Registrable Securities covered
thereby have been sold pursuant to such registration and (B) the expiration of
ninety (90) days after such registration statement becomes effective.

(b) The Company will prepare and file with the Commission such amendments and
supplements to the Registration Statement, prospectus, prospectus supplement or
any issuer free writing prospectus used in connection with such Registration
Statement as may be necessary to comply with the provisions of the Securities
Act applicable to it with respect to the disposition of Registrable Securities
covered thereby for the period set forth in Section 2.05(a).

(c) Prior to filing a Registration Statement, a prospectus or any issuer free
writing prospectus or any amendment or supplement to such Registration
Statement, prospectus or issuer free writing prospectus, the Company will make
available to (i) each Participating Holder, (ii) Holders’ Counsel and (iii) each
Underwriter of the Registrable Securities covered by such Registration
Statement, copies of such Registration Statement, prospectus or issuer free
writing prospectus and each amendment or supplement as proposed to be filed,
together with any exhibits thereto, and thereafter, furnish to such
Participating Holders, Holders’ Counsel and Underwriters, if any, such number of
copies of such Registration Statement, prospectus or issuer free writing
prospectus and each amendment and supplement thereto, the prospectus included in
such Registration Statement (including each preliminary prospectus) and such
other documents or information as such Participating Holder, Holders’ Counsel or
Underwriters may reasonably request in order to facilitate the disposition of
the Registrable Securities in accordance with the plan of distribution set forth
in the prospectus included in the Registration Statement.

(d) The Company will promptly notify each Participating Holder of any stop order
issued or threatened by the Commission and use commercially reasonable efforts
to prevent the issuance of such stop order or, if issued, to remove it as soon
as reasonably possible.

(e) On or prior to the date on which the Registration Statement is declared
effective, the Company shall use commercially reasonable efforts to register or
qualify such Registrable Securities under such other securities or blue sky laws
of such jurisdictions as any Participating Holder reasonably requests and do any
and all other lawful acts and things which may be necessary or advisable to
enable the Participating Holders to consummate the disposition in such
jurisdictions of such Registrable Securities, and use commercially reasonable
efforts to keep each such registration or qualification (or exemption therefrom)
effective while the Registration Statement is effective; provided, that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (e), (ii) subject itself to taxation in any such jurisdiction or
(iii) consent to general service of process in any such jurisdiction.

 

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(f) The Company will notify each Participating Holder, Holders’ Counsel and the
Underwriter promptly and confirm such notice in writing, (i) when any
prospectus, prospectus supplement, post-effective amendment or issuer free
writing prospectus has been filed and, with respect to a Registration Statement
or any post-effective amendment, when the same has become effective, (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to a Registration Statement, prospectus or issuer
free writing prospectus for additional information to be included in any
Registration Statement, prospectus or issuer free writing prospectus, (iii) of
the issuance by any state securities commission or other regulatory authority of
any order suspending the qualification or exemption from qualification of any of
the Registrable Securities under state securities or blue sky laws or the
initiation of any proceedings for that purpose, and (iv) of the happening of any
event that makes any statement made in a Registration Statement or any related
prospectus or issuer free writing prospectus or any document incorporated or
deemed to be incorporated by reference therein untrue or that requires the
making of any changes in such Registration Statement, prospectus, issuer free
writing prospectus or documents so that they will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements in the Registration
Statement, prospectus or issuer free writing prospectus not misleading in light
of the circumstances in which they were made; and, as promptly as practicable
thereafter, prepare and file with the Commission a supplement or amendment to
such Registration Statement, prospectus or issuer free writing prospectus so
that such Registration Statement, prospectus or issuer free writing prospectus
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each Participating
Holder hereby agrees to keep any disclosures under subsection (iv) above
confidential until such time as a supplement or amendment is filed.

(g) The Company will furnish customary closing certificates and other
deliverables to the Underwriter(s) and the Participating Holders and enter into
customary agreements satisfactory to the Company (including, if applicable, an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities.

(h) The Company will make available for inspection by any Underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by any such Participating
Holder or Underwriter (in each case after reasonable prior notice and at
reasonable times during normal business hours and without unnecessary
interruption of the Company’s business or operations), all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company’s officers, directors, employees and independent accountants to
supply all information reasonably requested by any such Participating Holder,
Underwriter, attorney, accountant or agent in connection with such Registration
Statement.

 

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(i) The Company shall use commercially reasonable efforts to cause all such
Registrable Securities registered pursuant hereunder to be listed on each
national securities exchange on which similar securities of the same class
issued by the Company are then listed.

(j) The Company shall use commercially reasonable efforts to ensure the
obtaining of all necessary approvals from FINRA.

(k) The Company shall furnish to each Participating Holder a copy of all
documents filed with and all material correspondence from or to the Commission
in connection with any such offering of Registrable Securities.

(l) The Company shall use its commercially reasonable efforts to furnish to the
lead Underwriter, addressed to the Underwriters, (1) an opinion of counsel for
the Company (which may be the Company’s General Counsel), dated the effective
date of the Registration Statement and the closing of the sale of any securities
thereunder, as well as a consent to be named in the Registration Statement or
any prospectus thereto, and (2) comfort letters as well as an audit opinion and
consent to be named in the Registration Statement or any prospectus relating
thereto signed by the Company’s independent public accountants who have examined
and reported on the Company’s financial statements included in the Registration
Statement covering substantially the same matters with respect to the
Registration Statement (and the prospectus or any issuer free writing prospectus
included therein) and (in the case of the accountants’ comfort letters) with
respect to events subsequent to the date of the financial statements, as are
customarily covered in opinions of issuer’s counsel and in accountants’ comfort
letters delivered to the underwriters in underwritten public offerings of
securities, to the extent that the Company is required to deliver or cause the
delivery of such opinion or comfort letters to the underwriters in an
underwritten public offering of securities.

(m) With respect to a Demand Registration involving an offering of at least
either (x) Registrable Securities that constitute five percent (5%) of the
Company’s outstanding Common Stock as of the Request Date or (y) Registrable
Securities with a fair market value of $75,000,000.00 as of the Request Date, at
the reasonable request of the Requesting Holder(s), cause appropriate executives
to participate, at the Company’s expense, in customary investor presentations
and “road shows” not to exceed five (5) Business Days in duration (to be
scheduled in a collaborative manner so as not to unreasonably interfere with the
conduct of the business of the Company).

Section 2.05 Participating Holders’ Obligations. The Company may require each
Participating Holder to promptly furnish in writing to the Company such
information regarding the distribution of the Registrable Securities as the
Company may from time to time reasonably request and such other information as
may be legally required in connection with such registration, including, without
limitation, all such information as may be requested by the Commission. Each
Participating Holder agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 2.04(f) hereof, such
Participating Holder will forthwith discontinue disposition of Registrable
Securities pursuant to

 

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the Registration Statement covering such Registrable Securities until such
Participating Holder’s receipt of the copies of the supplemented or amended
prospectus or issuer free writing prospectus contemplated by
Section 2.04(f) hereof, and, if so directed by the Company, such Participating
Holder will deliver to the Company all copies, other than permanent file copies
then in such Participating Holder’s possession and retained solely in accordance
with record retention policies then-applicable to such Participating Holder, of
the most recent prospectus or issuer free writing prospectus covering such
Registrable Securities at the time of receipt of such notice.

Section 2.06 Blackout Provisions.

(a) Notwithstanding anything in this Agreement to the contrary, by delivery of
written notice to the Participating Holders (a “Suspension Notice”) stating
which one or more of the following limitations shall apply to the addressee of
such Suspension Notice, the Company may (1) postpone effecting a registration
under this Agreement, or (2) require such addressee to refrain from disposing of
Registrable Securities under the registration, in either case for a period of no
more than 180 consecutive days from the delivery of such Suspension Notice
(which period may not be extended or renewed). The Company may postpone
effecting a registration or apply the limitations on dispositions specified in
clause 2 of this Section 2.06(a) if (w) the Board of Directors of the Company
(the “Board”) in good faith determines that such registration or disposition
would materially impede, delay or interfere with any material transaction then
pending or proposed to be undertaken by the Company or any of its subsidiaries,
(x) the Board in good faith determines that the Company is in possession of
material non-public information the disclosure of which during the period
specified in such notice the Board reasonably believes would not be in the best
interests of the Company or (y) during any Scheduled Black-Out Period.

(b) If the Company shall take any action pursuant to clause 2 of Section 2.06(a)
with respect to any Participating Holder in a period during which the Company
shall be required to cause a Registration Statement to remain effective under
the Securities Act and the prospectus to remain current, such period shall be
extended for such Participating Holder by one (1) day beyond the end of such
period for each day that, pursuant to Section 2.06(a), the Company shall require
such Participating Holder to refrain from disposing of Registrable Securities
owned by such Participating Holder.

Section 2.07 Exchange Act Registration. The Company will use its commercially
reasonable efforts to timely file with the Commission such information as the
Commission may require under Section 13(a) or Section 15(d) of the Exchange Act
and the Company shall use its commercially reasonable efforts to take all action
as may be required as a condition to the availability of Rule 144 under the
Securities Act with respect to its Common Stock.

 

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ARTICLE III

INDEMNIFICATION

Section 3.01 Indemnification by the Company. With respect to each Registration
which has been effected pursuant to Section 2.01 or Section 2.02, the Company
agrees, notwithstanding the termination of this Agreement, to indemnify and hold
harmless, to the fullest extent permitted by law, each Participating Holder and
each of its managers, members, partners, officers, directors, employees and
agents, and each Person, if any, who controls such Participating Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act and any controlled Affiliate of such Participating Holder, together with the
managers, members, partners, officers, directors, employees and agents of such
controlling Person (each such Person being referred to herein as a “Covered
Person”), from and against any and all losses, claims, damages, liabilities,
reasonable attorneys’ fees, costs and expenses of investigating and defending
any such claim (collectively, “Damages”) and any action in respect thereof to
which such Participating Holder, and any such Covered Person may become subject
under the Securities Act or otherwise, insofar as such Damages (or proceedings
in respect thereof) arise out of, or are based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (including any prospectus or issuer free writing prospectus) (or any
amendment or supplement thereto), or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of any prospectus or issuer free writing
prospectus, in light of the circumstances in which they were made) not
misleading, and shall reimburse such Participating Holder and each such Covered
Person for any legal and other expenses reasonably incurred by such
Participating Holder or Covered Person in investigating or defending or
preparing to defend against any such Damages or proceedings; provided, however,
that the Company shall not be liable to in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission, made or incorporated by reference in
such Registration Statement, any such prospectus, issuer free writing prospectus
or preliminary prospectus or any amendment or supplement thereto, or any
document incorporated by reference therein, in reliance upon, and in conformity
with, written information prepared and furnished to the Company by any
Participating Holder or Covered Person expressly for use therein.

Section 3.02 Indemnification by the Participating Holders. Each of the
Participating Holders agree, jointly and severally, to indemnify and hold
harmless the Company, its officers, directors, employees, agents, each
underwriter and each Person, if any, who controls the Company or any of its
subsidiaries within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and any controlled Affiliate of the Company or
any of its subsidiaries, together with the managers, members, partners,
officers, directors, employees and agents of such Person, to the same extent as
the foregoing indemnity from the Company to the Participating Holders, for
information related to the Participating Holders or a Covered Person, or their
plan of distribution, furnished in writing by the Participating Holders or any
Covered Person to the Company expressly for use in any Registration Statement,
prospectus or issuer free writing prospectus, or any amendment or supplement
thereto, or any preliminary prospectus. No Holder shall be required to indemnify
any Person pursuant to this Section 3.02 for any amount in excess of the net
proceeds of the Registrable Securities sold for the account of such Holder.

 

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Section 3.03 Conduct of Indemnification Proceedings. Promptly after receipt by
any Person (an “Indemnified Party”) of notice of any claim or the commencement
of any action in respect of which indemnity may be sought pursuant to
Section 3.01 or 3.02, the Indemnified Party shall, if a claim in respect thereof
is to be made against the Person against whom such indemnity may be sought (an
“Indemnifying Party”), notify the Indemnifying Party in writing of the claim or
the commencement of such action; provided that the failure to notify the
Indemnifying Party shall relieve the Indemnifying Party from liability that it
may have to an Indemnified Party otherwise than under Section 3.01 or 3.02 to
the extent of any prejudice resulting therefrom. If any such claim or action
shall be brought against an Indemnified Party, and it shall notify the
Indemnifying Party thereof, the Indemnifying Party shall be entitled to assume
the defense thereof with counsel reasonably satisfactory to the Indemnified
Party. After notice from the Indemnifying Party to the Indemnified Party of its
election to assume the defense of such claim or action, the Indemnifying Party
shall not be liable to the Indemnified Party for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable out-of-pocket costs of investigation; provided,
that the Indemnified Party shall have the right to employ separate counsel to
represent the Indemnified Party who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Indemnified Party
against the Indemnifying Party, but the fees and expenses of such counsel shall
be for the account of such Indemnified Party unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) in the reasonable opinion of counsel to such Indemnified Party
representation of both parties by the same counsel would be inappropriate due to
actual or potential conflicts of interest between them, it being understood,
however, that the Indemnifying Party shall not, in connection with any one such
claim or action or separate but substantially similar or related claims or
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for all
Indemnified Parties. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any claim or pending
or threatened proceeding in respect of which the Indemnified Party is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party. Whether or not the defense of any claim or action is assumed
by the Indemnifying Party, such Indemnifying Party will not be subject to any
liability for any settlement made without its written consent.

Section 3.04 Contribution. If the indemnification provided for pursuant to this
Article III is due in accordance with the terms hereof, but is held by a court
to be unavailable or unenforceable in respect of any Damages referred to herein,
then each applicable Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and of the Indemnified Party on the other in connection with the statements
or omissions which result in such Damages as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party on the
one hand and of the Indemnified Party on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party, and by such party’s relative intent, knowledge, access to information and
opportunity to correct or prevent such

 

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statement or omission. In no event shall the liability of any Holder hereunder
be in excess of the net proceeds of the Registrable Securities sold for the
account of such Holder or the amount for which such Indemnifying Party would
have been obligated to pay by way of indemnification if the indemnification
provided in this Article III.

ARTICLE IV

MISCELLANEOUS

Section 4.01 Holdback. Each Holder of Registrable Securities agrees to enter
into a lock-up agreement with the managing Underwriter for any underwritten
offering of the Company’s securities (whether or not Registrable Securities are
included in such offering), containing terms reasonably acceptable to such
managing Underwriter, covering the period commencing 15 days prior to the
effective date of the Registration Statement or, if applicable, the prospectus
supplement, pertaining to such offering and ending on the 90th day after such
effective date.

Section 4.02 Termination of Registration Rights. The rights granted under this
Agreement shall terminate on the date that is three (3) months after the date no
manager, member, partner, officer, director or employee of the Holder(s) or MHR
Fund Management LLC is a member of the Board.

Section 4.03 Amendment and Modification. This Agreement may be amended, modified
and supplemented, and any of the provisions contained herein may be waived, only
by a written instrument signed by the Company and each Holder, provided that the
addition of a Permitted Transferee as a Holder hereunder shall not constitute an
amendment or modification for purposes of this Section 4.03.

Section 4.04 Assignment; Binding Effect; Entire Agreement. The rights and
obligations hereunder may be assigned in whole or in part by any Holder to a
controlled affiliate of such Holder or to any member, partner or stockholder of
any such Holder (a “Permitted Transferee”) without the consent of the Company or
the other Holders. Such assignment shall be effective upon receipt by the
Company of (x) written notice from the Holder certifying that the transferee is
a Permitted Transferee, stating the name and address of the Permitted Transferee
and identifying the amount of Registrable Securities with respect to which the
rights under this Agreement are being transferred, and (y) a written agreement
from the Permitted Transferee to be bound by all of the terms of this Agreement.
Upon receipt of the documents referenced in (x) and (y) above, the Permitted
Transferee shall thereafter be deemed to be a “Holder.” Except as set forth
above, this Agreement and the rights and obligations hereunder may not be
assigned by any party hereto without the prior written consent of each of the
other parties hereto. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns. This Agreement sets forth the entire agreement
and understanding between the parties as to the subject matter hereof and merges
and supersedes all prior discussions, agreements and understandings of any and
every nature among them with respect to the subject matter hereof.

 

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Section 4.05 Severability. In the event that any provision of this Agreement or
the application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.

Section 4.06 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including fax or similar writing) and shall
be given to:

 

  If to the Company:            Navistar International Corporation      2701
Navistar Drive      Lisle, Illinois 60532      Facsimile: (331) 332-3186     
Email: curt.kramer@navistar.com      Attention: Curt Kramer   With copies (which
shall not constitute notice) to:      Skadden, Arps, Slate, Meagher & Flom LLP  
   155 N. Wacker Drive      Suite 2700      Chicago, Illinois 60606     
Facsimile: (312) 407-0411      Email: charles.mulaney@skadden.com     
Attention:    Charles W. Mulaney, Jr.         Richard C. Witzel, Jr.   If to the
Holders:            MHR Fund Management LLC      40 West 57th Street, 24th Floor
     New York, NY 10019      Attn: Janet Yeung, Esq.      Telephone:
(212) 262-0005      Facsimile: (212) 262-9356

or such other address or fax number as such party may hereafter specify for the
purpose of giving such notice to such party. Each such notice, request or other
communication shall be deemed to have been received (a) if given by fax, when
such fax is transmitted to the fax number specified pursuant to this
Section 4.06 and appropriate confirmation is received, or (b) if given by any
other means, when delivered in person or by overnight courier or two
(2) business days after being sent by registered or certified mail (postage
prepaid, return receipt requested).

 

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Section 4.07 Headings. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect their meaning, construction or effect.

Section 4.08 Counterparts. This Agreement may be executed via facsimile or
electronic transmission and in any number of counterparts, each of which shall
be deemed to be an original instrument and all of which together shall
constitute one and the same instrument.

Section 4.09 Remedies. In the event of a breach or a threatened breach by any
party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach will be entitled to specific
performance, without posting a bond, of its rights under this Agreement or to
injunctive relief, in addition to being entitled to exercise all rights provided
in this Agreement and granted by law, it being agreed by the parties that the
remedy at law, including monetary damages, for breach of any such provision will
be inadequate compensation for any loss and that any defense or objection in any
action for specific performance or injunctive relief that a remedy at law would
be adequate is waived.

Section 4.10 Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement
and any claim, controversy or dispute arising under or related to this Agreement
and/or the interpretation and enforcement of the rights and duties of the
parties shall be governed by and construed in accordance with the laws of the
State of Delaware without reference to the conflict of laws principles thereof.
Each of the Holders and the Company (a) irrevocably and unconditionally consents
to the exclusive personal jurisdiction and venue of the Chancery Court of the
State of Delaware and any state appellate court therefrom within the State of
Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction
over a particular matter, any state or federal court within the State of
Delaware), (b) agrees that it shall not attempt to deny or defeat such personal
jurisdiction and venue by motion or other request for leave from any such court,
(c) agrees that it shall not bring any action relating to this Agreement or
otherwise in any court other than the Chancery Court of the State of Delaware
and any state appellate court therefrom within the State of Delaware (or, if the
Delaware Court of Chancery declines to accept jurisdiction over a particular
matter, any state or federal court within the State of Delaware) and
(d) irrevocably waives the right to trial by jury.

[Signature pages follow]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.

 

NAVISTAR INTERNATIONAL CORPORATION By:  

/s/ Curt A. Kramer

Name:   Curt A. Kramer Title:   Corporate Secretary

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MHR CAPITAL PARTNERS MASTER ACCOUNT LP MHR CAPITAL PARTNERS (100) LP   By:   MHR
Advisors LLC   Its:   General Partner By:  

Mark H. Rachesky, M.D.

Name:   Mark H. Rachesky, M.D. Title:   President MHR INSTITUTIONAL PARTNERS III
LP   By:   MHR Institutional Advisors III LLC   Its:   General Partner By:  

Mark H. Rachesky, M.D.

Name:   Mark H. Rachesky, M.D. Title:   President