Exhibit 10.5

EXECUTION COPY

 

 

PURCHASE AGREEMENT

BETWEEN

NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION

AND

NAVISTAR FINANCIAL CORPORATION

DATED AS OF APRIL 25, 2008

 

 

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TABLE OF CONTENTS

 

         Page

ARTICLE I DEFINITIONS

   1  

SECTION 1.01

  Definitions    1

ARTICLE II PURCHASE AND SALE OF RECEIVABLES

   2  

SECTION 2.01

  Purchase and Sale of Receivables    2  

SECTION 2.02

  Purchase Price    2  

SECTION 2.03

  The Closing    3

ARTICLE III REPRESENTATIONS AND WARRANTIES

   3  

SECTION 3.01

  Representations and Warranties as to Receivables    3  

SECTION 3.02

  Additional Representations and Warranties of NFC    7  

SECTION 3.03

  Representations and Warranties of NFRRC    9

ARTICLE IV CONDITIONS

   10  

SECTION 4.01

  Conditions to Obligation of NFRRC    10  

SECTION 4.02

  Conditions To Obligation of NFC    11

ARTICLE V ADDITIONAL AGREEMENTS

   11  

SECTION 5.01

  Conflicts With Further Transfer and Servicing Agreements    11  

SECTION 5.02

  Protection of Title    11  

SECTION 5.03

  Other Liens or Interests    12  

SECTION 5.04

  Repurchase Events    12  

SECTION 5.05

  Indemnification    13  

SECTION 5.06

  Further Assignments    13  

SECTION 5.07

  Pre-Closing Collections    13  

SECTION 5.08

  Limitation on Transfer of International Purchase Obligations    13  

SECTION 5.09

  Sale Treatment    14

ARTICLE VI MISCELLANEOUS PROVISIONS

   14  

SECTION 6.01

  Amendment    14  

SECTION 6.02

  Survival; Termination    14  

SECTION 6.03

  Notices    14  

SECTION 6.04

  Governing Law    14  

SECTION 6.05

  Waivers    14  

SECTION 6.06

  Costs and Expenses    14  

SECTION 6.07

  Confidential Information    15  

SECTION 6.08

  Headings    15  

SECTION 6.09

  Counterparts    15  

SECTION 6.10

  Severability of Provisions    15  

SECTION 6.11

  Further Assurances    15  

SECTION 6.12

  Assignment; Third-Party Beneficiaries    15  

SECTION 6.13

  Merger and Integration    15

 

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  SECTION 6.14   No Petition Covenants    16   SECTION 6.15   MUTUAL WAIVER OF
JURY TRIAL    16 EXHIBIT A Form of PA Assignment   

 

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PURCHASE AGREEMENT

PURCHASE AGREEMENT, dated as of April 25, 2008, between NAVISTAR FINANCIAL
RETAIL RECEIVABLES CORPORATION, a Delaware corporation (“NFRRC”), and NAVISTAR
FINANCIAL CORPORATION, a Delaware corporation (“NFC”).

WHEREAS, NFRRC desires to purchase on the date hereof Receivables and the
Related Security with respect thereto;

WHEREAS, NFC is willing to sell the Receivables and the Related Security with
respect thereto to NFRRC;

WHEREAS, NFRRC may wish to sell or otherwise transfer the Receivables and the
Related Security with respect thereto, or interests therein, to a trust,
corporation, partnership or other entity (any such transferee being the
“Subsequent Transferee”); and

WHEREAS, the Subsequent Transferee may issue debentures, notes, participations,
certificates of beneficial interest, partnership interests or other interests or
securities (collectively, any such issued interests or securities being
“Securities”) to fund its acquisition of the Receivables and the Related
Security with respect thereto and, in connection with such issuance, the
Subsequent Transferee may grant a security interest in, or otherwise pledge the
Receivables and Related Security to the Indenture Trustee, for the benefit of
the Financial Parties.

NOW, THEREFORE, in consideration of the foregoing, the other good and valuable
consideration and the mutual terms and covenants herein contained, the parties
hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01 Definitions. Capitalized terms used but not otherwise defined in
this Agreement shall have the respective meanings assigned them in Part I of
Appendix A to the Pooling Agreement of even date herewith by and between
Navistar Financial 2008-A Owner Trust and NFRRC, as it may be amended,
supplemented or modified from time to time. All references herein to “the
Agreement” or “this Agreement” are to this Purchase Agreement as it may be
amended, supplemented or modified from time to time, the exhibits hereto and the
capitalized terms used herein which are defined in such Appendix A, and all
references herein to Articles, Sections and subsections are to Articles,
Sections or subsections of this Agreement unless otherwise specified. The rules
of construction set forth in Part II of such Appendix A shall be applicable to
this Agreement.

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ARTICLE II

PURCHASE AND SALE OF RECEIVABLES

SECTION 2.01 Purchase and Sale of Receivables. Subject to the satisfaction of
the conditions specified in Article IV, NFC agrees to and does hereby sell,
transfer, assign and otherwise convey to NFRRC, without recourse (except as
provided in Section 5.04), and NFRRC agrees to purchase on the Closing Date (the
“Purchase Date”) pursuant to a written assignment substantially in the form of
Exhibit A (the “PA Assignment”), all right, title and interest of NFC in, to and
under the Retail Notes identified on the Schedule of Retail Notes to the PA
Assignment delivered to NFRRC on the Purchase Date (the “Designated
Receivables”) and the Related Security associated with the Designated
Receivables.

It is the intention of NFC and NFRRC that the transfer and assignment
contemplated by this Section 2.01 shall constitute a sale of the Designated
Receivables and Related Security by NFC to NFRRC and the beneficial interest in
and title to the assets conveyed pursuant to this Section 2.01 shall not be part
of NFC’s estate in the event of the filing of a bankruptcy petition by or
against NFC under any bankruptcy law. NFC intends to treat such transfer and
assignment as a sale for tax and other purposes and a secured financing for
accounting purposes. Notwithstanding the foregoing, in the event a court of
competent jurisdiction determines that such transfer and assignment did not
constitute such a sale or that such sale shall for any reasons be ineffective or
unenforceable or that such beneficial interest is a part of NFC’s estate (any of
the foregoing, a “Recharacterization”), then (i) NFC shall be deemed to have
granted to NFRRC a first priority perfected security interest in all of NFC’s
right title and interest in, to and under the assets conveyed pursuant to this
Section 2.01, and NFC hereby grants such security interest and (ii) the assets
conveyed pursuant to this Section 2.01 shall be deemed to include all rights,
powers and options (but none of the obligations, if any) of NFC under any
agreement or instrument included in the assets conveyed pursuant to this
Section 2.01, including the immediate and continuing right to claim for,
collect, receive and give receipt for principal and interest payments in respect
of the Designated Receivables included in the assets conveyed pursuant to this
Section 2.01 and all other monies payable under the Designated Receivables
conveyed pursuant to this Section 2.01, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights,
powers and options, to bring Proceedings in the name of NFC or otherwise and
generally to do and receive anything that NFC is or may be entitled to do or
receive under or with respect to the assets conveyed pursuant to this
Section 2.01. For purposes of such grant, this Agreement shall constitute a
security agreement under the UCC. In the case of any Recharacterization, each of
NFC and NFRRC represents and warrants as to itself that each remittance of
collections by NFC to NFRRC hereunder or in connection herewith will have been
(i) in payment of a debt incurred by NFC in the ordinary course of business or
financial affairs of NFC and NFRRC and (ii) made in the ordinary course of
business or financial affairs of NFC and NFRRC.

SECTION 2.02 Purchase Price. In consideration for the purchase of any Designated
Receivables and Related Security, NFRRC shall, on the Purchase Date, pay to NFC
an amount equal to the aggregate Starting Receivables Balance for such
Designated Receivables (the “Purchase Price”) and NFC shall execute and deliver
to NFRRC a PA Assignment with respect to such Designated Receivables. On the
Closing Date, a portion of the Purchase Price payable on such date equal to
$247,050,629.36 shall be paid to NFC in immediately available

 

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funds, and the balance of the Purchase Price ($40,217,544.32) shall be recorded
as an intercompany obligation due from NFRRC to NFC under a revolving note (the
“NFRRC Revolving Note”) issued under the Amended and Restated Intercompany
Advance Agreement, dated as of May 3, 1994, between NFC and NFRRC.

SECTION 2.03 The Closing. The sale and purchase of the Designated Receivables
(the “Closing”), shall take place at such a place, on a date and at a time
mutually agreeable to NFC and NFRRC, and may occur simultaneously with the
closing of any related transactions contemplated by the Further Transfer and
Servicing Agreements.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

SECTION 3.01 Representations and Warranties as to Receivables. NFC makes the
following representations and warranties as to the Designated Receivables on
which NFRRC relies in accepting the Designated Receivables. Such representations
and warranties speak as of the Closing Date for such Designated Receivables and
as of the date of the related transfer of such Designated Receivables under the
Further Transfer and Servicing Agreements, and shall survive the sale, transfer
and assignment of such Designated Receivables to NFRRC and the subsequent
assignment and transfer thereof pursuant to the Further Transfer and Servicing
Agreements:

(a) Characteristics of Receivables. Each Designated Receivable:

(i) was originated or acquired by NFC to finance a retail purchase by a business
customer or a refinancing (for reasons other than credit reasons, unless it was
amended or restructured at least 12 months prior to the Cutoff Date, it is not
owed by an Obligor that is the subject of a bankruptcy or insolvency proceeding
and since its amendment or restructuring it has not been greater than 60 days
past due (measured from the date of any Scheduled Payment)) of a Financed
Vehicle or Financed Vehicles by a business customer;

(ii) has created or shall create a valid, binding and enforceable first
priority, perfected security interest in favor of NFC in each Financed Vehicle
related thereto, which security interest will be validly assigned by NFC to
NFRRC and will be assignable by NFRRC to a subsequent purchaser;

(iii) contains customary and enforceable provisions such as to render the rights
and remedies of the holder thereof adequate for realization against the
collateral of the benefits of the security;

(iv) shall yield interest at the Annual Percentage Rate and comes from one of
the following categories, which differ in their provisions for the payment of
principal and interest: Equal Payment Fully Amortizing Receivables, Equal
Payment Skip Receivables, Equal Payment Balloon Receivables, Level Principal
Fully Amortizing Receivables, Level Principal Skip Receivables, Level Principal
Balloon Receivables, or Other Receivables. “Equal Payment Fully Amortizing
Receivables” are Receivables that provide for equal monthly payments that fully
amortize the

 

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amount financed over its original term to maturity. “Equal Payment Skip
Receivables” are Receivables that provide for equal monthly payments in eleven
or fewer months of each twelve-month period that fully amortize the amount
financed over its original term to maturity. “Equal Payment Balloon Receivables”
are Receivables that provide for equal monthly payments except that a larger
payment becomes due on the final maturity date for such Receivables. “Level
Principal Fully Amortizing Receivables” are Receivables that provide for monthly
payments consisting of level principal amounts together with accrued and unpaid
interest on the unpaid Receivable Balances. “Level Principal Skip Receivables”
are Receivables that provide for monthly payments in eleven or fewer months of
each twelve-month period consisting of level principal amounts together with
accrued and unpaid interest on the unpaid Receivable Balances. “Level Principal
Balloon Receivables” are Receivables that provide for monthly payments
consisting of level principal amounts together with accrued and unpaid interest
on the unpaid Receivable Balances, except that a larger principal payment
becomes due on the final maturity date for such Receivables. “Other Receivables”
are Receivables not described above, including Receivables that provide for
level monthly payments in eleven or fewer months of each twelve-month period
that amortize a portion of the amount financed over its original term to
maturity with a larger payment that becomes due on the final maturity date for
such Receivables;

(v) immediately prior to the transfer and assignment thereof to NFRRC by NFC
pursuant to this Agreement, NFC had good title to it, free of any Lien (except
for Liens that will be released as of the date of such transfer), and all right,
title and interest in it has been validly sold by NFC to NFRRC pursuant to this
Agreement, and NFRRC has good title to it, free of any Lien (except for Liens
created by the Basic Documents), and the transfer of the Retail Note to NFRRC
has been perfected under the UCC; and

(vi) was originated or acquired in the ordinary course of business in accordance
with NFC’s underwriting standards.

(b) Schedule of Retail Notes. The information set forth in the Schedule of
Retail Notes relating to such Designated Receivables is true and correct in all
material respects.

(c) Compliance With Law. All requirements of applicable federal, state and local
laws, and regulations thereunder, including the Equal Credit Opportunity Act,
the Federal Reserve Board’s Regulation “B”, the Servicemembers Civil Relief Act,
and any applicable bulk sales or bulk transfer law and other equal credit
opportunity and disclosure laws, in respect of any of the Designated
Receivables, have been complied with in all material respects, and each such
Designated Receivable and the sale of the Financed Vehicle or Financed Vehicles
evidenced thereby complied at the time it was originated or made and now
complies in all material respects with all legal requirements of the
jurisdiction in which it was originated or made.

(d) Binding Obligation. Each Designated Receivable represents the genuine,
legal, valid and binding payment obligation in writing of the Obligor thereon,
enforceable

 

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against the Obligor by the holder thereof in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors’ rights in
general and by equity, regardless of whether such enforceability is considered
in a proceeding in equity or at law.

(e) Security Interest in Financed Vehicle. Immediately prior to the sale,
transfer and assignment thereof pursuant hereto, each Designated Receivable was
secured by a validly perfected first priority security interest in the related
Financed Vehicle or, in the event any such Receivable was secured by more than
one Financed Vehicle, in each related Financed Vehicle, each in favor of NFC as
secured party, or all necessary and appropriate action had been commenced that
will result, within 100 days following the Cutoff Date, in the valid perfection
of a first priority security interest in each related Financed Vehicle in favor
of NFC as secured party in each case (except for first priority security
interests which may exist in any accessions not financed by NFC).

(f) Receivables In Force. No Designated Receivable has been satisfied,
subordinated or rescinded, and no Financed Vehicle securing any Designated
Receivable has been released from the Lien of the related Receivable in whole or
in part.

(g) No Waiver. Since the Cutoff Date, no provision of any Designated Receivable
has been waived, altered or modified in any respect.

(h) No Amendments. Since the Cutoff Date, no Designated Receivable has been
amended or otherwise modified such that the total number of the Obligor’s
Scheduled Payments is increased or the Starting Receivable Balance thereof is
increased, and prior to the Cutoff Date, no Designated Receivable has been
amended or restructured for credit reasons, unless it was amended or
restructured at least 12 months prior to the Cutoff Date, it is not owed by an
Obligor that is the subject of a bankruptcy or insolvency proceeding and since
its amendment or restructuring it has not been greater than 60 days past due
(measured from the date of any Scheduled Payment).

(i) No Defenses. No right of rescission, setoff, counterclaim or defense has
been asserted or threatened with respect to any Designated Receivable.

(j) No Liens. There are, to NFC’s knowledge, no Liens or claims that have been
filed for work, labor or materials affecting any Financed Vehicle relating to
any Designated Receivable that are or may be prior to, or equal or coordinate
with, the security interest in each Financed Vehicle granted by the Designated
Receivable (except for Permitted Liens).

(k) No Default. There has been no default, breach, violation or event permitting
acceleration under the terms of any Designated Receivable, and no event has
occurred and is continuing that with notice or the lapse of time would
constitute a default, breach, violation or event permitting acceleration under
the terms of any Designated Receivable, and NFC has not waived any of the
foregoing, in each case except for payments on any Designated Receivables which
are not more than 60 days past due (measured from the date of any Scheduled
Payment) as of the Cutoff Date, or with respect to any Eligible Restructured
Receivable, no such event has occurred since the date of its amendment or
restructuring.

 

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(l) Insurance. Each Obligor on a Designated Receivable is required to maintain a
physical damage insurance policy for each Financed Vehicle of the type that NFC
requires in accordance with its customary underwriting standards for the
purchase of truck, bus and trailer receivables, unless NFC has in accordance
with its customary procedures permitted an Obligor to self-insure such Financed
Vehicle.

(m) Lawful Assignment. No Designated Receivable was originated in, or is subject
to the laws of, any jurisdiction the laws of which would make unlawful the sale,
transfer and assignment of such Designated Receivable under this Agreement or
any Further Transfer and Servicing Agreements.

(n) All Filings Made. All filings necessary under the UCC in any jurisdiction to
give NFRRC a first priority perfected security or ownership interest in the
Designated Receivables and the Related Security (to the extent such Related
Security constitutes Code Collateral) have been made, and the Designated
Receivables constitute Code Collateral.

(o) One Original. There is only one original executed copy of each Designated
Receivable.

(p) No Documents or Instruments; Etc. No Designated Receivable, or constituent
part thereof, constitutes a “negotiable instrument” or “negotiable document of
title” (as such terms are used in the UCC), each Designated Receivable is an
“account” or “tangible chattel paper” within the meaning of Section 9-102 of the
UCC.

(q) Maturity of Receivables. Each Designated Receivable has an original term to
maturity of not less than 11 months and not greater than 84 months and, as of
the Cutoff Date, had a remaining term to maturity of not less than 2 months and
not greater than 84 months.

(r) Scheduled Payments; Delinquency. As of the Cutoff Date, each Designated
Receivable had a first scheduled payment that was due on or before May 31, 2008;
as of the Cutoff Date, no Designated Receivable had or will have a payment that
was more than 60 days past due, or with respect to any Eligible Restructured
Receivable, has not had a payment more than 60 days past due since the date of
its amendment or restructuring; and as of the Purchase Date, no Designated
Receivable had or will have a final scheduled payment that is due later than
March 31, 2015.

(s) Vehicles. Each Financed Vehicle to which a Designated Receivable relates was
a new or used medium or heavy duty truck, truck chassis, bus or trailer at the
time the related Obligor executed the Retail Note.

(t) Origin. Each Designated Receivable was originated in the United States and
is payable in U.S. Dollars.

(u) Starting Receivable Balance. The Starting Receivable Balance of each
Designated Receivable as of the Cutoff Date shall be $968.00 or more.

(v) Concentration. (i) The aggregate Starting Receivable Balance of all
Receivables from a single Obligor shall not exceed 3.00% of the Aggregate
Starting Receivable

 

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Balance, (ii) the aggregate Starting Receivable Balance of all Receivables
having a remaining term in excess of 72 months as of the Cutoff Date shall not
exceed 4.54% of the Aggregate Starting Receivables Balance, (iii) the weighted
average remaining maturity of the Designated Receivables shall not be greater
than 49 months, (iv) the aggregate Starting Receivables Balance of all
Receivables not originated by NFC or one of its Affiliates shall not exceed
0.00% of the Aggregate Starting Receivables Balance, (v) the aggregate Starting
Receivables Balance for all Receivables that are Eligible Restructured
Receivables shall not exceed 0.17% of the Aggregate Starting Receivables
Balance, (vi) the aggregate Starting Receivables Balance of all Receivables
secured by used vehicles does not exceed 22.33% of the Aggregate Starting
Receivables Balance, (vii) the aggregate Starting Receivables Balance of all
Receivables owed by Non-Fleet Obligors does not exceed 9.06% of the Aggregate
Starting Receivables Balance, (viii) the aggregate Starting Receivables Balance
of all Receivables that are Equal Payment Balloon Receivables (as defined in
Section 3.01(a)(iv) herein) shall not exceed 39.97% of the Aggregate Starting
Receivables Balance, and (ix) the aggregate Starting Receivables Balance of all
Receivables the Obligors of which are leasing the related Financed Vehicle
through NFC’s Idealease program shall not exceed 44.82% of the Aggregate
Starting Receivables Balance.

(w) Selection Criteria. The Designated Receivables were selected on a random
basis from all receivables satisfying the selection criteria described herein,
and no selection procedures believed to be adverse to NFRRC or to holders of the
Securities issued under the Further Transfer and Servicing Agreements were
utilized in selecting the Designated Receivables from those receivables of NFC
and Truck Retail Instalment Paper Corp., its wholly owned subsidiary, which meet
the selection criteria under this Agreement.

(x) Minimum APR. As of the Cutoff Date, each Designated Receivable has an Annual
Percentage Rate of not less than 5.00%.

(y) Weighted Average APR. The Weighted Average APR of all Designated Receivables
transferred to NFRRC shall not be less than 6.34%.

(z) No Government Contracts. No Obligor under any of the Designated Receivables
is a governmental authority of the United States or any state or political
subdivision thereof.

SECTION 3.02 Additional Representations and Warranties of NFC. NFC hereby
represents and warrants to NFRRC as of the Purchase Date and as of the Closing
Date under the Further Transfer and Servicing Agreements, in its capacity as the
seller of the Designated Receivables hereunder, that:

(a) Organization and Good Standing. NFC has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with power and authority to own its properties and to conduct its
business as such properties are presently owned and such business is presently
conducted, and had at all relevant times, and now has, power, authority and
legal right to acquire and own the Designated Receivables.

(b) Due Qualification. NFC is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals, in all

 

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jurisdictions in which the ownership or lease of property or the conduct of its
business requires or shall require such qualification.

(c) Power and Authority. NFC has the power and authority to execute and deliver
this Agreement and to carry out its terms; NFC has full power and authority to
sell and assign the Designated Receivables and the Related Security to NFRRC,
and has duly authorized such sale and assignment to NFRRC by all necessary
corporate action; and the execution, delivery and performance of this Agreement
have been duly authorized by NFC by all necessary corporate action.

(d) Valid Sale; Binding Obligation. This Agreement, together with the PA
Assignment, has been duly executed and delivered by NFC, and shall (upon
satisfaction of the conditions set forth in Section 4.02(b) hereof relating to
the Designated Receivables) constitute a valid sale, transfer and assignment of
the Designated Receivables and Related Security, enforceable against creditors
of and purchasers from NFC. This Agreement, together with the PA Assignment,
constitute a legal, valid and binding obligation of NFC enforceable against NFC
in accordance with its respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors’ rights in general and by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.

(e) No Violation. The consummation of the transactions contemplated by this
Agreement and the PA Assignment, and the fulfillment of the terms of this
Agreement and the PA Assignment shall not conflict with, result in any breach of
any of the terms and provisions of, or constitute (with or without notice or
lapse of time) a default under, the certificate of incorporation or by-laws of
NFC, or any indenture, agreement, mortgage, deed of trust or other instrument to
which NFC is a party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust or other instrument (other
than this Agreement, the PA Assignment or any Further Transfer and Servicing
Agreement), or violate any law or, to NFC’s knowledge, any order, rule or
regulation applicable to NFC of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over NFC or any of its properties.

(f) No Proceedings. There are no proceedings or, to NFC’s knowledge,
investigations pending or, to NFC’s knowledge, threatened, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over NFC or its properties (i) asserting the
invalidity of this Agreement or the PA Assignment, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or the PA
Assignment, or (iii) seeking any determination or ruling that might materially
and adversely affect the performance by NFC of its obligations under, or the
validity or enforceability of, this Agreement or the PA Assignment.

(g) No Consent. No permit, consent, approval or authorization of, or declaration
to or filing with, any governmental authority is required in connection with the
execution, delivery and performance by NFC of this Agreement or the PA
Assignment or the

 

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consummation by NFC of the transactions contemplated hereby or thereby except as
expressly contemplated herein or therein.

(h) ERISA. No notice of a Lien arising under Title I or Title IV of ERISA has
been filed against, or otherwise affects the assets of NFC.

(i) Solvency. NFC is, and after giving effect to the transactions contemplated
to occur on such date will be, solvent.

(j) Investment Company Act. NFC is not, and is not controlled by, an “investment
company” within the meaning of, and is not required to register as an
“investment company” under, the Investment Company Act.

SECTION 3.03 Representations and Warranties of NFRRC. NFRRC hereby represents
and warrants to NFC as of the Purchase Date:

(a) Organization and Good Standing. NFRRC has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with power and authority to own its properties and to conduct its
business as such properties are presently owned and such business is presently
conducted, and had at all relevant times, and now has, power, authority and
legal right to acquire and own the Designated Receivables.

(b) Due Qualification. NFRRC is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of property or
the conduct of its business requires such qualification.

(c) Power and Authority. NFRRC has the power and authority to execute and
deliver this Agreement and to carry out its terms and the execution, delivery
and performance of this Agreement have been duly authorized by NFRRC by all
necessary corporate action.

(d) No Violation. The consummation by NFRRC of the transactions contemplated by
this Agreement and the fulfillment of the terms of this Agreement shall not
conflict with, result in any breach of any of the terms and provisions of or
constitute (with or without notice or lapse of time) a default under, the
certificate of incorporation or by-laws of NFRRC, or any indenture, agreement,
mortgage, deed of trust or other instrument to which NFRRC is a party or by
which it is bound, or result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, agreement or
other instrument (other than this Agreement, the PA Assignment or any Further
Transfer and Servicing Agreement), or violate any law or, to NFRRC’s knowledge,
any order, rule or regulation applicable to NFRRC of any court or of any federal
or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over NFRRC or any of its properties.

(e) No Proceedings. There are no proceedings or, to NFRRC’s knowledge,
investigations pending or, to NFRRC’s knowledge, threatened, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over NFRRC or its properties (i) asserting
the invalidity of this Agreement or the PA

 

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Assignment, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or (iii) seeking any determination or ruling that
might materially and adversely affect the performance by NFRRC of its
obligations under, or the validity or enforceability of, this Agreement or the
PA Assignment.

(f) Binding Obligation. This Agreement has been duly executed and delivered by
NFRRC, and constitutes a legal, valid and binding obligation of NFRRC
enforceable against NFRRC in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, or other
similar laws affecting the enforcement of creditors’ rights in general and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.

(g) No Consent. No permit, consent, approval or authorization of, or declaration
to or filing with, any governmental authority is required in connection with the
execution, delivery and performance by NFRRC of this Agreement, or the
consummation by NFRRC of the transactions contemplated hereby except as
expressly contemplated herein.

ARTICLE IV

CONDITIONS

SECTION 4.01 Conditions to Obligation of NFRRC. The obligation of NFRRC to
purchase Designated Receivables and the Related Security hereunder on the
Purchase Date is subject to the satisfaction of the following conditions:

(a) Representations and Warranties True. The representations and warranties of
NFC in Section 3.01 regarding such Designated Receivables and the Related
Security being transferred on the Purchase Date, and the representations and
warranties of NFC in Section 3.02, shall be true and correct as of the Purchase
Date (or if specified as applying to some other date, as of such date), and NFC
shall have performed all obligations to be performed by it hereunder on or prior
to the Purchase Date.

(b) No Repurchase Event. No Repurchase Event (as defined in Section 5.04 below)
shall have occurred on or prior to the Purchase Date with respect to any of the
Designated Receivables.

(c) Computer Files Marked. NFC shall, at its own expense, on or prior to the
Purchase Date, (i) indicate in its computer files created in connection with the
Designated Receivables that the Designated Receivables have been sold by NFC to
NFRRC pursuant to this Agreement and the PA Assignment by NFC and (ii) deliver
to NFRRC the Schedule of Retail Notes certified by an officer of NFC to be true,
correct and complete.

(d) Documents to Be Delivered by NFC.

(i) The PA Assignment. On the Purchase Date, NFC shall execute and deliver to
NFRRC the PA Assignment of the Designated Receivables and the Related Security.

 

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(ii) Evidence of UCC Filing. On or prior to the Purchase Date, NFC shall record
and file, at its own expense, a UCC-1 financing statement in each jurisdiction
in which required by applicable law, naming NFC as seller or debtor, naming
NFRRC as purchaser or secured party, naming the Designated Receivables and
Related Security as collateral, meeting the requirements of the laws of each
such jurisdiction and in such manner as is necessary to perfect under the UCC
the sale, transfer, assignment and conveyance of the Designated Receivables and
the Related Security (to the extent such Related Security constitutes Code
Collateral) to NFRRC. NFC shall deliver a file-stamped copy, or other evidence
satisfactory to NFRRC of such filing, to NFRRC on or prior to the Purchase Date.

(iii) Other Documents. On the Purchase Date, NFC shall provide such other
documents as NFRRC may reasonably request.

(e) [Reserved].

(f) Other Transactions. The related transactions contemplated by the Further
Transfer and Servicing Agreements shall be consummated on or prior to the
Purchase Date (and all conditions precedent thereto shall be satisfied) to the
extent that such transactions are intended to be substantially contemporaneous
with the transactions hereunder.

SECTION 4.02 Conditions To Obligation of NFC. The obligation of NFC to sell the
Designated Receivables to NFRRC hereunder on the Purchase Date is subject to the
satisfaction of the following conditions:

(a) Representations and Warranties True. The representations and warranties of
NFRRC hereunder shall be true and correct as of the Purchase Date, and NFRRC
shall have performed all obligations to be performed by it hereunder on or prior
to the Purchase Date.

(b) Purchase Price. On the Purchase Date, NFRRC shall pay to NFC the Purchase
Price, payable on such date as provided in Section 2.02 of this Agreement.

ARTICLE V

ADDITIONAL AGREEMENTS

NFC agrees with NFRRC as follows:

SECTION 5.01 Conflicts With Further Transfer and Servicing Agreements. To the
extent that any provision of Sections 5.02 through 5.04 of this Agreement
conflicts with any provision of the Further Transfer and Servicing Agreements,
the Further Transfer and Servicing Agreements shall govern.

SECTION 5.02 Protection of Title.

(a) Filings. NFC shall prepare and file such financing statements and cause to
be prepared and filed such continuation and other statements, all in such manner
and in such places as may be required by law fully to preserve, maintain and
protect the interest of NFRRC under this Agreement in the Designated Receivables
and the Related Security, and hereby

 

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authorizes NFRRC (and the Indenture Trustee) to file any such financing
statements or continuation statements relating to all or any part thereof. NFC
shall deliver (or cause to be delivered) to NFRRC, the Indenture Trustee and the
Agent file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.

(b) Name Change. NFC shall not change its name, identity or corporate structure
in any manner that would, could or might make any financing statement or
continuation statement filed by NFC in accordance with Section 5.02(a) seriously
misleading within the meaning of Section 9-506 of the UCC, unless it shall have
given NFRRC, the Indenture Trustee and the Agent at least 60 days prior written
notice thereof and shall file such financing statements or amendments as may be
necessary to continue the perfection of NFRRC’s security interest in the
Designated Receivables and the Related Security.

(c) Jurisdiction of Formation; Maintenance of Offices. NFC shall give NFRRC, the
Indenture Trustee and the Agent at least 60 days prior written notice of any
change in its jurisdiction of formation and shall file such financing statements
or amendments as may be necessary to continue the perfection of NFRRC’s security
interest in the Designated Receivables and the Related Security. NFC shall at
all times maintain each office from which it services Designated Receivables and
its jurisdiction of formation within the United States of America.

SECTION 5.03 Other Liens or Interests. Except for the conveyances hereunder and
as contemplated by the Further Transfer and Servicing Agreements, NFC shall not
sell, pledge, assign or transfer the Designated Receivables or the Related
Security to any other Person, or grant, create, incur, assume or suffer to exist
any Lien (except any Permitted Lien) on any interest therein, and NFC shall
defend the right, title and interest of NFRRC in, to and under the Designated
Receivables and Related Security against all claims of third parties claiming
through or under NFC.

SECTION 5.04 Repurchase Events. By its execution of the Further Transfer and
Servicing Agreements to which it is a party, NFC shall be deemed to acknowledge
the assignment by NFRRC of such of its right, title and interest in, to and
under this Agreement to the Subsequent Transferee as shall be provided in the
Further Transfer and Servicing Agreements. NFC hereby covenants and agrees with
NFRRC for the benefit of NFRRC and the Interested Parties, that (A) in the event
of (i) a breach of any of NFC’s representations and warranties contained in
Section 3.01 hereof with respect to any Designated Receivable or (ii) a breach
by NFC of Section 5.03 hereof with respect to any Designated Receivable, which
breach materially and adversely affects NFRRC’s interest (or the interest of any
Financial Party) in such Designated Receivable (it being understood that a
breach of Section 3.01(v)(i) hereof shall be deemed to materially and adversely
affect NFRRC’s interest, or the interest of any Financial Party, in such
Designated Receivable), or (B) if at any time NFRRC or the Subsequent Transferee
is required to obtain a license pursuant to Article 11-B of the New York Banking
Law and such entity has failed to obtain such license and such failure adversely
affects the interest of NFRRC (or the interest of any Financial Party) (each
breach or circumstance described in preceding clause (A) or (B), a “Repurchase
Event”) unless, in any such case, such breach shall have been cured in all
material respects or such license shall have been obtained, as applicable, as of
the second Accounting Date following NFC’s discovery or its receipt of notice of
breach or the existence of such circumstance (or, at NFC’s election, the first
Accounting Date following

 

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such discovery), NFC will repurchase the Designated Receivable or, in the case
of preceding clause (B), all Designated Receivables affected by the failure to
obtain such license, from the Subsequent Transferee (if the Subsequent
Transferee is then the Owner of such Designated Receivable) on the related
Distribution Date for an amount equal to the Warranty Payment (which amount
shall be deposited by NFC directly into the Collection Account on the Transfer
Date for the related Distribution Date), without further notice from NFRRC
hereunder. Upon the occurrence of a Repurchase Event with respect to one or more
Designated Receivables for which NFRRC is the Owner, NFC agrees to repurchase
such Designated Receivable from NFRRC for an amount and upon the same terms as
NFC would be obligated to repurchase such Designated Receivables from the
Subsequent Transferee if the Subsequent Transferee was then the Owner thereof,
and upon payment of such amount, NFC shall have such rights with respect to such
Designated Receivables as if NFC had purchased such Designated Receivable from
the Subsequent Transferee as the Owner thereof. It is understood and agreed that
the obligation of NFC to repurchase any Designated Receivable pursuant to this
Section 5.04 shall, if such obligation is fulfilled, constitute the sole remedy
against NFC for such breach available to NFRRC or any Interested Party.

SECTION 5.05 Indemnification. NFC shall indemnify NFRRC for any liability as a
result of the failure of a Designated Receivable to be originated in compliance
with all requirements of law and for any breach of any of its representations
and warranties contained herein. This indemnity obligation shall be in addition
to any obligation that NFC may otherwise have.

SECTION 5.06 Further Assignments. NFC acknowledges that NFRRC shall, pursuant to
the Further Transfer and Servicing Agreements, sell the Designated Receivables
and the Related Security to the Subsequent Transferee and assign its rights
hereunder to the Subsequent Transferee, subject to the terms and conditions of
the Further Transfer and Servicing Agreements, and that the Subsequent
Transferee may in turn further pledge, assign or transfer its rights in the
Designated Receivables, the Related Security and this Agreement to the Indenture
Trustee, for the benefit of the Financial Parties. NFC further acknowledges that
NFRRC may assign its rights under the Servicing Agreement to the Subsequent
Transferee and that the Subsequent Transferee may in turn pledge, assign or
transfer its rights in the Servicing Agreement to the Indenture Trustee, for the
benefit of the Financial Parties.

SECTION 5.07 Pre-Closing Collections. Within two Business Days after the
Purchase Date, NFC shall transfer to the account or accounts designated by NFRRC
(or by the Subsequent Transferee under the Further Transfer and Servicing
Agreements) all collections (from whatever source) on or with respect to the
Designated Receivables and the Related Security conveyed by NFC to NFRRC on the
Purchase Date pursuant to Section 2.01.

SECTION 5.08 Limitation on Transfer of International Purchase Obligations. NFRRC
acknowledges and agrees that the rights pursuant to the International Purchase
Obligations are personal to NFC, and only the proceeds of such rights have been
assigned to NFRRC. NFRRC is not and is not intended to be a third-party
beneficiary of such rights and, accordingly, such rights will not be exercisable
by, enforceable by or for the benefit of, or preserved for the benefit of,
NFRRC, the Issuer, the Owner Trustee or the Indenture Trustee.

 

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SECTION 5.09 Sale Treatment. NFC intends to treat each transfer and assignment
described herein as a sale for tax and other purposes and as a secured financing
for accounting purposes.

ARTICLE VI

MISCELLANEOUS PROVISIONS

SECTION 6.01 Amendment. This Agreement may be amended from time to time (subject
to any expressly applicable amendment provision of the Further Transfer and
Servicing Agreements) by a written amendment duly executed and delivered by NFC
and NFRRC; provided, however, that this Agreement may not be amended unless such
amendment is in accordance with the provisions of Section 5.01 of the Pooling
Agreement as if such Section 5.01 were contained herein and were applicable to
this Agreement.

(b) Notwithstanding any other provision of this Agreement, if the consent of the
Swap Counterparty is required pursuant to the Swap Counterparty Rights Agreement
to amend this Agreement, any such purported amendment shall be null and void ab
initio unless the Swap Counterparty consents in writing to such amendment.

SECTION 6.02 Survival; Termination. This Agreement shall create and constitute
the continuing obligations of the parties hereto and shall remain in full force
and effect until terminated in accordance with its terms; provided, however,
that this Section 6.02 and the rights and remedies with respect to Section 6.14
shall be continuing and shall survive any termination of this Agreement. This
Agreement may be terminated by NFC and NFRRC at any time following the
termination of the Further Transfer and Servicing Agreements in accordance with
their respective terms.

SECTION 6.03 Notices. All demands, notices and communications under this
Agreement shall be delivered as specified in Appendix B to the Pooling
Agreement.

SECTION 6.04 Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement and the PA Assignment shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Illinois, without giving effect to any choice of law or conflict provision or
rule (whether of the State of Illinois or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Illinois.

SECTION 6.05 Waivers. No failure or delay on the part of NFRRC (or the Indenture
Trustee or the Agent) in exercising any power, right or remedy under this
Agreement or the PA Assignment shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or remedy preclude any other
or further exercise thereof or the exercise of any other power, right or remedy.

SECTION 6.06 Costs and Expenses. NFC agrees to pay all reasonable out-of-pocket
costs and expenses of NFRRC, including fees and expenses of counsel, in
connection with the perfection as against third parties of NFRRC’s right, title
and interest in, to and under the Designated Receivables and Related Security
and the enforcement of any obligation of NFC hereunder.

 

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SECTION 6.07 Confidential Information. NFRRC agrees that it shall neither use
nor disclose to any person the names and addresses of the Obligors, except in
connection with the enforcement of NFRRC’s rights hereunder, under the
Designated Receivables, under the Further Transfer and Servicing Agreements or
as required by law.

SECTION 6.08 Headings. The various headings in this Agreement are for purposes
of reference only and shall not affect the meaning or interpretation of any
provision of this Agreement.

SECTION 6.09 Counterparts. This Agreement may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.

SECTION 6.10 Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or terms
shall be deemed enforceable to the fullest extent permitted, and if not so
permitted, shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of any Securities or
rights of the holders thereof.

SECTION 6.11 Further Assurances. NFC and NFRRC agree to do and perform, from
time to time, any and all acts and to execute any and all further instruments
required or reasonably requested by the other more fully to effect the purposes
of this Agreement, including the preparation of any financing statements or
continuation statements relating to the Designated Receivables and Related
Security for filing under the provisions of the UCC of any applicable
jurisdiction.

SECTION 6.12 Assignment; Third-Party Beneficiaries. NFC may not assign any of
its rights or obligations hereunder or any interest herein without the prior
written consent of NFRRC and the Agent. NFRRC may not assign any of its rights
or obligations hereunder or any interest herein without the prior written
consent of NFC and the Agent; provided, however, that each of the transactions
contemplated in Section 5.06 may be consummated without the further consent of
any Person. NFC and NFRRC agree that the Indenture Trustee is an express
third-party beneficiary with respect to this Agreement and, as such, shall have
the right to enforce this Agreement and to exercise directly all of NFRRC’s
rights and remedies under this Agreement (including, without limitation, the
right to give or withhold any consents or approvals of NFRRC to be given or
withheld hereunder). The Swap Counterparty shall be a third-party beneficiary to
this Agreement only to the extent that it has rights specified herein or rights
with respect to this Agreement specified in the Swap Counterparty Rights
Agreement. Except as otherwise expressly provided in this Agreement, no other
Person shall have any right or obligation hereunder.

SECTION 6.13 Merger and Integration. Except as specifically stated otherwise
herein, this Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof, and all prior understandings, written or
oral, are superseded by this Agreement.

 

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This Agreement may not be modified, amended, waived, or supplemented except as
provided herein.

SECTION 6.14 No Petition Covenants. Notwithstanding any prior termination of
this Agreement, NFC shall not, prior to the date which is one year and one day
after the final distribution with respect to the Securities, acquiesce, petition
or otherwise invoke or cause any Person to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
NFRRC or the Issuer under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of NFRRC or the Issuer or any substantial
part of its property, or ordering the winding up or liquidation of the affairs
of NFRRC or the Issuer.

SECTION 6.15 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN
OR AMONG ANY OF THE PARTIES HERETO, WHETHER ARISING IN CONTRACT, TORT OR
OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

* * * * *

 

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IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the date and year
first above written.

 

NAVISTAR FINANCIAL CORPORATION By:  

/s/ John V. Mulvaney, Sr.

Name:   John V. Mulvaney, Sr. Title:   Vice President, Chief Financial Officer
and Treasure NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION By:  

/s/ John V. Mulvaney, Sr.

Name:   John V. Mulvaney, Sr. Title:   Vice President, Chief Financial Officer
and Treasure

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EXHIBIT A

FORM OF PA ASSIGNMENT

As of                     , 2008, for value received, in accordance with the
Purchase Agreement, dated as of the date hereof (the “Purchase Agreement”),
between Navistar Financial Corporation, a Delaware corporation (“NFC”), and
Navistar Financial Retail Receivables Corporation, a Delaware corporation
(“NFRRC”), NFC does hereby sell, assign, transfer and otherwise convey unto
NFRRC, without recourse (except as provided in Section 5.04 of the Purchase
Agreement), all right, title and interest of NFC in, to and under, the Retail
Notes identified on the Schedule of Retail Notes attached hereto having an
aggregate Starting Receivable Balance of $                .     (the “Designated
Receivables”) and the Related Security associated with the Designated
Receivables;

The foregoing sale does not constitute and is not intended to result in any
assumption by NFRRC of any obligation of the undersigned to the Obligors,
Dealers, insurers or any other Person in connection with the Designated
Receivables, the agreements with Dealers, any Insurance Policies or any
agreement or instrument relating to any of them.

This PA Assignment is made pursuant to and upon the representations, warranties
and agreements on the part of the undersigned contained in the Purchase
Agreement and is to be governed by the Purchase Agreement.

Capitalized terms used herein and not otherwise defined shall have the meaning
assigned to them in the Purchase Agreement.

* * * * *

 

Ex. A-1

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IN WITNESS WHEREOF, the undersigned has caused this PA Assignment to be duly
executed as of the day and year first above written.

 

NAVISTAR FINANCIAL CORPORATION

By:

 

 

Name:

 

Title:

 

 

Ex. A-2