EXECUTION COPY

 
RECEIVABLES SALE AGREEMENT

dated as of April 8, 2004

 
between

NAVISTAR FINANCIAL CORPORATION,
as Transferor

and
 
TRUCK RETAIL ACCOUNTS CORPORATION,
as Transferee

 
 
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Exhibits and Schedules

Exhibit I                                                Definitions

 
Exhibit II
-
Principal Place of Business; Location(s) of Records; Organizational and Federal
Employer Identification Numbers; Other Names

 
Exhibit III
Lock-Boxes; Lock-Box Accounts; Lock-Box Banks; Blocked Accounts; Blocked Account
Banks

Exhibit IV                                              Form of Compliance
Certificate

Exhibit V                                               Credit and Collection
Policy

Exhibit VI                                              Form of Subordinated
Note

Schedule 2.1(e)                                    Disclosed Matters

Schedule A
List of Documents to Be Delivered to Transferee Prior to the Initial  Purchase

 
 
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RECEIVABLES SALE AGREEMENT

 
THIS RECEIVABLES SALE AGREEMENT, dated as of April 8, 2004, is by and between
NAVISTAR FINANCIAL CORPORATION, a Delaware corporation (“Transferor”), and TRUCK
RETAIL ACCOUNTS CORPORATION, a Delaware corporation (“Transferee”).  Unless
defined elsewhere herein, capitalized terms used in this Agreement shall have
the meanings assigned to such terms in Exhibit I hereto (or, if not defined in
Exhibit I hereto, the meanings assigned to such terms in Exhibit I to the
Purchase Agreement referenced below).
 
PRELIMINARY STATEMENTS
 
Transferor now owns, and from time to time hereafter will own,
Receivables.  Transferor wishes to sell and assign to Transferee, and Transferee
wishes to purchase from Transferor, all of Transferor’s right, title and
interest in and to such Receivables, together with the Related Security and
Collections with respect thereto.
 
Transferor and Transferee intend the transactions contemplated hereby to be true
sales of the Receivables, Related Security and Collections from Transferor to
Transferee, providing Transferee with the full benefits of ownership thereof,
and Transferor and Transferee do not intend these transactions to be, or for any
purpose to be characterized as, loans from Transferee to Transferor.
 
Following each acquisition by Transferee of Receivables, Related Security and
Collections from Transferor, Transferee will convey undivided interests therein
to Bank One, NA (Main Office Chicago), as agent (together with its successors in
such capacity, the “Agent”), for the benefit of Jupiter Securitization
Corporation, a Delaware corporation (“Conduit”), and/or certain financial
institutions (together with Conduit, the “Purchasers”), pursuant to that certain
Receivables Purchase Agreement dated as of April 8, 2004 by and among
Transferee, as Seller, Transferor, as initial Servicer, the Purchasers and the
Agent (as the same may from time to time hereafter be amended, restated or
otherwise modified from time to time, the “Purchase Agreement”).
 
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
 
ARTICLE I
 
AMOUNTS AND TERMS OF THE PURCHASES
 
Section 1.1                                Purchases of Receivables.
 
(a)           In consideration for the Purchase Price and upon the terms and
subject to the conditions set forth herein, Transferor does hereby sell, assign,
transfer, set-over and otherwise convey to Transferee, without recourse (except
to the extent
 

 
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expressly provided herein), and Transferee does hereby purchase from Transferor,
all of Transferor’s right, title and interest in and to all Receivables existing
as of the close of business on the last Business Day of the week then most
recently ended (each such last Business Day, a “Cutoff Date”), together with all
Related Security relating thereto and all Collections thereof.  Each Purchase
shall be made on the related Transfer Date, and Transferee shall be obligated to
pay the Purchase Price for the Receivables purchased hereunder on each Transfer
Date in accordance with Section 1.2.  In connection with payment of the Purchase
Price for any Receivables purchased hereunder, Transferee may request that
Transferor deliver, and Transferor shall deliver, such approvals, opinions,
information, reports or documents as Transferee may reasonably request as are
customary in similar transactions in order to protect the interests of
Transferee (and its assigns) under or as contemplated in this Agreement or the
other Transaction Documents.
 
(b)           It is the intention of the parties hereto that each sale of
Receivables made hereunder shall constitute a true sale which is absolute and
irrevocable and provides Transferee with the full benefits of ownership of the
Receivables and the associated Related Security and Collections.  Except for the
Purchase Price Credits owed pursuant to Section 1.3, each Purchase hereunder is
made without recourse to Transferor; provided, however, that (i) Transferor
shall be liable to Transferee for all representations, warranties, covenants and
indemnities made by Transferor pursuant to the terms of the Transaction
Documents to which Transferor is a party, and (ii) no Purchase shall constitute
or is intended to result in an assumption by Transferee or any assignee thereof
of any obligation of Transferor or any other Person arising in connection with
the Receivables, the related Contracts and/or other Related Security or any
other obligations of Transferor.  In view of the intention of the parties hereto
that each sale of Receivables made hereunder on a Transfer Date shall constitute
a sale of such Receivables rather than a loan secured thereby, Transferor agrees
that it will, on or prior to the date hereof and in accordance with Section
4.1(e)(ii), note in its financial statements that its Receivables have been sold
to Transferee (and its assigns).  Upon the request of Transferee or the Agent
(as Transferee’s assignee), Transferor will file and/or authorize the filing of
such financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices as may be necessary or
appropriate to perfect and maintain the perfection of Transferee’s ownership
interest in the Receivables and the Related Security and Collections with
respect thereto, or as Transferee or the Agent (as Transferee’s assignee) may
reasonably request.
 
Section 1.2                                Payment for the Purchases.
 
(a)           The Purchase Price for each Purchase of Receivables shall be
payable in full by Transferee to Transferor on the applicable Transfer Date, and
shall be paid to Transferor in the following manner:
 

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(i)           in immediately available funds; and/or
 
(ii)           from the proceeds of a subordinated loan made by Transferor to
Transferee (each, a “Subordinated Loan”) in an amount not to exceed the lesser
of (A) the remaining unpaid portion of such Purchase Price, or (B) an amount not
to exceed an amount that would result in the shareholder’s equity of the
Transferee being less than the sum of (1) the Loss Reserve (calculated using a
Loss Percentage equal to 1.5 multiplied by the Loss Ratio multiplied by the Loss
Horizon), (2) the Yield Reserve and (3) the Servicing Reserve.
 
Transferor is hereby authorized by Transferee to endorse on the schedule
attached to the Subordinated Note (or otherwise in accordance with its customary
practices for advances to its Affiliates) an appropriate notation evidencing the
date and amount of each advance thereunder, as well as the date of each payment
with respect thereto, provided that the failure to make such notation shall not
affect any obligation of Transferee thereunder.  Subject to the limitations set
forth in Section 1.2(a)(ii), Transferor irrevocably agrees to advance each
Subordinated Loan requested by Transferee on or prior to the Termination
Date.  The Subordinated Loans shall be evidenced by, and shall be payable in
accordance with the terms and provisions of, the Subordinated Note.
 
(b)           From and after the Termination Date, Transferor shall not be
obligated to (but may, at its option) sell Receivables to Transferee.
 
Section 1.3                                Purchase Price Credit Adjustments.
 
  If on any day:
 
(a)           the Outstanding Balance of a Receivable is:
 
(i)           reduced, in whole or in part, as a result of any defective or
rejected or returned goods or services, any discount or any adjustment or
otherwise by Transferor (other than cash Collections received on account of such
Receivables or a write-off of all or any portion of its Outstanding Balance as
uncollectible),
 
(ii)           reduced or canceled as a result of a setoff in respect of any
claim by any Person (whether such claim arises out of the same or a related
transaction or an unrelated transaction), or
 
(b)           any of the representations and warranties set forth in Section 2.2
are not true when made or deemed made with respect to any Receivable,
 
then, in such event, Transferee shall be entitled to a credit (each, a “Purchase
Price Credit”) against the Purchase Price otherwise payable hereunder on the
next succeeding Transfer Date equal to:
 

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(i)           in the case of a partial reduction under clause (a)(i) or (a)(ii)
above, in the amount of such reduction, and
 
(ii)           in all other cases, in the amount of the Outstanding Balance of
such Receivable (calculated before giving effect to the applicable total
reduction or cancellation).
 
If such Purchase Price Credit exceeds the Purchase Price of the Receivables
being purchased on the next succeeding Transfer Date, then Transferor shall pay
the remaining amount of such Purchase Price Credit in cash on such Transfer
Date, provided that if the Termination Date has not occurred, Transferee shall
be allowed to deduct the remaining amount of such Purchase Price Credit from any
indebtedness it owes to Transferor under the Subordinated Note.  Upon payment of
the Purchase Price Credit either as an offset to the Purchase Price of
Receivables or in cash with respect to any Receivable for which such Purchase
Price Credit equals the Outstanding Balance of such Receivable, such Receivable
shall be deemed to be transferred from the Transferee to the Transferor and
shall become the property of the Transferor for all purposes.  With respect to
any Receivable for which such Purchase Price Credit paid either as an offset to
the Purchase Price of Receivables or in cash is less than the Outstanding
Balance of such Receivable, the Transferor shall be entitled to any Collections
received with respect to such Receivable in excess of the Outstanding Balance of
such Receivable not offset by a Purchase Price Credit.
 
Section 1.4                                Payments and Computations, Etc
 
.  All amounts to be paid or deposited by Transferee hereunder shall be paid or
deposited in accordance with the terms hereof on the day when due in immediately
available funds to the account designated from time to time by Transferor.  In
the event that any payment owed by any Person hereunder becomes due on a day
that is not a Business Day, then such payment shall be made on the next
succeeding Business Day.  If any Person fails to pay any amount hereunder when
due, such Person agrees to pay, on demand, interest thereon at the Default Rate
until paid in full; provided, however, that the Default Rate shall not at any
time exceed the maximum rate permitted by applicable law.  All computations of
interest payable hereunder shall be made on the basis of a year of 360 days for
the actual number of days (including the first but excluding the last day)
elapsed.
 
Section 1.5                                Transfer of Records.
 
(a)           In connection with each Purchase of Receivables hereunder,
Transferor hereby sells, transfers, assigns and otherwise conveys to Transferee
all of Transferor’s right and title to and interest in the Records relating to
all Receivables sold hereunder, without the need for any further documentation
in connection with such Purchase.  In connection with such transfer, Transferor
hereby grants to each of Transferee, the Agent and the Servicer an irrevocable,
non-exclusive license to use, without royalty or payment of any kind, all
software used by Transferor to account for the Receivables, to the extent
necessary to
 

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administer the Receivables, whether such software is owned by Transferor or is
owned by others and used by Transferor under license agreements with respect
thereto, provided that should the consent of any licensor of such software be
required for the grant of the license described herein, to be effective,
Transferor hereby agrees that, upon the request of Transferee (or the Agent, as
Transferee’s assignee), Transferor will use its commercially reasonable efforts
to obtain the consent of such third-party licensor.  The license granted hereby
shall be irrevocable until the indefeasible payment in full of the Aggregate
Unpaids and shall terminate on the date this Agreement terminates in accordance
with its terms.
 
(b)           Transferor (i) shall take such action requested by Transferee
and/or the Agent (as Transferee’s assignee), from time to time hereafter, that
may be necessary or appropriate to ensure that Transferee and its assigns under
the Purchase Agreement have an enforceable ownership interest in the Records
relating to the Receivables purchased from Transferor hereunder, and (ii) shall
use its commercially reasonable efforts to ensure that Transferee, the Agent and
the Servicer each has an enforceable right (whether by license or sublicense or
otherwise) to use all of the computer software used to account for the
Receivables and/or to recreate such Records to the extent necessary or
reasonably desirable to service the Receivables or exercise any right of the
Transferee (or its assigns) hereunder with respect to such Receivables.
 
Section 1.6                                Characterization.
 
  If, notwithstanding the intention of the parties expressed in Section 1.1(b),
any sale by Transferor to Transferee of Receivables hereunder shall be
characterized as a secured loan and not a sale or such sale shall for any reason
be ineffective or unenforceable, then this Agreement shall be deemed to
constitute a security agreement under the UCC and other applicable law.  For
this purpose and without being in derogation of the parties’ intention that each
sale of Receivables hereunder shall constitute a true sale thereof, Transferor
hereby grants to Transferee a duly perfected security interest in all of
Transferor’s right, title and interest in, to and under all Receivables now
existing and hereafter arising, all Related Security and Collections, all other
rights and payments relating to the Receivables and all proceeds of the
foregoing (other than the Purchase Price) to secure the prompt and complete
payment of a loan deemed to have been made in an amount equal to the aggregate
Purchase Price of all outstanding Receivables together with all other
obligations of Transferor hereunder, which security interest shall be prior to
all other Adverse Claims thereto.  Transferee and its assigns shall have, in
addition to the rights and remedies which they may have under this Agreement,
all other rights and remedies provided to a secured creditor under the UCC and
other applicable law, which rights and remedies shall be cumulative.
 

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ARTICLE II
 
REPRESENTATIONS AND WARRANTIES
 
Section 2.1                                General Representations and
Warranties of Transferor.
 
  Transferor hereby represents and warrants to Transferee on the date hereof and
on each Transfer Date that:
 
(a)           Organization; Powers
 
.  Transferor is duly organized, validly existing and in good standing (to the
extent such requirement shall be applicable) under the laws of the jurisdiction
of its organization, has all requisite corporate power and authority to carry on
its business as now conducted and, except where the failure to do so,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
 
(b)           Authorization and Enforceability
 
.  The Transactions are within Transferor’s corporate powers and have been duly
authorized by all necessary corporate and, if required, stockholder
action.  This Agreement has been duly executed and delivered by Transferor and
constitutes a legal, valid and binding obligation of Transferor, enforceable 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
 
(c)           Governmental Approvals; No Conflicts
 
.  Other than the filing of the financing statements required hereunder, the
Transactions (i) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except (A) such
as have been obtained or made and are in full force and effect, (B) routine
renewals of existing licenses and permits of Transferor in the ordinary course
of business and (C) such filings as may be required under federal and state
securities laws for purposes of disclosure, (ii) will not violate any applicable
law or regulation or any order of any Governmental Authority, (iii) will not
violate or result in a default under any indenture, agreement or other
instrument binding upon Transferor or its assets, or give rise to a right
thereunder to require any payment to be made by Transferor, (iv) will not
violate the charter, by-laws or other organizational documents of Transferor,
and (v) will not result in the creation or imposition of any Adverse Claim on
any asset of Transferor except for the ownership interest in the Receivables,
Related Security and Collections conveyed hereunder and, with respect to clauses
(i), (ii), (iii) and (v), except as would not reasonably be expected to result
in a Material Adverse Effect.  No transaction contemplated hereby requires
compliance with any bulk sales act or similar law
 

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.(d)           Compliance with Laws and Agreements
 
.  Each of Transferor and its Subsidiaries is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon it or
its property, except where the failure to do so, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.  No Termination Event has occurred and is continuing.
 
(e)          Litigation
 
.  There are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of Transferor,
threatened against or affecting Transferor or any of its Subsidiaries (a)  which
would reasonably be expected to result in an adverse determination and that, if
adversely determined, would reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (b) that involve this Agreement or the Transactions.
 
 (f)         Disclosure
 
.  Transferor has disclosed to Transferee, the Agent and the Purchasers all
matters known to it that, individually or in the aggregate, would reasonably be
expected to result in a Material Adverse Effect.  None of the reports, financial
statements, certificates or other information furnished by or on behalf of
Transferor to Transferee (or the Agent or any Purchaser) in connection with the
negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, Transferor represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
 
(g)           Places of Business and Locations of Records
 
.  Transferor is incorporated under the laws of Delaware.  The chief executive
office of Transferor and the offices where it keeps all of its Records are
located at the addresses listed on Exhibit II or such other locations of which
Transferee has been notified in accordance with Section 4.2(a) (other than
Records in transit to any such location) in jurisdictions where all action
required by Section 4.2(a) has been taken and completed.  Transferor’s
Organizational and Federal Employer Identification Numbers are correctly set
forth on Exhibit II.
 
(h)           Collections
 
.  The conditions and requirements set forth in Section 4.1(l) have at all times
been satisfied and duly performed in all material respects.  The names and
addresses of all Lock-Box Banks and Blocked Account Banks, together with the
account numbers of the Blocked Accounts and Lock-Box Accounts at each Blocked
Account Bank and Lock-Box Bank, respectively, and the post office box number of
each Lock-Box, are listed on Exhibit III.  Transferor has not granted any
Person, other than the Transferee (and its assigns) dominion and control of any
Lock-Box, Lock-Box Account or Blocked Account, or the right to take dominion
 

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and control of any such Lock-Box, Lock-Box Account or Blocked Account at a
future time or upon the occurrence of a future event.
 
(i)           Material Adverse Effect
 
.  Since the last day of the most recent fiscal year for which it has filed a
Form 10-K, no event has occurred that would have a Material Adverse Effect.
 

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(j)           Taxes
 
.  Transferor and its Subsidiaries have timely filed or caused to be filed all
Tax returns and reports required to have been filed and has paid or caused to be
paid all Taxes required to have been paid by it, except (a) Taxes that are being
contested in good faith by appropriate proceedings and for which Transferor or
such Subsidiary, as applicable, has set aside on its books adequate reserves
with respect thereto in accordance with GAAP or (b) to the extent that the
failure to do so would not reasonably be expected to result in a Material
Adverse Effect.
 
(k)           Names
 
.  In the past five (5) years, Transferor has not used any corporate names,
trade names or assumed names other than the name in which it has executed this
Agreement and as listed on Exhibit II.
 
(l)           Ownership of  Transferee
 
.  Transferor owns, directly or indirectly, 100% of the issued and outstanding
capital stock of Transferee, free and clear of any Adverse Claim other than the
Adverse Claim on such stock granted in connection with the Transferor Credit
Agreement.  Such capital stock is validly issued, fully paid and nonassessable,
and there are no options, warrants or other rights to acquire securities of
Transferee.
 
(m)           Investment and Holding Company Status
 
.Transferor is not (a) an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended or (b) a
“holding company” as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended.
 
Section 2.2                                Representations and Warranties of
Transferor with Respect to the Receivables.
 
Transferor hereby represents and warrants to Transferee on each Transfer Date
that:
 
(a)           Enforceability of Contracts
 
.  Each Contract with respect to each  Receivable being sold on such Transfer
Date is effective to create, and has created, a legal, valid and binding
obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and any accrued interest thereon, enforceable
against the Obligor in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors’ rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
 

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(b)           Eligible Receivables
 
Each Receivable included in the Net Receivables Balance as an Eligible
Receivable was an Eligible Receivable on its applicable Transfer Date.
 
(c)           Compliance with Credit and Collection Policy
 
.  Transferor has complied in all material respects with the Credit and
Collection Policy with regard to each Receivable being sold on such Transfer
Date and the related Contract, and has not made any change to such Credit and
Collection Policy, except such material change as to which Transferee (and the
Agent, as its assignee) has been notified in accordance with Section 4.1(a)(vii)
and as otherwise permitted pursuant to Section 4.2(c).
 
(d)           Payments to Transferor
 
.  With respect to each Receivable transferred to Transferee on such Transfer
Date, the Purchase Price received by Transferor constitutes reasonably
equivalent value in consideration therefor and such transfer was not made for or
on account of an antecedent debt.  The sale of each such Receivable to
Transferee on such Transfer Date is not voidable under any section of the
Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 101 et seq.), as amended.
 
(e)           Good Title
 
.  With respect to each Receivable transferred to Transferee on such Transfer
Date, immediately prior to such Transfer, Transferor (i) is the legal and
beneficial owner of the Receivables to be sold on such Transfer Date and (ii) is
the legal and beneficial owner of the Related Security with respect thereto or
possesses a valid and perfected security interest therein, in each case, free
and clear of any Adverse Claim except as created by the Transaction Documents
and except for any Adverse Claims released pursuant to release terms acceptable
to the Agent set forth in the Transferor Credit Agreement upon transfer of such
assets.
 
(f)           Perfection
 
.  This Agreement, together with the filing of the financing statements
contemplated hereby, is effective to transfer to Transferee (and Transferee
shall acquire from Transferor) (i) legal and equitable title to, with the right
to sell and encumber each Receivable transferred to Transferee on such Transfer
Date, together with the Collections with respect thereto, and (ii) all of
Transferor’s right, title and interest in the Related Security associated with
each Receivable, in each case, free and clear of any Adverse Claim, except as
created by the Transaction Documents.  There have been duly filed all financing
statements or other similar instruments or documents necessary under the UCC (or
any comparable law) of all appropriate jurisdictions to perfect Transferee’s
ownership interest in the Receivables, the Related Security and the Collections
to the extent such interest can be perfected by filing under Article 9 of the
UCC.
 

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(g)           Use of Proceeds
 
.  No portion of the Purchase Price payable on account of the Purchase occurring
on such Transfer Date will be used (i) for a purpose that violates any law, rule
or regulation
 
applicable to Transferor or (ii) to acquire any security in any transaction
which is subject to Section 13 or 14 of the Securities Exchange Act of 1934, as
amended.
 
(h)           Obligor Litigation
 
.  No Obligor is immune from civil and commercial law and suit on the grounds of
sovereignty or otherwise from any legal action, suit or proceeding such that
Transferee (or its assigns) would be unable to litigate any claim against such
Obligor in respect of any Receivable.
 

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ARTICLE III
 
CONDITIONS OF PURCHASES
 
Section 3.1                                Conditions Precedent to Initial
Purchase
 
.  The initial Purchase under this Agreement is subject to the conditions
precedent that (a) Transferee shall have received on or before the date of such
Purchase those documents referenced on Schedule A to be received by or on behalf
of Transferee and (b) all of the conditions to the initial purchase under the
Purchase Agreement shall have been satisfied or waived in accordance with the
terms thereof.
 
Section 3.2                                Conditions Precedent to All Purchases
 
.  Transferee’s obligation to pay for Receivables to be transferred on any
Transfer Date (including the initial Transfer Date) shall be subject to the
further conditions precedent that:  (a) the Facility Termination Date shall not
have occurred; (b) Transferee (or its assigns) shall have received such other
approvals, opinions or documents as it may reasonably request as are customary
in similar transactions in order to protect the interests of Transferee (and its
assigns) under or as contemplated in the Transaction Documents and (c) on the
applicable Transfer Date, the following statements shall be true (and acceptance
of the proceeds of any payment for such Receivable shall be deemed a
representation and warranty by Transferor that such statements are then true):
 
(i)           the representations and warranties set forth in Article II are
true and correct on and as of the date such Receivable came into existence as
though made on and as of such Transfer Date; and
 
(ii)           no event has occurred and is continuing that will constitute a
Termination Event or a Potential Termination Event.
 
Notwithstanding the foregoing conditions precedent, upon payment of the Purchase
Price for any Receivable (whether by payment of cash, through an increase in the
amounts outstanding under the Subordinated Note, or by offset of amounts owed to
Transferee), title to such Receivable and the Related Security and Collections
with respect thereto shall vest in Transferee, whether or not the conditions
precedent to Transferee’s obligation to pay for such Receivable were in fact
satisfied; provided, however, that Transferee shall retain its claim for
indemnity under Article VI in respect of such failure of condition.
 

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ARTICLE IV

COVENANTS
 
Section 4.1                                Affirmative Covenants of Transferor.
 
  Until the date on which this Agreement terminates in accordance with its
terms, Transferor hereby covenants as set forth below:
 
(a)           Financial Reporting.  Transferor will maintain a system of
accounting established and administered in accordance with GAAP, and furnish to
Transferee (or its assigns):
 
(i)           Annual Reporting.  Within 90 days after the close of each fiscal
year of the Parent and Transferor, the Parent’s and Transferor’s Form 10-K for
such fiscal year, which shall include its respective audited consolidated
statement of financial condition and related statements of consolidated income
and retained earnings and consolidated cash flow as of the end of and for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by Deloitte & Touche, LLP or other
independent public accountants of recognized national standing (without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations and cash flow of the Parent
and Transferor and its respective consolidated Subsidiaries on a consolidated
basis in accordance with GAAP, consistently applied.
 
(ii)           Quarterly Reporting.  Within 45 days after the end of each of the
first three fiscal quarters of each fiscal year of Parent and Transferor, the
Parent’s and Transferor’s Form 10-Q for such fiscal quarter, which shall include
its consolidated statement of financial condition and related statements of
consolidated income and retained earnings and respective consolidated cash flow
as of the end of and for the then elapsed portion of the fiscal year, setting
forth in each case in comparative form the figures for the corresponding period
or periods of (or, in the case of the statement of financial condition, as of
the end of) the previous fiscal year, all certified by one of its respective
Authorized Officers as presenting fairly in all material respects the financial
condition and results of operations and cash flow of the Parent and Transferor
and its respective consolidated Subsidiaries on a consolidated basis in
 

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accordance with GAAP, consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes.
 
(iii)           Compliance Certificate.  Together with the financial statements
required hereunder, a compliance certificate in substantially the form of
Exhibit IV signed by one of Transferor’s Financial Officers.
 
(iv)           [Intentionally Omitted]
 
(v)           [Intentionally Omitted]
 
(vi)           Copies of Notices.  Promptly upon its receipt of any notice of
amendment or default under or in connection with any Lock-Box Account Agreement
from any Person other than Transferee, the Agent or any Purchaser, copies of the
same.
 
(vii)           Change in Credit and Collection Policy.  At least ten (10)
Business Days prior to the effectiveness of any material change in or material
amendment to the Credit and Collection Policy, a copy of the Credit and
Collection Policy then in effect and a notice indicating such change or
amendment, provided that if such proposed change or amendment would be
reasonably likely to materially and adversely affect the collectibility of the
Receivables or materially decrease the credit quality of any newly created
Receivables, such change shall not be effective without Transferee’s and the
Agent’s (as Transferee’s assignee) consent thereto, which consent shall not be
unreasonably withheld and, in the case of the Agent, such consent or refusal to
consent shall be given within fifteen (15) Business Days of the acknowledgment
of receipt of such request, as acknowledged in writing, electronically or
otherwise, by a Responsible Agent Party.
 
(viii)                      Other Information.  Promptly, from time to time,
such other information, documents, records or reports relating to the
Receivables or the condition or operations, financial or otherwise, of the
Transferor as Transferee (or its assigns) may from time to time reasonably
request as such information, documents, records or reports are necessary or
reasonably desirable to determine the capability of the Transferee to perform
its obligations under any Transaction Document to which it is a party in order
to protect the interests of Transferee (and its assigns) under or as
contemplated by this Agreement.
 
(b)           Notices.  Transferor will notify the Transferee (or its assigns)
in writing of any of the following promptly upon learning of the occurrence
thereof, describing the same and, if applicable, the steps being taken with
respect thereto:
 

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(i)           Termination Events or Potential Termination Events.  The
occurrence of each Termination Event and each Potential Termination Event, by a
statement of an Authorized Officer of Transferor.
 
(ii)           Judgment and Proceedings.  The entry of any judgment or decree or
the filing or commencement of any litigation or any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or affecting the
Transferor, any Subsidiary or any Affiliate thereof that would reasonably be
expected to result in a Material Adverse Effect.
 
(iii)           Defaults.  The occurrence of a default or an event of default
under any other financing arrangement with obligations with an aggregate
principal amount equal to or in excess of $50,000,000 pursuant to which
Transferor is a debtor or an obligor.
 
(iv)           Downgrade of the Transferor.  Any downgrade in the rating of any
Indebtedness of Transferor by Standard and Poor’s Ratings Group or by Moody’s
Investors Service, Inc., setting forth the Indebtedness affected and the nature
of such change.
 
(v)           Material Adverse Effect.  The occurrence of any other event or
condition that has had, or would reasonably be expected to have, a Material
Adverse Effect.
 
(c)           Compliance with Laws and Preservation of Corporate
Existence.  Transferor will comply in all respects with all applicable laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it may be subject, except where the failure to so comply would not
reasonably be expected to have a Material Adverse Effect.  Transferor will
preserve and maintain its corporate existence, rights, franchises and privileges
in the jurisdiction of its incorporation, and qualify and remain qualified in
good standing as a foreign corporation in each jurisdiction where its business
is conducted, except where the failure to so qualify or remain in good standing
would not reasonably be expected to have a Material Adverse Effect.
 
(d)           Audits.  Transferor will furnish to Transferee (and the Agent, as
its assignee) from time to time such information with respect to it and the
Receivables and its compliance with this Agreement as Transferee (or its
assigns) may reasonably request as such information, documents, records or
reports are necessary or reasonably desirable to determine the capability of the
Transferor to perform its obligations under any Transaction Document to which it
is a party in order to protect the interests of Transferee (and its assigns)
under or as contemplated by this Agreement.  Transferor will, from time to time
during regular business hours as requested by Transferee (or its assigns) upon
reasonable notice and at the sole cost of Transferor, permit Transferee, or its
assigns) or their
 

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respective agents or representatives and shall cause Originator to permit
Transferee (or its assigns) or their respective agents or representatives), (i)
to examine and make copies of and abstracts from all Records in the possession
or under the control of such Person relating to the Receivables and the Related
Security, including, without limitation, the related Contracts, and (ii) to
visit the offices and properties of such Person for the purpose of examining
such materials described in clause (i) above, and to discuss matters relating to
the Receivables and the Related Security or any Person’s performance under any
of the Transaction Documents or any Person’s performance under the Contracts
and, in each case, with any of the Authorized Officer’s of Seller or the
Servicer having knowledge of such matters (each of the foregoing examinations
and visits, a “Review”); provided, however, that, so long as no Termination
Event or Servicing Termination Event (as defined in the Purchase Agreement) has
occurred and is continuing, Transferor shall only be responsible for the costs
and expenses of one (1) Review in any one calendar year.  Notwithstanding
anything herein to the contrary, Transferor shall have no obligation to take any
action in conflict with any applicable law, rule, regulation or contractual
obligation prohibiting the disclosure of confidential information with respect
to any Obligor; provided, however, with respect to any contractual obligation,
Transferor shall use its commercially reasonable efforts to obtain any
applicable consent to disclose such information upon the request of the Agent.
 
(e)           Keeping and Marking of Records and Books.
 
(i)           Transferor will (and shall cause Originator to) maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables in the event
of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the immediate identification of each new Receivable
and all Collections of and adjustments to each existing Receivable).
 
(ii)           Transferor will (and will cause Originator to) (A) on or prior to
the date hereof, mark its master data processing records relating to the
Receivable with a legend, reasonably acceptable to Transferee (and the Agent as
its assignee), describing Transferee’s ownership interests in the Receivables
and further describing the Purchaser Interests of the Agent (on behalf of the
Purchasers) under the Purchase Agreement and (B) upon the request of Transferee
(or its assigns) following a Termination Event and the transfer of servicing
under the Purchase Agreement deliver to Transferee (or its assigns) all Records
(including, without
 

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limitation, all multiple originals of any Contract) relating to the
Receivables.  Notwithstanding anything herein to the contrary, Transferor shall
have no obligation to take any actions in conflict with any applicable law,
rule, regulation or contractual obligation prohibiting the disclosure of
confidential information with respect to any Obligor; provided, however, with
respect to any contractual obligation, Transferor shall use its commercially
reasonable efforts to obtain any applicable consent to disclose such information
upon the request of the Agent.
 
(f)           Compliance with Contracts and Credit and Collection
Policy.  Transferor will (and shall cause Originator to) timely and fully (i)
perform and comply with all material provisions, covenants and other promises
required to be observed by it under the Contracts related to the Receivables,
and (ii) comply in all material respects with the Credit and Collection Policy
in regard to each Receivable and the related Contract.
 
(g)           Performance and Enforcement of Master Intercompany
Agreement.  Transferor will and will cause Originator to, perform each of their
respective obligations and undertakings under and pursuant to the Master
Intercompany Agreement relating to or affecting in any material respect the
Receivables, will purchase Receivables thereunder in accordance with the terms
thereof and will enforce the rights and remedies accorded to Transferor under
the Master Intercompany Agreement with respect to the Receivables.  Transferor
will take all actions to perfect and enforce its rights and interests (and the
rights and interests of Transferee as assignee of Transferor) under the Master
Intercompany Agreement with respect to the Receivables as Transferee (or its
assigns) may from time to time reasonably request, including, without
limitation, making claims to which it may be entitled under any indemnity,
reimbursement or similar provision contained in the Master Intercompany
Agreement with respect to the Receivables.
 
(h)           Ownership.  Transferor will take all necessary action to establish
and maintain, irrevocably in Transferee (i) legal and equitable title to the
Receivables and the Collections and (ii) all of Transferor’s right, title and
interest in the Related Security associated with the Receivables, in each case,
free and clear of any Adverse Claims other than Adverse Claims in favor of
Transferee (and its assigns) (including, without limitation, the filing of all
financing statements or other similar instruments or documents necessary under
the UCC (or any comparable law) of all appropriate jurisdictions to perfect
Transferee’s interest in such Receivables, Related Security and Collections to
the extent such interest can be perfected by filing under Article 9 of the UCC
and such other action to perfect, protect or more fully evidence the interest of
Transferee as Transferee (or its assigns) may reasonably request).
 

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(i)           Purchasers’ Reliance
 
(j)           .Transferor acknowledges that the Agent and the Purchasers are
entering into the transactions contemplated by the Purchase Agreement in
reliance upon Transferee’s identity as a legal entity that is separate from
Transferor and any Affiliates thereof.  Therefore, from and after the date of
execution and delivery of this Agreement, Transferor will take reasonable steps
to maintain Transferee’s identity as a separate legal entity and to make it
manifest to third parties that Transferee is an entity with assets and
liabilities distinct from those of Transferor and any Affiliates thereof and not
just a division of Transferor or any such Affiliate.  Without limiting the
generality of the foregoing and in addition to the other covenants set forth
herein, Transferor (i) will not hold itself out to third parties as liable for
the debts of Transferee nor purport to own the Receivables and other assets
acquired by Transferee, (ii) will take all other actions necessary on its part
to ensure that Transferee is at all times in compliance with the covenants set
forth in Section 7.1(i) of the Purchase Agreement and (iii) will cause all tax
liabilities arising in connection with the transactions contemplated herein or
otherwise to be allocated between Transferor and Transferee on an arm’s-length
basis and in a manner consistent with the procedures set forth in U.S. Treasury
Regulations §§1.1502-33(d) and 1.1552-1.
 
(k)           [Intentionally Deleted]
 
(l)           Collections.  Transferor will cause (1) all proceeds from all
Lock-Boxes to be directly deposited by a Lock-Box Bank into a Lock-Box Account
and (2) each Lock-Box, Lock-Box Account and Blocked Account to be subject at all
times to a Lock-Box Account Agreement or Blocked Account Agreement, as
applicable, that is in full force and effect.  Transferor will cause all
proceeds from each Lock-Box Account to be deposited directly into the Specified
NFC Allocation Account unless a Collection Notice with respect to any Lock-Box
Account has been delivered pursuant to Section 8.3 of the Purchase
Agreement.  Transferor will cause all proceeds relating to Receivables in the
Specified NFC Allocation Account to be deposited into a Blocked Account within
two (2) Business Days following deposit into the Specified NFC Allocation
Account.  In the event any payments relating to Receivables are remitted
directly to Transferor or any Affiliate of Transferor, Transferor will remit (or
will cause all such payments to be remitted) directly to a Blocked Account Bank
and deposited into a Blocked Account within two (2) Business Days following
receipt thereof and, at all times prior to such remittance, Transferor will
itself hold or, if applicable, will cause such payments to be held in trust for
the exclusive benefit of Transferee and its assigns.  Transferor hereby confirms
that it has hereby transferred control of each Lock-Box, Lock-Box Account and
Blocked Account to Transferee and agrees that it will not grant the right to
take dominion and control of any Lock-Box, Lock-Box Account or Blocked Account
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occurrence of a future event to any Person, except to Transferee, Transferee and
the Agent (as their assignee) as contemplated by this Agreement and the Purchase
Agreement.
 
(m)           Taxes.  Transferor will file all tax returns and reports required
by law to be filed by it and promptly pay all taxes and governmental charges at
any time owing, except (a) any such taxes which are not yet delinquent or are
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books or (b) to the extent that the failure to do so would not reasonably be
expected to result in a Material Adverse Effect.  Transferor will pay when due
any taxes payable in connection with the Receivables, exclusive of taxes on or
measured by income or gross receipts of Transferee and its assigns.
 
(n)           Insurance.  Transferor will maintain in effect, or cause to be
maintained in effect, at Transferor’s own expense, such casualty and liability
insurance as Transferor deems appropriate in its good faith business judgment.
 
(o)           Payment to Originator
 
(p)           .  With respect to each Receivable, its purchase from Originator
shall be effected under and pursuant to the terms of the Master Intercompany
Agreement, including without limitation, the terms relating to the amount and
timing of payments to be made to Originator in respect of the purchase price for
such Receivable.
 
Section 4.2                                Negative Covenants of Transferor.
 
  Until the date on which this Agreement terminates in accordance with its
terms, Transferor hereby covenants that:
 
(a)           Name Change, Offices and Records.  Transferor will not change its
legal name or legal structure or relocate any office where Records are kept
unless it shall have: (i) given Transferee (and the Agent, as its assignee) at
least ten (10) Business Days’ prior written notice thereof and (ii) delivered to
the Agent, as Transferee’s assignee, all financing statements, instruments and
other documents reasonably requested by the Agent in connection with such change
or relocation.
 
(b)           Change in Payment Instructions to Obligors.  Except as may be
required by Agent pursuant to Section 8.2(b) of the Purchase Agreement,
Transferor will not add or terminate any bank as a Lock-Box Bank or Blocked
Account Bank, or make any change in the instructions to Obligors regarding
payments to be made to any Lock-Box, or Lock-Box Account, unless Transferee (and
the Agent, as its assignee) shall have received, at least ten (10) Business Days
before the proposed effective date therefor, (i) written notice of such
addition, termination or change and (ii) with respect to the addition of a
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Bank or Blocked Account Bank or a Blocked Account, Lock-Box Account or Lock-Box,
an executed Lock-Box Account Agreement or Blocked Account Agreement, as
applicable, with respect to the new Blocked Account, Lock-Box Account or
Lock-Box; provided, however, that Transferor may make changes in instructions to
Obligors regarding payments if such new instructions require such Obligor to
make payments to another existing Blocked Account, Lock Box Account or Lock-Box.
 
(c)           Modifications to Contracts and Credit and Collection
Policy.  Transferor will not (and will not permit Originator to) make any change
to the Credit and Collection Policy that would reasonably be expected to
materially andadversely affect the collectibility of the Receivables or any
significant portion thereof, or materially decrease the credit quality of newly
created Receivables unless such change shall be consented to by the
Agent.  Except as otherwise permitted in its capacity as Servicer pursuant to
Article VIII of the Purchase Agreement, Transferor will not extend, amend or
otherwise modify the terms of any Receivable or any Contract related thereto
other than in accordance with the Credit and Collection Policy.
 
(d)           Sales, Liens.  Transferor will not sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to,
or create or suffer to exist any Adverse Claim upon (including, without
limitation, the filing of any financing statement) or with respect to, any
Receivable, Related Security or Collections, or upon or with respect to any
Contract under which any Receivable arises, or any Lock-Box, Lock-Box Account or
Blocked Account, or assign any right to receive income with respect thereto
(other than, in each case, the creation of the interests therein in favor of
Transferee and its assigns provided for in the Transaction Documents and Adverse
Claims which are released pursuant to release language acceptable to the Agent
set forth in the Transferor Credit Agreement upon transfer of the related
assets), and Transferor will defend the right, title and interest of Transferee
and its assigns in, to and under any of the foregoing property, against all
claims of third parties claiming through or under Transferor.  Without the prior
written consent of the Agent, as Transferee’s assign, Transferor shall not
create or suffer to exist any mortgage, pledge, security interest, encumbrance,
lien, charge or other similar arrangement on any of its inventory, the sale of
which gives rise to any Receivable other than liens created pursuant to the
Transaction Documents.
 

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(e)           Accounting for Purchase.  Transferor will not, and will not permit
any Affiliate to, account for or treat (whether in financial statements or
otherwise) the transactions contemplated hereby in any manner other than the
sale of the Receivables and the Related Security by Transferor to Transferee or
in any other respect account for or treat the transactions contemplated hereby
in any manner other than as a sale of the Receivables and the Related Security
by Transferor to Transferee except to the extent that such transactions are not
recognized on account of consolidated financial reporting in accordance with
GAAP.
 
(f)           No Adverse Selection.  To the extent that Originator or Transferor
has retained Receivables that would be Eligible Receivables but which have not
been ultimately transferred to Transferee hereunder, Originator and Transferor
will not select those Receivables to be transferred hereunder in any manner that
materially adversely affects Transferee.
 

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ARTICLE V
 
TERMINATION EVENTS
 
Section 5.1                                Termination Events.
 
The occurrence of any one or more of the following events shall constitute a
Termination Event:
 
(a)           Transferor shall fail to make any payment or deposit required
hereunder when due; provided, however, that no Termination Event shall occur
under this Section 5.1(a) as a result of any late payment or deposit (i) made
before 5:00 p.m. on the applicable due date or (ii) which is cured within one
(1) Business Day after Transferor has knowledge of such failure if (A) with
respect to clause (ii) only, such late payment or deposit was due to funds
transmission failure beyond Transferor’s control, including the failure of any
Lock-Box Bank or Blocked Account Bank to follow wire transfer instructions, (B)
such late payment or deposits do not occur more than five (5) times in any
calendar year, and (C) Transferor pays all costs incurred by Transferee (or its
assigns) as a direct result of such failure or, (iii) solely to the extent such
payment or deposit represents interest or fees, such failure continues for five
(5) Business Days after Transferor has knowledge of such failure.
 
(b)           Transferor shall fail to perform or observe any term, covenant or
agreement hereunder (other than as referred to in another subsection of this
Section 5.1) or any other Transaction Document to which it is a party and, such
failure shall continue for ten (10) consecutive Business Days after the
Transferor has knowledge of such failure.
 
(c)           Any representation, warranty, certification or statement made by
Transferor in this Agreement, any other Transaction Document or in any other
document delivered pursuant hereto or thereto shall prove to have been incorrect
when made or deemed made and such inaccuracy, to the extent capable of being
remedied, shall remain unremedied in all material respects for five (5) Business
Days after any Seller Party has knowledge of such inaccuracy; provided that the
materiality qualifier in this clause shall not apply to any representation or
warranty which itself has a materiality qualifier.
 
(d)           The Indebtedness outstanding under the Transferor Credit Agreement
becomes due in full prior to its scheduled maturity or shall be declared to be
due and payable in full or required to be prepaid in full prior to the date of
maturity thereof, in each case, as a result of an event of default under the
Transferor Credit Agreement.
 

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(e)           (i)  An involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (A) liquidation, reorganization, or
other relief in respect of Transferor or its debts, or of a substantial part of
its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (B) the appointment of
a receiver, trustee, custodian, sequestrator, conservator or similar official
for Transferor or for a substantial part of its assets, and, in any such case,
such proceeding or petition shall continue undismissed for 60 days or an order
or decree approving or ordering any of the foregoing shall be entered;
 
      (ii)                 Transferor shall (A) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization, or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (B) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or petition
described in clause (i) of this Section 5.1(e), (C) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Parent, Originator, Transferor or Transferee or for a
substantial part of its assets, (D) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (E) make a
general assignment for the benefit of creditors or (F) take any action for the
purpose of effecting any of the foregoing; or
 
           (iii)           Transferor shall become unable, admit in writing or
fail generally to pay its debts as they become due.
 
(f)           A Change of Control shall occur.
 
(g)           One or more judgments for the payment of money in an aggregate
amount in excess of $10,000,000 shall be rendered against Transferor, any of its
Subsidiaries or any combination thereof and the same shall remain undischarged
for a period of 30 consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment creditor
to attach or levy upon any assets of Transferor or any of its Subsidiaries to
enforce any such judgment.
 
Section 5.2                                Remedies.
 
  Upon the occurrence and during the continuation of a Termination Event,
Transferee may take any of the following actions:  (i) declare the Termination
Date to have occurred, whereupon the Termination Date shall forthwith occur,
without demand, protest or further notice of any kind, all of which are hereby
expressly waived by Transferor; provided, however, that upon the occurrence of a
Termination Event described in Section 5.1(e), or of an actual or deemed entry
of an order for relief with respect to Transferor under the Federal Bankruptcy
Code, the Termination Date shall automatically occur, without demand, protest or
any notice of any kind, all of which are hereby expressly waived by Transferor
or (ii) to the
 

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fullest extent permitted by applicable law, declare that the Default Fee shall
accrue with respect to any amounts then due and owing by Transferor to
Transferee.  The aforementioned rights and remedies shall be without limitation
and shall be in addition to all other rights and remedies of Transferee and its
assigns otherwise available under any other provision of this Agreement, by
operation of law, at equity or otherwise, all of which are hereby expressly
preserved, including, without limitation, all rights and remedies provided under
the UCC, all of which rights shall be cumulative.
 

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ARTICLE VI
 
INDEMNIFICATION
 
Section 6.1                                Indemnities by Transferor.
 
  Without limiting any other rights that Transferee may have hereunder or under
applicable law, Transferor hereby agrees to indemnify (and pay upon demand to)
Transferee and its assigns and their respective officers, directors, agents and
employees (each an “Indemnified Party”) from and against any and all damages,
losses, claims, Taxes, liabilities, costs, expenses and for all other amounts
payable, including reasonable attorneys’ fees and disbursements (all of the
foregoing being collectively referred to as “Indemnified Amounts”) awarded
against or incurred by any of them arising out of or as a result of this
Agreement or the acquisition, either directly or indirectly, by Transferee of an
interest in the Receivables, excluding, however:
 
(a)                 Indemnified Amounts to the extent that such Indemnified
Amounts resulted from gross negligence, willful misconduct, violation of law or
breach of any of the Transaction Documents on the part of the Indemnified Party
seeking indemnification;
 
(b)                 Indemnified Amounts to the extent the same includes losses
in respect of Receivables that are uncollectible on account of the insolvency,
bankruptcy or lack of creditworthiness of the related Obligor; or
 
(c)                 taxes imposed by any jurisdiction other than a jurisdiction
which acquired taxing authority over the Indemnified Party as a result of the
Transaction, on or measured by the overall net income of such Indemnified Party
to the extent that the computation of such taxes is consistent with the
characterization for income tax purposes of the acquisition by the Purchasers
under the Purchase Agreement of Purchaser Interests as a loan or loans by the
Purchasers to Transferee secured by the Receivables, the Related Security, the
Lock-Box Accounts, the Blocked Accounts and the Collections;
 
provided,however, that nothing contained in this sentence shall limit the
liability of Transferor or limit the recourse of Transferee to Transferor for
amounts otherwise specifically provided to be paid by Transferor under the terms
of this Agreement.  Without limiting the generality of the foregoing
indemnification, Transferor shall indemnify the Indemnified Parties for
Indemnified Amounts (including, without limitation, losses in respect of
uncollectible receivables, regardless of whether reimbursement therefor would
constitute recourse to Transferor) relating to or resulting from:
 

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(i)           any representation or warranty made by Transferor (or any officers
of Transferor) under or in connection with this Agreement, any other Transaction
Document or any other information or report delivered by Transferor pursuant
hereto or thereto that shall have been false or incorrect when made or deemed
made;
 
(ii)           the failure by Transferor to comply with any applicable law, rule
or regulation with respect to any Receivable or Contract related thereto, or the
nonconformity of any Receivable or Contract included therein with any such
applicable law, rule or regulation or any failure of Transferor to keep or
perform any of its obligations, express or implied, with respect to any
Contract;
 
(iii)           any failure of Transferor to perform its duties, covenants or
other obligations in accordance with the provisions of this Agreement or any
other Transaction Document to which it is a party, or any failure of Transferor
to satisfy any condition precedent to any Purchase;
 
(iv)           any products liability, personal injury or damage suit or other
similar claim arising out of or in connection with merchandise, insurance or
services that are the subject of any Contract or any Receivable;
 
(v)           any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
(including, without limitation, a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other claim
resulting from the sale of the merchandise or service related to such Receivable
or the furnishing or failure to furnish such merchandise or services;
 

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(vi)           the commingling of Collections of Receivables at any time with
other funds;
 
(vii)           any investigation, litigation or proceeding related to or
arising from this Agreement or any other Transaction Document, the transactions
contemplated hereby, the use of the proceeds of any Purchase Price payment, the
ownership of the Receivables or any other investigation, litigation or
proceeding relating to Transferor in which any Indemnified Party becomes
involved as a result of any of the transactions contemplated hereby;
 
(viii)                      [Intentionally Omitted];
 
(ix)           any Termination Event described in Section 5.1(e);
 
(x)           any failure of Transferor to acquire and maintain legal and
equitable title to, and ownership of any Receivable and the Related Security and
Collections with respect thereto from Originator, free and clear of any Adverse
Claim (other than as created hereunder); or any failure of Transferor to give
reasonably equivalent value to Originator under the Master Intercompany
Agreement in consideration of the transfer by Originator of any Receivable, or
any attempt by any Person to void such transfer under statutory provisions or
common law or equitable action;
 
(xi)           any failure to vest and maintain vested in Transferee, or to
transfer to Transferee, legal and equitable title to, and ownership of, the
Receivables and the Collections, and all of Transferor’s right, title and
interest in the Related Security associated with the Receivables, in each case,
free and clear of any Adverse Claim;
 
(xii)           the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any Receivable,
the Related Security and Collections with respect thereto, and the proceeds of
any thereof, whether at the time of  Purchase or at any subsequent time;
 
(xiii)                      any action by Transferor not required by, or
omission by Transferor not prohibited by, the Transaction Documents which
reduces or impairs the rights of Transferee with respect to any Receivable or
the value of any such Receivable;
 
(xiv)                      any attempt by any Person to void any Purchase
hereunder under statutory provisions or common law or equitable action; and
 
(xv)           the failure of any Receivable included in the calculation of the
Net Receivables Balance as an Eligible Receivable to be an Eligible Receivable
at the time so included.
 

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ARTICLE VII
 
MISCELLANEOUS
 
Section 7.1                                Waivers and Amendments.
 
(a)           No failure or delay on the part of Transferee (or its assigns) in
exercising any power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other further exercise thereof or the exercise of
any other power, right or remedy.  The rights and remedies herein provided shall
be cumulative and nonexclusive of any rights or remedies provided by law.  Any
waiver of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given.
 
(b)           No provision of this Agreement may be amended, supplemented,
modified or waived except in writing signed by Transferor and Transferee and, to
the extent required under the Purchase Agreement, the Agent and the Financial
Institutions or the Required Financial Institutions.
 
Section 7.2                                Notices.
 
  All communications and notices provided for hereunder shall be in writing
(including bank wire, telecopy or electronic facsimile transmission or similar
writing) and shall be given to the other parties hereto at their respective
addresses or telecopy numbers set forth on the signature pages hereof or at such
other address or telecopy number as such Person may hereafter specify for the
purpose of notice to the other party hereto.  Each such notice or other
communication shall be effective (a) if given by telecopy, upon the receipt
thereof, (b) if given by mail, five (5) Business Days after the time such
communication is deposited in the mail with first class postage prepaid or
(c) if given by any other means, when received at the address specified in this
Section 7.2.
 
Section 7.3                                Protection of Ownership Interests of
Transferee
 
(a)           Transferor agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary, or that Transferee (or its assigns) may
reasonably request, to perfect, protect or more fully evidence the interest of
Transferee hereunder and the Purchaser Interests, or to enable Transferee (or
its assigns) to exercise and enforce their rights and remedies hereunder.  At
any time after a Servicer Termination Event and the transfer of servicing, the
Transferee (or its assigns) may, at Transferor’s sole cost and expense, direct
Transferor to notify the Obligors of Receivables, at Transferor’s expense, of
the ownership or security interests of Transferee under this Agreement and may
also direct that payments of all amounts due or that become due under any or all
Receivables be made directly to Transferee or its designee.
 

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(b)           If Transferor fails, after any applicable grace period, to perform
any of its obligations hereunder, Transferee (or its assigns) may (but shall not
be required to) perform, or cause performance of, such obligations, and
Transferee’s (or such assigns’) costs and expenses incurred in connection
therewith shall be payable by Transferor as provided in Section 6.2.  Transferor
irrevocably authorizes Transferee (and its assigns) at any time and from time to
time in the sole discretion of Transferee (or its assigns), and appoints
Transferee (and its assigns) as its attorney(ies)-in-fact, to act on behalf of
Transferor (i) to execute on behalf of Transferor as debtor and to file
financing statements necessary in Transferee’s (or its assigns’) sole discretion
to perfect and to maintain the perfection and priority of the interest of
Transferee in the Receivables and (ii) to file a carbon, photographic or other
reproduction of this Agreement or any financing statement with respect to the
Receivables as a financing statement in such offices as Transferee (or its
assigns) in their sole discretion deem necessary to perfect and to maintain the
perfection and priority of Transferee’s interests in the Receivables.  This
appointment is coupled with an interest and is irrevocable.
 
Section 7.4                                Confidentiality
 
(a)           Transferor shall maintain and shall cause each of its employees
and officers to maintain the confidentiality of this Agreement and the other
confidential or proprietary information with respect to the Agent and Conduit
and their respective businesses obtained by it or them in connection with the
structuring, negotiating and execution of the transactions contemplated herein,
except that Transferor and its officers and employees may disclose such
information to Transferor’s external accountants and attorneys and as required
by any applicable law, rule, regulation, direction, request or order of any
judicial, administrative or regulatory authority or proceeding (whether or not
having the force or effect of law).
 

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(b)           Anything herein to the contrary notwithstanding, Transferor hereby
consents to the disclosure of any nonpublic information with respect to it (i)
to Transferee, the Agent, the Financial Institutions or Conduit by each other,
(ii) by Transferee, the Agent or the Purchasers to any prospective or actual
assignee or participant of any of them, provided such assignee or participant
agrees to be bound by the confidentiality provisions specified herein and (iii)
by the Agent to any rating agency, Commercial Paper dealer or provider of a
surety, guaranty or credit or liquidity enhancement to Conduit or any entity
organized for the purpose of purchasing, or making loans secured by, financial
assets for which Bank One acts as the administrative agent and to any officers,
directors, employees, outside accountants and attorneys of any of the foregoing,
provided each such Person is informed of the confidential nature of such
information.  In addition, the Purchasers and the Agent may disclose any such
nonpublic information pursuant to any law, rule, regulation, direction, request
or order of any judicial, administrative or regulatory authority or proceedings
(whether or not having the force or effect of law).  Transferee and its assigns
shall use its commercially reasonable efforts to notify Transferor of any order
or request for any nonpublic information.
 
(c)           Transferee shall maintain and shall cause each of its employees
and officers to maintain the confidentiality of this Agreement and the other
confidential or proprietary information with respect to Transferor, the Obligors
and their respective businesses obtained by it in connection with the due
diligence evaluations, structuring, negotiating and execution of the Transaction
Documents, and the consummation of the transactions contemplated herein and any
other activities of Transferee arising from or related to the transactions
contemplated herein, provided, however, that except as prohibited by law, rule
or regulation each of Transferee and its employees and officers shall be
permitted to disclose such confidential or proprietary information: (i) to the
Agent and the other Purchasers, (ii) to any prospective or actual assignee or
participant of the Agent or the other Purchasers who execute a confidentiality
agreement for the benefit of Transferor and Transferee on terms comparable to
those required of Transferee hereunder with respect to such disclosed
information, (iii) to any rating agency, provider of a surety, guaranty or
credit or liquidity enhancement to Conduit, (iv) to any officers, directors,
employees, outside accountants and attorneys of any of the foregoing, and (v) to
the extent required pursuant to any applicable law, rule, regulation, direction,
request or order of any judicial, administrative or regulatory authority or
proceedings with competent jurisdiction (whether or not having the force or
effect of law) so long as such required disclosure is made under seal to the
extent permitted by applicable law or by rule of court or other applicable body.
 

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(d)           Notwithstanding any other express or implied agreement to the
contrary, the parties hereto agree that each of them and each of their
employees, representatives, and other agents may disclose to any and all
Persons, without limitation of any kind, the tax treatment and tax structure of
the transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to any of them relating to such tax treatment and
tax structure, except where confidentiality is reasonably necessary to comply
with U.S. federal or state securities laws.  For purposes of this paragraph, the
terms “tax treatment” and “tax structure” have the meanings specified in
Treasury Regulation section 1.6011-4(c).
 
Section 7.5                                Bankruptcy Petition.
 
  Each of Transferor and Transferee hereby covenants and agrees that, prior to
the date that is one year and one day after the payment in full of all
outstanding senior indebtedness of Conduit, it will not institute against, or
join any other Person in instituting against, Conduit any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.
 
Section 7.6                                Limitation of Liability.
 
  Except with respect to any claim arising out of the willful misconduct or
gross negligence of the Agent or any Purchaser, no claim may be made by
Transferor or any other Person against the Agent or any Purchaser or their
respective Affiliates, directors, officers, employees, attorneys or agents for
any special, indirect, consequential or punitive damages in respect of any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement, or any act, omission
or event occurring in connection therewith; and Transferor hereby waives,
releases, and agrees not to sue upon any claim for any such damages, whether or
not accrued and whether or not known or suspected to exist in its favor.
 
Section 7.7                                CHOICE OF LAW.
 
  THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.
 

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Section 7.8                                CONSENT TO JURISDICTION.
 
  EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION
OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO,
ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY DOCUMENT EXECUTED BY ANY PARTY PURSUANT TO THIS AGREEMENT AND
EACH PARTY  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 TRANSFEREE (OR ITS
ASSIGNS) TO BRING PROCEEDINGS AGAINST TRANSFEROR IN THE COURTS OF ANY OTHER
JURISDICTION.  ANY JUDICIAL PROCEEDING BY TRANSFEROR AGAINST TRANSFEREE (OR ITS
ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY
DOCUMENT EXECUTED BY ORIGINAL SELLER PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT
ONLY IN A COURT IN CHICAGO, ILLINOIS OR NEW YORK, NEW YORK.
 
Section 7.9                                WAIVER OF JURY TRIAL.
 
  EACH PARTY HERETO HEREBY WAIVES 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 AGREEMENT, ANY DOCUMENT EXECUTED BY TRANSFEROR PURSUANT TO THIS AGREEMENT
OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
 
Section 7.10                                Integration; Binding Effect;
Survival of Terms.
 
(a)           This Agreement and each other Transaction Document contain the
final and complete integration of all prior expressions by the parties hereto
with respect to the subject matter hereof and shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof
superseding all prior oral or written understandings.
 

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(b)           This Agreement shall be binding upon and inure to the benefit of
Transferor, Transferee and their respective successors and permitted assigns
(including any trustee in bankruptcy).  Transferor may not assign any of its
rights and obligations hereunder or any interest herein without the prior
written consent of Transferee, the Agent and the Purchasers.  Transferee may
assign at any time its rights and obligations hereunder and interests herein to
any other Person without the consent of Transferor.  Without limiting the
foregoing, Transferor acknowledges that Transferee will assign to the Agent, for
the benefit of the Purchasers, its rights, remedies, powers and privileges
hereunder and that the Agent may further assign such rights, remedies, powers
and privileges to the extent permitted in the Purchase Agreement.  Transferor
agrees that the Agent, as the assignee of Transferee, shall, subject to the
terms of the Purchase Agreement, have the right to enforce this Agreement and to
exercise directly all of Transferee’s rights and remedies under this Agreement
(including, without limitation, the right to give or withhold any consents or
approvals of Transferee to be given or withheld hereunder) and Transferor agrees
to cooperate fully with the Agent in the exercise of such rights and
remedies.  This Agreement shall create and constitute the continuing obligations
of the parties hereto in accordance with its terms and shall remain in full
force and effect until terminated in accordance with its terms; provided,
however, that the rights and remedies with respect to (i) any breach of any
representation and warranty made by Transferor pursuant to Article II; (ii) the
indemnification and payment provisions of Article VI; and (iii) Section 7.4 and
Section 7.5 shall be continuing and shall survive any termination of this
Agreement.
 

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Section 7.11                                Counterparts; Severability; Section
References.
 
This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same Agreement.  Any provisions of this Agreement which are
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.  Unless otherwise
expressly indicated, all references herein to “Article,” “Section,” “Schedule”
or “Exhibit” shall mean articles and sections of, and schedules and exhibits to,
this Agreement.
 

 
[SIGNATURE PAGE FOLLOWS]
 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date hereof.
 

NAVISTAR FINANCIAL CORPORATION

By:           
Name:
Title:

Address:                2850 W. Golf Road
Rolling Meadows, Illinois 60008
Attention: President and Treasurer
Fax: (847) 734-4090

TRUCK RETAIL ACCOUNTS CORPORATION

By:           
Name:
Title:

Address:                2850 W. Golf Road
Rolling Meadows, Illinois 60008
Attention: Vice President
and Treasurer
Fax: (847) 734-4090

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Exhibit I

Definitions

This is Exhibit I to the Agreement (as hereinafter defined).   As used in the
Agreement and the Exhibits, Schedules and Annexes thereto, capitalized terms
have the meanings set forth in this Exhibit I (such meanings to be equally
applicable to the singular and plural forms thereof).  If a capitalized term is
used in the Agreement, or any Exhibit, Schedule or Annex thereto, and not
otherwise defined therein or in this Exhibit I, such term shall have the meaning
assigned thereto in Exhibit I to the Purchase Agreement.
 
“Adverse Claim” means any Lien.
 
“Agent” has the meaning set forth in the Preliminary Statements to the
Agreement.
 
“Agreement” means the Receivables Sale Agreement, dated as of April 8, 2004,
between Transferor and Transferee, as the same may be amended, restated or
otherwise modified.
 
“Calculation Period” means each calendar month or portion thereof which elapses
during the term of the Agreement.  The first Calculation Period shall commence
on the initial Transfer Date and the final Calculation Period shall terminate on
the Termination Date.
 
“Change of  Control” means the occurrence of one or more of the following
events:  (i) any person or group (within the meaning of the Securities Exchange
Act of 1934 (the “Exchange Act”) and the rules of the Securities and Exchange
Commission thereunder as in effect on the date hereof), other than employee or
retiree benefit plans or trusts sponsored or established by Transferor or
Originator, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of (A) securities of the Parent
representing 35% or more of the combined voting power of the Parent’s then
outstanding voting stock, or (B) securities of the Transferor representing 50%
or more of the combined voting power of Transferor’s then outstanding voting
stock; (ii) the following individuals cease for any reason to constitute more
than three-fourths of the number of directors then serving on the Board of
Directors of the Parent; individuals who, on the date hereof, constitute the
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
by the Parent’s stockholders was approved by the vote of a majority of the
directors then still in office or whose appointment, election or nomination was
previously so approved or recommended; (iii) the stockholders of the Parent
shall approve any Plan of Liquidation; (iv) Transferor consolidates with or
merges with or into another Person, or Transferor or any Subsidiary of
Transferor, directly or indirectly, sells, assigns, conveys, transfers, leases
or otherwise disposes of, in one transaction or series of related transactions,
all or substantially all of the property or assets of the Transferor and the
Subsidiaries of Transferor (determined on a consolidated basis) to any Person,
or Person consolidates with, or merges with or into, Transferor, in any such
event pursuant to a transaction in which the outstanding voting stock of
Transferor is converted into or exchanges for cash, securities or other
property, and, as a
 

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result of which, neither the Parent nor Originator has “beneficial ownership”
(as set forth above), directly or indirectly, of at least 50% of the combined
voting power of the then outstanding voting stock of the surviving or transferee
corporation; (v) so long as any Indebtedness under the Senior Subordinated Note
Indenture (as defined in the Transferor’s Credit Agreement) is outstanding, a
“Change of Control” as defined in the Senior Subordinated Note Indenture shall
occur; or (vi) Transferor shall cease to own, directly or indirectly, 100% of
the voting stock of the Transferee.
 
“Conduit” has the meaning set forth in the Preliminary Statements to the
Agreement.
 
“Credit and Collection Policy” means Transferor credit and collection policies
and practices relating to Contracts and Receivables existing on the date hereof
and as attached as Exhibit V, as modified from time to time in accordance with
the Agreement.
 
“Cutoff  Date” has the meaning set forth in Section 1.1(a).
 
“Default Rate” means a rate equal to the sum of (i) the Prime Rate, plus (ii) 2%
per annum.
 
“Disclosed Matters” means the actions, suits and proceedings disclosed in
Schedule 2.1(e).
 
“Discount Factor” means a percentage calculated as follows:
 

 
 
Days Sales Outstanding
 
x
 
(Prime Rate + Servicing Fee)
 
+ Profit Discount
360
       

 
where,
 
“Days Sales Outstanding” means, for any weekly period, an amount equal to the
product of (i) a fraction, the numerator of which is the sum of the Outstanding
Balance of all Receivables at the end of each of the 12 immediately preceding
weekly periods, and the denominator of which is the aggregate amount of
Receivables acquired by the Transferor during the 12 immediately preceding
weekly periods and (ii) 7.
 
Profit Discount = .25%
 
“Financial Officer” means, with respect to Transferor, the chief financial
officer, principal accounting officer, treasurer, controller, cash manager,
financing manager or treasury reporting manager of Transferor.
 
“GAAP” means generally accepted accounting principles in the United States of
America.
 

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“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.
 
“Indebtedness” has the meaning provided in Transferor Credit Agreement.
 
“Hedging Agreement” means any interest rate protection agreement, foreign
currency exchange agreement, currency swap agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
 
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset and (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or other title retention agreement relating to
such asset.
 
“Material Adverse Effect” means a material adverse effect on (i) the financial
condition or operations of Transferor and its Subsidiaries, taken as a whole,
(ii) the ability of Transferor to perform its obligations under the Agreement or
any other Transaction Document, (iii) the legality, validity or enforceability
of the Agreement or any other Transaction Document, (iv) Transferor’s,
Transferee’s, the Agent’s or any Purchaser’s interest in the Receivables
generally or in any significant portion of the Receivables, the Related Security
or Collections with respect thereto, or (v) the collectibility of the
Receivables generally or of any material portion of the Receivables.
 
“Master Intercompany Agreement” means that certain Master Intercompany Agreement
dated April 26, 1993, as amended as of September 20, 1996 and as may be amended,
supplemented or modified from time to time with respect to any provision not
related to the Receivables except as otherwise agreed to by the Agent, by and
between Originator and Transferor.
 
“Material Indebtedness” means Indebtedness, or obligations in respect of one or
more Hedging Agreements in an aggregate principal amount exceeding
$10,000,000.  For purposes of determining Material Indebtedness, the “principal
amount” of the obligations in respect of any Hedging Agreement at any time shall
be the maximum aggregate amount (giving effect to any netting agreements) that
Transferor would be required to pay if such Hedging Agreement were terminated at
such time.
 
“Original Balance” means, with respect to any Receivable, the Outstanding
Balance of such Receivable on the date it was created.
 
“Originator” means International Truck and Engine Corporation, a Delaware
corporation.
 
“Parent” means Navistar International Corporation, a Delaware corporation, and
its successors.
 

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“Potential Termination Event” means an event which, with the passage of time or
the giving of notice, or both, would constitute a Termination Event.
 
“Prime Rate” means a rate per annum equal to the prime rate of interest
announced from time to time by Bank One or its parent (which is not necessarily
the lowest rate charged to any customer), changing when and as said prime rate
changes.
 
“Purchase” means each purchase pursuant to Section 1.1(a) of the Agreement by
Transferee from Transferor of Receivables and the Related Security and
Collections related thereto, together with all related rights in connection
therewith.
 
“Purchase Agreement” has the meaning set forth in the Preliminary Statements to
the Agreement.
 
“Purchase Price” means, with respect to any Purchase, the aggregate price to be
paid by Transferee to Transferor for such Purchase in accordance with Section
1.2 of the Agreement for the Receivables, Collections and Related Security being
sold to Transferee, which price shall equal on any date (i) the product of (x)
the Outstanding Balance of such Receivables on such date, multiplied by (y) one
minus the Discount Factor in effect on such date, minus (ii) any Purchase Price
Credits to be credited against such Purchase Price otherwise payable in
accordance with Section 1.3 of the Agreement.
 
“Purchase Price Credit” has the meaning set forth in Section 1.3 of the
Agreement.
 
“Receivable” means each domestic open account trade receivable arising from the
sale of one or more trucks by Originator, including, without limitation, all
rights to receive payments of Finance Charges with respect thereto, which
receivable has been sold by the Originator to the Transferor pursuant to the
Master Intercompany Agreement (but excluding any receivable that has been or is
to be resold by the Transferor to the Originator unless that receivable has
already been sold by the Transferee pursuant to the Purchase Agreement and
included in the Net Receivables Balance reported to the Agent), but excluding
any Retail Account Service Charges (as defined in the Master Intercompany
Agreement) paid to Transferor.  Open account trade receivables arising from any
one transaction, including, without limitation, those represented by an
individual invoice, shall constitute a Receivable separate from a Receivable
consisting of the rights and obligations arising from any other transaction;
provided, further, that any open account trade receivable referred to in this
sentence shall be a Receivable regardless or whether the Obligor, the Originator
or Transferor treats such trade receivable as a separate payment obligation.
 
“Related Security” means, with respect to any Receivable, if any:
 
(i)           all of Transferor’s interest in the inventory and goods (including
returned or repossessed inventory or goods, if any), the sale of which by
Transferor gave rise to such Receivable, and all insurance proceeds with
respect  to such inventory and goods,
 

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(ii)           all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements and security agreements
describing any collateral securing such Receivable,
 
(iii)           all guaranties, letters of credit, credit insurance and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such Receivable whether pursuant to the Contract related to
such Receivable or otherwise,
 
(iv)           all service contracts and other contracts and agreements
associated with such Receivable,
 
(v)           all Records related to such Receivable,
 
(vi)           all of Transferor’s rights and remedies under the Master
Intercompany Agreement associated with such Receivable,
 
(vii)           all of Transferor’s right, title and interest in each Lock-Box,
each Lock-Box Account and each Blocked Account, and
 
(viii)                      all proceeds of any of the foregoing (other than the
Purchase Price).
 
“Subordinated Loan” has the meaning set forth in Section 1.2(a) of the
Agreement.
 
“Subordinated Note” means a promissory note in substantially the form of Exhibit
VI hereto as more fully described in Section 1.2 of the Agreement, as the same
may be amended, restated, supplemented or otherwise modified from time to time.
 
“Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
 
“Termination Date” means the earliest to occur of (i) the Facility Termination
Date, (ii) the Business Day immediately prior to the occurrence of a Termination
Event set forth in Section 5.1(e), (iii) the Business Day specified in a written
notice from Transferee to Transferor following the occurrence of any other
Termination Event, and (iv) the date which is 10 Business Days after
Transferee’s receipt of written notice from Transferor that it wishes to
terminate the facility evidenced by this Agreement.
 
“Termination Event” has the meaning set forth in Section 5.1 of the Agreement.
 
“Transaction Documents” means, collectively, the Agreement, the Master
Intercompany Agreement (but only those portions that relate to the Receivables),
the Purchase Agreement, each Lock-Box Account Agreement, each Blocked Account
Agreement, the
 

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Subordinated Note and all other instruments, documents and agreements executed
and delivered in connection herewith or therewith.
 
“Transactions” means, collectively, (a) the execution and delivery by Transferor
of the Transaction Documents to which it is a party, (b) the sale by the
Transferor of the Receivables, Related Security and Collections pursuant to the
Agreement and use of the proceeds thereof, and (c) the performance of
Transferor’s other obligations under the Transaction Documents to which it is a
party.
 
“Transfer Date” means the first Business Day of each week after the date of the
Agreement.
 
“Transferee” has the meaning set forth in the preamble to the Agreement.
 
“Transferor” has the meaning set forth in the preamble to the Agreement.
 
“Transferor Credit Agreement” means that certain Credit Agreement, dated as of
December 8, 2000, originally among Transferor, Arrendadora Financiera Navistar,
S.A. de C.V., Servicios Financieros Navistar, S.A. de C.V. and Navistar
Comercial, S.A. de C.V., as Borrowers, various lenders, JPMorgan Chase Bank (as
successor to The Chase Manhattan Bank), as Administrative Agent, Bank of
America, N.A., as Syndication Agent, and The Bank of Nova Scotia, as
Documentation Agent, as the same may be amended, restated or otherwise modified
from time to time.
 
“UCC” means the Uniform Commercial Code as from time to time in effect in the
specified jurisdiction.
 
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP.  All terms used in Article 9 of the UCC in the State of
Illinois, and not specifically defined herein, are used herein as defined in
such Article 9.
 

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Exhibit II

Places of Business; Locations of Records;
Organizational and Federal Employer Identification Numbers; Other Names

TRANSFEROR

Places of Business:
Illinois

Locations of Records:
2850 W. Golf Road
Rolling Meadows, Illinois 60008

Federal Employer Identification Number:
36-XXXXXXXXX
 
Organizational Identification Number:
04290010

Trade and Assumed Names, Prior Names:
International Harvester Credit Corporation
 
International Finance Group
 

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Exhibit III

Lock-Boxes; Lock-Box Accounts, Lock-Box Banks,
Blocked Accounts; Blocked Account Banks

Lock Box
Related Lock-Box Account
Lock-Box No. XXXXXX, P.O. Box198381, Atlanta Georgia 39384-8381
Account No.: XXXXXXXXXX maintained with Bank of America, 231 South La Salle
Street, Chicago, IL 60604

Proceeds Allocation Account:  No. XXX-XXXXXX located at JPMorgan Chase Bank, 4
New York Plaza, 6th Floor, New York, New York 10004 (ABA No. 021000021)
 
Blocked Account: a trust account number XXXXXXXXX in the name “Blocked Account
for Bank One, NA (Main Office Chicago), as Agent” maintained with JPMorgan Chase
Bank, 4 New York Plaza, 6th Floor, New York, New York 10004.
 

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Exhibit IV

Form of Compliance Certificate

 
This Compliance Certificate is furnished pursuant to that certain Receivables
Sale Agreement dated as of April 8, 2004 (the “Agreement”), between TRUCK RETAIL
ACCOUNTS CORPORATION, a Delaware corporation, and NAVISTAR FINANCIAL
CORPORATION, a Delaware corporation (“Transferor”).  Capitalized terms used and
not otherwise defined herein are used with the meanings attributed thereto in
the Agreement.
 
THE UNDERSIGNED HEREBY CERTIFIES THAT:
 
1.           I am the duly elected ______________ of Transferor.
 
2.           I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of Transferor with respect to the accounting period covered by
the attached financial statements.
 
3.           The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
a Termination Event or a Potential Termination Event, as each such term is
defined under the Agreement, as of the date of this Certificate, except as set
forth below.
 
4.           Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which Transferor has taken, is taking, or
proposes to take with respect to each such condition or
event:_______________________________________.
 
The foregoing certifications, together with the financial statements delivered
with this Certificate in support hereof, are made and delivered this ___ day of
________________, 20__.
 
______________________________
[Name]

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Exhibit V

Credit and Collection Policy

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Exhibit VI

Form of Subordinated Note

SUBORDINATED NOTE
April 8, 2004

1.           Note.  FOR VALUE RECEIVED, the undersigned, TRUCK RETAIL ACCOUNTS
CORPORATION, a Delaware corporation (“SPV”), hereby unconditionally promises to
pay to NAVISTAR FINANCIAL CORPORATION, a Delaware corporation (“NFC”), in lawful
money of the United States of America and in immediately available funds, on the
date following the Termination Date, which is one year and one day after the
date on which (i) the Outstanding Balance of all Receivables sold under the Sale
Agreement referred to below has been reduced to zero and (ii) NFC has paid to
the SPV all indemnities, adjustments and other amounts which may be owed
thereunder in connection with the Purchases (the “Collection Date”), the
aggregate unpaid principal sum outstanding of all “Subordinated Loans” made from
time to time by NFC to SPV pursuant to and in accordance with the terms of that
certain Receivables Sale Agreement dated as of April 8, 2004 between NFC and SPV
(as amended, restated, supplemented or otherwise modified from time to time, the
“Sale Agreement”).  Reference to Section 1.2 of the Sale Agreement is hereby
made for a statement of the terms and conditions under which the loans evidenced
hereby have been and will be made.  All terms which are capitalized and used
herein and which are not otherwise specifically defined herein shall have the
meanings ascribed to such terms in the Sale Agreement.
 
2.           Interest.  SPV further promises to pay interest on the outstanding
unpaid principal amount hereof from the date hereof until payment in full hereof
at a rate equal to the Prime Rate; provided, however, that if SPV shall default
in the payment of any principal hereof, SPV promises to pay, on demand, interest
at the rate of the Prime Rate plus 2.00% per annum on any such unpaid amounts,
from the date such payment is due to the date of actual payment.  Interest shall
be payable on the first Business Day of each month in arrears; provided,
however, that SPV may elect on the date any interest payment is due hereunder to
defer such payment and upon such election the amount of interest due but unpaid
on such date shall constitute principal under this Subordinated Note.  The
outstanding principal of any loan made under this Subordinated Note shall be due
and payable on the Collection Date and may be repaid or prepaid at any time
without premium or penalty.
 
3.           Principal Payments.  NFC is authorized and directed by SPV to enter
on the grid attached hereto, or, at its option, in its books and records, the
date and amount of each loan made by it which is evidenced by this Subordinated
Note and the amount of each payment of principal made by SPV, and absent
manifest error, such entries shall constitute prima facie evidence of the
accuracy of the information so entered; provided that neither the failure of NFC
to make any such entry or any error therein shall expand, limit or affect the
obligations of SPV hereunder.
 
4.           Subordination.  NFC shall have the right to receive, and SPV shall
make, any and all payments relating to the loans made under this Subordinated
Note provided that, after
 

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giving effect to any such payment, the aggregate Outstanding Balance of
Receivables (as each such term is defined in the Purchase Agreement hereinafter
referred to) owned by SPV at such time exceeds the sum of (a) the Aggregate
Unpaids (as defined in the Purchase Agreement) outstanding at such time under
the Purchase Agreement, plus (b) the aggregate outstanding principal balance of
all loans made under this Subordinated Note.  NFC hereby agrees that at any time
during which the conditions set forth in the proviso of the immediately
preceding sentence shall not be satisfied, NFC shall be subordinate in right of
payment to the prior payment of any indebtedness or obligation of SPV owing to
the Agent or any Purchaser under that certain Receivables Purchase Agreement
dated as of April 8, 2004 by and among SPV, NFC, as Servicer, various
“Purchasers” from time to time party thereto, and Bank One, NA (Main Office
Chicago), as the “Agent” (as amended, restated, supplemented or otherwise
modified from time to time, the “Purchase Agreement”).  The subordination
provisions contained herein are for the direct benefit of, and may be enforced
by, the Agent and the Purchasers and/or any of their respective assignees
(collectively, the “Senior Claimants”) under the Purchase Agreement.  Until the
date on which all “Capital” outstanding under the Purchase Agreement has been
repaid in full and all other obligations of SPV and/or the Servicer thereunder
and under the “Fee Letter” referenced therein (all such obligations,
collectively, the “Senior Claim”) have been indefeasibly paid and satisfied in
full,  NFC shall not institute against SPV any proceeding of the type described
in Section 5.1(e) of the Sale Agreement unless and until the Collection Date has
occurred.  Should any payment, distribution or security or proceeds thereof be
received by NFC in violation of this Section 4, NFC agrees that such payment
shall be segregated, received and held in trust for the benefit of, and deemed
to be the property of, and shall be immediately paid over and delivered to the
Agent for the benefit of the Senior Claimants.
 
5.           Bankruptcy; Insolvency.  Upon the occurrence of any proceeding of
the type described in Section 5.1(e) of the Sale Agreement involving SPV as
debtor, then and in any such event the Senior Claimants shall receive payment in
full of all amounts due or to become due on or in respect of the Aggregate
Capital (as defined in the Purchase Agreement) and the Senior Claim (including
“CP Costs” and “Yield” as defined and as accruing under the Purchase Agreement
after the commencement of any such proceeding, whether or not any or all of such
CP Costs or Yield is an allowable claim in any such proceeding) before NFC is
entitled to receive payment on account of this Subordinated Note, and to that
end, any payment or distribution of assets of SPV of any kind or character,
whether in cash, securities or other property, in any applicable insolvency
proceeding, which would otherwise be payable to or deliverable upon or with
respect to any or all indebtedness under this Subordinated Note, is hereby
assigned to and shall be paid or delivered by the Person making such payment or
delivery (whether a trustee in bankruptcy, a receiver, custodian or liquidating
trustee or otherwise) directly to the Agent for application to, or as collateral
for the payment of, the Senior Claim until such Senior Claim shall have been
paid in full and satisfied.
 
6.           Amendments.  This Subordinated Note shall not be amended or
modified except in accordance with Section 7.1 of the Sale Agreement.  The terms
of this Subordinated Note may not be amended or otherwise modified without the
prior written consent of the Agent for the benefit of the Purchasers, which
shall not be unreasonably withheld.
 

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7.           GOVERNING LAW.  THIS SUBORDINATED NOTE HAS BEEN MADE AND DELIVERED
AT CHICAGO, ILLINOIS, AND SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF
THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS AND DECISIONS OF THE
STATE OF ILLINOIS.  WHEREVER POSSIBLE EACH PROVISION OF THIS SUBORDINATED NOTE
SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER
APPLICABLE LAW, BUT IF ANY PROVISION OF THIS SUBORDINATED NOTE SHALL BE
PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
SUBORDINATED NOTE.
 
8.           Waivers.  All parties hereto, whether as makers, endorsers, or
otherwise, severally waive presentment for payment, demand, protest and notice
of dishonor.  NFC additionally expressly waives all notice of the acceptance by
any Senior Claimant of the subordination and other provisions of this
Subordinated Note and expressly waives reliance by any Senior Claimant upon the
subordination and other provisions herein provided.
 
9.           Assignment.  This Subordinated Note may not be assigned, pledged or
otherwise transferred to any party other than its delivery to NFC without the
prior written consent of the Agent (which shall not be unreasonably withheld),
and any such attempted transfer shall be void.
 
TRUCK RETAIL ACCOUNTS CORPORATION

By:_____________________________
   Title:

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Schedule
to
SUBORDINATED NOTE
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL

 
Date
 
 
Amount of
Subordinated
Loan
 
 
Amount of Principal
Paid
 
 
Unpaid
Principal
Balance
 
 
Notation made by
                                                                               
                                                                               
                                                                               
                                               

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Schedule 2.1(e)

Disclosed Matters

None

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Schedule A

DOCUMENTS TO BE DELIVERED TO TRANSFEREE
ON OR PRIOR TO THE INITIAL PURCHASE

SEE PART I OF SCHEDULE B TO THE PURCHASE AGREEMENT.

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