RECEIVABLES SALE AGREEMENT

Exhibit 99.1

 

EXECUTION COPY

 

RECEIVABLES SALE AGREEMENT

 

BETWEEN

 

NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION

 

AND

 

NAVISTAR FINANCIAL CORPORATION

 

DATED AS OF APRIL 29, 2005

TABLE OF CONTENTS

 

 

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EXHIBITS

 

Exhibit A - Form of Assignment

 

 

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RECEIVABLES SALE AGREEMENT, dated as of April 29, 2005 between NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION, a Delaware corporation (“ NFRRC ”), and NAVISTAR FINANCIAL CORPORATION, a Delaware corporation (“ NFC ”).

 

WHEREAS, NFRRC desires to purchase a portfolio of commercial retail loans evidenced by notes secured by new and used medium and heavy duty trucks, buses and trailers (collectively, the “ Retail Notes ”), together with related rights owned by NFC;

 

WHEREAS, NFC is willing to sell such Retail Notes and related rights to NFRRC;

 

WHEREAS, NFRRC may wish to sell or otherwise transfer such Retail Notes and related rights, or interests therein, to a trust, corporation, partnership or other entity (any such transferee being the “ Subsequent Transferee ”); and

 

WHEREAS, the Subsequent Transferee may issue commercial paper, debentures, notes, participations, certificates of beneficial interest, partnership interests or other interests or securities (collectively, any such issued interests or securities being “ Securities ”) to fund its acquisition of such Retail Notes and related rights.

 

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

 

ARTICLE I

DEFINITIONS

 

SECTION 1.01. Definitions . Capitalized terms used but not otherwise defined in this Agreement shall have the respective meanings assigned them in Exhibit I to the Receivables Purchase Agreement of even date herewith by and among Navistar Financial Retail Receivables Corporation, as Seller, Navistar Financial Corporation, as Servicer, and Thunder Bay Funding, LLC (“ Thunder Bay ”), as Purchaser, and Royal Bank of Canada (“ RBC ”), as Agent (as it may be amended, supplemented or modified from time to time, the “ Purchase Agreement” ). All references herein to “ the Agreement ” or “ this Agreement ” are to this Sale Agreement as it may be amended, supplemented or modified from time to time, the exhibits hereto and the capitalized terms used herein which are defined in such Exhibit I , and all references herein to Articles, Sections and subsections are to Articles, Sections or subsections of this Agreement unless otherwise specified.

 

ARTICLE II

PURCHASE AND SALE OF RECEIVABLES

 

SECTION 2.01. Purchase and Sale of Receivables . Subject to the satisfaction of the conditions specified in Article IV, NFC agrees to sell, transfer, assign and otherwise convey to NFRRC, without recourse , pursuant to a written assignment substantially in the form of Exhibit A (an “ Assignment ”), and NFRRC agrees to purchase as of the date of this Agreement (the “ Closing Date ”), all right, title and interest of NFC in, to and under:

 

(a) the Retail Notes, secured by one or more Financed Vehicles, that are identified in a schedule to the Assignment delivered to NFRRC on the Closing Date (the “ Designated Receivables ”) and all monies paid thereon (including Liquidation Proceeds) and due thereunder on and after the Cutoff Date;

 

(b) the security interests in the Financed Vehicles granted by Obligors pursuant to the Designated Receivables and, to the extent permitted by law, any accessions thereto which are financed by NFC;

 

(c) all other security interests or liens and property, if any, purporting to secure payment of such Designated Receivables, whether pursuant to a Contract related to such Designated Receivables or otherwise, together with all financing statements and security agreements describing any collateral securing such Designated Receivables;

 

(d) the benefits of any lease assignments with respect to the related Financed Vehicles;

 

(e) any proceeds from any Insurance Policies with respect to the Designated Receivables;

 

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(f) any proceeds from Dealer Liability with respect to the Designated Receivables, proceeds from any International Purchase Obligations with respect to the Designated Receivables (subject to the limitations set forth in Section 5.08 hereof); and

 

(g) all guaranties, letters of credit and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Designated Receivable whether pursuant to the Contract related to such Designated Receivable or otherwise (other than the International Purchase Obligations);

 

(h) all Records and Receivable Files relating to such Designated Receivables;

 

(i) all of NFC’s right, title and interest in the Designated Accounts and the Designated Account Property; and

 

(j) all proceeds of any of the foregoing (the property described in clauses (b) through (j) hereof is referred to as the “ Related Security ”).

 

SECTION 2.02. Purchase Price . In consideration for the purchase of the Designated Receivables and the Related Security, NFRRC shall, on the Closing Date, pay to NFC an amount equal to the Initial Aggregate Receivables Balance for such Designated Receivables (the “ Purchase Price ”) and NFC shall execute and deliver to NFRRC an Assignment with respect to such Designated Receivables and Related Security. On the Closing Date, a portion of the Purchase Price payable on such date equal to approximately $383,977,192.30 shall be paid to NFC in immediately available funds, and the balance of the Purchase Price shall be recorded as an advance from NFC to NFRRC under the Navistar Financial Retail Receivables Corporation Revolving Note dated as of December 16, 1991.

 

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

 

SECTION 2.04. Payments and Default Fee . 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, the Default Fee in respect thereof until paid in full; provided , however , that such Default Fee shall not at any time exceed the maximum rate permitted by applicable law.

 

SECTION 2.05. Transfer of Records .

 

(a) NFC hereby sells, transfers, assigns and otherwise conveys to NFRRC all of NFC’s right and title to and interest in the Records relating to the Designated Receivables, without the need for any further documentation in connection therewith. In connection with such transfer, NFC hereby grants to each of NFRRC, the Agent and the Servicer an irrevocable,

 

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non-exclusive license to use, without royalty or payment of any kind, all software used by NFC to account for the Designated Receivables to the extent necessary to administer the Designated Receivables, whether such software is owned by NFC or is owned by others and used by NFC 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, (i) the grant is limited to the extent that such consent has been obtained and (ii) NFC hereby agrees that upon the request of NFRRC (or NFRRC’s assignee), NFC will use its 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) NFC shall take such action requested by NFRRC and/or the Agent (as NFRRC’s assignee), from time to time hereafter, that may be necessary or appropriate to ensure that NFRRC and its assigns under the Purchase Agreement have an enforceable ownership interest in the Records relating to the Designated Receivables.

 

SECTION 2.06. Intended Characterization .

 

(a) Except for the obligation of NFC to repurchase Designated Receivables in the event of a Repurchase Event, the sale of Receivables hereunder is made without recourse to Originator; provided , however , that NFC shall be liable to NFRRC for all representations, warranties, covenants and indemnities made by NFC pursuant to the terms of this Agreement or any other Transaction Documents to which NFC is a party.

 

(b) It is the intention of the parties hereto that the purchase of the Designated Receivables made hereunder shall constitute a sale, which sale is absolute and irrevocable and provides NFRRC with the full benefits of ownership of the Designated Receivables. If, notwithstanding the foregoing, the conveyance by NFC to NFRRC of the Designated 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 the sale of Designated Receivables hereunder shall constitute a true sale thereof, NFC hereby grants to NFRRC a duly perfected security interest in all of NFC’s right, title and interest in, to and under the Designated Receivables and Related Security with respect thereto, all other rights and payments relating to the Designated Receivables and all proceeds of the foregoing to secure the prompt and complete payment of a loan deemed to have been made in an amount equal to the Purchase Price of the Designated Receivables together with all other obligations of NFC hereunder. In such event, NFRRC 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 and in equity, which rights and remedies shall be cumulative.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

SECTION 3.01. Representations and Warranties as to Receivables . NFC makes the following representations and warranties as to the Designated Receivables on which NFRRC relies in accepting such Receivables. Such representations and warranties speak as of the Closing Date (or, if such representation and warranty expressly specifies another date, then as of such other date), and as of the related transfer of such Designated Receivables under the Further Transfer and Servicing Agreements, and shall survive the sale, transfer and assignment of such Designated Receivables to NFRRC and the subsequent assignment and transfer thereof pursuant to the Further Transfer and Servicing Agreements:

 

(a) Characteristics of Receivables . Each Designated Receivable:

 

(i) was originated by NFC to finance a retail purchase by a retail customer or a refinancing of a Financed Vehicle or Financed Vehicles by a retail customer and was fully and properly executed by the parties thereto;

 

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

 

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

 

(iv) shall yield interest at the Annual Percentage Rate; and

 

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

 

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

 

(b) Schedule of Receivables . The information set forth in the Schedule of Receivables is true and correct in all material respects;

 

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

 

(d) Binding Obligation . Each Designated Receivable represents the genuine, legal, valid and binding payment obligation in writing of the Obligor thereon, enforceable against the Obligor by the holder thereof in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights in general and by equity, regardless of whether such enforceability is considered in a proceeding in equity or at law;

 

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

 

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

 

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

 

(h) No Amendments . Since the Cutoff Date, no Designated Receivable has been amended or otherwise modified such that the total number of the Obligor’s Scheduled Payments is increased or the Initial Receivable Balance thereof is increased;

 

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

 

(j) No Liens . There are, to NFC’s knowledge, no Liens or claims that have been filed for work, labor or materials affecting any Financed Vehicle securing any Designated Receivable that are or may be prior to, or equal or coordinate with, the security interest in each Financed Vehicle granted by the Designated Receivable (except for Liens or claims which may exist in any accessions to the Financed Vehicles not financed by NFC);

 

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

 

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

 

(m) Good Title . No Designated Receivable or Related Security has been sold, transferred, assigned or pledged by NFC to any Person other than NFRRC; immediately prior to the conveyance of any Designated Receivables pursuant to this Agreement, NFC was the legal and beneficial owner thereof, and was the legal and beneficial owner of all Related Security, or held a valid and perfected security interest in all Related Security, in each case, free of any Lien (except for any Lien which may exist in accessions to the Financed Vehicles not financed by NFC); and, upon execution and delivery of this Agreement and the related Assignment by NFC, and satisfaction of the conditions set forth in Section 4.02 hereof relating to such Designated Receivables, NFRRC shall have all of the right, title and interest of NFC in and to the Designated Receivables and the Related Security, free of any Lien (except for any Lien which may exist in accessions to the Financed Vehicles not financed by NFC);

 

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

 

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(o) All Filings Made . All filings necessary under the UCC in any jurisdiction to give NFRRC a first priority perfected security or ownership interest in the Designated Receivables and the Related Security (to the extent it constitutes property, a security interest in which may be perfected by filing under the applicable UCC (“ Code Collateral ”)) shall have been made, and the Designated Receivables constitute Code Collateral;

 

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

 

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

 

(r) Maturity of Receivables . Each Designated Receivable has an original term to maturity of not less than 9 months and not greater than 74 months and, as of the Cutoff Date, had a remaining term to maturity of not less than 6 months and not greater than 73 months;

 

(s) Annual Percentage Rate . The Annual Percentage Rate of each Designated Receivable is not less than 4.800%;

 

(t) Scheduled Payments; Delinquency . As of the Cutoff Date, each Designated Receivable had a first scheduled payment that was due on or before April 30, 2005; as of the Cutoff Date, no Designated Receivable had a payment that was more than 60 days past due; as of the Closing Date, no Designated Receivable had a final scheduled payment that is due later than April 30, 2012;

 

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

 

(v) Origin . Each Designated Receivable was originated in the United States;

 

(w) Beginning Receivable Balance . The Initial Receivable Balance of each Designated Receivable shall be $1,000 or more;

 

(x) Concentration . The aggregate Initial Receivables Balance of all Receivables from a single Obligor shall not be more than 2.02% of the Initial Aggregate Receivables Balance;

 

(y) Selection Criteria . The Designated Receivables were selected on a random basis from all Retail Notes satisfying the selection criteria described herein, and no selection procedures believed to be adverse to NFRRC or to the Agent or the Purchasers were utilized in selecting the Designated Receivables from those Retail Notes of NFC which meet the selection criteria under this Agreement; and

 

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