Exhibit 10.2

Execution Version

AMENDED AND RESTATED ABL CREDIT AGREEMENT

Dated as of August 17, 2012

among

NAVISTAR, INC.,

as Borrower,

THE LENDERS PARTY HERETO,

BANK OF AMERICA, N.A.,

as Administrative Agent,

JPMORGAN CHASE BANK, N.A.

and

WELLS FARGO CAPITAL FINANCE, LLC,

as Syndication Agents,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

J.P. MORGAN SECURITIES LLC,

and

WELLS FARGO CAPITAL FINANCE, LLC,

as Joint Lead Arrangers and Joint Book Managers,

and

CREDIT SUISSE SECURITIES (USA) LLC,

as Joint Book Manager

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

Table of Contents

 

         Page   ARTICLE I    DEFINITIONS   

Section 1.01

  Defined Terms      1   

Section 1.02

  Classification of Loans and Borrowings      32   

Section 1.03

  Terms Generally      32   

Section 1.04

  Accounting Terms; GAAP      33   

Section 1.05

  Times of Day      33   

Section 1.06

  Timing of Payment or Performance      33   

Section 1.07

  Certifications      33    ARTICLE II    THE CREDITS   

Section 2.01

  Commitments      33   

Section 2.02

  Loans and Borrowings      33   

Section 2.03

  Requests for Borrowings      34   

Section 2.04

  Protective Advances      35   

Section 2.05

  Swingline Loans; Settlement      36   

Section 2.06

  Letters of Credit      36   

Section 2.07

  Funding of Borrowings      42   

Section 2.08

  Type; Interest Elections      42   

Section 2.09

  Termination and Reduction of Commitments      43   

Section 2.10

  Repayment of Loans; Evidence of Debt      44   

Section 2.11

  Prepayment of Loans      45   

Section 2.12

  Fees      46   

Section 2.13

  Interest      47   

Section 2.14

  Alternate Rate of Interest      47   

Section 2.15

  Increased Costs      48   

Section 2.16

  Break Funding Payments      49   

Section 2.17

  Taxes      49   

Section 2.18

  Payments Generally; Allocation of Proceeds; Sharing of Set-offs      52   

Section 2.19

  Mitigation Obligations; Replacement of Lenders      54   

Section 2.20

  Illegality      55   

Section 2.21

  Reserves; Change in Reserves      55   

Section 2.22

  [Reserved]      55   

Section 2.23

  Defaulting Lender      55    ARTICLE III    REPRESENTATIONS AND WARRANTIES   

Section 3.01

  Organization      56   

Section 3.02

  Borrower Information; Subsidiaries      56   

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

Section 3.03

  Powers      56   

Section 3.04

  Governmental Authorization      57   

Section 3.05

  Due Execution      57   

Section 3.06

  No Action, Suit, Etc      57   

Section 3.07

  No Material Adverse Change      57   

Section 3.08

  Consolidated Financials      57   

Section 3.09

  Information      58   

Section 3.10

  Margin Regulations      58   

Section 3.11

  Investment Company Act      58   

Section 3.12

  Solvency      58   

Section 3.13

  ERISA      58   

Section 3.14

  Environmental      60   

Section 3.15

  Taxes      60   

Section 3.16

  Existing Debt      60   

Section 3.17

  Existing Liens      60   

Section 3.18

  [Reserved]      60   

Section 3.19

  Insurance      60   

Section 3.20

  Security Interest in Collateral      61   

Section 3.21

  Sanctioned Persons      61   

Section 3.22

  Reserved      61   

Section 3.23

  Labor Disputes      61   

Section 3.24

  No Defaults      61   

Section 3.25

  Ownership of Property; Liens      61   

Section 3.26

  Status of Debt      62    ARTICLE IV    CONDITIONS   

Section 4.01

  Closing Date      62   

Section 4.02

  Each Borrowing      65   

Section 4.03

  Determinations Under Sections 4.01 and 4.02      66    ARTICLE V   
AFFIRMATIVE COVENANTS   

Section 5.01

  Financial Statements; Borrowing Base and Other Information      67   

Section 5.02

  Notices of Material Events      69   

Section 5.03

  Existence; Conduct of Business      70   

Section 5.04

  Payment of Taxes      70   

Section 5.05

  Maintenance of Properties      71   

Section 5.06

  Books and Records; Inspection Rights; Appraisals; Field Examinations      71
  

Section 5.07

  Compliance with Laws      72   

Section 5.08

  Use of Proceeds      72   

Section 5.09

  Insurance      72   

Section 5.10

  Further Assurances      72   

Section 5.11

  Establishment and Utilization of the Collection Account      73   

Section 5.12

  Speculative Transactions      74   

Section 5.13

  Compliance with Borrowing Base      74   

Section 5.14

  Sales of Parts Inventory and of Parts Receivables      74   

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

Section 5.15

  Location of Parts Inventory      74    ARTICLE VI    NEGATIVE COVENANTS   

Section 6.01

  Debt      75   

Section 6.02

  Liens      77   

Section 6.03

  Change in Nature of Business      78   

Section 6.04

  Mergers, Etc      78   

Section 6.05

  Sales, Etc. of Assets      79   

Section 6.06

  Investments in Other Persons      80   

Section 6.07

  Restricted Payments      82   

Section 6.08

  Accounting Changes      83   

Section 6.09

  Prepayments, Etc., of Debt      83   

Section 6.10

  Partnerships, Etc      83   

Section 6.11

  Payment Restrictions Affecting Borrower      84   

Section 6.12

  Transactions with Affiliates      84   

Section 6.13

  Amendment of Material Documents      84   

Section 6.14

  Sales of Receivables      85   

Section 6.15

  Designation of Designated Senior Debt      85    ARTICLE VII    EVENTS OF
DEFAULT   

Section 7.01

  Events of Default      85    ARTICLE VIII    THE ADMINISTRATIVE AGENT   

Section 8.01

  The Administrative Agent      88   

Section 8.02

  Indemnification by Lenders      91   

Section 8.03

  Banking Services Providers      92   

Section 8.04

  No Third Party Beneficiaries      92    ARTICLE IX    MISCELLANEOUS   

Section 9.01

  Notices      92   

Section 9.02

  Waivers; Amendments      94   

Section 9.03

  Expenses; Indemnity; Damage Waiver      96   

Section 9.04

  Successors and Assigns      98   

Section 9.05

  Survival      103   

Section 9.06

  Counterparts; Integration; Effectiveness      104   

Section 9.07

  Severability      104   

Section 9.08

  Right of Setoff      104   

Section 9.09

  Governing Law; Jurisdiction; Consent to Service of Process      104   

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

Section 9.10

  WAIVER OF JURY TRIAL      105   

Section 9.11

  Headings      105   

Section 9.12

  Confidentiality      105   

Section 9.13

  Lender Obligations Several; Violation of Law      106   

Section 9.14

  USA PATRIOT Act      106   

Section 9.15

  Disclosure; No Advisory or Fiduciary Responsibility      106   

Section 9.16

  Appointment for Perfection      107   

Section 9.17

  Interest Rate Limitation      107   

Section 9.18

  Reserved      107   

Section 9.19

  Reserved      107   

Section 9.20

  Reserved      107   

Section 9.21

  Obligations Absolute      107   

Section 9.22

  Discretionary Loans      108   

Section 9.23

  Credit Inquiries      108   

Section 9.24

  Existing Senior Credit Agreement      108   

SCHEDULES:

Commitment Schedule

 

Schedule 2.06

   - Existing Letters of Credit

Schedule 3.02

   - Subsidiaries

Schedule 3.16

   - Existing Debt

Schedule 3.17

   - Existing Liens

Schedule 3.19

   - Insurance

EXHIBITS:

 

Exhibit A

   - Form of Administrative Questionnaire

Exhibit B

   - Form of Assignment and Assumption

Exhibit C

   - Form of Borrowing Base Certificate

Exhibit D

   - Form of Perfection Certificate

Exhibit E

   - Form of Letter of Credit Request

Exhibit F

   - Form of Borrowing Request

Exhibit G

   - Form of Promissory Note

Exhibit H

   - Form of Security Agreement

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

AMENDED AND RESTATED ABL CREDIT AGREEMENT (this “Agreement”), dated as of August
[•], 2012, by and among NAVISTAR, INC., a Delaware corporation (the “Borrower”),
THE LENDERS (as hereinafter defined) from time to time party hereto, BANK OF
AMERICA, N.A., as administrative agent for the Lenders hereunder (“Bank of
America” or, together with any successor administrative agent appointed pursuant
hereto, in such capacity and including any permitted successor or assign, the
“Administrative Agent”), JPMORGAN CHASE BANK, N.A. and WELLS FARGO CAPITAL
FINANCE, LLC as co-syndication agents (collectively, the “Syndication Agents”),
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, J.P. MORGAN SECURITIES LLC
and WELLS FARGO CAPITAL FINANCE, LLC, as joint lead arrangers (in such capacity
and including any permitted successor or assign, the “Joint Lead Arrangers”),
and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, J.P. MORGAN SECURITIES
LLC, WELLS FARGO CAPITAL FINANCE, LLC and CREDIT SUISSE SECURITIES (USA) LLC as
joint book managers (in such capacity, the “Joint Book Managers”).

PRELIMINARY STATEMENTS

The parties hereto are entering into this Agreement in order to amend and
restate the Existing Senior Credit Agreement (as defined below). Upon
satisfaction (or waiver in accordance with Section 9.02) of the conditions set
forth herein, the Existing Senior Credit Agreement shall be amended and restated
in its entirety in the form of this Agreement, with the effect provided in
Section 9.24 hereof.

NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:

“2009 Senior Note Indenture” means the Indenture, dated as of October 28, 2009,
by and among Navistar International, Borrower and The Bank of New York Mellon
Trust Company, N.A., as trustee.

“2009 Senior Subordinated Convertible Note Indenture” means the Indenture, dated
as of October 28, 2009, between Navistar International and The Bank of New York
Mellon Trust company, N.A., as trustee.

“Account” has the meaning assigned to such term in the Security Agreement.

“ACH” means automated clearing house transfers.

“Additional Discretionary Loans” has the meaning assigned to such term in
Section 9.22(c).

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Adjustment Date” means the first day of each February, May, August, and
November as applicable.

“Administrative Agent” has the meaning assigned to such term in the preamble to
this Agreement.

“Administrative Questionnaire” means an Administrative Questionnaire in the form
of Exhibit A.

“Affiliate” means, as applied to any Person, any other Person directly or
indirectly Controlling, Controlled by, or under common Control with, that
Person.

“Agent Indemnitee” means the Administrative Agent and its respective officers,
directors, employees, Affiliates, agents and attorneys.

“Agent Professionals” means attorneys, accountants, appraisers, auditors,
business valuation experts, environmental engineers or consultants, turnaround
consultants, and other professionals and experts retained by the Administrative
Agent in accordance with the terms hereof.

“Agreement” has the meaning assigned to such term in the preamble to this
agreement.

“Agreement Value” means, for each Hedge Agreement, on any date of determination,
an amount reasonably determined by the Administrative Agent equal to the amount,
if any, that would be payable by Borrower to its counterparty to such Hedge
Agreement in accordance with its terms as if (a) such Hedge Agreement was being
terminated early on such date of determination, and (b) Borrower was the sole
“Affected Party.”

“Anti-Terrorism Laws” means any laws relating to terrorism or money laundering,
including the USA PATRIOT Act.

“Applicable Margin” means, for any day, with respect to any Base Rate Loan or
LIBOR Loan, the applicable rate per annum set forth below under the caption
“LIBOR Spread” or “Base Rate Spread”, based upon the Average Historical Excess
Availability as of the most recent Adjustment Date; provided that until
November 1, 2012 the “Applicable Margin” shall be the applicable rate per annum
set forth below in Category 1:

 

Average Historical

Excess Availability

  

LIBOR

Spread

   

Base Rate

Spread

 

Category 1

    

Average Historical Excess Availability greater than $60,000,000.

     2.75 %      1.75 % 

Category 2

    

Average Historical Excess Availability less than or equal to $60,000,000.

     3.25 %      2.25 % 

The Applicable Margin shall be adjusted quarterly on a prospective basis on each
Adjustment Date based upon the Average Historical Excess Availability in
accordance with the table above; provided, however, that if an Event of Default
shall have occurred and be continuing at the time any reduction in the
Applicable Margin would otherwise be implemented, no such reduction shall be
implemented until the date on which such Event of Default shall have been cured
or waived.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Applicable Percentage” means, at any time, in the case of any Lender, with
respect to Revolving Loans, LC Exposure or Swingline Loans, a percentage equal
to a fraction, the numerator of which is such Lender’s Commitment (or, if the
Commitments have terminated or expired, such Lender’s Exposure at that time) and
the denominator of which is the aggregate Commitments (or, if the Commitments
have terminated or expired, the aggregate Exposure at that time); provided that
in the case of Section 2.23 when a Defaulting Lender shall exist, any such
Defaulting Lender’s Commitment shall be disregarded in any of such calculations.

“Approved Fund” means any Person (other than a natural Person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course and that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers, advises or manages a Lender.

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.04), and accepted by the Administrative Agent, substantially in the
form of Exhibit B or any other form approved by the Administrative Agent.

“Availability Period” means the period from and including the Closing Date to
but excluding the Maturity Date.

“Availability Reserves” means the sum (without duplication of any other reserve
or items that are otherwise addressed or excluded through eligibility criteria
as more expressly provided in the last sentence of Section 2.21) of (a) the
Inventory Reserve; plus (b) the Banking Services Reserve; plus (c) the Line
Reserves; plus (d) the aggregate amount of liabilities secured by Liens upon
Collateral which rank or are capable of ranking prior to or pari passu with the
Liens of the Administrative Agent (but imposition of any such Reserve shall not
waive an Event of Default arising therefrom) as the Administrative Agent in its
Permitted Discretion may elect to impose; plus (e) the Liquidity Block Amount;
plus (f) without duplication of any reserve specified in clauses (a) through
(e) above, such other reserves of the type reflected in the Borrowing Base
Certificate delivered on the Closing Date or otherwise reflected on the form of
Borrowing Base Certificate attached as Exhibit C; plus (g) such additional
Reserves, in such amounts and with respect to such matters, as the
Administrative Agent in its Permitted Discretion may elect to impose from time
to time in accordance with Section 2.21.

“Available Commitments” means, at any time, an amount equal to (a) the aggregate
Commitments then in effect, minus (b) the Liquidity Block Amount, minus (c) Line
Reserves.

“Average Historical Excess Availability” means, at any Adjustment Date, the
average daily Excess Availability for the three month period immediately
preceding such Adjustment Date (or, in the case of the Adjustment Date falling
on November 1, 2012, for the period from the Closing Date until October 31,
2012) with the Borrowing Base at such time for any such day used to determine
“Excess Availability” calculated by reference to the most recent Borrowing Base
Certificate delivered to the Administrative Agent on or prior to such day
pursuant to Section 5.01(c) as the same may be adjusted from time to time by the
Administrative Agent to reflect the establishment or adjustment of Availability
Reserves in accordance with Section 2.21 or the receipt of a new Inventory
appraisal; provided that in the case of any adjustment by the Administrative
Agent due to the receipt of a new Inventory appraisal, the Administrative Agent
shall have provided Borrower at least five Business Days’ prior written notice
of any such adjustment.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Backstop” means the issuance of a standby letter of credit, in form and
substance satisfactory to the Administrative Agent, issued by an issuer
satisfactory to the Administrative Agent, in an amount equal to 103% of the
stated amount of all outstanding Letters of Credit. “Backstopped” has a
correlative meaning. Nothing in this definition shall be deemed a consent by the
Administrative Agent or the Lenders to the incurrence by Borrower of Obligations
(contingent or otherwise) with respect to any such letter of credit unless such
Obligations constitute Debt permitted under Section 6.01 and, if secured, such
Obligations are secured by Liens permitted under Section 6.02.

“Bank of America” has the meaning assigned to such term in the preamble to this
Agreement.

“Banking Services” means each and any of the following products, services or
facilities provided to Borrower by the Administrative Agent, any Lender or any
of their Affiliates: (a) Cash Management Services, (b) commercial credit card
and merchant card services, (c) stored value cards and treasury management
services (including, without limitation, overdraft, controlled disbursement, ACH
transactions, return items and interstate depository network services) and
(d) other banking products or services as may be requested by Borrower, other
than Letters of Credit.

“Banking Services Obligations” means any and all Obligations of Borrower,
whether absolute or contingent and however and whenever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), owed to a Secured Banking Services Provider
in connection with Banking Services provided to Borrower.

“Banking Services Reserve” means the aggregate amount of reserves established by
the Administrative Agent from time to time in its Permitted Discretion in
respect of Banking Services Obligations.

“Bankruptcy Law” means Title 11, U.S. Code, as amended from time to time, or any
similar foreign, federal or state law for the relief of debtors, including all
rules and regulations promulgated thereunder.

“Base Rate” means, for any day, a per annum rate equal to the greatest of
(a) the Prime Rate for such day; (b) the Federal Funds Effective Rate for such
day, plus 0.50%; and (c) LIBOR for a 30 day interest period as determined on
such day, plus 1.0%.

“Base Rate Loan” means any Loan that bears interest based on the Base Rate.

“Blackout Period” means the first four Business Days of a calendar month or such
lesser period during which Borrower’s computer system is unavailable due to
month-end file maintenance and closing procedures.

“Board” means the Board of Governors of the Federal Reserve System of the United
States of America (or any successor thereto).

“Board of Directors” means (a) with respect to a corporation, the board of
directors of the corporation, (b) with respect to a partnership, the member,
manager(s) or board of directors, as applicable, of the general partner of the
partnership and (c) with respect to any other Person, the member, manager, the
board or committee of such Person serving a similar function.

“Borrower” has the meaning assigned to such term in the preamble to this
Agreement.

“Borrower Reply” has the meaning assigned to such term in Section 9.22(c).

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Borrowing” means any (a) Revolving Loans of the same Type made, converted or
continued on the same date and, in the case of LIBOR Loans, as to which a single
Interest Period is in effect, (b) Swingline Loan or (c) Protective Advance.

“Borrowing Base” means, at any time, an amount equal to the Inventory Component
minus, without duplication, the then-current amount of all Availability
Reserves. The Borrowing Base at any time shall be determined by reference to the
most recent Borrowing Base Certificate delivered to the Administrative Agent
pursuant to Section 5.01(c), as the same may be adjusted from time to time by
the Administrative Agent to reflect the establishment or adjustment of
Availability Reserves in accordance with Section 2.21 or the receipt of a new
Inventory appraisal; provided that in the case of any adjustment by the
Administrative Agent due to the receipt of a new Inventory appraisal, the
Administrative Agent shall have provided Borrower at least five Business Days’
prior written notice of any such adjustment.

“Borrowing Base Certificate” means a certificate, signed and certified as
accurate and complete in all material respects by a Financial Officer of
Borrower, in substantially the form of Exhibit C or another form which is
acceptable to the Administrative Agent in its reasonable discretion.

“Borrowing Request” means a request by Borrower for a Borrowing in accordance
with Section 2.03 and substantially in the form attached hereto as Exhibit F, or
such other form as shall be approved by the Administrative Agent.

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a LIBOR Loan, the
term “Business Day” shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.

“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the amount thereof accounted for as a liability determined in
accordance with GAAP; provided, that a change in GAAP or the interpretation
thereof shall not result in any lease that is, or would be, characterized by a
Person as an operating lease in accordance with GAAP in effect on the date
hereof being considered a Capital Lease Obligation.

“Capitalized Leases” means all leases that have been or should be, in accordance
with GAAP, recorded as capitalized leases; provided, that a change in GAAP or
the interpretation thereof shall not result in any lease that is, or would be,
characterized by a Person as an operating lease in accordance with GAAP in
effect on the date hereof being considered a Capitalized Lease.

“CARB” means the California Air Resources Board.

“Cash Collateralize” means the deposit in the LC Collateral Account of an amount
equal to 103% of the aggregate LC Obligations as security for the payment of
Facility Obligations. “Cash Collateralization” has a correlative meaning.

“Cash Equivalents” means:

(a) securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality of the United States
government; provided, that the full faith and credit of the United States, is
pledged in support of those securities having maturities of not more than
24 months from the date of acquisition;

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

(b) certificates of deposit and eurodollar time deposits with maturities of 24
months or less from the date of acquisition, bankers’ acceptances with
maturities not exceeding twenty-four months and overnight bank deposits, in each
case, with any commercial bank having capital and surplus in excess of
$500,000,000 and, as applicable, a Thomson Bank Watch Rating of “B” or better;

(c) repurchase obligations or securities lending arrangements for underlying
securities of the types described in clauses (a) and (b) above entered into with
any financial institution meeting the qualifications specified in clause
(b) above;

(d) commercial paper having a rating of at least “A-2” from S&P or “P-2” from
Moody’s and in each case maturing within 270 days after the date of acquisition
or asset-backed securities having a rating of at least “A” from S&P or “A2” from
Moody’s and in each case maturing within thirty-six months after the date of
acquisition;

(e) demand or time deposit accounts used in the ordinary course of business with
overseas branches of commercial banks incorporated under the laws of the United
States of America, any state thereof or the District of Columbia; provided that
such commercial bank has, at the time of the Investment therein, (i) capital,
surplus and undivided profits (as of the date of such institution’s most
recently published financial statement) in excess of $100,000,000, and (ii) the
long-term unsecured debt obligations (other than such obligations rated on the
basis of the credit of a Person other than such institution) of such
institution, at the time of the Investment therein, are rated at least “A” from
S&P or “A2” from Moody’s;

(f) obligations (including, but not limited to demand or time deposits, bankers’
acceptances and certificates of deposit) issued or guaranteed by a depository
institution or trust company incorporated under the laws of the United States of
America, any state thereof or the District of Columbia; provided that (i) such
instrument has a final maturity not more than one year from the date of purchase
thereof, and (ii) such depository institution or trust company has at the time
of the Investment therein or contractual commitment providing for such
Investment, (A) capital, surplus and undivided profits (as of the date of such
institution’s most recently published financial statement) in excess of
$100,000,000 and (B) the long-term unsecured debt obligations (other than such
obligations rated on the basis of the credit of a Person other than such
institution) of such institution, at the time of the Investment therein or
contractual commitment providing for such Investment, are rated at least “A”
from S&P or “A2” from Moody’s;

(g)(i) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (f) of this
definition, or (ii) money market funds which are rated at least “AAA” from S&P;
or

(h) Dollars.

Notwithstanding the foregoing, any investments which would otherwise constitute
Cash Equivalents of the kinds described in clauses (a), (b), (c) and (d) hereof
that are permitted to have maturities in excess of 12 months shall only be
deemed to be Cash Equivalents under this definition if and only if the total
weighted average maturity of all Cash Equivalents of the kinds described in
clauses (a), (b), (c) and (d) does not exceed twelve months on an aggregate
basis.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Cash Management Services” means any services provided from time to time by Bank
of America, any Lender or any of their respective Affiliates to Borrower in
connection with operating, collections, payroll, trust, or other depository or
disbursement accounts, including automated clearinghouse, e-payable, electronic
funds transfer, wire transfer, controlled disbursement, overdraft, depository,
information reporting, lockbox and stop payment services.

“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or any Issuing Bank (or,
for purposes of Section 2.15(b), by any lending office of such Lender or by such
Lender’s or such Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement (other
than any such request, guideline or directive to comply with any law, rule or
regulation that was in effect on the date of this Agreement); provided that,
notwithstanding the foregoing, (x) the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, guidelines or directives
thereunder or issued in connection therewith and (y) all requests, rules,
guidelines or directives promulgated by the Bank for International Settlements,
the Basel Committee on Banking Supervision (or any successor or similar
authority) or the United States regulatory authorities, in each case pursuant to
Basel III, shall in the case of each of clause (x) and (y) above be deemed to be
a “Change in Law”.

“Change of Control” means the occurrence of one or more of the following events:

(a) any “person” or “group” (as such terms are used in Section 13(d) and 14(d)
of the Exchange Act), other than employee or retiree benefit plans or trusts
sponsored or established by Navistar International or Borrower is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of Navistar International representing 35% or more
of the combined voting power of Navistar International’s then-outstanding Voting
Interests;

(b) the following individuals cease for any reason to constitute more than a
majority of the number of directors then serving on the Board of Directors of
Navistar International: individuals who, on the date hereof, constitute such
Board of Directors and any new director (other than a director whose initial
assumption of the office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of Navistar International) whose appointment or election
by such Board of Directors or nomination for election by such Person’s
stockholders was approved by the vote of at least a majority of the directors
then still in office or whose appointment, election or nomination was previously
so approved or recommended with respect to directors whose appointment of
election to such Board of Directors was made by the holders of Navistar
International’s nonconvertible junior preference stock, series B, by the holders
of such preference stock;

(c) the shareholders of Navistar International or Borrower shall approve any
Plan of Liquidation (whether or not otherwise in compliance with the provisions
hereof), other than as otherwise expressly permitted herein;

(d) Navistar International consolidates with or merges with or into another
Person, other than a merger or consolidation of Navistar International in which
the holders of the common stock of Navistar International outstanding
immediately prior to the consolidation or merger hold, directly or indirectly,
at least a majority of the common stock of the surviving corporation immediately
after such consolidation or merger;

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

(e) Navistar International or Borrower, directly or indirectly, sells, assigns,
conveys, transfers, leases or otherwise disposes of, in one transaction or a
series of related transactions, all or substantially all of the property or
assets of Navistar International and its Restricted Subsidiaries or Borrower and
its Restricted Subsidiaries (determined on a Consolidated basis) to any Person;
provided, that neither (i) the merger of a Restricted Subsidiary of Borrower
into Borrower (so long as Borrower is the surviving corporation) or any other
Restricted Subsidiary, nor (ii) a series of transactions involving the sale of
receivables or interests therein in the ordinary course of business by a Finance
Subsidiary in connection with a Permitted Receivables Financing, nor (iii) the
grant of a Lien on assets of Navistar International or any Subsidiary thereof in
connection with the Facility or the Term Loan Facility, nor (iv) the sale,
conveyance, transfer or lease otherwise permitted hereunder shall be deemed to
be a Change of Control;

(f) Navistar International ceases to own and control, directly or indirectly, at
least 85% of the Voting Interests of Borrower; or

(g) A “change of control”, “change in control” or similar term as defined in any
of the Navistar International Indentures, the Term Loan Facility or any other
document, instrument or agreement evidencing or governing Debt for Borrowed
Money of Borrower in a principal amount in excess of $50,000,000.

“Class”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are Loans, Swingline Loans or
Protective Advances.

“Closing Date” means August 17, 2012, which is the date on which the conditions
specified in Section 4.01 are satisfied (or are waived in accordance with
Section 9.02).

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” means all property subject to, or purported to be subject to, a
Lien pursuant to the Security Agreement.

“Collateral Access Agreement” has the meaning assigned to such term in the
Security Agreement.

“Collateral Cooperation Agreement” means an agreement by and between the Term
Loan Collateral Agent and the Administrative Agent in form and substance
reasonably acceptable to the Administrative Agent and Borrower and which
provides for, among other things, (i) access rights in favor of the
Administrative Agent and Borrower for the benefit of the Lenders upon the
occurrence and during the continuance of an Event of Default to all locations
where Collateral is located, and (ii) the non-exclusive, royalty free right of
the Administrative Agent and Lenders to use the Intellectual Property of
Borrower upon the occurrence and during the continuance of an Event of Default,
to the extent necessary to realize upon the Collateral.

“Collateral Documents” means, collectively, the Security Agreement, any
Collateral Access Agreement, any account control agreement and any other
documents granting and/or perfecting a Lien upon the Collateral as security for
payment of the Secured Obligations.

“Collection Account” has the meaning assigned to such term in Section 5.11.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Commitment” means, with respect to each Lender, (a) the commitment of such
Lender to make Revolving Loans, acquire participations in Letters of Credit,
make Protective Advances and make Swingline Loans hereunder, expressed as an
amount representing the maximum possible aggregate amount of such Lender’s
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.09, and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04. The
initial amount of each Lender’s Commitment is set forth on the Commitment
Schedule, or in the Assignment and Assumption pursuant to which such Lender
shall have assumed its Commitment, as applicable. The initial aggregate amount
of the Lenders’ Commitments is $175,000,000.

“Commitment Fee Rate” means a rate equal to 0.50% per annum.

“Commitment Schedule” means the Schedule attached hereto and identified as such.

“Consolidated” refers to the consolidation of accounts in accordance with GAAP.

“Consolidated Net Tangible Assets” as of any date of determination means the
total amount of assets of Navistar International and its Subsidiaries after
deducting therefrom (a) all current liabilities (excluding any current
liabilities that by their terms are extendable or renewable at the option of the
obligor thereon to a time more than twelve months after the time as of which the
amount thereof is being computed); (b) total prepaid expenses and deferred
charges; and (c) all goodwill, trade names, trademarks, patents, licenses,
copyrights and other intangible assets, all as set forth, or on a pro forma
basis would be set forth, on the consolidated balance sheet of Navistar
International and its Subsidiaries for Navistar International’s most recently
completed fiscal quarter, prepared in accordance with GAAP.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power or by contract. “Controlling” and
“Controlled” have meanings correlative thereto.

“Cost” means the cost of purchases of Parts Inventory determined according to
the accounting policies used in the preparation of Borrower’s financial
statements (pursuant to which the average cost method of accounting is utilized
for substantially all merchandise Inventories).

“Credit Extensions” means each of (a) a Borrowing and (b) an LC Credit
Extension.

“Debt” of any Person means, without duplication, (a) all indebtedness of such
Person for borrowed money, (b) all Obligations of such Person for the accrued
purchase price of property or services (other than obligations under trade
payables, deferred expenses, deferred compensation and similar obligations
arising in the ordinary course of business), (c) all Obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments, (d) all
Obligations of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations of such Person, (f) all Obligations
of such Person under acceptance, letter of credit or similar facilities, (g) all
Obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Equity Interests in such Person or any other
Person, to the extent either (i) such Obligations would represent a claim
against such Person in a proceeding under any Bankruptcy Law or (ii) in the case
of Redeemable Preferred Interests, such interests are redeemable by their terms
or at the option of the holder prior to one year after the Maturity Date,
(h) all Obligations of such Person in respect of Hedge Agreements, valued at the
Agreement Value thereof, (i) all Guaranteed Debt and Synthetic Debt of such
Person and (j) all indebtedness and other payment Obligations referred to in
clauses (a) through (i) above of another Person secured by (or for which the
holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on property (including, without limitation, accounts and
contract

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such indebtedness or other payment Obligations;
provided that if the obligations so secured have not been assumed by such Person
or are otherwise not such Person’s legal liability, the amount of such Debt for
the purposes of this definition shall be limited to the lesser of the amount of
such Debt secured by such Lien or the fair market value of the assets or
property securing such Lien. Debt shall not include customary contractual
indemnities or warranties.

“Debt for Borrowed Money” of any Person means, at any date of determination, the
sum of (a) all items that, in accordance with GAAP, would be classified as
indebtedness on a Consolidated balance sheet of such Person at such date,
(b) all Obligations of such Person under acceptance, letter of credit or similar
facilities at such date and (c) all Synthetic Debt of such Person at such date.

“Default” means any Event of Default or any event or condition that, with the
lapse of time or giving of notice, would, unless cured or waived, constitute an
Event of Default.

“Defaulting Lender” means any Lender that, as determined by the Administrative
Agent, (a) has failed to perform any funding obligations hereunder, and such
failure is not cured within three Business Days; (b) has notified the
Administrative Agent or Borrower that such Lender does not intend to comply with
its funding obligations hereunder or has made a public statement to the effect
that it does not intend to comply with its funding obligations hereunder or
under any other credit facility; (c) has failed, within three Business Days
following request by the Administrative Agent, to confirm in a manner
satisfactory to the Administrative Agent that such Lender will comply with its
funding obligations hereunder; or (d) has, or has a direct or indirect parent
company that has, become the subject of an Insolvency Proceeding or taken any
action in furtherance thereof; provided, however, that a Lender shall not be a
Defaulting Lender solely by virtue of a Governmental Authority’s ownership of an
equity interest in such Lender or parent company.

“Designated Parts Location” has the meaning assigned to such term in the
Security Agreement.

“Discretionary Loans” has the meaning assigned to such term in Section 9.22(a).

“Document” has the meaning set forth in Article 9 of the UCC.

“Dollars” or “$” refers to lawful money of the United States of America.

“Domestic Subsidiary” means, with respect to any Person, any Subsidiary of such
Person organized in the United States, any State thereof or the District of
Columbia.

“Eligible Assignee” means (a) a Lender, (b) a commercial bank, insurance company
or company engaged in the business of making commercial loans or a commercial
finance company, which Person, together with its Affiliates, has a combined
capital and surplus in excess of $1,000,000,000 (provided, that for purposes of
determining eligibility with respect to Section 9.04(b)(i)(A), such Person,
together with its Affiliates, shall only be required to have a combined capital
and surplus of at least $500,000,000 to the extent that an Event of Default has
occurred and is continuing at the time of such assignment, in accordance with
the terms hereof), (c) any Affiliate of a Lender under common control with such
Lender, or (d) an Approved Fund of a Lender; provided that in any event,
“Eligible Assignee” shall not include (i) any natural person, (ii) any
Defaulting Lender, or (iii) Navistar International or Borrower or any Affiliate
of any thereof.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Eligible Parts Inventory” means, at any time, all Parts Inventory of Borrower;
provided, however, that Eligible Parts Inventory shall not include any Parts
Inventory:

(a) which is not subject to a first priority (subject to Permitted Liens arising
by operation of law, as described in clauses (a) and (b) of the definition of
“Permitted Liens” or similar Liens arising by operation of law which are
permitted under Section 6.02(g)) perfected Lien in favor of the Administrative
Agent;

(b) which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent, (ii) a Permitted Lien arising by operation of law, as
described in clauses (a) and (b) of the definition of “Permitted Liens” or
similar Liens arising by operation of law which are permitted under
Section 6.02(g), (iii) a Landlord Lien as to which either (x) a subordination
agreement reasonably satisfactory to the Administrative Agent has been obtained
or (y) a Landlord Lien Reserve applies or (iv) a mechanics Lien as to which an
appropriate Reserve has been established by the Administrative Agent in its
Permitted Discretion;

(c) which (i) is Slow Moving, (ii) is obsolete, unmerchantable, defective, or
unfit for sale as determined in the ordinary course of business of Borrower
consistent with past practice or (iii) constitutes 15L or 13L heavy duty engines
that have not been certified by the EPA as complying with the applicable NOx
emissions standards;

(d) except as otherwise agreed by the Administrative Agent, which does not
conform in all material respects to the representations and warranties contained
in this Agreement or the Security Agreement;

(e) which is not owned only by Borrower;

(f) which constitutes packaging and shipping material, supplies, samples,
prototypes, displays or display items, bill-and-hold goods, goods that are
returned or marked for return (but not held for resale and not otherwise
constituting Eligible Parts Inventory) or repossessed, or which constitutes
goods held on consignment or goods which are not of a type held for sale in the
ordinary course of business;

(g) which is not located in the U.S. or is in transit;

(h) which is located at any location leased by Borrower, unless (i) such
location is a Designated Parts Location and (ii) either (x) the lessor has
delivered to the Administrative Agent a Collateral Access Agreement as to such
location or (y) up to a three month Reserve for rent, charges and other amounts
due or to become due with respect to such location has been established by the
Administrative Agent in its Permitted Discretion;

(i) which is (a) located in either a third party warehouse or (b) is in the
possession of a bailee at a Designated Location (other than a third party
processor), unless, in the case of subclauses (a) and (b) above, (x) such Parts
Inventory is located at a Designated Parts Location and (y) such warehouseman or
bailee has delivered to the Administrative Agent a Collateral Access Agreement
and such other documentation as the Administrative Agent may reasonably require;

(j) which is being processed offsite at a third party location other than at a
Designated Parts Location by a third party processor or is in transit to or from
said third party location or third party processor unless an appropriate Reserve
(not to exceed the total amount payable to such processor based on monthly
sales) has been established by the Administrative Agent in its Permitted
Discretion;

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

  (k) Reserved;

(l) which is the subject of a consignment sale on behalf of Borrower;

(m) which contains or bears any Intellectual Property rights licensed to
Borrower by any Person unless the Administrative Agent may sell or otherwise
dispose of such Parts Inventory without (i) infringing the rights of such
licensor, (ii) violating any contract with such licensor, or (iii) incurring any
liability with respect to payment of royalties other than royalties incurred
pursuant to sale of such Parts Inventory under the current licensing agreement
relating thereto;

(n) which is not reflected in a current perpetual inventory report of Borrower;

(o) subject to Section 6.06(e)(vi), which is acquired in connection with an
acquisition permitted pursuant to Section 6.06, to the extent the Administrative
Agent shall not have received a Report in respect of such Parts Inventory, which
Report shows results reasonably satisfactory to the Administrative Agent;

(p) which is located on real property subject to a mortgage granted by Borrower
in favor of any other Person unless such Person has entered into the Collateral
Cooperation Agreement (if such Person is the Term Loan Collateral Agent) or a
Collateral Access Agreement (reasonably satisfactory to the Administrative
Agent) or the Administrative Agent has established in its Permitted Discretion
such Reserves as it deems appropriate; or

(q) which falls into a category of ineligibility as may be established by the
Administrative Agent in its Permitted Discretion; provided that the
Administrative Agent shall have provided Borrower at least five Business Days’
prior written notice of any such establishment.

Notwithstanding anything to the contrary herein, the gross amount of Parts
Inventory to be included in the Borrowing Base before applying the advance rate
shall be reduced on a dollar for dollar basis equal to the amount of any
inter-company profit in Parts Inventory.

“Environmental Action” means any action, suit, demand, demand letter, claim,
written notice of non compliance or violation, written notice of liability or
potential liability, investigation, proceeding, consent order or consent
agreement relating in any way to any Environmental Law, any Environmental Permit
or Hazardous Material or arising from alleged injury or threat to health, safety
or the environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial or
other actions or damages, and (b) by any governmental or regulatory authority or
third party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices, promulgated or entered into by
any Governmental Authority, relating to the environment, preservation or
reclamation of natural resources, the management, release or threatened release
of any Hazardous Material or to health and safety matters.

“Environmental Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“EPA” means the United States Environmental Protection Agency.

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited or unlimited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any
warrants, options or other rights entitling the holder thereof to purchase or
acquire any such equity interest; provided that all convertible Debt shall be
deemed Debt, and not Equity Interests, unless and until the applicable part of
any such Debt is converted into common stock or other type of equity interest of
Borrower.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA or
Section 412 of the Code would be deemed a single employer or otherwise
aggregated with Borrower under Section 414 of the Code or Section 4001 of ERISA.

“ERISA Event” means (a)the occurrence of a reportable event, within the meaning
of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice
requirement with respect to such event has been waived by the PBGC; (b) the
requirements of Section 4043(b) of ERISA apply with respect to a contributing
sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event
described in paragraph (10), (11), (12) or (13) of Section 4043(c) of ERISA is
reasonably expected to occur with respect to such Plan within the following 30
days; (c) the application for a minimum funding waiver with respect to a Plan or
the failure to satisfy any minimum funding standards under Section 412 of the
Code or Section 302 of ERISA with respect to any Plan; (d) the provision by the
administrator of any Plan of a notice of intent to terminate such Plan, pursuant
to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan
amendment referred to in Section 4041(e) of ERISA); (e) the cessation of
operations at the facilities of Borrower or any ERISA Affiliate under the
circumstances described in Section 4062(e) of ERISA; (f) a complete or partial
withdrawal by Borrower or any ERISA Affiliate from a Multiple Employer Plan or
notification to Borrower or any ERISA Affiliate that a Multiemployer Plan is in
reorganization; (g) the conditions for imposition of a lien under Sections 303
or 4068 of ERISA or Section 430 of the Code shall have been met with respect to
any Plan; (h) the engaging in a non-exempt prohibited transaction within the
meaning of Section 4975 of the Code or Section 406 of ERISA with respect to any
Plan; or (i) the institution by the PBGC of proceedings to terminate a Plan
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the termination
of, or the appointment of a trustee to administer, such Plan.

“Event of Default” has the meaning assigned to such term in Section 7.01.

“Excess Availability” means, at any time, an amount equal to (a) the lesser of
(i) the Available Commitments at such time and (ii) the Borrowing Base at such
time (as determined by reference to the most recent Borrowing Base Certificate
required to be delivered to the Administrative Agent pursuant to
Section 5.01(c), minus (b) the aggregate Exposures of all Lenders at such time,
as the same may be adjusted from time to time by the Administrative Agent to
reflect the establishment or adjustment of Availability Reserves in accordance
with Section 2.21 or the receipt of a new Inventory appraisal; provided that in
the case of any adjustment by the Administrative Agent due to the receipt of a
new Inventory appraisal, the Administrative Agent shall have provided Borrower
at least five Business Days’ prior written notice of any such adjustment.

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

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Excluded Matters” means (a) any regulatory action by the EPA or the CARB with
respect to the NOx emissions standards for the 15L and 13L heavy-duty diesel
engines of Navistar International and its Subsidiaries (including, without
limitation, any such action resulting from the decision of the United States
Court of Appeals for the District of Columbia Circuit in Mack Trucks, Inc. and
Volvo Group North America, LLC v. Environmental Protection Agency decided
June 12, 2012) and events and conditions arising in connection therewith (the
“Regulatory Actions”) but only so long as, notwithstanding any such Regulatory
Actions, Navistar International and its Subsidiaries shall (at all times on and
after July 31, 2012 and, in the case of the 15L heavy-duty diesel engines, prior
to Navistar International and its Subsidiaries commencing to sell trucks in the
United States containing 15L heavy-duty diesel engines purchased from Cummins
Inc. that have been certified by the EPA as complying with the NOx emissions
standards for the 15L heavy-duty diesel engines and, in the case of the 13L
heavy-duty diesel engines, prior to Navistar International and its Subsidiaries
having developed a 13L heavy-duty ICT+ diesel engine and such engine having been
certified by the EPA as complying with the NOx emissions standards for the 13L
heavy-duty diesel engines) be permitted to sell noncompliant 15L and 13L
heavy-duty diesel engines (and trucks containing such engines) in the United
States) and (b) any adverse effect on the general affairs, assets, liabilities,
financial position or results of operations of Navistar International and its
Subsidiaries, taken as a whole, on account of or related to the Regulatory
Actions.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
any Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of Borrower hereunder, (a) income or franchise taxes
imposed on (or measured by) its net income by the United States of America, or
by the jurisdiction under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable lending office is located, (b) any branch profits taxes imposed
by the United States of America or any similar tax imposed by any other
jurisdiction in which Borrower is located, (c) in the case of a Non-U.S. Lender
(other than an assignee pursuant to a request by Borrower under
Section 2.19(b)), any withholding tax that is imposed on amounts payable to such
Non-U.S. Lender at the time such Non-U.S. Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Non-U.S. Lender’s failure to comply with Section 2.17(e), (f) or (g), except to
the extent that such Non-U.S. Lender (or its assignor, if any) was entitled, at
the time of designation of a new lending office (or assignment), to receive
additional amounts from Borrower with respect to such withholding tax pursuant
to Section 2.17(a) and (d) any U.S. federal withholding taxes imposed pursuant
to FATCA (or any amended or successor version of FATCA that is substantively
comparable and not materially more onerous to comply with).

“Existing Debt” means Debt of Borrower outstanding immediately before the
occurrence of the Closing Date.

“Existing Letters of Credit” means those Letters of Credit set forth on Schedule
2.06.

“Existing Senior Credit Agreement” means that certain ABL Credit Agreement,
dated as of October 18, 2011, among Borrower, each Former Borrower the lenders
party thereto, Bank of America, N.A., as administrative agent thereunder, and
the other parties thereto (as amended, modified or supplemented prior to the
date hereof).

“Exposure” means, with respect to any Lender at any time, the sum of (a) the
outstanding principal amount of such Lender’s Revolving Loans; plus (b) its LC
Exposure; plus (c) its Applicable Percentage of the aggregate principal amount
of Swingline Loans outstanding at such time; plus (d) its Applicable Percentage
of the aggregate principal amount of Protective Advances outstanding at such
time.

“Facility” means the credit facility provided for by this Agreement.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Facility Obligations” means all unpaid principal of and accrued and unpaid
interest on the Loans, all LC Exposure, all accrued and unpaid fees and all
expenses, reimbursements, indemnities and other Obligations of Borrower to the
Lenders or to any Lender, the Administrative Agent, any Issuing Bank or any
Indemnified Party arising under the Loan Documents.

“FATCA” means Sections 1471 through 1474 of the Code as of the date of this
Agreement, including any regulations promulgated thereunder or official
interpretations thereof issued after the date of this Agreement.

“Federal Funds Effective Rate” means (a) the weighted average of interest rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers on the applicable Business Day (or on
the preceding Business Day, if the applicable day is not a Business Day), as
published by the Federal Reserve Bank of New York on the next Business Day; or
(b) if no such rate is published on the next Business Day, the average rate
(rounded up, if necessary, to the nearest 1/100th of 1%) charged to Bank of
America on the applicable day on such transactions, as determined by the
Administrative Agent.

“Fee Letter” means that certain second amended and restated fee letter
agreement, dated as of the date hereof, by and among Bank of America, MLPFS and
Borrower.

“Finance Subsidiary” means (a) NFC, (b) any Subsidiary of NFC and (c) any other
Subsidiary of Navistar International existing on the Closing Date or formed or
acquired thereafter which engages principally in securitization transactions and
in activities reasonably related to or in connection with the entering into of
securitization transactions and, in the case of each of clauses (a), (b) and
(c) above:

 

  (i) no portion of the Debt or any other obligations (contingent or otherwise)
of which

 

  (1) is guaranteed by Borrower,

 

  (2) is recourse to or obligates Borrower in any way other than pursuant to
representations, warranties and covenants (including those related to servicing)
entered into in the ordinary course of business in connection with a Permitted
Receivables Financing or a Master Intercompany Agreement, or

 

  (3) subjects any property or asset of Borrower, directly or indirectly,
contingently or otherwise, to any Lien or to the satisfaction thereof, other
than pursuant to representations, warranties and covenants (including those
related to servicing) entered into in the ordinary course of business in
connection with a Permitted Receivables Financing or a Master Intercompany
Agreement; and

 

  (ii) with which Borrower does not

 

  (1) provide any credit support or

 

  (2)

have any contract, agreement, arrangement or understanding other than on terms
that are fair and reasonable and that are no less favorable to Borrower than
could be obtained from an unrelated Person (other than, in

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

  the case of subclauses (1) and (2) of this clause (ii), representations,
warranties and covenants (including those relating to servicing) entered into in
the ordinary course of business in connection with a Permitted Receivables
Financing, a Master Intercompany Agreement and intercompany notes relating to
the sale of receivables to such Finance Subsidiary); and

 

  (iii) with which Borrower has no obligation to maintain or preserve such
Subsidiary’s financial condition or to cause such Subsidiary to achieve certain
levels of operating results. For purposes of the foregoing, Borrower shall not
be deemed to be providing credit support to NFC or any Subsidiary of NFC that
would otherwise qualify as a Finance Subsidiary as a result of the terms of the
Support Agreement in which Borrower agrees to provide credit support directly to
NFC for the benefit of its lenders (but not any other provisions).

“Financial Officer” of any Person means the chief financial officer, treasurer,
vice president of finance, controller or assistant treasurer of such Person.

“Fiscal Year” means a fiscal year of Borrower ending on October 31 in any
calendar year.

“Former Borrowers” means, collectively, IC Bus, LLC, SST Truck Company LLC, IC
Bus of Oklahoma, LLC, Navistar Diesel of Alabama, LLC, Navistar RV, LLC
(f/k/a/Monaco RV, LLC), Navistar Big Bore Diesels, LLC and Workhorse Custom
Chassis, LLC.

“Fronting Exposure” means a Defaulting Lender’s pro rata share of LC Obligations
or Swingline Loans, except to the extent allocated to other Lenders under
Section 2.23.

“Funding Account” has the meaning assigned to such term in Section 4.02(e).

“GAAP” means generally accepted accounting principles in the United States of
America in effect and applicable to that accounting period in respect of which
reference to GAAP is being made, subject to the provisions of Section 1.04.

“Governmental Authority” means any nation or government, any state, province,
city, municipal entity or other political subdivision thereof, and any
governmental, executive, legislative, judicial, administrative or regulatory
agency, department, authority, instrumentality, commission, board, bureau or
similar body, whether federal, state, provincial, territorial, local or foreign.

“Governmental Authorization” means any authorization, approval, consent,
franchise, license, covenant, order, ruling, permit, certification, exemption,
notice, declaration or similar right, undertaking or other action of, to or by,
or any filing, qualification or registration with, any Governmental Authority.

“Guaranteed Debt” means, with respect to any Person, any Obligation or
arrangement of such Person to guarantee or intended to guarantee any Debt
(“primary obligations”) of any other Person (the “primary obligor”) in any
manner, whether directly or indirectly, including, without limitation but
without duplication, (a) the direct or indirect guarantee (other than customary
contractual indemnities or warranties), endorsement (other than for collection
or deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the Obligation of a primary
obligor, (b) the Obligation to make take-or-pay or similar payments, if
required, regardless of nonperformance by any other party or parties to an
agreement or (c) any Obligation of such Person,

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (A) for the purchase or payment of any such primary obligation or
(B) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, assets, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (iv) otherwise to assure
or hold harmless the holder of such primary obligation against loss in respect
thereof. The amount of any Guaranteed Debt shall be deemed to be an amount equal
to the stated or determinable amount of the primary obligation in respect of
which such Guaranteed Debt is made (or, if less, the maximum amount of such
primary obligation for which such Person may be liable pursuant to the terms of
the instrument evidencing such Guaranteed Debt) or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder), as determined by such
Person in good faith.

“Hazardous Materials” means (a) petroleum or petroleum products, by-products or
breakdown products, radioactive materials, asbestos-containing materials,
polychlorinated biphenyls and radon gas and (b) any other chemicals, materials
or substances designated, classified or regulated as hazardous or toxic or as a
pollutant or contaminant or words of similar meaning and regulatory effect under
any Environmental Law.

“Hedge Agreements” means interest rate swap, cap or collar agreements, interest
rate future or option contracts, currency swap agreements, currency forward,
future or option contracts, commodity price/index swap, futures or option
contracts, credit default swap or option agreements and other hedging
agreements.

“Indemnified Costs” has the meaning assigned to such term in Section 8.02.

“Indemnified Party” has the meaning assigned to such term in Section 9.03(b).

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Information” has the meaning set forth in Section 3.09.

“Initial Closing Date” means “Closing Date” as defined in the Existing Senior
Credit Agreement.

“Insolvency Proceeding” means any case or proceeding or proposal commenced by or
against a Person under any Bankruptcy Law for, or any agreement of such Person
to, (a) the entry of an order for relief or otherwise seeking relief under any
Bankruptcy Law; (b) the appointment of a receiver, interim receiver, monitor,
sequestrator, trustee, liquidator, administrator, conservator or other custodian
for such Person or any part of its Property; or (c) a general assignment for the
benefit of creditors.

“Insufficiency” means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

“Interest Election Request” means a request by Borrower to convert or continue a
Borrowing in accordance with Section 2.08.

“Interest Payment Date” means (a) with respect to any Base Rate Loan (including
any Swingline Loan), the first Business Day of each February, May, August and
November (commencing November 1, 2012) and the Maturity Date and (b) with
respect to any LIBOR Loan, the last day of the

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

Interest Period applicable to the Borrowing of which such Loan is a part and, in
the case of a LIBOR Borrowing with an Interest Period of more than 90 days’
duration, each day that would have been an Interest Payment Date had successive
Interest Periods of 90 days’ duration been applicable to such Borrowing.

“Interest Period” means with respect to any LIBOR Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is 30, 60, 90 or 180 days (or, to
the extent available to each Lender, 270 or 360 days, or such other period as
may be agreed to by all the Lenders) thereafter, as Borrower may elect; provided
that (i) if any Interest Period would end on a day other than a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
unless such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day
and (ii) any Interest Period that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.

“Inventory” has the meaning assigned to such term in the Security Agreement.

“Inventory Component” means the lesser of (a) 65% of Eligible Parts Inventory,
valued at the lower of Cost and market value, and (b) 85% of the Net Orderly
Liquidation Value of Eligible Parts Inventory.

“Inventory Reserve” means (without duplication of any other reserve or items
that are otherwise addressed or excluded through eligibility criteria as more
expressly provided in the last sentence of Section 2.21) (a) such reserves as
may be established from time to time by the Administrative Agent, in its
Permitted Discretion, with respect to changes in the determination of the
saleability, at retail, of the Eligible Parts Inventory or which reflect such
other factors as negatively affect the market value of the Eligible Parts
Inventory; (b) Shrink Reserve; (c) such Reserves as may be established from time
to time by the Administrative Agent, in its Permitted Discretion, with respect
to export parts inventory, based on Borrower’s monthly sales of export parts;
(d) without duplication of any reserve specified in clauses (a) through
(c) above, such other reserves of the type reflected in the Borrowing Base
Certificate delivered on the Closing Date or otherwise reflected on the form of
Borrowing Base Certificate attached as Exhibit C; (e) Reserves in respect of
Liens which rank or are capable of ranking prior to or pari passu with the Liens
of the Administrative Agent (but the imposition of any such Reserve shall not
waive an Event of Default arising therefrom); and/or (f) such Reserves as shall
have been established from time to time by the Administrative Agent in
accordance with Section 2.21.

“Investment” in any Person means any loan or advance to such Person, any
purchase or other acquisition of any Equity Interests or Debt or the assets
comprising a division or business unit or all or substantially all of the
business of such Person, any capital contribution to such Person or any other
direct or indirect investment in such Person, including, without limitation, any
acquisition by way of a merger or consolidation (or similar transaction) and any
arrangement pursuant to which the investor incurs Debt of the types referred to
in clause (i) or (j) of the definition of “Debt” in respect of such Person;
provided, however, that for purposes of calculation, the amount of any
Investment outstanding at any time shall be the aggregate cash Investment less
all cash returns, cash dividends and cash distributions (or the fair market
value of any non-cash returns, dividends and distributions) received by such
Person and less all liabilities expressly assumed by another Person in
connection with the sale of such Investment to the extent such Person is
effectively released from such liability.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Investment Series” has the meaning assigned to such term in Section 6.06(r).

“Integrated Global Structuring Transaction” means (i) the issuance of Equity
Interests by Navistar Canada, Inc. (“NCI”) to Borrower to settle certain accrued
obligations under an existing term debenture between Borrower and NCI and the
contribution of the such debenture by Borrower to a Subsidiary of Borrower
(“NSULC”) in exchange for Equity Interests of NSULC, (ii) the contribution by
Borrower of the Capital Stock of NSULC to NCI in exchange for Equity Interests
of NCI, (iii) the contribution by Navistar International of Equity Interests of
Navistar Aftermarket Products, Inc. (“NAM”) to the Borrower in exchange for
Equity Interests of Borrower and (iv) through a series of intercompany
contributions and transfers, the contribution of the Equity Interests of NCI and
a Bermuda limited partnership to the partnership capital of NC2 Global LLC, in
each case in connection with a proposed restructuring by Navistar International
and its Subsidiaries.

“Issuing Bank” means each of Bank of America, each issuer of the Existing
Letters of Credit (solely with respect to the Existing Letters of Credit and any
extensions or renewals thereof to the extent permitted by Section 2.06(k)), and
any other Lender which at the request of Borrower and with the consent of the
Administrative Agent (not to be unreasonably withheld, delayed or conditioned)
agrees to become an Issuing Bank. Each Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of such
Issuing Bank, in which case the term “Issuing Bank” shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate.

“Joint Book Managers” has the meaning assigned to such term in the preamble to
this Agreement.

“Joint Lead Arrangers” has the meaning assigned to such terms in the preamble to
this Agreement.

“Landlord Lien” means any Lien of a landlord on Borrower’s property, granted by
statute.

“Landlord Lien Reserve” means an amount equal to (a) the aggregate of (i) all
past due rent and other past due amounts owing by Borrower to any landlord,
warehouseman, processor, repairman, mechanic, shipper, freight forwarder, broker
or other Person who possesses any Collateral or could assert a Lien on any
Collateral and (ii) up to three months’ rent for all of Borrower’s leased
locations where Eligible Parts Inventory is located in each Landlord Lien State,
other than leased locations with respect to which the Administrative Agent shall
have received a landlord’s waiver or subordination of Lien in form reasonably
satisfactory to the Administrative Agent or (b) zero, to the extent the
Administrative Agent shall have otherwise waived the landlord waiver or
subordination or Reserve; provided that the Landlord Lien Reserve shall not
exceed the total value of the Eligible Parts Inventory at such location included
in the Borrowing Base.

“Landlord Lien State” means (a) each of Washington, Virginia and Pennsylvania
and (b) such other state(s) in which a landlord’s claim for rent has priority by
operation of law over the Lien of the Administrative Agent in any of the
Collateral consisting of Eligible Parts Inventory.

“LC Collateral Account” has the meaning assigned to such term in
Section 2.06(j).

“LC Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof (in the face amount thereof) or any increase in the face amount thereof.

“LC Disbursement” means a payment made by an Issuing Bank pursuant to a drawing
on a Letter of Credit.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“LC Exposure” means, at any time of determination, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time, plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed or
converted to Loans by Borrower at such time, minus (c) the amount then on
deposit in the LC Collateral Account. The LC Exposure of any Lender at any time
shall be its Applicable Percentage of the total LC Exposure at such time.

“LC Obligations” means the sum (without duplication) of (a) all amounts owing by
Borrower for any drawings under Letters of Credit, plus (b) the stated amount of
all outstanding Letters of Credit.

“Lenders” means the Persons listed on the Commitment Schedule and any other
Person that shall have become a party hereto pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Assumption. Unless the context otherwise requires, the term
“Lenders” includes the Swingline Lender.

“Letter of Credit” means any standby or commercial letter of credit issued
pursuant to this Agreement.

“Letter of Credit Request” has the meaning assigned to such term in
Section 2.06(b).

“LIBOR” means, for any Interest Period with respect to a LIBOR Loan, the per
annum rate of interest (rounded up, if necessary, to the nearest 1/100th of 1%),
determined by the Administrative Agent at approximately 11:00 a.m. (London time)
two Business Days prior to commencement of such Interest Period, for a term
comparable to such Interest Period, equal to (a) the British Bankers Association
LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially
available source designated by the Administrative Agent); or (b) if BBA LIBOR is
not available for any reason, the interest rate at which Dollar deposits in the
approximate amount of the LIBOR Loan would be offered by Bank of America’s
London branch to major banks in the London interbank Eurodollar market. If the
Board imposes a Reserve Percentage with respect to LIBOR deposits, then LIBOR
shall be the foregoing rate, divided by 1 minus the Reserve Percentage.

“LIBOR Loan” means a Loan that bears interest based on LIBOR.

“Lien” means any lien, security interest, encumbrance or other charge of any
kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.

“Line Reserves” means the sum (without duplication) of (a) the Landlord Lien
Reserve, plus (b) such additional Reserves established from time to time by the
Administrative Agent in its Permitted Discretion in such amount as the
Administrative Agent determines reflects the amount the Administrative Agent
would have to pay in order to preserve, protect or gain access to the
Collateral, minus (c) the lesser of (i) Suppressed Availability and
(ii) $3,750,000.

“Liquidation” means the exercise by the Administrative Agent of those rights and
remedies accorded to the Administrative Agent under the Loan Documents and
applicable law as a creditor of Borrower with respect to the realization on the
Collateral during the continuation of an Event of Default, or the conduct by
Borrower acting with the consent of the Administrative Agent, of any public,
private or going out of business sale or other disposition of the Collateral for
the purpose of liquidating the Collateral. Derivations of the word “Liquidation”
(such as “Liquidate”) are used with like meaning in this Agreement.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Liquidity Block Amount” means at any time an amount equal to the greater of
(a) $30,000,000 and (b) 20% of the Commitments in effect at such time.

“Loan Documents” means this Agreement, any promissory notes issued pursuant to
the Agreement, any Letters of Credit or Letter of Credit applications, the Fee
Letter, the Collateral Cooperation Agreement and the Collateral Documents. Any
reference in this Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto.

“Loans” means the loans and advances made by the Lenders pursuant to this
Agreement, including Revolving Loans, Swingline Loans and Protective Advances.

“Margin Stock” has the meaning assigned to such term in Regulation U.

“Master Intercompany Agreements” means (a) the NFC MIA; (b) the agreement, dated
as of December 18, 1986, among Navistar Canada, Inc. (formerly, Navistar
International Corporation Canada), Navistar Financial Corporation Canada Inc.
and General Electric Canadian Holdings Limited; (c) the Operating Agreement,
dated March 5, 2010, among General Electric Capital Corporation, GE Capital
Commercial, Inc., Navistar International Corporation, Navistar, Inc. and
Navistar Financial Corporation, (d) one or more agreements serving some or all
of the same purposes of the agreements listed in clauses (a) through (c) above
among Borrower or one of its Restricted Subsidiaries and one or more other
Persons (including one or more Unrestricted Subsidiaries) in the ordinary course
of business on terms no less favorable to Borrower and its Restricted
Subsidiaries than the agreements in clauses (a), (b) and (c); and (e) any
amendment, modification, supplement or restatement from time to time of the
agreements in clauses (a) through (d); provided, that none of the aforementioned
agreements shall be amended, modified, supplemented or restated in a manner
that, when taken as a whole, is adverse in any material respect to the interests
of Navistar International and its Restricted Subsidiaries, taken as a whole, or
in a manner materially adverse to Borrower.

“Material Adverse Change” means any material adverse change in the business,
financial condition, operations, performance or properties of Borrower other
than, for the purposes of Section 3.07, in respect of Excluded Matters (provided
that any such material adverse change resulting from developments occurring
after the Closing Date in connection with Excluded Matters shall constitute a
Material Adverse Change).

“Material Adverse Effect” means (a) a material adverse effect on (i) the
business, financial condition, operations, performance or properties of
Borrower, other than, for the purposes of Section 3.06(a), in respect of the
Excluded Matters (provided that the effects of any adverse developments after
the Closing Date in connection with Excluded Matters shall not be excluded in
determining whether such material adverse effect has occurred), (ii) the rights
and remedies of the Administrative Agent and the Lenders under the Loan
Documents, or (iii) the ability of Borrower to perform its Facility Obligations
under the Loan Documents, or (b) a material impairment of the rights or
remedies, taken as a whole, available to the Administrative Agent and the
Lenders under the Loan Documents.

“Maturity Date” means the earlier of the Scheduled Maturity Date or any earlier
date on which the Commitments are otherwise terminated pursuant to the terms
hereof.

“Maximum Rate” has the meaning assigned to such term in Section 9.17.

“MLPFS” has the meaning assigned to such term in the preamble to this Agreement.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating
agency business.

“Multiemployer Plan” means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which Borrower or any ERISA Affiliate is making,
or has an obligation to make, contributions, or within any of the preceding five
plan years has made, or has had an obligation to make, contributions.

“Multiple Employer Plan” means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of Borrower
or any ERISA Affiliate and at least one Person other than Borrower and the ERISA
Affiliates or (b) was so maintained and in respect of which Borrower or any
ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the
event such plan has been or were to be terminated.

“Navistar International” means Navistar International Corporation, a Delaware
corporation.

“Navistar International Indentures” means collectively, the 2009 Senior Note
Indenture and the 2009 Senior Subordinated Convertible Note Indenture.

“Net Orderly Liquidation Value” means, with respect to Parts Inventory of any
Person, an amount equal to the orderly liquidation value (net of all costs and
expenses incurred in connection with liquidation) of Eligible Parts Inventory as
a percentage of the Cost of such Parts Inventory, which percentage shall be
determined by reference to the most recent third-party appraisal of such Parts
Inventory performed by an appraiser and on terms satisfactory to the
Administrative Agent received by the Administrative Agent and distributed to
Borrower; provided that Borrower acknowledges that such appraisals are prepared
by or for the Administrative Agent and the Lenders for their purposes, and
Borrower shall not be entitled to rely upon them unless otherwise expressly
agreed in writing by the Administrative Agent.

“NFC” means Navistar Financial Corporation, a Delaware corporation.

“NFC MIA” means the Amended and Restated Master Intercompany Agreement, dated as
of April 1, 2007, between NFC and Borrower, and its related manufacturing
Subsidiaries and affiliates, as amended, modified, supplemented or restated on
or prior to the Closing Date and thereafter from time to time in a manner that
is not adverse in any material respect to the interests of Borrower.

“Non-Consenting Lender” has the meaning assigned to such term in
Section 9.02(d).

“Non-U.S. Lender” means a person that is not a “United States person” within the
meaning of Section 7701(a)(30) of the Code.

“Obligation” means, with respect to any Person, any payment, performance or
other obligation of such Person of any kind, including, without limitation, any
liability of such Person on any claim, whether or not the right of any creditor
to payment in respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, disputed, undisputed, legal,
equitable, secured or unsecured, and whether or not such claim is discharged,
stayed or otherwise affected by any proceeding referred to in Section 7.01(h).
Without limiting the generality of the foregoing, the Obligations of Borrower
under the Loan Documents include (a) the obligation to pay principal, interest,
charges, expenses, fees, attorneys’ fees and disbursements, indemnities and
other amounts payable by Borrower under any Loan Document, (b) the obligation of
Borrower to reimburse any amount in respect of any of the foregoing that any
Lender, in its sole discretion, may elect to pay or advance on behalf of
Borrower and (c) any interest accruing after the commencement of a proceeding of
the type referred to in Section 7.01(h) (or which would have accrued but for the
commencement of such proceeding) whether or not allowed.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“OFAC” has the meaning assigned to such term in Section 3.21.

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement.

“Parts Inventory” has the meaning assigned to such term in the Security
Agreement.

“Participant” has the meaning assigned to such term in Section 9.04(c)(i).

“Participant Register” has the meaning assigned to such term in
Section 9.04(c)(iii).

“Parts Receivables” has the meaning assigned to the term “Receivables” in the
Security Agreement.

“Payment Condition” means, with respect to the applicable specified activity on
any date of determination, (a) (i) for the purposes of determining whether any
Restricted Payment is permitted under Section 6.07(b), no Event of Default has
occurred and is continuing or (ii) for the purposes of determining whether any
other type of payment or specified activity is permitted hereunder, no Specified
Default or Event of Default has occurred and is continuing and (b) Excess
Availability on the date of such determination, before and after giving effect
to such specified activity, is no less than the greater of (i) 12.5% of the
Commitments then in effect and (ii) $21,875,000; provided that if in connection
with the specified activity for which the Payment Condition is being measured,
Borrower has borrowed or obtained a Letter of Credit under the Facility on or
shortly before or after the date the specified activity is consummated, Borrower
shall deliver a certificate to the Administrative Agent certifying as to clauses
(a) and (b) above.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

“Pension Plan” means a Single Employer Plan or a Multiple Employer Plan.

“Perfection Certificate” means a certificate substantially in the form of
Exhibit D to this Agreement, or in any other form approved by the Administrative
Agent (such approval not to be unreasonably withheld, delayed or conditioned).

“Permitted Discretion” means the Administrative Agent’s commercially reasonable
judgment, exercised in good faith in accordance with customary business
practices for comparable asset-based lending transactions, as to any factor
which the Administrative Agent reasonably determines: (a) will or reasonably
could be expected to adversely affect in any material respect the value of any
Collateral, the enforceability or priority of the Administrative Agent’s Liens
thereon, or the amount that the Administrative Agent, the Lenders or any Issuing
Bank would be likely to receive (after giving consideration to delays in payment
and costs of enforcement) in the liquidation of such Collateral; or (b) suggests
that any collateral report or financial information delivered to the
Administrative Agent by Borrower is incomplete, inaccurate or misleading in any
material respect. In exercising such judgment, the Administrative Agent may
consider, without duplication, such factors already included in or tested by the
definitions of Eligible Parts Inventory, as well as any of the following:
(i) changes after the Closing

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

Date in any material respect in demand for, pricing of, or product mix of Parts
Inventory; (ii) changes after the Closing Date in any material respect in any
concentration of risk with respect to Borrower’s Parts Inventory; and (iii) any
other factors arising after the Closing Date that change in any material respect
the credit risk of lending to Borrower on the security of the Parts Inventory.

“Permitted Joint Venture” means any Person which is, directly or indirectly,
through its Subsidiaries or otherwise, engaged principally in any business in
which Borrower (or any Former Borrower) is engaged, or a reasonably related,
ancillary or complementary business, and the Equity Interests of which (a) is
owned by Borrower or a Restricted Subsidiary thereof and one or more Persons
other than Borrower or any affiliate of Borrower or (b) is acquired by Borrower
or a Restricted Subsidiary.

“Permitted Liens” means such of the following: (a) Liens for taxes, assessments
and governmental charges or levies to the extent not yet due or being contested
in accordance with Section 5.04; (b) Liens imposed by law, such as
materialmen’s, mechanics’, carriers’, warehousemen’s, workmen’s and repairmen’s
Liens and other similar Liens arising in the ordinary course of business
securing obligations (i) that are not overdue for a period of more than 30 days
or (ii) the validity or amount thereof is being contested in good faith by
appropriate proceedings and Borrower has set aside on its books adequate
reserves with respect thereto in accordance with GAAP; (c) pledges or deposits
in the ordinary course of business to secure obligations under workers’
compensation laws or similar legislation or to secure public or statutory
obligations; (d) deposits to secure the performance of bids, trade contracts and
leases (other than Debt for Borrowed Money), statutory obligations, surety bonds
(other than bonds related to judgments or litigation), performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(e) Liens securing judgments (or the payment of money not constituting an Event
of Default under Sections 7.01(i) or 7.01(j)) or securing appeal or other surety
bonds related to such judgments; (f) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of nondelinquent
customs duties in connection with the importation of goods in the ordinary
course of business; (g) Liens encumbering deposits made in the ordinary course
of business to secure nondelinquent obligations arising from statutory,
regulatory, contractual or warranty requirements of Borrower for which a reserve
or other appropriate provision, if any, as may be required by GAAP has been
made; (h) Liens arising out of consignment or similar arrangements for the sale
of goods entered into by Borrower in the ordinary course of business and in
accordance with industry practice; (i) easements, rights of way, zoning
ordinances and similar charges, title defects or other irregularities and other
encumbrances on title to real property that do not materially adversely affect
the use of such property for its present purposes; (j) rights of setoff or
bankers’ Liens upon deposits of cash or securities in favor of banks or other
depositary institutions and Liens associated with overdraft protection and
netting services; and (k) Liens on insurance proceeds and deposits in connection
with the financing of insurance premiums.

“Permitted Receivable Financing” means any receivable financing facility or
arrangement (a) entered into in the ordinary course of Navistar International’s
business pursuant to which a Finance Subsidiary purchases or otherwise acquires
accounts receivable of Navistar International or any Restricted Subsidiary of
Navistar International and enters into a third party financing thereof on terms
that are market and customary to Navistar International and its Restricted
Subsidiaries, (b) entered into by Borrower or any Restricted Subsidiary at the
request of a customer and pursuant to which Borrower or such Restricted
Subsidiary, as applicable, agrees to sell to such commercial bank or its
affiliate accounts receivable owing by such customer at a discount (i.e.,
“supply chain financing”) or (c) entered into by Borrower or any Restricted
Subsidiary for the purpose of factoring its accounts receivables for cash
consideration, in an aggregate amount for clauses (a), (b) and (c) not to exceed
$25,000,000 at any time outstanding.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Person” means any natural person, corporation, limited liability company,
unlimited liability company, trust, joint venture, association, company,
partnership, Governmental Authority or any other entity.

“Plan” means any employee benefit plan (as such term is defined in Section 3(3)
of ERISA) established or maintained by Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, an ERISA
Affiliate.

“Plan of Liquidation” means, with respect to any Person, a plan (including by
operation of law) that provides for, contemplates or the effectuation of which
is preceded or accompanied by (whether or not substantially contemporaneously)
(a) the sale, lease, conveyance or other disposition of all or substantially all
of the assets of such Person; and (b) the distribution of all or substantially
all of the proceeds of sale, lease, conveyance or other disposition and all or
substantially all of the remaining assets of such Person to holders or Equity
Interests of such Person.

“Preferred Interests” means, with respect to any Person, Equity Interests issued
by such Person that are entitled to a preference or priority over any other
Equity Interests issued by such Person upon any distribution of such Person’s
property and assets, whether by dividend or upon liquidation.

“Prime Rate” means the rate of interest announced by Bank of America from time
to time as its prime rate. Such rate is set by Bank of America on the basis of
various factors, including its costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above or below such rate. Any change in such rate
announced by Bank of America shall take effect at the opening of business on the
day specified in the public announcement of such change.

“Protective Advance” has the meaning assigned to such term in Section 2.04(a).

“Ratings Condition” means that (a) the corporate family rating of Navistar
International is at least “BBB-” from S&P and “Baa3” from Moody’s; provided,
that to the extent the rating provided by S&P and Moody’s are not equivalent,
then, subject to the following proviso, the higher rating shall be used for
purposes of this definition and this clause (a) shall be deemed satisfied by if
such higher rating is at least “BBB-” from S&P and “Baa3” from Moody’s;
provided, further that to the extent such S&P and Moody’s ratings shall be
separated by more than one level (it being acknowledged and agreed by way of
example that “BBB+” and “BBB” are separated by one level), the lower such
rating, adjusted up by one level shall be used to determine the rating and this
clause (a) shall be deemed satisfied if such lower rating, as adjusted, is at
least “BBB-” from S&P and “Baa3” from Moody’s; provided, finally, that if either
S&P or Moody’s cease to exist, this clause (a) shall be deemed satisfied if the
rating from the remaining rating agency is at least “BBB-” or “Baa3”, as
applicable; and (b) no Specified Default or Event of Default has occurred and is
continuing.

“Receivables” means any receivables generated from the sale of Collateral and
required to be sold pursuant to, and in accordance with, the terms of any Master
Intercompany Agreement.

“Receivables Facility” means the Second Amended and Restated Credit Agreement,
dated as of December 2, 2011, among NFC, JPMorgan Bank and the other parties
referred to therein, as amended and restated or otherwise modified from time to
time and the related guarantees by Borrower and Navistar International.

“Receivables Trigger Event” means solely with respect to a Master Intercompany
Agreement counterparty that purchases Parts Receivables of Borrower (a) if any
such counterparty

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

becomes subject to any proceeding of any type referred to in Section 7.01(h);
(b) the failure of any such counterparty to pay in cash (after giving effect to
netting counterpayments made in the ordinary course of business consistent with
the past practices of the counterparties) to Borrower the full purchase price of
any Receivables sold to such counterparty thereunder within two Business Days of
the deadline for such payment pursuant to such Master Intercompany Agreement,
provided that, with respect to payments to be made pursuant to the NFC MIA, if
such two-day payment deadline occurs during a “Blackout Period” then the
deadline for payment under this clause (b) shall be the first Business Day
following such Blackout Period; or (c) if any such counterparty gives notice of
its intent to terminate such Master Intercompany Agreement and terminates such
Master Intercompany Agreement without a comparable replacement being in full
force and effect.

“Recovery Zone Bonds” means collectively, the Illinois Finance Authority
Recovery Zone Facility Revenue Bonds (Navistar International Corporation
Project) Series 2010 and The County of Cook, Illinois Recovery Zone Facility
Revenue Bonds (Navistar International Corporation Project) Series 2010, in the
aggregate original principal amount of up to $225,000,000.

“Recovery Zone Bonds Loan Agreements” means collectively, (a) the Loan
Agreement, dated as of October 1, 2010, between Navistar International and the
Illinois Finance Authority and (b) the Loan Agreement, dated as of October 1,
2010, between Navistar International and the County of Cook, Illinois.

“Redeemable” means, with respect to any Equity Interest, any such Equity
Interest that (a) the issuer has undertaken to redeem at a fixed or determinable
date or dates, whether by operation of a sinking fund or otherwise, or upon the
occurrence of a condition not solely within the control of the issuer or (b) is
redeemable at the option of the holder; provided that any such Equity Interests
that would constitute Redeemable Equity Interests solely because the provisions
thereof give holders thereof the right to require the issuer thereof to redeem
such Equity Interests upon the occurrence of a change in control or an asset
sale shall not be Redeemable Equity Interests if such Equity Interests provide
that the issuer thereof will not redeem any such Equity Interests pursuant to
such provisions prior to the full payment of all of the Facility Obligations.

“Refinancing Conditions” means each of the following conditions with respect to
the refinanced Debt: (a) it is in an aggregate principal amount that does not
exceed the original principal amount of the Debt being extended, renewed,
refinanced, restructured or replaced (except by the amount of any accrued
interest, closing costs, expenses and fees, and premium paid in connection with
such extension, renewal, refinancing or replacement); (b) it matures (excluding
any maturity as the result of an optional redemption by the issuer thereof) or
is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the holder thereof, in whole or in part, other
than in connection with a Change of Control or an asset sale, after November 18,
2017; (c) it has a weighted average life no less than the remaining weighted
average life of, the Debt being extended, renewed, refinanced or replaced;
(d) it is subordinated to the Obligations at least to the same extent as the
Debt being extended, renewed, restructured, refinanced or replaced; (e) for all
Debt other than Debt under the Term Loan Documents and other Debt permitted
under Section 6.01(s), unless otherwise approved by the Administrative Agent,
(i) the representations, covenants and defaults applicable to it, taken as a
whole, are not materially more burdensome to Borrower than those applicable to
the Debt being extended, renewed, refinanced or replaced or (ii) in the case of
any Debt that refinances any Debt that matures within one year of such
refinancing, the representations, covenants and defaults applicable to it, taken
as a whole, reflect current market terms, in each case it being agreed that a
certificate executed and delivered by a Financial Officer to the Administrative
Agent to such effect shall be conclusive and binding on the Administrative Agent
and Lenders unless the Administrative Agent shall object in writing to such
conclusion within five Business Days; (f) unless approved by the Administrative
Agent in writing, it does

 

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not restrict the payment, repayment or prepayment of the Facility Obligations by
Borrower, (g) the collateral granted pursuant to it is the same or less than the
collateral granted pursuant to the Debt being extended, renewed, refinanced or
replaced; and (h) upon giving effect to it, no Specified Default or Event of
Default exists.

“Register” has the meaning assigned to such term in Section 9.04(b).

“Regulation T” means Regulation T of the Board as from time to time in effect
and all official rulings and interpretations thereunder or thereof, and any
successor provision thereto.

“Regulation U” means Regulation U of the Board as from time to time in effect
and all official rulings and interpretations thereunder or thereof, and any
successor provision thereto.

“Regulation X” means Regulation X of the Board as from time to time in effect
and all official rulings and interpretations thereunder or thereof, and any
successor provision thereto.

“Related Funds” has the meaning assigned to such term in Section 9.04(b).

“Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, trustees, employees, agents
and advisors of such Person and such Person’s Affiliates.

“Report” means reports prepared by the Administrative Agent or another Person
showing the results of appraisals, field examinations or audits pertaining to
Borrower’s assets from information furnished by or on behalf of Borrower, after
the Administrative Agent has exercised its rights of inspection pursuant to this
Agreement, which Reports may be distributed to the Lenders by the Administrative
Agent, subject to the provisions of Section 9.12.

“Required Lenders” means, at any time, Lenders having Exposure and unused
Commitments representing more than 50% of the sum of the total Exposure and
unused Commitments at such time; provided that the Exposure and unused
Commitments of any Defaulting Lender shall be disregarded in the determination
of the Required Lenders at any time.

“Requirement of Law” means, as to any Person, any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

“Reserve Percentage” means the reserve percentage (expressed as a decimal,
rounded up to the nearest 1/100th of 1%) applicable to member banks under
regulations issued by the Board for determining the maximum reserve requirement
for Eurocurrency liabilities.

“Reserves” means all (if any) Line Reserves and Availability Reserves.

“Responsible Officer” of any Person means the chief executive officer,
president, chief financial officer, treasurer, assistant treasurer, senior vice
president, vice president, controller or chief accounting officer of Borrower.

“Restricted Payment” has the meaning assigned to such term in Section 6.07(b).

“Restricted Subsidiary” has the meaning assigned to such term in the 2009 Senior
Note Indenture.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Revolving Loan” means a Loan made pursuant to Section 2.01.

“S&P” means Standard & Poor’s Ratings Service, a division of the McGraw-Hill
Companies, Inc., and any successor to its rating agency business.

“Sale/Lease-back Transaction” means an arrangement relating to property now
owned or hereafter acquired whereby Borrower transfers such property to a Person
and Borrower thereafter leases it from such Person.

“Scheduled Maturity Date” means July 16, 2014; provided, that if, on or before
such date, (i) the maturity date of the Term Loan Facility is extended or
(ii) the Term Loan Facility is refinanced, renewed or replaced so long as the
maturity date of the Term Loan Facility or such refinancing, replacement or
renewal Debt (if applicable) is on or after August 17, 2017, then the Scheduled
Maturity Date shall be May 18, 2017.

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of its functions.

“Secured Banking Services Provider”: means (a) Bank of America or any of its
Affiliates; and (b) any other Lender or Affiliate of a Lender that is providing
Banking Services; provided such provider delivers written notice to the
Administrative Agent and Borrower, in form and substance reasonably satisfactory
to the Administrative Agent, by the later of the Closing Date or 10 days
following creation of Banking Services, (i) describing the Banking Services and
setting forth the maximum amount to be secured by the Collateral and the
methodology to be used in calculating such amount, and (ii) agreeing to be bound
by Section 8.03.

“Secured Obligations” means all Facility Obligations, together with, to the
extent permitted by the 2009 Senior Note Indenture, Banking Services Obligations
in an aggregate amount of up to $25,000,000.

“Secured Parties” has the meaning assigned to such term in the Security
Agreement.

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

“Security Agreement” means the Amended and Restated Security Agreement of even
date herewith, substantially in the form of Exhibit H between Borrower and the
Administrative Agent, for the benefit of the Administrative Agent and the
Secured Parties.

“Senior Notes” means the 8.25% Senior Notes due 2021 issued by Navistar
International pursuant to the 2009 Senior Note Indenture.

“Senior Subordinated Convertible Notes” means the 3.00% Senior Subordinated
Convertible Notes due 2014 issued by Navistar International pursuant to the 2009
Senior Subordinated Convertible Note Indenture.

“Settlement Report” means a report summarizing Loans outstanding and LC Exposure
as of a given settlement date, allocated to Lenders on a pro rata basis in
accordance with their Commitments.

“Shrink” means Parts Inventory identified by Borrower as lost, misplaced, or
stolen.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Shrink Reserve” means an amount reasonably estimated by the Administrative
Agent to be equal to that amount which is required in order that the Shrink
reflected in current stock ledger of Borrower would be reasonably equivalent to
the Shrink calculated as part of Borrower’s most recent physical inventory (it
being understood and agreed that no Shrink Reserve established by the
Administrative Agent shall be duplicative of any Shrink as so reflected in the
current stock ledgers of Borrower or estimated by Borrower for purposes of
computing the Borrowing Base other than at month’s end).

“Shy Settlement” shall mean that certain Amended and Restated Settlement
Agreement dated June 30, 1993, in reference to the class action of Shy et al. v.
Navistar, Civil Action No. C-3-92-333 (S.D. Ohio).

“Single Employer Plan” means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of Borrower
or any ERISA Affiliate and for no Person other than Borrower and the ERISA
Affiliates or (b) was so maintained and in respect of which Borrower or any
ERISA Affiliate could have liability under Section 4069 of ERISA in the event
such plan has been or were to be terminated.

“Slow Moving” means Parts Inventory held in excess of three years of usage.

“Specified Default” means the failure of Borrower to comply with the terms of
Sections 5.01(c) or 5.11, the failure of Borrower to deliver financial
statements when required pursuant to Sections 5.01(a) or (b), or the occurrence
of any Default specified in Sections 7.01(a) or 7.01(h).

“Stated Amount” means, at any time, the maximum amount for which a Letter of
Credit may be honored.

“Subject Agreements” has the meaning assigned to such term in Section 9.22(b).

“Subordinated Debt” means any Debt of Borrower that is subordinated to the
Obligations of Borrower under the Loan Documents on and that otherwise contains,
terms and conditions, including as to subordination, reasonably satisfactory to
the Administrative Agent.

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.

“Super Majority Lenders” means, at any time, Lenders having Exposure and unused
Commitments representing more than 66-2/3% of the sum of the total Exposure and
unused Commitments at such time; provided that the Exposure and unused
Commitments of any Defaulting Lender shall be disregarded in the determination
of the Super Majority Lenders at any time.

“Support Agreement” means the Third Amended and Restated Parents’ Side Agreement
dated as of December 2, 2011, between Navistar International and Borrower, as it
may be amended, modified, supplemented or restricted from time to time; provided
that such agreement shall not be amended, supplemented, amended and restated or
otherwise modified after the Closing Date in a manner adverse in any material
respect to the interests of Borrower.

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Suppressed Availability” means the amount (not less than zero) by which the
then-applicable Borrowing Base exceeds the then-effective Commitments.

“Swingline Lender” means Bank of America, in its capacity as lender of Swingline
Loans hereunder.

“Swingline Loan” has the meaning assigned to such term in Section 2.05(a).

“Syndication Agents” has the meaning assigned to such term in the preamble to
this Agreement.

“Synthetic Debt” means, with respect to any Person, without duplication of any
clause within the definition of “Debt,” all (a) Obligations of such Person under
any lease that is treated as an operating lease for financial accounting
purposes and a financing lease for tax purposes (i.e., a “synthetic lease”),
(b) Obligations of such Person in respect of transactions entered into by such
Person, the proceeds from which would be reflected on the financial statements
of such Person in accordance with GAAP as cash flows from financings at the time
such transaction was entered into (other than as a result of the issuance of
Equity Interests) and (c) Obligations of such Person in respect of other
transactions entered into by such Person that are not otherwise addressed in the
definition of “Debt” or in clause (a) or (b) above that are intended to function
primarily as a borrowing of funds (including, without limitation, any minority
interest transactions that function primarily as a borrowing).

“Tax Allocation Agreements” means (a) the Tax Allocation Agreement among the
International Harvester Company (predecessor to Borrower) and its Subsidiaries
(as defined therein), effective as of October 1, 1981, as it has been and may be
amended and/or supplemented from time to time, (b) the Tax Allocation Agreement
between Navistar International and Navistar International Transportation Corp.
(predecessor to Borrower), effective April 1, 1987, as it has been and may be
amended and/or supplemented from time to time and (c) the Tax Allocation
Agreement by and among Navistar International and its Subsidiary Members (as
defined therein), dated April 14, 2008; provided that such agreements shall not
be amended, supplemented, amended and restated or otherwise modified after the
Closing Date in a manner adverse in any material respect to the interests of
Borrower or its Subsidiaries.

“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

“Term Loan” means the term loans made to Borrower (and guaranteed by Navistar
International and certain Subsidiaries of Navistar International) in the maximum
aggregate original principal amount of up to $1 billion pursuant to the Term
Loan Agreement.

“Term Loan Agents” means the Term Loan Collateral Agent and the Administrative
Agent (as defined in the Term Loan Agreement).

“Term Loan Agreement” means that certain Credit Agreement dated as of August 17,
2012, by and among, inter alia, Navistar International, Borrower, JPMorgan Chase
Bank, N.A., as administrative agent thereunder, and the lenders from time to
time party thereto.

“Term Loan Collateral Agent” means the Collateral Agent (as defined in the Term
Loan Agreement).

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

“Term Loan Documents” means the Credit Documents (as defined in the Term Loan
Agreement) and any other documents that are designated under any agreement
refinancing, replacing, renewing, extending or restructuring the Term Loan
Agreement as “Term Loan Documents” for the purposes of this Agreement.

“Term Loan Facility” means the term loan facility provided by the Term Loan
Agreement.

“Term Loan Lender” means the lenders party to the Term Loan Agreement.

“Term Loan Security Agreement” means the Guarantee and Collateral Agreement
dated as of the date hereof among Borrower, Navistar International, the Term
Loan Collateral Agent and the other parties thereto.

“Total Utilization of Commitments” means the average daily aggregate Exposures
of all Lenders.

“Transaction Costs” means fees and expenses payable or otherwise borne by
Borrower in connection with the Transactions and the transactions contemplated
thereby.

“Transactions” means, collectively, (a) the execution, delivery and performance
by Borrower of the Loan Documents to which it is a party and the making of the
Borrowings and the issuance, amendment and renewal of Letters of Credit
hereunder, and (b) the payment of the Transaction Costs.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to LIBOR or the Base Rate.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York or any other state the laws of which are required to be
applied in connection with the issue of perfection of security interests.

“UFCA” has the meaning assigned to such term in Section 9.18(b).

“UFTA” has the meaning assigned to such term in Section 9.18(b).

“Unliquidated Obligations” means, at any time, any Secured Obligations (or
portion thereof) that are contingent in nature or unliquidated at such time,
including any Secured Obligation that is: (a) an obligation to reimburse a bank
for drawings not yet made under a Letter of Credit issued by it; (b) any other
obligation (including any guarantee) that is contingent in nature at such time;
or (c) an obligation to provide collateral to secure any of the foregoing types
of obligations; but excluding unripened or contingent obligations related to
indemnification under Section 9.03 for which no written demand has been made.

“Unrestricted Subsidiary” has the meaning assigned to such term in the 2009
Senior Note Indenture.

“U.S. Liquidity” means, at any time of determination the sum of (a) unrestricted
(determined in a manner consistent with GAAP) cash and Cash Equivalents of
Navistar International and its Domestic Subsidiaries at such time, plus
(b) amounts available to Navistar International and its Domestic Subsidiaries
under lines of credit in the United States at such time, plus (c) unrestricted
cash

 

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

(determined in a manner consistent with GAAP) located in a foreign jurisdiction
at such time, so long as such cash may be transferred to Navistar International
and its Domestic Subsidiaries in the United States without restrictions under
any charter, document or other contractual obligation and without any material
adverse tax consequences.

“USA PATRIOT Act” means The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)), as amended
or modified from time to time.

“Voting Interests” means, with respect to any Person, securities of any class or
classes of Equity Interests in such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency) to vote in the election of members of the
Board of Directors or other governing body of such Person.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

Section 1.02 Classification of Loans and Borrowings . For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving
Loan” or “Swingline Loan”) or by Type (e.g., a “LIBOR Loan”) or by Class and
Type (e.g., a “LIBOR Revolving Loan”). Borrowings also may be classified and
referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “LIBOR
Borrowing”) or by Class and Type (e.g., a “LIBOR Revolving Borrowing”).

Section 1.03 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
organizational document, agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, amended and restated, supplemented, waived, modified,
restructured, refinanced, replaced, renewed or extended (subject to any
restrictions on such amendments, amendment and restatements, supplements,
modifications, restructurings, refinancings, replacements, renewals or
extensions set forth herein), (b) any reference herein to any Person shall be
construed to include such Person’s successors and permitted assigns and, in the
case of any Governmental Authority, any other Governmental Authority that shall
have succeeded to any or all functions thereof, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof,
(d) all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, (e) the words “asset” and “property” shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights,
(f) the words “knowledge” or “aware” or words of similar import shall mean, when
used in reference to Borrower, the actual knowledge of any Responsible Officer
and (g) references to any law shall include all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting
such law. All determinations (including calculations of the Borrowing Base) made
from time to time under the Loan Documents shall be made in light of the
circumstances existing at such time. The Borrowing Base calculations shall be
consistent with historical methods of valuation and calculation (and not
necessarily calculated in accordance with GAAP). No provision of any Loan
Documents shall be construed against any party by reason of such party having,
or being deemed to have, drafted the provision.

 

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Section 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if Borrower
notifies the Administrative Agent that Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision
(or if the Administrative Agent notifies Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith. Notwithstanding the foregoing, for purposes of
determining compliance with any covenant contained herein, Indebtedness of
Borrower and its Subsidiaries shall be deemed to be carried at 100% of the
outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB
ASC 470-20 on financial liabilities shall be disregarded.

Section 1.05 Times of Day. Unless otherwise specified, all references herein to
times of day shall be references to Central time (daylight or standard, as
applicable).

Section 1.06 Timing of Payment or Performance. When the payment of any
obligation or the performance of any covenant, duty or obligation is stated to
be due or performance required on a day which is not a Business Day, the date of
such payment (other than as described in the definition of Interest Period) or
performance shall extend to the immediately succeeding Business Day and such
extension of time shall be reflected in computing interest or fees, as the case
may be.

Section 1.07 Certifications. All certifications to be made hereunder by an
officer or representative of Borrower shall be made by such person in his or her
capacity solely as an officer or a representative of Borrower, on Borrower’s
behalf and not in such Person’s individual capacity.

ARTICLE II

THE CREDITS

Section 2.01 Commitments. (a) Subject to the terms and conditions set forth
herein, each Lender agrees, severally and not jointly, to make Revolving Loans
in Dollars to Borrower from time to time during the Availability Period in an
aggregate principal amount that will not result in:

(i) such Lender’s Exposure exceeding the lesser of (A) such Lender’s Applicable
Percentage of the Available Commitment, and (B) such Lender’s Applicable
Percentage of the Borrowing Base (except as provided for in Section 2.04); or

(ii) the total Exposures of all the Lenders exceeding the lesser of (A) the
aggregate Available Commitments, and (B) the Borrowing Base (except as provided
for in Section 2.04).

(b) Within the foregoing limits and subject to the terms and conditions set
forth herein (including the Administrative Agent’s authority, in its sole
discretion, to make Protective Advances pursuant to the terms of Section 2.04),
Borrower may borrow, repay and reborrow Revolving Loans without premium or
penalty.

Section 2.02 Loans and Borrowings. (a) Each Loan (other than a Swingline Loan or
a Protective Advance) shall be made as part of a Borrowing consisting of Loans
of the same Class and Type

 

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made by the Lenders ratably in accordance with their respective Commitments of
the applicable Class. Any Protective Advance and any Swingline Loan shall be
made in accordance with the procedures set forth in Sections 2.04 and 2.05,
respectively.

(b) Subject to Sections 2.14 and 2.15, each Borrowing shall be comprised
entirely of Base Rate Loans or LIBOR Loans as Borrower may request in accordance
herewith. Each Swingline Loan and each Protective Advance shall be a Base Rate
Loan. Each Lender at its option may make any LIBOR Loan by causing any domestic
or foreign branch or Affiliate of such Lender to make such Loan; provided, that
(i) any exercise of such option shall not affect the obligation of Borrower to
repay such Loan in accordance with the terms of this Agreement, and (ii) in
exercising such option, such Lender shall use reasonable efforts to minimize any
increase in LIBOR or increased costs to Borrower resulting therefrom (which
obligation of such Lender shall not require it to take, or refrain from taking,
actions that it determines would result in increased costs for which it will not
be compensated hereunder or that it otherwise determines would be
disadvantageous to it and in the event of such request for costs for which
compensation is provided under this Agreement, the provisions of Section 2.15
shall apply).

(c) At the commencement of each Interest Period for any LIBOR Borrowing, such
Borrowing when made shall be in a minimum principal amount of $1,000,000 and in
integral multiples of $1,000,000 thereafter. Each Base Rate Borrowing when made
shall be in a minimum principal amount of $1,000,000; provided that a Base Rate
Borrowing may be made in a lesser aggregate amount that is equal to the entire
unused balance of the Available Commitments or that is required to (i) finance
the reimbursement of an LC Disbursement as contemplated by Section 2.06(e), or
(ii) repay Swingline Loans as contemplated by Section 2.10(a). Borrowings of
more than one Type and Class may be outstanding at the same time; provided that
there shall not at any time be more than a total of ten different Interest
Periods in effect for LIBOR Borrowings at any time outstanding.

(d) Notwithstanding any other provision of this Agreement, Borrower shall not be
entitled to request, or to elect to convert or continue, any Borrowing if the
Interest Period requested with respect thereto would end after the Maturity
Date.

Section 2.03 Requests for Borrowings. (a) To request a Borrowing, Borrower shall
notify the Administrative Agent of such request either in writing by delivery of
a Borrowing Request (by hand, facsimile or a “pdf” or other electronic
transmission) signed by Borrower or by telephone (i) in the case of a LIBOR
Borrowing, not later than 1:00 p.m. three Business Days before the date of the
proposed Borrowing or (ii) in the case of a Base Rate Borrowing (including any
such notice of a Base Rate Borrowing to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.06(e)), not later than 12:00 noon on
the date of the proposed Borrowing. Each such telephonic Borrowing Request shall
be irrevocable and shall be confirmed promptly by hand delivery, facsimile or a
“pdf” or other electronic transmission to the Administrative Agent of a written
Borrowing Request signed by Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.01:

(A) the aggregate amount of the requested Borrowing;

(B) the date of such Borrowing, which shall be a Business Day;

(C) whether such Borrowing is to be a Base Rate Borrowing or a LIBOR Borrowing;

 

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(D) in the case of a LIBOR Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”; and

(E) the location and number of Borrower’s accounts or any other designated
account(s) to which funds are to be disbursed.

(b) If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be a Base Rate Borrowing. If no Interest Period is specified
with respect to any requested LIBOR Borrowing, then Borrower shall be deemed to
have selected an Interest Period of 30 day’s duration. Promptly following
receipt of a Borrowing Request in accordance with this Section 2.03, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender’s Loan to be made as part of the requested Borrowing.

(c) Unless payment is otherwise timely made by Borrower, the becoming due of any
Facility Obligation shall be deemed to be a request for a Base Rate Loan on the
due date, in the amount of such Facility Obligation. The proceeds of such Loan
shall be disbursed as direct payment of the relevant Facility Obligation. This
Section 2.03(c) shall be subject in all respects to the terms of Section 9.22 of
this Agreement.

(d) If Borrower establishes a controlled disbursement account with the
Administrative Agent or any branch or Affiliate of the Administrative Agent,
then the presentation for payment of any check, ACH or electronic debit, or
other payment item at a time when there are insufficient funds to cover it shall
be deemed to be a request for a Base Rate Loan on the date of such presentation,
in the amount of such payment item and the Administrative Agent shall notify
Borrower promptly thereafter; provided that the Administrative Agent shall not
be liable for any failure to give such notice; provided, further that any
failure to give such notice shall not affect the validity of such Loan. The
proceeds of such Loan may be disbursed directly to the controlled disbursement
account or other appropriate account. This Section 2.03(d) shall be subject in
all respects to the terms of Section 9.22 of this Agreement.

Section 2.04 Protective Advances. (a) Subject in all respects to the limitations
set forth below and the terms of Section 9.22 of this Agreement (and
notwithstanding anything to the contrary in Section 4.02, including failure to
satisfy or waive any of the conditions precedent set forth in Section 4.02), the
Administrative Agent is authorized by Borrower and the Lenders, from time to
time in the Administrative Agent’s sole discretion (but shall have absolutely no
obligation to), to make Loans to Borrower, on behalf of all Lenders at any time
that any condition precedent set forth in Section 4.02 has not been satisfied or
waived, which the Administrative Agent, in its Permitted Discretion, deems
necessary or desirable (i) to preserve or protect the Collateral, or any portion
thereof, (ii) to enhance the likelihood of, or maximize the amount of, repayment
of the Loans and other Obligations, or (iii) to pay any other amount chargeable
to or required to be paid by Borrower pursuant to the terms of this Agreement,
including payments of reimbursable expenses (including costs, fees, and expenses
as described in Section 9.03) and other sums payable under the Loan Documents
(each such Loan, a “Protective Advance”). Any Protective Advance may be made in
a principal amount that would cause the aggregate Exposures to exceed the
Borrowing Base; provided that no Protective Advance may be made to the extent
that, after giving effect to such Protective Advance (together with the
outstanding principal amount of any outstanding Protective Advances), the
aggregate principal amount of Protective Advances outstanding hereunder would
exceed 5% of the aggregate Commitments as determined on the date of such
proposed Protective Advance; and provided, further that, the aggregate amount of
such proposed Protective Advances plus the aggregate Exposures shall not exceed
the aggregate Commitments. No

 

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Protective Advance may remain outstanding for more than 60 days without the
consent of the Required Lenders. Each Protective Advance shall be secured by the
Liens in favor of the Administrative Agent in and to the Collateral and shall
constitute Facility Obligations and Secured Obligations hereunder. The
Administrative Agent’s authorization to make Protective Advances may be revoked
at any time by the Required Lenders. Any such revocation must be in writing and
shall become effective prospectively upon the Administrative Agent’s receipt
thereof. The making of a Protective Advance on any one occasion shall not
obligate the Administrative Agent to make any Protective Advance on any other
occasion. At any time that the conditions precedent set forth in Section 4.02
have been satisfied or waived, the Administrative Agent may request the Lenders
to make a Revolving Loan to repay a Protective Advance. At any other time, the
Administrative Agent may require the Lenders to fund their risk participations
described in Section 2.04(b).

(b) Upon the making of a Protective Advance by the Administrative Agent (whether
before or after the occurrence of a Default), each Lender shall be deemed,
without further action by any party hereto, unconditionally and irrevocably to
have purchased from the Administrative Agent without recourse or warranty, an
undivided interest and participation in such Protective Advance in proportion to
its Applicable Percentage. From and after the date, if any, on which any Lender
is required to fund its participation in any Protective Advance purchased
hereunder, the Administrative Agent shall promptly distribute to such Lender,
such Lender’s Applicable Percentage of all payments of principal and interest
and all proceeds of Collateral (if any) received by the Administrative Agent in
respect of such Protective Advance.

Section 2.05 Swingline Loans; Settlement. (a) The Administrative Agent, as the
Swingline Lender, may, but shall not be obligated to, advance Swingline Loans to
Borrower (such loan, a “Swingline Loan”), up to an aggregate outstanding amount
of $20,000,000. Each Swingline Loan shall constitute a Revolving Loan for all
purposes, except that payments thereon shall be made to the Administrative Agent
for its own account. The obligation of Borrower to repay Swingline Loans shall
be evidenced by the records of the Administrative Agent and need not be
evidenced by any promissory note.

(b) Settlement of Swingline Loans and other Loans among the Lenders and the
Administrative Agent shall take place on a date determined from time to time by
the Administrative Agent (but at least weekly), in accordance with the
applicable Settlement Report delivered by the Administrative Agent to the
Lenders. Between settlement dates, the Administrative Agent may in its
discretion apply payments on Loans to Swingline Loans, regardless of any
designation by Borrower or any provision herein to the contrary. Each Lender’s
obligation to make settlements with the Administrative Agent is absolute and
unconditional, without offset, counterclaim or other defense, and whether or not
the Commitments have terminated or the conditions in Section 4 are satisfied.
If, due to a proceeding of the type described in Section 7.01(h) with respect to
Borrower or otherwise, any Swingline Loan made to Borrower may not be settled
among the Lenders hereunder, then each Lender shall be deemed to have purchased
from the Administrative Agent a pro rata participation in accordance with their
Applicable Percentage in such Loan and shall transfer the amount of such
participation to the Administrative Agent, in immediately available funds,
within one Business Day after the Administrative Agent’s request therefor.

Section 2.06 Letters of Credit. (a) General. Subject to the terms and conditions
set forth herein, (i) each Issuing Bank agrees, in reliance upon the agreements
of the other Lenders set forth in this Section 2.06, from time to time on any
Business Day during the period from the Closing Date to but not including the
fifth Business Day prior to the Maturity Date, upon the request of Borrower, to
issue standby Letters of Credit denominated in Dollars only and issued for the
account of Borrower, and to amend or renew Letters of Credit previously issued
by it, in accordance with Section 2.06(b); and (ii) the Lenders severally agree
to participate in the Letters of Credit issued pursuant to Section 2.06(d) (it
being

 

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understood and agreed that any such participation shall not constitute a Loan).
Subject to the terms and conditions hereof, Borrower’s ability to obtain Letters
of Credit shall be fully revolving, and accordingly Borrower may, during the
foregoing period, obtain Letters of Credit to replace Letters of Credit that
have expired or that have been drawn upon and reimbursed.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), Borrower shall hand deliver or
facsimile (or transmit by a “pdf” or other electronic communication) to the
applicable Issuing Bank and the Administrative Agent, at least two Business Days
in advance of the requested date of issuance (or such shorter period as is
acceptable to the applicable Issuing Bank), a request to issue substantially in
the form of Exhibit E attached hereto (each a “Letter of Credit Request”). To
request an amendment, extension or renewal of a Letter of Credit, Borrower shall
submit such a request on its letterhead, addressed to the applicable Issuing
Bank (with a copy to the Administrative Agent) at least two Business Days in
advance of the requested date of amendment, extension or renewal (or such
shorter period as is acceptable to the applicable Issuing Bank), identifying the
Letter of Credit to be amended, renewed or extended, and specifying the proposed
date (which shall be a Business Day) and other details of the amendment,
extension or renewal. Requests for issuance, amendment, renewal or extension
must be accompanied by such other information as shall be necessary to issue,
amend, renew or extend such Letter of Credit. If requested by the applicable
Issuing Bank, Borrower also shall submit a letter of credit application on such
Issuing Bank’s standard form in connection with any request for a Letter of
Credit. In the event of any inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by Borrower to, or entered into by
Borrower with, the applicable Issuing Bank relating to any Letter of Credit, the
terms and conditions of this Agreement shall control. A Letter of Credit shall
be issued, amended, renewed or extended only if (and on issuance, amendment,
renewal or extension of each Letter of Credit Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension (i) the LC Exposure shall not exceed $175,000,000 (as such
amount may be decreased pursuant to Section 2.09(c)) and (ii) the aggregate
amount of the Credit Extensions shall not exceed the lesser of (1) the Available
Commitments and (2) the Borrowing Base. Promptly after the delivery of any
Letter of Credit or any amendment to a Letter of Credit to an advising bank with
respect thereto or to the beneficiary thereof, the applicable Issuing Bank will
also deliver to Borrower and the Administrative Agent a true and complete copy
of such Letter of Credit or amendment. Upon receipt of such Letter of Credit or
amendment, the Administrative Agent shall notify the Lenders, in writing, of
such Letter of Credit or amendment, and if so requested by a Lender, the
Administrative Agent will provide such Lender with copies of such Letter of
Credit or amendment. Notwithstanding the forgoing, after giving effect to
Section 2.23(a), no Issuing Bank shall be required to issue Letters of Credit if
a Defaulting Lender exists at such time, unless such Lender has, or Borrower
has, entered into arrangements satisfactory to the Administrative Agent and such
Issuing Bank (including the delivery of cash collateral) to eliminate any
Fronting Exposure associated with such Lender.

(c) Expiration Date. Each Letter of Credit shall expire not later than the
earlier of (i) the stated expiration date on such Letter of Credit, and (ii) the
date that is five Business Days prior to the Maturity Date (other than any
Letter of Credit with a stated expiry date within 12 months following the
Maturity Date that shall have been fully Cash Collateralized or Backstopped by
Borrower as of the Maturity Date); provided, that, Borrower may request the
issuance of standby Letters of Credit with tenors in excess of 12 months, so
long as the aggregate total of the stated amounts of all such standby Letters of
Credit (with tenors in excess of 12 months) outstanding at any time shall not
exceed $25,000,000, and all other Letters of Credit issued hereunder shall have
tenors of 12 months or less; provided, further, that any standby Letter of
Credit with a tenor of 12 months or less may provide for the automatic extension
thereof for any number of additional periods, each of up to one year in duration
(none of which, in any event, shall extend beyond the date referred to above).
Each commercial Letter of Credit shall expire on the earlier of (A) 180 days
after the date of the issuance of such Letter of Credit and (B) the date that is
30 days prior to the Maturity Date.

 

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(d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action
on the part of the applicable Issuing Bank or the Lenders, the applicable
Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from
such Issuing Bank, a participation in each such Letter of Credit equal to such
Lender’s Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Administrative Agent, for the account of the applicable Issuing Bank, such
Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank
and not reimbursed by Borrower on the date due as provided in paragraph (e) of
this Section 2.06, or of any reimbursement payment required to be refunded to
Borrower for any reason. Each Lender acknowledges and agrees that its obligation
to acquire participations pursuant to this paragraph (d) in respect of Letters
of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever. No Issuing Bank
makes to any Lender any express or implied warranty, representation or guaranty
with respect to the Collateral, Letter of Credit document or Borrower. No
Issuing Bank shall be responsible to any Lender for any recitals, statements,
information, representations or warranties contained in, or for the execution,
validity, genuineness, effectiveness or enforceability of any Letter of Credit
document; the validity, genuineness, enforceability, collectability, value or
sufficiency of any Collateral or the perfection of any Lien thereon; or the
assets, liabilities, financial condition, results of operations, business,
creditworthiness or legal status of Borrower.

(e) Reimbursement. If the applicable Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 12:00 noon, on the Business Day immediately following the date
Borrower receives notice under paragraph (g) of this Section 2.06 of such LC
Disbursement so long as notice is delivered to Borrower no later than 10:00
a.m.; provided that Borrower may, subject to the satisfaction (or waiver in
accordance with Section 9.02) of the conditions to borrowing set forth herein,
request in accordance with Section 2.03 or 2.05 that such payment be financed
with a Base Rate Borrowing, in an equivalent amount and, to the extent so
financed, Borrower’s obligation to make such payment shall be discharged and
replaced by the resulting Base Rate Borrowing. If Borrower fails to make such
payment when due, or if any payment made by Borrower must be disgorged, returned
or otherwise relinquished for any reason, including by reason of any event
described in Section 7.01(h), the Administrative Agent shall notify each Lender
of the applicable LC Disbursement, the payment then due from Borrower in respect
thereof and such Lender’s Applicable Percentage thereof. Promptly following
receipt of such notice, each Lender shall pay to the Administrative Agent its
Applicable Percentage of the payment then due from Borrower, in the same manner
as provided in Section 2.07 with respect to Loans made by such Lender (and
Section 2.07 shall apply, mutatis mutandis, to the payment obligations of the
Lenders), and the Administrative Agent shall promptly pay to the applicable
Issuing Bank the amounts so received by it from the Lenders. Promptly following
receipt by the Administrative Agent of any payment from Borrower pursuant to
this paragraph (g), the Administrative Agent shall distribute such payment to
the applicable Issuing Bank or, to the extent that the Lenders have made
payments pursuant to this paragraph (g) to reimburse the applicable Issuing
Bank, then to such Lenders and such Issuing Bank as their interests may appear.
Any payment made by a Lender pursuant to this paragraph to reimburse an Issuing
Bank for any LC Disbursement shall not constitute a Loan and shall not relieve
Borrower of its obligation to reimburse such LC Disbursement.

 

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(f) Obligations Absolute. Borrower’s and the Lenders’ obligation to reimburse LC
Disbursements, as provided in paragraph (e) of this Section 2.06, shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein, (ii) any
draft or other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any material respect, (iii) payment by the applicable Issuing Bank
under a Letter of Credit against presentation of a draft or other document that
does not comply with the terms of such Letter of Credit, or (iv) any other event
or circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section 2.06, constitute a legal or
equitable discharge of, or provide a right of setoff against, Borrower’s
obligations hereunder (other than payment or performance, to the extent
thereof). Neither the Administrative Agent, the Lenders nor any Issuing Bank,
nor any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of
the circumstances referred to in the preceding sentence), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of such Issuing Bank; provided that the foregoing shall not be
construed to excuse such Issuing Bank (or any of its agents, employees,
officers, advisors or Related Parties) from liability to Borrower to the extent
of any direct damages (as opposed to consequential damages, claims in respect of
which are hereby waived by Borrower to the extent permitted by applicable law)
suffered by Borrower that are caused by such Issuing Bank’s (or any of its
agents, employees, officers, advisors or Related Parties) (i) failure to
exercise care when determining whether drafts and other documents presented
under a Letter of Credit comply with the terms thereof, (ii) gross negligence,
(iii) willful misconduct or (iv) bad faith. The parties hereto expressly agree
that, in the absence of gross negligence, bad faith or willful misconduct on the
part of the applicable Issuing Bank (or its agents, officers, employees,
advisors or Related Parties) (as finally determined by a court of competent
jurisdiction), such Issuing Bank shall be deemed to have exercised care in each
such determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Letter of Credit, the applicable Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are
not in strict compliance with the terms of such Letter of Credit.

(g) Disbursement Procedures. The applicable Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. Such Issuing Bank shall promptly
notify the Administrative Agent and Borrower by telephone (confirmed by
facsimile or electronic transmission) of such demand for payment and whether
such Issuing Bank has made or will make an LC Disbursement thereunder; provided
that any failure to give or delay in giving such notice shall not relieve
Borrower of its obligation to reimburse such applicable Issuing Bank and the
Lenders with respect to any such LC Disbursement.

(h) Interim Interest. If an Issuing Bank shall make any LC Disbursement, then,
unless Borrower shall reimburse such LC Disbursement in full on the date such LC
Disbursement is made, the unpaid amount thereof shall bear interest, for each
day from and including the date such LC Disbursement is made to but excluding
the date that Borrower reimburses such LC Disbursement, at the rate per annum
then applicable to Loans that are Base Rate Loans; provided that, if Borrower
fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of
this Section 2.06, then Section 2.13(c) shall apply. Interest accrued pursuant
to this paragraph (h) shall be for the account of the

 

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applicable Issuing Bank, except that interest accrued on and after the date of
payment by any Lender pursuant to paragraph (e) of this Section 2.06 to
reimburse such Issuing Bank shall be for the account of such Lender to the
extent of such payment. Interest accrued under this Section 2.06(h) or
Section 2.13(c) (as it relates thereto) shall constitute and form a part of the
reimbursement obligations owed by Borrower in respect of such Letters of Credit.

(i) Replacement of an Issuing Bank. An Issuing Bank may be replaced with the
consent of the Administrative Agent (not to be unreasonably withheld, delayed or
conditioned) at any time by written agreement among Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The
Administrative Agent shall notify the Lenders of any such replacement of an
Issuing Bank. At the time any such replacement shall become effective, Borrower
shall pay all unpaid fees accrued for the account of the replaced Issuing Bank
pursuant to Section 2.12(b). From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the replaced Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein to the term
“Issuing Bank” shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the replacement of an Issuing Bank hereunder, the
replaced Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of an Issuing Bank under this Agreement with respect
to Letters of Credit issued by it prior to such replacement to the extent such
Letters of Credit remain outstanding or otherwise with respect to
indemnification and any other amounts owing to it hereunder until such amounts
have been paid in full, but shall not be required to issue additional Letters of
Credit.

(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, within one Business Day of the date Borrower receives notice from
the Administrative Agent acting at the direction of the Required Lenders or an
Issuing Bank (or, if the maturity of the Loans has been accelerated, Lenders
with LC Exposure representing greater than 50% of the total LC Exposure)
demanding the deposit of cash collateral pursuant to this paragraph (j),
Borrower shall deposit, in an account with the Administrative Agent, in the name
of the Administrative Agent and for the benefit of the Lenders (the “LC
Collateral Account”), an amount in cash equal to 103% of the LC Exposure as of
such date; provided that the obligation to deposit such cash collateral shall
become effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to Borrower described in clause (h) or (i) of
Section 7.01. Such deposit shall be held by the Administrative Agent as
collateral for the payment and performance of the Secured Obligations in
accordance with the provisions of this paragraph (j) during the continuance of
any such Event of Default but shall be promptly released and returned to
Borrower upon the cure or waiver of such Event of Default. The Administrative
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account and Borrower hereby grants the Administrative
Agent a security interest in the LC Collateral Account for the benefit of the
Lenders. Other than any interest earned on the investment of such deposits,
which investments shall be made at the discretion of the Administrative Agent
for the benefit of Borrower to the extent not applied to the Obligations or any
Banking Services Obligations during the continuance of an Event of Default in
accordance with Section 2.18 and at the risk and expense of Borrower, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall be
applied by the Administrative Agent to reimburse the applicable Issuing Bank for
LC Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
Borrower for the LC Exposure at such time or, if the maturity of the Loans has
been accelerated (but subject to the consent of the Lenders with LC Exposure
representing greater than 50% of the total LC Exposure), be applied to satisfy
other Secured Obligations. If Borrower is required to provide an amount of cash
collateral hereunder as a result of the occurrence and continuance of an Event
of Default, such amount (together with all interest and other earnings with
respect thereto, to the extent not applied as aforesaid) shall be returned
promptly to Borrower but in no event later than 3 Business Days after such Event
of Default has been cured or waived.

 

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(k) Existing Letters of Credit. On the Initial Closing Date, the Existing
Letters of Credit, to the extent then outstanding, were automatically and
without further action by the parties thereto deemed to continue as Letters of
Credit issued pursuant to Section 2.06 for the account of Borrower and subject
to the provisions hereof, and for this purpose (i) fees in respect thereof
pursuant to Section 2.12(b) shall be payable (in substitution for any fees set
forth in the applicable letter of credit reimbursement agreements or
applications relating to the Existing Letters of Credit, except to the extent
that such fees are also payable pursuant to Section 2.12(b)) as if the Existing
Letters of Credit had been issued on the Closing Date, (ii) the Existing Letters
of Credit shall be included in the calculation of LC Obligations and (iii) all
liabilities of Borrower with respect to the Existing Letters of Credit shall
constitute Facility Obligations. The Existing Letters of Credit shall not be
extended or renewed, except pursuant to customary automatic extension provisions
in existence on the date hereof or unless the Letter of Credit issuer is a
Lender and has been validly appointed as an Issuing Bank hereunder prior to the
requested extension or renewal. Notwithstanding the foregoing, Borrower shall
not be required to pay any additional issuance fees with respect to the issuance
of the Existing Letters of Credit solely as a result of such letters of credit
being converted to a Letter of Credit hereunder, it being understood that the
fronting, participation and other fees set forth in Section 2.12(b) shall
otherwise apply to the Existing Letters of Credit.

(l) Borrower assumes all risks of the acts, omissions or misuses of any Letter
of Credit by the beneficiary. In connection with issuance of any Letter of
Credit, neither the Administrative Agent, nor any Issuing Bank or Lender shall
be responsible for the existence, character, quality, quantity, condition,
packing, value or delivery of any goods purported to be represented by any
Documents; any differences or variation in the character, quality, quantity,
condition, packing, value or delivery of any goods from that expressed in any
Documents; the form, validity, sufficiency, accuracy, genuineness or legal
effect of any Documents or of any endorsements thereon; the time, place, manner
or order in which shipment of goods is made; partial or incomplete shipment of,
or failure to ship, any goods referred to in a Letter of Credit or Documents;
any deviation from instructions, delay, default or fraud by any shipper or other
Person in connection with any goods, shipment or delivery; any breach of
contract between a shipper or vendor and Borrower (or any other Person whose
obligations are supported by such Letter of Credit); errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex, telecopy, e-mail, telephone or otherwise; errors in
interpretation of technical terms; the misapplication by a beneficiary of any
Letter of Credit or the proceeds thereof; or any consequences arising from
causes beyond the control of any Issuing Bank, the Administrative Agent or any
Lender, including any act or omission of a Governmental Authority. The rights
and remedies of an Issuing Bank under the Loan Documents shall be cumulative.
Each Issuing Bank shall be fully subrogated to the rights and remedies of each
beneficiary whose claims against Borrower are discharged with proceeds of any
Letter of Credit.

(m) In connection with its administration of and enforcement of rights or
remedies under any Letters of Credit or related documents, the applicable
Issuing Bank shall be entitled to act, and shall be fully protected in acting,
upon any certification, documentation or communication in whatever form believed
by such Issuing Bank, in good faith, to be genuine and correct and to have been
signed, sent or made by a proper Person. The applicable Issuing Bank may consult
with and employ legal counsel, accountants and other experts to advise it
concerning its obligations, rights and remedies, and shall be entitled to act
upon, and shall be fully protected in any action taken in good faith reliance
upon, any advice given by such experts. The applicable Issuing Bank may employ
agents and attorneys-in-fact in connection with any matter relating to Letters
of Credit or related documents, and shall not be liable for the negligence or
misconduct of agents and attorneys-in-fact selected with reasonable care.

 

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Section 2.07 Funding of Borrowings. (a) Each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:30 p.m. to the account of the Administrative
Agent most recently designated by it for such purpose by notice to the Lenders
in an amount equal to such Lender’s respective Applicable Percentage; provided,
that Swingline Loans shall be made as provided in Section 2.05. The
Administrative Agent will make such Loans available to Borrower by promptly
crediting the amounts so received, in like funds, to the Funding Account or as
otherwise directed by Borrower; provided that Base Rate Loans made to finance
the reimbursement of (i) an LC Disbursement as provided in Section 2.06(e) shall
be remitted by the Administrative Agent to the applicable Issuing Bank and
(ii) a Protective Advance shall be retained by the Administrative Agent to be
applied as contemplated by Section 2.04 (and the Administrative Agent shall,
upon the request of Borrower, deliver to Borrower a reasonably detailed
accounting of either such application).

(b) Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section 2.07 and may, in
reliance upon such assumption, make available to Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and Borrower severally agree to pay to the Administrative Agent forthwith
on demand (without duplication) such corresponding amount with interest thereon,
for each day from and including the date such amount is made available to
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of Borrower, the
interest rate applicable to Loans that are Base Rate Loans. If such Lender pays
such amount to the Administrative Agent, then such amount shall constitute such
Lender’s Loan included in such Borrowing. Nothing herein shall be deemed to
relieve any Lender from its obligation to fulfill its Commitment or to prejudice
any rights which the Administrative Agent or Borrower may have against any
Lender as a result of any default by such Lender hereunder.

Section 2.08 Type; Interest Elections. (a) Each Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
LIBOR Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a LIBOR
Borrowing, may elect Interest Periods therefor, all as provided in this
Section 2.08. Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
based upon their Applicable Percentages, and the Loans comprising each such
portion shall be considered a separate Borrowing. This Section 2.08 shall not
apply to Swingline Borrowings or Protective Advances, which may not be converted
or continued.

(b) To make an election pursuant to this Section 2.08, Borrower shall notify the
Administrative Agent of such election by telephone, facsimile or a “pdf” or
other electronic transmission by the time that a Borrowing Request would be
required under Section 2.03 if Borrower were requesting a Borrowing of the Type
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery, facsimile or electronic “pdf” or other
electronic transmission to the Administrative Agent of a written Interest
Election Request in a form approved by the Administrative Agent and signed by
Borrower.

 

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(c) Each telephonic and written (including permitted electronic transmission)
Interest Election Request shall specify the following information in compliance
with Section 2.02:

(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be a Base Rate Borrowing or a LIBOR
Borrowing; and

(iv) if the resulting Borrowing is a LIBOR Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a LIBOR Borrowing but does not
specify an Interest Period, then Borrower shall be deemed to have selected an
Interest Period of 30 day’s duration.

(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.

(e) If Borrower fails to deliver a timely Interest Election Request with respect
to a LIBOR Borrowing prior to the end of the Interest Period applicable thereto,
and unless such Borrowing is repaid as provided herein (including any prepayment
notice required pursuant to Section 2.11), then, at the end of such Interest
Period, such Borrowing shall be converted to a Base Rate Borrowing.
Notwithstanding any contrary provision hereof, if an Event of Default has
occurred and is continuing and the Administrative Agent (at its discretion or at
the request of the Required Lenders), so notifies Borrower, then, so long as an
Event of Default is continuing no outstanding Borrowing may be converted to or
continued as a LIBOR Borrowing and unless repaid, at the end of the then-current
Interest Period applicable thereto each LIBOR Borrowing shall be converted to a
Base Rate Borrowing.

Section 2.09 Termination and Reduction of Commitments. (a) Unless previously
terminated, the Commitments shall terminate on the Maturity Date.

(b) Upon delivering the notice required by Section 2.09(d), Borrower may at any
time terminate the Commitments (without premium or penalty) upon (i) the payment
in full of all outstanding Loans, together with accrued and unpaid interest
thereon, (ii) the cancellation and return of all outstanding Letters of Credit
(or alternatively, with respect to each such Letter of Credit, the Cash
Collateralization or Backstop of such Letter of Credit), and (iii) the payment
in full of all accrued and unpaid fees and all reimbursable expenses and other
Obligations then earned, due, and owing as of such termination together with
accrued and unpaid interest thereon.

(c) Upon delivering the notice required by Section 2.09(d), Borrower may from
time to time reduce the Commitments (without premium or penalty); provided that
(i) each reduction of the Commitments shall be in an amount that is not less
than $1,000,000, and in integral multiples of $1,000,000 thereafter, and
(ii) Borrower shall not reduce the Commitments if, after giving

 

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effect to any concurrent prepayment of the Revolving Loans in accordance with
Section 2.10, the sum of the aggregate Exposures would exceed the Available
Commitments; provided, that any reduction of the Commitments must include a
corresponding reduction in the maximum LC Exposure, under Section 2.06(b).

(d) Borrower shall notify the Administrative Agent of any election to terminate
or reduce the Commitments under paragraph (b) or (c) of this Section 2.09 at
least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, Administrative Agent shall advise the Lenders
of the contents thereof. Each notice delivered by Borrower pursuant to this
Section 2.09 shall be irrevocable; provided that a notice of termination of the
Commitments delivered by Borrower may state that such notice is conditioned upon
the effectiveness of other credit facilities, other debt or equity issuances, an
asset sale or an investment, in which case such notice may be revoked by
Borrower (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction
of the Commitments pursuant to this Section 2.09 shall be permanent. Upon any
reduction of the Commitments, the Commitment of each Lender shall be reduced by
such Lender’s Applicable Percentage of such reduction amount.

Section 2.10 Repayment of Loans; Evidence of Debt. (a) Borrower hereby
unconditionally promises to pay (i) to the Administrative Agent for the account
of each Lender the then unpaid principal amount of each Revolving Loan on the
Maturity Date and (ii) to the Administrative Agent the then unpaid amount of
each Protective Advance on the earlier of the Maturity Date and written demand
by the Administrative Agent; provided that on each date that a Revolving Loan is
made while any Protective Advance is outstanding, Borrower shall repay all
Protective Advances with the proceeds of such requested Revolving Loan.

(b) At all times after the occurrence and during the continuance of an Event of
Default (subject to the provisions of Section 2.18(b) and (c) and to the terms
of the Security Agreement), on each Business Day, at or before 12:00 noon, the
Administrative Agent shall apply all immediately available funds credited to the
Collection Account (without any premium or penalty or commitment reduction) as
follows; first to pay any fees or expense reimbursements then earned, due and
owing to the Administrative Agent, the Issuing Banks and the Lenders (other than
in connection with Banking Services) pursuant to the terms of the Loan
Documents, pro rata; second to pay interest due and payable in respect of any
Revolving Loans (including Swingline Loans) and any Protective Advances
permitted to be made under Section 9.22 that may be outstanding, pro rata; third
to prepay the principal of any Protective Advances permitted to be made under
Section 9.22 that may be outstanding, pro rata; and fourth to prepay the
principal of the Loans (including Swingline Loans) and to prepay unreimbursed LC
Disbursements, ratably and then in the amount necessary to Cash Collateralize
the LC Exposure, pro rata. Amounts to be applied pursuant to this
Section 2.10(b) in prepayment of Revolving Loans shall be applied, as
applicable, first to reduce outstanding Base Rate Loans. Any amounts remaining
after each such application shall be applied to prepay LIBOR Loans and if
Borrower was required to Cash Collateralize any Letters of Credit as a result of
the occurrence and continuance of an Event of Default, after such Event of
Default has been cured or waived, all amounts in the LC Collateral Account shall
be returned to Borrower in accordance with the last sentence of Section 2.06(j).

(c) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness of Borrower to such Lender resulting
from each Loan made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.

 

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(d) The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Class and Type thereof and the
Interest Period (if any) applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender’s share thereof.
In addition, Borrower shall receive a monthly statement detailing such accounts
from the Administrative Agent.

(e) The entries made in the accounts maintained pursuant to paragraph (c) of
this Section 2.10 shall be prima facie evidence of the existence and amounts of
the Obligations recorded therein (absent manifest error); provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of Borrower to
repay the Loans in accordance with the terms of this Agreement.

(f) Any Lender may request that Loans made by it be evidenced by a promissory
note. In such event, Borrower promptly shall prepare, execute and deliver to
such Lender a promissory note payable to such Lender and its registered assigns
and in substantially the form of Exhibit G hereto; provided that the Lenders
agree to provide at least three Business Days prior notice of any such request
for promissory notes on the Closing Date. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the payee named therein and its registered
assigns.

Section 2.11 Prepayment of Loans. (a) Upon prior notice in accordance with
paragraph (c) of this Section 2.11, Borrower shall have the right at any time
and from time to time to prepay any Borrowing in whole or in part, without
premium or penalty (but subject to Section 2.16) or Commitment reduction.
Prepayments made pursuant to this Section 2.11(a), first, shall be applied
ratably to the Swingline Loans and to outstanding LC Disbursements; and second,
shall be applied ratably to the outstanding Revolving Loans.

(b) Mandatory Prepayments. Except for Protective Advances permitted under
Section 2.04, in the event and on each Business Day, on which Borrower receives
written notice that the total Exposure exceeds the lesser of (i) the Available
Commitments and (ii) the Borrowing Base, Borrower shall prepay (on the date of
receipt of such notice, if such notice is received by 10:00 a.m. on such day,
and by the next Business Day, if such notice is received after 10:00 a.m. on
such day) the Revolving Loans or Swingline Loans and/or reduce the LC Exposure,
in an aggregate amount equal to such excess by taking any of the following
actions as it shall determine at its sole discretion: (1) prepayment of
Revolving Loans or Swingline Loans or (2) deposit of cash in the LC Collateral
Account to Cash Collateralize any outstanding Letters of Credit in accordance
with Section 2.05(j).

(c) Voluntary Prepayments. Borrower shall notify the Administrative Agent by
telephone (confirmed by “pdf”, other electronic transmission or facsimile to the
Administrative Agent), or by “pdf” or other electronic transmission or by
facsimile of any prepayment hereunder (i) in the case of prepayment of a LIBOR
Borrowing, not later than 1:00 p.m. three Business Days before the date of
prepayment or (ii) in the case of prepayment of a Base Rate Borrowing, not later
than 10:00 a.m. on the Business Day of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid; provided that, if a notice of
prepayment is given in connection with a conditional notice of termination of
the Commitments as contemplated by Section 2.09, then such notice of prepayment
may be revoked if such notice of termination is revoked in accordance with
Section 2.09. Promptly following receipt of any such notice relating to a
Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof. Each

 

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partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.02. Each prepayment of a Borrowing pursuant to this paragraph
(c) shall be applied to Swingline Loans until paid in full, before application
to Revolving Loans. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.13.

Section 2.12 Fees. (a) Borrower agrees to pay to the Administrative Agent, for
the account of each Lender, a commitment fee, which shall accrue at the
Commitment Fee Rate on the average daily amount of the Available Commitment of
such Lender during the period from and including the Closing Date to but
excluding the date on which the Lenders’ Commitments terminate. Accrued
commitment fees shall be payable in arrears on the first Business Day of each
February, May, August and November (commencing November 1, 2012) and on the date
on which the Commitments terminate, commencing on the first such date to occur
after the date hereof. All commitment fees shall be computed on the basis of a
year of 365 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of
calculating the commitment fees, the Commitments shall be deemed utilized as a
result of outstanding Swingline Loans.

(b) Borrower agrees to pay to the Administrative Agent for the account of each
Lender a participation fee with respect to its participations in Letters of
Credit at the same Applicable Margin used to determine the interest rate
applicable to LIBOR Loans on the daily amount of such Lender’s LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements),
during the period from and including the Closing Date to but excluding the later
of the date on which such Lender’s Commitment terminates and the date on which
such Lender ceases to have any LC Exposure. In addition, Borrower agrees to pay
to the applicable Issuing Bank, for its own account, in respect of each Letter
of Credit issued by such Issuing Bank with respect to each Letter of Credit
issued for the account of Borrower by such Issuing Bank, a fronting fee for the
period from the date of issuance of such Letter of Credit through the expiration
date of such Letter of Credit (or if terminated on an earlier date, to the
termination date of such Letter of Credit), computed at a rate equal to
0.125% per annum of the daily Stated Amount of such Letter of Credit, as well as
such Issuing Bank’s reasonable and customary standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. Participation fees and fronting fees accrued to but
excluding the last Business Day of each January, April, July and October
(commencing October 31, 2012) shall be payable on the first Business Day
following such last day, commencing on the first such date to occur after the
Closing Date; provided that all such fees shall be payable on the date on which
the Commitments terminate and any such fees accruing after the date on which the
Commitments terminate shall be payable on demand. Any other fees payable to any
Issuing Bank pursuant to this paragraph (b) shall be payable by the respective
Borrower for its own account within ten Business Days after demand (accompanied
by reasonable back-up documentation therefor). All participation fees and
fronting fees shall be computed on the basis of a year of 365 days and shall be
payable for the actual number of days elapsed. All such fees described in this
clause (b) shall constitute and form a part of the reimbursement obligations
owed by Borrower in respect of such Letters of Credit.

(c) Borrower agrees to pay the fees set forth in the Fee Letter, payable in the
amounts and at the times specified therein or as so otherwise mutually agreed
upon by Borrower and the Administrative Agent or the Lenders party thereto or
such agency fees as may otherwise be separately agreed upon by Borrower and the
Administrative Agent.

(d) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent (or to the applicable Issuing Bank,
in the case of fees payable to it) for distribution, in the case of commitment
fees and participation fees, to the Lenders. Fees paid shall not be refundable
under any circumstances.

 

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Section 2.13 Interest. (a) The Loans comprising each Base Rate Borrowing
(including each Swingline Loan and each Protective Advance) shall bear interest
at the Base Rate plus the Applicable Margin.

(b) The Loans comprising each LIBOR Borrowing shall bear interest at LIBOR for
the Interest Period in effect for such Borrowing plus the Applicable Margin.

(c) Notwithstanding the foregoing, upon the occurrence and during the
continuance of an Event of Default, upon the request of the Required Lenders and
effective thereupon (or automatically in the case of an Event of Default under
Section 7.01(h)), all (i) all Loans shall bear interest at a rate of 2.00% plus
the rate otherwise applicable to such Loan as provided in the preceding
paragraphs of this Section 2.13, (ii) all unreimbursed LC Disbursements shall
bear interest at a rate of 2.00% plus the rate of interest applicable to Base
Rate Loans in accordance with Section 2.06(h) and (iii) all participation fees
payable in accordance with Section 2.12(b)(i) shall be increased by 2.00%, in
addition to the rate otherwise payable thereunder. In the case of clauses
(ii) and (iii), such amounts shall constitute and form a part of the
reimbursement obligations owed by Borrower in respect of such Letters of Credit.

(d) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan and upon termination of the Commitments; provided
that (i) interest accrued pursuant to paragraph (c) of this Section 2.13 shall
be payable on written demand, (ii) in the event of any repayment or prepayment
of any Loan (other than a prepayment of a Base Rate Loan prior to the end of the
Availability Period), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment, and (iii) in the
event of any conversion of any LIBOR Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.

(e) All interest on Base Rate Borrowings and LIBOR Borrowings hereunder shall be
computed on the basis of a year of 360 days, and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day). The
applicable Base Rate or LIBOR shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.

Section 2.14 Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a LIBOR Borrowing:

(a) the Administrative Agent reasonably determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining LIBOR for such Interest Period;

(b) the Administrative Agent is advised by the Required Lenders that LIBOR for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders of making or maintaining their Loans included in such Borrowing for such
Interest Period; or

(c) Dollar deposits are not being offered to banks in the London interbank
Eurodollar market for the applicable amount and Interest Period of such Loan;

then the Administrative Agent shall promptly give written notice thereof to
Borrower and the Lenders by telephone or facsimile or “pdf” or other electronic
transmission as promptly as practicable thereafter and, until the Administrative
Agent notifies Borrower and the Lenders that the circumstances giving rise to
such notice no longer exist, (i) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a LIBOR
Borrowing shall be ineffective and such Borrowing shall be converted to a Base
Rate Borrowing on the last day of the Interest Period applicable thereto, and
(ii) unless withdrawn timely in accordance with the terms hereof, if any
Borrowing Request requests a LIBOR Borrowing, such Borrowing shall be made as a
Base Rate Borrowing.

 

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Section 2.15 Increased Costs. (a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended by or participated in, any Lender
(except any such reserve requirement reflected in the LIBOR) or Issuing Bank;

(ii) impose on any Lender or Issuing Bank or the London interbank market any
other condition affecting this Agreement or LIBOR Loans made by such Lender or
any Letter of Credit or participation therein; or

(iii) subject any Lender or Issuing Bank to any Tax with respect to any Loan,
Loan Document, Letter of Credit or participation in LC Obligations, or change
the basis of taxation of payments to such Lender or Issuing Bank in respect
thereof (except for Indemnified Taxes or Other Taxes covered by Section 2.17 and
the imposition of, or any change in the rate of, any Excluded Tax payable by
such Lender or Issuing Bank);

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBOR Loan (or of maintaining its obligation
to make any such Loan) or to increase the cost to such Lender or Issuing Bank of
participating in, issuing or maintaining any Letter of Credit or to reduce the
amount of any sum received or receivable by such Lender or Issuing Bank
hereunder (whether of principal, interest or otherwise), then, within 10
Business Days following delivery of the certificate contemplated by paragraph
(c) of this Section 2.15, Borrower will pay to such Lender or Issuing Bank, as
applicable, such additional amount or amounts as will compensate such Lender or
Issuing Bank, as applicable, for such additional costs incurred or reduction
suffered (except for any Taxes, which shall be dealt with exclusively pursuant
to Section 2.17).

(b) If any Lender or Issuing Bank determines that any Change in Law regarding
capital or liquidity requirements has or would have the effect of reducing the
rate of return on such Lender’s or Issuing Bank’s capital or on the capital of
such Lender’s or Issuing Bank’s holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters of Credit held
by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a
level below that which such Lender or such Issuing Bank or such Lender’s or such
Issuing Bank’s holding company could have achieved but for such Change in Law
other than due to Taxes, which shall be dealt with exclusively pursuant to
Section 2.17 (taking into consideration such Lender’s or such Issuing Bank’s
policies and the policies of such Lender’s or such Issuing Bank’s holding
company with respect to capital adequacy and liquidity), then from time to time
following delivery of the certificate contemplated by paragraph (c) of this
Section 2.15 Borrower will pay to such Lender or such Issuing Bank, as
applicable, such additional amount or amounts as will compensate such Lender or
such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for
any such reduction suffered.

(c) A certificate of a Lender or an Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or Issuing Bank or its holding
company, as applicable, as specified in paragraph (a) or (b) of this
Section 2.15 and setting forth in reasonable detail the manner in which such
amount or amounts was determined shall be delivered to Borrower and shall be
conclusive absent manifest error. Borrower shall pay such Lender or Issuing
Bank, as applicable, the amount shown as due on any such certificate within ten
Business Days after receipt thereof.

 

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(d) Failure or delay on the part of any Lender or Issuing Bank to demand
compensation pursuant to this Section 2.15 shall not constitute a waiver of such
Lender's or Issuing Bank's right to demand such compensation; provided, that
Borrower shall not be required to compensate a Lender or an Issuing Bank
pursuant to this Section 2.15 for any increased costs or reductions incurred
more than 180 days prior to the date that such Lender or Issuing Bank, as
applicable, notifies Borrower of the Change in Law giving rise to such increased
costs or reductions and of such Lender's or Issuing Bank's intention to claim
compensation therefor; provided, further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 180-day period
referred to above shall be extended to include the period of retroactive effect
thereof.

Section 2.16 Break Funding Payments. In the event of (a) the payment of any
principal of any LIBOR Loan other than on the last day of an Interest Period
applicable thereto (including as a result of an Event of Default); (b) the
conversion of any LIBOR Loan other than on the last day of the Interest Period
applicable thereto; (c) the failure to borrow, convert, continue or prepay any
LIBOR Loan on the date specified in any notice delivered pursuant hereto
(regardless of whether such notice may be revoked under Section 2.09(d) and is
revoked in accordance therewith); or (d) the assignment of any LIBOR Loan other
than on the last day of the Interest Period applicable thereto as a result of a
request by Borrower pursuant to Section 2.19, then, in any such event, Borrower
shall compensate each Lender promptly upon written request for the loss, cost
and expense attributable to such event (including the loss of anticipated
profits). In the case of a LIBOR Loan, such loss, cost or expense to any Lender
shall include the amount determined by such Lender to be the excess, if any, of
(i) the amount of interest which would have accrued on the principal amount of
such Loan had such event not occurred, at LIBOR that would have been applicable
to such Loan, for the period from the date of such event to the last day of the
then-current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 2.16 and the basis therefor and
setting forth in reasonable detail the manner in which such amount or amounts
was determined shall be delivered to Borrower and shall be conclusive absent
manifest error. Borrower shall pay such Lender the amount shown as due on any
such certificate within ten Business Days after receipt thereof. The Lenders
shall not be required to purchase Dollar deposits in any interbank market to
fund any LIBOR Loan, but this Section 2.16 shall apply as if each Lender had
purchased such deposits.

Section 2.17 Taxes. (a) Any and all payments by or on account of any obligation
of Borrower hereunder shall be made free and clear of and without deduction for
any Indemnified Taxes or Other Taxes; provided that if Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.17) the Administrative Agent, Lender or any Issuing Bank
(as applicable) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) Borrower shall make such deductions and
(iii) Borrower shall timely pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law. If at any time
Borrower is required by applicable law to make any deduction or withholding from
any sum payable hereunder, Borrower shall promptly notify the relevant Lender,
Administrative Agent or Issuing Bank upon becoming aware of the same. In
addition, each Lender, the Administrative Agent or Issuing Bank shall promptly
notify Borrower or Borrower upon becoming aware of any circumstances as a result
of which Borrower is or would be required to make any deduction or withholding
from any sum payable hereunder.

 

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(b) In addition, Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

(c) Borrower shall indemnify the Administrative Agent, each Lender and each
Issuing Bank, within ten Business Days after written demand therefor (including
documentation reasonably supporting such request), for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender
or such Issuing Bank, as applicable, on or with respect to any payment by or on
account of any obligation of Borrower hereunder (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section 2.17) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto (excluding penalties, interest and reasonable
expenses arising from the failure to pay the Indemnified Taxes or Other Taxes in
a grossly negligent manner or in a willful disregard of the law), whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. Upon Borrower's reasonable
written request, the Administrative Agent, each Lender and each Issuing Bank
shall reasonably cooperate with Borrower in seeking a refund of Indemnified
Taxes or Other Taxes; provided that such cooperation shall not be required if,
in the Administrative Agent's or such Lender's or Issuing Bank's sole
discretion, it would subject such Administrative Agent, Lender or Issuing Bank
to any unreimbursed cost or expense or otherwise be disadvantageous to the
Administrative Agent, Lender or Issuing Bank in any way. A certificate as to the
amount of such payment or liability delivered to Borrower by a Lender or an
Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a
Lender or an Issuing Bank, shall be conclusive absent manifest error.

(d) Promptly after any payment of Indemnified Taxes or Other Taxes by Borrower
to a Governmental Authority, Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.

(e) Any Non-U.S. Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which Borrower is located,
or any treaty to which such jurisdiction is a party, with respect to payments
under this Agreement shall deliver to Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by Borrower as will permit such payments to be made without
withholding or at a reduced rate. In particular, on or prior to the date which
is ten Business Days after the Closing Date, each Non-U.S. Lender shall deliver
to Borrower (with a copy to the Administrative Agent) two duly signed, properly
completed copies of either IRS Form W-8BEN or any successor thereto (relating to
such Non-U.S. Lender and entitling it to an exemption from, or reduction of,
United States withholding tax on all payments to be made to such Non-U.S. Lender
by Borrower pursuant to this Agreement or any other Loan Document) or IRS Form
W-8ECI or W-8IMY (together with any attachments) or any successor thereto
(relating to all payments to be made to such Non-U.S. Lender by Borrower
pursuant to this Agreement or any other Loan Document) or such other evidence
reasonably satisfactory to Borrower and the Administrative Agent that such
Non-U.S. Lender is entitled to an exemption from, or reduction of, United States
withholding tax, including any exemption pursuant to Section 871(h) or 881(c) of
the Code, and in the case of a Non-U.S. Lender claiming such an exemption under
Section 881(c) of the Code, a certificate that establishes in writing to
Borrower and the Administrative Agent that such Non-U.S. Lender is not (i) a
"bank" as referenced in Section 881(c)(3)(A) of the Code, (ii) a 10-percent
shareholder within the meaning of Section 881(c)(3)(B) of the Code, or (iii) a
controlled foreign corporation related to Borrower within the meaning of
Section 881(c)(3)(C) of the Code. Thereafter and from time to time, each such
Non-U.S. Lender shall (A) promptly submit to Borrower (with a copy to the
Administrative Agent) such additional duly completed and signed copies of one or
more of such forms or certificates (or such

 

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successor forms or certificates as shall be adopted from time to time by the
relevant United States taxing authorities) as may then be available under
then-current United States Laws and regulations to avoid, or such evidence as is
reasonably satisfactory to Borrower and the Administrative Agent of any
available exemption from, or reduction of, United States withholding taxes in
respect of all payments to be made to such Non-U.S. Lender by Borrower pursuant
to this Agreement, or any other Loan Document, in each case, (1) on or before
the date that any such form, certificate or other evidence expires or becomes
obsolete, (2) after the occurrence of any event requiring a change in the most
recent form, certificate or evidence previously delivered by it to Borrower and
(3) from time to time thereafter if reasonably requested by Borrower or the
Administrative Agent, and (B) promptly notify Borrower and the Administrative
Agent of any change in circumstances which would modify or render invalid any
claimed exemption or reduction.

(f) Each Lender, the Administrative Agent or Issuing Bank that is a “United
States person” within the meaning of Section 7701(a)(30) of the Code, agrees to
complete and deliver to Borrower a statement signed by an authorized signatory
of the Lender to the effect that it is a United States person together with a
duly completed and executed copy of Internal Revenue Service Form W-9 or
successor form.

(g) If a payment made by Borrower hereunder or under any other Loan Document
would be subject to United States federal withholding tax imposed by FATCA if
any Lender, Administrative Agent or Issuing Bank fails to comply with the
applicable reporting requirements of FATCA (including those contained in
Section 1471(b) or 1472(b) of the Code, as applicable), such Lender,
Administrative Agent or Issuing Bank shall use commercially reasonable efforts
to deliver to Borrower documentation, at the time or times prescribed by law and
at such time or times reasonably requested by Borrower, prescribed by the United
States Internal Revenue Service (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code), including any certification,
documentation, information or other reporting necessary to establish an
exemption from withholding under FATCA, and the applicable Lender,
Administrative Agent or Issuing Bank shall use commercially reasonable efforts
to provide any other documentation reasonably requested by Borrower sufficient
for Borrower (i) to comply with its obligations under FATCA, (ii) to determine
that such Lender, Administrative Agent or Issuing Bank has complied with such
applicable reporting requirements, and (iii) if necessary, to determine the
amount to deduct and withhold from such payment.

(h) If the Administrative Agent or a Lender determines, in good faith in its
reasonable discretion, that it has received a refund of any Indemnified Taxes or
Other Taxes as to which it has been indemnified by Borrower or with respect to
which Borrower has paid additional amounts pursuant to this Section 2.17, it
shall pay over such refund to Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by Borrower under this Section 2.17
with respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender (including any
Taxes imposed with respect to such refund) as is determined by the
Administrative Agent or such Lender in good faith in its reasonable discretion,
and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, that Borrower, upon the
request of the Administrative Agent or such Lender, agrees to repay as soon as
reasonably practicable the amount paid over to Borrower (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority.
This Section 2.17 shall not be construed to require the Administrative Agent or
any Lender to make available its tax returns (or any other information relating
to its taxes which it deems confidential) to Borrower or any other Person.

 

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(i) If Borrower determines in good faith that a reasonable basis exists for
contesting any Indemnified Taxes or Other Taxes for which additional amounts
have been paid under this Section 2.17, the relevant Lender, the Administrative
Agent or the relevant Issuing Bank shall cooperate with Borrower in challenging
such Indemnified Taxes or Other Taxes, at Borrower's expense, if so requested by
Borrower in writing.

(j) Each Lender and Issuing Bank shall promptly notify the Administrative Agent
of any change in circumstances that would change any claimed Tax exemption or
reduction. Each Lender and Issuing Bank shall indemnify, hold harmless and
reimburse (within 10 days after written demand therefor) the Administrative
Agent for any Taxes, losses, claims, liabilities, penalties, interest and
expenses (including reasonable attorneys' fees) incurred by or asserted against
the Administrative Agent by any Governmental Authority due to such Lender's or
Issuing Bank's failure to deliver, or inaccuracy or deficiency in, any
documentation required to be delivered by it pursuant to this Section 2.17. Each
Lender and Issuing Bank authorizes the Administrative Agent to set off any
amounts due to the Administrative Agent under this Section 2.17 against any
amounts payable to such Lender or Issuing Bank under any Loan Document.

Section 2.18 Payments Generally; Allocation of Proceeds; Sharing of Set-offs.
(a) Unless otherwise specified, Borrower shall make each payment required to be
made by them hereunder (whether of principal, interest, fees or reimbursement of
LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or
otherwise) prior to 1:00 p.m., on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time on
any date may, in the reasonable discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative Agent to the applicable account designated to Borrower by the
Administrative Agent, except (i) payments to be made directly to the applicable
Issuing Bank or the Swingline Lender as expressly provided herein, (ii) payments
pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the
Persons entitled thereto and (iii) as otherwise set forth herein. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in Dollars. Any payment required to be made by the
Administrative Agent hereunder shall be deemed to have been made by the time
required if the Administrative Agent shall, at or before such time, have taken
the necessary steps to make such payment in accordance with the regulations or
operating procedures of the clearing or settlement system used by the
Administrative Agent to make such payment.

(b) All proceeds of Collateral received by the Administrative Agent after an
Event of Default has occurred and is continuing, if the Required Lenders direct
that such proceeds be applied to repayment and all proceeds of Collateral
received by the Administrative Agent after the Loans have become due and payable
pursuant to Article VII or on or after the Maturity Date, shall, in each case,
be applied as follows, first, to, ratably, pay any fees, indemnities, or expense
reimbursements then due to the Administrative Agent or any Issuing Bank from
Borrower (other than in connection with Banking Services) under the Loan
Documents; second, to pay interest due and payable in respect of any Revolving
Loans, Swingline Loans and any Protective Advances (to the extent made in
accordance with the terms herein), ratably; third, to pay the principal of the
Protective Advances (to the extent made in accordance with the terms herein);
fourth, to pay principal on the Loans (other than the Protective Advances) and
to prepay unreimbursed LC Disbursements, ratably and then in the amount
necessary to Cash Collateralize the LC Exposure, ratably; fifth, to pay any
Banking Services Obligations then due with respect to Banking Services to the
extent they constitute Secured Obligations; sixth, to the payment of any other
Secured

 

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Obligation then due and owing to the Administrative Agent or any Lender by
Borrower; and seventh, to Borrower or as Borrower shall direct and if Borrower
was required to Cash Collateralize any Letters of Credit as a result of the
occurrence and continuance of an Event of Default, after such Event of Default
has been cured or waived, all amounts in the LC Collateral Account shall be
returned to Borrower in accordance with the last sentence of Section 2.06(j).

(c) If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans or participations in LC Disbursements, Swingline Loans or Protective
Advances resulting in such Lender receiving payment of a greater proportion of
the aggregate amount of its Loans and participations in LC Disbursements,
Swingline Loans or Protective Advances and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
and participations in LC Disbursements, Swingline Loans and Protective Advances
of other Lenders at such time outstanding to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and participations in LC Disbursements, Swingline Loans
and Protective Advances; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph (c) shall not be construed to apply to any payment
made by Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements, Swingline Loans or Protective Advances to any assignee or
participant, other than to Borrower or any Subsidiary or Affiliate thereof (as
to which the provisions of this paragraph (c) shall apply). Borrower consents to
the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of Borrower in the amount of such participation.
Notwithstanding the foregoing, if a Defaulting Lender obtains payment or
reduction of any Obligation, it shall immediately turn over the amount thereof
to the Administrative Agent for application under Section 2.23 and it shall
provide a written statement to the Administrative Agent and Borrower describing
the Obligation affected by such payment or reduction.

(d) Unless the Administrative Agent shall have received notice from Borrower
prior to the date on which any payment is due to the Administrative Agent for
the account of the Lenders or for the account of the applicable Issuing Bank
hereunder that Borrower will not make such payment, the Administrative Agent may
assume that Borrower has made such payment on such date in accordance herewith
and may, in reliance upon such assumption, distribute to the Lenders or the
applicable Issuing Bank, as applicable, the amount due. In such event, if
Borrower has not in fact made such payment, then each of the Lenders or the
applicable Issuing Bank, as applicable, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.

(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Sections 2.04(b), 2.05(b), 2.06(d) or (e), 2.07(b), 2.18(d) or 9.03,
then (i) the Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid and (ii) such amount shall bear interest from the due date until paid at
the rate determined by the Administrative Agent as

 

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customary in the banking industry for interbank compensation. In no event shall
Borrower be entitled to receive credit for any interest paid by a Lender to the
Administrative Agent, nor shall any Defaulting Lender be entitled to interest on
any amounts held by the Administrative Agent pursuant to Section 2.23. If the
Administrative Agent pays any amount to a Lender in the expectation that a
related payment will be received by the Administrative Agent from Borrower and
such related payment is not received, then the Administrative Agent may recover
such amount from each Lender that received it. If the Administrative Agent
determines at any time that an amount received under any Loan Document must be
returned to Borrower or paid to any other Person pursuant to applicable law or
otherwise, then, notwithstanding any other term of any Loan Document, the
Administrative Agent shall not be required to distribute such amount to any
Lender. If any amounts received and applied by the Administrative Agent to any
Facility Obligations are later required to be returned by the Administrative
Agent pursuant to applicable law, each Lender shall pay to the Administrative
Agent, on demand, such Lender's pro rata share of the amounts required to be
returned.

Section 2.19 Mitigation Obligations; Replacement of Lenders. (a) If any Lender
requests compensation under Section 2.15, or if Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.17, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices or affiliates, if, in the reasonable judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.15 or 2.17, as applicable, in the future and (ii) would not subject
such Lender to any material unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender in any material respect; provided, however,
that Borrower shall not be liable for such costs and expenses of a Lender
requesting compensation if (i) such Lender becomes a party to this Agreement on
a date after the Closing Date and (ii) the relevant Change in Law occurs on a
date prior to the date such Lender becomes a party hereto. Borrower hereby
agrees to pay all reasonable costs and out-of-pocket expenses incurred by any
Lender in connection with any such designation or assignment promptly after
written demand (which includes documentation reasonably supporting such
request). A certificate setting forth such costs and expenses shall be submitted
by such Lender to Borrower, which shall be presumptive evidence thereof, absent
manifest error.

(b) If any Lender requests compensation under Section 2.15, or if Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, or is a
Defaulting Lender, then Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, replace such Lender by
requiring such Lender to assign and delegate (and such Lender shall be obligated
to assign and delegate), without recourse (in accordance with and subject to the
restrictions contained in Section 9.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) Borrower shall have received the prior written
consent of the Administrative Agent and each Issuing Bank, which consent in each
case shall not unreasonably be withheld, delayed or conditioned, (ii) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Revolving Loans and participations in LC Disbursements,
Swingline Loans and Protective Advances, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or Borrower (in the
case of all other amounts), and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.15 or payments required
to be made pursuant to Section 2.17, such assignment will result in a reduction
in such compensation or payments. A Lender (other than a Defaulting Lender)
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling Borrower to require such assignment and delegation cease to apply.
Nothing in this Section 2.19 shall be deemed to prejudice any rights that
Borrower may have against any Lender that is a Defaulting Lender.

 

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Section 2.20 Illegality. If any Lender reasonably determines that any Change in
Law has made it unlawful, or that any Governmental Authority has asserted after
the Closing Date that it is unlawful, for such Lender or its applicable lending
office to make or maintain any LIBOR Loans, or to determine or charge interest
rates based on LIBOR, or any Governmental Authority has imposed material
restrictions on the authority of such Lender to purchase or sell, or to take
deposits of, Dollars in the London interbank market, then, on notice thereof by
such Lender to Borrower through the Administrative Agent, any obligations of
such Lender to make or continue LIBOR Loans or to convert Base Rate Borrowings
to LIBOR Borrowings shall be suspended until such Lender notifies the
Administrative Agent and Borrower that the circumstances giving rise to such
determination no longer exist. Upon receipt of such notice, Borrower shall upon
demand from such Lender (with a copy to the Administrative Agent), either
convert all LIBOR Borrowings of such Lender to Base Rate Borrowings, either on
the last day of the Interest Period therefor, if such Lender may lawfully
continue to maintain such LIBOR Borrowings to such day, or immediately, if such
Lender may not lawfully continue to maintain such Loans. Upon any such
prepayment or conversion, Borrower shall also pay accrued interest on the amount
so prepaid or converted. Each Lender agrees to designate a different lending
office if such designation will avoid the need for such notice and will not, in
the determination of such Lender, otherwise be disadvantageous to it.

Section 2.21 Reserves; Change in Reserves. The Administrative Agent may at any
time and from time to time in the exercise of its Permitted Discretion
establish, increase or decrease Reserves; provided that the Administrative Agent
shall have provided Borrower at least five Business Days' prior written notice
of any such establishment or increase. The amount of any Reserve established by
the Administrative Agent shall have a reasonable relationship to the event,
condition or other matter that is the basis for the Reserve. Upon delivery of
such notice, the Administrative Agent shall be available to discuss the proposed
Reserve or increase, and Borrower may take such action as may be required so
that the event, condition or matter that is the basis for such Reserve or
increase no longer exists, in a manner and to the extent reasonably satisfactory
to the Administrative Agent in the exercise of their Permitted Discretion. In no
event shall such notice and opportunity limit the right of the Administrative
Agent to establish or change such Reserve, unless the Administrative Agent shall
have determined in its Permitted Discretion that the event, condition or other
matter that is the basis for such new Reserve or such change no longer exists or
has otherwise been adequately addressed by Borrower. Notwithstanding anything
herein to the contrary, Reserves shall not duplicate eligibility criteria
contained in the definition of "Eligible Parts Inventory" and vice versa, or
reserves or criteria deducted in computing the cost or market value of Eligible
Parts Inventory or the Net Orderly Liquidation Value of Eligible Parts Inventory
and vice versa.

Section 2.22 [Reserved].

Section 2.23 Defaulting Lender.

(a) For purposes of determining the Lenders' obligations to fund or participate
in Loans or Letters of Credit, the Administrative Agent may exclude the
Commitments and Loans of any Defaulting Lender(s) from the calculation of a
Lender's Applicable Percentage. A Defaulting Lender shall have no right to vote
on any amendment, waiver or other modification of a Loan Document, except as
provided in clauses (A), (B) and (C) of the proviso in Section 9.02(b).

 

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(b) The Administrative Agent may, in its discretion, receive and retain any
amounts payable to a Defaulting Lender under the Loan Documents, and a
Defaulting Lender shall be deemed to have assigned to the Administrative Agent
such amounts until all Obligations owing to the Administrative Agent,
non-Defaulting Lenders and other Secured Parties have been paid in full. The
Administrative Agent may apply such amounts to the Defaulting Lender's defaulted
obligations, use the funds to Cash Collateralize such Lender's Fronting
Exposure, or readvance the amounts to Borrower hereunder. A Lender shall not be
entitled to receive any fees accruing hereunder during the period in which it is
a Defaulting Lender, and the unfunded portion of its Commitment shall be
disregarded for purposes of calculating the Commitment Fee under
Section 2.12(a). If any Obligations under any Letters of Credit owing to a
Defaulted Lender are reallocated to other Lenders, fees attributable to
Obligations under Section 2.12(b) shall be paid to such Lenders. The
Administrative Agent shall be paid all fees attributable to Obligations under
Letters of Credit that are not reallocated.

(c) Borrower, the Administrative Agent and each Issuing Bank may agree in
writing that a Lender is no longer a Defaulting Lender. At such time, the
Applicable Percentage shall be recalculated without exclusion of such Lender's
Commitments and Loans, and all outstanding Loans, Letters of Credit and other
exposures under the Commitments shall be reallocated among the Lenders and
settled by the Administrative Agent (with appropriate payments by the reinstated
Lender) in accordance with the recalculated Applicable Percentage. Unless
expressly agreed by Borrower, the Administrative Agent and the applicable
Issuing Banks, no reinstatement of a Defaulting Lender shall constitute a waiver
or release of claims against such Lender. The failure of any Lender to fund a
Loan, to make a payment in respect of Obligations under Letters of Credit or
otherwise to perform its obligations hereunder shall not relieve any other
Lender of its obligations, and no Lender shall be responsible for default by
another Lender.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Borrower hereby represents and warrants as follows:

Section 3.01 Organization. Borrower (a) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation, (b) is duly qualified and in good standing as a foreign corporation
or company in each other jurisdiction in which it owns or leases property or in
which the conduct of its business requires it to so qualify or be licensed
except where the failure to so qualify or be licensed would not be reasonably
likely to have a Material Adverse Effect, and (c) has all requisite corporate
power and authority to enter into the Loan Documents to which it is a party.

Section 3.02 Borrower Information; Subsidiaries. Set forth on Schedule 3.02
hereto is a complete and accurate list of (a) Borrower and all Subsidiaries of
Borrower as of the date hereof, showing as of the date hereof the jurisdiction
of Borrower’s incorporation or formation, the address of Borrower’s principal
place of business and Borrower’s taxpayer and/or corporate identification number
and (b) all Restricted Subsidiaries as of the date hereof.

Section 3.03 Powers. The execution, delivery and performance by Borrower of each
Loan Document to which it is or is to be a party is within Borrower's corporate
powers, have been duly authorized by all necessary corporate action, and do not
(a) contravene Borrower's charter or bylaws, (b) violate any law, rule,
regulation (including, without limitation, Regulation X of the Board), order,
writ, judgment, injunction, decree, determination or award binding upon
Borrower, (c) conflict with or result in the breach of, or constitute a default
or require any payment to be made under, any contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument binding on
Borrower or any of Borrower's properties except, in the case of performance by
Borrower, to the extent that such conflict or breach would not be reasonably
expected to result in a Material Adverse Effect, or (d) result in or require

 

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the creation or imposition of any Lien upon or with respect to any of the
properties of Borrower. As of the date hereof, Borrower is not in violation of
any such law (including any Anti-Terrorism Laws), rule, regulation, order, writ,
judgment, injunction, decree, determination or award or in breach of any such
contract, loan agreement, indenture, mortgage, deed of trust, lease or other
instrument, the violation or breach of which (other than the violation or breach
of any Anti-Terrorism Law) would be reasonably likely to have a Material Adverse
Effect.

Section 3.04 Governmental Authorization. No Governmental Authorization, and no
notice to or filing with, any Governmental Authority is required for (a) the due
execution, delivery, recordation, registration, filing or performance by
Borrower of any Loan Document to which it is or is to be a party, or (b) the
exercise by the Administrative Agent or any Lender of its rights under the Loan
Documents, except for (i) authorizations, approvals, actions, notices,
registrations and filings which have been duly obtained, taken, given or made
and are in full force and effect, (ii) routine renewals of existing licenses and
permits of Borrower and its Subsidiaries in the ordinary course of business,
(iii) authorizations, approvals, actions, notices, registrations and filings to
perfect Liens on the Collateral and (iv) and such filings as may be required
under federal and state securities laws for purposes of disclosure.

Section 3.05 Due Execution. This Agreement has been, and each other Loan
Document will have been, duly executed and delivered by Borrower. This Agreement
is, and each other Loan Document when delivered hereunder will be, the legal,
valid and binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.

Section 3.06 No Action, Suit, Etc. There is no action, suit, investigation,
litigation or proceeding against Borrower, including any Environmental Action,
pending or threatened in writing before any Governmental Authority or arbitrator
that (i) would be reasonably likely to have a Material Adverse Effect or
(ii) purports to affect the legality, validity or enforceability of any Loan
Document.

Section 3.07 No Material Adverse Change. There has been no Material Adverse
Change since October 31, 2011.

Section 3.08 Consolidated Financials.

(a) The audited consolidated financial statements of Navistar International and
its consolidated Subsidiaries dated October 31, 2011 and any additional audited
financial statements delivered pursuant to Section 5.01 (i) were prepared in
accordance with GAAP consistently applied, except as otherwise expressly noted
therein; and (ii) fairly present in all material respects the financial
condition of Navistar International and its consolidated Subsidiaries as of the
date thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied, except as otherwise expressly noted
therein.

(b) The unaudited consolidated balance sheets of Navistar International and its
consolidated Subsidiaries dated April 30, 2012 and the related consolidated
statements of income or operations, shareholders’ equity and cash flows for the
fiscal quarter ended on that date and any additional unaudited financial
statements delivered pursuant to Section 5.01 (i) were prepared in accordance
with GAAP consistently applied, except as otherwise expressly noted therein, and
(ii) fairly present in all material respects the financial condition of Navistar
International and its consolidated Subsidiaries as of the date thereof and their
results of operations for the period covered thereby, subject, in the case of
clauses (i) and (ii), to the absence of footnotes and to normal year-end audit
adjustments.

 

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Section 3.09 Information. No written information, exhibit or report (other than
the projections, budgets, estimates, forward-looking information and general
market data) about Borrower or its Subsidiaries prepared by or on behalf of
Borrower and furnished by or on behalf of Borrower to the Administrative Agent
or any Lender in connection with the negotiation and syndication of the Loan
Documents or pursuant to the terms of the Loan Documents contained, when
furnished and taken as a whole, any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements made therein
not materially misleading in light of the circumstances under which such
statements were made.

Section 3.10 Margin Regulations. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock.

Section 3.11 Investment Company Act. Borrower is not required to be registered
as an “investment company,” or an “affiliated person” of, or “promoter” or
“principal underwriter” for, an “investment company,” as such terms are defined
in the Investment Company Act of 1940, as amended. Neither the making of any
Loans, nor the application of the proceeds or repayment thereof by Borrower, nor
the consummation of the other transactions contemplated by the Loan Documents,
will violate any provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.

Section 3.12 Solvency. (a) Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the making
of each Loan and after giving effect to the application of the proceeds of each
Loan and the issuance, renewal or extension of each Letter of Credit, (i) the
fair value of the assets of Borrower at a fair valuation and on a going concern
basis, will exceed the debts and liabilities, direct, subordinated, contingent
or otherwise, of Borrower; (ii) the present fair saleable value of the property
of Borrower (on a going concern basis) will be greater than the amount that will
be required to pay the probable liability of Borrower, on its debts and other
liabilities, direct, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) Borrower will be able to
pay its debts and liabilities, direct, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (iv) Borrower will
not have unreasonably small capital with which to conduct the businesses in
which it is engaged as such businesses are now conducted and are proposed to be
conducted following the Closing Date. The amount of contingent liabilities at
any time shall be computed as the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.

(b) Borrower does not intend to incur debts beyond its ability to pay such debts
as they mature, taking into account the timing and amounts of cash to be
received by Borrower and the timing and amounts of cash to be payable by
Borrower on or in respect of its Debt.

Section 3.13 ERISA.

(a) Each Plan of Borrower is in compliance in all material respects with the
applicable provisions of ERISA, the Code, and other federal and state laws,
except where the failure to comply could not reasonably be expected to have a
Material Adverse Effect. Each Plan that is intended to qualify under
Section 401(a) of the Code has received an opinion or favorable determination
letter from the IRS and, nothing has occurred since the date of such letter that
could reasonably be expected to result in the loss of, such qualification.
Borrower and ERISA Affiliate has made all required contributions to each Plan
subject to Section 412 of the Code, and no application for a funding waiver or
(except as required by law) an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.

 

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(b) There are no pending or, to the knowledge of Borrower, threatened claims,
actions or lawsuits by any Governmental Authority, with respect to any Plan of
Borrower that could reasonably be expected to have a Material Adverse Effect. No
ERISA Event has occurred or is reasonably expected to occur which could
reasonably be expected to have a Material Adverse Effect. Neither Borrower nor
any ERISA Affiliate has (i) incurred, or reasonably expects to incur, any
liability under Title IV of ERISA (other than premiums due and not delinquent
under Section 4007 of ERISA) or (ii) has engaged in a transaction that could
reasonably be expected to be subject to Section 4069 or 4212(c) of ERISA.

(c) With respect to any Plan of Borrower (i) neither any Plan nor any trust
created thereunder, nor any trustee or administrator thereof, has engaged in a
“prohibited transaction,” as such term is defined in Section 4975 of the Code,
which could subject the Plan, any such trust, or any trustee or administrator
thereof, or any party dealing with the Plan or any such trust to the tax or
penalty on prohibited transactions imposed by Section 4975 of the Code, and
which has had or could reasonably be expected to have a Material Adverse Effect;
and (ii) the performance of the transactions contemplated by this Agreement will
not involve any such prohibited transaction.

(d) There have been no “reportable events,” as such term is defined in
Section 4043 of ERISA, within the last five years except for the reportable
events that did not and could not reasonably be expected to have a Material
Adverse Effect.

(e) Neither any Pension Plan of Borrower nor any trusts created thereunder has
incurred any “accumulated funding deficiency” (whether or not waived), as such
term was defined in Section 302 of ERISA prior to the effective date of the
Pension Protection Act of 2006, nor has any Plan or such trust failed to satisfy
the minimum funding standards (whether or not waived), as defined in Section 302
of ERISA on and after the effective date of the Pension Protection Act of 2006
within the last five years, in either case which have had, or could reasonably
be expected to have, a Material Adverse Effect. The conditions for imposition of
a lien under Section 303 of ERISA do not exist with respect to any Pension Plan
and no Pension Plan has been in violation of the limitations imposed by
Section 436 of the Code.

(f) Except as could not reasonably be expected to have a Material Adverse
Effect, Borrower and any ERISA Affiliate, (i) has fulfilled in all material
respects its obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan to which it has any such obligation; and (ii) has
not incurred any material and past due liability to the Pension Benefit Guaranty
Corporation. Except as could not reasonably be expected to have a Material
Adverse Effect, neither Borrower nor any ERISA Affiliate is required to make or
accrue, nor within the last five years has contributed or been obligated to
contribute to, a Multiemployer Plan.

(g) Neither Borrower nor any ERISA Affiliate has incurred or is reasonably
expected to incur any Withdrawal Liability.

(h) Neither Borrower nor any ERISA Affiliate has been notified by the sponsor of
a Multiemployer Plan that such Multiemployer Plan is in reorganization or has
been terminated, within the meaning of Title IV of ERISA, and no such
Multiemployer Plan is reasonably expected to be in reorganization or to be
terminated, within the meaning of Title IV of ERISA.

 

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Section 3.14 Environmental. (a) Except as would not reasonably be expected to
have a Material Adverse Effect, (i) the operations and properties of Borrower
comply in all respects with all applicable Environmental Laws and Environmental
Permits, (ii) all past non-compliance with such Environmental Laws and
Environmental Permits has been resolved without ongoing obligations or costs,
and (iii) no circumstances exist that would be reasonably likely to (x) form the
basis of an Environmental Action against Borrower or its properties or (y) cause
any such property to be subject to any restrictions on ownership, occupancy, use
or transferability under any Environmental Law.

(b) In each case except as would not reasonably be expected to have a Material
Adverse Effect: (i) none of the properties currently or formerly owned or
operated by Borrower is listed or proposed for listing on the NPL or on the
CERCLIS or any analogous foreign, state or local list or is adjacent to any such
property; (ii) there are no and never have been any underground or aboveground
storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons
in which Hazardous Materials are being or have been treated, stored or disposed
on any property currently owned or operated by Borrower, to the best of its
knowledge, on any property formerly owned or operated by Borrower; there is no
asbestos or asbestos-containing material on any property currently owned or
operated by Borrower; and (iii) Hazardous Materials have not been released,
discharged or disposed of on any property currently or formerly owned or
operated by Borrower.

(c) In each case except as would not reasonably be expected to have a Material
Adverse Effect: (i) Borrower is not undertaking, and has not completed, either
individually or together with other potentially responsible parties, any
investigation or assessment or remedial or response action relating to any
actual or threatened release, discharge or disposal of Hazardous Materials at
any site, location or operation, either voluntarily or pursuant to the order of
any governmental or regulatory authority or the requirements of any
Environmental Law; and (ii) all Hazardous Materials generated, used, treated,
handled or stored at, or transported to or from, any property currently or
formerly owned or operated by Borrower have been disposed of in a manner not
reasonably expected to result in liability to Borrower.

Section 3.15 Taxes. Borrower has filed, has caused to be filed or has been
included in all tax returns (federal and material state, local and foreign)
required to be filed and, except to the extent not required by Section 5.04 has
paid all taxes shown thereon to be due, together with applicable interest and
penalties.

Section 3.16 Existing Debt. Set forth on Schedule 3.16 hereto is a complete and
accurate list of all Existing Debt of Borrower outstanding in a principal amount
in excess of $50,000,000 (and excluding any intercompany debt as of the date
hereof), showing as of the date hereof the obligor and the principal amount
outstanding thereunder, the maturity date thereof and the amortization schedule
therefor.

Section 3.17 Existing Liens. Set forth on Schedule 3.17 hereto is a complete and
accurate list of all Liens on the property or assets of Borrower securing Debt
for Borrowed Money outstanding in a principal amount in excess of $50,000,000 as
of the date hereof, showing as of the date hereof the lienholder thereof, the
principal amount of the obligations secured thereby and the property or assets
of Borrower subject thereto.

Section 3.18 [Reserved].

Section 3.19 Insurance. Schedule 3.19 sets forth a true, complete and correct
description of all property and liability insurance maintained by or on behalf
of Borrower as of the Closing Date. As of the Closing Date, all such insurance
is in full force and effect and all premiums in

 

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respect of such insurance have been duly paid to the extent due and owing.
Borrower believes that the insurance maintained by or on behalf of Borrower
complies with the requirements of Section 5.09. It is acknowledged and agreed
the insurance set forth on Schedule 3.19 satisfies the insurance requirements
set forth in the Loan Documents.

Section 3.20 Security Interest in Collateral. The provisions of this Agreement
and the other Loan Documents create legal and valid Liens on all the Collateral
of the type in which a security interest can be created under Article 9 of the
UCC in favor of the Administrative Agent, for the benefit of the Secured
Parties; and upon the proper filing of UCC financing statements required
pursuant to Section 4.01(k) (and payment of any applicable fees), such Liens
constitute perfected and continuing Liens on the Collateral (to the extent a
security interest in such Collateral and any proceeds of any item of Collateral
can be perfected through the filing of UCC financing statements), securing the
Secured Obligations, enforceable against Borrower and all third parties (subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law),
and having priority over all other Liens on the Collateral except in the case of
(a) Permitted Liens and similar Liens arising by operation of law which are
permitted under Section 6.02(g), to the extent any such Permitted Liens or
similar Liens would have priority over the Liens in favor of the Administrative
Agent pursuant to any applicable law, and (b) Liens perfected only by
possession, notation or control to the extent the Administrative Agent has not
obtained or does not maintain possession, control or notation of such
Collateral; provided, that such possession, control or notation shall only be
required to the extent set forth in the Security Agreement.

Section 3.21 Sanctioned Persons. None of Navistar International, Borrower, or
any Subsidiary thereof, nor, to the knowledge of Borrower, any director,
officer, agent, employee or Affiliate of Navistar International, Borrower or any
Subsidiary thereof is currently subject to any U.S. sanctions administered by
the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”);
and Borrower will not directly or indirectly use or otherwise make available the
proceeds of the Loans or the Letters of Credit to any Person, for the purpose of
financing the activities of any Person currently subject to any U.S. sanctions
administered by OFAC.

Section 3.22 Reserved.

Section 3.23 Labor Disputes. Except as would not reasonably be expected to have
a Material Adverse Effect: (a) there are no strikes, lockouts or slowdowns
against Borrower pending or, to the knowledge of Borrower, threatened; (b) the
hours worked by and payments made to employees of Borrower have not been in
violation of the Fair Labor Standards Act or any other applicable federal,
state, local or foreign law dealing with such matters; and (c) all payments due
from Borrower on account of wages and employee health and welfare insurance and
other benefits, have been paid or accrued as a liability on the books of
Borrower to the extent required by GAAP. Except as would not reasonably be
expected to have a Material Adverse Effect, the consummation of the Transactions
will not give rise to a right of termination or right of renegotiation on the
part of any union under any collective bargaining agreement to which Navistar
International or Borrower (or any predecessor) is a party or by which Navistar
International or Borrower (or any predecessor) is bound.

Section 3.24 No Defaults. No Default or Event of Default has occurred and is
continuing.

Section 3.25 Ownership of Property; Liens. Borrower has good record and
marketable title in fee simple to, or valid leasehold interests in, all material
real property, and good title to or rights to use material personal property,
necessary or used in the ordinary conduct of its business, except for such
defects as could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

 

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Section 3.26 Status of Debt. None of the execution, performance or existence of
the Term Loan Agreement, the Loan Documents or the incurrence of any Facility
Obligations (including, without limitation, the incurrence or existence of Loans
and of LC Obligations) or the Term Loan by Borrower nor the incurrence or
existence of Liens to secure the Secured Obligations violates (a) the 2009
Senior Note Indenture, (b) the 2009 Senior Subordinated Convertible Note
Indenture, (c) the Recovery Zone Bonds Loan Agreements, (d) the Term Loan
Agreement and (e) any other material Debt for Borrowed Money of, or binding
upon, Borrower.

ARTICLE IV

CONDITIONS

Section 4.01 Closing Date. The effectiveness of this amendment and restatement
of the Existing Senior Credit Agreement, as contemplated hereby, and the
obligations of the Lenders to make Loans, and of any Issuing Bank to issue
Letters of Credit hereunder, shall not become effective until the date on which
each of the following conditions is satisfied (or waived in accordance with this
Agreement):

(a) Credit Agreement and Loan Documents. The Administrative Agent (or its
counsel) shall have received:

(i) from each party hereto either (A) a counterpart of this Agreement signed on
behalf of such party, or (B) written evidence reasonably satisfactory to the
Administrative Agent (which may include facsimile or electronic transmission of
a signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement; and

(ii) duly executed copies of the Loan Documents and such other certificates,
documents, instruments and agreements as provided for herein in connection with
the transactions contemplated by this Agreement and the other Loan Documents,
including any promissory notes requested by a Lender at least three Business
Days prior to the Closing Date pursuant to Section 2.10;

(b) Legal Opinions. The Administrative Agent shall have received, on behalf of
itself, the Lenders and each Issuing Bank on the Closing Date (i) a written
opinion of Kirkland & Ellis LLP, counsel for Borrower and (ii) a written opinion
of general counsel of Borrower, in each case (A) in form and substance
reasonably satisfactory to the Administrative Agent, (B) dated the Closing Date,
and (C) addressed to each Issuing Bank, the Administrative Agent and the
Lenders.

(c) Reserved.

(d) Closing Certificates; Certified Certificate of Incorporation; Good Standing
Certificates. The Administrative Agent shall have received:

(i) a certificate of Borrower, dated the Closing Date and executed by its
Secretary or Assistant Secretary, which shall (A) certify as to the attached
resolutions of its Board of Directors authorizing the execution, delivery and
performance of the Loan Documents to which it is a party, (B) identify by name
and title and bear the

 

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signatures of the officers of Borrower authorized to sign the Loan Documents,
and (C) contain appropriate attachments, including the certificate or articles
of incorporation or organization of Borrower certified by the relevant authority
of the jurisdiction of organization of Borrower (which certification shall
confirm the payment of all franchise taxes) and a true and correct copy of its
by-laws; and

(ii) a copy of a certificate of the Secretary of State of the jurisdiction of
incorporation of Borrower, dated reasonably near the Closing Date, which shall
certify Borrower is duly incorporated and in good standing or presently
subsisting under the laws of the jurisdiction of its incorporation or formation.

(e) No Default Certificate. The Administrative Agent shall have received a
certificate of Borrower signed on behalf of Borrower by its President or a
Senior Vice President or Vice President or Treasurer, dated the Closing Date
(the statements made in which certificate shall be true on and as of the Closing
Date), certifying as to:

(i) the absence of any amendments to the charter of Borrower since the date of
the certificate referred to in Section 4.01(d)(ii);

(ii) the truth in all material respects of the representations and warranties
contained in the Loan Documents as though made on and as of the Closing Date
(except to the extent such representation or warranty expressly relates to an
earlier specified date, in which case such representation or warranty was true
in all material respects as of such specified date);

(iii) the absence of any Default (including any Default resulting from the
initial Borrowing or issuance of a Letter of Credit); and

(iv) the Excess Availability amount as of the Closing Date (giving effect to all
(A) Borrowings to be made, and (B) Letters of Credit to be issued or deemed
issued, on such date).

(f) Fees. The Administrative Agent shall have received all fees required to be
paid by Borrower, and all reasonable out-of-pocket expenses which are
reimbursable pursuant to the Loan Documents and for which invoices have been
presented at least one Business Day prior to the Closing Date (including the
reasonable documented fees and expenses of legal counsel reimbursable
hereunder).

(g) Lien Searches. The Administrative Agent shall have received the results of
recent Lien searches in each of the jurisdictions contemplated by the Perfection
Certificate, and such search shall reveal no Liens on any of the Collateral of
Borrower, except for Liens permitted by Section 6.02 or discharged on or prior
to the Closing Date pursuant to a pay-off letter or other documentation
reasonably satisfactory to the Administrative Agent.

(h) Solvency. The Administrative Agent shall have received a customary
certificate from the chief financial officer or treasurer of Borrower certifying
that Borrower, after giving effect to (i) the Transactions contemplated to occur
under the Loan Documents and (ii) the execution and delivery of the Term Loan
Documents, the making of the Term Loan thereunder and the application of the
proceeds thereof and the granting of the Liens thereunder, in each case on or as
of the Closing Date, is solvent (within the meaning of Section 3.12).

 

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(i) Borrowing Base Certificate. The Administrative Agent shall have received
prior to the Closing Date a Borrowing Base Certificate which calculates the
Borrowing Base as of the last day of the most recent month ended at least twenty
days prior to the Closing Date.

(j) Closing Minimum Excess Availability. After giving effect to all Borrowings
to be made on the Closing Date and the issuance of any Letters of Credit on the
Closing Date, Excess Availability shall be not less than $50,000,000.

(k) Perfection Certificate; Filings, Registrations and Recordings. The
Administrative Agent shall have received from Borrower a completed Perfection
Certificate, dated the Closing Date and signed by a Responsible Officer of
Borrower, together with all attachments contemplated thereby. Each document
(including any UCC financing statement and appropriate UCC-3 financing
statements amending and restating the collateral description contained in the
UCC-1 financing statement filed in connection with the Existing Senior Credit
Agreement) required by the Collateral Documents or under law or reasonably
requested by the Administrative Agent to be filed, registered or recorded in
order to create in favor of the Administrative Agent, for the benefit of the
Secured Parties, a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than with respect to Liens
permitted by Section 6.02), shall be in proper form for filing, registration or
recordation. The Administrative Agent, on behalf of the Secured Parties, shall
have a security interest in the Collateral of the type and priority described in
the Collateral Documents (subject to Liens permitted by Section 6.02).

(l) Reserved.

(m) Reserved.

(n) Insurance. The Administrative Agent shall have received a customary
insurance broker's letter dated on or about the Closing Date, in form and
substance reasonably satisfactory to the Administrative Agent, confirming that
the insurance carried by Borrower complies with the terms of the Security
Agreement and is reasonable and customary, or other evidence thereof reasonably
satisfactory to the Administrative Agent.

(o) Reserved.

(p) USA PATRIOT Act. The Administrative Agent shall have received all
documentation and other information required by regulatory authorities under
applicable “know your customer” and anti-money laundering rules and regulations,
including without limitation, the USA PATRIOT Act, such documentation to be
received at least two Business Days prior to the Closing Date to the extent
requested at least five Business Days prior to the Closing Date.

(q) Reserved.

(r) Existing Senior Credit Agreement. On or prior to the Closing Date, any and
all loans, accrued interest and fees and other amounts owing under the Existing
Senior Credit Agreement shall be paid and the commitments (other than those
continuing hereunder) shall be terminated.

(s) Approvals. Borrower have received any governmental and material third party
consents and approvals required in connection with the Transactions.

(t) Term Loan. The execution and delivery by Borrower, the Term Loan Agents and
the Term Loan Lenders of the Term Loan Agreement, in form and substance
reasonably acceptable to Administrative Agent, and Borrower shall have received
not less than $750 million in gross proceeds thereunder.

 

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(u) Other. The satisfaction (or waiver in accordance with Section 9.02) of each
of the conditions set forth in Section 4.02.

The Administrative Agent shall notify Borrower and the Lenders of the Closing
Date, and such notice shall be conclusive and binding.

Section 4.02 Each Borrowing. The obligation of each Lender to make a Loan on the
occasion of each Borrowing (including any on the Closing Date), and of any
Issuing Bank to issue, amend, renew or extend any Letter of Credit, shall be
subject to the further conditions precedent that on the date of such Borrowing
(which term shall, for the purposes of this Section 4.02, include any issuance,
amendment (increasing the face amount thereof), renewal, or extension of a
Letter of Credit pursuant hereto), and both immediately before and after giving
effect thereto, the following statements shall be true:

(a) the Administrative Agent shall have received, in the case of a Borrowing, a
Borrowing Request as required by Section 2.03 or, in the case of the issuance of
a Letter of Credit, the applicable Issuing Bank and the Administrative Agent
shall have received a notice requesting the issuance amendment, renewal or
extension of such Letter of Credit as required by Section 2.06(b), in each case
such notice or request to a calculation, to be based on the most recently
reported Borrowing Base calculation, establishing the existence of sufficient
Excess Availability to make such Borrowing and certifying that, immediately
before and immediately after giving effect to any such Borrowing and/or the
issuance, amendment (increasing the face amount thereof), renewal or extension
of any Letter of Credit, such Borrowing or issuance, amendment, renewal, or
extension (and the incurrence or existence of the Liens created pursuant to the
Loan Documents) is permitted under all material Debt of Borrower (including
(i) the 2009 Senior Note Indenture, (ii) the 2009 Senior Subordinated
Convertible Note Indenture, (iii) the Recovery Zone Bonds Loan Agreements,
(iv) the Term Loan Agreement and (v) any other material Debt for Borrowed Money
of or binding upon Borrower or its properties) and that no default or event of
default thereunder would arise as a result of such Borrowing or issuance;

(b) immediately before and immediately after giving effect to any Borrowing
and/or the issuance, amendment (increasing the face amount thereof), renewal or
extension of any Letter of Credit, (i) the representations and warranties of
Borrower contained in Section 3.26 are true and correct and (ii) each other
representation and warranty of Borrower contained in each Loan Document shall be
correct in all material respects on and as of such date and to the application
of the proceeds therefrom, as though made on and as of such date, other than any
such representations or warranties that, by their terms, refer to a specific
date other than the date of such Borrowing or issuance, amendment, renewal or
extension, in which case as of such specific date;

(c) on the Closing Date and immediately before and immediately after giving
effect to any Borrowing and/or the issuance, amendment (increasing the face
amount thereof), renewal or extension of any Letter of Credit (i) Excess
Availability shall not be less than zero and (ii) US Liquidity shall be greater
than $250 million;

(d) at the time of and immediately after giving effect to such Borrowing and/or
the issuance, amendment (increasing the face amount thereof), renewal or
extension of any Letter of Credit (other than an amendment, extension or renewal
of a Letter of Credit without any increase in the Stated Amount of such Letter
of Credit), as applicable, no Event of Default or Default shall have occurred
and be continuing;

 

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(e) by the date of the initial Borrowing or issuance of a Letter of Credit, the
Administrative Agent shall have received a notice setting forth the deposit
account of Borrower (the “Funding Account”) to which the Administrative Agent is
authorized by Borrower to transfer the proceeds of any Borrowings requested or
authorized pursuant to this Agreement; and

(f) Field Examination and Appraisal.

(i) With respect to the making of any Borrowing hereunder, the Administrative
Agent shall have received (A) the results of a completed field examination
performed in connection with the amendment and restatement of this Agreement
with respect to the Collateral to be included in calculating the Borrowing Base
and of the relevant accounting systems, policies and procedures of Borrower, and
(B) an appraisal of the Net Orderly Liquidation Value of Parts Inventory in form
and substance reasonably satisfactory to the Administrative Agent.

(ii) With respect to the issuance or amendment (increasing the face amount
thereof) of Letters of Credit, if, after giving effect to such issuance or
amendment of a Letter of Credit, the LC Exposure would exceed $75,000,000, the
Administrative Agent shall have received (A) the results of a completed field
examination performed in connection with the amendment and restatement of this
Agreement with respect to the Collateral to be included in calculating the
Borrowing Base and of the relevant accounting systems, policies and procedures
of Borrower, and (B) an appraisal of the Net Orderly Liquidation Value of Parts
Inventory in form and substance reasonably satisfactory to the Administrative
Agent.

Each Borrowing and each issuance, amendment (which increases the face amount of
any Letter of Credit), renewal or extension of a Letter of Credit shall be
deemed to constitute a representation and warranty by Borrower on the date
thereof as to the matters specified in paragraphs (b) through (e) of this
Section 4.02. For avoidance of doubt, each statement above shall be true both
immediately before and after giving effect to any Borrowing and/or the issuance
of any Letter of Credit.

Section 4.03 Determinations Under Sections 4.01 and 4.02. For purposes of
determining compliance with the conditions specified in Section 4.01 and 4.02,
each applicable Lender shall be deemed to have consented to, approved or
accepted or to be satisfied with each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to
such Lender unless an officer of the Administrative Agent responsible for the
transactions contemplated by the Loan Documents shall have received notice from
such Lender prior to the Closing Date specifying its objection thereto, and such
Lender shall not have made available to the Administrative Agent such Lender’s
ratable portion of such Borrowing.

ARTICLE V

AFFIRMATIVE COVENANTS

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees, expenses and other amounts payable under any
Loan Document have been paid in full (other than contingent indemnification
obligations) and all Letters of Credit have expired or terminated (or have been
Cash Collateralized pursuant to Section 2.09(b) or Backstopped) and all LC
Disbursements shall have been reimbursed, Borrower covenants and agrees with the
Administrative Agent and the Lenders that:

 

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Section 5.01 Financial Statements; Borrowing Base and Other Information.
Borrower will furnish to the Administrative Agent:

(a) within 90 days after the end of each fiscal year of Navistar International
commencing with the fiscal year ended October 31, 2012, a consolidated balance
sheet of Navistar International and its Subsidiaries as at the end of such
fiscal year, and the related consolidated statements of income or operations,
changes in shareholders' equity, and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail and prepared in accordance with GAAP, such consolidated
statements to be audited and accompanied by (i) a report and opinion of KPMG,
other independent certified public accountant of national recognized standing or
other certified public accountants of recognized standing reasonably acceptable
to the Administrative Agent, which report and opinion shall be prepared in
accordance with generally accepted auditing standards and shall not be subject
to any "going concern" or like qualification or exception or any qualification
or exception as to the scope of such audit, (ii) information historically
presented in Exhibit 99.1 of Navistar International's 10-K and (iii) a
certificate of a Financial Officer of Borrower stating that no Event of Default
has occurred and is continuing or, if an Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action that Borrower
has taken and proposes to take with respect thereto.

(b) within 45 days after the end of each of the first three fiscal quarters of
each fiscal year of Navistar International, a consolidated balance sheet of
Navistar International and its Subsidiaries as at the end of such fiscal
quarter, the related consolidated statements of income or operations for such
fiscal quarter and for the portion of Navistar International's fiscal year then
ended, and the related consolidated statements of changes in shareholders'
equity and cash flows for the portion of Navistar International's fiscal year
then ended, in each case setting forth in comparative form, as applicable, the
figures for the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail,
such consolidated statements to be certificated by a Financial Officer of
Borrower as fairly presenting in all material respects the financial condition,
results of operations, shareholder's equity and cash flows of Navistar
International and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes, together with,
in the case of financial statements for any Fiscal Quarter ended on or after the
Closing Date, a certificate by a Financial Officer of Borrower stating that no
Event of Default has occurred and is continuing or, if an Event of Default has
occurred and is continuing, a statement as to the nature thereof and the action
that Borrower has taken and proposes to take with respect thereto; provided,
however that, in the event of any change in generally accepted accounting
principles used in the preparation of such financial statements, Borrower shall
also provide a reconciliation of such financial statements to GAAP.

Notwithstanding the foregoing, (i) in the event that Borrower delivers to the
Administrative Agent an annual report for Navistar International and its
Subsidiaries on Form 10-K for any fiscal year, as filed with the SEC, within 90
days after the end of such Fiscal Year, so long as (1) the financial statements
therein contain the report and opinion required by clause (a)(i) of this
Section 5.01, (2) the financial statements therein contain the information
historically presented in Exhibit 99.1 of Navistar International's 10-K and
(3) Borrower separately delivers the certificate required by clause (a)(iii) of
this Section 5.01, such Form 10-K shall satisfy all requirements of paragraph
(a) of this Section 5.01 for such Fiscal Year and (ii) in the event that
Borrower delivers to the Administrative Agent a quarterly report for Navistar
International and its Subsidiaries on Form 10-Q for any fiscal quarter, as filed
with the SEC, within 45 days after the end of such fiscal quarter, so long as
(1) the financial statements therein comply with the requirements set forth in
paragraph (b) of this Section 5.01, (2) the financial statements therein contain
the information historically presented in Exhibit 99.1 of Navistar
International's 10-K and (3) Borrower separately delivers the certificate and
certifications required by paragraph (b) of this Section 5.01, such Form 10-Q
shall satisfy all requirements of paragraph (b)(i) of this Section 5.01 for such
fiscal quarter.

 

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(c) Borrowing Base Certificates. As soon as available but in any event on or
prior to the 20th day of each calendar month (or more frequently as required
under this Section 5.01(c), Section 5.02(c), Section 5.13 and the second proviso
at the end of Section 6.05 and at other time expressly required by the terms
hereof), deliver to the Administrative Agent (which shall promptly provide
copies of the same to the Lenders) a Borrowing Base Certificate, which
calculates the Borrowing Base, as of the close of business on the last day of
the immediately preceding calendar month (or in the case of a voluntary delivery
of a Borrowing Base Certificate at the election of Borrower, a subsequent date),
together with such supporting information in connection therewith as the
Administrative Agent may reasonably request, which may include, without
limitation, (i) Parts Inventory reports by category and location, together with
a reconciliation to the corresponding Borrowing Base Certificate, (ii) a
reasonably detailed calculation of Eligible Parts Inventory, (iii) a
reconciliation of Borrower's Inventory between the amounts shown in Borrower's
ledger balance and any Parts Inventory reports delivered pursuant to clause
(i) above and (iv) if a Receivables Trigger Event shall have occurred and be
continuing, a reasonably detailed aging of Borrower's Accounts that are subject
to an applicable Master Intercompany Agreement; provided that if Excess
Availability is less than the greater of $15,000,000 and 10% of the Commitments
at any time, and in such case continuing until such time as Excess Availability
is greater than or equal to $15,000,000 and 10% of the Commitments for a period
of 30 consecutive days, as certified by Borrower to the Administrative Agent,
Borrower shall deliver a Borrowing Base Certificate and such supporting
information on Wednesday of each week (or if Wednesday is not a Business Day, on
the next succeeding Business Day), as of the close of business on the
immediately preceding Saturday, together with such other information in respect
of the Collateral as the Administrative Agent shall reasonably request; and
provided, further, that Borrowing Base Certificates will only be required to be
delivered on a weekly basis to the extent the information required to prepare
such certificate is reasonably available in light of Borrower's then current
reporting systems and shall be prepared based on a methodology (including
estimates to the extent such Collateral cannot be precisely determined on a
weekly basis after Borrower use commercially reasonable efforts to do so)
mutually agreed by Borrower and Administrative Agent.

(d) Perfection Certificates. Deliver to the Administrative Agent as soon as
commercially practicable, following the reasonable request of the Administrative
Agent (but not more than once per calendar year) an updated Perfection
Certificate reflecting all changes since the last-delivered Perfection
Certificate was prepared.

(e) Reserved.

(f) USA PATRIOT Act. Promptly following the Administrative Agent's request
therefor, deliver to the Administrative Agent all documentation and other
information that the Administrative Agent reasonably requests on its behalf or
on behalf of any Lender in order to comply with its ongoing obligations under
applicable "know your customer" and anti-money laundering rules and regulations,
including the USA PATRIOT Act and the Proceeds of Crime Act.

(g) ERISA.

(i) ERISA Events; ERISA Reports. (i) Promptly and in any event within fifteen
Business Days after Borrower or any ERISA Affiliate knows that any ERISA Event
has occurred with respect to a Plan which is reasonably expected to result in a
Material Adverse Effect, a statement of a Financial Officer of Borrower
describing such ERISA Event and the action, if any, that Borrower or such ERISA
Affiliate has taken and proposes to take with respect thereto, and (ii) promptly
and in any event within

 

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fifteen Business Days after the date any records, documents or other information
are, or are required to be, furnished to the PBGC with respect to any Plan
pursuant to Section 4010 of ERISA, a copy of such records, documents and
information.

(ii) Plan Terminations. Promptly and in any event within fifteen Business Days
after receipt thereof by Borrower or any ERISA Affiliate, copies of each written
notice from the PBGC stating its intention to terminate any Plan or to have a
trustee appointed to administer any Plan.

(iii) Plan Annual Reports. Promptly upon the request of the Administrative
Agent, copies of each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) with respect to each Plan.

(iv) Multiemployer Plan Notices. Promptly and in any event within fifteen
Business Days after receipt thereof by Borrower or any ERISA Affiliate from the
sponsor of a Multiemployer Plan, copies of each written notice concerning
(A) the imposition of Withdrawal Liability by any such Multiemployer Plan,
(B) the reorganization or termination, within the meaning of Title IV of ERISA,
of any such Multiemployer Plan or (C) the amount of liability incurred, or that
may be incurred, by Borrower or any ERISA Affiliate in connection with any event
described in clause (A) or (B).

(h) Creditor Reports. Promptly after the furnishing thereof, copies of any
statement or report furnished to any holder of Debt of Borrower pursuant to the
terms of any material indenture, loan or credit or similar agreement (other than
administrative notices that could not reasonably be expected to be material to
the interests of the Lenders) and not otherwise required to be furnished to the
Lenders pursuant to any other clause of this Section 5.01.

(i) Insurance. As soon as available and in any event within 30 days after the
end of each Fiscal Year, deliver to the Administrative Agent a report
summarizing the property and liability insurance coverage (specifying type,
amount and carrier) in effect for Borrower and containing such additional
information as the Administrative Agent may reasonably specify.

(j) Other Information. Subject to Section 5.06(d), deliver to the Administrative
Agent promptly following the Administrative Agent’s request therefor, such other
information regarding the operations, business affairs and financial condition
of Navistar International or Borrower, or compliance with the terms of any Loan
Document, as the Administrative Agent may reasonably request (on behalf of
itself or any Lender).

Documents required to be delivered pursuant to this Section 5.01 may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which Borrower provides the Administrative Agent
with a notice that such documents have been posted, or provides the
Administrative Agent with a link thereto on Borrower’s or Navistar
International’s website on the internet; or (ii) on which such documents are
posted on Borrower’s behalf on IntraLinks/IntraAgency or another relevant
internet or intranet website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent).

Section 5.02 Notices of Material Events. Borrower will furnish to the
Administrative Agent prompt written notice of the following after any
Responsible Officer of Borrower obtains knowledge thereof:

 

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(a) as soon as possible, but in any event within five Business Days of obtaining
such knowledge, the occurrence of any Event of Default or Default;

(b) the filing or commencement of, or any written threat or notice of intention
of any person to file or commence, any action, suit or proceeding, whether at
law or in equity or by or before any Governmental Authority or in arbitration,
against Borrower as to which an adverse determination is reasonably probable and
which, if adversely determined, would reasonably be expected to have a Material
Adverse Effect;

(c) any loss, damage, or destruction to the Collateral in the amount of
$2,500,000 or more per occurrence, whether or not covered by insurance;
provided, that if such loss, damage or destruction is in an amount in excess of
$5,000,000, Borrower shall provide (as soon as commercially practicable after
the occurrence of the event) to the Administrative Agent an updated Borrowing
Base Certificate (with the only updates being with respect to the Collateral so
lost, damaged or destroyed and which may include estimates as to the amount of
such loss, damage or destruction);

(d) any Environmental Action against, or of any noncompliance by, Borrower with
any Environmental Law or Environmental Permit that would reasonably be expected
to have a Material Adverse Effect;

(e) as soon as possible, but in any event within two Business Days of obtaining
such knowledge, the occurrence of a Receivables Trigger Event;

(f) any material breach of the terms of, or the occurrence of a default or an
event of default under, any Master Intercompany Agreement to which Borrower is a
party, and notice (in reasonable detail) of any written notices delivered
thereunder; and

(g) any other development that results in, or would reasonably be expected to
result in, a Material Adverse Effect with respect to the Collateral.

Each notice delivered under this Section 5.02 shall be accompanied by a
statement of a Responsible Officer of Borrower setting forth the details of the
event or development requiring such notice and any action taken or proposed to
be taken with respect thereto.

Section 5.03 Existence; Conduct of Business. Borrower will, do or cause to be
done all things reasonably necessary (a) to preserve, renew and keep in full
force and effect its legal existence and the rights, qualifications, licenses,
permits, franchises, governmental authorizations, Intellectual Property rights,
licenses and permits (except as such would otherwise reasonably expire, be
abandoned or permitted to lapse in the ordinary course of business), necessary
or desirable in the normal conduct of its business except to the extent failure
to maintain would not reasonably be expected to result in a Material Adverse
Effect; provided, however, that the foregoing shall not prohibit any merger,
consolidation, liquidation, dissolution or disposition permitted under this
Agreement; and (b) to maintain all requisite authority to conduct its business
in each jurisdiction in which its business is conducted, except, other than with
respect to Borrower’s existence, to the extent such failure to do so would not
reasonably be expected to have a Material Adverse Effect.

Section 5.04 Payment of Taxes. Borrower will pay or discharge all material Tax
liabilities, before the same shall become delinquent or in default, except where
(a) (i) the validity or amount thereof is being contested in good faith by
appropriate proceedings, and (ii) Borrower has set aside on its books adequate
reserves with respect thereto in accordance with GAAP, or (b) the failure to
make payment pending such contest would not reasonably be expected to result in
a Material Adverse Effect.

 

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Section 5.05 Maintenance of Properties. Borrower will (a) at all times maintain
and preserve all material property necessary to the normal conduct of its
business in satisfactory repair, working order and condition, ordinary wear and
tear excepted and casualty or condemnation excepted and (b) make, or cause to be
made, all needful and proper repairs, renewals, additions, improvements and
replacements to the Collateral as necessary in accordance with prudent industry
practice in order that the business carried on in connection therewith, if any,
may be properly conducted at all times, except, in each case, where the failure
to do so, individually or in the aggregate, would not reasonably be expected to
result in a Material Adverse Effect.

Section 5.06 Books and Records; Inspection Rights; Appraisals; Field
Examinations. (a) Borrower will (i) keep proper books of record and account in
accordance with GAAP in which entries full, true and correct in all material
respects are made of dealings and transactions in relation to its business and
activities and (ii) subject to the limitations in Section 5.06(b) so long as no
Event of Default shall have occurred and be continuing, permit any
representatives designated by the Administrative Agent (including employees of
the Administrative Agent or any consultants, accountants, lawyers and appraisers
retained by the Administrative Agent), once a year, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, including environmental assessment reports and Phase I or
Phase II studies, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times during normal
business hours and at the expense of Borrower; provided, that following the
occurrence of an Event of Default, and so long as such Event of Default shall
remain uncured or unwaived, Borrower shall permit any representative designated
by the Administrative Agent (including employees of the Administrative Agent or
any consultants, accountants, lawyers and appraisers retained by the
Administrative Agent) to conduct visits as described above at any time during
normal business hours and on reasonable prior notice as the Administrative Agent
may deem reasonable necessary; provided, further that Borrower shall be given
the opportunity to be present during any discussions between the Administrative
Agent (or any of their agents) and Borrower’s accountants.

(b) At reasonable times during normal business hours and upon reasonable prior
notice that the Administrative Agent’s request, independently of or in
connection with the visits and inspections provided for in clause (a) above,
Borrower will grant access to the Administrative Agent (including employees of
the Administrative Agent or any consultants, accountants, lawyers and appraisers
retained by the Administrative Agent) to such Person’s books, records, accounts
and Inventory so that the Administrative Agent or an appraiser retained by the
Administrative Agent may conduct an appraisal. In addition to, and not in
limitation of, the foregoing, at any time and from time to time the
Administrative Agent may conduct (or engage third parties to conduct) field
examinations, verifications and evaluations as the Administrative Agent may deem
necessary or appropriate. All such appraisals, field examinations and other
verifications and evaluations shall be in form and substance reasonably
acceptable to the Administrative Agent and at the sole expense of Borrower;
provided that the Administrative Agent shall provide Borrower with a reasonably
detailed accounting of all such expenses and provided, further that (i) absent
the existence and continuance of an Event of Default, the Administrative Agent
may conduct no more than two appraisals in any calendar year, (ii) absent the
existence and continuance of an Event of Default, the Administrative Agent may
conduct no more than one field examination in any calendar year, (iii) if Excess
Availability is or has been less than the greater of (x) 20% of the Commitments
and (y) $30,000,000 for three consecutive Business Days and absent the existence
and continuance of an Event of Default, the Administrative Agent may conduct as
many field examinations deemed necessary by the Administrative Agent in any
calendar year in order to maintain such field examination data current within
180 days, and (iv) if an Event of Default has occurred and is continuing, the
Administrative Agent may

 

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conduct as many field examinations and as many appraisals in any calendar year
as the Administrative Agent may deem necessary. Neither the Administrative Agent
nor any Lender shall have any duty to Borrower to share any results of any
inspection, appraisal or report described in clauses (a) and (b) above with
Borrower and Borrower acknowledges that all inspections, appraisals and reports
are prepared by or for the Administrative Agent and the Lenders for their
purposes, and Borrower shall not be entitled to rely upon them unless otherwise
expressly agreed in writing by the Administrative Agent.

(c) Borrower acknowledges that the Administrative Agent, after exercising their
rights of inspection, may prepare and distribute to the Lenders certain Reports
pertaining to Borrower’s assets for internal use by the Administrative Agent and
the Lenders, subject to the provisions of Section 9.12.

(d) Notwithstanding anything to the contrary in this Section 5.06 or
Section 5.01(j), neither Borrower nor any of its Subsidiaries will be required
to disclose, permit the inspection, examination or making of extracts, or
discussion of, any documents, information or other matter that (i) constitutes
non-financial trade secrets or non-financial proprietary information, (ii) in
respect of which disclosure to the Administrative Agent (or any designated
representative) is then prohibited by law or any agreement binding on Borrower
or such Subsidiary, (iii) is subject to attorney-client or similar privilege or
constitutes attorney work-product or (iv) is subject to confidentiality
obligations owed to a third party.

Section 5.07 Compliance with Laws. Borrower will comply in all material respects
with all Requirements of Law applicable to it or its property, such compliance
to include, without limitation, compliance with Environmental Laws, compliance
with ERISA and other applicable laws relating to Plans, the Racketeer Influenced
and Corrupt Organizations Chapter of the Organized Crime Control Act of 1970 and
Anti-Terrorism Laws, in each case (other than Anti-Terrorism Laws) except
where the failure to do so would not reasonably be expected to result in a
Material Adverse Effect.

Section 5.08 Use of Proceeds. The proceeds of the Loans will be used by Borrower
only (a) to issue standby or commercial letters of credit (including Letters of
Credit issued prior to the Closing Date), (b) to finance ongoing working capital
needs and (c) for other general corporate purposes (including investments and
restricted payments to the extent permitted hereunder). No part of the proceeds
of any Loan and no Letter of Credit will be used, whether directly or
indirectly, for any purpose that would entail a violation of Regulations T, U or
X.

Section 5.09 Insurance. Borrower will maintain, with financially sound and
reputable insurance companies (a) insurance in such amounts and against such
risks, as are customarily maintained by similarly situated companies engaged in
the same or similar businesses operating in the same or similar locations and
(b) all insurance required pursuant to the Collateral Documents (and shall cause
the Administrative Agent to be listed as a loss payee on property policies
covering loss or damage to Collateral and as an additional insured on liability
and casualty policies), provided that Borrower may self-insure as is customary
by similarly situated companies engaged in the same or similar businesses
operating in the same or similar locations, except that with respect to any
Collateral, no Borrower may self-insure above a reasonable and customary
deductible. Borrower will furnish to the Administrative Agent, promptly
following request, information in reasonable and customary detail as to the
insurance so maintained.

Section 5.10 Further Assurances. Promptly upon reasonable request, Borrower
shall deliver such instruments, assignments, or other documents or agreements,
and shall take such actions, as the Administrative Agent deems appropriate under
applicable law to evidence or perfect its Lien on any Collateral, or otherwise
to give effect to the intent of this Agreement or any other Loan Document.

 

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Section 5.11 Establishment and Utilization of the Collection Account No later
than 45 days after the Closing Date (or such later time as the Administrative
Agent shall agree in its sole discretion), (a) Borrower shall have established
concentration accounts for Borrower (the “Collection Account”) into which (to
the extent required under Section 4.5 of the Security Agreement, and except for
inadvertent errors) all cash proceeds received from any sale, disposition or
collection of any Collateral (including, without limitation, proceeds of
Collateral received in connection with a Permitted Receivables Financing or a
Master Intercompany Agreement) shall be deposited within (x) two Business Days
of Borrower’s receipt thereof in the case of payments made under a Permitted
Receivables Financing or a Master Intercompany Agreement and (y) three Business
Days of Borrower’s receipt thereof in the case of any other payments and
(b) Borrower shall deliver with respect to the Collection Account, an account
control agreement and other documentation providing for springing control by the
Administrative Agent, all reasonably acceptable to the Administrative Agent.
After the establishment of the Collection Account, except for inadvertent
errors, no other funds or proceeds from any property of Borrower other than cash
proceeds received from the sale, disposition or collection of any Collateral
required to be deposited in the Collection Account under Section 4.5 of the
Security Agreement shall be deposited to or maintained in the Collection Account
and, except for inadvertent errors, cash proceeds from any sale, disposition or
collection of Collateral may not be commingled with any other funds of Borrower.
Borrower hereby agrees that, if an Event of Default has occurred and is
continuing, the Administrative Agent will have exclusive dominion over the
Collection Account until all Events of Default have been cured or waived;
provided that if such Event of Default resulted from the aggregate Exposure
exceeding the Borrowing Base, such cure or waiver shall be required to be in
effect for at least 30 consecutive days unless the overadvance giving rise
thereto is refunded, repaid or prepaid by Borrower in accordance with
Section 2.11(b), in which case such cure or waiver shall be effective at the
time of such refund, repayment or prepayment. In the absence of an Event of
Default, Borrower will be entitled to direct the application of funds in the
Collection Account, including directing the Administrative Agent (or other
depository bank, if applicable) to apply funds to the repayment of the
outstanding Loans and other amounts payable under the Loan Documents and to
otherwise withdraw funds from the Collection Account. If an Event of Default has
occurred and is continuing, (i) the Administrative Agent shall have the right to
apply proceeds received into the Collection Account to the outstanding Secured
Obligations as provided in Article V of the Security Agreement and (ii) Borrower
shall not be entitled to present items drawn on or otherwise to withdraw or
direct the dispositions of funds from the Collection Account nor shall Borrower
be entitled to close the Collection Account until all Secured Obligations (other
than contingent indemnification obligations or Banking Services Obligations not
then due and owing and Letters of Credit which are Cash Collateralized or
Backstopped in accordance with the terms herein) under this Agreement are paid
and performed in full. Notwithstanding any other agreements Borrower may have
with any Secured Party, the Administrative Agent shall be entitled, during the
continuance of any Event of Default, for purposes of this Agreement to give
instructions as to the withdrawal or disposition of funds from time to time
credited to any deposit account with the Administrative Agent (to the extent
constituting Collateral) or the Collection Account, or as to any other matters
relating to any of the forgoing without further consent of Borrower. The
Administrative Agent's power under this Agreement to give instructions as to the
withdrawal or disposition of any funds from time to time credited to the
Collection Account or any other deposit account with the Administrative Agent
(to the extent constituting Collateral) or as to any other matters relating to
the foregoing includes, without limitation, during an Event of Default, the
power to give stop payment orders for any items being presented to such accounts
for payment. Notwithstanding the foregoing provisions of this Section 5.11,
irrespective of whether an Event of Default has occurred and is continuing is in
effect, if no Borrowings are outstanding hereunder and either no Letters of
Credit are outstanding hereunder or any Letters of Credit which may be
outstanding hereunder are Cash Collateralized by 103%, and so long as no Banking
Services Obligations are then due and owing which have not been repaid, Borrower
shall be entitled to direct the application of funds in the Collection Account.

 

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Notwithstanding anything to the contrary contained herein or any other Loan
Documents, ordinary course adjustments and net settlements may be made to Parts
Receivables sold under a Receivables Financing or a Master Intercompany
Agreement in conformity with past practice; provided, such adjustments arise
directly from adjustments made with respect to Parts Inventory or Parts
Receivables.

Section 5.12 Speculative Transactions. In the event that the mark to market
liability of Borrower in respect of any speculative transactions exceeds
$5,000,000, Borrower shall promptly close out or unwind such transactions and
discharge all liabilities in respect thereof.

Section 5.13 Compliance with Borrowing Base. Borrower shall conduct any sales,
assignments, conveyances, transfers or other dispositions of Parts Inventory
other than in the ordinary course of business in such a manner so as to remain
in compliance with the Borrowing Base at all times. In addition, within five
Business Days following the consummation of any such transaction (or such longer
period as the Administrative Agent may agree) where the aggregate value of Parts
Inventory sold, assigned, conveyed, transferred or otherwise disposed of other
than in the ordinary course of business is greater than $5,000,000, Borrower
shall deliver to the Administrative Agent an updated Borrowing Base Certificate
reflecting such transaction.

Section 5.14 Sales of Parts Inventory and of Parts Receivables. All sales of
Parts constituting Collateral shall be separately invoiced by Borrower and, from
and after the establishment of the Collection Account in accordance with
Section 5.11, all payments received in connection therewith shall be segregated
from all other cash and property of Borrower and shall be deposited into the
Collection Account in accordance with Section 5.11. All sales of Parts
Receivables shall be separately documented.

Section 5.15 Location of Parts Inventory. Except for Parts Inventory (x) in
transit from a vendor or supplier of the Borrower to a Designated Parts Location
or between Designated Parts Locations so long as such Parts Inventory is not
commingled with other property of the Borrower or any other Person and (y) with
an aggregate book value not to exceed $15,000,000 at any time, all Parts
Inventory shall be located at either:

(i) a parts distribution center owned or leased by the Borrower constituting a
Designated Parts Location, so long as (A) no Inventory of any other Person is
stored at such location and (B) no Inventory constituting Term Loan Collateral
is located at such location (other than Term Loan Collateral that is immaterial
in the view of the Inventory of Borrower otherwise held at such location); or

(ii) at a storage facility, third party processor or third party logistics
provider constituting a Designated Parts Location, so long as once received and
stored by such third party (A) the Parts Inventory is segregated from any other
property of any other Person, (B) the Parts Inventory is clearly identified at
all times as belonging to the Borrower, (C) in the case of Parts Inventory
located at a storage facility, no Inventory constituting Term Loan Collateral is
located at such storage facility (other than Term Loan Collateral that is
immaterial in the view of the Inventory of Borrower otherwise held at such
location) and (D) in the case of Parts Inventory located at a third party
processor or third party logistics provider, such Parts Inventory is not
commingled with any other property of the Borrower.

Borrower shall not dispose of or close any parts distribution center owned or
leased by it unless it shall have provided Administrative Agent with ten days’
prior written notice (or such shorter notice as Administrative Agent may agree).

 

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ARTICLE VI

NEGATIVE COVENANTS

Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees, expenses and other amounts payable under any
Loan Document have been paid in full (other than contingent indemnification
obligations) and all Letters of Credit have expired or terminated (or have been
Cash Collateralized pursuant to Section 2.09(b) or Backstopped) and all LC
Disbursements shall have been reimbursed, Borrower covenants and agrees that
Borrower will not, at any time:

Section 6.01 Debt. Create, incur, assume or suffer to exist any Debt, except:

(a) Debt created under the Loan Documents;

(b) Guaranteed Debt of Navistar International in respect of Debt under the 2009
Senior Note Indenture governing the 8.25% Senior Notes due November 1, 2021 and
any refunding, refinancing, restructuring, renewal or replacement, in whole or
in part, of such Debt provided that the Refinancing Conditions are satisfied;

(c) other Existing Debt, and any Debt extending the maturity of, or refunding,
replacing, restructuring, renewal or refinancing, in whole or in part, any
Existing Debt; provided, that the Refinancing Conditions are satisfied;

(d) Debt secured by Liens permitted by Section 6.02(d); provided that the
aggregate outstanding principal amount of all such Debt, together with the
aggregate amount of Capital Lease Obligations permitted under Section 6.01(e),
shall not exceed at any time the greater of (x) $75,000,000 and (y) 2% of the
Consolidated Net Tangible Assets at the time of the incurrence thereof;

(e) Capital Lease Obligations; provided that the aggregate outstanding principal
amount of all such Capital Lease Obligations, together with the aggregate amount
of Debt permitted under Section 6.01(d), shall not exceed at any time the
greater of (x) $75,000,000 and (y) 2% of the Consolidated Net Tangible Assets at
the time of the incurrence thereof;

(f) Debt in respect of Hedge Agreements incurred in the ordinary course of
business and consistent with prudent business practice;

(g) intercompany Debt between Borrower and/or a Restricted Subsidiary of
Navistar International;

(h) Subordinated Debt;

(i) other Debt not to exceed in the aggregate $100,000,000 at any time
outstanding;

(j) Guaranteed Debt of Borrower with respect to (x) obligations of NFC under the
Receivables Facility and (y) obligations with respect to Navistar
International’s financial service operations in Mexico; provided that the
aggregate amount of all such Guaranteed Debt shall not exceed $50,000,000 at any
time outstanding;

 

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(k) Debt under the Master Intercompany Agreements and the Support Agreement and
Debt arising in connection with the Integrated Global Structuring Transaction;

(l) Debt under Permitted Receivables Financings;

(m) Debt incurred by Borrower constituting reimbursement obligations with
respect to letters of credit issued in the ordinary course of business,
including, without limitation, letters of credit in response to worker’s
compensation claims or self-insurance;

(n) Debt arising from agreements of Borrower providing for adjustment of
purchase price, earn-out or other similar obligations, in each case, incurred or
assumed in connection with any acquisition permitted under Section 6.06;

(o) obligations in respect of performance and surety bonds and completion
guarantees provided by Borrower in respect of obligations arising in the
ordinary course of business and not constituting Debt for Borrowed Money;

(p) Debt consisting of notes issued to current or former employees, officers or
directors in connection with the redemption or repurchase of Equity Interests
held by such Persons in an aggregate amount not in excess of $10,000,000 at any
time outstanding;

(q) Debt consisting of take-or-pay obligations contained in supply agreements
entered into by Borrower in the ordinary course of business;

(r) Debt in respect of any Sale/Leaseback Transaction with respect to the
purchase of tooling and related manufacturing equipment in the ordinary course
of business;

(s) (i) Debt in respect of the Term Loan Documents and (ii) any refunding,
refinancing, restructuring, renewal or replacement, in whole or in part, of such
Debt; provided that, in the case of any such refunding, refinancing,
restructuring, renewal or replacement, the Refinancing Conditions are satisfied;

(t) Reserved;

(u) Investments to the extent constituting Debt (as defined in clause (i) or
(j) in the definition of “Debt”);

(v) Guarantees issued by Borrower in connection with Recovery Zone Bonds; and

(w) Indebtedness of Borrower arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of business; provided, however, that such Indebtedness is
extinguished within five business days after incurrence.

The accrual of interest and the accretion or amortization of original issue
discount on Debt and the payment of interest in the form of additional Debt
originally incurred in accordance with this Section 6.01 will not constitute an
incurrence of Debt.

 

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Section 6.02 Liens. Create, incur, assume or suffer to exist any Lien on or with
respect to any of its properties of any character (including, without
limitation, accounts) whether now owned or hereafter acquired, or assign any
accounts or other right to receive income, except:

(a) Liens created under the Loan Documents;

(b) Permitted Liens;

(c) Liens existing on the date hereof;

(d) purchase money Liens upon or in real property or equipment acquired or held
by Borrower in the ordinary course of business to secure the purchase price of
such property or equipment or to secure Debt incurred for the purpose of
financing the acquisition, construction or improvement of any such property or
equipment to be subject to such Liens, or Liens existing on any such property or
equipment at the time of acquisition (other than any such Liens created in
contemplation of such acquisition that do not secure the purchase price), or
extensions, restructures, renewals or replacements of any of the foregoing for
the same or a lesser amount (plus an amount equal to any accrued interest and
fees and expenses and premiums incurred in connection therewith); provided,
however, that no such Lien shall extend to or cover any property other than the
property or equipment being acquired, constructed or improved and such
improvements and, in each case, any proceeds, accessions and substitutions
thereof, and no such extension, renewal or replacement shall extend to or cover
any property not theretofore subject to the Lien being extended, refinanced,
restructured, renewed or replaced (other than proceeds, accessions, and
substitutions thereof); and provided further that (i) the aggregate principal
amount of the Debt secured by Liens permitted by this clause (d) shall not
exceed the amount permitted under Section 6.01(d) at any time outstanding, and
(ii) if any real property on which Parts Inventory is stored is mortgaged
pursuant to this clause (d), Borrower shall use commercially reasonable efforts
to provide the Administrative Agent with a Collateral Access Agreement
(reasonably satisfactory to the Administrative Agent) pertaining to such
mortgaged real property;

(e) Liens arising under Capitalized Leases permitted under Sections 6.01(e) and
(s); provided that no such Lien shall extend to or cover any assets other than
the assets subject to such Capitalized Leases (other than proceeds, accessions
and substitutions thereof);

(f) (i) Liens on property of a Person existing at the time such Person is merged
into or consolidated with Borrower; provided that (x) such merger or
consolidation is otherwise permitted under the Loan Documents, and (y) such
Liens were not created in contemplation of such merger, consolidation or
investment and do not extend to any assets other than those of the Person merged
into or consolidated with Borrower and (ii) Liens on earnest money deposits of
cash or Cash Equivalents made by or received by Borrower in connection with any
Investment permitted under Section 6.06 or asset disposition permitted under
Section 6.05;

(g) other Liens securing obligations outstanding in an aggregate principal
amount not to exceed $50,000,000 at any time;

(h) the replacement, refinancing, restructuring, extension or renewal of any
Lien permitted herein upon or in the same property theretofore subject thereto
or the replacement, extension, refinancing, restructuring or renewal (without
increase in the amount (other than by an amount equal to accrued interest and
fees and expenses and premiums incurred in connection therewith) or change in
any direct or contingent obligor) of the Debt secured thereby;

 

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(i) Liens incurred pursuant to the Master Intercompany Agreements and the
Support Agreement;

(j) leases or subleases, licenses, and sublicenses granted to others that do not
materially interfere with the ordinary course of business of Borrower or of any
Restricted Subsidiary of Borrower;

(k) Liens arising from filing UCC financing statements regarding leases;

(l) Liens arising pursuant to the Term Loan Documents or any Debt otherwise
permitted under Sections 6.01(s) (including any Guarantee by Borrower of any
Debt refunding, refinancing, restructuring, renewing or replacing any such
Debt); provided that (i) no such Lien shall extend to or cover any Collateral
(other than “Collateral” (as defined in the Term Loan Security Agreement as in
effect on the Closing Date)) and (ii) the Collateral Cooperation Agreement shall
be in full force and effect and each replacement, extending, refinancing,
restructuring or renewing lender (if any) (or a representative on such lender’s
behalf) shall be or become a party thereto;

(m) Liens securing Permitted Receivables Financings; and

(n) Liens encumbering customary initial deposits and margin deposits, and other
Liens incurred in the ordinary course of business that are within the general
parameters customary in the industry, in each case securing Debt under any Hedge
Agreements; and

(o) so long as the Ratings Condition is satisfied, other Liens securing
obligations in an amount not exceeding 5% of the Consolidated Net Tangible
Assets as of the time of the incurrence of such Debt and Liens; provided that if
any Lien is granted on any owned or leased real property where any Parts
Inventory is located, Borrower shall use commercially reasonable efforts to
obtain a Collateral Access Agreement (reasonably satisfactory to the
Administrative Agent) with such lienholder and such other documentation as the
Administrative Agent may reasonably require.

Notwithstanding the foregoing, none of the Liens permitted pursuant to this
Section 6.02 may at any time attach to any Parts Inventory of Borrower, any
other Collateral, or to any Collection Account or any LC Collateral Account,
other than those permitted under clauses (a), (b), (c) and (f) of the definition
of “Permitted Liens” and clause (a), clause (g) and clause (l) of this
Section 6.02 (but, in the case of clause (g) of this Section 6.02, only to the
extent such Liens arise by operation of law).

Section 6.03 Change in Nature of Business. Make any material change in the
general nature of its business as carried on at the date hereof; provided, that
Borrower may enter into complementary, ancillary or supportive businesses.

Section 6.04 Mergers, Etc. Merge into or consolidate with any Person or permit
any Person to merge into it, except that as part of any acquisition permitted
under Section 6.06, any other Person may merge into or consolidate with
Borrower; provided, that (i) the lines of business of the Person to be merged
shall be substantially the same lines of business as the principal businesses of
Borrower or any Former Borrower in the ordinary course; and (iii) such Person
shall be a United States legal entity with assets domiciled in the United
States; provided, further, that (i) the parties to such merger or consolidation
shall, prior to such merger or consolidation, have taken such steps as may be
reasonably required by the Administrative Agent to ensure the continued
perfection of the Administrative Agent’s security interest in the Collateral
following such merger or consolidation (as well as the perfection of the
Administrative Agent’s security interest in any assets previously owned by the
other party to such merger or consolidation otherwise constituting Collateral);
and (ii) following Borrower’s merger with any Person

 

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or such Person’s consolidation into Borrower, any assets owned by such other
Person prior to such merger or consolidation shall undergo field exams and an
audit by the Administrative Agent or its designee prior to such additional
assets being included in the calculation of the Borrowing Base; provided that if
the value of such additional assets is less than or equal to 5% of the
Commitments, such additional assets may be included in the calculation of the
Borrowing Base without any additional field exam, audit or appraisal at the
Administrative Agent’s discretion; provided, finally that in each case,
immediately before and after giving effect thereto, no Event of Default shall
have occurred and be continuing.

Section 6.05 Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose
of any assets, or grant any irrevocable option or other right to purchase, lease
or otherwise acquire any assets, except:

(a) sales of Inventory in the ordinary course of its business, in compliance
with the terms of the Loan Documents, and the granting of any option or other
right to purchase, lease or otherwise acquire Inventory in the ordinary course
of its business and in compliance with the terms of the Loan Documents;

(b) in a transaction authorized by Section 6.04;

(c) sales, transfers or other dispositions of assets not constituting Collateral
(or the grant of any option or other right to purchase, lease or otherwise
acquire such assets) by Borrower to any Former Borrower;

(d) sales, transfers or other dispositions of assets other than Collateral for
consideration consisting of at least 75% cash and for fair value;

(e) sales and proceeds of Receivables (including Parts Receivables) pursuant to
any Master Intercompany Agreement or Permitted Receivables Financing;

(f) Sale/Leaseback Transactions with respect to the purchase of tooling and
related manufacturing equipment in the ordinary course of business consistent
with past practices;

(g) any sale, transfer or other disposition of defaulted receivables for
collection or any sale, transfer or other disposition of property or assets in
the ordinary course of business;

(h) the grant of any license or sublicense of patents, trademarks, registrations
therefor and other similar Intellectual Property in the ordinary course of
business consistent with past practices;

(i) the granting of any Lien (or foreclosure thereon) securing obligations to
the extent permitted hereunder;

(j) any sale, transfer or other disposition expressly permitted by Section 6.06;

(k) any disposition of assets or property in the ordinary course of business to
the extent such property or assets are surplus, negligible, obsolete,
uneconomical, worn-out or no longer useful in Borrower’s business;

(l) sales of Inventory (including Parts Inventory) outside of the ordinary
course of business having a fair market value not in excess of $10,000,000 in
any Fiscal Year;

 

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(m) the disposition of the shares of Navistar Canada, Inc. in connection with
the Integrated Global Structuring Transaction; and

(n) so long as the Ratings Condition and the Payment Condition are satisfied
after giving pro forma effect thereto, sales, transfers and other dispositions
of assets (other than Collateral);

provided, that any and all net cash proceeds from any sales, transfers, leases
and other dispositions of Collateral permitted hereby, which sales, transfers,
leases or dispositions of Collateral shall reduce Excess Availability to less
than zero, shall, on the date of receipt of payment for such sales, transfers,
leases or dispositions by Borrower, be applied to the repayment of outstanding
amounts under and in accordance with Section 2.10(b); provided, further that in
connection with any sale, transfer or other disposition of Collateral outside of
the ordinary course of business with an aggregate value greater than $5,000,000,
Borrower shall comply with Section 5.13 and provided, further that any sale,
transfer or other disposition of Parts Inventory (x) shall be for cash or made
on customary trade terms or (y) shall constitute “help out” sales to Borrower’s
manufacturing businesses, Navistar International or any of Navistar
International’s other Subsidiaries consistent with past practices. To the extent
any Collateral is sold, transferred or otherwise disposed of as permitted by
this Section 6.05, such Collateral shall be sold free and clear of the Liens
created by the Loan Documents, and the Administrative Agent shall be authorized
to take any actions deemed appropriate in order to effect or evidence the
foregoing.

Section 6.06 Investments in Other Persons. Make or hold any Investment in any
other Person, except:

(a) Investments outstanding on the date hereof by Borrower in its Subsidiaries
and additional Investments (made with assets not constituting Collateral) in a
Former Borrower;

(b) loans and advances to employees in the ordinary course of the business of
Borrower as presently conducted in an aggregate principal amount not to exceed
$5,000,000 at any time outstanding, and made in compliance with the provisions
of the Sarbanes-Oxley Act of 2002;

(c) Investments by Borrower in cash or Cash Equivalents;

(d) Investments existing on the date hereof and any refinancings, extensions,
replacements and renewals of such Investments so long as the amount of such
refinanced, extended, replaced or renewed Investment is not increased;

(e) the purchase or other acquisition of a business unit, division or all of the
Equity Interests in any other Person that, upon the consummation thereof, will
be a wholly owned Subsidiary of Borrower (including, without limitation, as a
result of a merger or consolidation) and the purchase or other acquisition by
Borrower of all or substantially all of the property and assets of any other
Person; provided that, with respect to each purchase or other acquisition made
pursuant to this clause (e):

(i) the lines of business of the Person to be (or the property and assets of
which are to be) so purchased or otherwise acquired shall be substantially the
same lines of business as one or more of the principal businesses of Borrower in
the ordinary course;

(ii) such purchase or other acquisition shall not include or result in any
contingent liabilities that could reasonably be expected to be material to the
business, financial condition or operations of Borrower, taken as a whole (as
determined

 

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in good faith by the board of directors (or the Persons performing similar
functions) of Borrower, if the board of directors is otherwise approving such
transaction, or, in each other case, by a Financial Officer of Borrower);

(iii) after giving pro forma effect to such purchase or other acquisition, the
Payment Condition shall be satisfied;

(iv) [Reserved];

(v) [Reserved]; and

(vi) any assets owned by such Person or business prior to its acquisition by
Borrower shall both (A) undergo field exams, an audit and, in the case of Parts
Inventory, an appraisal by the Administrative Agent or its designee and (B) be
subject to the perfected security interest of the Administrative Agent therein,
in each case, prior to such assets being included in the calculation of the
Borrowing Base; provided that if the value of such additional assets is less
than or equal to 5% of the Commitments, such additional assets may be included
in the calculation of the Borrowing Base at the Administrative Agent’s
discretion without an updated field exam, audit or appraisal.

(f) Investments in Permitted Joint Ventures so long as at the time of such
Investment and after giving effect thereto, the Payment Condition shall be
satisfied;

(g) trade receivables and prepaid expenses, in each case arising in the ordinary
course of business; provided, that such receivables and prepaid expenses would
be recorded as assets of such Person in accordance with GAAP;

(h) Investments received as consideration for asset dispositions permitted
pursuant to Section 6.05;

(i) Investments for which the sole consideration provided is Equity Interests of
Borrower so long as payment of such consideration does not result in a Change of
Control;

(j) Investments in securities of trade creditors, suppliers or customers
received pursuant to any plan of reorganization, proposal, restructuring,
workout or similar arrangement of such trade creditor, supplier or customer or
upon the compromise of any debt created in the ordinary course of business owing
to Borrower or a Subsidiary, whether through litigation, arbitration or
otherwise;

(k) other Investments, if at the time of the making thereof and after giving pro
forma affect thereto the Payment Condition is satisfied; provided that if any
such Investment involves any purchase or acquisition, the requirements of
subclauses (i) through (vi) (other than subclause (iii)) of clause (e) above
shall have been satisfied;

(l) Investments in Navistar International or any Restricted Subsidiary of
Navistar International so long as Excess Availability shall be equal or greater
than the greater of $21,875,000 and 12.5% of the Commitments; provided that if
any such Investment involve any purchase or acquisition, the requirements of
subclause (i) through (vi) (other than subclause (iii)) of clause (e) above
shall have been satisfied;

(m) other Investments in an amount not to exceed $50,000,000 at any time
outstanding;

 

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(n) loans or advances to, guarantees in favor of, and other extensions of credit
to customers and suppliers in the ordinary course of business in an aggregate
amount not to exceed $25,000,000 at any time outstanding;

(o) Guaranteed Debt otherwise permitted under Section 6.01 to the extent
constituting an Investment;

(p) Guaranteed Debt of Borrower in connection with Recovery Zone Bonds;

(q) Investments pursuant to Master Intercompany Agreements and the Support
Agreement;

(r) Investments in (or asset dispositions to) Restricted Subsidiaries of
Navistar International so long as any such Investment (or disposition) is part
of a series of simultaneous Investments (and/or dispositions) by various
Restricted Subsidiaries in other Restricted Subsidiaries (collectively, an
“Investment Series” (with each such Investment in the Investment Series (or
disposition) having an equal aggregate amount (or fair market value)) that
results in the aggregate proceeds of the initial Investment (or disposition)
being invested in one or more Restricted Subsidiaries that are not Borrower;
provided that (x) such Investment Series be completed within three Business Days
following the date upon which the first transaction in such Investment Series
occurs, (y) none of the Investments in the Investment Series include a sale or
other disposition of the Collateral (except to the extent such Investment is a
transfer of cash or Cash Equivalents from a Collection Account and such
transferred cash or Cash Equivalents shall remain subject to a perfected
security interest of the Administrative Agent, and the validly, perfection and
priority of such security interest shall not be impaired by or in connection
with such transfer) and (z) no more than $25,000,000 of cash or Cash Equivalents
may be transferred from the Collection Account in connection with such
Investment Series unless the Administrative Agent has received opinions of
counsel, satisfactory to Administrative Agent, that such cash and Cash
Equivalents remain subject to a perfected security interest of the
Administrative Agent, and the validly, perfection and priority of such security
interest shall not be impaired by or in connection with such transfer; provided,
further, that (A) the initial Investment (or disposition) was made by a
Restricted Subsidiary and (B) Borrower shall not have made an Investment (or
disposition) in an amount in excess of the amount of proceeds Borrower received
by way of an Investment by another Restricted Subsidiary in Borrower (except to
the extent any such excess is permitted by, and (if applicable) reduces
availability under, Sections 6.06(e), (f), (h), (k) and (m));

(s) guarantees by Borrower of any Indebtedness under the Term Loan Documents or
any refunding, refinancing, restructuring, renewal or replacement thereof
permitted under Section 6.01(s); and

(t) Investments made or received in connection with the Integrated Global
Structuring Transaction.

For purposes of covenant compliance, the amount of any Investment shall be the
amount actually invested, without adjustment for subsequent increases or
decreases in the value thereof.

Section 6.07 Restricted Payments. Declare or pay any dividends, purchase,
redeem, retire, defease or otherwise acquire for value any of its Equity
Interests now or hereafter outstanding, return any capital to its stockholders,
partners or members (or the equivalent Persons thereof) as such, make any
distribution of assets, Equity Interests, obligations or securities to its
stockholders, partners or members (or the equivalent Persons thereof) as such
(each a “Restricted Payment”), except that:

 

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(a) Borrower (A) may make Restricted Payments (including in respect of
intercompany debt owing by Borrower) payable only in common stock of Borrower,
and (B) may make Restricted Payments with the proceeds received
contemporaneously from the issue of new shares of its Equity Interests with
equal or inferior voting powers, designations, preferences and rights;

(b) so long as the Payment Condition is satisfied after giving pro forma effect
thereto, Borrower may make Restricted Payments; and

(c) Borrower may make Restricted Payments to Navistar International to enable
Navistar International to pay (i) Navistar International’s franchise taxes
incurred in the ordinary course of business and (ii) federal, state and local
income taxes then due and owing that are directly attributable to (or arising as
a result of) Navistar International being required to include in its income for
tax purposes the income of Borrower.

Section 6.08 Accounting Changes. Make or permit any change in (a) accounting
policies or reporting practices, except as required by generally accepted
accounting principles, or (b) its Fiscal Year.

Section 6.09 Prepayments, Etc., of Debt. Prepay, redeem, purchase, defease or
otherwise satisfy, in each case, prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, any
Debt, except: (a) the prepayment of the Borrowings and other amounts outstanding
in accordance with the terms of this Agreement, (b) regularly scheduled or
required repayments or redemptions of Existing Debt, the Term Loan and other
Debt permitted under Section 6.01(s), (c) any prepayments or redemptions of
Existing Debt in connection with a refunding, renewal, replacement,
restructuring, refinancing, purchase, defeasement or other satisfaction of such
Existing Debt permitted by Section 6.01(c), (d) the repayment, purchase,
defeasement or other satisfaction or prepayment of the amounts under, and in
accordance with, documentation with respect to Debt permitted by Section 6.01(b)
or Section 6.01(r) on the terms contained therein so long as in the case of any
voluntary prepayment, purchase, redemption or other acquisition for value the
Payment Condition is satisfied; provided that nothing herein shall prevent
Navistar International from prepaying the Senior Notes with sources of funds
other than from Borrower, (e) the repayment or prepayment of the amounts under,
and in accordance with, documentation with respect to Debt permitted by
Section 6.01(e) or, so long as no Specified Default or Event of Default or is
then continuing or would result therefrom, Section 6.01(s), (f) the repayment or
prepayment of the amounts under, and in accordance with, documentation with
respect to Debt permitted by Section 6.01(r), (g) any repayment or prepayment of
Debt under any agreement permitting the reborrowing thereof, (h) any other
prepayment or redemption of Debt if at the time the making thereof, and after
giving pro forma effect thereto, the Payment Condition is satisfied, (i) any
prepayment, redemption, purchase, defeasement or other satisfaction of Debt owed
to Navistar International or any of its Restricted Subsidiaries so long as after
giving pro forma effect to such prepayment or redemption, Excess Availability
shall be equal or greater than the greater of $21,875,000 and 12.5% of the
Commitments and (j) the repayment or prepayment of Debt with Equity Interests
and/or the proceeds of Equity Interests; provided, however, that this
Section 6.09 shall not limit any refinancing of Debt otherwise permitted
hereunder so long as (x) the Refinancing Conditions are satisfied with respect
to such refinanced Debt, (y) such Debt is refinanced with other Debt of Navistar
International and it Subsidiaries (other than Borrower) or (z) such refinancing
Debt is otherwise permitted under Section 6.01.

Section 6.10 Partnerships, Etc. Become a general partner in any general or
limited partnership or joint venture, the sole assets of which consist of its
interest in such partnership or joint venture.

 

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Section 6.11 Payment Restrictions Affecting Borrower. Directly or indirectly
enter into or suffer to exist any agreement or arrangement which prohibits or
limits the ability of Borrower to create, incur, assume or suffer to exist any
Lien in favor of the Lenders in respect of the Facility Obligations or any other
Loan Documents upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except (i) the Loan Documents, (ii) any agreement or
instrument evidencing Existing Debt or any refinancing, extension,
restructuring, renewal or replacement thereof permitted pursuant of
Section 6.01(b) and (c), (iii) the Shy Settlement, (iv) leases, subleases or
licenses, sublicenses, service contracts and other contracts restricting the
assignment, subletting or sublicensing thereof, (v) those which arise in
connection with any disposition, transfer or sale permitted under Section 6.05
pending the consummation of such disposition, transfer or sale, (vi) any
agreement in effect on the Closing Date as any such agreement is in effect on
such date, (vii) the 2009 Senior Note Indenture, 2009 Senior Subordinated Note
Indenture, the Term Loan Documents, the Recovery Zone Bonds Loan Agreements, the
Master Intercompany Agreements or the Support Agreement or any notes issued
under any of the foregoing, in each case, as in effect on the Closing Date and
any agreements amending, modifying, extending, renewing, refinancing,
restructuring or replacing such agreements so long as the prohibitions and
limitations in such agreements are not more materially restrictive than those in
existence on the date hereof, (viii) restrictions relating to any Lien permitted
under Section 6.02 imposed by the holder of such Lien, (ix) any other agreement
governing Debt entered into after the Closing Date that contains prohibitions
and limitations that are not materially more restrictive (taken as a whole) with
respect to Borrower than those in effect on the Closing Date with respect to
that Borrower pursuant to agreements in effect on the Closing Date, and
(x) customary provisions in partnership agreements, limited liability company
organizational governance documents, joint venture agreements and other similar
agreements entered into in the ordinary course of business that restrict the
payment of dividends from such partnership, limited liability company, joint
venture or similar Person.

Section 6.12 Transactions with Affiliates. Conduct any transactions with an
Affiliate otherwise permitted under the Loan Documents on terms that are not
fair and reasonable, and no less favorable to Borrower than such Person would
obtain in a comparable arm’s length transaction, other than (a) transactions
with Former Borrowers not involving Collateral, (b) transactions entered into
pursuant to the terms of the Master Intercompany Agreements, the Tax Allocation
Agreements or the Support Agreement, (c) Restricted Payments to the extent
permitted under Section 6.07 and Investments to the extent permitted under
Section 6.06, (d) the Integrated Global Structuring Transaction, (e) reasonable
fees and compensation paid to and advances of expenses to and indemnity provided
on behalf of officers, directors, employees or consultants of Borrower, as
determined in good faith by Borrower's Board of Directors or senior management;
(f) transactions existing on the Closing Date and (g) transactions under the
Term Loan Documents; provided, that all sales of Parts Inventory by Borrower to
any Former Borrower permitted under Section 6.05 shall be on terms (including
price and credit terms) no less favorable to Borrower than Borrower would obtain
in a comparable arms’-length with a Person not an Affiliate and (g) “help out”
sales of Parts Inventory to Navistar International and its Subsidiaries
consistent with past practice.

Section 6.13 Amendment of Material Documents. Amend, modify or waive (a) any of
Borrower's rights under any Navistar International Indenture, any Recovery Zone
Bonds Loan Agreement (or any instrument or agreement governing any refinancing
Indebtedness in respect thereof permitted under Section 6.01), (b) any Term Loan
Documents (or any instrument or agreement governing any refinancing Indebtedness
in respect thereof permitted under Section 6.01(s)), to the extent such
amendment, modification or waiver would place restrictions on Borrower providing
collateral to secure the Facilities Obligations or would place restrictions on
the payment, repayment or prepayment of any Facility Obligations (other than, in
each case, any such restrictions set forth in the Term Loan Agreement as in
effect on the date hereof) or (c) its certificate of incorporation, by-laws,
operating, management or partnership agreement or other organizational
documents, to the extent, in the case of each of the foregoing clauses (a) or
(c), any such amendment, modification or waiver would be materially adverse to
the interests of the Lenders.

 

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Section 6.14 Sales of Receivables. Following the occurrence and during the
continuation of a Receivables Trigger Event with respect to a counterparty under
any Master Intercompany Agreement, sell or otherwise transfer or assign, any
Receivables or other receivables or instruments, to the applicable counterparty
under such Master Intercompany Agreement.

Section 6.15 Designation of Designated Senior Debt. Designate any Debt (or any
similar term) (other than the Debt under the 2009 Senior Note Indenture or any
Debt under the Term Loan Documents or any refinancing, extension, renewal,
restructuring or replacement thereof permitted pursuant to Section 6.01(b) or
Section 6.01(s), respectively and Debt under this Agreement or under the other
Loan Documents) of Borrower “Designated Senior Debt” (or any similar term)
under, and as defined in any Subordinated Debt of Borrower which contains such
designations.

ARTICLE VII

EVENTS OF DEFAULT

Section 7.01 Events of Default. If any of the following events (“Events of
Default”) shall occur and be continuing:

(a) Borrower shall fail to pay (i) any principal of any Loan or any
reimbursement obligation in respect of any unconverted LC Disbursement when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or by acceleration thereof or otherwise, or
(ii) any interest on any Loan or any fee or any other amount payable under this
Agreement or any other Loan Document within five Business Days after it shall
become due and payable; or

(b) any representation or warranty made or deemed made by or on behalf of
Borrower herein or in any other Loan Document or the Borrowing Base Certificate
or any other certificate required to be delivered hereunder (including under
Article V) or required to be delivered in connection with the other Loan
Documents shall prove to have been materially incorrect when made or deemed
made; or

(c) Borrower shall fail to observe or perform any covenant, condition, term or
agreement contained in Article VI, or Section 5.02(a), 5.02(b), 5.02(e), 5.03,
5.06, 5.08, 5.09, 5.11, 5.14 or 5.15 of this Agreement or Article IV of the
Security Agreement; or

(d) Borrower shall fail to perform or observe (i) any term, covenant or
agreement contained in Section 5.01(a), (b), (c), (d), (g), (h), (i), or
5.02(c), (d) or (f); or (ii) any other term, covenant or agreement contained in
any Loan Document on its part to be performed or observed if such failure shall
remain unremedied for five days (in the case of the foregoing clause (i)) or
30 days (in the case of the foregoing clause (ii)) after the earlier of the date
on which (A) any Responsible Officer of Borrower becomes aware of such failure
or (B) written notice thereof shall have been given to Borrower by the
Administrative Agent or any Lender; or

(e) (i) any Collateral Document after delivery thereof pursuant to the terms of
the Loan Documents shall for any reason, other than pursuant to the terms
hereunder or thereunder (including as a result of a transaction permitted under
Section 6.03, 6.04 or 6.05), fail to create a valid and perfected security
interest with the priority required by the Collateral Documents with respect to
any

 

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significant portion of the Collateral purported to be covered thereby, except to
the extent that any such loss of perfection or priority results from the failure
of the Administrative Agent to maintain possession of certificates actually
delivered to it representing securities pledged under the Collateral Documents
or from the failure of the Administrative Agent to file UCC continuation
statements or (ii) except as otherwise permitted hereunder, any Collateral
Document shall fail to remain in full force or effect or any action shall be
taken by Borrower to discontinue or to assert the invalidity or unenforceability
of any Collateral Document; or

(f) any Loan Document, or any material provision therein, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or thereunder (including as a result of a transaction permitted under
Section 6.03, 6.04 or 6.05) or as a result of the satisfaction in full of the
Obligations (other than contingent indemnification obligations), ceases to be in
full force and effect, or Borrower, Navistar International or any of their
respective Subsidiaries shall challenge in writing the validity or
enforceability of any Loan Document or Borrower, Navistar International or any
of their respective Subsidiaries shall deny in writing that Borrower has any
further liability or obligation under any Loan Document (other than as a result
of repayment in full of the Obligations (other than contingent indemnification
obligations) and termination of the Commitments) or purports in writing to
revoke or rescind any Loan Document; or

(g) Navistar International or any of its Subsidiaries shall fail to pay any
principal of, premium or interest on or any other amount payable in respect of
any Debt for Borrowed Money of Navistar International, Borrower or such
Subsidiary (as the case may be) that is outstanding in a principal amount (or,
in the case of any Hedge Agreement, an Agreement Value) of at least $50,000,000
either individually or in the aggregate for Navistar International and all
Subsidiaries when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; or any other event shall
occur or condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt or otherwise to cause, or to permit the holder thereof to cause, such
Debt to mature; or any such Debt shall be declared to be due and payable or
required to be prepaid or redeemed (other than by a regularly scheduled required
prepayment or redemption), purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each case prior
to the stated maturity thereof; or

(h) Navistar International or any of its material Subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or an Insolvency Proceeding shall be instituted by or
against Borrower, Navistar International or any of their respective material
Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, interim receiver, monitor,
liquidator, trustee or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it) that is being diligently contested by it in good
faith, either such proceeding shall remain undismissed or unstayed for a period
of 45 days or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or any
substantial part of its property) shall occur; or Borrower, Navistar
International or any of their respective material Subsidiaries shall take any
corporate action to authorize any of the actions set forth above in this clause
(h); or

 

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(i) any judgments or orders (other than those covered by insurance) either
individually or in the aggregate, for the payment of money in excess of
$50,000,000 shall be rendered against Borrower and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order, or (ii) there shall be any period of 20 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or

(j) any non-monetary judgment or order shall be rendered against Borrower that
could reasonably be expected to have a Material Adverse Effect, and there shall
be any period of 20 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or

(k) any ERISA Event shall have occurred with respect to a Plan which is
reasonably expected to result in a Material Adverse Effect; or

(l) Borrower or any ERISA Affiliate shall have been notified by the sponsor of a
Multiemployer Plan that it has incurred Withdrawal Liability to such
Multiemployer Plan in an amount that, when aggregated with all other amounts
required to be paid to Multiemployer Plans by Borrower and the ERISA Affiliates
as Withdrawal Liability (determined as of the date of such notification),
exceeds $10,000,000 or requires payments exceeding $2,500,000 per annum; or

(m) Borrower or any ERISA Affiliate shall have been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, and as a result of such
reorganization or termination the aggregate annual contributions of Borrower and
the ERISA Affiliates to all Multiemployer Plans that are then in reorganization
or being terminated have been or will be increased over the amounts contributed
to such Multiemployer Plans for the plan years of such Multiemployer Plans
immediately preceding the plan year in which such reorganization or termination
occurs by an amount exceeding $10,000,000; or

(n) a Change of Control shall occur;

then, and in any such event, the Administrative Agent shall at the request of
the Required Lenders, by written notice to Borrower, (i) declare the Commitments
of each Lender and the obligation of each Lender to make Loans or of any Issuing
Bank to issue a Letter of Credit to be terminated, whereupon the same shall
forthwith terminate; (ii) declare the Loans, all interest thereon and all other
amounts payable by Borrower under this Agreement and the other Loan Documents to
be forthwith due and payable, whereupon the Loans, all such interest and all
such amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by each of Borrower; and (iii) require that Borrower deposit in the LC
Collateral Account an amount in cash equal to 103% of the then-outstanding LC
Exposure; provided, however, that, upon the occurrence of an event with respect
to Borrower described in Section 7.01(h), (x) the Commitments of each Lender and
the obligation of each Lender to make Loans and of any Issuing Bank to issue
Letters of Credit shall automatically be terminated and (y) the principal of the
Loans then outstanding, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
Borrower, and the obligation of Borrower to Cash Collateralize the outstanding
Letters of Credit as aforesaid shall automatically become effective, in each
case without further act of the Administrative Agent or any Lender. Upon the
occurrence and during the continuance of an Event of Default, the Administrative
Agent may, and at the request of the Required Lenders shall, exercise any rights
and remedies provided to the Administrative Agent under the Loan Documents or at
law or equity, including all remedies provided under the UCC.

 

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ARTICLE VIII

THE ADMINISTRATIVE AGENT

Section 8.01 The Administrative Agent.

(a) Each Secured Party and each Issuing Bank hereby irrevocably appoints and
designates the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf, including execution of
the other Loan Documents (including the Collateral Cooperation Agreement and any
amendments, supplements or other modifications of Collateral Cooperation
Agreement that the Borrower may from time to time request in connection with the
amendment, extension, renewal, refinancing or replacement of the Term Loan
Agreement, to give effect to any such amendment, extension, renewal, refinancing
or replacement) and acting as agent for purposes of perfection, and to exercise
such powers as are delegated to the Administrative Agent by the terms of the
Loan Documents, together with such actions and powers as are reasonably
incidental thereto. Each Secured Party and each Issuing Bank agrees that any
action taken by the Administrative Agent or the Required Lenders in accordance
with the provisions of the Loan Documents, and the exercise by the
Administrative Agent or Required Lenders of any rights or remedies set forth
therein, together with all other powers reasonably incidental thereto, shall be
authorized by and binding upon all Secured Parties. Without limiting the
generality of the foregoing, the Administrative Agent shall have the sole and
exclusive authority to (i) act as the disbursing and collecting agent for the
Lenders with respect to all payments and collections arising in connection with
the Loan Documents; (ii) execute and deliver, as the Administrative Agent, each
Loan Document, including any intercreditor or subordination agreement, and
accept delivery of each Loan Document from Borrower or other Person; (iii) act
as collateral agent for Secured Parties for purposes of perfecting and
administering Liens under the Loan Documents, and for all other purposes stated
therein; (d) manage, supervise or otherwise deal with Collateral; and (iv) take
any enforcement action or otherwise exercise any rights or remedies with respect
to any Collateral under the Loan Documents, applicable law or otherwise and
subject to the terms of the Loan Documents. The Administrative Agent alone shall
be authorized to determine whether any Parts Inventory constitute Eligible Parts
Inventory, whether to impose or release any reserve or whether any conditions to
funding or to issuance of a Letter of Credit have been satisfied in accordance
with the terms of the Loan Documents, which determinations and judgments, if
exercised in good faith, shall exonerate the Administrative Agent from liability
to any Lender or other Person for any error in judgment.

(b) Each Person serving as an Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not an Administrative Agent, and such Person
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with Borrower or any Subsidiary of Borrower or other
Affiliate thereof as if it were not an Administrative Agent hereunder.

(c) The Administrative Agent shall not have any duties or obligations except
those expressly set forth in the Loan Documents. Without limiting the generality
of the foregoing, (i) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (ii) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing as directed by
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02), and
(iii) except as expressly set forth in the Loan Documents, the Administrative
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to Borrower or any of its
Subsidiaries that is communicated to or obtained by the Person serving as the
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any capacity. The Administrative Agent shall not be liable for any action taken
or not taken by it with the consent or at the request of the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 9.02) or in the absence of its own
gross negligence or willful misconduct. The Administrative Agent shall not be
deemed to have knowledge of any Default unless and until written notice thereof
is given to the Administrative Agent by Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (A) any statement, warranty or representation made in or in
connection with any Loan Document, (B) the contents of any certificate, report
or other document delivered hereunder or in connection with any Loan Document,
(C) the performance or observance of any of the covenants, agreements or other
terms or conditions set forth in any Loan Document, (D) the validity,
enforceability, effectiveness or genuineness of any Loan Document or any other
agreement, instrument or document, (E) the creation, perfection or priority of
Liens on the Collateral or the existence of the Collateral, or (F) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent. If any Lender acquires knowledge of a
Default, Event of Default or failure of such conditions, it shall promptly
notify the Administrative Agent and the other Lenders thereof in writing. Each
Secured Party agrees that, except as otherwise provided in any Loan Documents or
with the written consent of the Administrative Agent and Required Lenders, it
will not take any enforcement action with respect to the Collateral, accelerate
Facility Obligations (other than Banking Services Obligations constituting
Secured Obligations), or exercise any right that it might otherwise have under
applicable law to credit bid at foreclosure sales, UCC sales or other similar
dispositions of Collateral or to assert any rights relating to any Collateral.

(d) The rights and remedies conferred upon the Administrative Agent under the
Loan Documents may be exercised without the necessity of joinder of any other
party, unless required by applicable law. The Administrative Agent may request
instructions from Required Lenders or other Secured Parties with respect to any
act (including the failure to act) in connection with any Loan Documents, and
may seek assurances to its satisfaction from Secured Parties of their
indemnification obligations against all claims that could be incurred by the
Administrative Agent in connection with any act. The Administrative Agent shall
be entitled to refrain from any act until it has received such instructions or
assurances, and the Administrative Agent shall not incur liability to any Person
by reason of so refraining. Instructions of the Required Lenders and Super
Majority Lenders shall be binding upon all Secured Parties, and no Secured Party
shall have any right of action whatsoever against the Administrative Agent as a
result of the Administrative Agent acting or refraining from acting in
accordance with the instructions of the Required Lenders and Super Majority
Lenders. Notwithstanding the foregoing, instructions by and consent of specific
parties shall be required to the extent provided in Section 9.02. In no event
shall the Administrative Agent be required to take any action that, in its
opinion, is contrary to applicable law or any Loan Documents or could subject
any Agent Indemnitee to personal liability.

(e) The Administrative Agent shall be entitled to rely upon, and shall not incur
any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document, electronic transmission or other writing
believed by it in good faith to be genuine and to have been signed or sent by
the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it in good faith to be made by
the proper Person, and shall not incur any liability for relying thereon. The
Administrative Agent shall have a reasonable and practicable amount of time to
act upon any instruction, notice or other communication under any Loan Document,
and shall not be liable for any delay in acting.

(f) The Administrative Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its

 

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rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of the Administrative Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication of
the credit facility provided for herein as well as activities as the
Administrative Agent. The Administrative Agent may consult with and employ Agent
Professionals, and shall be entitled to act upon, and shall be fully protected
in any action taken in good faith reliance upon, any advice given by an Agent
Professional. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agents, employees or Agent Professionals
selected by it with reasonable care.

(g) Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph (g), the Administrative Agent may resign at
any time by notifying the Lenders, the Issuing Banks and Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Administrative Agent which shall be (i) a Lender or an Affiliate of a Lender or
(ii) a commercial bank or an Affiliate of any such commercial bank that is
organized under the laws of the United States or any state or district thereof,
has a combined capital surplus of at least $200,000,000 and (provided no Event
of Default exists) is reasonably acceptable to Borrower (such consent not to be
unreasonably withheld, delayed or conditioned). If no successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Banks, appoint a successor Administrative Agent from
among the Lenders or, if no Lender accepts such role, the retiring
Administrative Agent may appoint the Required Lenders as the successor
Administrative Agent. Upon the acceptance by a successor Administrative Agent of
an appointment as the Administrative Agent hereunder, or upon appointment of
Required Lenders as successor Administrative Agent, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between Borrower and such successor.
After the Administrative Agent’s resignation hereunder, the provisions of this
Article VIII and Section 9.03 shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as the Administrative Agent. Any successor to Bank of
America by merger or acquisition of stock or this loan shall continue to be the
Administrative Agent hereunder without further act on the part of the parties
hereto, unless such successor resigns as provided above.

(h) Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or thereunder.

(i) Each Lender hereby agrees that (i) it has requested a copy of each Report
prepared by or on behalf of the Administrative Agent; (ii) the Administrative
Agent (A) makes no representation or warranty, express or implied, as to the
completeness or accuracy of any Report or any of the information contained
therein or any inaccuracy or omission contained in or relating to a Report and
(B) shall not be liable for any information contained in any Report; (iii) the
Reports are not comprehensive audits or examinations, and that any Person
performing any field examination will inspect only specific information
regarding Borrower and will rely significantly upon Borrower’s books and

 

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records, as well as on representations of Borrower’s personnel and that the
Administrative Agent undertakes no obligation to update, correct or supplement
the Reports; (iv) it will keep all Reports confidential and strictly for its
internal use, not share the Report with Borrower or any other Person except as
otherwise permitted pursuant to this Agreement; and (v) without limiting the
generality of any other indemnification provision contained in this Agreement,
it will pay and protect, and indemnify, defend, and hold the Administrative
Agent and any such other Person preparing a Report harmless (A) from and
against, the claims, actions, proceedings, damages, costs, expenses, and other
amounts (including reasonable attorneys’ fees) incurred by the Administrative
Agent or such other Person as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender and
(B) from any action such Lender may take as a result of or any conclusion it may
draw from any Report.

(j) If the Administrative Agent believes that it may be limited in the exercise
of any rights or remedies under the Loan Documents due to any applicable law,
the Administrative Agent may appoint an additional Person who is not so limited,
as a separate co-collateral agent. If the Administrative Agent so appoints a
co-collateral agent, each right and remedy intended to be available to the
Administrative Agent under the Loan Documents shall also be vested in such
separate agent. The Secured Parties shall execute and deliver such documents as
the Administrative Agent deems appropriate to vest any rights or remedies in
such agent. If any co-collateral agent shall die or dissolve, become incapable
of acting, resign or be removed, then all the rights and remedies of such agent,
to the extent permitted by applicable law, shall vest in and be exercised by the
Administrative Agent until appointment of a new agent.

(k) The Joint Lead Arrangers, the Joint Book Managers and the Syndication Agents
shall not have any right, power, obligation, liability, responsibility or duty
under this Agreement other than those applicable to all Lenders as such.

Section 8.02 Indemnification by Lenders. (a) Each Lender severally agrees to
indemnify the Administrative Agent (to the extent not promptly reimbursed by
Borrower) from and against such Lender’s ratable share (determined as provided
below) of any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against the
Administrative Agent, arising solely in the Administrative Agent’s capacity the
Administrative Agent hereunder and under the other Loan Documents, or any action
taken or omitted by the Administrative Agent solely in its capacity as the
Administrative Agent under the Loan Documents (collectively, the ”Indemnified
Costs”); provided, however, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent’s gross negligence or willful misconduct as found in a final,
non-appealable judgment by a court of competent jurisdiction. Without limitation
of the foregoing, each Lender agrees to reimburse the Administrative Agent
promptly upon demand for its ratable share of any costs and expenses (including,
without limitation, fees and expenses of counsel) payable by Borrower under
Section 9.03, to the extent that the Administrative Agent, acting solely in its
capacity as the Administrative Agent hereunder, is not promptly reimbursed for
such costs and expenses by Borrower. In the case of any investigation,
litigation or proceeding giving rise to any Indemnified Costs, this Section 8.02
applies whether any such investigation, litigation or proceeding is brought by
any Lender or any other Person.

(b) For purposes of this Section 8.02, each Lender’s ratable share of any amount
shall be determined, as at the incurrence of the relevant Indemnified Costs,
according to its share of the aggregate principal amount of the Advances
outstanding at such time and the aggregate participation in the LC Disbursements
at such time. The failure of any Lender to reimburse the Administrative Agent
promptly upon demand for its ratable share of any amount required to be paid by

 

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the Lenders to the Administrative Agent as provided herein shall not relieve any
other Lender of its obligation hereunder to reimburse the Administrative Agent
for its ratable share of such amount, but no Lender shall be responsible for the
failure of any other Lender to reimburse the Administrative Agent for such other
Lender’s ratable share of such amount. Without prejudice to the survival of any
other agreement of any Lender hereunder, the agreement and obligations of each
Lender contained in this Section 8.02 shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the other
Loan Documents.

(c) The Administrative Agent shall not be liable to any Secured Party for any
action taken or omitted to be taken under the Loan Documents, except for losses
directly and solely caused by the Administrative Agent’s gross negligence or
willful misconduct. The Administrative Agent does not assume any responsibility
for any failure or delay in performance or any breach by Borrower, Lender or
other Secured Party of any obligations under the Loan Documents. The
Administrative Agent makes no express or implied representation, warranty or
guarantee to the Secured Parties with respect to any Facility Obligations,
Collateral, Loan Documents or Borrower. No Agent Indemnitee shall be responsible
to the Secured Parties for any recitals, statements, information,
representations or warranties contained in any Loan Documents; the execution,
validity, genuineness, effectiveness or enforceability of any Loan Documents;
the genuineness, enforceability, collectability, value, sufficiency, location or
existence of any Collateral, or the validity, extent, perfection or priority of
any Lien therein; the validity, enforceability or collectability of any Facility
Obligations; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of Borrower. No Agent
Indemnitee shall have any obligation to any Secured Party to ascertain or
inquire into the existence of any Default or Event of Default.

Section 8.03 Banking Services Providers. Each Secured Banking Services Provider,
by delivery of a notice to the Administrative Agent of Banking Services, agrees
to be bound by Section 2.10 and this Section 8.03. Each Secured Banking Services
Provider shall indemnify and hold harmless the Agent Indemnitees, to the extent
not reimbursed by Borrower, against all Indemnified Costs that may be incurred
by or asserted against any Agent Indemnitee in connection with such provider's
Banking Services Obligations.

Section 8.04 No Third Party Beneficiaries. This Article VIII is an agreement
solely among the Lenders and the Administrative Agent, and shall survive payment
and satisfaction in full of the Secured Obligations. Except solely to the extent
of Borrower’s rights to consent pursuant to and subject to the conditions in
Section 8.01(g), this Article VIII does not confer any rights or benefits upon
Borrower or any other Person. As between Borrower and the Administrative Agent,
any action that the Administrative Agent may take under any Loan Documents or
with respect to any Facility Obligations shall be conclusively presumed to have
been authorized and directed by the Lenders.

ARTICLE IX

MISCELLANEOUS

Section 9.01 Notices. (a) Except in the case of notices and other communications
expressly permitted to be given by telephone (and subject to paragraph
(b) below), all notices and other communications provided for herein shall be in
writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by facsimile, as follows:

 

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(i) if to Borrower:

Navistar, Inc.

2701 Navistar Drive

Lisle, IL 60532 4201

Attention: Treasurer

Facsimile No: (331) 332-2573

Email: jim.moran@navistar.com

Copy to:

Kirkland & Ellis LLP

300 North LaSalle

Chicago, IL 60654

Attn: Maureen Sweeney, P.C. and Michelle Kilkenney

Phone: (312) 862-2000

Facsimile No.: (312) 862-2200

Email: mkilkenney@kirkland.com

(ii) if to Bank of America, as the Administrative Agent, an Issuing Bank or the
Swingline Lender, at:

Bank of America Business Capital

135 South LaSalle, 4th Floor

Mail Code: IL4-135-04-25

Chicago, IL 60603

Attention: Thomas J. Brennan

Facsimile No.: (312) 992-9609

Email: thomas.brennan@baml.com

(iii) if to any other Lender, to it at its address or facsimile number set forth
in its Administrative Questionnaire.

All such notices and other communications (x) sent by hand or overnight courier
service, or mailed by certified or registered mail, shall be deemed to have been
given when received or (y) sent by facsimile shall be deemed to have been given
when sent and when receipt has been confirmed by telephone; provided that if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient. The Administrative Agent and the Lenders may rely upon any notices
purportedly given by or on behalf of Borrower even if such notices were not made
in a manner specified herein, were incomplete or were not confirmed, or if the
terms thereof, as understood by the recipient, varied from a later confirmation.
Borrower shall indemnify and hold harmless each Indemnified Party from any
liabilities, losses, costs and expenses arising from any telephonic
communication purportedly given by or on behalf of Borrower, except to the
extent arising from such Indemnified Party’s gross negligence, willful
misconduct or bad faith as found in a final, non-appealable judgment by a court
of competent jurisdiction.

(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by electronic communications (including e-mail and Internet or
intranet websites) pursuant to procedures approved by the Administrative Agent;
provided that the foregoing shall not apply, except to the extent expressly
provided for therein, to notices pursuant to Article II or to compliance and

 

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no Event of Default certificates delivered pursuant to Section 5.01 unless
otherwise agreed by the Administrative Agent. The Administrative Agent or
Borrower will agree to accept notices and other communications to it hereunder
by electronic “pdf” communications or other electronic transmissions of actual
signed documents which shall be directed to the specific name of the individual
person previously identified by the Administrative Agent to receive such notice
and otherwise pursuant to procedures that may be approved by it; provided that
approval of such procedures may be limited to particular notices or
communications. All such notices and other communications (i) sent to the e-mail
address of the specific individual person specified previously identified by the
Administrative Agent to receive such notice shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement); provided, that if not given during the normal business
hours of the recipient, such notice or communication shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient, and (ii) posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i) of notification that such notice or
communication is available and identifying the website address therefor.

(c) Any party hereto may change its address or facsimile number or email address
for notices and other communications hereunder by notice to the other parties
hereto.

Section 9.02 Waivers; Amendments. (a) No failure or delay by the Administrative
Agent, Issuing Bank or Lender in exercising any right or power hereunder or
under any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Issuing Banks and the Lenders
hereunder and under any other Loan Document are cumulative and are not exclusive
of any rights or remedies that they would otherwise have. No waiver of any
provision of any Loan Document or consent to any departure by Borrower therefrom
shall in any event be effective unless the same shall be permitted by paragraph
(b) of this Section 9.02, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. Without
limiting the generality of the foregoing, to the extent permitted by law, the
making of a Loan or issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether the Administrative Agent, Lender or
Issuing Bank may have had notice or knowledge of such Default at the time.

(b) Neither this Agreement nor any other Loan Document nor any provision hereof
or thereof may be waived, amended or modified except (i) in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by
Borrower and the Required Lenders (or the Administrative Agent with the consent
of the Required Lenders), or (ii) in the case of any other Loan Document (other
than any such amendment to effectuate any modification thereto expressly
contemplated by the terms of such other Loan Documents), pursuant to an
agreement or agreements in writing entered into by the Administrative Agent and
Borrower, with the consent of the Required Lenders; provided that no such
agreement shall (A) increase the Commitment of any Lender (including a
Defaulting Lender) without the written consent of such Lender; it being
understood that a waiver of any condition precedent set forth in Article IV or
the waiver of any default interest, Default or Event of Default that is not
otherwise expressly required to be waived by more than Required Lenders,
mandatory prepayment or mandatory reduction of the Commitments, or the making of
any Protective Advance, so long as in compliance with the provisions of
Section 2.04, shall not constitute an increase of any Commitment of any Lender,
provided that any change to the second or fourth proviso to the second sentence
of Section 2.04(a) shall require the written consent of each Lender; (B) reduce
or forgive the principal amount of any Loan or LC Disbursement or reduce the
rate of interest thereon, or reduce or forgive any interest or fees payable
hereunder, without the written consent of each Lender (including a Defaulting

 

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Lender) directly affected thereby, provided that only the consent of the
Required Lenders shall be necessary to (1) amend the provisions of
Section 2.13(c) providing for the default rate of interest, or to waive any
obligations of Borrower to pay interest at such default rate, Event of Default
or Default that is not otherwise expressly required to be waived by more than
Required Lenders or (2) waive any mandatory prepayment; (C) postpone any
scheduled date of payment of the principal amount of any Loan or LC
Disbursement, or any date for the payment of any interest, fees or other
Obligations payable hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration of any Commitment, without
the written consent of each Lender (including a Defaulting Lender) directly
affected thereby, provided that only the consent of the Required Lenders shall
be necessary to amend the provisions of Section 2.13(c) providing for the
default rate of interest, or to waive any obligations of Borrower to pay
interest at such default rate, Event of Default or Default that is not otherwise
expressly required to be waived by more than Required Lenders; (D) change
Section 2.18(b), (c) or (d) or Section 2.10(b) in a manner that would alter the
manner in which payments are shared, without the written consent of each Lender
directly affected thereby; (E) change the definition of the term “Liquidity
Block Amount” or “Borrowing Base” or any respective component definition thereof
if, in any case, as a result thereof the amounts available to be borrowed by
Borrower would be increased (provided that the foregoing shall not limit the
discretion of the Administrative Agent to change, establish or eliminate any
Reserves without the consent of any Lenders) without the written consent of the
Super Majority Lenders; (F) change any of the provisions of this Section 9.02 or
reduce the minimum percentage set forth in the definition of “Required Lenders”
or the definition of “Super Majority Lenders” or any other provision of any Loan
Document specifying the number or percentage of Lenders (or Lenders of any
Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender; or (G) except as provided in paragraph (c) or (d) of this
Section 9.02 or in any Collateral Document, release all or substantially all of
the Collateral, without the written consent of each Lender; provided, further
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent, any Issuing Bank or the Swingline Lender
hereunder without the prior written consent of the Administrative Agent, such
Issuing Bank or the Swingline Lender, as the case may be. The Administrative
Agent may also amend the Commitment Schedule to reflect assignments entered into
pursuant to Section 9.04.

(c) The Lenders hereby irrevocably agree that the Liens granted to the
Administrative Agent by Borrower on any Collateral shall be automatically
released (i) upon the termination of the Commitments, payment and satisfaction
in full in cash of all Secured Obligations owing as of the date of such
termination (other than Unliquidated Obligations), the termination, expiration
or, to the extent effected in a manner reasonably acceptable to the relevant
Issuing Banks or as otherwise provided for herein, Cash Collateralization or
Backstop of all outstanding Letters of Credit in an amount equal to 103% of the
face amount of all outstanding Letters of Credit; (ii) upon the sale or other
disposition of the property constituting such Collateral (including as part of
or in connection with any other sale or other disposition permitted hereunder)
to any Person, to the extent such sale or other disposition is made in
compliance with the terms of this Agreement; (iii) subject to paragraph (b) of
this Section 9.02, if the release of such Lien is approved, authorized or
ratified in writing by the Required Lenders, (iv) as required to effect any sale
or other disposition of such Collateral in connection with any exercise of
remedies of the Administrative Agent and the Lenders pursuant to the Collateral
Documents, or (v) as required pursuant to, and in accordance with the terms of,
any Master Intercompany Agreement provided that the Administrative Agent may, in
its discretion, release the Lien on Collateral valued in the aggregate not in
excess of $20,000,000 during each Fiscal Year without the consent of any Lender.
Any such release shall not in any manner discharge, affect, or impair the
Obligations or any Liens (other than those expressly being released) upon (or
obligations of Borrower in respect of) all interests retained by Borrower,
including the proceeds of any sale, all of which shall continue to constitute
part of the Collateral to the extent required under the provisions of the Loan
Documents.

 

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(d) If, in connection with any proposed amendment, waiver or consent requiring
the consent of “each Lender” or “each Lender directly affected thereby” or the
“Super Majority Lenders”, the consent of the Required Lenders is obtained, but
the consent of other necessary Lenders is not obtained (any such Lender whose
consent is necessary but not obtained being referred to herein as a
“Non-Consenting Lender”), then Borrower may elect to replace a Non-Consenting
Lender as a Lender party to this Agreement; provided, that, concurrently with
such replacement, (i) another bank or other entity which is a Lender or
otherwise reasonably satisfactory to Borrower and the Administrative Agent shall
agree, as of such date, to purchase for cash the Loans and other Obligations due
to the Non-Consenting Lender pursuant to an Assignment and Assumption and to
become a Lender for all purposes under this Agreement and to assume all
obligations of the Non-Consenting Lender to be terminated as of such date and to
comply with the requirements of Section 9.04(b), (ii) the replacement Lender
shall pay the processing and recordation fee referred to in
Section 9.04(b)(ii)(C), if applicable, in accordance with the terms of such
Section, (iii) the replacement Lender shall grant its consent with respect to
the applicable proposed amendment, waiver or consent and (iv) Borrower shall pay
to such Non-Consenting Lender in same day funds on the day of such replacement
(1) all interest, fees and other amounts then accrued but unpaid to such
Non-Consenting Lender by Borrower hereunder to and including the date of
termination, including, without limitation, payments due to such Non-Consenting
Lender under Sections 2.15 and 2.17, and (2) an amount, if any, equal to the
payment which would have been due to such Lender on the day of such replacement
under Section 2.16 had the Loans of such Non-Consenting Lender been prepaid on
such date rather than sold to the replacement Lender. In connection with any
such replacement, if any such Non-Consenting Lender does not execute and deliver
to the Administrative Agent a duly executed Assignment and Assumption reflecting
such replacement within five (5) Business Days of the date on which the
replacement Lender executes and delivers such Assignment and Assumption to such
Non-Consenting Lender, then such Non-Consenting Lender shall be deemed to have
executed and delivered such Assignment and Assumption without any action on the
part of the Non-Consenting Lender.

Notwithstanding anything to the contrary contained in this Section 9.02, if the
Administrative Agent and Borrower shall have jointly identified an obvious error
or any error or omission of a technical or immaterial nature, in each case, in
any provision of this Agreement or any other Loan Document, then the
Administrative Agent and Borrower shall be permitted to amend such provision and
such amendment shall become effective without any further action or consent of
any other party to this Agreement or any other Loan Document if the same is not
objected to in writing by the Required Lenders within five Business Days
following receipt of notice thereof.

Section 9.03 Expenses; Indemnity; Damage Waiver. (a) Subject to any express
limitations that may be set forth in this Agreement with respect to the
frequency of appraisals and field exams, Borrower agree to pay within (x) one
Business Day (in the case of written demands prior to the Closing Date) and
(y) ten Business Days (in the case of written demands thereafter) after written
demand (which includes documentation reasonably supporting such request) (i) all
reasonable out-of-pocket costs and expenses of the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification and amendment of, or any consent or waiver under, the Loan
Documents (including, without limitation, (A) all due diligence, syndication,
transportation, computer, duplication, appraisal, audit, field examination,
Report preparation, Collection Account setup and maintenance, insurance,
consultant, search, filing and recording fees and expenses (including the
Administrative Agent’s standard charges for field examinations which may be a
standard per diem field examiner charge), and (B) in the case of legal expenses
and fees, limited to the reasonable fees and out-of-pocket expenses of one
principal counsel for the Administrative Agent and any necessary local counsel
to the Administrative Agent, with respect to advising the Administrative Agent
as to its rights and responsibilities, or the protection or preservation of
rights or interests, under the Loan Documents, with respect to negotiations with
Borrower or with other creditors of Borrower arising out of any Default or

 

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any events or circumstances that may give rise to a Default and with respect to
presenting claims in or otherwise participating in or monitoring any bankruptcy,
insolvency or other similar proceeding involving creditors’ rights generally and
any proceeding ancillary thereto) and (ii) all reasonable out-of-pocket costs
and expenses of the Administrative Agent and each Lender in connection with the
enforcement of the Loan Documents, whether in any action, suit or litigation, or
any bankruptcy, insolvency or other similar proceeding affecting creditors’
rights generally (including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent and each Lender
with respect thereto; provided that Borrower shall only be required to reimburse
the reasonable fees and out-of-pocket expenses of one legal counsel per
jurisdiction to the extent no conflict exists).

(b) (i) Borrower agrees to indemnify, defend and save and hold harmless the
Administrative Agent, each Lender and each of their respective Affiliates,
successors and permitted assigns, and their respective officers, directors,
employees, agents, members, controlling persons and advisors (each, an
“Indemnified Party”) from and against, and shall pay within ten Business Days of
written demand (including documentation reasonably supporting such request), any
and all claims, damages, actual losses, liabilities and expenses (including,
without limitation, reasonable fees, disbursements and other charges of
counsel), joint or several, that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection with
or by reason of (including, without limitation, in connection with any
investigation, litigation or proceeding or preparation of a defense in
connection therewith) (1) the Facility, the actual or proposed use of the
proceeds of the Advances, the Loan Documents or any of the transactions
contemplated thereby, or (2) the actual or alleged presence of Hazardous
Materials on any property of Borrower or any of its Subsidiaries or any
Environmental Action relating in any way to Borrower or any of its Subsidiaries,
except (A) to the extent such claim, damage, loss, liability or expense is found
in a final nonappealable judgment by a court of competent jurisdiction to have
resulted from the gross negligence, willful misconduct or bad faith of such
Indemnified Party or its officers, directors, employees or agents to the extent
acting at the direction of such Indemnified Party, (B) to the extent such claim,
damage, loss, liability or expense is found in a final nonappealable judgment by
a court of competent jurisdiction to have resulted from a material breach of
obligations by such Indemnified Party or its officers, directors, employees or
agents under the Loan Documents or (C) if such dispute is solely between
Indemnified Parties or their respective officers, affiliates, directors,
employees, agents, advisors, controlling persons, members and successors and
permitted assigns; provided that Borrower agrees to indemnify and hold harmless
each Indemnified Party with respect to any matters described in this clause (C),
(x) in respect of any claims against any Indemnified Party in its capacity in
fulfilling its role as the Administrative Agent or a Joint Lead Arranger or any
other similar role under the Loan Documents and (y) in respect of any claims
arising out of or in connection with or by reason of any act or omission of
Borrower. In the case of an investigation, litigation or other proceeding to
which the indemnity in this Section 9.03(b) applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by Borrower, its directors, shareholders or creditors, any Indemnified Party or
any other Person, whether or not any Indemnified Party is otherwise a party
thereto and whether or not the transactions set forth in the Loan Documents are
consummated, but excluding from this indemnity any disputes which are solely
between or among Indemnified Parties or their respective officers, affiliates,
directors, employees, agents, advisors, controlling persons, members and
successors and permitted assigns, except in respect of the Administrative Agent
in its capacity as the Administrative Agent hereunder). Each party hereto also
agrees not to assert any claim against any other party hereto or any of their
Affiliates, or any of their respective officers, directors, employees, agents
and advisors, on any theory of liability, for special, indirect, consequential
or punitive damages arising out of or otherwise relating to the Facility, the
actual or proposed use of the proceeds of the Advances, the Loan Documents or
any of the transactions contemplated by the Loan Documents.

 

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(ii) Borrower shall not be liable for any settlement of any proceedings effected
without its written consent (which consent shall not be unreasonably withheld,
delayed or conditioned), but if settled with Borrower’s written consent or if
there is a final judgment against an Indemnified Party in any such proceedings,
Borrower agrees to indemnify and hold harmless each Indemnified Party from and
against any and all actual losses, claims, damages, liabilities and expenses by
reason of such settlement or judgment in accordance with this paragraph.
Borrower shall not, without the prior written consent of an Indemnified Party,
effect any settlement of any pending or threatened proceeding in respect of
which indemnity could have been sought hereunder by such Indemnified Party
unless such settlement (1) includes an unconditional release of such Indemnified
Party in form and substance reasonably satisfactory to such Indemnified Party
from all liability on claims that are the subject matter of such proceeding and
(2) does not include any statement as to or any admission of fault, culpability
or a failure to act by or on behalf of such Indemnified Party.

(c) If any payment of principal of, or Conversion of, any LIBOR Borrowing is
made by an Eligible Assignee to a Lender other than on the last day of the
Interest Period for such Borrowing upon an assignment of rights and obligations
under this Agreement pursuant to Section 9.04, as a result of a demand by
Borrower pursuant to Section 2.20, or if Borrower fails to make any payment or
prepayment of an Borrowing for which a notice of prepayment has been given or
that is otherwise required to be made, whether pursuant to Section 2.10, 2.11 or
Article VII or otherwise, Borrower shall, promptly following written demand by
such Lender (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or expenses that it may
reasonably incur as a result of such payment or Conversion or such failure to
pay or prepay, as the case may be, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Borrowing.

(d) If Borrower fails to pay when due any costs, expenses or other amounts
payable by it under any Loan Document, including, without limitation, fees and
expenses of counsel and indemnities, with 3 days’ prior written notice to
Borrower such amount may be paid on behalf of Borrower by the Administrative
Agent or any Lender, in its sole discretion.

(e) Without prejudice to the survival of any other agreement of Borrower
hereunder or under any other Loan Document, the agreements and obligations of
Borrower contained in Sections 2.15, 2.17 and 2.19 and this Section 9.03 shall
survive the payment in full of principal, interest and all other amounts payable
hereunder and under any of the other Loan Documents.

Section 9.04 Successors and Assigns. (a) The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns permitted hereby (including any
Affiliate of an Issuing Bank that issues any Letter of Credit), except that
(i) Borrower may not (except as permitted under Section 6.04) assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Lender (and any attempted assignment or transfer by
Borrower without such consent shall be null and void) and (ii) no Lender may
assign or otherwise transfer its rights or obligations hereunder except in
accordance with this Section 9.04 (any attempted assignment or transfer not
complying with the terms of this Section 9.04 shall be null and void). Nothing
in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of an Issuing Bank that issues any
Letter of Credit), Participants (to the extent provided in paragraph (c) of this
Section 9.04) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the Issuing Banks and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.

 

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(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld or delayed) of:

(A) Borrower; provided that no consent of Borrower shall be required for an
assignment to another Lender, an Affiliate of a Lender, an Approved Fund or, if
an Event of Default specified in Section 7.01(a) or (h) has occurred and is
continuing, any other Eligible Assignee, and provided, further that no consent
of Borrower shall be required for an assignment during the primary syndication
of the Loans to Persons identified by the Administrative Agent to Borrower on or
prior to the Closing Date and reasonably acceptable to Borrower;

(B) the Administrative Agent; provided that no consent of the Administrative
Agent shall be required for an assignment to another Lender, an Affiliate or
branch of a Lender, an Approved Fund;

(C) the Swingline Lender; and

(D) each Issuing Bank.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to another Lender, an Affiliate of a
Lender or an Approved Fund or an assignment of the entire remaining amount of
the assigning Lender’s Commitment or Loans of any Class, the amount of the
Commitment or the principal amount of Loans of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent and
further determined on an aggregate basis for all concurrent assignments to
Related Funds (as defined below)) shall be in a minimum amount of $5,000,000 and
increments of $1,000,000 in excess thereof unless each of Borrower and the
Administrative Agent otherwise consent; provided that no such consent of
Borrower shall be required if an Event of Default specified in Section 7.01(a)
or (h) has occurred and is continuing;

(B) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement;

 

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(C) the parties to each assignment shall (1) electronically execute and deliver
to the Administrative Agent an Assignment and Assumption via an electronic
settlement system acceptable to the Administrative Agent (which initially shall
be ClearPar, LLC) or (2) manually execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500 (provided that such fee may be waived or reduced in the sole
discretion of the Administrative Agent); and

(D) the assignee, if it shall not be a Lender, shall deliver on or prior to the
effective date of such assignment, to the Administrative Agent (1) an
Administrative Questionnaire and (2) if applicable, an appropriate Internal
Revenue Service form (such as Form W-8BEN or W-8ECI or any successor form
adopted by the relevant United States taxing authority) as required by
applicable law supporting such assignee's position that no withholding by
Borrower or the Administrative Agent for United States income tax payable by
such assignee in respect of amounts received by it hereunder is required.

The term “Related Funds” shall mean with respect to any Lender that is an
Approved Fund, any other Approved Fund that is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
of this Section 9.04, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of
Sections 2.15, 2.16, 2.17, 2.19 and 9.03 with respect to facts and circumstances
occurring on or prior to the effective date of such assignment). Any assignment
or transfer by a Lender of rights or obligations under this Agreement that does
not comply with this Section 9.04 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section 9.04.

(iv) The Administrative Agent, acting for this purpose as an agent of Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of
the Lenders and their respective successors and assigns, and the Commitment of,
and principal amount of and interest on the Loans and LC Disbursements owing to,
each Lender pursuant to the terms hereof from time to time (the “Register”). The
entries in the Register shall be conclusive, absent manifest error, and
Borrower, the Administrative Agent, the Issuing Banks and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by Borrower, the
Issuing Banks and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

 

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(v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire and tax certifications required by Section 9.04(b)(ii)(D)(2)
(unless the assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) of this Section 9.04, if
applicable, and any written consent to such assignment required by paragraph
(b) of this Section 9.04, the Administrative Agent shall promptly accept such
Assignment and Assumption and record the information contained therein in the
Register; provided that if either the assigning Lender or the assignee shall
have failed to make any payment required to be made by it pursuant to
Section 2.05, 2.06(d) or (e), 2.07(b), 2.18(c) or 9.03, the Administrative Agent
shall have no obligation to accept such Assignment and Assumption and record the
information therein in the Register unless and until such payment shall have
been made in full, together with all accrued interest thereon. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this clause (v). Notwithstanding anything in this
Agreement to the contrary, the Loans and Commitments are intended to be treated
as registered obligations for tax purposes and the right, title and interest of
the Lenders in and to such Loans and Commitments shall be transferable only in
accordance with the terms hereof. This Section 9.04(b)(v) shall be construed so
that the Loans and Commitments are at all times maintained in “registered form”
within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code.

(vi) By executing and delivering an Assignment and Assumption, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (A) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim and that its
Commitment, and the outstanding balances of its Revolving Loans, in each case
without giving effect to assignments thereof which have not become effective,
are as set forth in such Assignment and Assumption, (B) except as set forth in
(A) above, such assigning Lender makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of Borrower or any respective Subsidiary or
the performance or observance by Borrower or any respective Subsidiary of any of
its obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (C) such assignee represents
and warrants that it is an Eligible Assignee, legally authorized to enter into
such Assignment and Assumption; (D) such assignee confirms that it has received
a copy of this Agreement, together with copies of the most recent financial
statements referred to in Section 3.08 or delivered pursuant to Section 5.01 and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Assumption;
(E) such assignee will independently and without reliance upon the
Administrative Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (F) such assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Administrative Agent, by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(G) such assignee agrees that it will perform in accordance with their terms all
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender, including delivery of the tax certifications
required by Section 9.04(b)(ii)(D)(2).

 

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(c) (i) Any Lender may, without the consent of Borrower, the Administrative
Agent, the Issuing Banks or the Swingline Lender, sell participations to one or
more banks or other entities (a “Participant”) in all or a portion of such
Lender’s rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it); provided that (A) such Lender’s
obligations under this Agreement shall remain unchanged, (B) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (C) Borrower, the Administrative Agent, the Issuing Banks
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the first proviso to
Section 9.02(b) that directly affects such Participant. Subject to paragraph
(c)(ii) of this Section 9.04, Borrower agrees that each Participant shall be
entitled to the benefits of Sections 2.15, 2.16, 2.17 and 2.19 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section 9.04.

(ii) A Participant shall not be entitled to receive any greater payment under
Section 2.15 or 2.17 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with Borrower’s prior
written consent. A Participant that would be a Non-U.S. Lender if it were a
Lender shall not be entitled to the benefits of Section 2.17 unless Borrower is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of Borrower, to comply with Section 2.17(e) as though it
were a Lender.

(iii) Each Lender that sells a participation shall, acting solely for this
purpose as an agent of Borrower, maintain a register complying with
Section 5f.103-1(c) of the United States Treasury Regulations on which it enters
the name and address of each Participant and the principal amounts (and stated
interest) of each participant's interest in the Loans and other obligations
under this Agreement (the “Participant Register”). The entries in the
Participant Register shall be conclusive absent manifest error, and such Lender
shall treat each person whose name is recorded in the Participant Register as
the owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary. Any participation of such Loan may
be effected only by the registration of such participation on the Participant
Register. The Participant Register shall be available for inspection by Borrower
from time to time upon reasonable notice.

(d) Any Lender may at any time pledge or grant a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Lender,
including without limitation any pledge or grant to secure obligations to a
Federal Reserve Bank, and this Section 9.04 shall not apply to any such pledge
or grant of a security interest; provided that no such pledge or grant of a
security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

 

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(e) Notwithstanding anything to the contrary contained herein, any Lender (a
“Granting Lender”) may grant to a special purpose funding vehicle (an “SPC”),
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and Borrower, the option to provide to Borrower all or any
part of any Loan that such Granting Lender would otherwise be obligated to make
to Borrower pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects
not to exercise such option or otherwise fails to provide all or any part of
such Loan, the Granting Lender shall be obligated to make such Loan pursuant to
the terms hereof. The making of a Loan by an SPC hereunder shall utilize the
Commitment of the Granting Lender to the same extent, and as if, such Loan were
made by such Granting Lender. Each party hereto hereby agrees that (i) neither
the grant to any SPC nor the exercise by any SPC of such option shall increase
the costs or expenses or otherwise increase or change the obligations of
Borrower under this Agreement (including its obligations under Section 2.15,
2.16 or 2.17), (ii) no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender) and the Granting Lender shall for all purposes including
approval of any amendment, waiver or other modification of any provision of the
Loan Documents, remain the Lender of record hereunder. In addition,
notwithstanding anything to the contrary contained in this Section 9.04, any SPC
may (i) with notice to, but without the prior written consent of, Borrower or
the Administrative Agent and without paying any processing fee therefor, assign
all or a portion of its interests in any Loans to the Granting Lender or to any
financial institutions (consented to by Borrower and Administrative Agent)
providing liquidity and/or credit support to or for the account of such SPC to
support the funding or maintenance of Loans and (ii) disclose on a confidential
basis any Information relating to its Loans to any rating agency, commercial
paper dealer or provider of any surety, guarantee or credit or liquidity
enhancement to such SPC, which Person shall agree to be bound by the terms of
confidentiality contained herein for the benefit of Borrower.

(f) In the event that any Lender shall become a Defaulting Lender, then an
Issuing Bank or the Swingline Lender shall have the right, but not the
obligation, at its own expense, upon notice to such Lender and the
Administrative Agent, to replace such Lender with an assignee (in accordance
with and subject to the restrictions contained in paragraph (b) above), and such
Lender hereby agrees to transfer and assign without recourse (in accordance with
and subject to the restrictions contained in paragraph (b) above) all its
interests, rights and obligations in respect of its Commitment to such assignee;
provided, however, that (i) no such assignment shall conflict with any law, rule
and regulation or order of any Governmental Authority, and (ii) such Issuing
Bank or the Swingline Lender, as applicable, or such assignee, as the case may
be, shall pay to such Lender in immediately available funds on the date of such
assignment the principal of and interest accrued to the date of payment on the
Loans made by such Lender hereunder and all other amounts accrued for such
Lender's account or owed to it hereunder.

Section 9.05 Survival. All covenants, agreements, representations and warranties
made by Borrower in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of the Loan
Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent, an Issuing Bank or any Lender
may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid or any Letter of Credit (which has not been Cash Collateralized
pursuant to Section 2.09(b) or Backstopped) is outstanding and so long as the
Commitments have not expired or terminated. The provisions of Sections 2.15,
2.16, 2.17, 2.19 and 9.03 and Article VIII shall survive and remain in full
force and effect regardless of the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof.

 

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Section 9.06 Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and the Fee Letter and any separate letter agreements with
respect to fees payable to the Administrative Agent constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating to
the subject matter hereof. Except as provided in Section 4.01, this Agreement
shall become effective when it shall have been executed by the Administrative
Agent and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Delivery of an
executed counterpart of a signature page of this Agreement by facsimile or
electronic transmission shall be effective as delivery of a manually executed
counterpart of this Agreement.

Section 9.07 Severability. To the extent permitted by law, any provision of any
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions thereof; and to the extent permitted
by law the invalidity of a particular provision in a particular jurisdiction
shall not invalidate such provision in any other jurisdiction.

Section 9.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates, with the prior written
consent of the Administrative Agent, is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final)
(other than payroll, petty cash, trust or tax accounts) at any time held and
other obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of Borrower against any of and all the Secured Obligations
held by such Lender, irrespective of whether or not such Lender shall have made
any demand under the Loan Documents and although such obligations may be
unmatured. The applicable Lender shall notify Borrower and the Administrative
Agent of such set-off or application; provided that any failure to give or any
delay in giving such notice shall not affect the validity of any such set-off or
application under this Section 9.08. The rights of each Lender under this
Section 9.08 are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.

Section 9.09 Governing Law; Jurisdiction; Consent to Service of Process.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN LETTERS OF CREDIT
AND AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH LETTER
OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE
LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES
ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS MOST
RECENTLY PUBLISHED AND IN EFFECT, ON THE DATE SUCH LETTER OF CREDIT WAS ISSUED,
BY THE INTERNATIONAL CHAMBER OF COMMERCE (THE “UNIFORM CUSTOMS”) AND, AS TO
MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.

(b) Each party hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the exclusive jurisdiction of any U.S. Federal or New York
State court sitting in the Borough of Manhattan, New York, New York in any
action or proceeding arising out of or relating to any Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding

 

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may be heard and determined in such New York State or, to the extent permitted
by law, in such Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent, any Issuing Bank or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
or any other Loan Document against Borrower or its properties in the courts of
any jurisdiction.

(c) Each party hereto hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (b) of this Section 9.09. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

(d) To the extent permitted by law, each party to this Agreement hereby
irrevocably waives personal service of any and all process upon it and agrees
that all such service of process may be made by registered mail (return receipt
requested) directed to it at its address for notices as provided for in
Section 9.01. Nothing in this Agreement or any other Loan Document will affect
the right of any party to this Agreement to serve process in any other manner
permitted by law.

Section 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 9.10.

Section 9.11 Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

Section 9.12 Confidentiality. The Administrative Agent, each Issuing Bank and
each Lender agrees (and each Lender agrees to cause its SPC, if any and agrees
to be liable for any breach thereof by its SPC) to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(a) to its and its Affiliates’ directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential); (b) to the extent requested by any regulatory, governmental or
administrative authority; (c) to the extent required by law or by any subpoena
or similar legal process (in which case you agree to inform Borrower promptly
thereof to the extent not prohibited by applicable law); (d) to any other party
to this Agreement; (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder; (f) subject to an
agreement containing provisions substantially the same as those of this
Section 9.12, to (i) any assignee of or Participant in, or any prospective
assignee of or

 

105

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

Participant in, any of its rights or obligations under this Agreement,
including, without limitation, any SPC, (ii) any pledgee referred to in
Section 9.04(d), or (iii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to Borrower and its
obligations; (g) with the consent of Borrower; or (h) to the extent such
Information (x) becomes publicly available other than as a result of a breach of
this Section 9.12 or any other confidentiality obligations owing to Borrower or
any of its Affiliates by the Administrative Agent, the Lenders or an Issuing
Bank, or (y) becomes available to the Administrative Agent, an Issuing Bank or
any Lender on a nonconfidential basis other than as a result of a breach of this
Section 9.12 from a source other than Borrower that is not known by the
Administrative Agent, any Lender or Issuing Bank to be subject to
confidentiality obligations to Borrower or its Affiliates. For the purposes of
this Section 9.12 only, “Information” means all information received from
Borrower relating to Borrower, its Subsidiaries or its business or the
Transactions, other than any such information that is available to the
Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by Borrower. Any Person required to maintain the
confidentiality of Information as provided in this Section 9.12 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

Section 9.13 Lender Obligations Several; Violation of Law. The respective
obligations of the Lenders hereunder are several and not joint and the failure
of any Lender to make any Loan or perform any of its obligations hereunder shall
not relieve any other Lender from any of its obligations hereunder. Anything
contained in this Agreement to the contrary notwithstanding, neither the Issuing
Banks nor any Lender shall be obligated to extend credit to Borrower in
violation of any Requirement of Law.

Section 9.14 USA PATRIOT Act. Each Lender and the Administrative Agent (for
itself and not on behalf of any Lender) hereby notifies Borrower that pursuant
to the requirements of the USA PATRIOT Act, it is required to obtain, verify and
record information that identifies Borrower, which information includes the name
and address of Borrower and other information that will allow such Lender or the
Administrative Agent, as applicable, to identify Borrower in accordance with the
USA PATRIOT Act. Borrower shall provide such information and take such actions
as are reasonably requested by the Administrative Agent or any Lender in order
to assist the Administrative Agent and the Lenders in maintaining compliance
with the USA PATRIOT Act.

Section 9.15 Disclosure; No Advisory or Fiduciary Responsibility.

(a) Disclosure. Borrower and each Lender hereby acknowledges and agrees that the
Administrative Agent and/or its Affiliates from time to time may hold
investments in, make other loans to or have other relationships with Borrower
and its Affiliates.

(b) No Advisory or Fiduciary Responsibility. In connection with all aspects of
each transaction contemplated by any Loan Document, Borrower acknowledges and
agrees that (i)(1) this credit facility and any related arranging or other
services by the Administrative Agent, any Lender, any of their Affiliates or any
arranger are arm's-length commercial transactions between Borrower and such
Person; (2) Borrower has consulted its own legal, accounting, regulatory and tax
advisors to the extent they have deemed appropriate; and (3) Borrower is capable
of evaluating, and understand and accept, the terms, risks and conditions of the
transactions contemplated by the Loan Documents; (ii) the Administrative Agent,
the Lenders, their Affiliates and any arranger is and has been acting solely as
a principal and, except as expressly agreed in writing by the relevant parties,
has not been, is not, and will not be acting as an advisor, agent or fiduciary
for Borrower, any of its Affiliates or any other Person, and has no obligation
with respect to the transactions contemplated by the Loan Documents except as
expressly set forth therein; and (iii) the Administrative Agent, the Lenders,
their Affiliates and any

 

106

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

arranger may be engaged in a broad range of transactions that involve interests
that differ from those of Borrower and its Affiliates, and have no obligation to
disclose any of such interests to Borrower or its Affiliates. To the fullest
extent permitted by applicable law, Borrower hereby waives and releases any
claims that it may have against the Administrative Agent, the Lenders, their
Affiliates and any arranger with respect to any breach of agency or fiduciary
duty in connection with any transaction contemplated by a Loan Document.

Section 9.16 Appointment for Perfection. Each Lender hereby appoints each other
Lender as its agent for the purpose of perfecting Liens, for the benefit of the
Administrative Agent and the Lenders, in assets which, in accordance with
Article 9 of the UCC or any other applicable law can be perfected only by
possession or control. Should any Lender (other than the Administrative Agent)
obtain possession or control of any such Collateral, such Lender shall notify
the Administrative Agent thereof, and, promptly upon the Administrative Agent’s
request therefor shall deliver such Collateral to the Administrative Agent or
otherwise deal with such Collateral in accordance with the Administrative
Agent’s instructions.

Section 9.17 Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section 9.17 shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender. In determining whether the
interest contracted for, charged or received by the Administrative Agent or a
Lender exceeds the maximum rate, such Person may, to the extent permitted by
applicable law, (a) characterize any payment that is not principal as an
expense, fee or premium rather than interest; (b) exclude voluntary prepayments
and the effects thereof; and (c) amortize, prorate, allocate and spread in equal
or unequal parts the total amount of interest throughout the contemplated term
of the Obligations hereunder.

Section 9.18 Reserved.

Section 9.19 Reserved.

Section 9.20 Reserved.

Section 9.21 Obligations Absolute. Borrower hereby covenants and agrees that the
Facility Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Lender with respect thereto. This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Facility Obligations is rescinded or must otherwise be returned by any Lender or
any other Person upon the insolvency, bankruptcy or reorganization of Borrower
or otherwise, all as though such payment had not been made.

 

107

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

Section 9.22 Discretionary Loans.

(a) Notwithstanding anything to the contrary contained herein, Administrative
Agent may make any Protective Advance or any Loan to pay any Facility
Obligations as permitted under Section 2.03(c) hereof or to fund any payment
item related to any controlled disbursement account as permitted under
Section 2.03(d) hereof (collectively, the “Discretionary Loans”), solely as
permitted under clauses (b) and (c), below.

(b) Administrative Agent may make Discretionary Loans in a principal amount of
up to $5,000,000 in the aggregate without the consent of Borrower.
Contemporaneously with or promptly after making such Discretionary Loan,
Administrative Agent shall provide written notice to a Financial Officer of
Borrower setting forth the amount of the Discretionary Loan and the application
of the proceeds thereof. Borrower agrees to maintain secured Debt capacity under
the agreements identified (specifically or otherwise) in Section 3.26 of this
Agreement (the “Subject Agreements”) at all times in an amount equal to the
difference between (i) $5,000,000 and (ii) the aggregate principal amount of
Discretionary Loans (if any) made by Administrative Agent in reliance on this
Section 9.22(b).

(c) Administrative Agent may make Discretionary Loans in addition to those
permitted under clause (b) above (“Additional Discretionary Loans”) with
Borrower’s consent as provided in this Section 9.22(c). If Administrative Agent
desires to make an Additional Discretionary Loan, Administrative Agent shall
provide written notice to a Financial Officer of Borrower setting forth the
amount of the desired Additional Discretionary Loan and requesting
(i) Borrower’s prior written consent to the making of such Additional
Discretionary Loan (which consent Borrower may give or withhold in its sole
discretion) and (ii) if Borrower is willing to consent to such Loan, a
determination by Borrower as to whether the making of such Discretionary Loan by
Administrative Agent would result in a breach or violation of the terms of any
Subject Agreement. Borrower shall promptly notify Administrative Agent in
writing whether it will provide or withhold its consent to the making of such
Additional Discretionary Loan by the Administrative Agent and, if it consents to
the making thereof, whether such Additional Discretionary Loan would result in a
breach or violation of the terms of any Subject Agreement (such notice being a
“Borrower Reply”). If the Borrower Reply indicates Borrower’s consent to the
making of such Discretionary Loan by Administrative Agent and that the making of
such Additional Discretionary Loan would not result in a breach or violation of
the terms of any Subject Agreement, Administrative Agent may make such
Additional Discretionary Loan within five Business Days of its receipt of
Borrower’s Reply, and Borrower shall reserve an amount equal to the principal
amount of such Additional Discretionary Loan against it’s available covenant
baskets under the Subject Agreements for the period beginning on the date of the
related Borrower Reply to the earlier of (i) the fifth Business Day after the
date of such Borrower Reply (it being understood that Administrative Agent may
make such Discretionary Loan at any time prior to the close of business on such
fifth Business Day) and (ii) the date the Administrative Agent makes such
Discretionary Loan. The Administrative Agent shall notify Borrower within one
Business Day of making any Additional Discretionary Loan.

Section 9.23 Credit Inquiries. Borrower hereby authorizes the Administrative
Agent and the Lenders (but they shall have no obligation) to respond, to the
extent permitted by Section 9.12, to usual and customary credit inquiries from
third parties concerning Borrower or any of its Subsidiaries.

Section 9.24 Existing Senior Credit Agreement.

(a) Each of the Lenders party hereto that is a “Lender” under the Existing
Senior Credit Agreement hereby waives advance notice of any termination or
reduction of commitments and prepayments of loans under the Existing Senior
Credit Agreement.

 

108

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AMENDED AND RESTATED ABL CREDIT AGREEMENT

 

(b) Effective on the Closing Date, the Existing Senior Credit Agreement is
hereby amended and restated in its entirety hereby. The amendment and
restatement of the Existing Senior Credit Agreement hereby shall not be
construed to discharge or otherwise affect any obligations of the “Borrowers”
(as defined in the Existing Senior Credit Agreement) accrued or otherwise owing
under the Existing Senior Credit Agreement that have not been paid, it being
understood that such obligations shall continue as obligations hereunder.
Without limiting the generality of the foregoing, this Agreement is not intended
to constitute a novation of the Existing Senior Credit Agreement.

(c) Effective on the Closing Date and the satisfaction or waiver of all of the
conditions thereto contained in Article IV hereof, each of the “Borrowers” (as
defined in the Existing Senior Credit Agreement) other than Navistar, Inc. (the
“Released Borrowers”) shall automatically be released from all liabilities,
obligations and indebtedness owing by such Released Borrowers under this
Agreement and the other Loan Documents (and including, for the avoidance of
doubt, the Existing Senior Credit Agreement and the “Loan Documents” (as defined
therein)), and all Liens and security interests of the Administrative Agent in
any and all of the property of the Released Borrowers created under the Loan
Documents shall be automatically released and terminated.

(d) Effective on the date hereof, the Lenders hereby waive any requirement set
forth in the Security Agreement (as defined in the Existing Senior Credit
Agreement) in respect of the contemplated name change of Monaco RV, LLC to
Navistar RV, LLC, which shall occur immediately prior to or contemporaneously
with the effectiveness of this Agreement.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

109

--------------------------------------------------------------------------------

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

 

BORROWER: NAVISTAR, INC. By:   /S/ JAMES M. MORAN Name: James M. Moran Title:  
Vice President and Treasurer

 

 

 

 

 

 

[Signature Page to Amended and Restated ABL Credit Agreement]

--------------------------------------------------------------------------------

AGENTS AND LENDERS: BANK OF AMERICA, N.A., as Administrative Agent, Issuing
Bank, Swingline Lender and a Lender

By:

  /S/ THOMAS J. BRENNAN

Name: Thomas J. Brennan

Title:   Senior Vice President

 

 

 

 

 

 

[Signature Page to Amended and Restated ABL Credit Agreement]

--------------------------------------------------------------------------------

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as a Joint Lead Arranger and
as a Joint Book Manager

By:

  /S/ OTIS KU

Name: Otis Ku

Title:   Director

 

 

 

 

 

 

[Signature Page to Amended and Restated ABL Credit Agreement]

 

--------------------------------------------------------------------------------

J.P. MORGAN SECURITIES LLC, as a Joint Lead Arranger and as a Joint Book Manager

By:

  /S/ GEOFFREY KIRIES

Name: Geoffrey Kiries

Title:   Executive Director

 

 

 

 

 

 

[Signature Page to Amended and Restated ABL Credit Agreement]

--------------------------------------------------------------------------------

WELLS FARGO CAPITAL FINANCE, LLC, as a Joint Lead Arranger, as a Joint Book
Manager, and as a Syndication Agent

By:

  /S/ DAVID P. HILL

Name: David P. Hill

Title:   Vice President

 

 

 

 

 

 

[Signature Page to Amended and Restated ABL Credit Agreement]

--------------------------------------------------------------------------------

JPMORGAN CHASE BANK, N.A., as a Syndication Agent

By:

  /S/ RICHARD W. DUKER

Name: Richard W. Duker

Title:   Managing Director

 

 

 

 

 

 

[Signature Page to Amended and Restated ABL Credit Agreement]

--------------------------------------------------------------------------------

CREDIT SUISSE SECURITIES (USA) LLC, as a Joint Book Manager

By:

  /S/ JAMES E. NAPPO

Name: James E. Nappo

Title:   Managing Director

By:

  /S/ MARK PADJEN

Name: Mark Padjen

Title:   Director

 

 

 

 

 

 

[Signature Page to Amended and Restated ABL Credit Agreement]

--------------------------------------------------------------------------------

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Issuing Bank

By:

  /S/ ARI BRUGER

Name: Ari Bruger

Title:   Vice President

By:

  /S/ RAHUL PARMAR

Name: Rahul Parmar

Title:   Associate

 

 

 

 

 

 

[Signature Page to Amended and Restated ABL Credit Agreement]

 

--------------------------------------------------------------------------------

EXHIBIT A

FORM OF ADMINISTRATIVE QUESTIONNAIRE

 

FAX ALONG WITH COMMITMENT LETTER TO:  

 

FAX #  

 

 

I. Borrower Name:  

 

 

$                                                                   
                       Type of Credit Facility  

 

II. Legal Name of Lender of Record for Signature Page:

 

 

 

  •  

Signing Credit Agreement              YES             NO

  •  

Coming in via Assignment              YES             NO

 

III. Type of Lender:  

 

(Bank, Asset Manager, Broker/Dealer, CLO/CDO, Finance Company, Hedge Fund,
Insurance, Mutual Fund, Pension Fund, Other Regulated Investment Fund, Special
Purpose Vehicle, Other – please specify)

 

IV. Domestic Address:   V. Eurodollar Address:

 

 

 

 

 

 

 

 

 

 

 

 

VI. Contact Information:

Syndicate level information (which may contain material non-public information
about the Borrower and its related parties or their respective securities will
be made available to the Credit Contact(s). The Credit Contacts identified must
be able to receive such information in accordance with his/her institution’s
compliance procedures and applicable laws, including Federal and State
securities laws.

 

   

Credit Contact

 

Primary

Operations Contact

 

Secondary

Operations Contact

Name:

 

 

 

 

 

 

Title:

 

 

 

 

 

 

Address:

 

 

 

 

 

 

Telephone:

 

 

 

 

 

 

Facsimile:

 

 

 

 

 

 

 

Ex. A-1

--------------------------------------------------------------------------------

E Mail Address:   

 

  

 

  

 

IntraLinks E Mail

Address:

  

 

  

 

  

 

Does Secondary Operations Contact need copy of notices?         YES         NO

 

    

Letter of Credit

Contact

  

Contact

  

Draft Documentation

Legal Counsel

Name:

  

 

  

 

  

 

Title:

  

 

  

 

  

 

Address:

  

 

  

 

  

 

Telephone:

  

 

  

 

  

 

Facsimile:

  

 

  

 

  

 

E Mail Address:

  

 

  

 

  

 

PLEASE CHECK IF YOU CAN FUND IN THE CURRENCIES REQUIRED FOR THIS TRANSACTION
LISTED BELOW:

 

             

  

US DOLLAR

  

         

  

 

  

         

  

 

 

  

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

 

  

 

VII. Lender’s SWIFT Payment Instructions for [Foreign Currency]:

Pay to:

 

 

(Bank Name)

 

      

(SWIFT)

 

   (Country)  

(Account #)

 

   (Account Name)  

(FFC Account #)

 

   (FFC Account Name)   (Attention)     

VII. Lender’s SWIFT Payment Instructions for [Foreign Currency]:

Pay to:

 

 

(Bank Name)

 

      

(SWIFT)

 

  

(Country)

 

 

Ex A-2

--------------------------------------------------------------------------------

 

(Account #)    (Account Name)

 

(FFC Account #)    (FFC Account Name)

 

(Attention)   

VII. Lender’s SWIFT Payment Instructions for [Foreign Currency]:

Pay to:

 

 

(Bank Name)

 

(SWIFT)    (Country)

 

(Account #)    (Account Name)

 

(FFC Account #)    (FFC Account Name)

 

(Attention)   

VII. Lender’s SWIFT Payment Instructions for [Foreign Currency]:

Pay to:

 

 

(Bank Name)

 

(SWIFT)    (Country)

 

(Account #)    (Account Name)

 

(FFC Account #)    (FFC Account Name)

 

(Attention)   

VIII. Lender’s Standby Letter of Credit, Commercial Letter of Credit, and
Bankers’ Acceptance Fed Wire Payment Instructions (if applicable):

Pay to:

 

 

(Bank Name)

 

(ABA #)   

 

(Account #)   

 

(Attention)   

IX. Lender’s Fed Wire Payment Instructions:

Pay to:

 

 

(Bank Name)

 

Ex. A-3

--------------------------------------------------------------------------------

 

(ABA#)    (City/State)

 

(Account #)    (Account Name)

 

(Attention)   

X. Organizational Structure and Tax Status

Please refer to the enclosed withholding tax instructions below and then
complete this section accordingly:

 

Lender Taxpayer Identification Number (TIN):                -
                        

Tax Withholding Form Delivered to Bank of America*:

 

 

   W-9

 

   W-8BEN

 

   W-8ECI

 

   W-8EXP

 

   W-8IMY

Tax Contact

 

Name:   

 

   Title:   

 

   Address:   

 

   Telephone:   

 

   Facsimile:   

 

   E Mail Address:   

 

  

NON–U.S. LENDER INSTITUTIONS

1. Corporations:

If your institution is incorporated outside of the United States for U.S.
federal income tax purposes, and is the beneficial owner of the interest and
other income it receives, you must complete one of the following three tax
forms, as applicable to your institution: a.) Form W-8BEN (Certificate of
Foreign Status of Beneficial Owner), b.) Form W-8ECI (Income Effectively
Connected to a U.S. Trade or Business), or c.) Form W-8EXP (Certificate of
Foreign Government or Governmental Agency).

A U.S. taxpayer identification number is required for any institution submitting
a Form W-8 ECI. It is also required on Form W-8BEN for certain institutions
claiming the benefits of a tax treaty with the U.S. Please refer to the
instructions when completing the form applicable to your institution. In
addition, please be advised that U.S. tax regulations do not permit the
acceptance of faxed forms. An original tax form must be submitted.

 

Ex. A-4

--------------------------------------------------------------------------------

2. Flow-Through Entities

If your institution is organized outside the U.S., and is classified for U.S.
federal income tax purposes as either a Partnership, Trust, Qualified or
Non-Qualified Intermediary, or other non-U.S. flow-through entity, an original
Form W-8IMY (Certificate of Foreign Intermediary, Foreign Flow-Through Entity,
or Certain U.S. branches for United States Tax Withholding) must be completed by
the intermediary together with a withholding statement. Flow-through entities
other than Qualified Intermediaries are required to include tax forms for each
of the underlying beneficial owners.

Please refer to the instructions when completing this form. In addition, please
be advised that U.S. tax regulations do not permit the acceptance of faxed
forms. Original tax form(s) must be submitted.

U.S. LENDER INSTITUTIONS:

If your institution is incorporated or organized within the United States, you
must complete and return Form W-9 (Request for Taxpayer Identification Number
and Certification). Please be advised that we require an original form W-9.

Pursuant to the language contained in the tax section of the Credit Agreement,
the applicable tax form for your institution must be completed and returned on
or prior to the date on which your institution becomes a lender under this
Credit Agreement. Failure to provide the proper tax form when requested will
subject your institution to U.S. tax withholding.

 

* Additional guidance and instructions as to where to submit this documentation
can be found at this link:

 

LOGO [g401097g39g17.jpg]

XI. Bank of America Payment Instructions:

 

Pay to: Bank of America, N.A.

ABA # 026009593

New York, NY

Acct. # 9369337536

Acct. Name: Bank of America Business Capital

Ref: Name of Facility

 

Ex. A-5

--------------------------------------------------------------------------------

EXHIBIT B

FORM OF ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Amended and Restated ABL Credit Agreement
identified below (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”), receipt of a copy of which
is hereby acknowledged by the Assignee. The Standard Terms and Conditions set
forth in Annex I attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth
herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including any letters of credit, guarantees, and swingline
loans included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of the Assignor (in its capacity as a Lender) against any Person, whether
known or unknown, arising under or in connection with the Credit Agreement, any
other documents or instruments delivered pursuant thereto or the loan
transactions governed thereby or in any way based on or related to any of the
foregoing, including contract claims, tort claims, malpractice claims, statutory
claims and all other claims at law or in equity related to the rights and
obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the “Assigned Interest”). Such sale and
assignment is without recourse to the Assignor and, except as expressly provided
in this Assignment and Assumption, without representation or warranty by the
Assignor.

 

1.   

Assignor:

 

 

   2.   

Assignee:

 

 

  

 

Ex. B-1

--------------------------------------------------------------------------------

     [and is an Affiliate/Approved Fund of [identify Lender]1] 3.    Borrower  
Navistar, Inc. 4.    Administrative Agent:   Bank of America, N.A., as
administrative agent under the Credit Agreement. 5.    Credit Agreement   The
Amended and Restated ABL Credit Agreement dated as of August [     ], 2012,
among, inter alia, Navistar, Inc., a Delaware corporation (the “Borrower”), the
Lenders (as therein defined) from time to time party thereto, Bank of America,
N.A., as administrative agent for the Lenders thereunder (“Bank of America” or,
together with any successor administrative agent appointed pursuant thereto, in
such capacity and including any permitted successor or assign, the
“Administrative Agent”), and the other parties party thereto.         Assigned
Interest  

 

Aggregate Amount of

Commitment/Loans

  

Amount of

Commitment/Loans

Assigned

   Percentage Assigned
of
Commitment/Loans2

$

   $    %

$

   $    %

$

   $    %

Effective Date:                , 201        [TO BE INSERTED BY THE
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

 

1 

Select as applicable.

2 

Set forth, to at least [9] decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

 

Ex. B-2

--------------------------------------------------------------------------------

ASSIGNOR [NAME OF ASSIGNOR]

By:

      Name:   Title:

 

ASSIGNEE [NAME OF ASSIGNEE]

By:

      Name:   Title:

Consented to and Accepted:

BANK OF AMERICA, N.A., as Administrative Agent, Swingline

Lender and Issuing Bank

 

By:

      Name:   Title:

 

By:

      Name:   Title:

 

Ex. B-3

--------------------------------------------------------------------------------

[ISSUING BANK], as Issuing Bank

By:

      Name:   Title:

 

[Consented to:3

NAVISTAR, INC., as Borrower

By:

      Name:   Title:]

 

 

3 

The consent of the Borrower is necessary in the circumstances set forth in
Section 9.04(b) of the Credit Agreement.

 

Ex. B-4

--------------------------------------------------------------------------------

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

Item 1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim, (iii) its
Commitment, and the outstanding balances of its Revolving Loans, in each case
without giving effect to assignments thereof which have not become effective,
are as set forth herein, and (iv) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Assumption and
to consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrowers, any of their Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by the Borrowers, any of their Subsidiaries or Affiliates or any
other Person of any of their respective obligations under any Loan Document.

1.2 Assignee. The Assignee (a) represents and warrants that (i) it is an
Eligible Assignee and has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it satisfies the requirements, if any, specified in the
Credit Agreement that are required to be satisfied by it in order to acquire the
Assigned Interest and become a Lender, (iii) from and after the Effective Date,
it shall be bound by the provisions of the Credit Agreement as a Lender
thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements referred
to in Section 3.08 or delivered pursuant to Section 5.01 thereof, as applicable,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (v) attached to the Assignment and
Assumption is any documentation required to be delivered by it pursuant to the
terms of the Credit Agreement, duly completed and executed by the Assignee; and
(b) agrees that (i) it will, independently and without reliance on the
Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, (ii) it appoints and authorizes the Administrative Agent to take such
action on its behalf and to exercise such powers under the Credit Agreement as
are delegated to the Administrative Agent, by the terms thereof, together with
such powers as are reasonably incidental thereto, and (iii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

 

Ex. B-5

--------------------------------------------------------------------------------

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective permitted
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by facsimile or other electronic means shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption. This Assignment
and Assumption shall be construed in accordance with and governed by the laws of
the State of New York.

 

Ex. B-6

--------------------------------------------------------------------------------

EXHIBIT C

FORM OF BORROWING BASE CERTIFICATE

 

Ex. 3C-1

--------------------------------------------------------------------------------

Navistar,          Inc. - PDC Only

Report #:         Report Date: xx/xx/xxxx

   Parts      Grand
Total  

Gross (per perpetuals) (in $000's)

     —           —     

Ineligible

  

 

—  

  

     —     

Eligible Inventory

     —           —        

 

 

    

 

 

 

Advance Rate (lesser of 65% or 85% NOLV)

        

 

 

    

 

 

 

Gross Available

     —           —     

Gross-After Category Limits

     —           —     

Less:

     

Reserve for A/P Contra

     

Rent Reserve (3 mo's)

        

 

 

    

 

 

 

Subtotal Reserves (Limited to $3.75MM)

        —     

Availability before Line Limit

        —     

Suppressed Availablity

        —           

 

 

 

Availability Net of Suppressed

        —     

Less: Reserves in Excess of $3.75MM

        —     

Less: Liquidity Block

           

 

 

 

Net Availability

        —     

Less: Total Revolving Loan Balance

        —     

Less: Letters of Credit

        —           

 

 

 

Remaining Availability

        —     

Appraised NOLV

     

NOLV @ 85%

     

Navistar, Inc. (the “Company”), by its duly authorized officer signing below,
hereby certifies that (a) the information set forth in this certificate is true
and correct as of the date(s) indicated herein and (b) the Company is in
compliance with all terms and provisions contained in (i) the loan or other
agreement between the Company and Bank of America NA pursuant to which this
certificate is delivered (the “Agreement”) and (ii) any and all documents,
instruments and agreements evidencing, governing or securing the Agreement or
otherwise executed in connection therewith.

 

Prepared by:         Authorized Signature:        

 

(1) If this document is being transmitted electronically, the Borrower
acknowledges that by entering the name of its duly authorized officer on the
Certificate, that officer has reviewed the Certificate and affirmed the
representations, warranties and certifications referenced above.

--------------------------------------------------------------------------------

Bank of America Business Capital Field Examination

 

CONSOLIDATING AVAILABILITY SCHEDULE

   CURR. EXAM  

(Use $000's)

             

Navistar, Inc.

   xx/xx/2012      Parts
Distribution
Centers
(PDC)  

PARTS INVENTORY: (Includes In-Transit)

Ineligible Inventory

   -         

Unexplained Variance in Reconciliation

     —        

Service Parts (perpetual)

     —        

Consigned Inventory (perpetual)

     —        

DSW/NON-Lost Material Warehouses (perpetual)

     —        

RTV-Return to Vendor Warehouse (perpetual)

     —        

Obsolete & Surplus Calculations (GL & Actual)-RM

     —        

Book Std. to Actual Cost Write-down-LCM (GLvsPerp)

     —        

Inventory Located at Rollins Storage, Springfield, OH

     —           —     

Inventory Revaluation Contra (GL)

     —           —     

Perpetual to GL Overstatement

     —        

In-Transit (On Water, 3rd Party Suppliers, between PDCs)

     —        

Suppliers' Inventory

     —        

Inter-Company Profit in Inventory

     —           —        

 

 

    

 

 

 

Total Parts Ineligible Inventory

Net Eligible Parts Inventory

    
  —  
—     
       
  —  
—     
     

 

 

    

 

 

 

Advance Rates (Lesser of 65% or 85% of NOLV)

Parts Inventory Availability

     —           —        

 

 

    

 

 

 

TOTAL INVENTORY AVAILABILITY

     —           —        

 

 

    

 

 

 

Reserves

     

Less: Rent Reserve (3 months)

     

Less: A/P to O/S Processors without Access Agreements

     —        

Less: Reserve for A/P Contra

     

Reserves in excess of $3,750

     —           

 

 

    

 

 

 

Total Reserves

     —           

 

 

    

Total Inventory Availability After Reserves

     —              —        

Total Inventory Availability

     —           

 

 

    

Maximum US Revolver

        

 

 

    

US Availability Before Liquidity Block

     —        

Less: Availability Block (Greater of 20% or $30MM)

     

Less: Reserves in excess of $3,750M

     —           

 

 

    

Inventory / US Availability

     —           

 

 

    

Total Availability Before Letters of Credit

     —        

Less: Total Revolving Balance

        

 

 

    

Less: Letters of Credit *

     

NET AVAILABILITY (SHORTFALL)

     —           

 

 

    

Suppressed Availability Calculation:

     

AR Availability

     —        

Inventory Availability

     —           

 

 

    

Total Availability

     —           

 

 

    

AR Limit

     

Inventory Limit

        

 

 

    

Total Limit

     —           

 

 

    

Suppressed Availability

     —           

 

 

    

 

131

--------------------------------------------------------------------------------

EXHIBIT D

FORM OF PERFECTION CERTIFICATE

 

Ex. D-1

--------------------------------------------------------------------------------

PERFECTION CERTIFICATE

Reference is hereby made to the AMENDED AND RESTATED ABL CREDIT AGREEMENT (the
“Agreement”), dated as of August 17, 2012, among NAVISTAR, INC., a Delaware
corporation (the “Borrower”), THE LENDERS as from time to time party thereto,
BANK OF AMERICA, N.A., as administrative agent for the Lenders (“Bank of
America”, in such capacity and including any permitted successor or assign, the
“Administrative Agent”), and the other parties thereto. Capitalized terms used
herein and not otherwise defined have the respective meanings assigned in the
Agreement

The undersigned hereby certifies, solely in such person’s capacity as an officer
and not individually, to the Administrative Agent as follows as of the date
hereof:

1. Names. (a) The exact legal name of the Borrower, as such name appears in its
certificate of incorporation or other applicable organizational document, is as
set forth in Schedule 1(a) hereto. The Borrower is (i) the type of entity
disclosed next to its name in Schedule 1(a) and (ii) a registered organization
except to the extent otherwise disclosed in Schedule 1(a) . Also set forth in
Schedule 1(a) is the organizational identification number of the Borrower, the
Federal Taxpayer Identification Number of the Borrower and the jurisdiction of
formation of the Borrower.

(b) Set forth in Schedule 1(b) hereto is each other corporate or organizational
name the Borrower has had in the past year, together with the date of the
relevant name change, and attached to such schedule are all amended certificates
of incorporation or certificates of formation and any attachments thereto filed
with the relevant state authority or other related corporate documents.

(c) Set forth in Schedule 1(c) hereto is a list of any other business or
organization to which the Borrower became the successor by merger,
consolidation, acquisition, change in form, nature or jurisdiction of
organization or otherwise, in the past year and attached to such schedule are
all certificates of merger and any attachments thereto filed by the Borrower
with the relevant state authority. Also set forth in Schedule 1(c) is the
information required by Section 1 of this certificate for any other business or
organization to which the Borrower became the successor by merger,
consolidation, acquisition, change in form, nature or jurisdiction of
organization or otherwise, in the past year, and attached to such schedule are
all related certificates of merger and any attachments thereto filed with the
relevant state authority.

2. Current Locations. (a) The chief executive office of the Borrower is located
at the address set forth in Schedule 2(a) hereto.

 

1

--------------------------------------------------------------------------------

(b) Attached hereto as Schedule 2(b) hereto is a list that includes all
locations where the Borrower maintains any material books or records relating to
any Collateral.

(c) Set forth in Schedule 2(c) hereto are all of the parts distribution centers
where the Borrower maintains any of the Parts Inventory (as defined in the
Security Agreement).

(d) Set forth in Schedule 2(d) hereto are all of the storage facilities where
the Borrower maintains any of the Parts Inventory.

(e) Set forth in Schedule 2(e) hereto are all of the third party processor or
logistics provider locations where the Borrower maintains any of the Parts
Inventory.

3. Good Standing. Attached hereto as Schedule 3 is the good standing certificate
or certificate of status of the Borrower dated within 45 days of the date hereof
from the relevant authority.

4. File Search Reports. Attached hereto as Schedule 4 is a true and accurate
summary of the file search reports from (a) each jurisdiction identified in
Section 1(a) with respect to each legal name set forth in Section 1, and
(b) each jurisdiction described in Schedule 1(c) relating to any of the
transactions described in Schedule 1(c) with respect to each legal name of the
person or entity from which the Borrower purchased or otherwise acquired any of
the Collateral or merged or consolidated with or acquired.

5. Collateral Filings. (a) Attached hereto as Schedule 5(a) are copies of UCC-1
financing statements, in each case, duly authorized by the Borrower constituting
a debtor (or the equivalent thereof under the laws of each relevant
jurisdiction) containing the indications of the Collateral, which are to be
filed in the filing offices in the jurisdictions identified in Schedule 6
hereto.

(b) Attached as Schedule 5(b) are copies of the UCC-3 financing statement
amendments, which are to be filed in the filing offices in the jurisdictions
identified in Schedule 6 hereto.

6. Schedule of Filings. Attached hereto as Schedule 6 is a schedule setting
forth, with respect to the filings described in Section 5 above, (i) each filing
and the appropriate filing office in which such filing is to be made and
(ii) any other actions required to create, preserve, protect and perfect the
security interests in the Collateral. No other filings or actions are required
to create, preserve, protect and perfect such security interests in the
Collateral as of the date hereof.

7. Pledged Accounts. Attached hereto as Schedule 7 is a true and complete list
of all Pledged Accounts (as defined in the Security Agreement) maintained by the
Borrower.

8. Counterparts. This Perfection Certificate may be executed in two or more
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute but one Perfection Certificate. Delivery of a
counterpart by facsimile or pdf electronic transmission shall constitute
delivery of an original.

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

 

2

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, we have hereunto signed this Perfection Certificate as of
the date first above written.

 

NAVISTAR, INC. By:       Name:   Title:

 

3

--------------------------------------------------------------------------------

Schedule 1(a)

Exact legal name of the Borrower, as such name appears in its certificate of
incorporation, type

of entity, organizational identification number, if any, Federal Taxpayer
Identification Number and the jurisdiction of formation

 

Name   Type of Entity  

Jurisdiction of

Formation

 

Organizational

Identification

Number

  Tax ID Number

 

 

4

--------------------------------------------------------------------------------

Schedule 1(b)

Each corporate or organizational name the Borrower has had in the past year,
together with the date of the relevant change

 

5

--------------------------------------------------------------------------------

Schedule 1(c)

List of all other names used by the Borrower, or any other business or
organization to which the Borrower became the successor by merger, consolidation
or otherwise, in the past year

 

6

--------------------------------------------------------------------------------

Schedule 2(a)

Chief Executive Office of the Borrower

 

7

--------------------------------------------------------------------------------

Schedule 2(b)

Locations of material books or records relating to any Collateral

 

8

--------------------------------------------------------------------------------

Schedule 2(c)

All of the parts distribution centers where the Borrower maintains any Parts
Inventory

 

Location   Address   Description

 

 

9

--------------------------------------------------------------------------------

Schedule 2(d)

All of the storage facilities where the Borrower maintains any Parts Inventory

 

Location   Address   Description

 

 

10

--------------------------------------------------------------------------------

Schedule 2(e)

All of the third party processor or logistics provider locations where the
Borrower maintains any Parts Inventory

 

Location   Address   Description

 

 

11

--------------------------------------------------------------------------------

Schedule 3

Good standing certificate or certificate of status of the Borrower

 

12

--------------------------------------------------------------------------------

Schedule 4

Summary of the file search reports, financing statements and other filings

 

13

--------------------------------------------------------------------------------

Schedule 5(a)

UCC-1 financing statements

 

14

--------------------------------------------------------------------------------

Schedule 5(b)

UCC-3 financing statement amendments

 

15

--------------------------------------------------------------------------------

Schedule 6

Filings and the relevant Filing Office

 

Filing

 

Filing Office

 

 

16

--------------------------------------------------------------------------------

Schedule 7

Pledged Accounts

 

No.                

   Name of Account    Account Bank    Account Number

 

 

17

--------------------------------------------------------------------------------

EXHIBIT A

SUMMARY OF FILE SEARCH REPORTS

--------------------------------------------------------------------------------

EXHIBIT B

UCC-1 FINANCING STATEMENTS

--------------------------------------------------------------------------------

EXHIBIT C

UCC-3 FINANCING STATEMENT AMENDMENTS

--------------------------------------------------------------------------------

EXHIBIT E

FORM OF LETTER OF CREDIT REQUEST

[Applicable Issuing Bank],1

as Issuing Bank

 

Attention:    

  [Name]   [Address]   Fax: [•] with a copy to:   Bank of America, N.A.,   as
Administrative Agent for the Lenders referred to below Attention: [   ]  

[Date]

Ladies and Gentlemen:

We hereby request that [•]2, as an Issuing Bank, in its individual capacity,
issue a [Standby][Commercial] Letter of Credit on [•]3, which Letter of Credit
shall be denominated in Dollars, shall be in the aggregate amount of [•]4 and
shall be for the account of Borrower. For the purposes of this Letter of Credit
Request, unless otherwise defined herein, all capitalized terms used herein and
defined in the Amended and Restated ABL Credit Agreement dated as of August [ ],
2012 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”), among, inter alia, Navistar, Inc., a
Delaware corporation (the “Borrower”), the Lenders from time to time party
thereto, Bank of America, N.A., as administrative agent for the Lenders
thereunder (“Bank of America” or, together with any successor administrative
agent appointed pursuant thereto, in such capacity and including any permitted
successor or assign, the “Administrative Agent”), and the other parties party
thereto, shall have the respective meaning assigned to such terms in the Credit
Agreement. The beneficiary of the requested Letter of Credit is [•]5, and such
Letter of Credit will have a stated expiration date of [•]6.

 

1 

Insert name and address of the applicable Issuing Bank.

2 

Insert name of the applicable Issuing Bank.

3 

Insert date of issuance, which must be a Business Day.

4 

Insert aggregate initial amount of the Letter of Credit.

5 

Insert name and address of beneficiary.

6 

Date may not be later than the date referred to in Section 2.06(c) of the Credit
Agreement.

 

Ex. E-1

--------------------------------------------------------------------------------

The undersigned hereby certifies in his capacity as an officer of the Borrower,
and not individually, that immediately before and immediately after giving
effect to the issuance of the Letter of Credit requested hereby, the issuance of
such Letter of Credit (and the incurrence or existence of the Liens created
pursuant to the Loan Documents) is permitted under all material Debt of Borrower
(including (a) the 2009 Senior Note Indenture, including Section 3.10(c)
thereof, (b) the 2009 Senior Subordinated Convertible Note Indenture, (c) the
Recovery Zone Bonds Loan Agreements, including Section 4.07(c) thereof, (d) the
Term Loan Agreement and (e) any other material Debt for Borrowed Money of or
binding upon Borrower or its properties) and that no default or event of default
thereunder would immediately arise as a result of such or issuance, amendment,
renewal, extension or conversion.

 

NAVISTAR, INC., as Borrower By:       Name:   Title:

 

Ex. E-2

--------------------------------------------------------------------------------

EXHIBIT F

FORM OF BORROWING REQUEST

Bank of America, N.A.,

as Administrative Agent for the Lenders referred to below

[ADDRESS]

Attention: [ ]

[•], 201[•]1

Ladies and Gentlemen:

Reference is made to the Amended and Restated ABL Credit Agreement dated as of
August [ ], 2012, among, inter alia, Navistar, Inc., a Delaware corporation (the
“Borrower”), the Lenders from time to time party thereto, Bank of America, N.A.,
as administrative agent for the Lenders thereunder (“Bank of America” or,
together with any successor administrative agent appointed pursuant thereto, in
such capacity and including any permitted successor or assign, the
“Administrative Agent”), and the other parties party thereto (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”). Terms defined in the Credit Agreement are used herein with
the same meanings.

The undersigned hereby gives you notice pursuant to Section 2.03 of the Credit
Agreement that it requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the terms on which such Borrowing is requested to be
made:

 

(A)

Aggregate Amount of Borrowing2

 

(B) Date of Borrowing (which shall be a Business Day)

 

1 

Must be notified in writing or by telephone (with such telephonic notification
to be confirmed promptly in writing by hand delivery, facsimile or a “pdf” or
other electronic transmission) (i) in the case of a LIBOR Borrowing, not later
than 1:00 p.m., Chicago time, three Business Days before the date of the
proposed Borrowing or (ii) in the case of a Base Rate Borrowing (including any
such notice of a Base Rate Borrowing to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.06(e)), not later than 12:00 noon,
Chicago time, on the date of the proposed Borrowing.

2 

Not less than the minimum principal amount as indicated in Section 2.02(c), and
in an integral multiple as indicated therein.

 

Ex. F-1

--------------------------------------------------------------------------------

(C)

Type of Borrowing3

 

(D)

Interest Period and the last day thereof (in the case of a LIBOR Borrowing)4

 

(E) Account Number and Location

The undersigned hereby certifies in his capacity as an officer of the Borrower,
and not individually, that, immediately before and immediately after giving
effect to the Borrowing requested hereby, such Borrowing (and the incurrence or
existence of the Liens created pursuant to the Loan Documents) is permitted
under all material Debt of Borrower (including (a) the 2009 Senior Note
Indenture, including Section 3.10(c) thereof, (b) the 2009 Senior Subordinated
Convertible Note Indenture, (c) the Recovery Zone Bonds Loan Agreements,
including Section 4.07(c) thereof, (d) the Term Loan Agreement and (e) any other
material Debt for Borrowed Money of or binding upon Borrower or its properties)
and that no default or event of default thereunder would immediately arise as a
result of such Borrowing.

 

NAVISTAR, INC., as Borrower By:       Name:   Title:

  

 

3 

Specify a Base Rate Borrowing or a LIBOR Borrowing.

4 

The initial Interest Period applicable to a LIBOR Borrowing shall be subject to
the definition of “Interest Period”.

 

Ex. F-2

--------------------------------------------------------------------------------

EXHIBIT G

FORM OF [AMENDED AND RESTATED] PROMISSORY NOTE

 

$[    ]    New York, New York    [•], 201[•]

FOR VALUE RECEIVED, the undersigned, NAVISTAR, INC., a Delaware corporation (the
“Borrower”), hereby promises to pay to [            ] (the “Lender”) or its
registered assigns, at the office of Bank of America, N.A. (the “Administrative
Agent”) at [ADDRESS], on the dates and in the amounts set forth in the Amended
and Restated ABL Credit Agreement dated as of August [ ], 2012 (as the same may
be amended, amended and restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”), by and among the Borrower, the Lenders from
time to time party thereto, Bank of America, N.A., as administrative agent for
the Lenders thereunder (“Bank of America” or, together with any successor
administrative agent appointed pursuant thereto, in such capacity and including
any permitted successor or assign, the “Administrative Agent”), and the other
parties party thereto, in lawful money of the United States of America in
immediately available funds, the aggregate unpaid principal amount of all Loans
made by the Lender to the Borrower pursuant to the Credit Agreement and to pay
interest from the date of such Loans on the principal amount thereof from time
to time outstanding, in like funds, at said office, at the rate or rates per
annum and payable on the dates provided in the Credit Agreement. Terms used but
not defined herein shall have the meanings assigned to them in the Credit
Agreement.

Borrower promises to pay interest, on written demand, on any overdue principal
and, to the extent permitted by law, overdue interest from the due dates at a
rate or rates provided in the Credit Agreement.

Borrower hereby waives diligence, presentment, demand, protest and notice of any
kind whatsoever. The nonexercise by the holder hereof of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any other instance.

All borrowings evidenced by this promissory note and all payments and
prepayments of the principal hereof and interest hereon and the respective dates
thereof shall be endorsed by the holder hereof on the schedules attached hereto
and made a part hereof or on a continuation thereof which shall be attached
hereto and made a part hereof, or otherwise recorded by such holder in its
internal records; provided, however, that the failure of the holder hereof to
make such a notation or any error in such notation shall not affect the
obligations of the Borrower under this promissory note.

[This promissory note is being issued as a replacement for, and in substitution
of, the original Promissory Note, dated as of October 18, 2011 (the “Original
Note”), issued pursuant to

 

Ex. G-1

--------------------------------------------------------------------------------

the ABL Credit Agreement, dated as of October 18, 2011, among the Borrower, IC
Bus, LLC, an Arkansas limited liability company, SST Truck Company LLC, a
Delaware limited liability company, IC Bus of Oklahoma, LLC, a Delaware limited
liability company, Navistar Diesel of Alabama, LLC, a Delaware limited liability
company, Monaco RV, LLC (f/k/a Navistar RV, LLC), a Delaware limited liability
company, Navistar Big Bore Diesels, LLC, a Delaware limited liability company
and Workhorse Custom Chassis, LLC, an Illinois limited liability company, the
Lenders from time to time party thereto, Bank of America, N.A., as
administrative agent for the Lenders thereunder, and the other parties party
thereto in favor of the Lender in the original maximum principal amount of $[•],
provided that this promissory note is not intended to be a novation of the
obligations or liabilities existing under the Original Note.]14

This promissory note is one of the promissory notes referred to in the Credit
Agreement that, among other things, contains provisions for the acceleration of
the maturity hereof upon the happening of certain events, for optional and
mandatory prepayment of the principal hereof prior to the maturity hereof and
for the amendment or waiver of certain provisions of the Credit Agreement, all
upon the terms and conditions therein specified. This promissory note is
entitled to the benefit of the Credit Agreement and is guaranteed and secured as
provided therein and in the other Loan Documents referred to in the Credit
Agreement. THIS PROMISSORY NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

 

NAVISTAR, INC. By:       Name:   Title:

 

14 

To be included in notes issued in replacement of notes issued under the Original
Credit Agreement.

 

Ex. G-2

--------------------------------------------------------------------------------

Schedule A to Note

LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS

 

Date

 

Amount of

Base Rate

Loans

 

Amount

Converted

to Base

Rate Loans

  

Amount of

Principal of

Base Rate

Loans

Repaid

   Amount of
Base Rate
Loans
Converted
to LIBOR
Loans    Unpaid
Principal
Balance of
Base Rate
Loans    Notation
Made By

 

 

Ex. G-3

--------------------------------------------------------------------------------

Schedule B to Note

LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF LIBOR LOANS

 

Date

 

Amount of

LIBOR

Loans

 

Amount

Converted

to LIBOR

Loans

   Interest
Period and
LIBOR
with
Respect
Thereto    Amount of
Principal of
LIBOR
Loans
Repaid    Unpaid
Principal
Balance of
LIBOR
Loans    Notation
Made By

 

 

Ex. G-4

--------------------------------------------------------------------------------

EXHIBIT H

FORM OF SECURITY AGREEMENT

 

Ex. H-1

--------------------------------------------------------------------------------

AMENDED AND RESTATED SECURITY AGREEMENT

Dated as of August 17, 2012

By and Among

NAVISTAR, INC.

as Grantor,

and

BANK OF AMERICA, N.A.,

as Administrative Agent

--------------------------------------------------------------------------------

SECURITY AGREEMENT

 

Table of Contents

 

         Page   ARTICLE I   DEFINITIONS   

Section 1.1

  Terms Defined in Credit Agreement      1   

Section 1.2

  Terms Defined in UCC      2   

Section 1.3

  Definitions of Certain Terms Used Herein      2    ARTICLE II    GRANT OF
SECURITY INTEREST    ARTICLE III    REPRESENTATIONS AND WARRANTIES   

Section 3.1

  Title, Perfection and Priority      7   

Section 3.2

  Pledged Accounts Information      7   

Section 3.3

  Accounts and Chattel Paper      8   

Section 3.4

  Parts Inventory      8   

Section 3.5

  No Financing Statements, Security Agreements      9   

Section 3.6

  [Reserved]      9   

Section 3.7

  Perfection Certificate      9    ARTICLE IV    COVENANTS   

Section 4.1

  General      9   

Section 4.2

  Receivables      12   

Section 4.3

  Parts Inventory Count; Parts Inventory Reporting System      13   

Section 4.4

  Delivery of Instruments, Chattel Paper and Documents      13   

Section 4.5

  Pledged Accounts      13   

Section 4.6

  No Interference      14   

Section 4.7

  Insurance      14   

Section 4.8

  Collateral Access Agreement and Certain Payments      14   

 

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ARTICLE V   REMEDIES   

Section 5.1

  Remedies      15   

Section 5.2

  Grantor’s Obligations Upon Default      16   

Section 5.3

  License      17    ARTICLE VI    ACCOUNT VERIFICATION; ATTORNEY IN FACT   

Section 6.1

  Account Verification      17   

Section 6.2

  Authorization for Secured Party to Take Certain Action      17   

Section 6.3

  [Reserved]      18   

Section 6.4

  NATURE OF APPOINTMENT; LIMITATION OF DUTY      18    ARTICLE VII    GENERAL
PROVISIONS   

Section 7.1

  Waivers      19   

Section 7.2

  Limitation on Administrative Agent’s and Secured Party's Duty with Respect to
the Collateral      19   

Section 7.3

  Compromises and Collection of Collateral      20   

Section 7.4

  Secured Party Performance of Debtor Obligations      21   

Section 7.5

  Specific Performance of Certain Covenants      21   

Section 7.6

  Dispositions Not Authorized      21   

Section 7.7

  No Waiver; Amendments; Cumulative Remedies      21   

Section 7.8

  Limitation by Law; Severability of Provisions      22   

Section 7.9

  Reinstatement      22   

Section 7.10

  Benefit of Agreement      22   

Section 7.11

  Survival of Representations      22   

Section 7.12

  Expenses      22   

Section 7.13

  Reserved      23   

Section 7.14

  Headings      23   

Section 7.15

  Termination or Release      23   

Section 7.16

  Entire Agreement      23   

Section 7.17

  CHOICE OF LAW      24   

Section 7.18

  CONSENT TO JURISDICTION      24   

Section 7.19

  WAIVER OF JURY TRIAL      24   

Section 7.20

  Indemnity      24   

Section 7.21

  Counterparts      25   

Section 7.22

  Existing Security Agreement      25   

 

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ARTICLE VIII   NOTICES   

Section 8.1

  Sending Notices      25   

Section 8.2

  Change in Address for Notices      26    ARTICLE IX    THE ADMINISTRATIVE
AGENT   

Section 9.1

  The Administrative Agent      26   

Schedules

Schedule 4.1(h) — Designated Parts Locations

Exhibits

Exhibit A — Offices in which financing statements and Security Agreements have
been filed

Exhibit B — Details of Pledged Accounts

Exhibit C — Form of Amendment

Exhibit D — Form of Perfection Certificate

Exhibit E — Form of Additional Designated Parts Locations and Additional Pledged
Accounts Certificate

 

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AMENDED AND RESTATED SECURITY AGREEMENT

AMENDED AND RESTATED SECURITY AGREEMENT (as it may be amended, amended and
restated, supplemented or otherwise modified from time to time, this “Security
Agreement”), dated as of August 17, 2012, by and among NAVISTAR, INC., a
Delaware corporation (the “Grantor”) and BANK OF AMERICA, N.A., as
administrative agent for the Lenders hereunder (“Bank of America” or, together
with any successor administrative agent appointed pursuant hereto, in such
capacity and including any permitted successor or assign, the “Administrative
Agent”).

PRELIMINARY STATEMENT

Reference is made to (a) the Existing Senior Credit Agreement (as defined in the
Credit Agreement referred to below) and (b) the Security Agreement dated as of
October 18, 2011 (the “Existing Security Agreement”), by and among Grantor, IC
Bus, LLC, an Arkansas limited liability company, SST Truck Company LLC, a
Delaware limited liability company, IC Bus of Oklahoma, LLC, a Delaware limited
liability company, Navistar Diesel of Alabama, LLC, a Delaware limited liability
company, Monaco RV, LLC, a Delaware limited liability company, Navistar Big Bore
Diesels, LLC, a Delaware limited liability company and Workhorse Custom Chassis,
LLC, an Illinois limited liability company, the lenders from time to time party
thereto, and Bank of America, N.A., as administrative agent for the Lenders
thereunder. The Existing Senior Credit Agreement is being amended and restated
in its entirety pursuant to and in accordance with the Amended and Restated ABL
Credit Agreement, dated as of the date hereof (as it may be amended, amended and
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among the Grantor, the lenders from time to time party thereto, the
Administrative Agent and the other parties thereto. The amendment and
restatement of the Existing Senior Credit Agreement pursuant to the Credit
Agreement is conditioned upon, among other things, the execution and delivery of
this Agreement in order to amend and restate in its entirety the Existing
Security Agreement.

ACCORDINGLY, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Terms Defined in Credit Agreement. All capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in the Credit
Agreement. In addition, the provisions of Sections 1.03 through 1.08 of the
Credit Agreement, as applicable, are incorporated herein.

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SECURITY AGREEMENT

 

Section 1.2 Terms Defined in UCC. Terms defined in the UCC that are not
otherwise defined in this Security Agreement or the Credit Agreement are used
herein as defined in the UCC.

Section 1.3 Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the preamble and Preliminary
Statement above, the following terms shall have the following meanings:

“Account” shall have the meaning set forth in Article 9 of the UCC.

“Article” means a numbered article of this Security Agreement, unless another
document is specifically referenced.

“Chattel Paper” shall have the meaning set forth in Article 9 of the UCC.

“Collateral” shall have the meaning set forth in Article II hereof.

“Collateral Access Agreement” means a landlord waiver or other agreement, in
such form as shall be reasonably satisfactory to the Administrative Agent and
Grantor, between the Administrative Agent and any third party (including any
bailee, consignee, customs broker, or other similar Person) in possession of any
Collateral or any landlord of any premises where any Collateral is located, as
such landlord waiver or other agreement may be amended, restated, or otherwise
modified from time to time. All Collateral Access Agreements in full force and
effect on the date hereof are reasonably satisfactory to the Administrative
Agent.

“Collateral Report” means any certificate (including, without limitation, any
Borrowing Base Certificate or Perfection Certificate), report or other document
delivered by Grantor to the Administrative Agent with respect to the Collateral
pursuant to any Loan Document.

“Control” shall have the meaning set forth in Article 8 or, if applicable, in
Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.

“Copyright License” means any written agreement, now or hereafter in effect,
granting to any Person any right under any Copyright now or hereafter owned by
any other Person or that such other Person otherwise has the right to license,
and all rights of any such Person under any such agreement.

“Copyrights” means, with respect to any Person, all of the following now owned
or hereafter acquired by such Person: (a) all copyright rights in any work
subject to the

 

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copyright laws of the United States of America or any other country, whether as
author, assignee, transferee or otherwise, and (b) all registrations and
recordings thereof, and all registration and recording applications filed in
connection therewith, including registrations, recordings and applications in
the United States Copyright Office or any similar office in any other country.

“Credit Agreement” shall have the meaning set forth in the Preliminary Statement
hereto.

“Deposit Account” shall have the meaning set forth in Article 9 of the UCC.

“Designated Parts Locations” shall have the meaning set forth in Section 4.1(h)
hereof.

“Document” shall have the meaning set forth in Article 9 of the UCC.

“Exhibit” refers to a specific exhibit to this Security Agreement, unless
another document is specifically referenced.

“General Intangible” shall have the meaning set forth in Article 9 of the UCC.

“Goods” shall have the meaning set forth in Article 9 of the UCC.

“Grantor” shall have the meaning set forth in the recitals.

“Instrument” shall have the meaning set forth in Article 9 of the UCC.

“Intellectual Property” means all intellectual and similar property of every
kind and nature, including inventions, designs, Patents, Copyrights, Trademarks,
Intellectual Property Licenses, trade secrets, domain names, confidential or
proprietary technical and business information, know-how, show-how or other data
or information, software and databases and all embodiments or fixations thereof
and related documentation, registrations and franchises, and all additions,
improvements and accessions to, and books and records describing or used in
connection with, any of the foregoing.

“Intellectual Property License” means any Patent License, Trademark License,
Copyright License or other license or sublicense agreement to which any Grantor
is a party.

“Inventory” shall have the meaning set forth in Article 9 of the UCC.

 

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“Investment Property” shall have the meaning set forth in Article 9 of the UCC.

“Letter-of-Credit Rights” shall have the meaning set forth in Article 9 of the
UCC.

“MIA Receivables” means any Accounts, Chattel Paper, Documents, Investment
Property, Instruments, Letter-of-Credit Rights, Payment Intangibles and any
other rights or claims to receive money generated from the sale of Receivables
and related assets sold pursuant to, and in accordance with, the terms of any
Master Intercompany Agreement.

“MIA Receivables Accounts” means all Payment Intangibles, Accounts, cash,
Documents and Instruments, in each case arising from the sale or other
disposition of MIA Receivables.

“Part” means an accessory, appurtenance or part of a vehicle (including trucks,
buses and RVs), chassis, trailer or engine, or other Good, in each case, that is
to be installed, used or attached, is capable of being installed, used or
attached, or intended to be installed, used or attached at a later time, on or
in a vehicle (including trucks, buses and RVs), chassis, trailer or engine
(including, without limitation, engines, engine parts, electrical components,
cabs, kits for engine repair, brakes, turbochargers, suspension parts,
transmissions, axles, drivelines, and replacement parts); provided that Parts
does not include vehicles (including trucks, buses and RVs), chassis or trailers
themselves.

“Parts Inventory” means (x) all Inventory located at a Designated Parts Location
and (y) all Parts in transit to a Designated Parts Location.

“Patent License” means any written agreement, now or hereafter in effect,
granting to any Person any right to make, use or sell any invention on which a
Patent now or hereafter owned by any other Person, or that any other Person now
or hereafter otherwise has the right to license, is in existence, and all rights
of any such Person under any such agreement.

“Patents” means, with respect to any Person, all of the following now owned or
hereafter acquired by such Person: (a) all letters patent of the United States
of America or the equivalent thereof in any other country, all registrations and
recordings thereof and all applications for letters patent of the United States
of America or the equivalent thereof in any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, and (b) all
reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof, and the inventions disclosed or claimed therein, including
the right to make, use and/or sell the inventions disclosed or claimed therein.

“Payment Intangible” shall have the meaning set forth in Article 9 of the UCC.

 

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“Pledged Accounts” means, collectively, the Deposit Accounts set forth on
Exhibit B , as such Exhibit may be amended, supplemented, or otherwise modified
from time to time (with the consent of the Administrative Agent) after Grantor
has provided 10 days’ (or such shorter period as permitted by the Administrative
Agent) prior written notice (including via email) to the Administrative Agent
designating any new Deposit Account as a “Pledged Account” and certifying, by
delivery of a certificate substantially in the form of Exhibit E, that (i) other
than as may result from inadvertent mistakes, no cash or other assets (other
than (A) insurance proceeds constituting Collateral, (B) any cash or Cash
Equivalents constituting Proceeds of any sale or other disposition of any Parts
Inventory and (C) Proceeds of the assets of the Grantor referred to in clauses
(a)(ii) and (a)(iii) of Article II of this Agreement) will be deposited in or
credited to such account and (ii) a notice of the new Pledged Account and
certification of the matter set forth in clause (i) above have been delivered
(or are being contemporaneously delivered) to the Term Representative.

“Proceeds” shall have the meaning set forth in Article 9 of the UCC.

“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property,
Instruments and any other rights or claims to receive money arising from the
sale or other disposition of Parts Inventory, or that are otherwise derived from
the sale or other disposition of Parts Inventory.

“Secured Parties” means (a) the Lenders, (b) the Administrative Agent, (c) each
Issuing Bank, (d) the Swingline Lender, (e) each Secured Banking Services
Provider, (f) the beneficiaries of each indemnification obligations undertaken
by Grantor under any Loan Document, and (g) the successors and permitted assigns
of each of the foregoing.

“Securities Account” shall have the meaning set forth in Article 8 of the UCC.

“Term Representative” has the meaning assigned to such term in the Collateral
Cooperation Agreement.

“Trademark License” means any written agreement, now or hereafter in effect,
granting to any Person any right to use any Trademark now or hereafter owned by
any other Person, or that any other Person otherwise has the right to license,
and all rights of any such Person under any such agreement.

“Trademarks” means, with respect to any Person, all of the following now owned
or hereafter acquired by such Person: all trademarks, service marks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all

 

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registration and recording applications filed in connection therewith, including
registrations, recordings and applications in the United States Patent and
Trademark Office or any similar offices in any other country or any political
subdivision thereof, and all extensions or renewals thereof.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York.

The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.

ARTICLE II

GRANT OF SECURITY INTEREST

(a) In order to secure the payment and performance of the Secured Obligations,
Grantor hereby pledges and grants to the Administrative Agent, on behalf of and
for the ratable benefit of the Secured Parties, a security interest in all of
its right, title and interest in, to and under all the following personal
property and other assets of Grantor, whether now owned by or owing to, or
hereafter acquired by or arising in favor of Grantor (all of which are
collectively referred to as the “Collateral”):

(i) all Parts Inventory;

(ii) all Receivables;

(iii) all MIA Receivables Accounts;

(iv) all Pledged Accounts;

(v) all funds or financial assets (including Investment Property, cash or Cash
Equivalents) credited to any Pledged Account;

(vi) all books and records, customer lists, credit files, computer files,
programs, printouts and other computer records related to the foregoing and any
General Intangibles (but excluding any Intellectual Property (other than
Intellectual Property specifically described in this clause (vi)) at any time
evidencing or relating to any of the foregoing; and

 

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(vii) all insurance proceeds and products of the foregoing, and all Proceeds of
the foregoing.

(b) Notwithstanding the foregoing or anything herein to the contrary,
(i) automatically upon the sale of any Receivables and related assets, if any,
pursuant to a Master Intercompany Agreement, any and all security interests in
such Receivables and related assets, if any, granted hereunder shall be
immediately released and the term “Collateral” as used herein shall no longer
include any such Receivable and related assets, if any; provided, that such
release shall not be in derogation or limitation of any rights in any other
Collateral, including Collateral described in clause (a)(iii) above (and such
release shall be deemed to be in exchange for Collateral described in clause
(a)(iii) above) and (ii) if any funds or financial assets (including Investment
Property, cash and Cash Equivalents) previously credited to any Pledged Account
are deposited in or credited to a Deposit Account or Securities Account (that is
not a Pledged Account) in which the Term Representative has a security interest,
automatically upon such deposit any and all security interests of the
Administrative Agent in such funds or financial assets granted hereunder or
under any other Loan Document shall be immediately released and the term
“Collateral” as used herein shall no longer include any such funds or financial
assets.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Grantor represents and warrants to the Administrative Agent, for the benefit of
the Secured Parties, that:

Section 3.1 Title, Perfection and Priority. Grantor has good and valid rights in
or the power to transfer the Collateral and title to the Collateral with respect
to which it has purported to grant a security interest hereunder, free and clear
of all Liens except for Liens permitted under Section 4.1(e), and has full power
and authority to grant to the Administrative Agent the security interest in such
Collateral pursuant hereto. When financing statements have been filed in the
appropriate offices against Grantor in the locations listed on Exhibit A hereto,
the Administrative Agent will have a fully perfected first priority security
interest in that Collateral in which a security interest may be perfected by
filing under the Uniform Commercial Code in effect in the applicable
jurisdiction, subject only to Liens permitted under Section 4.1(e).

Section 3.2 Pledged Accounts Information. The names of the account banks, the
account numbers and the other details with respect to the Pledged Accounts are
and will be correctly stated, at the time furnished, on Exhibit B hereto (as
amended from time to time).

 

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Section 3.3 Accounts and Chattel Paper.

(a) As of the Closing Date, there is no Collateral consisting of Chattel Paper,
and all further references to Chattel Paper in this Section 3.3 shall be with
respect to reporting requirements occurring subsequent to the Closing Date.

(b) Except as may be disclosed on the most recent Collateral Report, (i) all
Accounts constituting Receivables represent bona fide sales of Parts Inventory
or rendering of services to Account Debtors in the ordinary course of the
Grantor’s business and, unless the procedures set forth in Section 4.1(c)(ii)
have been complied with, are not evidenced by a judgment, Instrument or Chattel
Paper; (ii) there are no setoffs, claims or disputes existing or asserted with
respect to any Accounts constituting Receivables referred to in such Collateral
Report, except any setoff, claim or dispute occurring in the ordinary course of
business or except to the extent notice has been provided pursuant to
Section 4.2(c), and Grantor has not made any agreement with any Account Debtor
with respect to any material Account constituting Receivables for any extension
of time for the payment thereof, any compromise or settlement for less than the
full amount thereof, any release of any Account Debtor from liability therefor,
or any deduction therefrom except a discount or allowance allowed by Grantor in
the ordinary course of its business for prompt payment; and (iii) to the
knowledge of Grantor, there are no facts, events or occurrences that in any way
impair the validity or enforceability (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law)
thereof or could reasonably be expected to reduce the amount payable thereunder
as shown on Grantor’s books and records, with respect to any material portion of
the Collateral.

(c) From and after the date the Collection Account is established in accordance
with Section 5.11 of the Credit Agreement, no payments have been or shall be
made on any Accounts arising from the sale of Parts Inventory except payments
delivered to the Collection Account in accordance with Section 5.11 of the
Credit Agreement (other than payments as a result of inadvertent mistakes).

Section 3.4 Parts Inventory. With respect to any Parts Inventory scheduled or
listed on the most recent Collateral Report as of the date of such Collateral
Report, except as disclosed therein and otherwise permitted under Sections 5.15
and 6.16 of the Credit Agreement: (a) no such Collateral consisting of Parts
intended to be sold by Grantor in its aftermarket parts services business is
now, or shall at any time or times hereafter be stored at any other location
other than a Designated Parts Location, (b) Grantor has good title to such Parts
Inventory and such Parts Inventory is not subject to any Lien or security
interest or document whatsoever except for the Lien granted to the
Administrative Agent, for the benefit of the Secured Parties, and except for
other Liens permitted under Section 4.1(e), (c) such Parts Inventory is Eligible
Parts Inventory, (d) such Parts Inventory which contains or bears any
Intellectual Property rights licensed to Grantor by any Person is not subject to
any licensing, patent, royalty, trademark, trade name or copyright agreements
with any third parties that would, upon sale or other disposition of such Parts
Inventory by the Administrative Agent in accordance with the terms hereof
(i) infringe the rights of such licensor, (ii) violate any contract with such
licensor, or (iii) cause the Administrative Agent to incur any liability with
respect to payment of royalties

 

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other than royalties incurred pursuant to sale of such Parts Inventory under the
current licensing agreement relating thereto and (e) the sale or other
disposition of such Parts Inventory (other than Parts Inventory that is not
material) by the Administrative Agent following the occurrence and during the
continuance of an Event of Default shall not require the consent of any Person
and shall not constitute a breach or default under any contract or agreement to
which such Parts Inventory is subject.

Section 3.5 No Financing Statements, Security Agreements. No financing statement
or security agreement describing all or any portion of the Collateral that has
not lapsed or been (or, on the Closing Date, will be) terminated naming a
Grantor as debtor has been filed or is of record in any jurisdiction except
(a) for financing statements or security agreements naming the Administrative
Agent on behalf of the Secured Parties as the secured party and (b) as permitted
by Sections 4.1(e) and 4.1(f).

Section 3.6 [Reserved].

Section 3.7 Perfection Certificate. The information set forth in the Perfection
Certificate delivered on the date hereof is correct and complete in all material
respects as of the date hereof.

ARTICLE IV

COVENANTS

From the date hereof, and thereafter until this Security Agreement is
terminated, Grantor agrees that:

Section 4.1 General.

(a) Collateral Records. Grantor will maintain complete and accurate books and
records as is consistent with its practices as of the date hereof in all
material respects with respect to the Collateral, and furnish to the
Administrative Agent such reports required pursuant to the Credit Agreement
relating to the Collateral as the Administrative Agent shall from time to time
reasonably request.

(b) Authorization to File Financing Statements; Ratification. Grantor hereby
authorizes the Administrative Agent to file, and if requested will deliver to
the Administrative Agent, all financing statements and other documents and take
such other actions as may from time to time be reasonably requested by the
Administrative Agent in order to maintain a first priority perfected security
interest in, subject only to Liens permitted under Section 4.1(e) hereof and, if
applicable, Control (to the extent required by the terms hereof) of, the
Collateral. Any financing statement filed by the Administrative Agent may be
filed in any filing office in any appropriate Uniform Commercial Code
jurisdiction and may (i) indicate the

 

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Collateral by any description which reasonably approximates the description
contained in this Security Agreement, and (ii) contain any other information
required by part 5 of Article 9 of the UCC for the sufficiency or filing office
acceptance of any financing statement or amendment, including whether Grantor is
an organization, the type of organization and any organizational identification
number issued to Grantor. Grantor also agrees to furnish any such information to
the Administrative Agent promptly upon reasonable request. Grantor also ratifies
its authorization for the Administrative Agent to have filed in any Uniform
Commercial Code jurisdiction any initial financing statements or amendments
thereto if filed prior to the date hereof, upon reasonable approval of such
financing statements by Grantor.

(c) Further Assurances. (i) Grantor agrees to take any and all reasonable
actions necessary to defend title to the Collateral against all Persons and to
defend the security interest of the Administrative Agent in the Collateral and
the priority thereof, in each case against any Lien not permitted under
Section 4.1(e).

(ii) Grantor agrees that from time to time, at the expense of Grantor, Grantor
will promptly execute and deliver, or otherwise authenticate, all further
instruments and documents, and take all further action that the Administrative
Agent may reasonably request, in order to perfect and protect any pledge or
security interest granted or purported to be granted by Grantor hereunder or to
enable the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral of Grantor. Without limiting the
generality of the foregoing, Grantor will promptly: (1) at the request of the
Administrative Agent, mark conspicuously each Document included in Parts
Inventory, each Chattel Paper included in Receivables or MIA Receivables
Accounts, any other Documents and, at the request of the Administrative Agent,
each of its records pertaining to such Collateral with a legend, in form and
substance reasonably satisfactory to the Administrative Agent, indicating that
such Document, Chattel Paper or other Collateral is subject to the security
interest granted hereby; (2) if any such Collateral shall be evidenced by a
promissory note or other instrument or Chattel Paper valued in excess of
$1,000,000, promptly deliver and pledge to the Administrative Agent hereunder
such note or instrument or Chattel Paper duly indorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
reasonably satisfactory to the Administrative Agent; and (3) file such financing
or continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Administrative Agent may
reasonably request, in order to perfect and preserve the security interest
granted or purported to be granted by Grantor hereunder.

(d) Disposition of Collateral. Grantor will not sell, lease, transfer or
otherwise dispose of the Collateral except for sales, leases, transfers and
other dispositions of Parts Inventory in the ordinary course of business and
other sales, leases, transfers and other dispositions permitted under
Section 6.05 of the Credit Agreement.

 

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(e) Liens. Grantor will not create, incur, or suffer to exist any Lien on the
Collateral except Liens permitted by Section 6.02 of the Credit Agreement.

(f) Other Financing Statements. Grantor will not authorize the filing of any
financing statement naming it as debtor covering all or any portion of the
Collateral, except to cover security interests as permitted by Section 4.1(e).
Until the termination of this Security Agreement pursuant to Section 7.15,
Grantor acknowledges that it is not authorized to file any financing statement
or amendment or termination statement with respect to any financing statement
naming the Administrative Agent as secured party without the prior written
consent of the Administrative Agent, subject to Grantor’s rights under
Section 9-509(d)(2) of the UCC.

(g) Change of Name, Etc. Grantor agrees to furnish to the Administrative Agent
prompt written notice of any change in: (i) Grantor’s legal name; (ii) the
location of Grantor’s chief executive office or its principal place of business;
(iii) Grantor’s organizational legal entity designation or jurisdiction of
incorporation or formation; (iv) Grantor’s organizational identification number
assigned to it by its jurisdiction of incorporation or formation; or (v) the
acquisition by Grantor of any material property constituting Collateral for
which additional filings or recordings are necessary to perfect and maintain the
Administrative Agent’s security interest therein (to the extent perfection of
the security interest in such property is required by the terms hereof). Grantor
agrees not to effect or permit any change referred to in the preceding sentence
unless all filings have been made under the Uniform Commercial Code or other
applicable law that are required in order for the Administrative Agent to
continue at all times following such change to have a valid, legal and
perfected, first priority security interest (subject to Liens permitted under
Section 4.1(e)) in the Collateral for its benefit and the benefit of the other
Secured Parties.

(h) Locations of Collateral. Except as otherwise permitted under Sections 5.15
and 6.16 of the Credit Agreement, Grantor will not maintain any Collateral
consisting of Parts intended to be sold by Grantor in its aftermarket parts
services business other than at (a) a parts distribution center owned or leased
by Grantor identified on Part 1 of Schedule 4.1(h) hereof, (b) a storage
facility of Grantor identified on Part 2 of Schedule 4.1(h) hereof or (c) third
party processor or logistics provider locations identified on Part 3 of Schedule
4.1(h) hereof, in each case as such Schedule may amended from time to time in
accordance with the next succeeding sentence to include parts distribution
centers owned or leased by Grantor, storage facilities of Grantor or third party
processors or logistics provider locations, in each case located in the United
States, as the case may be (such locations, collectively, the “Designated Parts
Locations”). Grantor will not maintain at any parts distribution center owned or
leased by Grantor which constitutes a Designated Parts Location (x) any
Inventory of any other Person or (y) any Inventory constituting Term Loan
Collateral of Grantor (other than Parts intended to be sold by Grantor in its
aftermarket parts services business and Term Loan Collateral that is immaterial
in view of the Inventory of the Grantor otherwise held at such location).
Schedule 4.1(h) may be amended by Grantor providing 10 days’ (or such shorter
period as agreed by the Administrative Agent) prior written notice to
Administrative Agent designating any such new location as a “Designated Parts
Location” and certifying, by delivery of a certificate substantially

 

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in the form of Exhibit E, that (i) if such Designated Parts Location is a parts
distribution center owned or leased by Grantor, no Inventory (other than Parts
intended to be sold by Grantor in its aftermarket parts services business and
Term Loan Collateral that is immaterial in view of the Inventory of the Grantor
otherwise held at such location) will be maintained at such location and (ii) a
notice of the new Designated Parts Location and a certification of the matters
set forth in clause (i) above have been delivered (or are being
contemporaneously delivered) to the Term Representative.

(i) Compliance with Terms. Grantor will perform and comply in all material
respects with all obligations in respect of the Collateral and all material
agreements relating to the Collateral to which it is a party or by which it is
bound, that would reasonably be expected to have a Material Adverse Effect.

Section 4.2 Receivables.

(a) Certain Agreements on Receivables Collateral. Except to the extent permitted
by Section 4.1(d) or that notice has been provided as required by
Section 4.2(c), Grantor will not make or agree to make any material discount,
credit, rebate or other reduction in the original amount owing on a Receivable
comprising Collateral or an MIA Receivables Account or accept in satisfaction of
a Receivable comprising Collateral or an MIA Receivables Account less than the
original amount thereof, other than in the ordinary course of business; provided
that during the continuance of an Event of Default, after notice from the
Administrative Agent, Grantor will not make or agree to make any discount,
credit, rebate or other reduction in the original amount owing on a Receivable
comprising Collateral or an MIA Receivables Account or accept in satisfaction of
a Receivable comprising Collateral or an MIA Receivables Account less than the
original amount thereof.

(b) Collection of Receivables. Except as otherwise provided in this Security
Agreement, Grantor will use commercially reasonable efforts to collect and
enforce, in the ordinary course of business, all amounts due or hereafter due to
Grantor under the Receivables comprising Collateral or the MIA Receivables
Accounts.

(c) Disclosure of Counterclaims on Receivables. If (other than in the ordinary
course of business) (i) any material discount, credit or agreement to make a
rebate or to otherwise reduce the amount owing on a material Receivable
comprising Collateral or an MIA Receivables Account exists or (ii) if, to the
knowledge of Grantor, any material dispute, setoff, claim, counterclaim or
defense exists or has been asserted or threatened in writing with respect to a
material Receivable comprising Collateral or an MIA Receivables Account, Grantor
will promptly disclose such fact to the Administrative Agent in writing.

(d) Electronic Chattel Paper. If Grantor at any time holds or acquires an
interest in any Electronic Chattel Paper or any “transferable record”, as that
term is defined in

 

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Section 201 of the Federal Electronic Signatures in Global and National Commerce
Act (other than as shall constitute MIA Receivables), or in Section 16 of the
Uniform Electronic Transactions Act as in effect in any relevant jurisdiction
constituting Collateral, in each case with a value in excess of $1,000,000,
Grantor shall promptly notify the Administrative Agent thereof and, at the
request of the Administrative Agent, shall take such action as the
Administrative Agent may reasonably request to vest in the Administrative Agent
Control under UCC Section 9-105 of such Electronic Chattel Paper or control (to
the extent the meaning of “control” has not been clearly established under such
provisions, “control” in this paragraph (d) to have such meaning as the
Administrative Agent shall in good faith specify in writing after consultation
with Grantor) under Section 201 of the Federal Electronic Signatures in Global
and National Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as so in effect in such jurisdiction, of such
transferable record. The Administrative Agent agrees with Grantor that the
Administrative Agent will arrange, pursuant to procedures reasonably
satisfactory to the Administrative Agent and so long as such procedures will not
result in the Administrative Agent’s loss of Control or control, as applicable,
for Grantor to make alterations to the Electronic Chattel Paper or transferable
record permitted under UCC Section 9-105 or, as the case may be, Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act or
Section 16 of the Uniform Electronic Transactions Act for a party in Control to
allow without loss of Control or control, as applicable, unless an Event of
Default has occurred and is continuing or would occur after taking into account
any action by Grantor with respect to such Electronic Chattel Paper or
transferable record.

Section 4.3 Parts Inventory Count; Parts Inventory Reporting System. Grantor
shall continue to conduct all cycle counts consistent with past practices or
other inventory control measures reasonably acceptable to the Administrative
Agent, and shall supply the Administrative Agent with mutually acceptable
reports providing reasonable detail of the results of such counts,
reconciliations related thereto and other reports on a monthly basis, under
procedures to be mutually agreed by the Administrative Agent and Grantor,
provided that the Administrative Agent agrees that any inventory count measure
consistent with industry practice is acceptable. Grantor will maintain a
perpetual inventory reporting system at all times.

Section 4.4 Delivery of Instruments, Chattel Paper and Documents. Grantor will
(a) hold for the benefit of the Administrative Agent upon receipt and promptly
thereafter deliver to the Administrative Agent any Chattel Paper and Instruments
constituting Collateral received after the date hereof, in each case with a
value in excess of $1,000,000, (b) upon the Administrative Agent’s request,
deliver to the Administrative Agent, and thereafter hold for the benefit of the
Administrative Agent upon receipt and promptly deliver to the Administrative
Agent any Document evidencing or constituting Collateral with a value in excess
of $1,000,000, and (c) upon the Administrative Agent’s reasonable request,
deliver to the Administrative Agent a duly executed amendment to this Security
Agreement, in the form of Exhibit C hereto (each, an “Amendment”), pursuant to
which Grantor will pledge any additional Collateral to the extent required
hereby or by the Credit Agreement. Grantor hereby authorizes the Administrative
Agent to attach each Amendment to this Security Agreement and agrees that all
additional collateral set forth in such Amendments shall be considered to be
part of the Collateral.

Section 4.5 Pledged Accounts. After establishment of the Collection Account, or
such time as the Collection Account is required to be established pursuant to
the Credit

 

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Agreement, Grantor will not, and will not permit, any (A) insurance proceeds
constituting Collateral, (B) any cash or Cash Equivalents constituting Proceeds
of any sale or other disposition of any Parts Inventory and (C) Proceeds of the
assets of the Grantor referred to in clauses (a)(ii) and (a)(iii) of Article II
of this Agreement to be deposited into any Deposit Account or Securities Account
other than a Pledged Account (other than payments as a result of inadvertent
mistakes).

Section 4.6 No Interference. Grantor agrees that it will not interfere with any
right, power and remedy of the Administrative Agent provided for in this
Security Agreement or now or hereafter existing at law or in equity or by
statute or otherwise, or the exercise or beginning of the exercise by the
Administrative Agent of any one or more of such rights, powers or remedies.

Section 4.7 Insurance.

(a) In the event any Collateral is located in any area that has been designated
by the Federal Emergency Management Agency as a “Special Flood Hazard Area”,
Grantor shall purchase and maintain flood insurance on such Collateral
(including any personal property which is located on any real property leased by
Grantor within a “Special Flood Hazard Area”). The amount of all insurance
required by this Section shall at a minimum comply with applicable law,
including the Flood Disaster Protection Act of 1973, as amended. All premiums on
such insurance shall be paid when due by Grantor, and copies of the policies
delivered to the Administrative Agent. If Grantor fails to obtain any insurance
as required by this Section, the Administrative Agent at the direction of the
Required Lenders may obtain such insurance at Grantor’s expense following five
(5) Business Days and prior written notice to the Grantor. By purchasing such
insurance, the Administrative Agent shall not be deemed to have waived any
Default arising from Grantor’s failure to maintain such insurance or pay any
premiums therefor.

(b) All insurance policies required under Section 5.09 of the Credit Agreement
shall name the Administrative Agent (for the benefit of the Administrative Agent
and the other Secured Parties) as an additional insured or as loss payee with
respect to the Collateral, as applicable, and shall contain loss payable
clauses, through endorsements in form and substance reasonably satisfactory to
the Administrative Agent.

Section 4.8 Collateral Access Agreement and Certain Payments. If Grantor leases
any warehouse or distribution facility after the Closing Date, Grantor shall use
commercially reasonable efforts to promptly obtain a Collateral Access Agreement
for such leased warehouse or distribution facility with respect to the locations
with an aggregate value in excess of $1,000,000 of Parts Inventory. Except as
would not reasonably be expected to have a Material Adverse Effect, Grantor
shall perform its obligations under all leases and other agreements with respect
to any such leased location or third-party warehouse where any Collateral is
located.

 

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ARTICLE V

REMEDIES

Section 5.1 Remedies.

(a) Upon the occurrence and during the continuance of an Event of Default, the
Administrative Agent may exercise any or all of the following rights and
remedies:

(i) those rights and remedies provided in this Security Agreement, the Credit
Agreement, or any other Loan Document; provided, that this Section 5.1(a) shall
not be understood to limit any rights available to the Administrative Agent and
the Lenders prior to an Event of Default;

(ii) those rights and remedies available to a secured party under the UCC
(whether or not the UCC applies to the affected Collateral) or under any other
applicable law (including, without limitation, any law governing the exercise of
a bank’s right of setoff or bankers’ Lien) when a debtor is in default under a
security agreement;

(iii) give notice of sole control or any other instruction under any blocked
account or account control agreement (with respect to the Collection Account),
Collateral Access Agreement or any other control or similar agreement and take
any action provided therein with respect to the applicable Collateral; and

(iv) without notice (except as specifically provided in Section 7.1 or elsewhere
herein), demand or advertisement of any kind to Grantor or any other Person,
enter the premises of Grantor where any Collateral is located (through self-help
and without judicial process) to collect, receive, assemble, process,
appropriate, sell, lease, assign, grant an option or options to purchase or
otherwise dispose of, deliver, or realize upon, the Collateral or any part
thereof in one or more parcels at public or private sale or sales (which sales
may be adjourned or continued from time to time with or without notice and may
take place at Grantor’s premises or elsewhere), for cash, on credit or for
future delivery without assumption of any credit risk, and upon such other terms
as the Administrative Agent may deem commercially reasonable.

(b) Grantor acknowledges and agrees that the compliance by the Administrative
Agent, on behalf of the Secured Parties, with any applicable state or federal
law requirements in connection with a disposition of the Collateral will not be
considered to adversely affect the commercial reasonableness of any sale of the
Collateral.

 

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(c) The Administrative Agent shall have the right upon any public sale or sales
and, to the extent permitted by law, upon any private sale or sales (including
in connection with an Insolvency Proceeding), to purchase for the benefit of the
Administrative Agent and the Secured Parties, the whole or any part of the
Collateral so sold, free of any right of equity redemption, which equity
redemption Grantor hereby expressly releases and in lieu of any actual payment
of the purchase price, the Administrative Agent may credit bid and set off the
amount of such price against the Secured Obligations.

(d) Until the Administrative Agent is able to effect a sale, lease, transfer or
other disposition of Collateral, the Administrative Agent shall have the right
to hold or use Collateral, or any part thereof, to the extent that it deems
appropriate for the purpose of preserving Collateral or the value of the
Collateral. The Administrative Agent may, if it so elects, seek the appointment
of a receiver or keeper to take possession of Collateral and to enforce any of
the Administrative Agent’s remedies (for the benefit of the Administrative Agent
and Secured Parties), with respect to such appointment without prior notice or
hearing as to such appointment.

(e) [Reserved].

(f) Notwithstanding the foregoing, none of the Administrative Agent or the
Secured Parties shall be required to (i) make any demand upon, or pursue or
exhaust any of their rights or remedies against, Grantor, any other obligor,
guarantor, pledgor or any other Person with respect to the payment of the
Secured Obligations or to pursue or exhaust any of their rights or remedies with
respect to any Collateral therefor or any direct or indirect guarantee thereof,
(ii) marshal the Collateral or any guarantee of the Secured Obligations or to
resort to the Collateral or any such guarantee in any particular order, or
(iii) effect a public sale of any Collateral.

Section 5.2 Grantor’s Obligations Upon Default. Upon the reasonable request of
the Administrative Agent after the occurrence and during the continuance of an
Event of Default, Grantor will:

(a) assemble and make available to the Administrative Agent the Collateral and
all books and records relating thereto at any place or places reasonably
specified by the Administrative Agent, whether at Grantor’s premises or
elsewhere; and

(b) permit the Administrative Agent, by the Administrative Agent’s
representatives and agents, to enter, occupy and use any premises where all or
any part of the Collateral, or the books and records relating thereto, or both,
are located, to take possession of all or any part of the Collateral or the
books and records relating thereto, or both, to remove all or any part of the
Collateral or the books and records relating thereto, or both, and to conduct
sales of the Collateral, without any obligation to pay Grantor for such use and
occupancy.

 

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Section 5.3 License. The Administrative Agent is hereby granted an irrevocable,
non-exclusive license or other right to use, license or sub-license (without
payment of royalty or other compensation to any Person) any or all Intellectual
Property of Grantor, computer hardware and software, trade secrets, brochures,
customer lists, promotional and advertising materials, labels, packaging
materials and other interests in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, in advertising for sale,
marketing, selling, collecting, completing manufacture of, or otherwise
exercising any rights or remedies with respect to, any Collateral; provided,
that such non-exclusive license shall only be exercisable upon the occurrence
and during the continuance of an Event of Default. Grantor’s rights and
interests under Intellectual Property shall inure to the Administrative Agent’s
benefit.

ARTICLE VI

ACCOUNT VERIFICATION; ATTORNEY IN FACT

Section 6.1 Account Verification. The Administrative Agent may (a) at any time
and from time to time, in the name of a nominee of the Administrative Agent or
in the name of Grantor, and (b) upon substantially contemporaneous notice to
Grantor, at any time and from time to time following the occurrence and during
the continuance of an Event of Default, in the Administrative Agent’s own name,
in the name of a nominee of the Administrative Agent or in the name of Grantor,
communicate (by mail, telephone, facsimile or otherwise) with the Account
Debtors of Grantor, parties to contracts with Grantor and obligors in respect of
Instruments of Grantor to verify with such Persons, to the Administrative
Agent’s satisfaction, the existence, amount, terms of, and any other matter
relating to, Accounts, Instruments, Chattel Paper, Payment Intangibles and/or
other Receivables that are Collateral.

Section 6.2 Authorization for Secured Party to Take Certain Action.

(a) Grantor irrevocably authorizes the Administrative Agent and appoints the
Administrative Agent as its attorney in fact (i) at any time and from time to
time in the sole discretion of the Administrative Agent (A) to execute on behalf
of Grantor as debtor and to file financing statements necessary or desirable in
the Administrative Agent’s reasonable discretion to perfect and to maintain the
perfection and priority of the Administrative Agent’s security interest in the
Collateral, (B) to file a carbon, photographic or other reproduction of this
Security Agreement or any financing statement with respect to the Collateral as
a financing statement and to file any other financing statement or amendment of
a financing statement (which would not add new collateral or add a debtor,
except as otherwise provided for herein or in any other Loan Document) in such
offices as the Administrative Agent in its reasonable discretion deems necessary
or desirable to perfect and to maintain the perfection and priority of the
Administrative Agent’s security interest in the Collateral, and (C) with five
(5) Business Days’ prior written notice to discharge past due taxes,
assessments, charges, fees or Liens on the Collateral (except for such Liens as
are permitted hereunder); (ii) at any time following the

 

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occurrence and during the continuance of an Event of Default, to endorse and
collect any cash proceeds of the Collateral and to apply the proceeds of any
Collateral received by the Administrative Agent to the Secured Obligations as
provided herein or in the Credit Agreement or any other Loan Document, (iii) at
any time following the occurrence and during the continuance of an Event of
Default, (A) to demand payment or enforce payment of the Receivables and the MIA
Receivables Accounts in the name of the Administrative Agent or Grantor and to
endorse any and all checks, drafts, and other instruments for the payment of
money relating to the Receivables or the MIA Receivables Accounts, (B) upon
substantially contemporaneous notice to Grantor, to sign Grantor’s name on any
invoice or bill of lading relating to the Receivables or MIA Receivables
Accounts, drafts against any Account Debtor of Grantor, assignments and
verifications of Receivables or MIA Receivables Accounts, (C) upon substantially
contemporaneous notice to Grantor, to exercise all of Grantor’s rights and
remedies with respect to the collection of the Receivables, the MIA Receivables
Accounts and any other Collateral, (D) upon substantially contemporaneous notice
to Grantor, to settle, adjust, compromise, extend or renew the Receivables or
the MIA Receivables Accounts, (E) to settle, adjust or compromise any legal
proceedings brought to collect Receivables or the MIA Receivables Accounts,
(F) to prepare, file and sign Grantor’s name on a proof of claim in bankruptcy
or similar document against any Account Debtor of Grantor, (G) to prepare, file
and sign Grantor’s name on any notice of Lien, assignment or satisfaction of
Lien or similar document in connection with the Receivables or the MIA
Receivables Accounts, and (H) to change the address for delivery of mail
addressed to Grantor to such address as the Administrative Agent may designate
and to receive, open and dispose of all mail addressed to Grantor; and (iv) with
5 Business Days’ prior notice to Grantor, to do all other acts and things
necessary to carry out the terms of this Security Agreement; and Grantor agrees
to reimburse the Administrative Agent within 10 Business Days of written demand
for any reasonable payment made or any reasonable documented out-of-pocket
expense incurred by the Administrative Agent in connection with any of the
foregoing; provided that, this authorization shall not relieve Grantor of any of
its obligations under this Security Agreement or under the Credit Agreement.

(b) All acts of said attorney or designee are hereby ratified and approved by
Grantor. The powers conferred on the Administrative Agent, for the benefit of
the Administrative Agent and Secured Parties, under this Section 6.2 are solely
to protect the Administrative Agent’s interests in the Collateral and shall not
impose any duty upon the Administrative Agent or any Secured Party to exercise
any such powers.

Section 6.3 [Reserved].

Section 6.4 NATURE OF APPOINTMENT; LIMITATION OF DUTY. THE APPOINTMENT OF THE
ADMINISTRATIVE AGENT AS ATTORNEY-IN-FACT IN THIS ARTICLE VI IS COUPLED WITH AN
INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS SECURITY
AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 7.15. NOTWITHSTANDING
ANYTHING CONTAINED HEREIN, NEITHER THE ADMINISTRATIVE AGENT, NOR ANY SECURED
PARTY, NOR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER
GRANTED HEREUNDER OR OTHERWISE OR TO PRESERVE THE

 

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SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING
SO, EXCEPT TO THE EXTENT SUCH DAMAGES ARE ATTRIBUTABLE TO THEIR OWN GROSS
NEGLIGENCE, WILLFUL MISCONDUCT OR BAD FAITH AS FINALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION; PROVIDED THAT, IN NO EVENT SHALL THEY BE LIABLE FOR ANY
PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

ARTICLE VII

GENERAL PROVISIONS

Section 7.1 Waivers. Grantor hereby waives notice of the time and place of any
public sale or the time after which any private sale or other disposition of all
or any part of the Collateral may be made. To the extent such notice may not be
waived under applicable law, any notice made shall be deemed reasonable if sent
to Grantor, addressed as set forth in Article VIII, at least ten days prior to
(a) the date of any such public sale or (b) the time after which any such
private sale or other disposition may be made. To the maximum extent permitted
by applicable law, Grantor waives all claims, damages, and demands against the
Administrative Agent or any Secured Party arising out of the repossession,
retention or sale of the Collateral, except such as arise out of the gross
negligence, willful misconduct or bad faith of the Administrative Agent or such
Secured Party as finally determined by a court of competent jurisdiction. To the
extent it may lawfully do so, Grantor absolutely and irrevocably waives and
relinquishes the benefit and advantage of, and covenants not to assert against
the Administrative Agent or any Secured Party, any valuation, stay, appraisal,
extension, moratorium, redemption or similar laws and any and all rights or
defenses it may have as a surety now or hereafter existing which, but for this
provision, might be applicable to the sale of any Collateral made under the
judgment, order or decree of any court, or privately under the power of sale
conferred by this Security Agreement, or otherwise. Except as otherwise
specifically provided herein, Grantor hereby waives presentment, demand, protest
or any notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Security Agreement or any Collateral.

Section 7.2 Limitation on Administrative Agent’s and Secured Party’s Duty with
Respect to the Collateral. (a) The Administrative Agent shall have no obligation
to clean-up or otherwise prepare the Collateral for sale. The Administrative
Agent and each Secured Party shall use reasonable care with respect to the
Collateral in its possession or under its control. None of the Administrative
Agent or any Secured Party shall have any other duty as to any Collateral in its
possession or control or in the possession or control of any agent or nominee of
the Administrative Agent or such Secured Party, or any income thereon or as to
the preservation of rights against prior parties or any other rights pertaining
thereto. To the extent that applicable law imposes duties on the Administrative
Agent to exercise remedies in a commercially reasonable manner, Grantor
acknowledges and agrees that it would be commercially reasonable for the
Administrative Agent (i) to fail to incur expenses deemed significant by the
Administrative Agent, in its reasonable discretion, to prepare Collateral for
disposition or otherwise to transform raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third

 

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party consents for the collection or disposition of Collateral to be collected
or disposed of, (iii) to fail to exercise collection remedies against Account
Debtors or other Persons obligated on Collateral or to remove Liens on or any
adverse claims against Collateral, (iv) to exercise collection remedies against
Account Debtors and other Persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other Persons, whether or not in the same business as Grantor, for
expressions of interest in acquiring all or any portion of such Collateral,
(vii) to hire one or more professional auctioneers to assist in the disposition
of Collateral, whether or not the Collateral is of a specialized nature,
(viii) to dispose of Collateral by utilizing internet sites that provide for the
auction of assets of the types included in the Collateral or that have the
reasonable capacity of doing so, or that match buyers and sellers of assets,
(ix) to dispose of assets in wholesale rather than retail markets, (x) to
disclaim disposition warranties, such as title, possession or quiet enjoyment,
(xi) to purchase insurance or credit enhancements to insure the Administrative
Agent against risks of loss, collection or disposition of Collateral or to
provide to the Administrative Agent a guaranteed return from the collection or
disposition of Collateral, or (xii) to the extent deemed appropriate by the
Administrative Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Administrative Agent
in the collection or disposition of any of the Collateral. Grantor acknowledges
that the purpose of this Section 7.2 is to provide non-exhaustive indications of
what actions or omissions by the Administrative Agent would be commercially
reasonable in the Administrative Agent’s exercise of remedies against the
Collateral and that other actions or omissions by the Administrative Agent shall
not be deemed commercially unreasonable solely on account of not being indicated
in this Section 7.2. Without limitation upon the foregoing, nothing contained in
this Section 7.2 shall be construed to grant any rights to Grantor or to impose
any duties on the Administrative Agent that would not have been granted or
imposed by this Security Agreement or by applicable law in the absence of this
Section 7.2.

(b) Anything herein to the contrary notwithstanding, (i) Grantor shall remain
liable under the contracts and agreements included in Grantor’s Collateral to
the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Security Agreement had not been
executed, (ii) the exercise by the Administrative Agent of any of the rights
hereunder shall not release Grantor from any of its duties or obligations under
the contracts and agreements included in the Collateral and (iii) no Secured
Party shall have any obligation or liability under the contracts and agreements
included in the Collateral by reason of this Security Agreement or any other
Loan Document, nor shall any Secured Party be obligated to perform any of the
obligations or duties of Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.

Section 7.3 Compromises and Collection of Collateral. Grantor and the
Administrative Agent recognize that setoffs, counterclaims, defenses and other
claims may be asserted by obligors with respect to certain of the Receivables or
MIA Receivables Accounts, that certain of the Receivables or MIA Receivables
Accounts may be or become uncollectible in whole or in part and that the expense
and probability of success in litigating a disputed Receivable or MIA
Receivables Account may exceed the amount that reasonably may be expected to be
recovered with respect to a Receivable or MIA Receivable Account. In view of

 

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the foregoing, Grantor agrees that the Administrative Agent may at any time and
from time to time, if an Event of Default has occurred and is continuing, and
upon substantially contemporaneous notice to Grantor, compromise with the
obligor on any Receivable or MIA Receivables Account, accept in full payment of
any Receivable or MIA Receivables Account such amount as the Administrative
Agent in its sole discretion shall determine or abandon any Receivable or MIA
Receivables Account, and any such action by the Administrative Agent shall be
commercially reasonable so long as the Administrative Agent acts in good faith
based on information known to it at the time it takes any such action.

Section 7.4 Secured Party Performance of Debtor Obligations. Without having any
obligation to do so, the Administrative Agent may perform or pay any obligation
which Grantor has agreed to perform or pay under this Security Agreement (with
the giving of any notice if required by Section 6.2) with five (5) Business
Days’ prior written notice to the Grantor and Grantor shall reimburse the
Administrative Agent for any amounts paid by the Administrative Agent pursuant
to this Section 7.4. Grantor’s obligation to reimburse the Administrative Agent
pursuant to the preceding sentence shall be a Secured Obligation payable on
demand.

Section 7.5 Specific Performance of Certain Covenants. Grantor acknowledges and
agrees that a breach of any of the covenants contained in Sections 4.1(d),
4.1(e), 4.4, 4.7, 4.8, or 5.2, will cause irreparable injury to the
Administrative Agent and the Secured Parties, that the Administrative Agent and
the Secured Parties have no adequate remedy at law in respect of such breaches
and therefore agrees, without limiting the right of the Administrative Agent or
the Secured Parties to seek and obtain specific performance of other obligations
of Grantor contained in this Security Agreement, that the covenants of Grantor
contained in the Sections referred to in this Section 7.5 shall be specifically
enforceable against Grantor.

Section 7.6 Dispositions Not Authorized. Grantor is not authorized to sell or
otherwise dispose of the Collateral, except as set forth in Section 4.1(d), and
notwithstanding any course of dealing between Grantor and the Administrative
Agent or other conduct of the Administrative Agent, no authorization to sell,
lease or transfer or otherwise dispose of the Collateral (except as set forth in
Section 4.1(d)) shall be binding upon the Administrative Agent or the Secured
Parties unless such authorization is in writing signed by the Administrative
Agent with the consent or at the direction of the Required Lenders.

Section 7.7 No Waiver; Amendments; Cumulative Remedies. No delay or omission of
the Administrative Agent or any Secured Party to exercise any right or remedy
granted under this Security Agreement shall impair such right or remedy or be
construed to be a waiver of any Default or an acquiescence therein, and any
single or partial exercise of any such right or remedy shall not preclude any
other or further exercise thereof or the exercise of any other right or remedy.
No waiver, amendment or other variation of the terms, conditions or provisions
of this Security Agreement whatsoever shall be valid unless in writing signed by
the Administrative Agent with the concurrence or at the direction of the Lenders
required under Section 9.02 of the Credit Agreement and then only to the extent
in such writing specifically set forth. All rights and remedies contained in
this Security Agreement or by law afforded shall be cumulative and all shall be
available to the Administrative Agent and the Secured Parties until termination
of this Security Agreement in accordance with Section 7.15 below.

 

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Section 7.8 Limitation by Law; Severability of Provisions. All rights, remedies
and powers provided in this Security Agreement may be exercised only to the
extent that the exercise thereof does not violate any applicable provision of
law, and all the provisions of this Security Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited to the extent necessary so that they shall not render this
Security Agreement invalid, unenforceable or not entitled to be recorded or
registered, in whole or in part. Any provision in this Security Agreement that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of this Security Agreement are declared to be severable.

Section 7.9 Reinstatement. This Security Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against Grantor for liquidation or reorganization, should Grantor become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of its
assets, and shall continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Secured Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Secured Obligations shall be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.

Section 7.10 Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of Grantor, the
Administrative Agent and the Secured Parties and their respective successors and
permitted assigns (including all Persons who become bound as a debtor to this
Security Agreement), except that Grantor, unless permitted by the Credit
Agreement, shall not have the right to assign its rights or delegate its
obligations under this Security Agreement or any interest herein, without the
prior written consent of the Administrative Agent. No sales of participations,
assignments, transfers, or other dispositions of any agreement governing the
Secured Obligations or any portion thereof or interest therein shall in any
manner impair the Lien granted to the Administrative Agent, for the benefit of
the Administrative Agent and the Secured Parties, hereunder.

Section 7.11 Survival of Representations. All representations and warranties of
Grantor contained in this Security Agreement shall survive the execution and
delivery of this Security Agreement.

Section 7.12 Expenses. Grantor agrees to reimburse the Administrative Agent
within 10 Business Days of written demand for any and all reasonable documented
out-of-pocket expenses paid or incurred by the Administrative Agent in the
administration, collection, preservation or sale of the Collateral (including
the reasonable documented expenses and charges associated with any periodic or
special audit or analysis of the Collateral to the extent provided in the Credit
Agreement). Any and all costs and expenses incurred by Grantor in the
performance of actions required pursuant to the terms hereof shall be borne
solely by Grantor.

 

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Section 7.13 Reserved.

Section 7.14 Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.

Section 7.15 Termination or Release.

(a) This Security Agreement shall continue in effect until (i) the Credit
Agreement has terminated pursuant to its express terms, and (ii) payment and
satisfaction in full in cash of all (A) Facility Obligations (other than
unripened, contingent indemnity obligations) owing as of the date of such
termination (or with respect to any outstanding Letters of Credit, have been
Cash Collateralized or Backstopped as required by the Credit Agreement) and
(B) Banking Services Obligations owing as of the date of such termination and no
Commitments of the Administrative Agent or the Lenders which would give rise to
any Obligations are outstanding.

(b) Upon any sale, lease, transfer or other disposition by Grantor of any
Collateral that is permitted under Section 4.1(d) to any other Person or, upon
the effectiveness of any written consent to the release of the security interest
granted hereby in any Collateral pursuant to Section 9.02 of the Credit
Agreement, the security interest in such Collateral shall be automatically
released.

(c) Upon the effectiveness of this Agreement, the security interest in all
Collateral (as defined in the Existing Senior Credit Agreement) not constituting
Collateral hereunder is automatically released.

(d) In connection with any termination or release pursuant to paragraph (a),
(b) or (c) above, or Section 7.22, the Administrative Agent shall promptly
execute and deliver to Grantor, at Grantor’s expense, all UCC termination
statements and similar documents that Grantor shall reasonably request to
evidence such termination or release. Any execution and delivery of documents
pursuant to this Section 7.15 shall be without recourse to or representation or
warranty by the Administrative Agent or any Secured Party. Without limiting the
provisions of Section 7.12, Grantor shall reimburse the Administrative Agent
promptly upon written demand for all reasonable and documented costs and
out-of-pocket expenses, including the reasonable and documented fees, charges
and expenses of one primary counsel (plus any applicable local counsel),
incurred by it in connection with any action contemplated by this Section 7.15.

Section 7.16 Entire Agreement. This Security Agreement, together with the other
Loan Documents, embodies the entire agreement and understanding between Grantor
and the Administrative Agent relating to the Collateral and supersedes all prior
agreements and understandings between Grantor and the Administrative Agent
relating to the Collateral.

 

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Section 7.17 CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

Section 7.18 CONSENT TO JURISDICTION. EACH PARTY HERETO HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW YORK STATE
COURT SITTING IN NEW YORK, NEW YORK IN THE BOROUGH OF MANHATTAN IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE
AGENT OR ANY SECURED PARTY TO BRING PROCEEDINGS AGAINST GRANTOR IN THE COURTS OF
ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY GRANTOR AGAINST THE
ADMINISTRATIVE AGENT OR ANY SECURED PARTY OR ANY AFFILIATE OF THE ADMINISTRATIVE
AGENT OR ANY SECURED PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR ANY
OTHER LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK IN
THE BOROUGH OF MANHATTAN.

Section 7.19 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
GRANTOR, THE ADMINISTRATIVE AGENT AND EACH SECURED PARTY HEREBY WAIVE TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT
OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

Section 7.20 Indemnity. Grantor agrees to indemnify, defend and save and hold
harmless the Administrative Agent, each Secured Party and each of their
respective Affiliates, successors and permitted assigns, and their respective
officers, directors, employees, agents, members, controlling persons and
advisors (each, an “Indemnified Party”) from and against, and shall pay within
10 Business Days of written demand (including documentation reasonably
supporting such request), any and all claims, damages, actual losses,
liabilities and expenses (including, without limitation, reasonable fees,
disbursements and other charges of one principal counsel for the Administrative
Agent and any necessary local counsel to the Administrative Agent), joint or
several, that may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by reason of
(including, without limitation, in connection with any investigation, litigation
or proceeding or preparation of a defense in connection therewith) this Security
Agreement, or the ownership, delivery, lease, possession, use, operation,
condition, sale, return or other disposition of any Collateral; provided, that
such indemnity shall not be available to the extent that such losses, claims,
damages,

 

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penalties, liabilities or related expenses are (i) found in a final
nonappealable judgment by a court of competent jurisdiction to have resulted
from the bad faith, gross negligence or willful misconduct of such Indemnified
Party or its officers, directors, employees or agents to the extent acting at
the direction of such Indemnified Party, (ii) to the extent such claim, damage,
loss, liability or expense is found in a final nonappealable judgment by a court
of competent jurisdiction to have resulted from a material breach of this
Security Agreement by such Indemnified Party or its officers, directors,
employees or agents or (iii) if such dispute is solely between Indemnified
Parties or their respective officers, affiliates, directors, employees, agents,
advisors, controlling persons, members and successors and permitted assigns;
provided, that Grantor agrees to indemnify and hold harmless each Indemnified
Party with respect to any matters described in this clause (iii), (x) in respect
of any claims against any Indemnified Party in its capacity in fulfilling its
role as the Administrative Agent or any other similar role under this Security
Agreement and (y) in respect of any claims arising out of or in connection with
or by reason of any act or omission of Grantor.

Section 7.21 Counterparts. This Security Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Security Agreement by signing any
such counterpart.

Section 7.22 Existing Security Agreement. (a) Effective on the Closing Date, the
Existing Security Agreement is hereby amended and restated in its entirety
hereby. The amendment and restatement of the Existing Security Agreement hereby
shall not be construed to discharge or otherwise affect any obligations of the
“Grantors” (as defined in the Existing Security Agreement) accrued or otherwise
owing under the Existing Security Agreement that have not been paid, it being
understood that such obligations shall continue as obligations hereunder.
Without limiting the generality of the foregoing, this Agreement is not intended
to constitute a novation of the Existing Security Agreement.

(b) Effective on the Closing Date and the satisfaction or waiver of all of the
conditions thereto contained in Article IV of the Credit Agreement, each of the
“Grantors” (as defined in the Existing Senior Credit Agreement) other than
Navistar, Inc. (the “Released Grantors”) shall automatically be released from
all liabilities, obligations and indebtedness owing by the such Released
Grantors under this Agreement, and all Liens and security interests of the
Administrative Agent in any and all of the property of the Released Grantors
created under the Loan Documents shall be automatically released and terminated.

ARTICLE VIII

NOTICES

Section 8.1 Sending Notices. Any notice required or permitted to be given under
this Security Agreement (a) sent by hand or overnight courier service, or mailed
by certified or registered mail, shall be deemed to have been given when
received, (b) sent by facsimile shall be deemed to have been given when sent and
when receipt has been confirmed by telephone (provided, that if not given during
normal business hours for the recipient, shall be

 

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deemed to have been given at the opening of business on the next Business Day
for the recipient) or (c) delivered or furnished by electronic communications
(including e-mail and Internet or intranet websites) pursuant to procedures
approved by the Administrative Agent and Grantor as set forth in Section 9.01 of
the Credit Agreement, in each case addressed to Grantor at the address set forth
in Section 9.01 of the Credit Agreement, and to the Administrative Agent at the
addresses set forth in accordance with Section 9.01 of the Credit Agreement.

Section 8.2 Change in Address for Notices. Grantor and the Administrative Agent
may change the address or facsimile number for service of notice upon it by a
notice in writing to the other parties.

ARTICLE IX

THE ADMINISTRATIVE AGENT

Section 9.1 The Administrative Agent. Bank of America, N.A. has been appointed
Administrative Agent for the Lenders hereunder pursuant to Article VIII of the
Credit Agreement. It is expressly understood and agreed by the parties to this
Security Agreement that any authority conferred upon the Administrative Agent
hereunder is subject to the terms of the delegation of authority made by the
Lenders to the Administrative Agent pursuant to the Credit Agreement, and that
the Administrative Agent has agreed to act (and any successor Administrative
Agent shall act) as such hereunder only on the express conditions contained in
such Article VIII. Any successor Administrative Agent appointed pursuant to
Article VIII of the Credit Agreement shall be entitled to all the rights,
interests and benefits of the Administrative Agent hereunder.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, Grantor and the Administrative Agent have executed this
Security Agreement as of the date first above written.

 

NAVISTAR, INC.

By:

    Name:   James M. Moran Title:  

Vice President and Treasurer

[Signature Pages]

 

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SECURITY AGREEMENT

 

BANK OF AMERICA, N.A.,

as Administrative Agent

By:       Name:  

Title:

[Signature Pages]