EXHIBIT 10.5

EXECUTION COPY

 

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PURCHASE AGREEMENT

BETWEEN

NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION

AND

NAVISTAR FINANCIAL CORPORATION

DATED AS OF FEBRUARY 27, 2006

 

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TABLE OF CONTENTS

 

          Page

ARTICLE I DEFINITIONS

   1

SECTION 1.01

  

Definitions

   1

ARTICLE II PURCHASE AND SALE OF RECEIVABLES

   1

SECTION 2.01

  

Purchase and Sale of Receivables

   1

SECTION 2.02

  

Purchase Price

   2

SECTION 2.03

  

The Closings

   2

SECTION 2.04

  

Covenant Regarding Subsequent Receivables

   2

ARTICLE III REPRESENTATIONS AND WARRANTIES

   2

SECTION 3.01

  

Representations and Warranties as to Receivables

   2

SECTION 3.02

  

Additional Representations and Warranties of NFC

   7

SECTION 3.03

  

Representations and Warranties of NFRRC

   8

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

   12

SECTION 5.06

  

Further Assignments

   12

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

   14

SECTION 6.03

  

Notices

   14

SECTION 6.04

  

Governing Law

   14

SECTION 6.05

  

Waivers

   15

SECTION 6.06

  

Costs and Expenses

   15

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

  

No Third-Party Beneficiaries

   15

 

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SECTION 6.13

  

Merger and Integration

   15

SECTION 6.14

  

No Petition Covenants

   16

EXHIBITS

 

Exhibit A - Form of Initial PA Assignment

Exhibit B - Form of Subsequent Transfer PA Assignment

 

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PURCHASE AGREEMENT

PURCHASE AGREEMENT, dated as of February 27, 2006, 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 and from time to time
during the Funding Period certain Retail Notes (collectively, the “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.

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 2006-BOA 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.

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 sell, transfer, assign and
otherwise convey

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to NFRRC, without recourse (except as provided in Section 5.04), and NFRRC
agrees to purchase (i) on the Closing Date pursuant to a written assignment
substantially in the form of Exhibit A (the “Initial PA Assignment”), and (ii)
on each Subsequent Transfer Date (each, together with the Closing Date, a
“Purchase Date”), pursuant to an assignment substantially in the form of Exhibit
B (each, a “Subsequent Transfer PA Assignment” and, together with the Initial PA
Assignment, each a “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 such Purchase Date (the “Designated
Receivables”) and the Related Security associated with the Designated
Receivables;

SECTION 2.02 Purchase Price. In consideration for the purchase of any Designated
Receivables and Related Security, NFRRC shall, on the related 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 $541,086,292.15 Purchase Price payable on such
date equal to $526,476,962.26 shall be paid to NFC in immediately available
funds, and the balance of the Purchase Price ($14,609,329.89) shall be recorded
as an advance from NFC to NFRRC. On each Subsequent Transfer Date, a portion of
the Purchase Price payable on such date equal to any Incremental Funding
pursuant to Article II of the Note Purchase Agreement in connection with any
Subsequent Transfer received by NFRRC shall be paid to NFC in immediately
available funds, and the balance of the Purchase Price payable on such date
shall be recorded as an advance from NFC to NFRRC.

SECTION 2.03 The Closings. Each sale and purchase of the Designated Receivables
(each, a “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.

SECTION 2.04 Covenant Regarding Subsequent Receivables. NFC covenants to deliver
and sell to NFRRC pursuant to Section 2.01 on or prior to the end of the Funding
Period and NFRRC agrees to purchase from NFC sufficient Subsequent Receivables
to permit the Funded amount to approximately equal to the amount of the Maximum
Net Investment under the Note Purchase Agreement.

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 (other than Section 3.01(n), which speaks only as of the Closing
Date) speak as of the Purchase 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 retail
customer or a refinancing (for reasons other than credit reasons, unless it was
amended or restructured at least 12 months prior to the applicable 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 retail customer;

 

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

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

(iv) shall yield interest at the Annual Percentage Rate and comes from one of
the following categories, which differ in their provisions for the payment of
principal and interest: Equal Payment Fully Amortizing Receivables, Equal
Payment Skip Receivables, Equal Payment Balloon Receivables, Level Principal
Fully Amortizing Receivables, Level Principal Skip Receivables, Level Principal
Balloon Receivables, or Other Receivables. “Equal Payment Fully Amortizing
Receivables” are Receivables that provide for equal monthly payments that fully
amortize the amount financed over its original term to maturity. “Equal Payment
Skip Receivables” are Receivables that provide for equal monthly payments in
eleven or fewer months of each twelve-month period that fully amortize the
amount financed over its original term to maturity. “Equal Payment Balloon
Receivables” are Receivables that provide for equal monthly payments except that
a larger payment becomes due on the final maturity date for such Receivables.
“Level Principal Fully Amortizing Receivables” are Receivables that provide for
monthly payments consisting of level principal amounts together with accrued and
unpaid interest on the unpaid Receivables 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 Receivables 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 Receivables 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

 

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Lien (except for Permitted Liens and Liens that will be released as 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 Permitted Liens), and the transfer of the Retail Note to NFRRC
has been perfected under the UCC;

(vi) such Designated Receivable 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 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 applicable 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 applicable Cutoff Date, no provision of any Designated
Receivable has been waived, altered or modified in any respect.

(h) No Amendments. Since the applicable Cutoff Date, no Designated Receivable
has been amended or otherwise modified such that the total number of the
Obligor’s

 

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Scheduled Payments is increased or the Starting Receivable Balance thereof is
increased, and prior to the applicable 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 applicable 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 applicable Cutoff Date, or with respect to any Eligible
Restructured Receivable, no such event has occurred since the date of its
amendment or restructuring.

(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 it constitutes
Code Collateral) shall 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. No Designated Receivable, or constituent part
thereof, constitutes a “negotiable instrument” or “negotiable document of title”
(as such terms are used in the UCC).

 

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(q) Maturity of Receivables. Each Designated Receivable has an original term to
maturity of not less than 6 months and not greater than 84 months and, as of the
related Cutoff Date, had a remaining term to maturity of not less than 6 months
and not greater than 84 months.

(r) Scheduled Payments; Delinquency. As of the Initial Cutoff Date, each
Designated Receivable being purchased on the Closing Date had a first scheduled
payment that was due on or before February 28, 2006; as of the applicable Cutoff
Date, each Designated Receivable being purchased during the Funding Period had
or will have a first scheduled payment that was due on or before the last day of
the Monthly Period next following the Monthly Period in which such Cutoff Date
occurs; as of the applicable 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 related
Purchase Date, no Designated Receivable had or will have a final scheduled
payment that is due later than April 30, 2013.

(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 its applicable Cutoff Date shall be $1,000 or more.

(v) Concentration. After giving effect to the transfer of such Designated
Receivables to the Trust under the Further Transfer and Servicing Agreements,
(i) the aggregate Receivable Balance of all Receivables from a single Obligor
shall not exceed 2.00% of the aggregate Receivable Balance of all Receivables in
the Trust, (ii) the aggregate Starting Receivable Balance of all Receivables
having a remaining term in excess of 72 months as of the applicable Cutoff Date
shall not exceed 10.00% of the Aggregate Starting Receivables Balance, (iii) the
weighted average remaining maturity of the Receivables in the Trust shall not be
greater than 58 months, (iv) the aggregate Starting Receivables Balance of all
Receivables not originated by NFC or one of its Affiliates shall not exceed
3.00% of the Aggregate Starting Receivables Balance, (v) the aggregate Starting
Receivables Balance for all Receivables that are Eligible Restructured
Receivables shall not exceed 5.00% of the Aggregate Starting Receivables
Balance, (vi) the aggregate Starting Receivables Balance of all Receivables
secured by used vehicles shall not exceed 22.50% of the Aggregate Starting
Receivables Balance and (vii) the aggregate Starting Receivables Balance of all
Receivables owed by Non-Fleet Obligors shall not exceed 22.50% of the Aggregate
Starting Receivables Balance. The Designated Receivables transferred on any
Purchase Date shall have a Weighted Average Coupon of not less than 8.00%.

(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

 

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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 Initial Cutoff Date, each Initial Receivable has an
Annual Percentage Rate of not less than 5.00% and, as of the applicable
Subsequent Cutoff Date, each Designated Receivable transferred after the Closing
Date has an Annual Percentage Rate of not less than 5.06%.

(y) 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 each Purchase Date and as of the related
Closing Date under the Further Transfer and Servicing Agreements, in its
capacity as the seller of the Receivables hereunder, that:

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

(b) Due Qualification. NFC is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which 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,
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 applicable
PA Assignment, when duly executed and delivered, shall (upon satisfaction of the
conditions set forth in Section 4.02(b) hereof relating to the related
Designated Receivables) constitute a valid sale, transfer and assignment of such
Designated Receivables and Related Security, enforceable against creditors of
and purchasers from NFC; and this Agreement, together with the applicable PA
Assignment, when duly executed and delivered, shall (upon satisfaction of the
conditions set forth in Section 4.02(b) hereof relating to such Designated
Receivables) 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.

 

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(e) No Violation. The consummation of the transactions contemplated by this
Agreement and any PA Assignment, and the fulfillment of the terms of this
Agreement and any 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, any 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 any PA Assignment, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or any 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 any 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 any PA
Assignment or the 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 under Section 6323 (a) of the Code (or any successor provision)
against, or otherwise affecting the assets 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 each 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.

 

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(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, any 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 any PA 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 any PA Assignment.

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

(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.

 

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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 any
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 such Purchase Date, and the representations and
warranties of NFC in Section 3.02, shall be true and correct as of such Purchase
Date (or if specified as applying to some other date, as of such date), with the
same effect as if then made, and NFC shall have performed all obligations to be
performed by it hereunder on or prior to such Purchase Date.

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

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

(d) Documents to Be Delivered by NFC.

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

(ii) Evidence of UCC Filing. On or prior to such 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 such 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 such Designated Receivables and
the Related Security (to the extent it constitutes Code Collateral) to NFRRC.
NFC shall deliver a file-stamped copy, or other evidence satisfactory to NFRRC
of such filing, to NFRRC on or prior to such Purchase Date.

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

(e) Funding Period. The Funding Period shall not have terminated.

 

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(f) Other Transactions. The related transactions contemplated by the Further
Transfer and Servicing Agreements shall be consummated on or prior to the
related 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 any 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 such Purchase Date, with the
same effect as if then made, and NFRRC shall have performed all obligations to
be performed by it hereunder on or prior to such Purchase Date.

(b) Purchase Price. On each 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 authorizes NFRRC 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 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 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 at
least 60 days prior written notice of any change in its jurisdiction of
formation and

 

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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 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 has
a Material Adverse Effect on NFRRC’s interest in such Designated Receivable
(each a “Repurchase Event”) unless, in either case, such breach shall have been
cured in all material respects as of the second Accounting Date following NFC’s
discovery or its receipt of notice of breach (or, at NFC’s election, the first
Accounting Date following such discovery), NFC will repurchase the Designated
Receivable 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, without further notice from NFRRC
hereunder. Upon the occurrence of a Repurchase Event with respect to a
Designated Receivable 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 Receivable 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 Receivable 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 as to which a
breach has occurred and is continuing shall, if such obligation is fulfilled,
constitute the sole remedy against NFC for such breach available to NFRRC or any
Interested Party.

SECTION 5.05 Indemnification. NFC shall indemnify NFRRC for any liability as a
result of the failure of a 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, the Designated Receivables and
the

 

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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
and the Related Security and this Agreement. NFC further acknowledges that NFRRC
may assign its rights under the Servicing Agreement to the Subsequent
Transferee.

SECTION 5.07 Pre-Closing Collections. Within two Business Days after each
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 such
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 accounting and tax 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. The representations, warranties and covenants of NFC set
forth in Article III and Article V of this Agreement shall remain in full force
and effect and shall survive each Purchase Date and each Closing under the
Further Transfer and Servicing Agreements.

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

SECTION 6.04 Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement and each 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.

 

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SECTION 6.05 Waivers. No failure or delay on the part of NFRRC in exercising any
power, right or remedy under this Agreement or any 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.

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 any Owner.

SECTION 6.11 Further Assurances. NFC and NFRRC agree to do and perform, from
time to time, any and all acts and to execute any and all further instruments
required or reasonably requested by the other more fully to effect the purposes
of this Agreement, including the 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 No Third-Party Beneficiaries. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, the Owners and their
respective successors and permitted assigns. Except as otherwise expressly
provided in this Agreement, no other Person shall have any right or obligation
hereunder.

SECTION 6.13 Merger and Integration. Except as specifically stated otherwise
herein, this Agreement sets forth the entire understanding of the parties
relating to the subject

 

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matter hereof, and all prior understandings, written or oral, are superseded by
this Agreement. This Agreement may not be modified, amended, waived, or
supplemented except as provided herein.

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 to the Note
Distribution Account or the Certificate Distribution Account, as applicable,
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 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 any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of NFRRC.

*    *    *    *    *

 

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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 Mulvaney

Name:   John Mulvaney Title:   Vice President and Controller
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION By:  

/s/ John Mulvaney

Name:   John Mulvaney Title:   Vice President and Controller

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EXHIBIT A

FORM OF INITIAL PA ASSIGNMENT

As of February 27, 2006, for value received, in accordance with the Purchase
Agreement, dated as of February 27, 2006 (the “Purchase Agreement”), between
Navistar Financial Corporation, a Delaware corporation (“NFC”), and Navistar
Financial Retail Receivables Corporation, a Delaware corporation (“NFRRC”), NFC
does hereby sell, assign, transfer and otherwise convey unto NFRRC, without
recourse, all right, title and interest of NFC in, to and under, the Retail
Notes identified on the Schedule of Retail Notes attached hereto having an
aggregate Starting Receivable Balance of $541,086,292.15 (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.

* * * * *

 

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:

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EXHIBIT B

FORM OF SUBSEQUENT TRANSFER PA ASSIGNMENT

As of                     , 2006, for value received, in accordance with the
Purchase Agreement, dated as of February 27, 2006 (the “Purchase Agreement”),
between Navistar Financial Corporation, a Delaware corporation (“NFC”), and
Navistar Financial Retail Receivables Corporation, a Delaware corporation
(“NFRRC”), NFC does hereby sell, assign, transfer and otherwise convey unto
NFRRC, without recourse, all right, title and interest of NFC in, to and under,
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 Subsequent Transfer 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.

* * * * *

 

B -1

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

 

NAVISTAR FINANCIAL CORPORATION

By:

 

 

Name:   Title: