Quarterly Report


     
            UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                        Washington, D. C.  20549

FORM 10-Q

      (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended July 31, 2004

                                   OR

  (  ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934

            For the transition period from ___ to ___

                   Commission File Number 001-04146

                               ----------

 

NAVISTAR FINANCIAL CORPORATION (Exact name of Registrant as specified in its charter) Delaware36-2472404 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 2850 West Golf Road Rolling Meadows, Illinois60008 (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code 847-734-4000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days Yes X No____ Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes X No ___ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No APPLICABLE ONLY TO CORPORATE ISSUERS: As of August 31, 2004, the number of shares outstanding of the registrant's common stock was 1,600,000. THE REGISTRANT IS A WHOLLY-OWNED SUBSIDIARY OF INTERNATIONAL TRUCK AND ENGINE CORPORATION, WHICH IS A WHOLLY-OWNED SUBSIDIARY OF NAVISTAR INTERNATIONAL CORPORATION, AND MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H (1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT. -------------------------------------------------------------------------------- NAVISTAR FINANCIAL CORPORATION AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Page Statements of Consolidated Income and Retained Earnings -- Three Months and Nine Months Ended July 31, 2004 and 2003.......2 Statements of Consolidated Financial Condition -- July 31, 2004; October 31, 2003; and July 31, 2003..............3 Statements of Consolidated Cash Flow -- Nine Months Ended July 31, 2004 and 2003........................4 Notes to Consolidated Financial Statements......................5 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition..........................13 Item 4. Controls and Procedures........................................20 PART II. OTHER INFORMATION Item 1. Legal Proceedings..............................................21 Item 5. Other Information..............................................21 Item 6. Exhibits and Reports on Form 8-K...............................21 Signature................................................................22 --------------------------------------------------------------------------------  
Part I - Financial Information  
Item 1. Financial Statements  
Navistar Financial Corporation and Subsidiaries Statements of Consolidated Income and Retained Earnings (Unaudited)
Three Months Ended Nine Months Ended July July July July Millions of Dollars 2004 2003 2004 2003 Revenues Retail Notes and Finance Leases.......$ 7.8 $12.5 $ 25.2 $ 34.9 Income Related to Sales of Finance Receivables.......................... 13.1 28.2 44.0 63.6 Operating Leases...................... 12.4 14.7 39.9 51.2 Wholesale Notes....................... 9.0 8.6 24.1 23.5 Accounts.............................. 5.3 4.0 16.5 13.1 Servicing Fees........................ 8.0 6.5 20.8 19.1 Other Revenue......................... 1.2 1.2 3.3 4.4 ----- ----- ----- ----- Total................................ 56.8 75.7 173.8 209.8 Expenses Cost of Borrowing Interest Expense..................... 8.8 12.0 31.9 38.1 Other................................ 1.6 2.3 6.2 6.2 Credit, Collection and Administrative. 10.1 10.7 28.2 31.9 Provision for Credit Losses........... 2.1 4.0 6.5 11.9 Depreciation on Operating Leases...... 9.6 10.9 29.7 35.5 Other Expense......................... 0.4 1.2 1.4 3.3 ----- ----- ----- ----- Total................................ 32.6 41.1 103.9 126.9 Income Before Taxes.................... 24.2 34.6 69.9 82.9 Income Tax Expense..................... 9.2 12.3 26.9 31.6 ----- ----- ----- ----- Net Income...........................$15.0 $22.3 $ 43.0 $ 51.3 ====== ====== ====== ====== Retained Earnings Beginning of Period..................$232.6 $216.1 $204.6 $197.1 Dividends Paid....................... - (5.0) - (15.0) ----- ----- ----- ----- End of Period........................$247.6 $233.4 $247.6 $233.4 ====== ====== ====== ====== See Notes to Consolidated Financial Statements. --------------------------------------------------------------------------------  
Navistar Financial Corporation and Subsidiaries Statements of Consolidated Financial Condition (Unaudited) July 31, October 31, July 31, Millions of Dollars 2004 2003 2003 ASSETS Cash and Cash Equivalents.................... $ 77.7 $ - $ 5.2 Finance Receivables Finance Receivables Held for Sale......... 419.7 519.9 533.6 Other Finance Receivables................. 299.0 347.3 242.5 Allowance for Losses...................... (7.0) (12.9) (15.1) ------ ------ ------ Finance Receivables, net............ 711.7 854.3 761.0 Amounts Due from Sales of Receivables........ 445.9 368.9 460.3 Net Investment in Operating Leases........... 158.2 191.1 192.5 Restricted Marketable Securities............. 419.1 505.6 430.1 Other Assets................................. 27.6 39.9 50.6 ------- ------- ------- Total Assets.............................. $1,840.2 $1,959.8 $1,899.7 ======== ======== ======= LIABILITIES AND SHAREOWNER'S EQUITY Net Accounts Payables to Affiliates.......... $ 9.6 $ 4.2 $ 26.2 Senior and Subordinated Debt................. 1,292.6 1,461.9 1,348.5 Other Liabilities............................ 116.6 129.5 123.6 ------- ------- ------- Total Liabilities......................... 1,418.8 1,595.6 1,498.3 Shareowner's Equity Capital Stock (par value $1.00, 1,600,000 shares issued and outstanding) and Paid-In Capital........................... 182.9 171.0 171.0 Retained Earnings............................ 247.6 204.6 233.4 Accumulated Other Comprehensive Loss......... (9.1) (11.4) (3.0) ------- ------- ------- Total Shareowner's Equity.................. 421.4 364.2 401.4 Total Liabilities and Shareowner's Equity.... $1,840.2 $1,959.8 $1,899.7 ======== ======== ======== See Notes to Consolidated Financial Statements.  
-------------------------------------------------------------------------------- Navistar Financial Corporation and Subsidiaries Statements of Consolidated Cash Flow (Unaudited) Nine Months Ended July July Millions of Dollars 2004 2003 Cash Flow From Operations Net income........................................... $ 43.0 $ 51.3 Adjustments to reconcile net income to cash provided from operations: Gains on sales of receivables..................... (39.8) (59.3) Depreciation, amortization and accretion.......... 37.3 43.8 Provision for credit losses....................... 6.5 11.9 Net change in accounts payable to affiliates...... 5.4 (26.0) Net change in accrued income taxes................ (4.9) 21.9 Other............................................. 2.1 7.9 ------ ------ Total.......................................... 49.6 51.5 ------ ------ Cash Flow From Investing Activities Originations of finance receivables held for sale.... (963.3) (764.6) Net proceeds from sales of finance receivables held for sale.................................... 1,118.6 1,347.2 Net proceeds from sales of retail accounts........... 100.0 - Net change in restricted marketable securities....... 86.5 (325.5) Collections of retail notes and finance lease receivables, net of change in unearned finance income.......... 97.7 53.7 Repurchase of sold retail receivables................ (152.8) (163.5) Net change in wholesale notes and accounts receivables........................................ (51.7) 51.8 Net change in amounts due from sales of receivables.. (49.6) (52.7) Purchase of equipment leased to others............... (22.0) (25.1) Sale of equipment leased to others................... 25.4 45.5 Receipts from derivative contracts................... 0.8 3.1 Payments on derivative contracts..................... (0.5) (15.0) ------- ------- Total.......................................... 189.1 154.9 ======= ======= Cash Flow From Financing Activities Net change in bank revolving credit facility usage... 60.0 (147.0) Proceeds from long-term debt......................... 31.3 28.4 Principal payments on long-term debt................. (82.3) (99.6) Dividends paid to International...................... - (15.0) Assumption of debt by Navistar International Corporation........................................ (170.0) - ------- ------- Total.......................................... (161.0) (233.2) ======= ======= Change in Cash and Cash Equivalents..................... 77.7 (26.8) Cash and Cash Equivalents, Beginning of Period.......... - 32.0 ------- ------- Cash and Cash Equivalents, End of Period................ $ 77.7 $5.2 ======= ======= Supplementary disclosure of cash flow information: Interest paid........................................ $ 33.2 $ 37.3 Income taxes paid, net of refunds.................... $ 32.9 $ 9.4 Supplementary disclosure of non-cash financing activity: Additional paid in capital resulting from assumption of debt by Navistar International Corporation........ $ 11.9 $ - See Notes to Consolidated Financial Statements. -------------------------------------------------------------------------------- NAVISTAR FINANCIAL CORPORATION AND SUBSIDIARIES  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Navistar Financial Corporation and its wholly-owned subsidiaries ("Corporation"). International Truck and Engine Corporation ("International"), which is wholly owned by Navistar International Corporation ("Navistar"), is the parent company of the Corporation. The accompanying unaudited financial statements have been prepared in accordance with accounting policies described in the Corporation's 2003 Annual Report on Form 10-K and should be read in conjunction with the disclosures therein. In January 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46, "Consolidation of Variable Interest Entities". This interpretation addresses consolidation requirements of variable interest entities ("VIE's"). In December 2003, the FASB revised this Interpretation to clarify the application of Accounting Research Bulletin No. 51, "Consolidated Financial Statements", to certain entities in which equity investors do not have the characteristics of a controlling financial interest for the entity to finance its activities without additional financial support. This Interpretation, as revised, is effective for periods ending after December 15, 2003. The Corporation determined that it does not have an interest in a VIE, as defined within this Interpretation. Transferors to qualifying special purpose entities ("QSPE's") subject to the reporting requirements of Statements of Financial Accounting Standards ("SFAS") 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", are excluded from the scope of this interpretation. The Corporation currently sells receivables to entities meeting the requirements of QSPE's. Therefore, this Interpretation has no impact on the Corporation's results of operations, financial condition, and cash flows. In December 2003, the FASB issued a revision to SFAS 132, "Employers' Disclosure about Pensions and Other Postretirement Benefits". This Statement retains the disclosures previously required by SFAS 132 but adds additional disclosure requirements about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. It also calls for the required information to be provided separately for pension plans and for other postretirement benefit plans. The Corporation assessed the assets, obligations, cash flows, and net periodic benefit cost for pension plans and for other postretirement benefit plans and determined the amounts to be inmmaterial; therefore, related disclosures have been omitted. On December 8, 2003, the President signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ("the Act") into law. The Act introduces a voluntary prescription drug benefit under Medicare as well as a federal subsidy to sponsors of retiree health care plans that provide prescription drug benefits that are at least actuarially equivalent to Medicare Part D. In May 2004, the FASB issued FSP 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003", which requires the commencement of accounting recognition for the effects of the Act no later than the Corporation's quarter ending October 31, 2004. The Corporation implemented the accounting guidance related to the effects of the Act during the quarter ended July 31, 2004. The cumulative effect of accounting for the subsidy as of the date of the Act through the date of implementation resulted in an immaterial reduction to the Corporation's postretirement benefit expenses and liabilities. In the opinion of management, these interim financial statements reflect all adjustments, consisting of normal recurring items, necessary to present fairly the results of operations, financial condition and cash flow for the interim periods presented. Interim results are not necessarily indicative of results to be expected for any other interim period or for the full year. Certain amounts in the prior period financial statements have been reclassified to conform with current period presentations.  
2. COMPREHENSIVE INCOME The Corporation's total comprehensive income was: Three Months Nine Months Ended July 31 Ended July 31 Millions of Dollars 2004 2003 2004 2003 Net income........................... $ 15.0 $ 22.3 $ 43.0 $ 51.3 Change in net unrealized gains (losses) on investments (net of tax of $1.0, ($0.1), ($1.4), and ($0.2))........ (1.6) 0.2 2.3 0.3 ------ ------ ------ ------ Total comprehensive income........ $ 13.4 $ 22.5 $ 45.3 $ 51.6 ====== ====== ====== ======  
3. FINANCE RECEIVABLES Finance receivables are summarized as follows: July 31, October 31, July 31, Millions of Dollars 2004 2003 2003 Retail notes, net of unearned income.... $ 320.9 $ 404.5 $ 410.5 Finance leases, net of unearned income.. 98.8 115.4 123.1 Wholesale notes......................... 87.3 46.0 34.3 Accounts: Retail............................... 133.5 217.9 140.1 Wholesale............................ 78.2 83.4 68.1 ------ ------ ------ Total accounts..................... 211.7 301.3 208.2 ------ ------ ------ Total finance receivables....... 718.7 867.2 776.1 Less: Allowance for losses...... 7.0 12.9 15.1 ------ ------ ------ Total finance receivables, net.. $ 711.7 $ 854.3 $ 761.0 ====== ====== ====== Finance receivables held for sale consisted of $419.7 million, $519.9 million, and $533.6 million in retail notes and finance leases, net of unearned income, as of July 31, 2004, October 31, 2003, and July 31, 2003, respectively.  
4. ALLOWANCE FOR LOSSES The change in allowance for losses is summarized as follows: July 31, October 31, July 31, Millions of Dollars 2004 2003 2003 Allowance for losses, beginning of period $ 12.9 $ 16.0 $ 16.0 Provision for credit losses.............. 6.5 15.8 11.9 Net losses charged to allowance.......... (4.1) (4.2) (5.0) Allocated to finance receivables sold.... (8.3) (14.7) (7.8) ------ ------ ----- Allowance for losses, end of period... $ 7.0 $ 12.9 $ 15.1 ====== ====== ====== The average outstanding balance of impaired finance receivables was not material for the fiscal periods ended July 31, 2004, October 31, 2003, and July 31, 2003. Interest income that would have been recognized on impaired finance receivables during the nine months ended July 31, 2004 and 2003 or for the year ended October 31, 2003 was not material. Balances with payments past due over 90 days on owned finance receivables, including held for sale, totaled $11.3 million as of July 31, 2004.  
5. SENIOR AND SUBORDINATED DEBT Senior and subordinated debt outstanding is summarized as follows: July 31, October 31, July 31, Millions of Dollars 2004 2003 2003 Bank revolving credit facility, at variable rates, due December 2005...... $ 631.0 $ 571.0 $ 435.0 Revolving retail warehouse facility, at variable rates, due October 2005.... 500.0 500.0 500.0 Borrowings secured by operating leases, 3.45% to 6.65%, due serially through April 2010............................. 161.6 212.5 236.6 Convertible debt, 4.75%, due April 2009. - 178.4 176.9 ------- ------- ------- Total senior and subordinated debt..... $1,292.6 $1,461.9 $1,348.5 ======= ======= ======= Navistar assumed the $220.0 million 4.75 percent convertible subordinated debt due in 2009 from the Corporation in June 2004. As compensation for the assumption of this debt, the Corporation paid Navistar approximately $170.0 million in cash. Navistar's assumption of the Corporation's debt resulted in an $11.9 million increase in additional paid in capital for the Corporation. 6. DERIVATIVE FINANCIAL INSTRUMENTS The Corporation uses derivative financial instruments as part of its overall interest rate risk management strategy as further described under Note 13 of the 2003 Annual Report on Form 10-K. The Corporation manages its exposure to fluctuations in interest rates by limiting the amount of fixed rate assets funded with variable rate debt. This is accomplished by selling fixed rate receivables on a fixed rate basis and by utilizing derivative financial instruments. These derivative financial instruments may include forward contracts, interest rate swaps, and interest rate caps. The fair value of these instruments is estimated based on quoted market prices and is subject to market risk as the instruments may become less valuable due to changes in market conditions or interest rates. The Corporation manages exposure to counterparty credit risk by entering into derivative financial instruments with major financial institutions that can be expected to fully perform under the terms of such agreements. The Corporation does not require collateral or other security to support derivative financial instruments with credit risk. The Corporation's counterparty credit exposure is limited to the positive fair value of contracts at the reporting date. As of July 31, 2004, the Corporation's derivative financial instruments had a negative net fair value. Notional amounts of derivative financial instruments do not represent exposure to credit loss. As of July 31, the notional amounts and fair values of the Corporation's derivative financial instruments are summarized as follows:  
Inception Maturity Instrument Notional Fair Value (Millions of Dollars) October 2000 November 2012 Interest rate cap $500.0 $ (1.3) November 2012 Interest rate cap 500.0 1.3 July 2001 April 2006 Interest rate swap 25.0 (0.7) November 2002 March 2007 Interest rate swap* 28.4 - October 2003 April 2008 Interest rate swap* - (0.1) July 2004 September 2008 Interest rate swap* - - * Accounted for as non-hedging instruments. The fair values of all derivatives are recorded in Other Liabilities on the Statements of Consolidated Financial Condition. On July 30, 2004, the Corporation entered into a Receivable Purchase Agreement. The Corporation is the Servicer of the Receivable Purchase Agreement. The other parties to the Agreement entered into an interest rate swap agreement. Although the Corporation is not a party to the swap agreement, the Corporation's role as Servicer creates an obligation for net amounts owed to the Agent under the swap agreement. In fiscal 2004, forward starting swap losses were $3.3 million, compared with $7.7 million in prior year. 7. SALES OF RECEIVABLES During the first nine months of fiscal 2004, the Corporation sold $1,120.0 million of retail notes and leases for a pre-tax gain of $39.8 million compared to the first nine months of fiscal 2003, when the Corporation sold $1,350.0 million of retail receivables for a pre-tax gain of $59.3 million. The Corporation's retained interests, which include interest-only receivables, cash reserve accounts, and subordinated certificates, are recorded at fair value in the periods in which the sales occur. The fair value of the interest-only receivable is based on estimates of prepayment speeds and discount rates. The Corporation evaluates the fair value of its retained interests quarterly and makes adjustments to these values when it deems permanent changes in its assumptions have changed. The following table summarizes income related to sales of finance receivables:  
Three Months Nine Months Ended July 31 Ended July 31 Millions of Dollars 2004 2003 2004 2003 Gains on sales of receivables..... $ 7.8 $26.1 $39.8 $59.3 Excess spread..................... 4.9 2.6 8.9 10.8 Fair value adjustment............. - - (2.4) - Derivative losses................. 0.2 (1.0) (3.3) (7.8) Interest income from retained securities and other........... 0.2 0.5 1.0 1.3 ----- ----- ----- ----- Total income related to sales of finance receivables... $13.1 $28.2 $44.0 $63.6 ===== ===== ===== ===== 8. COMMITMENTS AND CONTINGENCIES Leases The Corporation is obligated under non-cancelable operating leases for the majority of its office facilities. These leases are generally renewable and provide that property taxes and maintenance costs are to be paid by the lessee. As of July 31, 2004, future minimum lease commitments under non-cancelable operating leases with remaining terms in excess of one year are as follows: Twelve months period ended July 31(Millions of Dollars)  
2005................................. $ 1.9 2006................................. 1.9 2007................................. 0.4 2008................................. 0.4 2009................................. 0.2 Thereafter........................... 0.1 ------ Total........................... $ 4.9 ====== The total operating lease expense for the nine months ended July 31, 2004 and 2003 and for the year ended October 31, 2003 was $1.3 million, $1.8 million and $2.3 million, respectively. Guarantees of Debt The Corporation periodically guarantees the outstanding debt of affiliates. The guarantees allow for diversification of funding sources for the affiliates. As of July 31, 2004, the Corporation has multiple guarantees related to Navistar's three Mexican finance subsidiaries, Servicios Financieros Navistar, S.A. de C.V. ("SOFOL"), Arrendadora Financiera Navistar, S.A. de C.V. ("Arrendadora") and Navistar Comercial S.A. de C.V. The Corporation has no recourse as guarantor in case of default. The following table summarizes the borrowings as of July 31, 2004:  
Type of Funding Maturity Amount of Outstanding Guaranty Balance (Millions of Dollars) Revolving credit facility(2) December 2005 $100.0 $21.0 Medium term note(1) November 2004 43.8 43.8 Revolving credit facility(1) July 2007 17.5 17.5 Revolving credit facility(1),(3) Indefinite 21.0 21.0 Revolving credit facility(1),(3) Indefinite 17.5 3.7 Revolving credit facility(1) August 2004 6.6 6.6 Revolving credit facility(1),(4) June 2005 4.4 - ------ Total $113.6 ====== (1)Peso-denominated (2)Revolving credit facility guaranteed jointly with Navistar (3)The bank reviews the terms of this facility monthly. This facility may be used for as long as all the conditions and terms are met. (4)Contract review date June 2005 Guarantees of Derivatives As of July 31, 2004, the Corporation had guaranteed derivative contracts for interest rate swaps and cross currency swaps related to SOFOL and Arrendadora. The Corporation is liable up to the fair market value of these derivative contracts only in cases of default by SOFOL and Arrendadora. The following table summarizes the guaranteed derivative contracts as of July 31, 2004:  
Outstanding Fair Instrument Maturity Notional Value (Millions of Dollars) Interest rate swaps and cross currency swaps* May 2007 $ 65.2 $ 0.2 * Peso-denominated Other The Corporation has entered into an agreement for the repurchase of equipment. Under this agreement, which matures in August 2004, the Corporation would be required to make a maximum potential future payment of $11.9 million. Under the provisions of this agreement, the Corporation can liquidate the repurchased assets to recover all or a portion of the payment. The Corporation has potential exposure to the extent that there is a difference between the fair value of the repurchased asset and the guaranteed repurchase amount. The Corporation's current exposure under this agreement is estimated to be immaterial. On November 30, 2001, the Corporation completed the sale of all of the stock of Harco National Insurance Company ("Harco"), a wholly-owned insurance subsidiary, to IAT Reinsurance Syndicate Ltd. ("IAT"), a Bermuda reinsurance company. As part of its sales agreement with IAT, the Corporation has agreed to guarantee the adequacy of Harco's loss reserves. There is no limit to the potential amount of future payments required by the Corporation related to this reserve. The sales agreement is scheduled to expire November 2008. The carrying amount of the Corporation's liability under this guarantee is estimated at $4.5 million as of July 31, 2004 and is included in Other Liabilities in the Consolidated Statements of Financial Condition. Management believes this reserve is adequate to cover any future potential payments to IAT. -------------------------------------------------------------------------------- NAVISTAR FINANCIAL CORPORATION AND SUBSIDIARIES  
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Certain statements under this caption purely constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. Navistar Financial Corporation's ("Corporation") actual results may differ significantly from the results discussed in such forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, and such forward-looking statements only speak as of the date of this Form 10-Q. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These statements often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed under the heading "Business Outlook". Overview The Corporation was incorporated in Delaware in 1949 and is a wholly-owned subsidiary of International Truck and Engine Corporation ("International"), which is a wholly-owned subsidiary of Navistar International Corporation ("Navistar"). As used herein, the "Corporation" refers to Navistar Financial Corporation and its wholly-owned subsidiaries unless the context otherwise requires. The Corporation is a commercial financing organization that provides wholesale, retail and lease financing in the United States for sales of new and used trucks sold by International and International's dealers. The Corporation also finances wholesale accounts and selected retail accounts receivable of International. Sales of new products (including trailers) of other manufacturers are also financed regardless of whether they are designed or customarily sold for use with International's truck products. The Corporation also services finance receivables it originates and purchases. The Corporation's sources of revenues are from sales of its receivables, servicing of its sold receivables, earnings from investments and interest earned from its financing programs under wholesale and other dealer loan financing programs. The Corporation is exposed to market risk primarily due to fluctuations in interest rates during the accumulation period prior to a sale of finance receivables. Interest rate risk arises when funding fixed rate receivables with floating rate debt. The Corporation has managed exposure to interest rate changes by funding floating rate receivables with floating rate debt and fixed rate receivables with fixed rate debt and equity capital. Management has reduced the net exposure, which results from the funding of fixed rate receivables with floating rate debt by generally selling fixed rate receivables on a fixed rate basis and by utilizing derivative financial instruments when appropriate. Business Outlook Navistar currently projects fiscal 2004 U.S. and Canadian Class 8 heavy truck demand to be 211,000 units, up 32.5% from 2003. Class 6 and 7 medium truck demand, excluding school buses, is forecast at 93,000 units, up 24.3% from 2003. Demand for school buses is expected to be 26,000 units, down 10.9% from 2003. Mid-range diesel engine shipments by Navistar to OEMs in fiscal 2004 are expected to be 349,200 units, 5.1% higher than 2003. Critical Accounting Policies The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. The significant accounting principles which management believes are the most important to aid in fully understanding the Corporation's financial results are: |X| Sales of Receivables |X| Allowance for Losses Details regarding the Corporation's use of these policies and the related estimates are described in the Corporation's 2003 Annual Report on Form 10-K. Results of Operations Fiscal Nine- Month Period 2004 Compared with 2003 Year-to-date net income was $43.0 million for 2004, compared with $51.3 million for the same period of 2003. During the first nine months of fiscal 2004, the Corporation sold $1,120.0 million of retail notes and leases for a pre-tax gain of $39.8 million compared to the first nine months of fiscal 2003, when the Corporation sold $1,350.0 million of retail receivables for a pre-tax gain of $59.3 million. The decrease in gains on sales of receivables is primarily due to lower volume and a decline in average portfolio yield due to increased competition. Lease portfolio yield dropped during fiscal 2004 as liquidations of older higher yielding leases were replaced with acquisitions of lower yielding leases. The decrease in revenue was partly offset by reductions in expenses. During the fiscal nine-month period in 2004, the Corporation experienced improved portfolio performance and pricing in the used truck market. The credit loss provision is funded based on the Corporation's belief that its portfolio performance and pricing will continue, barring any adverse impact on the economy and the trucking industry. The allowance is maintained at an amount management considers appropriate in relation to the outstanding portfolio based on factors such as overall portfolio credit risk quality, historical loss experience, and current economic conditions. Financial Condition Finance Volume and Finance Market Share The Corporation's finance market share of new International trucks sold in the U.S. increased to 15.5% at July 31, 2004 from 15.1% at July 31, 2003 primarily due to increased originations. During the first nine months of fiscal 2004, the Corporation's net retail notes and finance leases originations were $963.3 million, compared with $764.6 million during the same period of fiscal 2003. This increase reflects the continued improvement in the Class 6-8 truck market in which International participates. Net serviced retail notes and finance leases balances were $2,606.6 million and $2,445.8 million as of July 31, 2004 and 2003, respectively. Wholesale note originations increased 28.1% to $2,868.1 million during the first nine months of fiscal 2004, compared with $2,239.2 million for the same period of fiscal 2003. Serviced wholesale note balances increased 19.6% to $1,084.6 million as of July 31, 2004 from $907.0 million as of July 31, 2003. The increase in wholesale note balances and originations reflects an increase in International orders and retail deliveries. Finance Volume and Finance Market Share The Corporation has seen an improvement in its truck repossession activities. Total year to date repossessions for fiscal 2004 were 1,180 units, compared with 1,919 units in 2003. Serviced repossession balance also decreased significantly from $31.7 million, as of July 31, 2003, to $20.2 million, as of July 31, 2004, as a result of the lower acquisition of repossessed vehicles. Funds Management The Corporation has traditionally obtained the funds to provide financing to International's dealers and retail customers from sales of finance receivables, commercial paper, short and long-term bank borrowings, and medium and long-term debt. The Corporation's current debt ratings have made sales of finance receivables the most economical source of funding.  
Credit Ratings The Corporation's debt ratings as of July 31, 2004 are as follows: Standard Fitch Moody's and Poor's Senior unsecured debt BB Ba3 BB- Subordinated debt B+ B2 B Outlook Stable Stable Stable Funding Facilities Receivable sales are a significant source of funding. Through the asset-backed public market and private placement sales, the Corporation has been able to fund fixed rate retail notes and finance leases at rates, which are more economical than those available to the Corporation in the public unsecured bond market. The Corporation sells retail notes and finance leases through Navistar Financial Retail Receivables Corporation ("NFRRC"), a special purpose, wholly-owned subsidiary of the Corporation. During the first nine months of 2004 and 2003, the Corporation sold $1,120 million and $1,350.0 million, respectively, of retail notes and finance leases to owner trusts which, in turn, issued asset-backed securities that were sold to investors. As of July 31, 2004, there was no remaining shelf registration available to NFRRC. On August 13, 2004, a $4.0 billion shelf registration filed by NFRRC became effective. In June 2004, International Truck Leasing Corp. ("ITLC"), a special purpose, wholly-owned subsidiary of the Corporation, was established to provide for the funding of certain leases. ITLC's assets are available to satisfy its creditors' claims prior to such assets becoming available for ITLC's uses or to the Corporation or affiliated companies. Truck Engine Receivables Financing Corporation, a special purpose, wholly-owned subsidiary of the Corporation, has in place a trust that provides for the funding of $100.0 million of unsecured trade receivables generated by the sale of diesel engines and engine service parts from International to Ford Motor Company. The facility matures in 2006. As of July 31, 2004, the Corporation had utilized $81.2 million of this facility. During the second quarter of fiscal 2004, Truck Retail Accounts Corporation ("TRAC"), a special purpose, wholly-owned subsidiary of the Corporation, obtained financing for its retail accounts with a bank conduit that provides for the funding of up to $100.0 million of eligible retail accounts. The revolving retail account facility expires in April 2005. The sales of retail accounts under TRAC constitute sales under generally accepted accounting principles in the United States of America, with the result that the sold accounts are removed from the Corporation's balance sheet and the investor's interests are not reflected as liabilities. TRAC is a separate corporate entity, and its assets will be available first and foremost to satisfy the claims of the creditors of TRAC. As of July 31, 2004, the Corporation had utilized $93.5 million of this facility. Navistar Financial Securities Corporation ("NFSC"), a special purpose, wholly-owned subsidiary of the Corporation, has in place a revolving wholesale note trust that provides for the funding of up to $1,236.0 million of eligible wholesale notes. As of July 31, 2004, it comprised two $200.0 million tranches of investor certificates maturing in 2004 and 2008, three $212.0 million tranches of investor certificates maturing in 2005 and 2006, and variable funding certificates with a maximum capacity of $200.0 million maturing in February 2005. NFSC also has retained interest in marketable securities that could be used to fund $169.6 million in additional eligible wholesale notes. As of July 31, 2004, the Corporation had utilized $997.3 million of the revolving wholesale note trust. Truck Retail Instalment Paper Corporation ("TRIP"), a special purpose wholly-owned subsidiary of the Corporation, issued $500.0 million of senior and subordinated floating rate asset-backed notes on October 16, 2000. The proceeds were used to establish a revolving retail warehouse facility to fund the Corporation's retail notes and retail leases, other than fair market value leases, during the accumulation period prior to a receivable sale. There were $130.2 million in retail notes and leases at the end of the third quarter 2004, compared with $500.0 million at the end of the third quarter 2003. This difference was a result of a conduit sale in the third quarter of 2004. The Corporation also has $820.0 million contractually committed bank revolving credit facility that will mature in December 2005. As of July 31, 2004, $652.0 million of this facility was utilized. As of July 31, 2004, the aggregate available, including unrestricted cash, to fund finance receivables under all the various facilities was $1,049.1 million. Navistar assumed the $220.0 million 4.75 percent convertible subordinated debt due in 2009 from the Corporation in June 2004. As compensation for the assumption of this debt, the Corporation paid Navistar approximately $170.0 million in cash. Navistar's assumption of the Corporation's debt resulted in an $11.9 million increase in additional paid in capital for the Corporation. The weighted average borrowing rate on all debt outstanding for the first nine months of fiscal 2004 decreased to 3.11% from 3.67% for the same period in 2003. The decrease in the Corporation's weighted average borrowing rate is primarily a result of lower LIBOR rates. Management believes that collections on the outstanding finance receivables portfolio plus cash available from the Corporation's various funding sources will permit the Corporation to meet the financing requirements of International's dealers and retail customers through 2004 and beyond. New Accounting Pronouncements The consolidated financial statements include the accounts of Navistar Financial Corporation and its wholly-owned subsidiaries ("Corporation"). International Truck and Engine Corporation ("International"), which is wholly owned by Navistar International Corporation ("Navistar"), is the parent company of the Corporation. The accompanying unaudited financial statements have been prepared in accordance with accounting policies described in the Corporation's 2003 Annual Report on Form 10-K and should be read in conjunction with the disclosures therein. In December 2003, the FASB issued a revision to SFAS 132, "Employers' Disclosure about Pensions and Other Postretirement Benefits". This Statement retains the disclosures previously required by SFAS 132 but adds additional disclosure requirements about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. It also calls for the required information to be provided separately for pension plans and for other postretirement benefit plans. The Corporation assessed the assets, obligations, cash flows, and net periodic benefit cost for pension plans and for other postretirement benefit plans and determined the amounts to be immaterial; therefore, related dislosures have been omitted. In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities". This interpretation addresses consolidation requirements of variable interest entities ("VIEs"). In December 2003, the FASB revised this Interpretation to clarify the application of Accounting Research Bulletin No. 51, "Consolidated Financial Statements", to certain entities in which equity investors do not have the characteristics of a controlling financial interest for the entity to finance its activities without additional financial support. This Interpretation, as revised, is effective for periods ending after December 15, 2003. The Corporation determined that it does not have an interest in a VIE, as defined within this Interpretation. Transferors to qualifying special purpose entities ("QSPE's") subject to the reporting requirements of FASB Statement No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", are excluded from the scope of this interpretation. The Corporation currently sells receivables to entities meeting the requirements of QSPE's. Therefore, this Interpretation has no impact on the Corporation's results of operations, financial condition, and cash flows. On December 8, 2003, the President signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ("the Act") into law. The Act introduces a voluntary prescription drug benefit under Medicare as well as a federal subsidy to sponsors of retiree health care plans that provide prescription drug benefits that are at least actuarially equivalent to Medicare Part D. In May 2004, the FASB issued FSP 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003", which requires the commencement of accounting recognition for the effects of the Act no later than the Corporation's quarter ending October 31, 2004. The Corporation implemented the accounting guidance related to the effects of the Act during the quarter ended July 31, 2004. The cumulative effect of accounting for the subsidy as of the date of the Act through the date of implementation resulted in an immaterial reduction to the Corporation's postretirement benefit expenses and liabilities. -------------------------------------------------------------------------------- NAVISTAR FINANCIAL CORPORATION AND SUBSIDIARIES  
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures The Corporation's principal executive officer and principal financial officer, along with other management of the Corporation, evaluated the Corporation's disclosure controls and procedures (as defined in rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of July 31, 2004. Based on that evaluation, the principal executive officer and principal financial officer of the Corporation concluded that, as of July 31, 2004, the disclosure controls and procedures in place at the Corporation were (1) designed to ensure that material information relating to the Corporation is made known to them to allow timely decisions regarding required disclosure and (2) effective, in that such disclosure controls and procedures provide reasonable assurance that information required to be disclosed by the Corporation in reports that the Corporation files or submits under the Exchange Act, is recorded, processed, summarized and reported on a timely basis in accordance with applicable rules and regulations. Although the Corporation's principal executive officer and principal financial officer believe the Corporation's existing disclosure controls and procedures are adequate to enable the Corporation to comply with its disclosure obligations, the Corporation is in the process of formalizing and documenting the procedures already in place. Changes in Internal Control over Financial Reporting The Corporation has not made any change to its internal control over financial reporting (as defined in rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended July 31, 2004 that have materially affected, or are reasonably likely to materially affect, the Corporation's internal control over financial reporting. ================================================================================ NAVISTAR FINANCIAL CORPORATION AND SUBSIDIARIES
 
PART II - OTHER INFORMATION  
ITEM 1. LEGAL PROCEEDINGS
There were no material pending legal proceedings other than ordinary, routine litigation incidental to the business of the Corporation.  
ITEM 5. OTHER INFORMATION None.  
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K  
(a) Exhibits: 3 Articles of Incorporation and By-Laws................E-1 4 Instruments Defining Rights of Security Holders, including Indentures.................................E-2 10 Material Contracts...................................E-4 31.1 CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002........E-12 31.2 CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002........E-14 32 CEO and CFO Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002........E-16 (b) Reports on Form 8-K filed during the quarter ended July 31, 2004: The Corporation filed a current report on Form 8-K with the Commission on May 12, 2004 to announce Navistar's intent to assume the Corporation's $220.0 million 4.75 percent convertible subordinated debt. -------------------------------------------------------------------------------- NAVISTAR FINANCIAL CORPORATION AND SUBSIDIARIES
 
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Navistar Financial Corporation (Registrant) Date: September 10, 2004/s/ PAUL MARTIN Paul Martin Vice President and Controller (Principal Accounting Officer)
 

 
                                                                 Exhibit 3

  NAVISTAR FINANCIAL CORPORATION
                         AND SUBSIDIARIES


 

ARTICLES OF INCORPORATION AND BY-LAWS
The following documents of Navistar Financial Corporation are incorporated herein by reference: 3.1 Restated Certificate of Incorporation of Navistar Financial Corporation (as amended and in effect on December 15, 1987). Filed on Form 8-K dated December 17, 1987. Commission File No. 001-04146. 3.2 The By-Laws of Navistar Financial Corporation (as amended February 29, 1988). Filed on Form 10-K dated January 19, 1989. Commission File No. 001-04146. 3.3 Amendment to the By-Laws of Navistar Financial Corporation. Filed as Exhibit 3.1 on Form 10-K dated December 18, 2003. Commission File No. 001-04146.
 
 
                                                          Exhibit 4

NAVISTAR FINANCIAL CORPORATION
                         AND SUBSIDIARIES


        NSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS,
                      INCLUDING INDENTURES

The following instruments of Navistar Financial Corporation
defining the rights of security holders are incorporated herein
by reference:


4.1     Credit  Agreement  for  $820,000,000  Revolving  Credit and
        Competitive  Advance Facility dated as of December 8, 2000,
        between the Corporation,  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,
        lenders  party  hereto,   The  Chase   Manhattan   Bank  as
        Administrative  Agent, Bank of America as Syndication Agent
        and  Bank of Nova  Scotia  as  Documentation  Agent.  Filed
        as Exhibit 10.05 to Navistar  Financial  Corporation's Form
        10-Q  dated   March  15,   2001.   Commission   File   No.
        001-04146.

4.2     Guarantee,  dated as of December 8, 2000, made by Navistar,
        in favor of The Chase  Manhattan  Bank,  as  Administrative
        Agent,  for the  lenders  parties to the Credit  Agreement,
        dated as of  December  8, 2000,  among  Navistar  Financial
        Corporation and Arrendadora  Financiera  Navistar,  S.A. DE
        C.V.,  Servicios  Financieros  Navistar,  S.A. DE C.V.  and
        Navistar  Comercial,  S.A. DE C.V.,  the  Lenders,  Bank of
        America,  N.A.,  as  syndication  agent,  The  Bank of Nova
        Scotia,  as  documentation  agent,  and the  Administrative
        Agent.   Filed  as  Exhibit  10.07  to  Navistar  Financial
        Corporation's  Form 10-Q  dated March 15, 2001.  Commission
        File No. 001-04146.

4.3     Indenture  dated  as of March  25,  2002 by and  among  the
        Corporation,  Navistar and The BNY Midwest  Trust  Company,
        as Trustee,  for 4.75% Subordinated  Exchangeable Notes due
        2009 for $220,000,000.  Filed as Exhibit  4.1  to  Form S-3
        dated May 7, 2002.  Commission File No. 333-87716-01.

4.4     Registration Rights Agreement,  dated as of March 25, 2002,
        by and  among  the  Corporation,  Navistar,  Salomon  Smith
        Barney,  Inc. and Banc of America  Securities,  LLC.  Filed
        as Exhibit  4.2  to Form S-3 dated May 7, 2002.  Commission
        File No. 333-87716-01.

4.5     First  Amendment  to  the  Credit  Agreement  dated  as  of
        December  8, 2000,  between  the  Corporation,  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,  and the  Chase  Manhattan  Bank,  as
        Administrative   Agent,   Bank   of   America,   N.A.,   as
        Syndication   Agent,  and  the  Bank  of  Nova  Scotia,  as
        Documentation   Agent,   with   respect   to   $820,000,000
        Revolving Credit and Competitive  Advance  Facility.  Filed
        as Exhibit 3.2 to the  Corporation's  Form 10-Q dated March
        8, 2004.  Commission File No. 001-04146.


The following instrument of Navistar Financial Corporation
defining the rights of security holders is filed herewith:


4.6     First  Supplement to Indenture,  dated as of June 11, 2004,
        by  and  among  the  Corporation,   Navistar  International
        Corporation and BNY Midwest Trust Company, as Trustee,  for
        the Corporation's  4.75%  Subordinated  Exchangeable  Notes
        due 2009 for $220,000,000.



 
 
                                                      EXHIBIT 4.6




                  NAVISTAR FINANCIAL CORPORATION

                                AND

                NAVISTAR INTERNATIONAL CORPORATION

          4.75% SUBORDINATED EXCHANGEABLE NOTES DUE 2009






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

                   FIRST SUPPLEMENT TO INDENTURE
                     DATED AS OF JUNE 11, 2004

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






                    BNY MIDWEST TRUST COMPANY,
                            AS TRUSTEE





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



                   FIRST Supplement to Indenture

      This First Supplement to Indenture (the "First Supplement")
is dated as of June 11, 2004 by and among Navistar Financial
Corporation, a Delaware corporation (the "Company"), Navistar
International Corporation, a Delaware corporation ("Navistar"),
and BNY Midwest Trust Company, an Illinois banking corporation
(the "Trustee"), with respect to the Company's 4.75% Subordinated
Exchangeable Notes due 2009 (the "Exchangeable Notes").
Capitalized terms used but not otherwise defined in this First
Supplement shall have the meanings ascribed to such terms in the
Indenture (hereinafter defined).  To the extent terms defined
herein differ from the Indenture, the terms defined herein shall
govern.

      WHEREAS, the Company, Navistar and the Trustee entered into
that certain Indenture, dated as of March 25, 2002 (as may be
further amended and supplemented from time to time in accordance
with its terms, the "Indenture");

      WHEREAS, Article 13 of the Indenture provides that Navistar
may, at its option, assume the obligations of Company under the
Exchangeable Notes and the Indenture provided that the conditions
outlined in such Section 13.1 of the Indenture are satisfied;

      WHEREAS, Navistar desires to assume the obligations of the
Company under the Exchangeable Notes and the Indenture in
accordance with Article 13 of the Indenture;

      WHEREAS, the conditions set forth in the Indenture for the
execution and delivery of this First Supplement have been
complied with or satisfied;

      WHEREAS, all things necessary to make this First Supplement
a valid agreement of the Company, Navistar and the Trustee, in
accordance with its terms, and a valid supplement to the
Indenture, have been done; and

      NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby
agree, for the equal and proportionate benefit of all holders of
the Exchangeable Notes, as follows:

                             ARTICLE I
                     ASSUMPTION OF OBLIGATIONS

      Section 1.1    Assumption of Obligations.  In accordance
with and pursuant to Section 13.1 of the Indenture, Navistar
hereby assumes the obligations of the Company under the
Exchangeable Notes and the Indenture and the performance of each
of the Company's covenants under the Exchangeable Notes and the
Indenture except as provided in Section 13.1 of the Indenture.

      Section 1.2    Effects of Assumption.  Upon the assumption
provided by Section 1.1 of this First Supplement, the
Exchangeable Notes will be general unsecured obligations of
Navistar and will be subordinated in right of payment to all of
Navistar's existing and future senior indebtedness, and Navistar
will succeed to, and be substituted for the Company, and may
exercise the Company's right and power, under the Indenture with
the same effect as if Navistar had been named as the Company in
the Indenture and all references in the Indenture to the Company
shall be to Navistar, except that (1) clauses (1)(b), (2)(b) and
(3)(b) in the definition of Change of Control shall not apply to
Navistar as successor and (2) Navistar, as successor, shall be
permitted to effect a Permitted Joint Venture notwithstanding the
prohibition on the Company from selling, assigning, transferring,
leasing, conveying or otherwise disposing of all or substantially
all of its assets.

      Section 1.3    Release of the Company.  Upon the assumption
provided by Section 1.1 of this First Supplement, the Company
will be relieved of all further obligations and covenants under
the Exchangeable Notes and the Indenture.

                            ARTICLE II
                     MISCELLANEOUS PROVISIONS

      Section 2.1    Instruments to be Read Together.  This First
Supplement is an indenture supplement to and in implementation of
the Indenture, and said Indenture and this First Supplement shall
henceforth be read together.

      Section 2.2    Confirmation.  The Indenture, as amended and
supplemented by this First Supplement, is in all respects
ratified and confirmed, and nothing herein shall affect the
validity or enforceability of the Indenture as amended and
supplemented by this First Supplement.

      Section 2.3    Counterparts.  This First Supplement may be
executed in any number of counterparts, each of which, when so
executed, shall be deemed to be an original, but all of which
shall together constitute one and the same instrument.

      Section 2.4    Effectiveness.  This First Supplement shall
become effective immediately upon its execution by the parties
hereto.

      Section 2.5    GOVERNING LAW.  THIS FIRST SUPPLEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK.  THE COMPANY AND NAVISTAR AGREE TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK, COUNTY OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS FIRST SUPPLEMENT.

      Section 2.6    Disclaimer of Trustee's Responsibility.  In
executing this First Supplement, the Trustee shall be entitled to
all the privileged and immunities afforded to the Trustee under
the terms and conditions of the Indenture.

      Section 2.7    No Recourse Against Others.  No director,
officer, employee, shareholder or Affiliate, as such, of the
Company or Navistar from time to time shall have any liability
for any obligations of the Company or Navistar under this First
Supplement or for any claim based on, in respect of, or by reason
of such obligations or their creation.  Each of such directors,
officers, employees, shareholders and Affiliates is a third party
beneficiary of this Section 2.7.

      Section 2.8    No Adverse Interpretation of Other
Agreements.  This First Supplement may not be used to interpret
another indenture, loan or debt agreement of the Company or
Navistar or any of their respective subsidiaries.  Any such other
indenture, loan or debt agreement may not be used to interpret
this First Supplement.

      Section 2.9    Successors.  All agreements of the Company
and Navistar in this First Supplement shall bind their respective
successors.  All agreements of the Trustee in this First
Supplement shall bind its successor.

      Section 2.10   Severability.  In case any provision in this
First Supplement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.

 

Section 2.11 TIA Controls. If any provisions hereof limits, qualifies or conflicts with a required or deemed provision of the TIA, the required or deemed provision in the TIA shall control. IN WITNESS WHEREOF, the parties hereto have caused this First Supplement to be duly executed as of the date first above written. NAVISTAR FINANCIAL CORPORATION By: /s/ ANDREW J. CEDEROTH Name: Andrew J. Cederoth Title: Vice President and Treasurer NAVISTAR INTERNATIONAL CORPORATION By: /s/ TERRY M. ENDSLEY Name: Terry M. Endsley Title: Vice President and Treasurer BNY MIDWEST TRUST COMPANY By: /s/ Dan Donovan Name: D.G. Donovan itle: Vice President
 
 
 
                                                         Exhibit 10

 NAVISTAR FINANCIAL CORPORATION
                         AND SUBSIDIARY


                        MATERIAL CONTRACTS

The following documents of Navistar Financial Corporation are
incorporated herein by reference:


10.1    Master Inter-company  Agreement dated as of April 26, 1993,
        between the  Corporation and  International.  Filed on Form
        8-K dated April 30, 1993.  Commission File No.  001-04146.

10.2    Inter-company  Purchase  Agreement  dated as of  April  26,
        1993,  between the Corporation and Truck Retail  Instalment
        Paper  Corp.  Filed  on Form  8-K  dated  April  30,  1993.
        Commission File No.  001-04146.

10.3    Pooling and Servicing  Agreement  dated as of June 8, 1995,
        among the  Corporation,  as  Servicer,  Navistar  Financial
        Securities  Corporation,  as  Seller,  The Chase  Manhattan


        Bank, as 1990 Trust  Trustee,  and The Bank of New York, as
        Master  Trust  Trustee.  Filed as Exhibit  4.1 to  Navistar
        Financial   Securities   Corporation's   Form   8-K   dated
        December 12, 2003.  Commission  File No. 033-87374.

 

10.4 Series 1995-1 Supplement to the Pooling and Servicing Agreement dated as of June 8, 1995, among the Corporation, as Servicer, Navistar Financial Securities Corporation, as Seller, and The Bank of New York, as Master Trust Trustee on behalf of the Series 1995-1 Certificate holders. Filed as Exhibit 4.1 to Navistar Financial Securities Corporation's Form 8-K dated December 4, 2003. Commission File No. 033-87374. 10.5 Series 1998-1 Supplement to the Pooling and Servicing Agreement dated as of July 17, 1998, among the Corporation, as Servicer, Navistar Financial Securities Corporation, as Seller, and the Bank of New York, as Master Trust Trustee on behalf of the Series 1998-1 Certificateholders. Filed as Exhibit 4.1 to Navistar Financial Securities Corporation's Form 8-K dated December 4, 2003. Commission File No. 033-87374. 10.6 Certificate Purchase Agreement dated as of January 28, 2000, between Navistar Financial Securities Corporation, as seller, the Corporation, as Servicer, Receivable Capital Corporation, as the Conduit Purchaser, Bank of America, National Association, as administrative Agent for the Purchasers, and Bank of America, National Association, as a Committed Purchaser. Filed as Exhibit 1.1 on Form 8-K dated February 24, 2000. Commission File No. 033-87374.  
10.7 Fourth Amendment to the Pooling and Servicing Agreement dated as of June 2, 2000, among the Corporation, as Servicer, Navistar Financial Securities Corporation, as Seller, The Chase Manhattan Bank, as 1990 Trust Trustee, and The Bank of New York, as Master Trust Trustee. Filed as Exhibit 4.7 to Navistar Financial Securities Corporation's Form S-3/A dated June 12, 2000. Commission File No. 333-32960. 10.8 Fifth Amendment to the Pooling and Servicing Agreement dated as of July 13, 2000, among the Corporation, as Servicer, Navistar Financial Securities Corporation, as Seller, The Chase Manhattan Bank, as 1990 Trust Trustee, and The Bank of New York, as Master Trust Trustee. Filed as Exhibit 4.2 to Navistar Financial Dealer Note Master Trust's Form 8-K dated July 14, 2000. Commission File No. 033-36767-03. 10.9 Series 2000-1 Supplement to the Pooling and Servicing Agreement dated as of July 13, 2000, among Navistar Financial Corporation, as Servicer, Navistar Financial Securities Corporation, as Seller, and the Bank of New York, as Master Trust Trustee on behalf of the Series 2000-1 Certificateholders. Filed as Exhibit 4.1 to Navistar Financial Securities Corporation's Form 8-K dated July 14, 2000. Commission File No. 033-87374. 10.10 Servicing Agreement dated as of October 16, 2000, between the Corporation, as Servicer, and Navistar Leasing Corporation, Harco Leasing Company, Inc., Truck Retail Instalment Paper Corp, The Bank of New York as Collateral Agent, and Bank One National Association, as Portfolio Trustee. Filed as Exhibit 10.01 to the Corporation's Form 10-Q dated March 15, 2001. Commission File No. 001-04146. 10.11 Receivables Purchase Agreement dated as of October 16, 2000, between Truck Retail Instalment Paper Corp. and the Corporation. Filed as Exhibit 10.02 to the Corporation's Form 10-Q dated March 15, 2001. Commission File No. 001-04146.  
10.12 Indenture Agreement dated as of October 16, 2000, between Truck Retail Instalment Paper Corp., as Issuer, and The Bank of New York, as Indenture Trustee. Filed as Exhibit 10.03 to the Corporation's Form 10-Q dated March 15, 2001. Commission File No. 001-04146. 10.13 Series 2000-1 Supplement dated as of October 16, 2000, to the Indenture also dated October 16, 2000 between Truck Retail Instalment Paper Corp., as Issuer, and The Bank of New York, as Indenture Trustee. Filed as Exhibit 10.04 to the Corporation's Form 10-Q dated March 15, 2001. Commission File No. 001-04146. 10.14 Credit Agreement dated as of December 8, 2000, between the Corporation, 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, and the Chase Manhattan Bank, as Administrative Agent, Bank of America, N.A., as Syndication Agent, and the Bank of Nova Scotia, as Documentation Agent, with respect to $820,000,000 Revolving Credit and Competitive Advance Facility. Filed as Exhibit 10.05 to the Corporation's Form 10-Q dated March 15, 2001. Commission File No. 001-04146. 10.15 Security, Pledge and Trust Agreement dated as of June 8, 2001, between the Corporation and Bankers Trust Company, as Trustee, pursuant to the terms of the Credit Agreement. Filed as Exhibit 10.01 to the Corporation's Form 10-K dated December 18, 2003. Commission File No. 001-04146. 10.16 Purchase Agreement dated as of April 27, 2001, between the Corporation and Navistar Financial Retail Receivables Corporation, as Purchaser, with respect to Navistar Financial 2001-A Owner Trust, as Issuer. Filed as Exhibit  
99.1 to Navistar Financial Retail Receivables Corporation's Form 8-K dated May 3, 2001. Commission File No. 033-50291. 10.17 Pooling and Servicing Agreement dated as of April 27, 2001, among the Corporation, as Servicer, and Navistar Financial Retail Receivables Corporation, as Seller, and Navistar Financial 2001-A Owner Trust, as Issuer. Filed as Exhibit 4.1 to Navistar Financial Retail Receivables Corporation's Form 8-K dated May 3, 2001. Commission File No. 033-50291. 10.18 Trust Agreement dated as of April 27, 2001, between Navistar Financial Retail Receivables Corporation, as Seller, and Chase Manhattan Bank USA, National Association, as Owner Trustee, with respect to Navistar  
Financial 2001-A Owner Trust. Filed as Exhibit 4.3 to Navistar Financial Retail Receivables Corporation's Form 8-K dated May 3, 2001. Commission File No. 033-50291. 10.19 Indenture dated as of April 27, 2001, between Navistar Financial 2001-A Owner Trust and The Bank of New York, as Indenture Trustee, with respect to Navistar Financial 2001-A Owner Trust. Filed as Exhibit 4.2 to Navistar Financial Retail Receivables Corporation's Form 8-K dated May 3, 2001. Commission File No. 033-50291. 10.20 Supplement No. 1, dated as of July 24, 2001, to Indenture agreement dated October 16, 2000, among Truck Retail Instalment Paper Corp. and The Bank of New York, to amend the Indenture to (i) revise the definition of "Series 2000-1 Loss Reserve Specified Balance", and (ii) revise the Amortization Events filed on Form 8-K dated August 6, 2001. Filed on Form 8-K dated August 6, 2001. Commission File No. 001-04146. 10.21 Purchase Agreement dated as of November 1, 2001, between the Corporation and Navistar Financial Retail Receivables Corporation, as Purchaser, with respect to Navistar Financial 2001-B Owner Trust, as Issuer. Filed as Exhibit 99.1 to Navistar Financial Retail Receivables Corporation's Form 8-K dated November 6, 2001. Commission File No. 033-50291. 10.22 Pooling and Servicing Agreement dated as of November 1, 2001, among the Corporation, as Servicer, and Navistar Financial Retail Receivables Corporation, as Seller, and Navistar Financial 2001-B Owner Trust, as Issuer. Filed as Exhibit 4.1 to Navistar Financial Retail Receivables Corporation's Form 8-K dated November 6, 2001. Commission File No. 033-50291. 10.23 Trust Agreement dated as of November 1, 2001, between Navistar Financial Retail Receivables Corporation, as Seller, and Chase Manhattan Bank USA, National Association, as Owner Trustee, with respect to Navistar Financial 2001-B Owner Trust. Filed as Exhibit 4.3 to Navistar Financial Retail Receivables Corporation's Form 8-K dated November 6, 2001. Commission File No. 033-50291.  
10.24 Indenture dated as of November 1, 2001, between Navistar Financial 2001-B Owner Trust and The Bank of New York, as Indenture Trustee, with respect to Navistar Financial 2001-B Owner Trust. Filed as Exhibit 4.2 to Navistar Financial Retail Receivables Corporation's Form 8-K dated November 6, 2001. Commission File No. 033-50291. 10.25 Purchase Agreement dated as of April 30, 2002, between the Corporation and Navistar Financial Retail Receivables Corporation, as Purchaser, with respect to Navistar Financial 2002-A Owner Trust, as Issuer. Filed as Exhibit  
99.1 to Navistar Financial Retail Receivables Corporation's Form 8-K dated May 3, 2002. Commission File No. 033-50291. 10.26 Pooling and Servicing Agreement dated as of April 30, 2002, among the Corporation, as Servicer, and Navistar Financial Retail Receivables Corporation, as Seller, and Navistar Financial 2002-A Owner Trust, as Issuer. Filed as Exhibit 4.1 to Navistar Financial Retail Receivables Corporation's Form 8-K dated May 3, 2002. Commission File No. 033-50291. 10.27 Trust Agreement dated as of April 30, 2002, between Navistar Financial Retail Receivables Corporation, as Seller, and Chase Manhattan Bank USA, National Association, as Owner Trustee, with respect to Navistar  
Financial 2002-A Owner Trust. Filed as Exhibit 4.3 to Navistar Financial Retail Receivables Corporation's Form 8-K dated May 3, 2002. Commission File No. 033-50291. 10.28 Indenture dated as of April 30, 2002, between Navistar Financial 2002-A Owner Trust and The Bank of New York, as Indenture Trustee, with respect to Navistar Financial 2002-A Owner Trust. Filed as Exhibit 4.2 to Navistar Financial Retail Receivables Corporation's Form 8-K dated May 3, 2002. Commission File No. 033-50291. 10.29 Supplement No. 2, dated as of July 31, 2002, to Indenture agreement dated October 16, 2000, among Truck Retail Instalment Paper Corp. and The Bank of New York, to amend the Indenture to (i) revise the definition of "Series 2000-1 Loss Reserve Specified Balance," and (ii) revise the definition of "Reserve Account Trigger Event." Filed on Form 8-K dated November 27, 2002. Commission File No. 001-04146. 10.30 Purchase Agreement dated as of November 19, 2002, between the Corporation and Navistar Financial Retail Receivables Corporation, as Purchaser, with respect to Navistar Financial 2002-B Owner Trust, as Issuer. Filed as Exhibit 99.1 to Navistar Financial Retail Receivables Corporation's Form 8-K dated November 25, 2002. Commission File No. 033-50291. 10.31 Pooling Agreement dated as of November 19, 2002, among the Corporation, as Servicer, and Navistar Financial Retail Receivables Corporation, as Seller, and Navistar Financial 2002-B Owner Trust, as Issuer. Filed as Exhibit 4.1 to Navistar Financial Retail Receivables Corporation's Form 8-K dated November 25, 2002. Commission File No. 033-50291. 10.32 Servicing Agreement dated as of November 19, 2002, among the Corporation, as Servicer, and Navistar Financial Retail Receivables Corporation, as Seller, and Navistar Financial 2002-B Owner Trust, as Issuer. Filed as Exhibit 99.3 to Navistar Financial Retail Receivables Corporation's Form 8-K dated November 25, 2002. Commission File No. 033-50291. 10.33 Trust Agreement dated as of November 19, 2002, between Navistar Financial Retail Receivables Corporation, as Seller, and Chase Manhattan Bank USA, National Association, as Owner Trustee, with respect to Navistar Financial 2002-B Owner Trust. Filed as Exhibit 4.3 to Navistar Financial Retail Receivables Corporation's Form 8-K dated November 25, 2002. Commission File No. 033-50291.  
10.34 Indenture dated as of November 19, 2002, between Navistar Financial 2002-B Owner Trust and The Bank of New York, as Indenture Trustee, with respect to Navistar Financial 2002-B Owner Trust. Filed as Exhibit 4.2 to Navistar Financial Retail Receivables Corporation's Form 8-K dated November 25, 2002. Commission File No. 033-50291. 10.35 Purchase Agreement dated as of June 5, 2003, between the Corporation and Navistar Financial Retail Receivables Corporation, as Purchaser, with respect to Navistar Financial 2003-A Owner Trust, as Issuer. Filed as Exhibit  
99.1 to Navistar Financial Retail Receivables Corporation's Form 8-K dated June 11, 2003. Commission File No. 033-50291. 10.36 Pooling Agreement dated as of June 5, 2003, among the Corporation, as Servicer, and Navistar Financial Retail Receivables Corporation, as Seller, and Navistar Financial 2003-A Owner Trust, as Issuer. Filed as Exhibit 4.1 to Navistar Financial Retail Receivables Corporation's Form 8-K dated June 11, 2003. Commission File No. 033-50291. 10.37 Servicing Agreement dated as of June 5, 2003, among the Corporation, as Servicer, and Navistar Financial Retail Receivables Corporation, as Seller, and Navistar Financial 2003-A Owner Trust, as Issuer. Filed as Exhibit 99.3 to Navistar Financial Retail Receivables Corporation's Form 8-K dated June 11, 2003. Commission File No. 033-50291. 10.38 Trust Agreement dated as of June 5, 2003, between Navistar Financial Retail Receivables Corporation, as Seller, and Chase Manhattan Bank USA, National Association, as Owner Trustee, with respect to Navistar Financial 2003-A Owner Trust. Filed as Exhibit 4.3 to Navistar Financial Retail Receivables Corporation's Form 8-K dated June 11, 2003. Commission File No. 033-50291. 10.39 Indenture dated as of June 5, 2003, between Navistar Financial 2003-A Owner Trust and The Bank of New York, as Indenture Trustee, with respect to Navistar Financial 2003-A Owner Trust. Filed as Exhibit 4.2 to Navistar Financial Retail Receivables Corporation's Form 8-K dated June 11, 2003. Commission File No. 033-50291. 10.40 Series 2003-1 Supplement to the Pooling and Servicing Agreement, dated as of July 13, 2003, among the Corporation, as Servicer, Navistar Financial Securities Corporation, as Seller, and the Bank of New York, as Master Trust Trustee on behalf of the Series 2003-1 Certificateholders. Filed as Exhibit 4.1 to Navistar Financial Securities Corporation's Form 8-K dated July 11, 2003. Commission File No. 033-87374. 10.41 Purchase Agreement dated as of October 31, 2003, between the Corporation and Navistar Financial Retail Receivables Corporation, as Purchaser, with respect to Navistar Financial 2003-B Owner Trust, as Issuer. Filed as Exhibit 99.1 to Navistar Financial Retail Receivables Corporation's Form 8-K dated November 5, 2003. Commission File No. 033-50291. 10.42 Pooling Agreement dated as of October 31, 2003, among the Corporation, as Servicer, and Navistar Financial Retail Receivables Corporation, as Seller, and Navistar Financial 2003-B Owner Trust, as Issuer. Filed as Exhibit 4.1 to Navistar Financial Retail Receivables Corporation's Form 8-K dated November 5, 2003. Commission File No. 033-50291. 10.43 Servicing Agreement dated as of October 31, 2003, among the Corporation, as Servicer, and Navistar Financial Retail Receivables Corporation, as Seller, and Navistar Financial 2003-B Owner Trust, as Issuer. Filed as Exhibit 99.3 to Navistar Financial Retail Receivables Corporation's Form 8-K dated November 5, 2003. Commission File No. 033-50291. 10.44 Trust Agreement dated as of October 31, 2003, between Navistar Financial Retail Receivables Corporation, as Seller, and Chase Manhattan Bank USA, National Association, as Owner Trustee, with respect to Navistar  
Financial 2003-B Owner Trust. Filed as Exhibit 4.3 to Navistar Financial Retail Receivables Corporation's Form 8-K dated November 5, 2003. Commission File No. 033-50291. 10.45 Indenture dated as of October 31, 2003, between Navistar Financial 2003-B Owner Trust and The Bank of New York, as Indenture Trustee, with respect to Navistar Financial 2003-B Owner Trust. Filed as Exhibit 4.2 to Navistar Financial Retail Receivables Corporation's Form 8-K dated November 5, 2003. Commission File No. 033-50291. 10.46 Sixth Amendment to the Pooling and Servicing Agreement dated as of October 31, 2003, among the Corporation, as Servicer, Navistar Financial Securities Corporation, as Seller, The Chase Manhattan Bank, as 1990 Trust Trustee, and The Bank of New York, as Master Trust Trustee. Filed as Exhibit 4.7 to Navistar Financial Dealer Note Master Owner Trust's Form S-3/A dated December 23, 2003. Commission File No. 333-104639-01. 10.47 Fourth Amendment to the Master Inter-company Agreement dated as of April 26, 1993, between the Corporation and International. Filed as Exhibit 3.1 to the Corporation's Form 10-Q dated March 8, 2004. Commission File No. 001-04146.  
10.48 First Amendment to the Credit Agreement dated as of December 8, 2000, between the Corporation, 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, and the Chase Manhattan Bank, as Administrative Agent, Bank of America, N.A., as Syndication Agent, and the Bank of Nova Scotia, as Documentation Agent, with respect to $820,000,000 Revolving Credit and Competitive Advance Facility. Filed as Exhibit 3.2 to the Corporation's Form 10-Q dated March 8, 2004. Commission File No. 001-04146. 10.49 Purchase Agreement dated as of April 1, 2004, between the Corporation and Navistar Financial Retail Receivables Corporation, as Purchaser, with respect to Navistar Financial 2004-A Owner Trust, as Issuer. Filed as Exhibit 99.1 to Navistar Financial Retail Receivables Corporation  
Owner Trust 2004-A's Form 8-K dated April 5, 2004. Commission File No. 333-67112-01. 10.50 Pooling Agreement dated as of April 1, 2004, among the Corporation, as Servicer, and Navistar Financial Retail Receivables Corporation, as Seller, and Navistar Financial 2004-A Owner Trust, as Issuer. Filed as Exhibit 4.1 to Navistar Financial Retail Receivables Corporation Owner Trust 2004-A's Form 8-K dated April 5, 2004. Commission File No. 333-67112-01. 10.51 Servicing Agreement dated as of April 1, 2004, among the Corporation, as Servicer, and Navistar Financial Retail Receivables Corporation, as Seller, and Navistar Financial 2004-A Owner Trust, as Issuer. Filed as Exhibit 99.3 to Navistar Financial Retail Receivables Corporation Owner Trust 2004-A's Form 8-K dated April 5, 2004. Commission File No. 333-67112-01. 10.52 Trust Agreement dated as of April 1, 2004, between Navistar Financial Retail Receivables Corporation, as Seller, and Chase Manhattan Bank USA, National Association, as Owner Trustee, with respect to Navistar  
Financial 2004-A Owner Trust. Filed as Exhibit 4.3 to Navistar Financial Retail Receivables Corporation Owner Trust 2004-A's Form 8-K dated April 5, 2004. Commission File No. 333-67112-01. 10.53 Indenture dated as of April 1, 2004, between Navistar Financial 2004-A Owner Trust and The Bank of New York, as Indenture Trustee, with respect to Navistar Financial 2004-A Owner Trust. Filed as Exhibit 4.2 to Navistar Financial Retail Receivables Corporation Owner Trust 2004-A's Form 8-K dated April 5, 2004. Commission File No. 333-67112-01. 10.54 First Amendment to the Certificate Purchase Agreement dated as of January 28, 2000, between Navistar Financial Securities Corporation, as seller, the Corporation, as Servicer, Receivable Capital Corporation, as the Conduit Purchaser, Bank of America, National Association, as administrative Agent for the Purchasers, and Bank of America, National Association, as a Committed Purchaser. Filed as Exhibit 99 on Form 10-Q dated June 9, 2004. Commission File No. 001-04146. 10.55 Indenture, dated as of June 10, 2004, between Navistar Financial Dealer Note Master Owner Trust, as Issuer, and The Bank of New York, as Indenture Trustee. Filed as Exhibit 4.2 to Navistar Financial Dealer Note Master Owner Trust's Form 8-K dated June 14, 2004. Commission File No. 333-104639-01. 10.56 Master Owner Trust Agreement dated as of June 10, 2004, between Navistar Financial Dealer Note Master Owner Trust, as Issuer, and The Bank of New York, as Indenture Trustee. Filed as Exhibit 4.11 to Navistar Financial Dealer Note Master Owner Trust's Form 8-K dated June 14, 2004. Commission File No. 333-104639-01. 10.57 Series 2004-1 Indenture Supplement dated as of June 10, 2004, between Navistar Financial Dealer Note Master Owner Trust, as Issuer, and The Bank of New York, as Indenture Trustee. Filed as Exhibit 4.3 to Navistar Financial Dealer Note Master Owner Trust's Form 8-K dated June 14, 2004. Commission File No. 333-104639-01. 10.58 Series 2004-1 Supplement to the Pooling and Servicing Agreement, dated as of June 10, 2004, among the Corporation, as Servicer, Navistar Financial Securities Corporation, as Seller, and the Bank of New York, as Master Trust Trustee on behalf of the Series 2004-1 Certificateholders. Filed as Exhibit 4.1 to Navistar Financial Dealer Note Master Owner Trust's Form 8-K dated June 14, 2004. Commission File No. 333-104639-01. 10.59 Seventh Amendment to the Pooling and Servicing Agreement dated as of June 10, 2004, among the Corporation, as Servicer, Navistar Financial Securities Corporation, as Seller, The Chase Manhattan Bank, as 1990 Trust Trustee, and The Bank of New York, as Master Trust Trustee. Filed as Exhibit 4.6 to Navistar Financial Dealer Note Master Owner Trust's Form 8-K dated June 14, 2004. Commission File No. 333-104639-01. The following documents of The Corporation are filed herewith:  
10.60 First Amendment to the Master Inter-company Agreement dated as of September 30, 1996, between the Corporation and International. 10.61 Second Amendment to the Master Inter-company Agreement dated as of August 16, 2000, between the Corporation and International. 10.62 Third Amendment to the Master Inter-company Agreement dated as of March 2002, between the Corporation and International. 10.63 Indenture, dated as of November 21, 2000, between Truck Engine Receivables Master Trust and The Bank of New York, as Indenture Trustee. 10.64 Trust Agreement dated as of November 21, 2000 between Truck Engine Receivables Financing Co., as Transferor, and Chase Manhattan Bank USA, National Association, as Owner Trustee. 10.65 Trust Sale and Servicing Agreement dated as of November 21, 2000, among the Corporation, as Servicer, Truck Engine Receivables Financing Co., as Seller, and Truck Engine Receivables Master Trust, as Trust. 10.66 Series 2000-1 Purchase Agreement dated as of November 15, 2000, among Truck Engine Receivables Financing Co., as Seller, the Corporation, as Servicer, and The Bank of New York, as Indenture Trustee. 10.67 Series 2000-1 Indenture Supplement dated as of November 21, 2000, among Truck Engine Receivables Financing Co., as Issuer, and The Bank of New York, as Indenture Trustee. 10.68 Receivables Sale Agreement dated as of July 30, 2004, between Navistar Financial Retail Receivables Corporation, as Purchaser, the Corporation, as Seller. 10.69 Receivables Purchase Agreement dated as of July 30, 2004, between Navistar Financial Retail Receivables Corporation, as Seller, the Corporation, as Servicer, and Royal Bank of Canada, as Agent.
 
 
                                                               EXHIBIT 10.60

                                AMENDMENT NO. 1

                       TO MASTER INTERCOMPANY AGREEMENT

      This is Amendment No. 1 to the Master Intercompany  Agreement dated as of
April 26, 1993 by and between Navistar  International  Transportation Corp. and
Navistar Financial Corporation (the "Agreement").

      WHEREAS,  the parties to the  Agreement  desire to amend the Agreement to
achieve the following three objectives:

1.    To remove certain archaic language from the Agreement which language had
      been required to be carried over from preceding agreements under
      covenants contained in certain NFC indentures relating to publicly
      issued debt which debt has now been repaid and which indentures are no
      longer operative;

2.    To amend the definition of Retail Account to clarify that sales to TEM's
      of NITC New Products are included.

3.    To amend certain definitions to clarify that NFC's retail leasing
      operations through Harco Leasing have been and shall continue to be
      subject to the same NITC repurchase and guarantee provisions under the
      Agreement as are provided to NFC with regard to its retail financing
      business; and

4.    To document  the  procedures  by which Harco  Leasing's  and NFC's retail
      leasing  operations  have been and shall  continue to have the benefit of
      NITC's residual value guarantees.

      NOW  THEREFORE  for good  and  valuable  consideration  the  receipt  and
adequacy of which is hereby  acknowledged  by the parties  hereto,  the parties
agree as follows:

A.    In  order  to  remove  references  to  "Trust  Recipient  Interests"  and
           "Harvester"  paragraph  II.A.1.  is  deleted  in  its  entirety  and
           replaced with the following:

           "A.  Sale and Purchase of Contracts

1.    On each  Business  day NITC agrees to offer to sell to NFC, to endorse or
                     otherwise assign to NFC, without recourse,  and to deliver
                     to  NFC  all  Retail  Contracts  and  Wholesale  Contracts
                     acquired in the  regular  course of NITC's  business,  and
                     existing  on  April  26,  1993 or  coming  into  existence
                     thereafter  all on terms which will (together with charges
                     made to others for financing  services) afford  reasonable
                     compensation  for the financing  services  rendered by NFC
                     to  NITC  and  Dealers  in  respect  of  the  sale  of New
                     International  Products,  New Goods or Used Goods.  NFC in
                     turn  agrees,  to the  extent  that it is able to  finance
                     such  purchases,  to purchase  such Retail  Contracts  and
                     Wholesale  Contracts except those, if any, as to which the
                     risk of loss is unacceptable to NFC."

           B.   The words "and Trust Receipt Interests" are deleted from
                Paragraph II.A.2.

           C.   Page 14 of the Agreement is replaced by Exhibit "A", attached
                hereto and made a part hereof.

           D.   The definition of Retail Account is amended by adding the
                words "and to TEM's" after the word "customers" in line 4.

E.    The definition of Dealer Repossession Loss is amended to add the words:
                "or unrecovered Equipment costs (Harco Leasing)" after Retail
                Contracts in the fourth line.

F.    The definition of NITC Repossession Loss is amended to add the words:
                "or unrecovered Equipment cost (Harco Leasing)" after Retail
                Contracts in the third line.

G.    Article V is deleted in its entirety.

           H.   A new section is added at the end of the Agreement as follows:


                "XI. Residual Guarantee

                     Whenever NITC shall offer a residual guarantee to a Harco
                     Leasing customer in order to fix the value of Equipment
                     at the end of a Harco Leasing lease term (a "NITC
                     Residual Guarantee") NFC shall document such Residual
                     Guarantee in writing to NITC and NITC shall pay such
                     Residual Guarantee to NFC or Harco Leasing at the end of
                     the Harco Leasing lease term on the next Business Day
                     following the delivery of the related Equipment (with
                     properly assigned title)  to NITC."



           This Amendment No. 1 is effective as of September 30, 1996.

                               NAVISTAR INTERNATIONAL
                               TRANSPORTATION CORP.


                               _____________________________
                               By:

                               Title:




                               NAVISTAR FINANCIAL CORPORATION


                               ________________________________________
                               By:


                               Title:

 
 
                                                      EXHIBIT 10.61

                          AMENDMENT NO. 2
                 TO MASTER INTERCOMPANY AGREEMENT


      THIS  AMENDMENT  NO.  2  (this  "Amendment")  to  the  Master
Intercompany  Agreement  (the  "Agreement")  dated as of April  26,
1993,   and  amended  as  of  September  30,  1996,  by  and  among
International   Truck  and  Engine   Corporation   (f/k/a  Navistar
International   Transportation   Corp.),  a  Delaware   corporation
("International")  and Navistar Financial  Corporation,  a Delaware
corporation  ("NFC") is made and  entered  into as of this 16th day
of August, 2000 by and among International and Navistar Financial.

      WHEREAS,   International   was  formerly  known  as  Navistar
International  Transportation  Corp.  and  was  referred  to in the
Agreement as "NITC",  but  International  now wishes to be referred
to in the Agreement as "International";

      WHEREAS,  NFC desires to securitize  certain Retail  Accounts
which are sold by  International  to NFC pursuant to Article III of
the Agreement; and

      WHEREAS NFC desires to clarify  the terms  through  which the
Retail Accounts are sold to NFC:

      NOW,  THEREFORE,  for good and  valuable  consideration,  the
receipt and sufficiency of which are hereby acknowledged:

      International and NFC hereby agree as follows:

      1.   Defined  Terms.  Capitalized  terms used  herein but not
           otherwise  defined  shall have the meanings set forth in
           the Agreement, as amended by this Amendment.

      2.   Changes to Existing Definitions.

           A.   The term "NITC," wherever used in the Agreement, is
           hereby deleted and replaced with the term "International."

           B.   The definition of "Retail  Account" in Article 1 of
           the  Agreement  shall be amended and restated to read in
           its entirety as follows:

           Retail  Account  means an unsecured  account  receivable
           owing  to  International  arising  out of  sales  of New
           International  Products and Used Goods by  International
           to its national  accounts (fleet) truck retail customers
           and TEMs in the  ordinary  course of its  business,  all
           Related  Security  with  respect  to  each  such  Retail
           Account,  all Collections with respect thereto,  and all
           cash and  non-cash  Proceeds  of the  foregoing.  Retail
           Accounts for  purposes of Article III of this  Agreement
           shall  refer  to  retail   accounts  which  are  now  in
           existence  and which may hereafter  come into  existence
           and  which are to be sold to NFC as  mutually  agreed to
           from time to time between International and NFC.

           C.   The definition of "New International Products"
           shall be amended and restated to read in its entirety
           as follows:

                New International  Products means New International
                Trucks,  engines  (including,  but not  limited to,
                any  engines  sold to  Ford  pursuant  to the  Ford
                Supply Agreements),  and parts manufactured or sold
                by International.

           D.   The definition of "TEM" in Article 1 of the
           Agreement shall be amended to state the following:

                TEM  means (i) Ford,  as  purchaser  under any Ford
                Supply  Agreement,   and  (ii)  a  truck  equipment
                manufacturer    and    its    distributors    which
                incorporate  International's  chassis or components
                into its products,  provided such  manufacturer  or
                distributor  is a  party  to a TEM  agreement  with
                International  under which agreement  International
                agrees   to   provide   chassis   or  other   truck
                components   to   be    incorporated    into   such
                manufacturer's products.

      3.   New Definitions.  Article I of the Agreement shall be
           amended to add the following defined terms:

           Collections  shall  mean,  for any Retail  Account as of
           any date,  (i) the sum of all  amounts,  whether  in the
           form of wire transfer,  cash,  checks,  drafts, or other
           instruments,  received by  International  in payment of,
           or applied  to, any amount owed by an Obligor on account
           of  such   Retail   Account  on  or  before  such  date,
           including,  without limitation,  all amounts received on
           account of such  Retail  Account  and all other fees and
           charges and (ii) cash proceeds of Related  Security with
           respect to such Retail Account.

           Contract   shall   mean  a  binding   contract   between
           International  and an  Obligor  including  any  and  all
           instruments,  agreements,  invoices  or  other  writings
           which gives rise to or  evidences  indebtedness  for the
           purchase  of one or more  New  International  Trucks  or
           Used Goods or related services from  International  (but
           excluding  (i)  any  dealer  note or  other  "floorplan"
           financing   and  (ii)  any   retail   installment   sale
           contract,   retail  note,   lease,   or  other  secured,
           intermediate term indebtedness).

           Ford   means  Ford   Motor   Company   and  any  of  its
           affiliates, as applicable.

           Ford Supply  Agreements means the Next Generation Diesel
           Supply   Agreement   entered   into   between  Ford  and
           International   as  of  October   1,   1987;   the  Next
           Generation  II  Diesel  Supply  Agreement  entered  into
           between Ford and  International  as of October 29, 1997;
           the V6  Diesel  Engine  Supply  Agreement  entered  into
           between  Ford and  International  as of August 1,  1999;
           any  amendments  to the  foregoing  agreements  and  any
           successor agreements.

           Related  Security  shall mean with respect to any Retail
           Account:

(a)   all Contracts with respect to such Retail Account;

(b)   all of International's interest, if any, in the New
                International Trucks and Used Goods;

(c)   all other security interests or liens and property subject
                thereto from time to time, if any, purporting to
                secure payment of such Retail Account, whether
                pursuant to the Contract related to such Retail
                Account or otherwise, together with all financing
                statements signed by an Obligor describing any
                collateral securing such Retail Account;

(d)   all guarantees, indemnities, letters of credit, insurance or
                other agreements or arrangements of any kind from
                time to time supporting or securing payment of
                such Retail Account whether pursuant to the
                Contract related to such Retail Account or
                otherwise;

(e)   all records relating to, and all service contracts and any
                other contracts associated with, the Retail
                Accounts, the Contracts or the Obligors;

(f)   all Proceeds of the foregoing.

           Obligor  shall mean,  for any Retail  Account,  each and
           every   Person   who   purchased   one   or   more   New
           International  Trucks or Used Goods or related  services
           on credit  under a Contract and who is obligated to make
           payments to International pursuant to such Contract.

           Proceeds  shall  mean  "proceeds"  as defined in Section
           9-306(1) of the Uniform  Commercial Code as in effect in
           the State of New York and in the jurisdiction  whose law
           governs the perfection of ownership interests therein.


      4.   Retail Account  Service  Charge.  The description of the
           "Retail Account Service Charge" in Article III.C.  shall
           be amended to state the following:

           International  agrees  to pay  NFC  the  Retail  Account
           Service Charge as provided herein,  which Retail Account
           Service  Charge should not be construed as interest on a
           loan,  but rather as a payment  for  services  rendered.
           The Retail  Account  Service  Charge  shall be accounted
           for  under the  Current  Account  Statement  and paid by
           International  to NFC on each Current Account  Statement
           Date.  The  Retail  Account   Service  Charge  shall  be
           determined  monthly by  multiplying  the Service  Charge
           Rate,  expressed as a monthly rate,  with respect to the
           relevant  Retail  Account   Settlement   Period  by  the
           average  of  the   averages  of  sold  Retail   Accounts
           including   additions   thereto   outstanding   at   the
           beginning  and  at  the  end  of  each  Retail   Account
           Settlement Period during a calendar month.

      5.   Consent to Assignment.   International consents  to  the
           assignment  by NFC of certain  of its rights  under this
           Agreement  and certain  Retail  Accounts and the Related
           Security,  Collections  and Proceeds  pertaining to such
           Retail Accounts  pursuant to a Purchase  Agreement dated
           as of August  16,  2000  between  NFC and  Truck  Retail
           Accounts  Corporation,  as the same may be amended  from
           time to time.

      6.   Effectiveness of  Amendments.  This  Amendment shall  be
           deemed effective on the date hereof. Except as expressly
           set forth above, all terms of the Agreement shall be and
           remain in full  force and  effect  and shall  constitute
           the   legal,   valid   and   binding   and   enforceable
           obligations  of the  parties  hereto.  To the extent any
           terms and conditions in the Agreement  shall  contradict
           or  be  in  conflict   with  any   provisions   of  this
           Amendment,   the  provisions  of  this  Amendment  shall
           govern.

      7.   Governing  law. THIS AMENDMENT AND THE  AGREEMENT  SHALL
           BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, UNLESS
           OTHERWISE  NOTED,  THE LAWS OF THE  STATE  OF  ILLINOIS,
           WITHOUT  REFERENCE  TO ITS  CONFLICT OF LAW  PROVISIONS,
           AND THE OBLIGATIONS,  RIGHTS AND REMEDIES OF THE PARTIES
           HEREUNDER   AND   THEREUNDER   SHALL  BE  DETERMINED  IN
           ACCORDANCE WITH SUCH LAWS.

      8.   Counterparts. This Amendment may be executed in separate
           counterparts each  of which shall be an original and all
           of which taken together shall constitute one and the
           same agreement.

      IN WITNESS WHEREOF, the parties thereto have executed this
      Amendment as of this 16th day of August, 2000.


                     INTERNATIONAL TRUCK AND ENGINE CORPORATION


                     By:  ______________________
                     Title:    ______________________


                     NAVISTAR FINANCIAL CORPORATION


                     By:  ______________________
                     Title:    ______________________

 
 
                                                                  EXHIBIT 10.62

                              AMENDMENT NUMBER 3
                     TO THE MASTER INTERCOMPANY AGREEMENT

      THIS AMENDMENT NUMBER 3 (this "Amendment") to the Master Intercompany
Agreement (the "Agreement") dated as of April 26, 1993, as amended September
20, 1996 and August 16, 2000, between International Truck and Engine
Corporation (f/k/a Navistar International Transportation Corp.), a Delaware
corporation ("International"), and Navistar Financial Corporation, a Delaware
corporation ("NFC"), is made and entered into this ____ day of March 2002
between International and NFC.

      WHEREAS,  in the ordinary course of its business NFC may find it
necessary, desirable or convenient to enter into various transactions to
fund, benefit or otherwise execute its business operations;

      WHEREAS, International desires to facilitate NFC's ability to enter into
such transactions on terms and conditions acceptable to NFC by providing NFC
with credit or other forms of support and assistance, either directly or
through its affiliates, as NFC shall find necessary, desirable or convenient
to accomplish those transactions; and

      WHEREAS, International and NFC desire to amend the Agreement to
establish certain procedures for the provision of such assistance to NFC.

      NOW THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Amendment hereby agree
that the Agreement shall be amended as follows:

1.    Capitalized terms used in this Amendment and not otherwise defined
           herein shall have the meanings set forth for such terms in the
           Agreement.

2.    The Agreement is hereby amended by adding Article XII to the Agreement,
           which Article XII shall read as follows:

           "XII.Provision of Credit and Other Support and Assistance

           From time to time, and at such times as NFC shall find it
           necessary, desirable or convenient, NFC may request International
           to supply NFC, either directly or through one of its affiliates,
           with credit or other support or assistance in connection with any
           financing or other transaction entered into or to be entered into
           by NFC.  The requested credit or other support or assistance may
           included, but shall not be limited to, the provision of capital
           contributions, guarantees, loans, leases, purchase and sale or
           other transactions involving cash, capital stock, warrants,
           options, evidences of indebtedness or other securities, assets or
           property, either tangible or intangible, the provision of
           operational, management, accounting or other services or any
           combination of the foregoing, and may be supplied directly to NFC,
           indirectly to a third party or parties through NFC or directly to
           the third party or parties by the entity supplying such support.
           Neither International nor any of its affiliates shall be under any
           obligation to supply or arrange any requested credit or other
           support or assistance, and the terms and conditions of any such
           credit or other support or assistance shall be mutually agreeable
           to the parties involved; provided, however, that the provision of
           such credit or other support or assistance shall be on commercially
           reasonable terms which shall be no less favorable to NFC than could
           have been obtained on an arm's-length basis from an unrelated third
           party.

3.    This Amendment shall be deemed effective on the date hereof.  Except as
           set forth above, all terms of the Agreement shall be and remain in
           full force and effect and shall constitute the legal, valid and
           binding and enforceable obligations of the parties thereto.  To the
           extent any terms and conditions in the Agreement shall contradict
           or be in conflict with any provisions of this Amendment, the
           provisions of this Amendment shall govern.

4.    THIS AMENDMENT AND THE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
           ACCORDANCE WITH, UNLESS OTHERWISE NOTED, THE LAWS OF THE STATE OF
           ILLINOIS, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
           THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND
           THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

5.    This Amendment may be executed in separate counterparts each of which
           shall be an original and all of which taken together shall
           constitute one and the same agreement.


           [The remainder of this page is intentionally left blank]

                                    * * * *

      IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the ___ day of March 2002.

                     INTERNATIONAL TRUCK AND ENGINE CORPORATION


                     By:  _______________________________

                     Title:    _______________________________


                     NAVISTAR FINANCIAL CORPORATION

                     By:  _______________________________

                     Title:    _______________________________

 
 
                                                      EXHIBIT 10.63






                TRUCK ENGINE RECEIVABLES MASTER TRUST

                  Trade Receivables Backed Notes








                              INDENTURE

                    Dated as of November 21, 2000






                        The Bank of New York

                          Indenture Trustee



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                         TABLE OF CONTENTS
                                                               Page

ARTICLE IDEFINITIONS AND INCORPORATION BY REFERENCE...............2
      SECTION 1.1    Definitions..................................2

ARTICLE IITHE NOTES...............................................2
      SECTION 2.1    Issuance of Notes; Execution, Authentication
                     and Delivery ..............................  2
      SECTION 2.2    Form of Notes and Indenture Trustee's
                     Certificate of Authentication................4
      SECTION 2.3    Temporary Notes..............................5
      SECTION 2.4    Registration; Registration of Transfer and
                     Exchange of Notes............................6
      SECTION 2.5    Mutilated, Destroyed, Lost or Stolen Notes...7
      SECTION 2.6    Persons Deemed Noteholders...................8
      SECTION 2.7    Payment of Principal and Interest............8
      SECTION 2.8    Cancellation of Notes........................9
      SECTION 2.9    Release of Collateral.......................10
      SECTION 2.10   Book-Entry Notes............................10
      SECTION 2.11   Notices to Clearing Agency..................11
      SECTION 2.12   Definitive Notes............................11
      SECTION 2.13   Seller as Noteholder........................11
      SECTION 2.14   Tax Treatment...............................12
      SECTION 2.15   Special Terms Applicable to Subsequent
                     Transfers of Certain Notes..................12
      SECTION 2.16   CUSIP Numbers...............................13

ARTICLE IIICOVENANTS.............................................13
      SECTION 3.1    Payment of Principal and Interest...........13
      SECTION 3.2    Maintenance of Agency Office................13
      SECTION 3.3    Money for Payments To Be Held in Trust......14
      SECTION 3.4    Existence...................................15
      SECTION 3.5    Protection of Collateral; Acknowledgment of
                     Pledge .....................................16
      SECTION 3.6    Opinions as to Collateral...................16
      SECTION 3.7    Performance of Obligations; Servicing of
                     Receivables ................................17
      SECTION 3.8    Negative Covenants..........................18
      SECTION 3.9    Annual Statement as to Compliance...........18
      SECTION 3.10   Consolidation, Merger, etc., of Issuer;
                     Disposition of Collateral...................19
      SECTION 3.11   Successor or Transferee.....................21
      SECTION 3.12   No Other Business...........................21
      SECTION 3.13   No Borrowing................................21
      SECTION 3.14   Guarantees, Loans, Advances and Other
                     Liabilities ................................21
      SECTION 3.15   Servicer's Obligations......................22
      SECTION 3.16   Capital Expenditures........................22
      SECTION 3.17   Removal of Administrator....................22
      SECTION 3.18   Restricted Payments.........................22
      SECTION 3.19   Notice of Events of Default.................23
      SECTION 3.20   Further Instruments and Acts................23
      SECTION 3.21   Indenture Trustee's Assignment of Interests
                     in Certain Receivables......................23
      SECTION 3.22   Representations and Warranties by the Issuer
                     to the Indenture Trustee....................23

ARTICLE IVSATISFACTION AND DISCHARGE.............................24
      SECTION 4.1    Satisfaction and Discharge of Indenture.....24
      SECTION 4.2    Application of Trust Money..................25
      SECTION 4.3    Repayment of Monies Held by Paying Agent....25
      SECTION 4.4    Duration of Position of Indenture Trustee...25

ARTICLE VDEFAULT AND REMEDIES....................................26
      SECTION 5.1    Events of Default...........................26
      SECTION 5.2    Acceleration of Maturity; Rescission and
                     Annulment ..................................27
      SECTION 5.3    Collection of Indebtedness and Suits for
                     Enforcement by Indenture Trustee............28
      SECTION 5.4    Remedies; Priorities........................30
      SECTION 5.5    Optional Preservation of the Collateral.....31
      SECTION 5.6    Limitation of Suits.........................31
      SECTION 5.7    Unconditional Rights of Noteholders To
                     Receive Principal and Interest..............32
      SECTION 5.8    Restoration of Rights and Remedies..........32
      SECTION 5.9    Rights and Remedies Cumulative..............33
      SECTION 5.10   Delay or Omission Not a Waiver..............33
      SECTION 5.11   Control by Noteholders......................33
      SECTION 5.12   Waiver of Past Defaults.....................34
      SECTION 5.13   Undertaking for Costs.......................34
      SECTION 5.14   Waiver of Stay or Extension Laws............35
      SECTION 5.15   Action on Notes.............................35
      SECTION 5.16   Performance and Enforcement of Certain
                     Obligations ................................35
      SECTION 5.17   Early Amortization Events...................36
      SECTION 5.18   Investment Event............................37

ARTICLE VITHE INDENTURE TRUSTEE..................................37
      SECTION 6.1    Duties of Indenture Trustee.................37
      SECTION 6.2    Rights of Indenture Trustee.................38
      SECTION 6.3    Indenture Trustee May Own Notes.............40
      SECTION 6.4    Indenture Trustee's Disclaimer..............40
      SECTION 6.5    Notice of Defaults..........................40
      SECTION 6.6    Reports by Indenture Trustee to Holders.....40
      SECTION 6.7    Compensation; Indemnity.....................40
      SECTION 6.8    Replacement of Indenture Trustee............41
      SECTION 6.9    Merger or Consolidation of Indenture Trustee42
      SECTION 6.10   Appointment of Co-Indenture Trustee or
                     Separate Indenture Trustee..................43
      SECTION 6.11   Eligibility; Disqualification...............44
      SECTION 6.12   Preferential Collection of Claims Against
                     Issuer .....................................44
      SECTION 6.13   Representations and Warranties of Indenture
                     Trustee ....................................44
      SECTION 6.14   Indenture Trustee May Enforce Claims Without
                     Possession of Notes......... ...............45
      SECTION 6.15   Suit for Enforcement........................45
      SECTION 6.16   Rights of Noteholders to Direct Indenture
                     Trustee ....................................46

ARTICLE VIINOTEHOLDERS' LISTS AND REPORTS........................46
      SECTION 7.1    Issuer To Furnish Indenture Trustee Names and
                     Addresses of Noteholders....................46
      SECTION 7.2    Preservation of Information, Communications
                     to Noteholders .............................46
      SECTION 7.3    Issuer Fiscal Year..........................47
      SECTION 7.4    Reports by Indenture Trustee................47

ARTICLE VIIIACCOUNTS, DISBURSEMENTS AND RELEASES.................47
      SECTION 8.1    Collection of Money.........................47
      SECTION 8.2    Trust Accounts and Group Accounts;
                     Allocations; Payments.......................47
      SECTION 8.3    General Provisions Regarding Trust Accounts
                     and Group Accounts..........................50
      SECTION 8.4    Release of Collateral.......................50
      SECTION 8.5    Opinion of Counsel..........................51
      SECTION 8.6    Effect of Group I Final Allocation Date.....51

ARTICLE IXSUPPLEMENTAL INDENTURES................................52
      SECTION 9.1    Supplemental Indentures Without Consent of
                     Noteholders ................................52
      SECTION 9.2    Supplemental Indentures With Consent of
                     Noteholders ................................53
      SECTION 9.3    Execution of Supplemental Indentures........55
      SECTION 9.4    Effect of Supplemental Indenture............55
      SECTION 9.5    Conformity with Trust Indenture Act.........55
      SECTION 9.6    Reference in Notes to Supplemental Indentures55

ARTICLE XREDEMPTION OF NOTES.....................................56
      SECTION 10.1   Redemption..................................56
      SECTION 10.2   Form of Redemption Notice...................56
      SECTION 10.3   Notes Payable on Redemption Date............57

ARTICLE XIMISCELLANEOUS..........................................57
      SECTION 11.1   Compliance Certificates and Opinions, etc...57
      SECTION 11.2   Form of Documents Delivered to Indenture
                     Trustee ....................................59
      SECTION 11.3   Acts of Noteholders.........................60
      SECTION 11.4   Notices, etc., to Indenture Trustee, Issuer
                     and Rating Agencies.........................61
      SECTION 11.5   Notices to Noteholders; Waiver..............61
      SECTION 11.6   Alternate Payment and Notice Provisions.....62
      SECTION 11.7   Effect of Headings and Table of Contents....62
      SECTION 11.8   Successors and Assigns......................62
      SECTION 11.9   Separability................................62
      SECTION 11.10  Benefits of Indenture.......................63
      SECTION 11.11  Legal Holidays..............................63
      SECTION 11.12  GOVERNING LAW...............................63
      SECTION 11.13  Counterparts................................63
      SECTION 11.14  Recording of Indenture......................63
      SECTION 11.15  No Recourse.................................64
      SECTION 11.16  No Petition.................................65
      SECTION 11.17  Inspection..................................65
      SECTION 11.18  No Substantive Review of Compliance Documents65
      SECTION 11.19  Amendment of Basic Documents................65


                               -ii-


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

      Schedule 1     Collection Accounts

           INDENTURE,  dated as of November 21, 2000, between TRUCK
ENGINE  RECEIVABLES  MASTER TRUST,  a Delaware  business trust (the
"Issuer"  or the  "Trust"),  and The Bank of New  York,  a New York
banking  corporation,  as indenture  trustee (as indenture  trustee
and not in its individual capacity, the "Indenture Trustee").

           Each  party  agrees to  follow  for the  benefit  of the
other  party  and  for  the  equal  and  ratable   benefit  of  the
Noteholders:


                           GRANTING CLAUSE

           The  Issuer  hereby  grants  a  security   interest  in,
transfers,  assigns  and  conveys to the  Indenture  Trustee on the
Closing  Date, as trustee for the benefit of the  Noteholders,  all
of the  Issuer's  right,  title and  interest  in, to and under (a)
all Receivables,  all Related  Security with respect  thereto,  all
monies due or to become due thereon and all amounts  received  with
respect thereto and all proceeds thereof  (including  "proceeds" as
defined  in the  UCC)  and  Recoveries;  (b)  the  Trust  Sale  and
Servicing  Agreement  (including the rights of the Seller under the
Receivables  Purchase  Agreement assigned to the Issuer pursuant to
the Trust Sale and  Servicing  Agreement  and  including the rights
of Navistar  Financial  under the Engine  Accounts  Sale  Agreement
assigned  to  the  Seller  pursuant  to  the  Receivables  Purchase
Agreement);  (c) all  Collections;  (d) all funds on deposit in the
Trust  Accounts,  the Group  Accounts,  the Lockbox Account and the
Series   Accounts;   and   (e) any   proceeds   of  the   foregoing
(collectively, the "Collateral").

           The  foregoing  grant  is made in trust  to  secure  the
payment of  principal  of and  interest  on, and any other  amounts
owing in  respect  of,  the  Notes,  equally  and  ratably  without
prejudice,  priority or distinction  (except as otherwise  provided
in any  Series  Supplement  or  supplement  hereto),  and to secure
compliance with the provisions of this  Indenture,  all as provided
in  this   Indenture.   This   Indenture   constitutes  a  security
agreement under the UCC.

           The  foregoing  grant  includes  all rights,  powers and
options (but none of the  obligations,  if any) of the Issuer under
any agreement or instrument  included in the Collateral,  including
the immediate and continuing right to claim for,  collect,  receive
and give receipt for  principal  and  interest  payments in respect
of  the  Receivables  included  in the  Collateral  and  all  other
monies payable under the  Collateral,  to give and receive  notices
and other communications,  to make waivers or other agreements,  to
exercise all rights and options,  to bring  Proceedings in the name
of  the  Issuer  or  otherwise  and  generally  to do  and  receive
anything  that the  Issuer is or may be  entitled  to do or receive
under or with respect to the Collateral.

           The  Indenture  Trustee,  as  trustee  on  behalf of the
Noteholders,  acknowledges  such grant and accepts the trusts under
this   Indenture  in  accordance   with  the   provisions  of  this
Indenture.


ARTICLE 1
             DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1     Definitions.   Capitalized   terms   used  and  not
defined  in this  Indenture  shall  have  the  respective  meanings
assigned  them  in  Part I of  Appendix  A to the  Trust  Sale  and
Servicing  Agreement  dated as of  November  21,  2000 (the "Trust
Sale   and   Servicing   Agreement")   among   Navistar   Financial
Corporation,  the Seller,  and the Trust. All references  herein to
"this  Indenture"  are to  this  Indenture  as it  may be  amended,
supplemented  or  modified  from time to time,  and all  references
herein to  Articles,  Sections,  subsections  and  exhibits  are to
Articles,  Sections,  subsections  and  exhibits of this  Indenture
unless  otherwise  specified.  All terms defined in this  Indenture
shall  have the  defined  meanings  when  used in any  certificate,
notice,  Note or other document made or delivered  pursuant  hereto
unless  otherwise  defined  therein.  The rules of construction set
forth in Part II  of  Appendix A  to the Trust  Sale and  Servicing
Agreement shall be applicable to this Indenture.


ARTICLE 2
                              THE NOTES

SECTION 2.1     Issuance of Notes;  Execution,  Authentication and
                Delivery.

(1)   Notes may be  issued by the  Issuer  upon  execution  of this
Indenture  and  from  time to time  thereafter,  in each  case,  in
accordance   with  the  terms  and  conditions   authorized  by  or
pursuant  to a Series  Supplement.  The  Notes may be issued in one
or more  Series and one or more  Groups.  The  aggregate  principal
amount of the Notes of all  Series  that may be  authenticated  and
delivered and outstanding under this Indenture is not limited.

(2)   The Notes  shall be  executed  on behalf of the Issuer by any
of its Authorized  Officers.  The signature of any such  Authorized
Officer  on the Notes may be manual  or  facsimile.  Notes  bearing
the manual or facsimile  signature of  individuals  who were at any
time  Authorized  Officers  of the Issuer  shall  bind the  Issuer,
notwithstanding  that such  individuals  or any of them have ceased
to hold such office  prior to the  authentication  and  delivery of
such Notes or did not hold such office at the date of such Notes.

(3)   Prior to or  concurrently  with the  delivery  of any Note to
the  Indenture  Trustee  for  authentication,  the  parties  hereto
shall  execute and deliver a Series  Supplement  which will specify
the  principal  terms of such new Series.  The terms of such Series
Supplement may modify or amend the terms of this  Indenture  solely
as applied to such new Series of Notes.

(1)   The Series  Supplement  shall set forth,  in  addition to all
      other requirements of such certificate:

     (1)   the name or designation of the particular Series including
           CUSIP Numbers (which shall  distinguish such Series from
           all other Series);

     (2)   the initial aggregate principal amount of the Series (or
           method for  calculating  its initial  principal  amount)
           which may be  authenticated  and  delivered  under  this
           Indenture (except for Notes  authenticated and delivered
           upon  registration  and transfer of, or in exchange for,
           or in lieu of,  other Notes of such  Series  pursuant to
           this Indenture);

     (3)   the method  for allocating principal and interest to the
           Noteholders;

     (4)   the rate or rates (or the method for determining the rate)
           at which the Notes of such Series  shall bear  interest,
           if any, or the initial  interest rate and the method for
           determining subsequent interest rates;

     (5)   the terms on which the Notes may be exchanged for Notes of
           another  Series,  be  subject  to  repurchase,  optional
           redemption  or mandatory  redemption by the Seller or be
           remarketed by any remarketing agent;

     (6)   the date on which the Notes will begin their accumulation
           period,  amortization  period  or other  period in which
           the Issuer will pay principal on the Notes;

     (7)   the percentage used to calculate monthly Servicing Fees;

     (8)   the  level of  subordination (if  any) provided  by  the
           Certificates;

     (9)   the Stated Final Maturity Date for that Series;

     (10)  whether that Series is part of Group I (and if not,  the
           group designation for such Series); and

     (11)  any other terms permitted by this Indenture.

(2)   The obligation of the Indenture  Trustee to authenticate  the
      Notes of such new  Series  and to  execute  and  deliver  the
      related Series  Supplement is subject to (x)  satisfaction of
      the Rating Agency  Condition  with respect to the issuance of
      such  new  series  and  (y)  the  delivery  to the  Indenture
      Trustee of the following:

     (1)   on or before the tenth Business Day immediately preceding
           the Series  Issuance  Date,  the Seller shall have given
           each Rating  Agency notice of such  issuance,  and on or
           before  the fifth  Business  Day  immediately  preceding
           the Series  Issuance  Date,  the Seller shall have given
           the Indenture Trustee,  the Owner Trustee,  the Servicer
           and each Rating Agency  written  notice of such issuance
           and the Series Issuance Date;

     (2)   a Series Supplement executed  by each party hereto other
           than the Indenture Trustee;

     (3)   an Opinion of Counsel to the effect that, for federal income
           tax  purposes,  (i) the  issuance  of the Notes will not
           adversely  affect the  characterization  of the Notes of
           any  outstanding  Series or class of Notes, as debt, nor
           will  the  issuance   cause  a  taxable  event  for  any
           Noteholder,   (ii) the  new  Series  of  Notes  will  be
           characterized  as debt and  (iii) the  Trust will not be
           an association or publicly  traded  partnership  taxable
           as a corporation; and

     (4)   written confirmation from the applicable Rating Agencies
           that the  issuance  will not result in a  qualification,
           reduction   or   withdrawal   of  the   rating   of  any
           outstanding series or class of Notes.

(4)   Prior to or concurrently  with each new issuance,  the Seller
shall have  represented  and warranted that the issuance shall not,
in  the   reasonable   belief  of  the   Seller,   cause  an  Early
Amortization  Event to occur  for any  outstanding  Series or class
of Notes.

(5)   Upon  execution  and  delivery  of a  Series  Supplement  and
Opinion  of  Counsel  to  the  Indenture  Trustee,   the  Indenture
Trustee  shall  thereupon  authenticate  and  deliver  the  related
Notes to or upon the  written  order of the  Issuer,  signed by any
Authorized Officer.

SECTION 2.2     Form of Notes and Indenture Trustee's  Certificate
of Authentication.

(1)   The Notes  shall be in the forms  provided  from time to time
by or  pursuant  to a  Series  Supplement  in  accordance  with the
terms of this  Indenture  and may have  such  letters,  numbers  or
other marks of  identification  or designation  and such legends or
endorsements  printed,  lithographed  or  engraved  thereon  as the
Issuer may deem  appropriate and as are not  inconsistent  with the
provisions  of this  Indenture,  or as may be  required  to  comply
with any law or with any rule or regulation  made pursuant  thereto
or with any rule or regulation  of any stock  exchange on which the
Notes may be listed or to  conform  to usage.  Any  portion  of the
text of any Note may be set forth on the reverse  thereof,  with an
appropriate  reference  thereto  on  the  face  of  the  Note.  The
Definitive  Notes shall be  typewritten,  printed,  lithographed or
engraved or produced by any  combination  of these methods (with or
without  steel  engraved   borders),   all  as  determined  by  the
Authorized  Officer  executing  such Notes,  as  evidenced  by such
officer's execution of such Notes.


(2)   The Indenture Trustee's  certificate of authentication  shall
be substantially in the following form:

          INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

           This  is one  of the  Notes  designated  above  and
      referred to in the within-mentioned Indenture.

                           The  Bank  of New  York,  not
                           in  its  individual  capacity
                           but   solely   as   Indenture
                           Trustee

                           By: ___________________________________
                           Name:
                           Title:

                           Dated:   ______________________________

(3)   Each  Note  shall  be dated  the date of its  authentication.
Unless otherwise  provided in the related Series  Supplement,  each
Note  shall  be  issuable  as a  registered  Note  in  the  minimum
denomination  of $250,000  and in integral  multiples  of $1,000 in
excess thereof.

SECTION 2.3     Temporary Notes.

(1)   Pending the  preparation of Definitive  Notes,  if any, to be
issued in exchange  for  Book-Entry  Notes the Issuer may  execute,
and upon receipt of an Issuer  Order the  Indenture  Trustee  shall
authenticate  and deliver,  such Temporary Notes which are printed,
lithographed,  typewritten,  mimeographed or otherwise produced, of
the  tenor  of the  Definitive  Notes  in lieu of  which  they  are
issued and with such  variations as are  consistent  with the terms
of  this  Indenture  as  the  officers  executing  such  Notes  may
determine, as evidenced by their execution of such Notes.

(2)   If  Temporary  Notes  are  issued,  the  Issuer  shall  cause
Definitive  Notes  to  be  prepared  without   unreasonable  delay.
After the  preparation  of Definitive  Notes,  the Temporary  Notes
shall be  exchangeable  for Definitive  Notes upon surrender of the
Temporary   Notes  at  the  Agency  Office  of  the  Issuer  to  be
maintained  as  provided  in  Section  3.2,  without  charge to the
Noteholder.  Upon  surrender  for  cancellation  of any one or more
Temporary  Notes,  the  Issuer  shall  execute  and  the  Indenture
Trustee  shall  authenticate  and  deliver in  exchange  therefor a
like   principal   amount  of   Definitive   Notes  of   authorized
denominations.  Until  so  delivered  in  exchange,  the  Temporary
Notes  shall in all  respects  be  entitled  to the  same  benefits
under this Indenture as Definitive Notes.

SECTION 2.4     Registration;   Registration   of  Transfer   and
Exchange of Notes.

(1)   The  Issuer  shall  cause  to  be  kept  the  Note  Register,
comprising  separate  registers for each Series and class of Notes,
in which,  subject  to such  reasonable  regulations  as the Issuer
may  prescribe,  the Issuer shall provide for the  registration  of
the Notes and the  registration  of transfers  and exchanges of the
Notes  (the  "Note   Register").   The   Indenture   Trustee  shall
initially  be the Note  Registrar  for the  purpose of  registering
the Notes and  transfers  of the  Notes as  herein  provided.  Upon
any  resignation of any Note  Registrar,  the Issuer shall promptly
appoint a  successor  Note  Registrar  or, if it elects not to make
such an appointment, assume the duties of the Note Registrar.

(2)   If a Person other than the Indenture  Trustee is appointed by
the Issuer as Note  Registrar,  the Issuer shall give the Indenture
Trustee  prompt  written  notice  of the  appointment  of such Note
Registrar and of the location,  and any change in the location,  of
the Note  Register.  The Indenture  Trustee shall have the right to
inspect  the Note  Register at all  reasonable  times and to obtain
copies  thereof.  The  Indenture  Trustee  shall  have the right to
rely upon a  certificate  executed on behalf of the Note  Registrar
by an Executive  Officer  thereof as to the names and  addresses of
the  Noteholders  and the  principal  amounts  and  number  of such
Notes.

(3)   Upon  surrender for  registration  of transfer of any Note at
the Corporate  Trust Office of the Indenture  Trustee or the Agency
Office of the Issuer (and  following  the  delivery,  in the former
case,  of such Notes to the Issuer by the Indenture  Trustee),  the
Issuer shall  execute,  the Indenture  Trustee  shall  authenticate
and the  Noteholder  shall obtain from the  Indenture  Trustee,  in
the name of the designated  transferee or transferees,  one or more
new Notes of the same Series in any authorized  denominations  of a
like aggregate principal amount.

(4)   At the option of the  Noteholder,  Notes may be exchanged for
other  Notes  of the  same  Series  and  class  in  any  authorized
denominations,   of  a  like  aggregate   principal  amount,   upon
surrender  of such Notes to be  exchanged  at the  Corporate  Trust
Office  of the  Indenture  Trustee  or  the  Agency  Office  of the
Issuer (and  following  the  delivery,  in the former case, of such
Notes to the Issuer by the  Indenture  Trustee),  the Issuer  shall
execute,  and the  Indenture  Trustee  shall  authenticate  and the
Noteholder  shall  obtain from the  Indenture  Trustee,  such Notes
which the Noteholder making the exchange is entitled to receive.

(5)   All  Notes  issued  upon  any  registration  of  transfer  or
exchange  of other  Notes  shall be the  valid  obligations  of the
Issuer,  evidencing  the  same  debt,  and  entitled  to  the  same
benefits under this Indenture,  as the Notes  surrendered upon such
registration of transfer or exchange.

(6)   Every Note  presented  or  surrendered  for  registration  of
transfer or exchange  shall be duly endorsed by, or be  accompanied
by a written  instrument  of transfer  duly executed by, the Holder
thereof or such  Holder's  attorney  duly  authorized  in  writing,
with  such  signature  guaranteed  by a  commercial  bank or  trust
company  located,  or having a correspondent  located,  in the City
of New York or the city in which  the  Corporate  Trust  Office  of
the  Indenture  Trustee  is  located,  or  by a  member  firm  of a
national  securities  exchange,  and such  other  documents  as the
Indenture Trustee may require.

(7)   No  service  charge  shall  be  made  to  a  Holder  for  any
registration  of transfer  or exchange of Notes,  but the Issuer or
Indenture  Trustee  may  require  payment  of a sum  sufficient  to
cover any tax or other  governmental  charge that may be imposed in
connection  with  any  registration  of  transfer  or  exchange  of
Notes,  other than  exchanges  pursuant to Sections  2.3 or 9.6 not
involving any transfer.

(8)   The    preceding    provisions    of   this    Section    2.4
notwithstanding,  the Issuer  shall not be  required to transfer or
make   exchanges,   and  the  Note   Registrar  need  not  register
transfers or  exchanges,  (i) of Notes that have been  selected for
redemption  pursuant  to  Article X, if  applicable;  (ii) of Notes
that are due for  repayment  within  15 days of  submission  to the
Corporate  Trust Office or the Agency Office;  or (iii) if Section
2.15 has not been complied with in connection with such transfer.

(9)   Neither the Indenture  Trustee nor the Note  Registrar  shall
have any  responsibility  to monitor or  restrict  the  transfer of
beneficial   ownership   in  any  Note  an  interest  in  which  is
transferable through the facilities of the Depository.

SECTION 2.5     Mutilated, Destroyed, Lost or Stolen Notes.

(1)   If (i) any  mutilated  Note is  surrendered  to the Indenture
Trustee,   or  the  Indenture  Trustee  receives  evidence  to  its
satisfaction  of the  destruction,  loss or theft of any Note,  and
(ii) there is delivered to the  Indenture  Trustee such security or
indemnity  as may be  required  by it to hold  the  Issuer  and the
Indenture Trustee  harmless,  then, in the absence of notice to the
Issuer,  the Note  Registrar  or the  Indenture  Trustee  that such
Note has been acquired by a bona fide  purchaser,  the Issuer shall
execute  and  upon  the  Issuer's  written  request  the  Indenture
Trustee  shall  authenticate  and  deliver,  in exchange  for or in
lieu of any such  mutilated,  destroyed,  lost or  stolen  Note,  a
replacement   Note  of  a  like  Series  and  class  and  aggregate
principal amount;  provided,  however,  that if any such destroyed,
lost or stolen Note,  but not a mutilated  Note,  shall have become
or within seven days shall be due and  payable,  or shall have been
called for redemption,  instead of issuing a replacement  Note, the
Issuer may make  payment to the Holder of such  destroyed,  lost or
stolen  Note when so due or  payable or upon the  Redemption  Date,
if applicable, without surrender thereof.

(2)   If,  after the delivery of a  replacement  Note or payment in
respect  of  a   destroyed,   lost  or  stolen  Note   pursuant  to
subsection  (a),  a bona fide  purchaser  of the  original  Note in
lieu of  which  such  replacement  Note  was  issued  presents  for
payment such original  Note,  the Issuer and the Indenture  Trustee
shall  be  entitled  to  recover  such  replacement  Note  (or such
payment)  from (i) any  Person to whom it was  delivered,  (ii) the
Person  taking such  replacement  Note from the Person to whom such
replacement  Note was  delivered  or  (iii)  any  assignee  of such
Person,  except  a bona  fide  purchaser,  and the  Issuer  and the
Indenture  Trustee  shall be entitled to recover  upon the security
or indemnity  provided therefor to the extent of any loss,  damage,
cost or expense  incurred  by the Issuer or the  Indenture  Trustee
in connection therewith.

(3)   In  connection  with the  issuance  of any  replacement  Note
under this  Section 2.5,  the Issuer or the  Indenture  Trustee may
require   the  payment  by  the  Holder  of  such  Note  of  a  sum
sufficient to cover any tax or other  governmental  charge that may
be imposed in relation  thereto and any other  reasonable  expenses
(including  all  fees  and  expenses  of  the  Indenture   Trustee)
connected therewith.

(4)   Any  duplicate  Note issued  pursuant to this  Section 2.5 in
replacement  for any  mutilated,  destroyed,  lost or  stolen  Note
shall constitute an original additional  contractual  obligation of
the  Issuer,  whether  or not  the  mutilated,  destroyed,  lost or
stolen  Note  shall  be found  at any  time or be  enforced  by any
Person,  and  shall  be  entitled  to  all  the  benefits  of  this
Indenture  equally  and  proportionately  with  any and  all  other
Notes duly issued hereunder.

(5)   The  provisions  of this Section 2.5 are  exclusive and shall
preclude  (to the extent  lawful)  all other  rights  and  remedies
with  respect  to  the   replacement   or  payment  of   mutilated,
destroyed, lost or stolen Notes.

SECTION 2.6     Persons   Deemed   Noteholders.    Prior   to   due
presentment  for  registration of transfer of any Note, the Issuer,
the  Indenture   Trustee  and  any  agent  of  the  Issuer  or  the
Indenture  Trustee  may treat the  Person in whose name any Note is
registered (as of the day of  determination)  as the Noteholder for
the purpose of  receiving  payments of principal of and interest on
such Note and for all other  purposes  whatsoever,  whether  or not
such  Note be  overdue,  and  neither  the  Issuer,  the  Indenture
Trustee  nor any  agent  of the  Issuer  or the  Indenture  Trustee
shall be affected by notice to the contrary.

SECTION 2.7     Payment of Principal and Interest.

(1)   Interest on each Series of Notes shall  accrue and be payable
as   provided  in  the   applicable   Series   Supplement.   Unless
otherwise  provided  in  the  applicable  Series  Supplement,   any
installment  of  interest  payable on any Note shall be  punctually
paid or duly  provided  for with funds set aside in the  Collection
Account  on or before the  applicable  Payment  Date,  and shall be
paid  to the  Person  in  whose  name  such  Note  (or  one or more
Predecessor  Notes) is  registered on the  applicable  Record Date,
by check  mailed  first-class,  postage  prepaid  to such  Person's
address as it appears on the Note  Register  on such  Record  Date;
provided,   however,   that,  with  respect  to  Book-Entry   Notes
registered  on the  applicable  Record Date in the name of the Note
Depository  for  which   Definitive  Notes  have  not  been  issued
pursuant to Section  2.12,  payment  shall be made by wire transfer
in immediately  available  funds to the account  designated by such
Holder.

(2)   The  principal  of each  Series of Notes  shall be payable as
provided  in  the  applicable  Series  Supplement.   All  principal
payments  on each  Series  of  Notes  shall be made pro rata to the
Noteholders  of  such  Series  entitled  thereto  unless  otherwise
provided  in  the  related  Series  Supplement.   Unless  otherwise
provided in the applicable  Series  Supplement,  any installment of
principal  payable  on any Note  shall be  punctually  paid or duly
provided  for by a deposit  by or at the  direction  of the  Issuer
into the  applicable  Principal  Funding  Account on the applicable
Payment  Date and shall be paid to the  Person  in whose  name such
Note  (or one or  more  Predecessor  Notes)  is  registered  on the
applicable  Record  Date,  by  check  mailed  first-class,  postage
prepaid  to  such  Person's  address  as it  appears  on  the  Note
Register  on  such  Record  Date;  provided,  however,  that,  with
respect to  Book-Entry  Notes  registered on the Record Date in the
name of the Note  Depository  for which  Definitive  Notes have not
been issued  pursuant  to Section  2.12,  payment  shall be made by
wire  transfer  in  immediately  available  funds  to  the  account
designated  by such  Holder,  except for the final  installment  of
principal  on any  such  Note  and  the  Redemption  Price  for any
Notes,  if so  called,  which,  in each  case,  shall be payable as
provided  herein.  The  funds  represented  by any such  checks  in
respect of  interest or  principal  returned  undelivered  shall be
held in accordance with Section 3.3.

(3)   With   respect  to  any  Payment  Date  on  which  the  final
installment  of  principal  and interest on a Series of Notes is to
be paid,  the  Indenture  Trustee  shall notify each  Noteholder of
such  Series of Notes as of the Record Date for such  Payment  Date
of  the  fact  that  the  final  installment  of  principal  of and
interest  on such  Note is to be paid on such  Payment  Date.  With
respect to  Book-Entry  Notes for which  Definitive  Notes have not
been  issued,  such notice  shall be sent on the Business Day prior
to such Payment Date by  facsimile,  and with respect to Definitive
Notes,  such notice shall be sent not later than six Business  Days
after such Record Date in  accordance  with Section  11.5(a),  and,
in each case,  shall specify that such final  installment  shall be
payable  only  upon  presentation  and  surrender  of such Note and
shall  specify  the  place  where  such Note may be  presented  and
surrendered  for  payment  of  such   installment.   The  Indenture
Trustee  shall not be liable for any  failure to provide  notice to
the  Noteholders  as required  pursuant to this  Section  2.7(c) to
the  extent  it has not  received  notice  of such  expected  final
Payment  Date from the  Issuer not later  than five  Business  Days
after the Record Date.  Notices in connection  with  redemptions of
Notes shall be mailed to Noteholders as provided in Section 10.2.

SECTION 2.8     Cancellation  of Notes.  All Notes  surrendered for
payment,  redemption,  exchange or  registration of transfer shall,
if surrendered to any Person other than the Indenture  Trustee,  be
delivered to the Indenture  Trustee and shall be promptly  canceled
by the  Indenture  Trustee.  The Issuer may at any time  deliver to
the  Indenture   Trustee  for  cancellation  any  Notes  previously
authenticated  and  delivered  hereunder  which the Issuer may have
acquired  in any  manner  whatsoever,  and all  Notes so  delivered
shall be  promptly  canceled  by the  Indenture  Trustee.  No Notes
shall be  authenticated  in lieu of or in  exchange  for any  Notes
canceled as  provided  in this  Section  2.8,  except as  expressly
permitted  by this  Indenture.  All  canceled  Notes may be held or
disposed  of by  the  Indenture  Trustee  in  accordance  with  its
standard  retention  or  disposal  policy  as in effect at the time
unless  the  Issuer  shall  direct by an Issuer  Order that they be
returned  to it;  provided,  however,  that  such  Issuer  Order is
timely and the Notes have not been  previously  disposed  of by the
Indenture Trustee.

SECTION 2.9     Release  of  Collateral.   The  Indenture   Trustee
shall  release  property  from  the lien of this  Indenture,  other
than as permitted by Sections  3.21,  8.2, 8.4 and 11.1,  only upon
receipt  of  an  Issuer   Request   accompanied   by  an  Officers'
Certificate and an Opinion of Counsel.

SECTION 2.10    Book-Entry  Notes.  Unless  otherwise  provided  in
the  applicable  Series  Supplement,  each  Series of  Notes,  upon
original  issuance,  shall be issued  in the form of a  typewritten
Note or Notes  representing  the Book-Entry  Notes, to be delivered
to The Depository  Trust Company,  the initial  Clearing  Agency by
or on  behalf  of the  Issuer  and  such  Note or  Notes  shall  be
registered   on  the  Note   Register  in  the  name  of  the  Note
Depository  (initially,  Cede & Co.).  No Note Owner shall  receive
a Definitive Note  representing  such Note Owner's interest in such
Note,  except  as  provided  in  Section  2.12.  Unless  and  until
Definitive  Notes with  respect  to such Notes have been  issued to
such Note Owners  pursuant to Section  2.12,  with  respect to such
Notes:

(1)   the  provisions  of this  Section 2.10 shall be in full force
and effect;

(2)   the  Note  Registrar  and  the  Indenture  Trustee  shall  be
entitled  to deal with the  Clearing  Agency  for all  purposes  of
this   Indenture   (including  the  payment  of  principal  of  and
interest  on  such  Notes  and  the  giving  of   instructions   or
directions  hereunder)  as the sole  Noteholder  and shall  have no
obligation to such Note Owners;

(3)   to the  extent  that  the  provisions  of this  Section  2.10
conflict  with  any  other   provisions  of  this  Indenture,   the
provisions of this Section 2.10 shall control;

(4)   the  rights  of the  Note  Owners  shall  be  exercised  only
through  the  Clearing   Agency  and  shall  be  limited  to  those
established  by law and  agreements  between  such Note  Owners and
the Clearing  Agency and/or the Clearing Agency  Participants,  and
unless and until  Definitive  Notes are issued pursuant to Section
2.12, the initial  Clearing Agency shall make book-entry  transfers
between the Clearing Agency  Participants  and receive and transmit
payments  of  principal  of and  interest  on  such  Notes  to such
Clearing  Agency  Participants,  pursuant  to the  Note  Depository
Agreement; and

(5)   whenever  this  Indenture  requires or permits  actions to be
taken based upon  instructions  or  directions  of Holders of Notes
evidencing  a specified  percentage  of the  Outstanding  Amount of
the Notes,  the Clearing  Agency shall be deemed to represent  such
percentage  only to the  extent  that it has (i)  received  written
instructions  to such  effect  from  Note  Owners  and/or  Clearing
Agency  Participants  owning or  representing,  respectively,  such
required  percentage  of the  beneficial  interest in the Notes and
(ii) has delivered such instructions to the Indenture Trustee.

SECTION 2.11    Notices to  Clearing  Agency.  With  respect to any
Notes  issued  as  Book-Entry  Notes,  whenever  a notice  or other
communication   to  the   Noteholders   is   required   under  this
Indenture,  unless and until  Definitive  Notes  representing  such
Notes shall have been issued to the  related  Note Owners  pursuant
to  Section  2.12,  the  Indenture  Trustee  shall  give  all  such
notices  and  communications  specified  herein  to be given to the
related  Noteholders  to the  Clearing  Agency  and  shall  have no
obligation to such Note Owners.

SECTION 2.12    Definitive  Notes.  If  for  any  Notes  issued  as
Book-Entry  Notes  (i) the   Administrator  advises  the  Indenture
Trustee in writing  that the Clearing  Agency is no longer  willing
or able to properly  discharge  its  responsibilities  with respect
to such  Notes and the  Issuer  is  unable  to  locate a  qualified
successor;  (ii) the  Administrator,  at its  option,  advises  the
Indenture  Trustee  in  writing  that it  elects to  terminate  the
book-entry  system through the Clearing Agency;  or (iii) after the
occurrence  of an Event of Default  or a  Servicing  Default,  Note
Owners  representing  beneficial  interests  aggregating at least a
majority  of the  Outstanding  Amount  of  such  Notes  advise  the
Clearing  Agency in writing that the  continuation  of a book-entry
system  through  the  Clearing  Agency  is no  longer  in the  best
interests  of such Note  Owners,  then the  Clearing  Agency  shall
notify  all Note  Owners  and the  Indenture  Trustee in writing of
the  occurrence  of any  such  event  and of  the  availability  of
Definitive  Notes to such Note  Owners  requesting  the same.  Upon
surrender  to the  Indenture  Trustee  of the  typewritten  Note or
Notes  representing  such Book-Entry  Notes by the Clearing Agency,
accompanied  by   registration   instructions,   the  Issuer  shall
execute and the Indenture  Trustee shall  authenticate  the related
Definitive  Notes  in  accordance  with  the  instructions  of  the
Clearing  Agency.  None of the Issuer,  the Note  Registrar  or the
Indenture  Trustee  shall be liable  for any delay in  delivery  of
such  instructions  and may  conclusively  rely  on,  and  shall be
fully  protected  in  relying  on,  such  instructions.   Upon  the
issuance of such  Definitive  Notes,  the  Indenture  Trustee shall
recognize  the  Holders of such  Definitive  Notes as  Noteholders.
The Indenture  Trustee shall not be liable if the  Administrator is
unable to locate a  qualified  successor  Depository  (or  Clearing
Agency).

SECTION 2.13    Seller   as   Noteholder.   The   Seller   in   its
individual  or any other  capacity  may become the owner or pledgee
of Notes of any  Series and may  otherwise  deal with the Issuer or
its  affiliates  with the same  rights it would have if it were not
the  Seller;  provided,  however,  that  the  Seller  shall  not be
deemed to be a Noteholder for purposes of  determining  whether the
Holders  of the  requisite  Outstanding  Amount of the  Notes  have
given  any  request,  demand,  authorization,   direction,  notice,
consent or waiver hereunder or under any Basic Documents.

SECTION 2.14    Tax  Treatment.  The Issuer,  by entering into this
Indenture,  and the Noteholders  and the Note Owners,  by acquiring
any Note or interest  therein,  (i) express  their  intention  that
the  Notes  qualify  under   applicable  tax  law  as  indebtedness
secured by the Collateral  and  (ii) unless  otherwise  required by
appropriate  taxing  authorities,  agree  to  treat  the  Notes  as
indebtedness  secured by the  Collateral for the purpose of federal
income,   state  and  local  income  and   franchise   taxes,   any
applicable  single  business tax, and any other taxes imposed upon,
measured by or based upon gross or net income.

SECTION 1.1

SECTION 2.15    Special Terms  Applicable to Subsequent  Transfers
of Certain Notes.

(1)   The Notes of a Series may not have been registered  under the
Securities   Act,   or   the   securities   laws   of   any   other
jurisdiction.   Consequently,   such  Notes  (the   "Unregistered
Notes") are not  transferable  other than  pursuant to an exemption
from  the  registration  requirements  of the  Securities  Act  and
satisfaction  of certain other  provisions  specified  herein or in
the related Series  Supplement.  Unless  otherwise  provided in the
related  Series  Supplement,  no sale,  pledge or other transfer of
any  Unregistered   Note  (or  interest  therein)  after  the  date
thereof  may be made by any  Person  unless  either  (i) such sale,
pledge or other  transfer is made to a  "qualified  institutional
buyer" (as  defined  under Rule 144A under the  Securities  Act) or
to an institutional  investor that is an "accredited  investor" (as
described in Rule  501(a)(1),  (2), (3) or (7) under the Securities
Act) and, if so requested by the Issuer or the  Indenture  Trustee,
such proposed  transferee  executes and delivers a  certificate  in
form and substance  satisfactory  to the Indenture  Trustee and the
Issuer,  (ii) such sale,  pledge or other  transfer  occurs outside
of the United  States to a non-United  States  Person in accordance
with  Regulation S of the Securities  Act, (iii) such sale,  pledge
or other  transfer is otherwise  made in a transaction  exempt from
the  registration  requirements  of the  Securities  Act,  in which
case   (A)  the   prospective   transferor   and  the   prospective
transferee  shall certify to the  Indenture  Trustee and the Issuer
in   writing   the   facts   surrounding   such   transfer,   which
certification  shall be in form and substance  satisfactory  to the
Indenture  Trustee and the Issuer,  and (B) the  Indenture  Trustee
shall be provided  with a written  opinion of counsel  (which shall
not be at the expense of the Issuer,  the  Servicer,  the Seller or
the  Indenture  Trustee) to the effect that such  transfer will not
violate  the  Securities  Act  or  (iv)  such  sale  satisfies  the
restrictions  on  transfer  set  forth  in  the  applicable  Series
Supplement.   Unless  otherwise  provided  in  the  related  Series
Supplement,  no sale,  pledge or other transfer of any Note that is
an  Unregistered  Note  (or  interest  therein)  may be made by any
Person  unless the Issuer  shall have  consented in writing to such
transfer.  Neither the Issuer nor the  Indenture  Trustee  shall be
obligated to register any  Unregistered  Notes under the Securities
Act,  qualify any  Unregistered  Notes under the securities laws of
any  state or  provide  registration  rights  to any  purchaser  or
holder thereof.

(2)   Unless otherwise  provided in the related Series  Supplement,
the  Unregistered  Notes may be acquired by or for the account of a
Benefit Plan.

(3)   Unless otherwise  provided in the related Series  Supplement,
Unregistered  Notes  shall  be  issued  in the  form of  Definitive
Notes,  shall be in fully  registered form and Sections 2.10, 2.11
and 2.12 of this Indenture shall not apply thereto.

(4)   Each  Unregistered  Note shall bear legends to the effect set
forth in subsection (a) above.

SECTION 2.16    CUSIP Numbers.

           The Issuer in issuing the Notes may use "CUSIP"  numbers
(if then  generally  in use),  and,  if so, the  Indenture  Trustee
shall  use  "CUSIP"   numbers  in  notices  of   redemption   as  a
convenience  to  Noteholders;  provided  that any such  notice  may
state  that no  representation  is made  as to the  correctness  of
such  numbers  either as  printed on the Notes or as  contained  in
any notice of a  redemption  and that  reliance  may be placed only
on the other  identification  numbers printed on the Notes, and any
such  redemption  shall  not  be  affected  by  any  defect  in  or
omission  of such  numbers.  The Issuer  will  promptly  notify the
Indenture Trustee of any change in the "CUSIP" numbers.


ARTICLE 3
                              COVENANTS

SECTION 3.1     Payment  of  Principal  and  Interest.  The  Issuer
shall duly and  punctually  pay the  principal  of and  interest on
the  Notes  in  accordance  with  the  terms  of  the  Notes,  this
Indenture  and the  related  Series  Supplement.  On  each  date on
which any payments are to be made,  the Issuer shall cause  amounts
on  deposit  in the  Carrying  Cost  Account,  the  Negative  Carry
Account,   the  Equalization  Account  and  any  Principal  Funding
Account to be paid to the  Noteholders  to the extent  provided  by
and in accordance  with the terms of the Notes,  this Indenture and
the related  Series  Supplement,  less  amounts  properly  withheld
under the Code by any Person  from a payment to any  Noteholder  of
interest  and/or  principal.  Any  amounts  so  withheld  shall  be
considered  as having  been paid by the  Issuer to such  Noteholder
for all purposes of this Indenture.

SECTION 3.2     Maintenance  of  Agency  Office.  As long as any of
the Notes  remains  outstanding,  the Issuer shall  maintain in the
Borough  of  Manhattan,  the  City  of New  York,  an  office  (the
"Agency  Office"),  being an office or  agency  where  Notes may be
surrendered  to  the  Issuer  for   registration   of  transfer  or
exchange,  and where  notices  and demands to or upon the Issuer in
respect  of  the  Notes  and  this  Indenture  may be  served.  The
Issuer hereby  initially  appoints the  Indenture  Trustee to serve
as its agent  for the  foregoing  purposes,  which  address  is The
Bank of New York,  101 Barclay  Street,  Floor 12-E,  New York, New
York  10286.  If the  Indenture  Trustee  is  not  the  agent,  the
Issuer shall give prompt  written  notice to the Indenture  Trustee
of the  location,  and of any change in the  location,  of any such
office  or  agency.  If at  any  time  the  Issuer  shall  fail  to
maintain  any such  office or agency or shall fail to  furnish  the
Indenture  Trustee  with  the  address  thereof,  such  surrenders,
notices and demands  may be made or served at the  Corporate  Trust
Office of the Indenture  Trustee,  and the Issuer  hereby  appoints
the   Indenture   Trustee  as  its  agent  to   receive   all  such
surrenders, notices and demands.

SECTION 3.3     Money for Payments To Be Held in Trust.

(1)   All  payments of amounts due and payable  with respect to any
Notes  that  are  to  be  made  from  amounts  withdrawn  from  the
Collection  Account,  the Carrying Cost Account,  the  Equalization
Account,  the Negative  Carry Account or the  applicable  Principal
Funding  Account  shall  be made on  behalf  of the  Issuer  by the
Indenture  Trustee or by another  Paying  Agent,  and no amounts so
withdrawn from the Collection  Account,  the Carrying Cost Account,
the  Equalization  Account,  the  Negative  Carry  Account  or such
Principal  Funding  Account  for  payments  of Notes  shall be paid
over to the Issuer except as provided in this Section 3.3.

(2)   On or before  each date on which  payments  are to be made or
the Redemption  Date (if  applicable),  the Issuer shall deposit or
cause to be deposited in the applicable  Principal  Funding Account
aggregate  sums  sufficient  to  pay  the  amounts  in  respect  of
principal  then  becoming due with respect to the Notes,  such sums
to be held  in  trust  for  the  benefit  of the  Persons  entitled
thereto  and  (unless the Paying  Agent is the  Indenture  Trustee)
shall  promptly  notify  the  Indenture  Trustee  in writing of its
action or failure to so act.

(3)   The Issuer  shall  cause  each  Paying  Agent  other than the
Indenture  Trustee to execute and deliver to the Indenture  Trustee
an  instrument  in which such  Paying  Agent  shall  agree with the
Indenture  Trustee  (and if the  Indenture  Trustee  acts as Paying
Agent,  it hereby so  agrees),  subject to the  provisions  of this
Section 3.3, that such Paying Agent shall:

  (1) hold all sums held by it for the  payment of amounts due with
      respect to the Notes in trust for the  benefit of the Persons
      entitled  thereto  until  such  sums  shall  be  paid to such
      Persons or otherwise  disposed of as herein  provided and pay
      such sums to such Persons as herein provided;

  (2) give the Indenture  Trustee  written notice of any default by
      the Issuer (or any other  obligor upon the Notes) of which it
      has actual  knowledge  in the making of any payment  required
      to be made with respect to the Notes;

  (3) at any time during the continuance of any such default,  upon
      the written request of the Indenture  Trustee,  forthwith pay
      to the  Indenture  Trustee  all sums so held in trust by such
      Paying Agent;

  (4) immediately  resign as a Paying  Agent and  forthwith  pay to
      the  Indenture  Trustee  all sums held by it in trust for the
      payment  of  Notes  if at any  time it  ceases  to  meet  the
      standards  required to be met by a Paying  Agent in effect at
      the time of determination; and

  (5) comply with all  requirements of the Code with respect to the
      withholding  from any payments made by it on any Notes of any
      applicable   withholding   taxes  imposed  thereon  and  with
      respect  to  any   applicable   reporting   requirements   in
      connection therewith.

(4)   The Issuer may at any time,  for the purpose of obtaining the
satisfaction  and  discharge  of this  Indenture  or for any  other
purpose,  by Issuer  Order  direct any  Paying  Agent to pay to the
Indenture  Trustee  all sums  held in trust by such  Paying  Agent,
such  sums  to be held  by the  Indenture  Trustee  upon  the  same
trusts  as those  upon  which  the sums  were  held by such  Paying
Agent;  and upon such payment by any Paying Agent to the  Indenture
Trustee,  such  Paying  Agent  shall be  released  from all further
liability with respect to such money.

(5)   Subject to applicable  laws with respect to escheat of funds,
any money held by the  Indenture  Trustee  or any  Paying  Agent in
trust for the  payment of any  amount due with  respect to any Note
and  remaining  unclaimed for one year after such amount has become
due and  payable  shall be  discharged  from such trust and be paid
by the  Indenture  Trustee to the Issuer upon  receipt of an Issuer
Request;  and the  Holder  of such  Note  shall  thereafter,  as an
unsecured  general  creditor,  look only to the Issuer for  payment
thereof  (but  only to the  extent  of the  amounts  so paid to the
Issuer),  and  all  liability  of the  Indenture  Trustee  or  such
Paying  Agent  with  respect to such trust  money  shall  thereupon
cease;  provided,  however,  that  the  Indenture  Trustee  or such
Paying Agent,  before being required to make any such payment,  may
at the  expense  of the Issuer  cause to be  published  once,  in a
newspaper   published   in  the   English   language,   customarily
published on each  Business Day and of general  circulation  in the
City of New York,  notice  that such money  remains  unclaimed  and
that,  after a date  specified  therein,  which  shall  not be less
than 30 days  from  the  date of such  publication,  any  unclaimed
balance  of  such  money  then  remaining  shall  be  paid  to  the
Issuer.  The  Indenture  Trustee may also adopt and employ,  at the
expense of the Issuer,  any other  reasonable means of notification
of such  repayment  (including,  but not limited to, mailing notice
of such  repayment  to Holders  whose  Notes  have been  called but
have not  been  surrendered  for  redemption  or whose  right to or
interest   in  monies   due  and   payable   but  not   claimed  is
determinable  from the records of the  Indenture  Trustee or of any
Paying Agent, at the last address of record for each such Holder).

SECTION 3.4     Existence.  The Issuer  shall  keep in full  effect
its  existence,  rights and  franchises  as a business  trust under
the laws of the  State  of  Delaware  (unless  it  becomes,  or any
successor  Issuer  hereunder  is or  becomes,  organized  under the
laws of any other  State or of the  United  States of  America,  in
which case the  Issuer  shall  keep in full  effect its  existence,
rights and  franchises  under the laws of such other  jurisdiction)
and shall obtain and preserve its  qualification  to do business in
each  jurisdiction  in  which  such  qualification  is or  shall be
necessary  to  protect  the  validity  and  enforceability  of this
Indenture,  the Notes,  the Collateral and each other instrument or
agreement included in the Trust Assets.

SECTION 3.5     Protection of Collateral; Acknowledgment of Pledge.

      The Issuer  shall from time to time  execute  and deliver all
such  supplements  and  amendments  hereto  and all such  financing
statements,    amendments   thereto,    continuation    statements,
assignments,  certificates,  instruments  of further  assurance and
other  instruments,  and shall take such other action  necessary or
advisable to:

(1)   maintain or preserve the lien and security  interest (and the
priority  thereof) of this Indenture or carry out more  effectively
the purposes hereof,  including by making the necessary  filings of
financing  statements  or  amendments  thereto  within  ninety days
after  the  occurrence  of  any of the  following  and by  promptly
notifying  in writing the  Indenture  Trustee of any such  filings:
(A)  any  change  in the  Issuer's  name,  (B)  any  change  in the
location  of the  Issuer's  principal  place of  business,  (C) any
merger or  consolidation  or other change in the Issuer's  identity
or   organizational   structure   and  (D)  any  other   change  or
occurrence  that would make any  financing  statement  or amendment
seriously  misleading  within the  meaning of Section  9-402(7)  of
the UCC;

(2)   perfect,  publish  notice of or protect  the  validity of any
grant of a security interest made or to be made by this Indenture;

(3)   enforce  the  rights  of  the   Indenture   Trustee  and  the
Noteholders in any of the Collateral; or

(4)   preserve  and defend title to the  Collateral  and the rights
of the Indenture  Trustee and the  Noteholders  in such  Collateral
against  the  claims of all  Persons  and  parties,  and the Issuer
hereby   designates   the   Indenture   Trustee   its   agent   and
attorney-in-fact to execute any financing  statement,  continuation
statement or other  instrument  required  pursuant to this Section
3.5.  In  addition,  the  Issuer  shall  deliver  to the  Indenture
Trustee all  documents  constituting  "instruments"  (as defined in
the UCC as in  effect  in the  applicable  jurisdiction)  as  shall
have been  delivered  to it by the Seller  pursuant to the terms of
the  Trust  Sale and  Servicing  Agreement  relating  to the  Trust
Assets with all such necessary endorsements.

SECTION 3.6     Opinions as to Collateral.

(1)   On  the  Closing  Date,  the  Issuer  shall  furnish  to  the
Indenture  Trustee an Opinion of Counsel  either  stating  that, in
the  opinion  of such  counsel,  such  action  has been  taken with
respect  to  the  recording  and  filing  of  this  Indenture,  any
indentures  supplemental hereto and any other requisite  documents,
and with  respect  to the  execution  and  filing of any  financing
statements  and   continuation   statements  as  are  necessary  to
perfect and make  effective the lien and security  interest of this
Indenture  and  reciting  the  details of such  action,  or stating
that, in the opinion of such  counsel,  no such action is necessary
to make such lien and security interest effective.

(2)   On or before June 30 in each calendar  year,  beginning  June
30, 2001,  the Issuer  shall  furnish to the  Indenture  Trustee an
Opinion of Counsel  either  stating  that,  in the  opinion of such
counsel,   such   action  has  been  taken  with   respect  to  the
recording,  filing,  re-recording  and refiling of this  Indenture,
any  indentures   supplemental   hereto  and  any  other  requisite
documents  and with  respect  to the  execution  and  filing of any
financing  statements and  continuation  statements as is necessary
to  maintain  the  lien  and  security  interest  created  by  this
Indenture  and  reciting the details of such action or stating that
in the  opinion of such  counsel  no such  action is  necessary  to
maintain   the  lien  and   security   interest   created  by  this
Indenture.   Such  Opinion  of  Counsel  shall  also  describe  the
recording,  filing,  re-recording  and refiling of this  Indenture,
any  indentures   supplemental   hereto  and  any  other  requisite
documents   and  the   execution   and  filing  of  any   financing
statements and  continuation  statements  that will, in the opinion
of such  counsel,  be required to  maintain  the lien and  security
interest  of  this  Indenture   until  June  30  in  the  following
calendar year.

SECTION 3.7     Performance   of   Obligations;   Servicing   of
Receivables.

(1)   The  Issuer  shall  not take any  action  and  shall  use its
reasonable  efforts  not to permit any action to be taken by others
that would  release any Person from any of such  Person's  material
covenants  or   obligations   under  any  instrument  or  agreement
included  in  the  Trust   Assets  or  that  would  result  in  the
amendment, hypothecation,  subordination,  termination or discharge
of,  or  impair  the  validity  or   effectiveness   of,  any  such
instrument or  agreement,  except as otherwise  expressly  provided
in this  Indenture,  the Trust Sale and  Servicing  Agreement,  the
Receivables  Purchase  Agreement,  the Administration  Agreement or
such other instrument or agreement.

(2)   The Issuer may  contract  with other  Persons to assist it in
performing  its duties under this  Indenture,  and any  performance
of such  duties by a Person  identified  to the  Indenture  Trustee
herein or in the Basic  Documents  or an Officers'  Certificate  of
the Issuer  shall be deemed to be action  taken by the Issuer.  The
Indenture  Trustee  shall  not be  responsible  for the  action  or
inaction  of the  Servicer  or the  Administrator.  Initially,  the
Issuer has contracted  with the Servicer and the  Administrator  to
assist the Issuer in performing its duties under this Indenture.

(3)   The Issuer  shall  punctually  perform and observe all of its
obligations and agreements  contained in this Indenture,  the Basic
Documents and in the  instruments  and  agreements  included in the
Trust  Assets,  including  but not  limited to filing or causing to
be filed all  Uniform  Commercial  Code  financing  statements  and
continuation  statements  required  to be filed  under the terms of
this  Indenture,  the Trust Sale and  Servicing  Agreement  and the
Receivables  Purchase  Agreement in accordance  with and within the
time periods provided for herein and therein.

(4)   If the Issuer  shall have  knowledge of the  occurrence  of a
Servicing  Default  under the Trust Sale and  Servicing  Agreement,
the Issuer  shall  promptly  notify the  Indenture  Trustee and the
Rating  Agencies  in  writing  thereof,  and shall  specify in such
notice the  response or action,  if any, the Issuer has taken or is
taking  with  respect  to  such  default.  If a  Servicing  Default
shall  arise from the  failure of the  Servicer  to perform  any of
its  duties  or  obligations  under the  Trust  Sale and  Servicing
Agreement or the  Receivables  Purchase  Agreement  with respect to
the  Receivables,  the Issuer and the Indenture  Trustee shall take
all reasonable  steps  available to them pursuant to the Trust Sale
and Servicing  Agreement  and the  Receivables  Purchase  Agreement
to  remedy such failure.

SECTION 3.8     Negative  Covenants.  So  long  as  any  Notes  are
Outstanding, the Issuer shall not:

(1)   sell,  transfer,  exchange or otherwise dispose of any of the
properties  or  assets  of  the  Issuer,  except  the  Issuer  may:
(i) collect,  liquidate,  sell or otherwise  dispose of the Trust's
interest   in   Receivables   including   Defaulted    Receivables,
(ii) make  cash  payments  out of the  Trust  Accounts,  the  Group
Accounts and any Principal  Funding  Account and  (iii) take  other
actions, in each case as contemplated by the Basic Documents;

(2)   claim  any  credit  on,  or  make  any  deduction   from  the
principal  or interest  payable in respect of the Notes (other than
amounts  properly  withheld  from such  payments  under the Code or
applicable  state law) or assert any claim  against  any present or
former  Noteholder  by reason of the payment of the taxes levied or
assessed upon any part of the Collateral; or

(3)   either  (i) permit  the  validity  or  effectiveness  of this
Indenture to be impaired,  or permit the lien of this  Indenture to
be amended, hypothecated,  subordinated,  terminated or discharged,
or  permit  any  Person  to  be  released  from  any  covenants  or
obligations  with respect to the Notes under this Indenture  except
as  may  be  expressly  permitted  hereby,  (ii) permit  any  lien,
charge,  excise,  claim,  security  interest,   mortgage  or  other
encumbrance  (other than the lien of this  Indenture) to be created
on or extend to or  otherwise  arise upon or burden the  Collateral
or  any  part  thereof  or any  interest  therein  or the  proceeds
thereof  (other  than tax liens,  mechanics'  liens and other liens
that arise by  operation  of law or as  otherwise  contemplated  by
the Basic  Documents) or  (iii) permit  the lien of this  Indenture
not to constitute a valid first priority  security  interest in the
Collateral  (other  than with  respect to any such tax,  mechanics'
or other lien).

SECTION 3.9     Annual  Statement  as  to  Compliance.  The  Issuer
shall deliver to the  Indenture  Trustee,  on or before  February 1
of  each  year,   beginning   February   1,  2002,   an   Officer's
Certificate  signed by an Authorized  Officer of the Issuer,  dated
as of October 31 of the previous year, stating that:

(1)   a review of the  activities  of the Issuer during such fiscal
year and of the  Issuer's  performance  under  this  Indenture  has
been made under such Authorized Officer's supervision; and

(2)   to the best of such Authorized Officer's knowledge,  based on
such review,  the Issuer has  fulfilled  in all  material  respects
all of its obligations  under this Indenture  throughout such year,
or,  if there  has been a default  in the  fulfillment  of any such
obligation,  specifying  each such default known to such Authorized
Officer  and  the  nature  and  status  thereof.  A  copy  of  such
certificate  may be  obtained  by any  Noteholder  by a request  in
writing to the Issuer  addressed to the  Corporate  Trust Office of
the Indenture Trustee.

SECTION 3.10    Consolidation,    Merger,   etc.,   of   Issuer;
Disposition of Collateral.

(1)   The Issuer  shall not  consolidate  or merge with or into any
other Person, unless:

  (1) the Person (if other than the Issuer)  formed by or surviving
      such  consolidation or merger shall be a Person organized and
      existing  under the laws of the United States of America,  or
      any State or the  District  of Columbia  and shall  expressly
      assume,  by an indenture  supplemental  hereto,  executed and
      delivered to the Indenture  Trustee,  in form satisfactory to
      the  Indenture  Trustee,  the due and  timely  payment of the
      principal  of and  interest on all Notes and the  performance
      or  observance  of  every  agreement  and  covenant  of  this
      Indenture  on the  part  of the  Issuer  to be  performed  or
      observed, all as provided herein;

  (2) immediately   after   giving   effect   to  such   merger  or
      consolidation,  no Event of Default  shall have  occurred and
      be continuing;

  (3) the Rating Agency  Condition  shall have been  satisfied with
      respect  to such  transaction  and such  Person for each then
      outstanding Series of Notes;

  (4) any action as is  necessary to maintain the lien and security
      interest created by this Indenture shall have been taken;

  (5) the Issuer shall have  delivered to the Indenture  Trustee an
      Officers'  Certificate and an Opinion of Counsel addressed to
      the Issuer, each stating:

(1)   that  such  consolidation  or  merger  and such  supplemental
           indenture comply with this Section 3.10; and

(2)   that all  conditions  precedent  herein  provided for in this
           Section  3.10  have  been  complied  with,  which  shall
           include any filing required by the Exchange Act; and

(6)   the Issuer has  received a Tax Opinion  regarding  the merger
      or consolidation.

(2)   Except as otherwise  expressly permitted by this Indenture or
the other  Basic  Documents,  the  Issuer  shall not sell,  convey,
exchange,  transfer or otherwise  dispose of any  material  portion
of the  properties  and assets  included in the  Collateral  to any
Person, unless:

(1)   the Person that  acquires  such  properties  or assets of the
      Issuer  (A)  shall be  a United  States  citizen  or a Person
      organized  and existing  under the laws of the United  States
      of America or any State and (B) by an indenture  supplemental
      hereto,  executed and delivered to the Indenture Trustee,  in
      form satisfactory to the Indenture Trustee:

      (1)     expressly assumes the due and punctual payment of the
                principal  of and  interest  on all  Notes  and the
                performance  or observance  of every  agreement and
                covenant  of  this  Indenture  on the  part  of the
                Issuer  to  be  performed   or  observed,   all  as
                provided herein;

      (2)     expressly agrees that all right, title and interest so
                sold, conveyed, exchanged, transferred or otherwise
                disposed  of shall be subject  and  subordinate  to
                the rights of Noteholders;

      (3)    unless otherwise provided in such supplemental indenture,
                expressly  agrees  to  indemnify,  defend  and hold
                harmless  the  Issuer  against  and from any  loss,
                liability  or expense  arising  under or related to
                this Indenture and the Notes; and

      (4)   expressly agrees that such Person (or if a group of Persons,
                then one  specified  Person) shall make all filings
                with  the  Commission  (and any  other  appropriate
                Person)  required by the Exchange Act in connection
                with the Notes;

(2)   immediately  after  giving  effect  to such  transaction,  no
      Event of Default shall have occurred and be continuing;

(3)   the Rating Agency  Condition  shall have been  satisfied with
      respect  to such  transaction  and such  Person for each then
      outstanding Series of Notes;

(4)   any action as is  necessary to maintain the lien and security
      interest created by this Indenture shall have been taken; and

(5)   the Issuer shall have  delivered to the Indenture  Trustee an
      Officers'  Certificate and an Opinion of Counsel addressed to
      the Issuer, each stating that:

(1)   such sale, conveyance,  exchange, transfer or disposition and
           such  supplemental  indenture  comply with this Section
           3.10;

(2)   such sale, conveyance,  exchange, transfer or disposition and
           such  supplemental  indenture  have no material  adverse
           tax consequence to the Issuer or to any Noteholder; and

(3)   that all  conditions  precedent  herein  provided for in this
           Section  3.10  have  been  complied  with,  which  shall
           include any filing required by the Exchange Act.

SECTION 3.11    Successor or Transferee.

(1)   Upon any  consolidation or merger of the Issuer in accordance
with  Section  3.10(a),  the  Person  formed by or  surviving  such
consolidation  or merger (if other than the Issuer)  shall  succeed
to,  and be  substituted  for,  and may  exercise  every  right and
power of, the Issuer under this  Indenture  with the same effect as
if such Person had been named as the Issuer herein.

(2)   Upon  a  conveyance   or  transfer  of  all  the  assets  and
properties of the Issuer  pursuant to Section  3.10(b),  the Issuer
shall  be  released  from  every  covenant  and  agreement  of this
Indenture  to be  observed or  performed  on the part of the Issuer
with  respect  to  the  Notes  immediately  upon  the  delivery  of
written notice to the Indenture  Trustee from the Person  acquiring
such  assets  and  properties  stating  that the Issuer is to be so
released.

SECTION 3.12    No Other  Business.  The Issuer shall not engage in
any  business  or  activity  other  than  acquiring,   holding  and
managing the  Collateral  and the proceeds  therefrom in the manner
contemplated  by the  Basic  Documents,  issuing  the Notes and the
Certificates,  making  payments  on the Notes and the  Certificates
and  such  other   activities  that  are  necessary,   suitable  or
convenient to accomplish the foregoing or are  incidental  thereto,
as set forth in Section 2.3 of the Trust Agreement.

SECTION 3.13    No  Borrowing.  The Issuer shall not issue,  incur,
assume,   guarantee  or  otherwise   become  liable,   directly  or
indirectly,  for any  indebtedness  for money  borrowed  other than
indebtedness  for  money  borrowed  in  respect  of the Notes or in
accordance with the Basic Documents.

SECTION 3.14    Guarantees,    Loans,    Advances    and   Other
Liabilities.  Except  as  contemplated  by  this  Indenture  or the
other  Basic  Documents,  the  Issuer  shall  not  make any loan or
advance or credit to, or guarantee  (directly or  indirectly  or by
an instrument  having the effect of assuring  another's  payment or
performance  on  any  obligation  or  capability  of  so  doing  or
otherwise),   endorse  or  otherwise  become  contingently  liable,
directly  or  indirectly,   in  connection  with  the  obligations,
stocks or dividends  of, or own,  purchase,  repurchase  or acquire
(or agree  contingently  to do so) any stock,  obligations,  assets
or  securities  of, or any other  interest  in, or make any capital
contribution to, any other Person.

SECTION 3.15    Servicer's  Obligations.  The Issuer  shall use its
best efforts to cause the  Servicer to comply with its  obligations
under  Sections  3.4,  3.5 and 3.6 of the Trust Sale and  Servicing
Agreement.

SECTION 3.16    Capital  Expenditures.  The  Issuer  shall not make
any  expenditure  (whether  by  long-term  or  operating  lease  or
otherwise)   for  capital   assets   (either   real,   personal  or
intangible  property)  other than the  purchase of the  Receivables
and other  property  and rights from the Seller on the Closing Date
and from time to time  thereafter  pursuant  to the Trust  Sale and
Servicing Agreement.

SECTION 3.17    Removal  of  Administrator.  So long  as any  Notes
are  Outstanding,  the Issuer  shall not  remove the  Administrator
without  cause unless the Rating  Agency  Condition for each Series
of Notes then  outstanding  shall have been satisfied in connection
with such removal.

SECTION 3.18    Restricted   Payments.   Except  for   payments  of
principal  or interest on or  redemption  of the Notes,  so long as
any Notes are  outstanding,  the  Issuer  shall  not,  directly  or
indirectly:

(1)   pay any dividend or make any  distribution  (by  reduction of
capital or otherwise),  whether in cash, property,  securities or a
combination  thereof,  to  the  Owner  Trustee  or any  owner  of a
beneficial  interest in the Issuer or otherwise,  in each case with
respect to any  ownership  or equity  interest or similar  security
in or of the Issuer or to the Servicer;

(2)   redeem,  purchase,  retire or otherwise acquire for value any
such ownership or equity interest or similar security; or

(3)   set aside or  otherwise  segregate  any  amounts for any such
purpose;

provided,  however,  that the Issuer may make, or cause to be made,
distributions to the Servicer,  the Seller,  the Indenture Trustee,
the Owner Trustee and the  Securityholders  as permitted by, and to
the extent funds are  available for such purpose  under,  the Trust
Sale and  Servicing  Agreement,  the Trust  Agreement  or the other
Basic  Documents.  The Issuer  shall not,  directly or  indirectly,
make  payments to or  distributions  from the  Collection  Account,
any Principal  Funding  Account or any other Trust Account or Group
Account except in accordance with the Basic Documents.

SECTION 3.19    Notice of Events of Default.  The Issuer  agrees to
give the Indenture  Trustee and the Rating  Agencies prompt written
notice  of  each  Event  of  Default   hereunder,   each  Servicing
Default,  any  Insolvency  Event with  respect to the Seller,  each
default  on  the  part  of the  Seller  or the  Servicer  of  their
respective   obligations   under  the  Trust  Sale  and   Servicing
Agreement,  each  default on the part of Navistar  Financial or the
Seller  of  their  respective  obligations  under  the  Receivables
Purchase  Agreement,  and each default on the part of International
or Navistar  Financial of their  respective  obligations  under the
Accounts  Sale   Agreement,   in  each  case  promptly   after  the
discovery thereof by the Issuer.

SECTION 3.20    Further  Instruments  and Acts. Upon request of the
Indenture  Trustee,  the Issuer  shall  execute  and  deliver  such
further  instruments  and do such further acts as may be reasonably
necessary  or proper to carry out more  effectively  the purpose of
this Indenture.

SECTION 3.21    Indenture  Trustee's  Assignment  of  Interests in
Certain  Receivables.  The Indenture Trustee shall assign,  without
recourse,  representation  or  warranty,  to  the  Servicer  or the
Seller,  as the case may be, all of the Indenture  Trustee's right,
title  and  interest  in  and  to any  Receivable  assigned  by the
Issuer to the Servicer or the Seller,  as  applicable,  pursuant to
the   Receivables   Purchase   Agreement  or  the  Trust  Sale  and
Servicing  Agreement  (in each case,  to the extent so assigned and
upon the  receipt of any  related  payment,  if  applicable),  such
assignment being an assignment  outright and not for security;  and
the Servicer or the Seller,  as  applicable,  shall  thereupon  own
the  interest  purchased  in such  Receivable,  free of any further
obligation to the  Indenture  Trustee or the  Securityholders  with
respect  thereto.  If in any enforcement  suit or legal  proceeding
it is held that the Servicer  may not enforce a  Receivable  on the
ground  that  it is  not a  real  party  in  interest  or a  holder
entitled to enforce such Receivable,  the Indenture  Trustee or the
Issuer shall,  at the  Servicer's  expense,  take such steps as the
Servicer  deems  necessary  to enforce  the  Receivable,  including
bringing  suit in the  Indenture  Trustee's  name on  behalf of the
Noteholders,  the  names  of the  Noteholders  or the  name  of the
Issuer.

SECTION 3.22    Representations  and  Warranties  by the Issuer to
the Indenture  Trustee.  The Issuer hereby  represents and warrants
to the Indenture Trustee as follows:

(1)   Good Title.  No interest  in any  Receivable  conveyed to the
Issuer  has been  sold,  transferred,  assigned  or  pledged by the
Issuer  to  any   Person   other   than  the   Indenture   Trustee;
immediately  prior to the conveyance of such  Receivables  pursuant
to this  Indenture,  the  Issuer  had  good  and  marketable  title
thereto, free of any Lien; and

(2)   All   Filings   Made.   All   filings   (including,   without
limitation,  Uniform  Commercial  Code  filings)  necessary  in any
jurisdiction  to give the Indenture  Trustee,  upon the acquisition
by  the  Issuer  of  any  Eligible  Receivable,  a  first  priority
perfected  security interest in such Eligible  Receivable have been
made.


ARTICLE 4
                     SATISFACTION AND DISCHARGE

SECTION 4.1     Satisfaction  and  Discharge  of  Indenture.   This
Indenture  shall cease to be of further  effect with respect to the
Notes  except as to:  (i) rights  of  registration  of transfer and
exchange;   (ii) substitution  of  mutilated,  destroyed,  lost  or
stolen Notes;  (iii) rights  of Noteholders to receive  payments of
principal  thereof and interest  thereon;  (iv)  Sections 3.3, 3.4,
3.5,  3.8,  3.10,  3.12,  3.13,  3.19  and  3.21;  (v) the  rights,
obligations  and  immunities  of the  Indenture  Trustee  hereunder
(including  the rights of the  Indenture  Trustee under Section 6.7
and the  obligations  of the Indenture  Trustee under Sections 4.2
and 4.4);  and  (vi) the  rights of  Noteholders  as  beneficiaries
hereof  with  respect  to  the  property  so  deposited   with  the
Indenture   Trustee  payable  to  all  or  any  of  them,  and  the
Indenture  Trustee,  on demand of and at the expense of the Issuer,
shall execute proper  instruments  acknowledging  satisfaction  and
discharge of this Indenture with respect to the Notes, if:

(1)   either:

(1)   all Notes  theretofore  authenticated  and  delivered  (other
      than (A) Notes that have been  destroyed,  lost or stolen and
      that have been  replaced  or paid as  provided in Section 2.5
      and (B) Notes for whose  payment money has  theretofore  been
      deposited  in  trust or  segregated  and held in trust by the
      Issuer  and  thereafter  repaid to the  Issuer or  discharged
      from  such  trust,  as  provided  in  Section  3.3) have been
      delivered to the Indenture Trustee for cancellation; or

(2)   all Notes not theretofore  delivered to the Indenture Trustee
      for cancellation:

(1)   have become due and payable,

(2)   will be due and  payable  on their  respective  stated  final
           maturity dates within one year, or

(3)   are  to be  called  for  redemption  within  one  year  under
           arrangements  satisfactory to the Indenture  Trustee for
           the  giving  of notice of  redemption  by the  Indenture
           Trustee in the name, and at the expense, of the Issuer,

      and the Issuer, in the case of (A), (B) or (C) of subsection
      4.1(a)(ii)  above, has irrevocably  deposited or caused to be
      irrevocably  deposited  with the  Indenture  Trustee  cash or
      direct  obligations  of  or  obligations  guaranteed  by  the
      United  States of America  (which  will  mature  prior to the
      date such amounts are  payable),  in trust for such  purpose,
      in an  amount  sufficient  to pay and  discharge  the  entire
      unpaid  principal  and  accrued  interest  on such  Notes not
      theretofore   delivered   to  the   Indenture   Trustee   for
      cancellation when due;

(2)   the  Issuer  has paid or caused to be paid or  performed  all
amounts  and  obligations  which the Issuer may owe to or on behalf
of the Indenture  Trustee for the benefit of the Noteholders  under
this Indenture or the Notes; and

(3)   the  Issuer  has  delivered  to  the  Indenture   Trustee  an
Officer's  Certificate  of the Issuer  and an  Opinion of  Counsel,
each meeting the  applicable  requirements  of Section  11.1(a) and
each  stating that all  conditions  precedent  herein  provided for
relating to the  satisfaction  and discharge of this Indenture have
been complied with.

SECTION 4.2     Application  of Trust Money.  All monies  deposited
with the  Indenture  Trustee  pursuant to Section 4.1 shall be held
in trust and applied by it, in  accordance  with the  provisions of
the Notes and this Indenture and the  applicable  provisions of the
Trust  Sale  and  Servicing  Agreement,   to  the  payment,  either
directly  or through any Paying  Agent,  as the  Indenture  Trustee
may  determine,  to the  Holders  of the  particular  Notes for the
payment or  redemption  of which such  monies  have been  deposited
with the  Indenture  Trustee,  of all sums  due and to  become  due
thereon for  principal  and  interest;  but such monies need not be
segregated  from other funds except to the extent  required  herein
or in the Trust Sale and Servicing Agreement or by applicable law.

SECTION 4.3     Repayment  of  Monies  Held  by  Paying  Agent.  In
connection  with the  satisfaction  and discharge of this Indenture
with  respect to each Series of Notes,  all monies then held by any
Paying   Agent  other  than  the   Indenture   Trustee   under  the
provisions  of  this  Indenture  with  respect  to all  such  Notes
shall,  upon  demand  of the  Issuer,  be  paid  to  the  Indenture
Trustee  to be  held  and  applied  according  to  Section  3.3 and
thereupon  such Paying  Agent  shall be  released  from all further
liability with respect to such monies.

SECTION 4.4     Duration   of  Position   of   Indenture   Trustee.
Notwithstanding  the earlier  payment in full of all  principal and
interest  due to all  Noteholders  under  the terms of the Notes of
each  Series  and  the  cancellation  of  such  Notes  pursuant  to
Section 3.1, the  Indenture  Trustee  shall  continue to act in the
capacity  as  Indenture  Trustee  hereunder  to the  benefit of the
Certificateholders  and the Indenture  Trustee,  for the benefit of
the  Certificateholders,  shall comply with its  obligations  under
Sections  6.1(a),  8.2  and 8.3 of the  Trust  Sale  and  Servicing
Agreement,  as  appropriate,  until such time as all  distributions
due to the  Certificateholders  have been  paid in full;  provided,
however  that  this  Section  4.4  shall  not  apply so long as the
Seller (or an affiliate) is the only Certificateholder.


ARTICLE 5
                        DEFAULT AND REMEDIES

SECTION 5.1     Events  of  Default.   For  the  purposes  of  this
Indenture,  "Event of Default" wherever used herein,  means any one
of  the  following  events  occurring  in  relation  to a  specific
Series:

(1)   failure  to pay any  interest  on any Note of such  Series as
and when the same becomes due and payable,  and such failure  shall
continue unremedied for a period of five Business Days; or

(2)   except as set forth in  Section  5.1(c),  failure  to pay any
installment  of the  principal  of any Note of such  Series  as and
when the same becomes due and payable,  and such failure  continues
unremedied  for a period of five  Business  Days after  there shall
have been given,  by registered or certified  mail,  written notice
thereof  to  the  Servicer  by  the  Indenture  Trustee  or to  the
Servicer  and the  Indenture  Trustee  by the  Holders  of not less
than  25% of the  aggregate  outstanding  principal  amount  of the
Notes of such  Series,  a written  notice  specifying  such default
and  demanding  that it be remedied and stating that such notice is
a "Notice of Default" hereunder; or

(3)   failure  to  pay  in  full  the  unpaid   principal   balance
attributable  to such  Series  of Notes  on or prior to the  Stated
Final Maturity Date for such Series or class; or

(4)   default in the  observance  or  performance  in any  material
respect of any  covenant  or  agreement  of the Issuer made in this
Indenture  (other  than a covenant or  agreement,  a default in the
observance  or  performance  of which is  specifically  dealt  with
elsewhere  in  this  Section  5.1)  which  failure  materially  and
adversely  affects the rights of the  Noteholders  of such  Series,
and such  default  shall  continue  or not be cured for a period of
60  days  after  there  shall  have  been  given,   by  registered,
certified  or  overnight  mail or by hand  delivery,  to the Issuer
and the Seller (or the Servicer,  as  applicable)  by the Indenture
Trustee  or to the  Issuer  and the  Seller  (or the  Servicer,  as
applicable)  and the  Indenture  Trustee by the Holders of not less
than  25% of the  aggregate  outstanding  principal  amount  of the
Notes of such  Series,  a written  notice  specifying  such default
and  requiring  it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or

(5)   the  filing  of  an  order  for  relief  by  a  court  having
jurisdiction  in the  premises  in  respect  of the  Issuer  or any
substantial  part of the  Collateral in an  involuntary  case under
the   Bankruptcy   Code,   and  such  order  shall  have  continued
undischarged  or  unstayed  for a period of 90 days;  or the filing
of a  decree  or  order  by a  court  having  jurisdiction  in  the
premises   approving   as   properly   filed  a  petition   seeking
reorganization,  arrangement,  adjustment  or  composition  of  the
Issuer  under any other  Insolvency  Law,  and such decree or order
shall have  continued  undischarged  or unstayed for a period of 90
days;  or the  filing  of a  decree  or  order  of a  court  having
jurisdiction  in the premises  appointing  a receiver,  liquidator,
assignee,  custodian,  trustee, sequestrator or similar official of
the  Issuer  or for  any  substantial  part of the  Collateral,  or
ordering the  winding-up or  liquidation  of the Issuer's  affairs,
and such  decree or order  shall have  continued  undischarged  and
unstayed for a period of 90 consecutive days; or

(6)   the  commencement by the Issuer of a voluntary case under the
Bankruptcy  Code;  or the filing of a petition or answer or consent
by the Issuer seeking  reorganization,  arrangement,  adjustment or
composition  under any other  Insolvency  Law,  or  consent  to the
filing of any such petition,  answer or consent;  or the consent by
the Issuer to the  appointment or taking  possession by a receiver,
liquidator,  assignee,  custodian, trustee, sequestrator or similar
official  of  the  Issuer  or  for  any  substantial  part  of  the
Collateral,  or the making by the Issuer of an  assignment  for the
benefit  of   creditors,   or  the  admission  in  writing  of  its
inability to pay its debts generally as such debts become due; or

(7)   any other event designated as such in a Series Supplement.

The Issuer  shall  deliver to the  Indenture  Trustee  within  five
Business Days after  learning of the  occurrence  thereof,  written
notice  in the form of an  Officer's  Certificate  of any  Event of
Default  under  Section  5.1(d),  its  status  and what  action the
Issuer is taking or proposes to take with respect thereto.

SECTION 5.2     Acceleration of Maturity; Rescission and Annulment.

(1)   If an Event of  Default  with  respect to any Series of Notes
should  occur  and be  continuing,  then  and in every  such  case,
unless  the  principal  amount  of the Notes of such  Series  shall
have already become due and payable,  either the Indenture  Trustee
or the Holders of Notes of such Series  representing  not less than
a  majority  of the  principal  amount of that  Series of Notes may
declare  the  principal  of those Notes to be  immediately  due and
payable,  by a  notice  in  writing  to  the  Issuer  (and  to  the
Indenture  Trustee  if given  by the  Noteholders  of such  Series)
setting  forth the Event or  Events of  Default,  and upon any such
declaration  the unpaid  principal  amount of such Notes,  together
with  accrued  and  unpaid  interest  thereon  through  the date of
acceleration,  shall  become  immediately  due  and  payable.  Such
declaration  will constitute an Early  Amortization  Event for that
Series and may be rescinded as set forth in Section 5.2(b).

(2)   At  any  time  after  such  declaration  of  acceleration  of
maturity  has  been  made and  before  a  judgment  or  decree  for
payment  of the  money  due  has  been  obtained  by the  Indenture
Trustee as  hereinafter  provided in this Article V, the Holders of
Notes  representing  a  majority  of the  principal  amount  of the
Notes,  by written notice to the Issuer and the Indenture  Trustee,
may  rescind  and  annul  such  declaration  and its  consequences;
provided,  however,  that no such  rescission  and annulment  shall
extend to or affect any  subsequent  Event of Default or impair any
right  consequent  thereto;  and  provided,  further,  that  if the
Indenture  Trustee shall have  proceeded to enforce any right under
this Indenture and such  proceedings  shall have been  discontinued
or abandoned  because of such  rescission  and annulment or for any
other  reason,  or shall  have  been  determined  adversely  to the
Indenture  Trustee,  then and in every  such  case,  the  Indenture
Trustee,  the  Issuer  and the  Noteholders,  as the  case  may be,
shall be restored to their  respective  former positions and rights
hereunder,  and all rights,  remedies  and powers of the  Indenture
Trustee,  the  Issuer  and the  Noteholders,  as the  case  may be,
shall continue as though no such proceedings had been commenced.

SECTION 5.3     Collection   of   Indebtedness   and   Suits  for
Enforcement by Indenture Trustee.

(1)   The Issuer  covenants  that if there  shall occur an Event of
Default  under  Sections  5.1(a),  (b) or (c)  that  has  not  been
waived  pursuant  to Section  5.12,  and the Notes of the  affected
Series have been  declared due and payable,  then the Issuer shall,
upon  demand  of  the  Indenture  Trustee,  pay  to  the  Indenture
Trustee,  for the ratable  benefit of the  parties to receive  such
amounts  pursuant  to the  terms  of  this  Indenture,  the  entire
amount  then  due and  payable  on the  Notes  of such  Series  for
principal  and interest,  with interest upon the overdue  principal
for each  Series of Notes,  at the rate  borne by such Notes and in
addition  thereto such  further  amount as shall be  sufficient  to
cover the costs and  expenses of  collection,  including  any fees,
the reasonable compensation,  expenses,  disbursements and advances
of the  Indenture  Trustee  and its  agents and  counsel,  with all
such  amounts  applied  as  described  in clause  FIRST of Section
5.4(b).

(2)   The Indenture  Trustee,  following the occurrence of an Event
of Default,  shall have full right,  power and  authority  to take,
or  defer  from  taking,  any  and all  acts  with  respect  to the
administration,  maintenance  or  disposition  of  the  collateral,
including  the exercise of any  remedies  specified in Sections 5.3
and 5.4.

(3)   If the Issuer  shall fail  forthwith to pay such amounts upon
such demand,  the Indenture  Trustee,  in its own name on behalf of
the Noteholders  and as trustee of an express trust,  may institute
a  Proceeding  for the  collection  of the sums so due and  unpaid,
and may  prosecute  such  Proceeding  to judgment or final  decree,
and may enforce the same  against the Issuer or other  obligor upon
such Notes and  collect in the  manner  provided  by law out of the
property of the Issuer or other  obligor upon such Notes,  wherever
situated, the monies adjudged or decreed to be payable.

(4)   If  an  Event  of  Default  occurs  and  is  continuing,  the
Indenture  Trustee may, as more  particularly  provided in Section
5.4, in its  discretion,  proceed to protect and enforce its rights
and  the   rights   of  the   Noteholders,   by  such   appropriate
Proceedings  as are  necessary or as the  Indenture  Trustee  shall
deem  necessary  to protect and enforce  any such  rights,  whether
for the specific  enforcement  of any covenant or agreement in this
Indenture  or in aid of the exercise of any power  granted  herein,
or to enforce any other proper  remedy or legal or equitable  right
vested  in  the   Indenture   Trustee  by  this   Indenture  or  by
applicable law.

(5)   If there  shall be  pending,  relative  to the  Issuer or any
other  obligor  upon the Notes or any Person  having or claiming an
ownership  interest  in  the  Collateral,   Proceedings  under  any
Insolvency   Law,  or  if  a  receiver,   assignee  or  trustee  in
bankruptcy or reorganization,  liquidator,  sequestrator or similar
official shall have been  appointed for or taken  possession of the
Issuer or its  property  or such other  obligor  or  Person,  or in
case of any other comparable judicial  Proceedings  relative to the
Issuer or other  obligor  upon the Notes,  or to the  creditors  or
property  of the  Issuer  or  such  other  obligor,  the  Indenture
Trustee,  irrespective  of whether the principal of any Notes shall
then be due and payable as therein  expressed or by  declaration or
otherwise and  irrespective of whether the Indenture  Trustee shall
have made any demand  pursuant to the  provisions  of this Section
5.3,  shall be entitled  and  empowered,  by  intervention  in such
Proceedings or otherwise:

(1)   to file and prove a claim or claims  for the whole  amount of
      principal  and  interest  owing and  unpaid in respect of the
      Notes and to file such other  papers or  documents  as may be
      necessary  or  advisable  in order to have the  claims of the
      Indenture   Trustee   (including  any  claim  for  reasonable
      compensation  to the Indenture  Trustee and each  predecessor
      trustee, and their respective agents,  attorneys and counsel,
      and  for   reimbursement  of  all  expenses  and  liabilities
      incurred,  and all advances  made, by the  Indenture  Trustee
      and  each  predecessor   trustee,   except  as  a  result  of
      negligence  or bad faith) and of the  Noteholders  allowed in
      such Proceedings;

(2)   unless prohibited by applicable law and regulations,  to vote
      on  behalf  of the  Holders  of  Notes in any  election  of a
      trustee,  a  standby  trustee  or Person  performing  similar
      functions in any such Proceedings;

(3)   to collect and receive any monies or other  property  payable
      or  deliverable  on any such  claims  and to  distribute  all
      amounts   received   with   respect  to  the  claims  of  the
      Noteholders and of the Indenture Trustee on their behalf; and

(4)   to file such  proofs of claim and other  papers or  documents
      as may be  necessary or advisable in order to have the claims
      of the  Indenture  Trustee or the Holders of Notes allowed in
      any  judicial   proceedings   relative  to  the  Issuer,  its
      creditors  and  its  property;  and  any  trustee,  receiver,
      liquidator,  custodian or other similar  official in any such
      Proceeding is hereby  authorized by each of such  Noteholders
      to  make  payments  to the  Indenture  Trustee,  and,  if the
      Indenture  Trustee  shall  consent to the making of  payments
      directly  to  such  Noteholders,  to  pay  to  the  Indenture
      Trustee  such  amounts  as  shall  be   sufficient  to  cover
      reasonable   compensation  to  the  Indenture  Trustee,  each
      predecessor  trustee and their respective  agents,  attorneys
      and  counsel,   and  all  other   expenses  and   liabilities
      incurred,  and all advances  made, by the  Indenture  Trustee
      and  each   predecessor   trustee   except  as  a  result  of
      negligence or bad faith.

(6)   Nothing  herein  contained  shall be deemed to authorize  the
Indenture  Trustee  to  authorize  or  consent  to or  vote  for or
accept  or  adopt  on  behalf  of  any   Noteholder   any  plan  of
reorganization,  arrangement,  adjustment or composition  affecting
the Notes or the rights of any Holder  thereof or to authorize  the
Indenture   Trustee  to  vote  in  respect  of  the  claim  of  any
Noteholder in any such  proceeding  except,  as aforesaid,  to vote
for the election of a trustee in bankruptcy or similar Person.

(7)   All  rights of action  and of  asserting  claims  under  this
Indenture,  or  under  any of the  Notes,  may be  enforced  by the
Indenture  Trustee  without the  possession  of any of the Notes or
the production  thereof in any trial or other Proceedings  relative
thereto,  and any  such  Proceedings  instituted  by the  Indenture
Trustee  shall be  brought in its own name as trustee of an express
trust,  and any  recovery  of  judgment,  subject to the payment of
the  expenses,  disbursements  and  compensation  of the  Indenture
Trustee,  each predecessor  trustee and their respective agents and
attorneys, shall be for the ratable benefit of the Noteholders.

(8)   In any  Proceedings  brought by the  Indenture  Trustee  (and
also  any   Proceedings   involving  the   interpretation   of  any
provision of this  Indenture to which the  Indenture  Trustee shall
be a party),  the Indenture  Trustee shall be held to represent all
the  Noteholders,  and  it  shall  not be  necessary  to  make  any
Noteholder a party to any such Proceedings.

SECTION 5.4     Remedies; Priorities.

(1)   If an Event of Default  shall have occurred and be continuing
and a Series of Notes has been  accelerated  under Section  5.2(a),
the  Indenture  Trustee may (but shall not be  required  to) do one
or more of the following (subject to Section 5.5):

(1)   institute  Proceedings  in its  own  name  on  behalf  of the
      Noteholders  and as  trustee  of an  express  trust  for  the
      collection  of all  amounts  then  payable on such  Series of
      Notes or under this Indenture with respect  thereto,  whether
      by  declaration  of  acceleration  or otherwise,  enforce any
      judgment obtained,  and collect from the Issuer and any other
      obligor upon such Notes monies adjudged due;

(2)   institute  Proceedings  from time to time for the complete or
      partial  foreclosure  of this  Indenture  with respect to the
      Collateral;

(3)   exercise  any  remedies of a secured  party under the UCC and
      take any other appropriate  action to protect and enforce the
      rights  and  remedies  of  the  Indenture   Trustee  and  the
      Noteholders; and

(4)   sell the  portions of the  related  Collateral  allocated  to
      that  Series,  or any  portion  thereof or rights or interest
      therein,  at one or more public or private  sales  called and
      conducted  in any  manner  permitted  by law or elect to have
      the Issuer maintain  possession of the Collateral,  including
      the  Receivables  included  therein,  and  continue  to apply
      Collections  on such  Receivables  as if  there  had  been no
      declaration of acceleration  (although the Early Amortization
      Period  commenced by that  declaration  shall continue unless
      the declaration is rescinded);  provided,  however,  that the
      Indenture  Trustee  may not sell or  otherwise  liquidate  an
      interest in the Collateral  following an Event of Default and
      acceleration  of the Notes,  unless (A) the Holders of all of
      the   outstanding   Notes  of  the  affected  Series  consent
      thereto,   (B) the  proceeds  of  such  sale  or  liquidation
      distributable  to  the   Securityholders  are  sufficient  to
      discharge in full the  principal of and the accrued  interest
      on the  Notes of the  affected  Series as of the date of such
      sale or  liquidation  or  (C) (i)  there has been an Event of
      Default  under  Section  5.1(a),  (b)  or  (c)  or  otherwise
      arising  from  a  failure  to  make  a  required  payment  of
      principal   on  any  Notes,   (ii)  the   Indenture   Trustee
      determines  that the Trust Assets are reasonably  unlikely to
      provide  sufficient funds for the payment of principal of and
      interest  on such Series of Notes as and when they would have
      become  due if the  Notes  had  not  been  declared  due  and
      payable and (iii) the Indenture  Trustee  obtains the consent
      of  Holders  of  a  majority  of  the  aggregate  outstanding
      principal  amount of such  Series of  Notes.  In  determining
      such  sufficiency  or  insufficiency  with respect to clauses
      (B) and (C), the Indenture  Trustee may, but need not, obtain
      and  rely  upon  an  opinion  of  an  Independent  investment
      banking or accounting  firm of national  reputation as to the
      feasibility   of  such   proposed   action   and  as  to  the
      sufficiency of the Trust Assets for such purpose.

(2)   If the  Indenture  Trustee  collects  any  money or  property
pursuant  to  this  Article  V, it  shall  pay  out  the  money  or
property in the following order:

                FIRST:  to the  Indenture  Trustee  for amounts due
      under Section 6.7; and

                SECOND:  to the  Collection  Account for allocation
      and   distribution   pursuant   to  the   applicable   Series
      Supplement, with such amounts being deemed to be Collections.

SECTION 5.5     Optional  Preservation  of the  Collateral.  If the
Notes have been  declared to be due and payable  under  Section 5.2
following  an  Event  of  Default  and  such  declaration  and  its
consequences  have not been  rescinded and annulled,  the Indenture
Trustee  may, but need not,  elect to take and maintain  possession
of the  Collateral.  It is the  desire of the  parties  hereto  and
the  Noteholders  that there be at all times  sufficient  funds for
the payment of  principal  of and  interest  on the Notes,  and the
Indenture   Trustee  shall  take  such  desire  into  account  when
determining  whether or not to take and maintain  possession of the
Collateral.   In   determining   whether   to  take  and   maintain
possession of the Collateral,  the Indenture  Trustee may, but need
not,  obtain and rely upon an opinion of an Independent  investment
banking  or  accounting  firm  of  national  reputation  as to  the
feasibility  of such proposed  action and as to the  sufficiency of
the Collateral for such purpose.

SECTION 5.6     Limitation  of Suits.  No Holder of any Note  shall
have  any  right  to   institute   any   Proceeding,   judicial  or
otherwise,  with respect to this Indenture,  or for the appointment
of a  receiver  or  trustee,  or for any  other  remedy  hereunder,
unless:

(1)   such  Holder  has  previously  given  written  notice  to the
Indenture Trustee of a continuing Event of Default;

(2)   the  Holders  of not  less  than 25% in  aggregate  principal
amount of the  outstanding  Notes have made written  request to the
Indenture  Trustee to institute such  Proceeding in respect of such
Event of Default in its own name as Indenture Trustee hereunder;

(3)   such Holder or Holders have offered to the Indenture  Trustee
reasonable  indemnity  against the costs,  expenses and liabilities
to be incurred in complying with such request;

(4)   the  Indenture  Trustee for 60 days after its receipt of such
notice,  request  and offer of  indemnity  has failed to  institute
such Proceedings; and

(5)   no direction  inconsistent with such written request has been
given to the  Indenture  Trustee  during such 60-day  period by the
Holders of a majority of the  Outstanding  Amount of the Notes;  it
being  understood  and  intended  that  no one or more  Holders  of
Notes  shall  have any right in any manner  whatever  by virtue of,
or by  availing  of, any  provision  of this  Indenture  to affect,
disturb or  prejudice  the rights of any other  Holders of Notes or
to obtain  or to seek to obtain  priority  or  preference  over any
other  Holders  of  Notes  or  to  enforce  any  right  under  this
Indenture,  except  in the  manner  herein  provided  and  for  the
equal,  ratable  and common  benefit of all  holders of Notes.  For
the protection  and  enforcement of the provisions of this Section
5.6,  each and every  Noteholder  shall be  entitled to such relief
as can be given either at law or in equity.

           If the Indenture  Trustee shall receive  conflicting  or
inconsistent  requests  and  indemnity  from two or more  groups of
Holders of Notes,  each  representing  less than a majority  of the
aggregate   principal   amount  of  the  outstanding   Notes,   the
Indenture  Trustee  in  its  sole  discretion  may  determine  what
action,  if  any,  shall  be  taken,   notwithstanding   any  other
provisions of this Indenture.

SECTION 5.7     Unconditional  Rights of  Noteholders  To  Receive
Principal and  Interest.  Notwithstanding  any other  provisions in
this  Indenture,  the  Holder  of any Note  shall  have the  right,
which is  absolute  and  unconditional,  to receive  payment of the
principal of and  interest on such Note on or after the  respective
due  dates  thereof  expressed  in such  Note or in this  Indenture
(or,  in the case of  redemption,  if  applicable,  on or after the
Redemption  Date) and to institute suit for the  enforcement of any
such  payment,  and such right  shall not be  impaired  without the
consent of such Holder.

SECTION 5.8     Restoration   of  Rights  and   Remedies.   If  the
Indenture  Trustee or any  Noteholder has instituted any Proceeding
to  enforce  any  right or remedy  under  this  Indenture  and such
Proceeding  has been  discontinued  or abandoned  for any reason or
has been determined  adversely to the Indenture  Trustee or to such
Noteholder,  then and in every such case the Issuer,  the Indenture
Trustee and the  Noteholders  shall,  subject to any  determination
in such Proceeding,  be restored  severally and to their respective
former   positions   hereunder,   and  thereafter  all  rights  and
remedies  of  the  Indenture  Trustee  and  the  Noteholders  shall
continue as though no such Proceeding had been instituted.

SECTION 5.9     Rights  and  Remedies   Cumulative.   No  right  or
remedy herein  conferred upon or reserved to the Indenture  Trustee
or to the  Noteholders  is  intended to be  exclusive  of any other
right or remedy,  and every right and remedy  shall,  to the extent
permitted  by law,  be  cumulative  and in  addition to every other
right and remedy given  hereunder  or now or hereafter  existing at
law or in equity or  otherwise.  The  assertion  or  employment  of
any right or remedy  hereunder,  or  otherwise,  shall not  prevent
the  concurrent  assertion or employment  of any other  appropriate
right or remedy.
SECTION 1.1

SECTION 5.10    Delay  or  Omission  Not  a  Waiver.  No  delay  or
omission  of the  Indenture  Trustee  or any  Holder of any Note to
exercise  any right or remedy  accruing  upon any  Default or Event
of Default  shall  impair any such right or remedy or  constitute a
waiver of any such  Default or Event of Default or an  acquiescence
therein.  Every  right  and  remedy  given by this  Article V or by
law  to  the  Indenture  Trustee  or  to  the  Noteholders  may  be
exercised  from  time  to  time,  and as  often  as  may be  deemed
expedient,  by the Indenture Trustee or by the Noteholders,  as the
case may be.

SECTION 5.11    Control by  Noteholders.  The Holders of a majority
in  aggregate  principal  amount of the  outstanding  Notes  shall,
subject  to  provision  being  made  for  indemnification   against
costs,  expenses  and  liabilities  in a form  satisfactory  to the
Indenture  Trustee,  have the right to direct the time,  method and
place of  conducting  any  Proceeding  for any remedy  available to
the Indenture  Trustee with respect to the Notes or exercising  any
trust  or  power  conferred  on the  Indenture  Trustee;  provided,
however, that:

(1)   such direction  shall not be in conflict with any rule of law
or with this Indenture;

(2)   subject to the express  terms of Section 5.4,  any  direction
to the  Indenture  Trustee to sell or  liquidate  the Trust  Assets
shall be by the  Holders of Notes  representing  not less than 100%
of the outstanding Notes;

(3)   if  the  conditions  set  forth  in  Section  5.5  have  been
satisfied  and the  Indenture  Trustee  elects to retain  the Trust
Assets   pursuant  to  Section  5.5,  then  any  direction  to  the
Indenture  Trustee by Holders of Notes  representing less than 100%
of the  outstanding  Notes to sell or  liquidate  the Trust  Assets
shall be of no force and effect; and

(4)   the  Indenture  Trustee  may take  any  other  action  deemed
proper  by the  Indenture  Trustee  that is not  inconsistent  with
such direction;  provided,  however,  that, subject to Section 6.1,
the  Indenture  Trustee need not take any action that it determines
might  cause it to incur any  liability  (y) with  respect to which
the  Indenture  Trustee  shall have  reasonable  grounds to believe
that adequate  indemnity  against such  liability is not assured to
it and (z) which might  materially  adversely  affect the rights of
any Noteholders not consenting to such action.

SECTION 5.12    Waiver of Past Defaults.

(1)   Prior to the declaration of the  acceleration of the maturity
of a Series of Notes as  provided  in Section  5.2,  the Holders of
not less than a majority  in  principal  amount of the  outstanding
Notes  of such  Series  may  waive  any  past  Default  or Event of
Default and its  consequences  except a Default  (i) in the payment
of  principal  of or  interest  on  any  of the  Notes  or  (ii) in
respect of a covenant or  provision  hereof that cannot be modified
or  amended  without  the  consent of the Holder of each such Note.
In the case of any such waiver,  the Issuer,  the Indenture Trustee
and the  Noteholders  shall be restored to their  former  positions
and  rights  hereunder,  respectively;  but no  such  waiver  shall
extend to any  subsequent  or other  Default  or  impair  any right
consequent thereto.

(2)   Upon any such waiver,  such Default  shall cease to exist and
be  deemed to have been  cured  and not to have  occurred,  and any
Event of  Default  arising  therefrom  shall be deemed to have been
cured  and  not  to  have  occurred,  for  every  purpose  of  this
Indenture;  but no such waiver  shall extend to any  subsequent  or
other  Default or Event of  Default or impair any right  consequent
thereto.

SECTION 5.13    Undertaking   for  Costs.   All   parties  to  this
Indenture  agree,  and each  Holder  of any  Note by such  Holder's
acceptance  thereof shall be deemed to have agreed,  that any court
may  in  its  discretion   require,   in  any  Proceeding  for  the
enforcement  of any right or remedy  under  this  Indenture,  or in
any  Proceeding  against  the  Indenture  Trustee  for  any  action
taken,  suffered or omitted by it as Indenture Trustee,  the filing
by any party  litigant in such  Proceeding of an undertaking to pay
the  costs of such  Proceeding,  and  that  such  court  may in its
discretion   assess   reasonable   costs,    including   reasonable
attorneys'  fees and expenses,  against any party  litigant in such
Proceeding,  having  due regard to the merits and good faith of the
claims  or  defenses   made  by  such  party   litigant;   but  the
provisions of this Section 5.13 shall not apply to:

(1)   any Proceeding instituted by the Indenture Trustee;

(2)   any  Proceeding  instituted  by any  Noteholder,  or group of
Noteholders,  in each case holding in the  aggregate  more than 10%
of the aggregate principal amount of the Notes; or

(3)   any   Proceeding   instituted  by  any   Noteholder  for  the
enforcement  of the  payment of  principal  of or  interest  on any
Note on or after the  respective  due dates  expressed in such Note
and in this Indenture  (or, in the case of redemption,  on or after
the Redemption Date).

SECTION 5.14    Waiver  of  Stay  or  Extension  Laws.  The  Issuer
covenants  (to the  extent  that  it may  lawfully  do so)  that it
shall  not at any time  insist  upon,  or  plead  or in any  manner
whatsoever,  claim or take the  benefit or  advantage  of, any stay
or extension  law wherever  enacted,  now or at any time  hereafter
in  force,   that  may  adversely   affect  the  covenants  or  the
performance  of this  Indenture.  The Issuer (to the extent that it
may  lawfully  do  so)  hereby  expressly  waives  all  benefit  or
advantage  of any  such  law,  and  covenants  that  it  shall  not
hinder,  delay or impede the execution of any power herein  granted
to  the  Indenture  Trustee,   but  shall  suffer  and  permit  the
execution  of  every  such  power  as  though  no such law had been
enacted.

SECTION 5.15    Action on Notes.  The Indenture  Trustee's right to
seek and  recover  judgment  on the Notes or under  this  Indenture
shall not be affected by the seeking,  obtaining or  application of
any  other  relief  under  or  with  respect  to  this   Indenture.
Neither  the lien of this  Indenture  nor any rights or remedies of
the Indenture  Trustee or the Noteholders  shall be impaired by the
recovery  of any  judgment  by the  Indenture  Trustee  against the
Issuer or by the levy of any  execution  under such  judgment  upon
any  portion  of the Trust  Assets or upon any of the assets of the
Issuer.  Any money or property  collected by the Indenture  Trustee
shall be applied in accordance with Section 5.4(b) hereof.

SECTION 5.16    Performance and Enforcement of Certain Obligations.

(1)   Promptly  following a request from the  Indenture  Trustee to
do so and at the  Administrator's  expense,  the  Issuer  agrees to
take all such lawful  action as the  Indenture  Trustee may request
to compel or secure the  performance  and  observance by the Seller
and the  Servicer  of their  respective  obligations  to the Issuer
under  or  in   connection   with  the  Trust  Sale  and  Servicing
Agreement  and the  Receivables  Purchase  Agreement or by Navistar
Financial  of its  obligations  under  or in  connection  with  the
Receivables   Purchase  Agreement  in  accordance  with  the  terms
thereof, and to exercise any and all rights,  remedies,  powers and
privileges   lawfully   available   to  the  Issuer   under  or  in
connection  with the  Trust  Sale and  Servicing  Agreement  to the
extent  and in  the  manner  directed  by  the  Indenture  Trustee,
including  the  transmission  of  notices of default on the part of
the  Seller  or the  Servicer  thereunder  and the  institution  of
legal  or  administrative  actions  or  proceedings  to  compel  or
secure  performance  by the Seller or the Servicer of each of their
obligations under the Trust Sale and Servicing Agreement.

(2)   If an Event of Default has  occurred and is  continuing,  the
Indenture  Trustee  may,  and, at the  direction  (which  direction
shall  be  in  writing  or  by  telephone   (confirmed  in  writing
promptly   thereafter))   of  the   Holders   of   66-2/3%  of  the
outstanding  Notes  of any  affected  Series  shall,  exercise  all
rights,  remedies,  powers,  privileges  and  claims of the  Issuer
against  the Seller or the  Servicer  under or in  connection  with
the Trust  Sale and  Servicing  Agreement,  including  the right or
power to take  any  action  to  compel  or  secure  performance  or
observance  by  the  Seller  or  the  Servicer  of  each  of  their
obligations  to the  Issuer  thereunder  and to give  any  consent,
request,  notice,  direction,  approval,  extension or waiver under
the  Trust  Sale  and  Servicing  Agreement,  and any  right of the
Issuer to take such action shall be suspended.

(3)   Promptly  following a request from the  Indenture  Trustee to
do so and at the  Administrator's  expense,  the  Issuer  agrees to
take all such lawful  action as the  Indenture  Trustee may request
to compel or secure the  performance  and  observance  by  Navistar
Financial of its  obligations  to the Seller under or in connection
with the  Receivables  Purchase  Agreement in  accordance  with the
terms  thereof,  and to  exercise  any  and all  rights,  remedies,
powers and  privileges  lawfully  available  to the Issuer under or
in  connection  with  the  Receivables  Purchase  Agreement  to the
extent  and in  the  manner  directed  by  the  Indenture  Trustee,
including  the  transmission  of  notices of default on the part of
the   Seller   thereunder   and  the   institution   of   legal  or
administrative   actions  or   proceedings   to  compel  or  secure
performance  by Navistar  Financial  of its  obligations  under the
Receivables Purchase Agreement.

(4)   If an Event of Default has  occurred and is  continuing,  the
Indenture  Trustee  may,  and, at the  direction  (which  direction
shall  be  in  writing  or  by  telephone   (confirmed  in  writing
promptly   thereafter))   of  the   Holders   of   66-2/3%  of  the
outstanding  Notes of any  outstanding  Series shall,  exercise all
rights,  remedies,  powers,  privileges  and  claims of the  Seller
against  Navistar   Financial  under  or  in  connection  with  the
Receivables  Purchase  Agreement,  including  the right or power to
take any action to compel or secure  performance  or  observance by
Navistar  Financial  of its  obligations  to the Seller  thereunder
and to give any  consent,  request,  notice,  direction,  approval,
extension or waiver under the Receivables  Purchase Agreement,  and
any right of the Seller to take such action shall be suspended.

SECTION 5.17    Early  Amortization  Events.  Immediately  upon the
occurrence of any event  described  below or in the related  Series
Supplement  for a Series of Notes,  subject to  applicable  law and
any other  condition  specified in the related  Series  Supplement,
and after any  applicable  grace period  specified  below or in the
Series Supplement,  an amortization event (an "Early  Amortization
Event")  shall  occur  without  any  notice or other  action on the
part of any party solely with respect to the affected Series.

(1)   the  filing  of  an  order  for  relief  by  a  court  having
jurisdiction  in the  premises  in  respect  of any  Securitization
Party or any  substantial  part of the Collateral in an involuntary
case  under  the  Bankruptcy   Code,  and  such  order  shall  have
continued  undischarged  or  unstayed  for a period of 90 days;  or
the filing of a decree or order by a court having  jurisdiction  in
the  premises  approving  as  properly  filed  a  petition  seeking
reorganization,  arrangement,  adjustment  or  composition  of such
Securitization  Party  under any  other  Insolvency  Law,  and such
decree or order shall have continued  undischarged  or unstayed for
a  period  of 90 days;  or the  filing  of a  decree  or order of a
court having  jurisdiction  in the premises  appointing a receiver,
liquidator,  assignee,  custodian, trustee, sequestrator or similar
official of any  Securitization  Party or for any substantial  part
of the  Collateral,  or ordering the  winding-up or  liquidation of
any  Securitization  Party's  affairs,  and  such  decree  or order
shall have continued  undischarged  and unstayed for a period of 90
consecutive days; or

(2)   the commencement by any  Securitization  Party of a voluntary
case under the  Bankruptcy  Code;  or the  filing of a petition  or
answer   or   consent   by   any   Securitization   Party   seeking
reorganization,  arrangement,  adjustment or composition  under any
other  Insolvency  Law,  or  consent  to the  filing  of  any  such
petition,  answer or consent;  or the  consent by a  Securitization
Party  to the  appointment  or  taking  possession  by a  receiver,
liquidator,  assignee,  custodian, trustee, sequestrator or similar
official of the  Securitization  Party or for any substantial  part
of the Collateral,  or the making by a  Securitization  Party of an
assignment  for the  benefit  of  creditors,  or the  admission  in
writing of its  inability to pay its debts  generally as such debts
become due; or

(3)   the Trust or the Seller shall become an "investment  company"
within the meaning of the Investment Company Act.
(1)

SECTION 5.18    Investment  Event.  An  Investment  Event  for  any
Series of Notes  shall be the  events so  defined,  if any,  in the
Series Supplement relating to the Series of Notes.


ARTICLE 6
                        THE INDENTURE TRUSTEE

SECTION 6.1     Duties of Indenture Trustee.

(1)   If an Event of Default  has  occurred  and is  continuing  of
which a  Responsible  Officer of the  Indenture  Trustee has actual
knowledge,  the  Indenture  Trustee  shall  exercise the rights and
powers  vested in it by this  Indenture  and use the same degree of
care  and  skill  in  their  exercise  as a  prudent  person  would
exercise  or use under the  circumstances  in the  conduct  of such
person's own affairs,  including without limitation,  continuing to
hold the  Collateral  and receive  collections  on the  Receivables
included  therein  as  provided  in the  Trust  Sale and  Servicing
Agreement.

(2)   Except during the continuance of an Event of Default:

(1)   the Indenture  Trustee  undertakes to perform such duties and
      only  such  duties  as are  specifically  set  forth  in this
      Indenture and the Trust Sale and  Servicing  Agreement and no
      implied  covenants  or  obligations  shall be read  into this
      Indenture or the Trust Sale and Servicing  Agreement  against
      the Indenture Trustee; and

(2)   in the  absence  of bad  faith  on its  part,  the  Indenture
      Trustee  may  conclusively  rely,  as to  the  truth  of  the
      statements  and the  correctness  of the  opinions  expressed
      therein,  upon  certificates  or  opinions  furnished  to the
      Indenture  Trustee and conforming to the requirements of this
      Indenture;  provided,  however,  that the  Indenture  Trustee
      shall  examine the  certificates  and  opinions to  determine
      whether  or not  they  conform  to the  requirements  of this
      Indenture (but need not confirm or  investigate  the accuracy
      of  any  mathematical  calculations  or  other  facts  stated
      therein).

(3)   The Indenture  Trustee may not be relieved from liability for
its own negligent  action,  its own negligent failure to act or its
own wilful misconduct or bad faith, except that:

(1)   this  Section  6.1(c)  does not limit the  effect of Section
      6.1(b);

(2)   the  Indenture  Trustee  shall not be liable for any error of
      judgment made in good faith by a Responsible  Officer  unless
      it is proved  that the  Indenture  Trustee was  negligent  in
      ascertaining the pertinent facts; and

(3)   the  Indenture  Trustee  shall not be liable with  respect to
      any  action  it  takes  or  omits  to take in good  faith  in
      accordance  with  a  direction  received  by it  pursuant  to
      Section 5.11.

(4)   The  Indenture  Trustee  shall not be liable for  interest on
any  money  received  by it  except as the  Indenture  Trustee  may
agree in writing with the Issuer.

(5)   Money  held in trust  by the  Indenture  Trustee  need not be
segregated  from other funds  except to the extent  required by law
or the  terms of this  Indenture  or the Trust  Sale and  Servicing
Agreement.

(6)   No provision of this  Indenture  shall  require the Indenture
Trustee  to  expend  or  risk  its own  funds  or  otherwise  incur
financial  liability  in the  performance  of  any  of  its  duties
hereunder  or in the  exercise  of any of its rights or powers,  if
it shall have  reasonable  grounds to believe  that  repayments  of
such funds to it is not  reasonably  assured or it has not received
an  indemnity  reasonably  satisfactory  to it against such risk or
liability.

(7)   The  Indenture  Trustee  shall have no  discretionary  duties
other  than  performing  those  ministerial  acts set  forth  above
necessary  to  accomplish  the purpose of the Trust as set forth in
this Indenture.

(8)   Every  provision of this Indenture  relating to the Indenture
Trustee shall be subject to the provisions of this Section 6.1.

SECTION 6.2     Rights of Indenture Trustee.

(1)   The  Indenture  Trustee  may  conclusively  rely and shall be
fully  protected  in  acting  or  refraining  from  acting  on  any
document  (whether in its original or facsimile  form)  believed by
it to be  genuine  and to have  been  signed  or  presented  by the
proper  Person.  The  Indenture  Trustee shall not be bound to make
any   investigation   into  any  fact  or  matter   stated  in  any
resolution,  certificate,  statement,  instrument, opinion, report,
notice,  request,  consent, order, approval, bond or other paper or
document.

(2)   Before the  Indenture  Trustee acts or refrains  from acting,
it may  require  an  Officer's  Certificate  from the  Issuer or an
Opinion of Counsel  that such  action or  omission  is  required or
permitted  hereunder.  The  Indenture  Trustee  shall not be liable
for any  action  it  takes  or  omits  to take  in  good  faith  in
reliance on such Officer's Certificate or Opinion of Counsel.

(3)   The  Indenture  Trustee  may  execute  any of the  trusts  or
powers  hereunder or perform any duties  hereunder  either directly
or by or through  agents or  attorneys  or a custodian  or nominee,
and  the  Indenture  Trustee  shall  not  be  responsible  for  any
misconduct  or  negligence  on the part of, or for the  supervision
of, any such agent,  attorney,  custodian or nominee appointed with
due care by it hereunder.

(4)   The  Indenture  Trustee shall not be liable for any action it
takes or  omits  to take in good  faith  which  it  believes  to be
authorized  or within  its  rights or  powers;  provided,  however,
that the Indenture  Trustee's  conduct does not  constitute  wilful
misconduct, negligence or bad faith.

(5)   The  Indenture  Trustee may consult  with  counsel of its own
selection,  and the advice or opinion  of counsel  with  respect to
legal  matters  relating to this  Indenture  and the Notes shall be
full and complete  authorization  and protection  from liability in
respect to any action  taken,  omitted or suffered by it  hereunder
in good  faith and in  accordance  with the  advice or  opinion  of
such counsel.

(6)   The Indenture  Trustee  shall not be under any  obligation to
take any  action  that is  discretionary  under the  provisions  of
this Indenture.

(7)   The Indenture  Trustee shall not be charged with knowledge of
any  default or event of default  unless  either (i) a  Responsible
Officer of the  Indenture  Trustee  shall have actual  knowledge or
(ii) the  Indenture  Trustee  shall have  received  written  notice
thereof from the Issuer or a Noteholder.

(8)   The  Indenture  Trustee  shall  have no duty to  monitor  the
performance  of the Issuer nor shall it have any  liability (in its
capacity as Indenture  Trustee) in connection  with the malfeasance
or  nonmalfeasance  by the  Issuer.  The  Indenture  Trustee  shall
have no  liability  in  connection  with  compliance  by the Issuer
with   statutory  or   regulatory   requirements   related  to  the
Collateral.  The  Indenture  Trustee shall not make or be deemed to
have made any  representations  or  warranties  with respect to the
Collateral or adequacy  thereof or the validity or  sufficiency  of
any assignment of the Collateral to the Indenture Trustee.

(9)   Except as otherwise  explicitly set forth in this  Indenture,
the  Indenture  Trustee shall have no duty or  obligation,  implied
or   otherwise,   to  (i)  attend  any  meetings  of  the  Issuer's
management  or  membership,  (ii) inspect the accounts or books and
records  of  the   Issuer,   (iii)   otherwise   insure   that  the
Noteholders  remain  informed  about the  business of the Issuer or
(iv) furnish to the Noteholders any information from the Issuer.

SECTION 6.3     Indenture  Trustee  May Own  Notes.  The  Indenture
Trustee  in its  individual  or any other  capacity  may become the
owner or pledgee of Notes and may  otherwise  deal with the Issuer,
the Servicer or any of their  respective  Affiliates  with the same
rights it would have if it were not  Indenture  Trustee;  provided,
however,  that the  Indenture  Trustee  shall comply with Sections
6.10 and 6.11. Any Paying Agent,  Note  Registrar,  co-registrar or
co-paying agent may do the same with like rights.

SECTION 6.4     Indenture  Trustee's   Disclaimer.   The  Indenture
Trustee shall not be  responsible  for and makes no  representation
as to the validity or adequacy of this  Indenture or the Notes,  it
shall  not be  accountable  for the  Issuer's  use of the  proceeds
from the Notes,  and it shall not be responsible  for any statement
of  the  Issuer  in the  Indenture  or in any  document  issued  in
connection  with the sale of the Notes or in the Notes  other  than
the Indenture Trustee's certificate of authentication.

SECTION 6.5     Notice  of  Defaults.  If a Default  occurs  and is
continuing  and if it is actually  known to a  Responsible  Officer
of the  Indenture  Trustee,  the  Indenture  Trustee  shall mail to
each  Noteholder  notice  of  the  Default  within  60  days  after
obtaining  actual  knowledge of the occurrence  thereof.  Except in
the case of a default in payment of  principal  of or  interest  on
any Note,  the Indenture  Trustee may withhold the notice if and so
long as a  committee  of its  Responsible  Officers  in good  faith
determines  that  withholding  the  notice is in the  interests  of
Noteholders.

SECTION 6.6     Reports  by  Indenture  Trustee  to  Holders.   The
Indenture   Trustee   shall   deliver   to  each   Noteholder   the
information  and  documents  set  forth in  Article  VII,  and,  in
addition,  all such  information  with  respect to the Notes as may
be  required  by  the  terms  of  the  Trust  Sale  and   Servicing
Agreement  to be  provided to Holders by the  Indenture  Trustee to
enable such  Holder to prepare  its  federal  and state  income tax
returns  within a  reasonable  time after the Servicer has provided
the  Indenture  Trustee  with  the  information  and  documentation
required by the Indenture Trustee to make such deliveries.


SECTION 6.7     Compensation; Indemnity.

(1)   The Issuer  shall pay out of funds which are  otherwise to be
distributed   to  the   Certificateholders,   or  shall  cause  the
Servicer  pursuant to any Series  Supplement and Section 3.2 of the
Trust  Sale  and  Servicing  Agreement  to  pay,  to the  Indenture
Trustee  from time to time such  compensation  for its  services as
shall  be  agreed  upon  in  writing.   The   Indenture   Trustee's
compensation  shall not be limited by any law on  compensation of a
trustee of an express  trust.  The Issuer  shall or shall cause the
Servicer  pursuant to any Series  Supplement and Section 3.2 of the
Trust  Sale and  Servicing  Agreement  to  reimburse,  out of funds
which are otherwise to be  distributed  to the  Certificateholders,
the Indenture  Trustee for all  reasonable  out-of-pocket  expenses
incurred  or  made  by  it,  including  costs  of  collection,   in
addition  to the  compensation  for  its  services.  Such  expenses
shall   include   the   reasonable   compensation   and   expenses,
disbursements  and  advances  of the  Indenture  Trustee's  agents,
counsel,  accountants  and  experts.  The Issuer shall out of funds
which are otherwise to be  distributed  to the  Certificateholders,
or shall cause the  Servicer  out of its own funds  pursuant to the
Trust Sale and  Servicing  Agreement  to  indemnify  the  Indenture
Trustee  in  accordance  with  Section  6.4 of the  Trust  Sale and
Servicing  Agreement.   The  Indenture  Trustee  shall  notify  the
Servicer  promptly  of any claim  for which it may seek  indemnity.
Failure by the  Indenture  Trustee  to so notify  the Issuer  shall
not  relieve  the  Issuer  or  the  Servicer  of  its   obligations
hereunder.  The  Issuer  shall  defend  or cause  the  Servicer  to
defend  any  such  claim,  and  the  Indenture   Trustee  may  have
separate  counsel and the Issuer  shall pay, out of funds which are
otherwise to be  distributed  to the  Certificateholders,  or shall
cause  the  Servicer  out of its  own  funds  to pay the  fees  and
expenses of such counsel.

(2)   The  Issuer's  obligation  to cause the Servicer to honor the
Issuer's   obligations  to  the  Indenture   Trustee  specified  in
Section  6.7(a) shall  survive the  discharge of this  Indenture or
the  earlier  resignation  or  removal  of the  Indenture  Trustee.
When the Indenture  Trustee  incurs  expenses  after the occurrence
of a default  specified  in Section  5.1(e) or (f) with  respect to
the  Issuer,  if the  surviving  entity  has  failed to honor  such
obligation  the  expenses are  intended to  constitute  expenses of
administration  under any  Insolvency  Law or under Title 11 of the
United States Code.

SECTION 6.8     Replacement of Indenture Trustee.

(1)   The  Indenture  Trustee  may at any time  give  notice of its
intent to resign by so  notifying  the Issuer;  provided,  however,
that no such  resignation  shall become effective and the Indenture
Trustee  shall not  resign  prior to the time set forth in Section
6.8(c).  The  Holders  of a  majority  in  aggregate  amount of the
outstanding   Notes  may  remove  the   Indenture   Trustee  by  so
notifying  the  Indenture  Trustee  and  may  appoint  a  successor
Indenture  Trustee.   Such  resignation  or  removal  shall  become
effective  in  accordance  with  Section  6.8(c).  The Issuer shall
remove the Indenture Trustee if:

(1)   the Indenture Trustee fails to comply with Section 6.11;

(2)   the Indenture Trustee is adjudged bankrupt or insolvent;

(3)   a  receiver  or other  public  officer  takes  charge  of the
      Indenture Trustee or its property; or

(4)   the Indenture Trustee otherwise becomes incapable of acting.

(2)   If the  Indenture  Trustee  gives  notice  of its  intent  to
resign  or is  removed  or if a  vacancy  exists  in the  office of
Indenture  Trustee  for any reason (the  Indenture  Trustee in such
event  being   referred  to  herein  as  the   retiring   Indenture
Trustee),  the  Issuer  shall  promptly  appoint  and  designate  a
successor  Indenture  Trustee  by written  notice to the  resigning
Indenture Trustee.

(3)   A  successor   Indenture  Trustee  shall  deliver  a  written
acceptance  of its  appointment  and  designation  to the  retiring
Indenture  Trustee and to the  Issuer.  Thereupon  the  resignation
or  removal  of  the  retiring   Indenture   Trustee  shall  become
effective,  and the successor  Indenture Trustee shall have all the
rights,  powers  and  duties of the  Indenture  Trustee  under this
Indenture.  The  successor  Indenture  Trustee  shall mail a notice
of its  succession  to  Noteholders.  The Issuer shall  release the
resigning  Indenture  Trustee  from its  obligations  hereunder  by
written   instrument.   The  retiring   Indenture   Trustee   shall
promptly  transfer all property held by it as Indenture  Trustee to
the successor Indenture Trustee.

(4)   If a successor  Indenture Trustee does not take office within
60 days after the retiring  Indenture  Trustee  gives notice of its
intent to resign or is removed,  the  retiring  Indenture  Trustee,
the  Issuer or the  Holders of a majority  in  aggregate  amount of
the  outstanding  Notes may petition at the expense of the Servicer
any  court  of  competent  jurisdiction  for  the  appointment  and
designation of a successor Indenture Trustee.

(5)   If the  Indenture  Trustee fails to comply with Section 6.11,
any  Noteholder  may petition  any court of competent  jurisdiction
for the removal of the Indenture  Trustee and the  appointment of a
successor Indenture Trustee.

(6)   Notwithstanding  the  replacement  of the  Indenture  Trustee
pursuant  to this  Section  6.8,  the  Issuer's  obligations  under
Section  6.7 and the  Servicer's  corresponding  obligations  under
the Trust  Sale and  Servicing  Agreement  shall  continue  for the
benefit of the retiring Indenture Trustee.

SECTION 6.9     Merger or Consolidation of Indenture Trustee.

(1)   Any  corporation  into  which the  Indenture  Trustee  may be
merged or  converted or with which it may be  consolidated,  or any
corporation    resulting    from   any   merger,    conversion   or
consolidation  to which the Indenture  Trustee shall be a party, or
any  corporation  succeeding  to  all or  substantially  all of the
corporate  trust  business of the Indenture  Trustee,  shall be the
successor  of  the   Indenture   Trustee   under  this   Indenture;
provided,  however,  that such corporation  shall be eligible under
the  provisions  of Section  6.11,  without the execution or filing
of any  instrument  or any  further  act on the  part of any of the
parties to this  Indenture  except where an  instrument of transfer
or  assignment  is  required  by law  to  effect  such  succession,
anything in this Indenture to the contrary notwithstanding.

(2)   If at the time  such  successor  or  successors  by merger or
consolidation  to  the  Indenture  Trustee  shall  succeed  to  the
trusts  created  by this  Indenture,  any of the Notes  shall  have
been  authenticated  but not  delivered,  any such successor to the
Indenture  Trustee may adopt the certificate of  authentication  of
any predecessor  trustee,  and deliver such Notes so authenticated;
and in case at that  time any of the  Notes  shall  not  have  been
authenticated,   any  successor  to  the   Indenture   Trustee  may
authenticate  such  Notes  either  in the  name of any  predecessor
hereunder  or in  the  name  of  the  successor  to  the  Indenture
Trustee.  In all such  cases  such  certificate  of  authentication
shall  have the same  full  force as is  provided  anywhere  in the
Notes or herein with respect to the  certificate of  authentication
of the Indenture Trustee.

SECTION 6.10    Appointment  of  Co-Indenture  Trustee or Separate
Indenture Trustee.

(1)   Notwithstanding  any other  provisions of this Indenture,  at
any time,  for the purpose of meeting any legal  requirement of any
jurisdiction  in which  any part of the  Issuer  may at the time be
located,  the  Indenture  Trustee  shall  have  the  power  and may
execute  and  deliver  all  instruments  to  appoint  one  or  more
Persons  approved by the  Indenture  Trustee to act as a co-trustee
or  co-trustees,  jointly with the Indenture  Trustee,  or separate
indenture  trustees,  of all or any part of the Trust,  and to vest
in such Person or  Persons,  in such  capacity  and for the benefit
of the  Noteholders,  such  title  to the  Collateral,  or any part
hereof,  and,  subject  to the other  provisions  of this  Section
6.10, such powers,  duties,  obligations,  rights and trusts as the
Indenture   Trustee  may  consider   necessary  or  desirable.   No
co-indenture  trustee or separate indenture trustee hereunder shall
be  required  to meet  the  terms  of  eligibility  as a  successor
trustee  under  Section  6.11 and no notice to  Noteholders  of the
appointment  of any  co-indenture  trustee  or  separate  indenture
trustee shall be required under Section 6.8.

(2)   Every separate  indenture  trustee and  co-indenture  trustee
shall,  to the  extent  permitted  by  law,  be  appointed  and act
subject to the following provisions and conditions:

(1)   all  rights,  powers,  duties and  obligations  conferred  or
      imposed  upon the  Indenture  Trustee  shall be  conferred or
      imposed upon and  exercised  or  performed  by the  Indenture
      Trustee and such separate  trustee or co-trustee  jointly (it
      being  understood  that such  separate  indenture  trustee or
      co-indenture  trustee  is not  authorized  to act  separately
      without the Indenture  Trustee  joining in such act),  except
      to the  extent  that  under  any law of any  jurisdiction  in
      which  any  particular  act or acts are to be  performed  the
      Indenture  Trustee shall be  incompetent  or  unqualified  to
      perform  such  act or  acts,  in  which  event  such  rights,
      powers,  duties and  obligations  (including  the  holding of
      title  to the  Issuer  or any  portion  thereof  in any  such
      jurisdiction)  shall be  exercised  and  performed  singly by
      such  separate  trustee  or  co-trustee,  but  solely  at the
      direction of the Indenture Trustee;

(2)   no indenture  trustee hereunder shall be personally liable by
      reason of any act or omission of any other indenture  trustee
      hereunder; and

(3)   the Indenture  Trustee may at any time accept the resignation
      of or remove any separate  indenture  trustee or co-indenture
      trustee.

(3)   Any notice,  request or other  writing given to the Indenture
Trustee  shall be  deemed  to have  been  given to each of the then
separate   indenture   trustees  and  co-indenture   trustees,   as
effectively  as  if  given  to  each  of  them.   Every  instrument
appointing any separate  trustee or co-trustee  shall refer to this
Indenture  and the  conditions  of this  Article VI. Each  separate
indenture  trustee and  co-indenture  trustee,  upon its acceptance
of the  trusts  conferred,  shall be  vested  with the  estates  or
property  specified  in  its  instrument  of  appointment,   either
jointly  with  the  Indenture  Trustee  or  separately,  as  may be
provided   therein,   subject  to  all  the   provisions   of  this
Indenture,   specifically   including   every   provision  of  this
Indenture  relating to the conduct of,  affecting the liability of,
or  affording  protection  to, the  Indenture  Trustee.  Every such
instrument shall be filed with the Indenture Trustee.


(4)   Any separate  indenture  trustee or co-indenture  trustee may
at  any  time  appoint  the  Indenture  Trustee  as  its  agent  or
attorney-in-fact  with full power and authority,  to the extent not
prohibited  by law,  to do any  lawful  act under or in  respect of
this  Indenture  on its  behalf  and in its name.  If any  separate
indenture  trustee  or  co-indenture   trustee  shall  die,  become
incapable  of acting,  resign or be  removed,  all of its  estates,
properties,  rights,  remedies  and  trusts  shall  vest  in and be
exercised  by the  Indenture  Trustee,  to the extent  permitted by
law,  without  the  appointment  of a new  or  successor  indenture
trustee.

SECTION 6.11    Eligibility;    Disqualification.   The   Indenture
Trustee  shall  at  all  times  satisfy  the  requirements  of  TIA
ss. 310(a)  and Section  26(a) of the  Investment  Company  Act.  The
Indenture  Trustee shall have a combined  capital and surplus,  and
an aggregate capital,  surplus and undivided  profits,  of at least
$50,000,000  as set  forth  in its  most  recent  published  annual
report of  condition  and (unless  waived by Moody's) it shall have
a long term  unsecured  debt  rating of Baa3 or better by  Moody's.
The Indenture  Trustee  shall comply with TIAss. 310(b);  provided,
however,  that there shall be excluded  from the  operation  of TIA
ss. 310(b)(1)   any  indenture  or   indentures   under  which  other
securities of the Issuer are  outstanding if the  requirements  for
such exclusion set forth in TIAss. 310(b)(1) are met.

SECTION 6.12    Preferential  Collection of Claims Against  Issuer.
The Indenture  Trustee  shall comply with TIAss. 311(a),  excluding
any creditor  relationship  listed in TIAss. 311(b).  A trustee who
has  resigned or been  removed  shall be subject to TIAss. 311(a) to
the extent indicated.

SECTION 6.13    Representations   and   Warranties  of  Indenture
Trustee.  The Indenture  Trustee  represents and warrants as of the
Closing Date that:

(1)   the Indenture  Trustee is a New York banking  corporation and
satisfies the eligibility requirements set forth in Section 6.11;

(2)   the  Indenture  Trustee has full power,  authority  and legal
right to  execute,  deliver  and perform  this  Indenture,  and has
taken all  necessary  action to authorize the  execution,  delivery
and performance by it of this Indenture;

(3)   the  execution,  delivery and  performance  by the  Indenture
Trustee of this  Indenture  (i) shall not violate any  provision of
any law or  regulation  governing  the banking and trust  powers of
the  Indenture  Trustee or any order,  writ,  judgment or decree of
any court,  arbitrator,  or  Governmental  Authority  applicable to
the  Indenture  Trustee  or any  of  its  assets,  (ii)  shall  not
violate any  provision of the  corporate  charter or by-laws of the
Indenture  Trustee and (iii) shall not  violate any  provision  of,
or  constitute,  with or without notice or lapse of time, a default
under,  or result in the creation or  imposition of any lien on any
properties  included in the  Collateral  pursuant to the provisions
of  any   mortgage,   indenture,   contract,   agreement  or  other
undertaking  to which it is a party,  which  violation,  default or
lien could  reasonably  be  expected to have a  materially  adverse
effect  on  the  Indenture  Trustee's  performance  or  ability  to
perform  its duties  under this  Indenture  or on the  transactions
contemplated in this Indenture;

(4)   the  execution,  delivery and  performance  by the  Indenture
Trustee of this  Indenture  shall not  require  the  authorization,
consent  or  approval  of,  the  giving of notice to, the filing or
registration  with,  or the  taking of any other  action in respect
of, any  Governmental  Authority or agency  regulating  the banking
and corporate trust activities of the Indenture Trustee; and

(5)   this  Indenture  has been duly  executed and delivered by the
Indenture  Trustee  and  constitutes  the legal,  valid and binding
agreement  of the  Indenture  Trustee,  enforceable  in  accordance
with its terms.

SECTION 6.14    Indenture  Trustee  May  Enforce  Claims  Without
Possession  of Notes.  All rights of action  and claims  under this
Indenture  or the  Notes  may be  prosecuted  and  enforced  by the
Indenture  Trustee  without the  possession  of any of the Notes or
the production  thereof in any  proceeding  relating  thereto,  and
any such  proceeding  instituted by the Indenture  Trustee shall be
brought  in its own name as  Indenture  Trustee.  Any  recovery  of
judgment  shall,  after provision for the payment of the reasonable
compensation,   expenses,   disbursements   and   advances  of  the
Indenture  Trustee,  its agents  and  counsel,  be for the  ratable
benefit of the  Noteholders  in respect of which such  judgment has
been obtained.

SECTION 6.15    Suit  for  Enforcement.  If  an  Event  of  Default
shall  occur  and be  continuing,  the  Indenture  Trustee,  in its
discretion may,  subject to the provisions of Section 6.1,  proceed
to  protect   and   enforce  its  rights  and  the  rights  of  the
Noteholders  under this  Indenture by a Proceeding  whether for the
specific  performance  of any  covenant or  agreement  contained in
this  Indenture or in aid of the  execution of any power granted in
this  Indenture  or  for  the   enforcement  of  any  other  legal,
equitable or other remedy as the Indenture  Trustee,  being advised
by  counsel,  shall deem  necessary  to protect  and enforce any of
the rights of the Indenture Trustee or the Noteholders.

SECTION 6.16    Rights  of   Noteholders   to  Direct   Indenture
Trustee.  Holders of Notes  evidencing  not less than a majority in
aggregate  principal  amount of the  outstanding  Notes  shall have
the right to  direct  in  writing  the  time,  method  and place of
conducting  any   Proceeding  for  any  remedy   available  to  the
Indenture  Trustee or  exercising  any trust or power  conferred on
the Indenture Trustee; provided,  however, that subject to Section
6.1,  the  Indenture  Trustee  shall  have the right to  decline to
follow any such direction if the Indenture  Trustee,  being advised
by  counsel,  determines  that  the  action  so  directed  may  not
lawfully  be  taken,  or if the  Indenture  Trustee  in good  faith
shall,  by a Responsible  Officer,  determine that the  proceedings
so directed  would be illegal or subject it to  personal  liability
or be unduly  prejudicial to the rights of Noteholders  not parties
to such  direction;  and  provided,  further,  that nothing in this
Indenture  shall impair the right of the Indenture  Trustee to take
any action  deemed  proper by the  Indenture  Trustee  and which is
not inconsistent with such direction by the Noteholders.



ARTICLE 7
                   NOTEHOLDERS' LISTS AND REPORTS

SECTION 7.1     Issuer  To  Furnish  Indenture  Trustee  Names and
Addresses  of  Noteholders.  The Issuer  shall  furnish or cause to
be  furnished  by the  Servicer to the  Indenture  Trustee  (a) not
more than five days  before each date on which  payments  are to be
made,  a  list,  in  such  form  as  the   Indenture   Trustee  may
reasonably  require,  of the names and  addresses of the Holders of
Notes as of the close of business on the related  Record Date,  and
(b) at  such other  times as the  Indenture  Trustee may request in
writing,  within 14 days  after  receipt  by the Issuer of any such
request,  a list of similar  form and content as of a date not more
than 10 days  prior to the time such list is  furnished;  provided,
however,  that  so  long  as the  Indenture  Trustee  is  the  Note
Registrar, no such list shall be required to be furnished.

SECTION 7.2     Preservation  of  Information,  Communications  to
Noteholders.

(1)   The Indenture  Trustee shall  preserve,  in as current a form
as is  reasonably  practicable,  the  names  and  addresses  of the
Holders of Notes  contained  in the most recent list  furnished  to
the  Indenture  Trustee as  provided  in Section  7.1 and the names
and  addresses  of  Holders  of  Notes  received  by the  Indenture
Trustee in its capacity as Note  Registrar.  The Indenture  Trustee
may destroy any list  furnished  to it as provided in such Section
7.1 upon receipt of a new list so furnished.

SECTION 7.3     Issuer Fiscal Year.

(1)   Unless the Issuer  otherwise  determines,  the fiscal year of
the Issuer shall end on October 31 of such year.

SECTION 7.4     Reports by Indenture Trustee.

(1)   On each Payment  Date,  the  Indenture  Trustee shall include
with each payment to each  Noteholder a copy of the  statement  for
the  Collection  Period or Periods  applicable to such Payment Date
as  required  pursuant  to  Section  3.4  of  the  Trust  Sale  and
Servicing  Agreement provided the Servicer has previously  provided
the Indenture Trustee with such information as required.


ARTICLE 8
                ACCOUNTS, DISBURSEMENTS AND RELEASES

SECTION 8.1     Collection   of   Money.    Except   as   otherwise
expressly   provided  herein,  the  Indenture  Trustee  may  demand
payment or delivery  of, and shall  receive and  collect,  directly
and  without  intervention  or  assistance  of any fiscal  agent or
other  intermediary,  all money and other  property  payable  to or
receivable by the  Indenture  Trustee  pursuant to this  Indenture.
The  Indenture  Trustee  shall apply all such money  received by it
as provided in this Indenture,  the applicable  Series  Supplement,
the  Receivables   Purchase   Agreement  and  the  Trust  Sale  and
Servicing  Agreement.  Except as  otherwise  expressly  provided in
this  Indenture,  if  any  default  occurs  in  the  making  of any
payment or  performance  under any agreement or instrument  that is
part  of the  Collateral,  the  Indenture  Trustee  may  take  such
action  as  may  be   appropriate   to  enforce   such  payment  or
performance,   including  the   institution   and   prosecution  of
appropriate   Proceedings.   Any  such  action   shall  be  without
prejudice  to any  right to claim an Event of  Default  under  this
Indenture  and any  right to  proceed  thereafter  as  provided  in
Article V.

SECTION 8.2     Trust Accounts and Group  Accounts;  Allocations;
Payments.

(1)   On or prior to the Closing  Date,  the Issuer shall cause the
Servicer to establish  and  maintain,  in the name of the Indenture
Trustee,  for the benefit of the  Noteholders,  the Trust  Accounts
and  Group  Accounts  as  provided  in any  Series  Supplement  and
Section  4.2 of the Trust  Sale and  Servicing  Agreement  (or with
respect  to any Trust  Account or Group  Account  for any Series of
Notes  issued  after the Closing  Date,  on or prior to the closing
date with respect to such Series of Notes).

(2)   Subject   to  and  in   accordance   with   Section   8.2(e),
Collections  of  Receivables  will be  allocated  to all  Series in
Group  I  in  the   aggregate   in  an  amount  equal  to  Group  I
Collections.  The  excess,  if any,  of  Collections  over  Group I
Collections  will be allocated to any  outstanding  Series that are
not in Group I, as  described  in the  related  Series  Supplement.
Amounts so allocated  to any Series in Group I will not,  except as
specified  in the related  Series  Supplement,  be available to the
Noteholders  of any  Series not in Group I.  Amounts  so  allocated
to any Series not in Group I will not,  except as  specified in the
related Series  Supplement,  be available to the Noteholders of any
Series in Group I.  Allocations  of  Collections  among the  Series
in any group and among the  classes in any Series and  between  the
Noteholders  and the  Certificateholders  shall be set forth in the
related Series Supplement or Supplements.

(3)   Subject to and in accordance  with Section  8.2(e),  Dilution
and  Warranty  Set-Offs on the  Receivables  will be  allocated  to
all Series in Group I in the  aggregate  in an amount  equal to the
Investor  Allocable  Dilution/Warranty  Amount. The excess, if any,
of Dilution and Warranty  Set-Offs over amounts  allocated to Group
I in respect of Dilution  and Warranty  Set-Offs  will be allocated
to any  outstanding  Series  that are not in Group I, as  described
in the  related  Series  Supplement.  Amounts so  allocated  to any
Series in Group I will  not,  except as  specified  in the  related
Series  Supplement,  be available to the  Noteholders of any Series
not in Group I.  Amounts  so  allocated  to any Series not in Group
I will not,  except as specified in the related Series  Supplement,
be  available  to  the  Noteholders  of  any  Series  in  Group  I.
Allocations  of Dilution and Warranty  Set-Offs among the Series in
any group and among the  Classes  in any  Series  and  between  the
Noteholders  and the  Certificateholders  shall be set forth in the
related Series Supplement or Supplements.

(4)   Subject to and in accordance with Section 8.2(e),  Net Losses
and Net  Recoveries  on the  Receivables  will be  allocated to all
Series in Group I in the  aggregate  in an amount equal to Investor
Allocable    Losses    and    Investor    Allocable     Recoveries,
respectively.   The   excess,   if  any,   of  Net  Losses  or  Net
Recoveries  (as  applicable)  over amounts  allocated to Group I in
respect  of Net  Losses or Net  Recoveries,  respectively,  will be
allocated  to any  outstanding  Series  that are not in Group I, as
described in the related  Series  Supplement.  Amounts so allocated
to any  Series in Group I will  not,  except  as  specified  in the
related Series  Supplement,  be available to the Noteholders of any
Series  which is not in Group I.  Amounts  allocated  to any Series
not in  Group  I will  not,  except  as  specified  in the  related
Series  Supplement,  be available to the  Noteholders of any Series
in Group I.  Allocations  of Net  Losses and Net  Recoveries  among
the  Series in any group and among the  Classes  in any  Series and
between the  Noteholders  and the  Certificateholders  shall be set
forth in the related Series Supplement or Supplements.

(5)   For  purposes  of  determining   the  applicable   allocation
percentages  for  any  Series  or  group  in  connection  with  the
allocation of Collections,  Group Collections,  Dilution,  Warranty
Set-Offs,   Net  Losses  and  Net   Recoveries  for  the  specified
Collection Period:

(1)   unless the related Supplement shall provide  otherwise,  each
      Series upon  issuance,  shall be deemed to have been  created
      and in  existence  as of  the  first  day  of the  Collection
      Period in which the related  Series  Cut-Off  Date falls and,
      as a result,  shall be  allocated  (based  on the  applicable
      allocation  percentage) its allocable portion of Collections,
      Group  Collections,  Dilution,  Net Losses and Net Recoveries
      for such Collection Period; and

(2)   unless  the   related   Series   Supplement   shall   provide
      otherwise,  with respect to any Series, if (x) as of the last
      day of any  Collection  Period on or after  the  Amortization
      Period  Commencement  Date for such  Series,  the  amounts on
      deposit  in  the  Collection   Account,   the  Carrying  Cost
      Account,   the  Equalization   Account,  the  Negative  Carry
      Account and the related  Series  Accounts,  Group Accounts or
      Trust  Accounts and  allocable to such Series are  sufficient
      to pay in full the  outstanding  principal  balance,  accrued
      interest and all other amounts  payable by the Trust (whether
      or not then due) with  respect to any such Series of Notes on
      the Payment Date  relating to such  Collection  Period (after
      giving effect to the allocations, distributions,  withdrawals
      and  deposits to be made on such related  Payment  Date) then
      (y) such Series  shall be deemed to have been paid in full on
      such last day and, as a result,  shall not be  allocated  any
      portion of  Collections,  Group  Collections,  Dilution,  Net
      Losses  or  Net  Recoveries  for  any  subsequent  Collection
      Period.  For purposes of making the  determination  in clause
      (x) above, on the date of any such  determination it shall be
      assumed that any theretofore  unpaid Transfer  Deposit Amount
      with respect to the immediately  preceding  Collection Period
      shall  be   allocated   to  such   Series   on  the   related
      Determination   Date  and  shall  be  payable   from  amounts
      allocated to or available  with respect to such Series on the
      related Payment Date.

(6)   On or before the date any  distribution  is to be made by the
Indenture  Trustee,  all amounts  required to be  disbursed  by the
Indenture  Trustee will be deposited by the Indenture  Trustee upon
receipt  into the  applicable  Principal  Funding  Account  or such
other Trust  Account or Group  Account as shall be specified in the
related  Series  Supplement.  The  Indenture  Trustee shall (unless
otherwise  provided in any Series  Supplement)  allocate the amount
deposited  into  such  Principal  Funding  Account  and such  other
Trust  Accounts  and Group  Accounts to the extent and at the times
as  provided  in  the  related  Series  Supplement.  The  Indenture
Trustee  shall pay  amounts to the  Holders  of such  Series to the
extent and at the times provided in the related Series Supplement.

(7)   The Indenture  Trustee shall allocate amounts  deposited in a
Principal   Funding  Account  for  payments  of  principal  on  the
applicable  Series  of  Notes,  and  pay  amounts  to  the  Holders
thereof,  to the extent and at the times  provided  in the  related
Series Supplements.

(8)   Notwithstanding   anything  to  the  contrary   herein,   all
investment  earnings on funds on deposit in the  Principal  Funding
Account,  net of losses and investment  expenses,  shall constitute
Investment  Proceeds  and be applied as  described  in the  related
Series Supplement.

(9)   Notwithstanding  any  provision  of  this  Indenture  to  the
contrary,  for so long as the Seller is the sole  Certificateholder
and  until  the  Indenture  Trustee  shall  have  received  written
notice  from the Trust or the Seller to the  contrary,  all amounts
to   be   distributed    by   the   Indenture    Trustee   to   the
Certificateholders  shall  be  distributed  to  the  Seller  to the
account specified by the Seller.

SECTION 8.3     General  Provisions  Regarding  Trust Accounts and
Group Accounts.

(1)   Subject to Section  6.1(c),  the Indenture  Trustee shall not
in any way be held  liable by reason  of any  insufficiency  in any
of the Trust  Accounts or Group  Accounts  resulting  from any loss
on any  Eligible  Investment  included  therein  except  for losses
attributable  to the Indenture  Trustee's  failure to make payments
on such Eligible  Investments issued by the Indenture  Trustee,  in
accordance with their terms.

(2)   If  (i) the  Servicer  shall have  failed to give  investment
directions  for any  funds on  deposit  in the  Trust  Accounts  or
Group  Accounts to the  Indenture  Trustee by 11:00 a.m.,  New York
City time (or such  other  time as may be  agreed  by the  Servicer
and the  Indenture  Trustee) on any Business  Day or (ii) an  Event
of Default shall have  occurred and be  continuing  with respect to
the  Notes  but the Notes  shall  not have  been  declared  due and
payable  pursuant  to Section  5.2,  or,  (iii) if such Notes shall
have been  declared due and payable  following an Event of Default,
but  amounts  collected  or  receivable  from the Trust  Assets are
being  applied in  accordance  with Section 5.5 as if there had not
been such a declaration,  then the Indenture  Trustee shall, to the
fullest  extent  practicable,  invest  and  reinvest  funds  in the
Trust   Accounts  and  Group   Accounts  in  Eligible   Investments
specified in clause (a)(4) of the definition thereof.

SECTION 8.4     Release of Collateral.

(1)   Subject to the payment of its fees and  expenses  pursuant to
Section 6.7, the  Indenture  Trustee may, and when  required by the
provisions  of  this  Indenture  shall,   execute   instruments  to
release  property  from the lien of this  Indenture,  or convey the
Indenture  Trustee's  interest  in the same,  in a manner and under
circumstances  that  are  consistent  with the  provisions  of this
Indenture.  No party  relying  upon an  instrument  executed by the
Indenture  Trustee as provided in this  Article VIII shall be bound
to ascertain the Indenture  Trustee's  authority,  inquire into the
satisfaction   of   any   conditions   precedent   or  see  to  the
application of any monies.

(2)   The  Indenture  Trustee  shall,  at such time as there are no
Notes  Outstanding  and  all  sums  due  to the  Indenture  Trustee
pursuant to Section 6.7 have been paid,  notify the Issuer  thereof
in writing  and upon  receipt  of an Issuer  Request,  release  any
remaining  portion of the  Collateral  that  secured the Notes from
the lien of this  Indenture  and release to the Issuer or any other
Person   entitled   thereto  any  funds  then  on  deposit  in  the
Collection  Account,   the  Equalization  Account  and,  except  as
otherwise  specified in the related  Series  Supplement,  any other
Trust Account or Group  Account.  The  Indenture  Trustee shall (i)
release any remaining  portion of the  Collateral  that secured the
Certificates  from the lien of this  Indenture  and (ii) release to
the Issuer or any other Person  entitled  thereto any funds then on
deposit in the  Collection  Account  only at such time as (x) there
are no Notes  Outstanding  and (y) all  sums  due to the  Indenture
Trustee pursuant to Section 6.7 have been paid.

SECTION 8.5     Opinion of Counsel.  The  Indenture  Trustee  shall
receive at least seven days'  notice when  requested  by the Issuer
to take any action  pursuant to Section 8.4,  accompanied by copies
of any instruments  involved,  and the Indenture Trustee shall also
require as a condition  to such  action,  an Opinion of Counsel and
an  Officer's  Certificate  stating  the  legal  effect of any such
action,  outlining  the steps  required to complete  the same,  and
concluding  that all  conditions  precedent  to the  taking of such
action  have  been   complied   with  and  such  action  shall  not
materially  and adversely  impair the security for the Notes or the
rights of the  Noteholders  in  contravention  of the provisions of
this  Indenture;  provided,  however,  that such Opinion of Counsel
shall not be  required  to  express an opinion as to the fair value
of the  Collateral.  Counsel  rendering  any such opinion may rely,
without  independent  investigation,  on the  accuracy and validity
of any certificate or other  instrument  delivered to the Indenture
Trustee   pursuant  to  the   provisions   of  this   Indenture  in
connection with any such action.

SECTION 8.6     Effect   of   Group   I  Final   Allocation   Date.
Following  the  occurrence  of the Group I Final  Allocation  Date,
Noteholders  of those  Series  in Group I will no  longer  have any
interest  in the  Collateral  (except  for a claim  on funds in the
Carrying  Cost  Account,   the  Negative   Carry  Account  and  the
Principal  Funding  Accounts)  and shall have no rights  under this
Indenture  except as set forth in the first  paragraph  of  Section
4.1, and all other  representations  and covenants of the Seller or
the Servicer,  as applicable,  and other provisions set forth below
and all  remedies for breaches  thereof,  will no longer  accrue to
the  benefit  of the  Noteholders  of those  Series  in Group I, in
each case,  unless the Revolving Period for any Series  recommences
as provided in the related Series Supplement:

(1)   representations  and  covenants of the Seller in Sections 2.3
and 2.4 of the Trust Sale and  Servicing  Agreement,  to the extent
they relate to the Receivables and the Related Security;

(2)   the representations and covenants of the Servicer in Section
3.3 of the Trust Sale and Servicing  Agreement,  to the extent they
relate to the Related Security;

(3)   the  conditions  to  exchange  of the Seller  Certificate  in
Section 3.4 of the Trust Agreement;

(4)   the  conditions  to the  issuance of a new Series of Notes in
Section 2.1 of this Indenture; and

(5)   the  obligations  of the Servicer to service the  Receivables
under Section 3.1 of the Trust Sale and Servicing Agreement.

           In addition,  upon the  occurrence  of the Group I Final
Allocation  Date,  no  Collections  will be  allocated  to Group I,
unless the  Revolving  Period  with  respect to any Series of Notes
in  Series  in  Group I  recommences  as  provided  in the  related
Series Supplement.


ARTICLE 9
                       SUPPLEMENTAL INDENTURES

SECTION 9.1     Supplemental   Indentures   Without   Consent  of
Noteholders.

(1)   In addition  to the rights to enter into  Series  Supplements
as provided in Section 2.1 of this  Indenture,  without the consent
of the  Holders  of any Notes but with  prior  notice to the Rating
Agencies,  the Issuer and the Indenture  Trustee,  when  authorized
by an Issuer  Order,  at any time and from time to time,  may enter
into  one  or  more  indentures   supplemental   hereto,   in  form
satisfactory  to the  Indenture  Trustee,  or may  amend  a  Series
Supplement for any of the following purposes:

(1)   to correct or amplify the  description of any property at any
      time  subject  to the lien of this  Indenture,  or  better to
      assure,  convey and confirm  unto the  Indenture  Trustee any
      property  subject or required to be  subjected to the lien of
      this  Indenture,  or to subject  additional  property  to the
      lien of this Indenture;

(2)   to evidence the  succession,  in compliance with Section 3.10
      and the applicable  provisions  hereof,  of another Person to
      the Issuer,  and the  assumption by any such successor of the
      covenants of the Issuer contained herein and in the Notes;

(3)   to add to the  covenants of the Issuer for the benefit of the
      Noteholders;

(4)   to convey, transfer,  assign, mortgage or pledge any property
      to or with the Indenture Trustee;

(5)   to  cure  any  ambiguity  or to  correct  or  supplement  any
      provision  herein  or in any  supplemental  indenture  or any
      Series  Supplement  which may be inconsistent  with any other
      provision herein or in any supplemental indenture;

(6)   to  evidence   and  provide   for  the   acceptance   of  the
      appointment  hereunder by a successor trustee with respect to
      the Notes and the  Indenture  and to add to or change  any of
      the provisions of this Indenture or any Series  Supplement as
      shall be necessary to facilitate  the  administration  of the
      trusts  hereunder by more than one  trustee,  pursuant to the
      requirements of Article VI;

(7)   to  modify,  eliminate  or  add  to the  provisions  of  this
      Indenture  or any Series  Supplement  to such extent as shall
      be necessary to effect the  qualification  of this  Indenture
      under the TIA or under any similar federal statute  hereafter
      enacted and to add to this  Indenture  such other  provisions
      as may be expressly  required by the TIA,  and the  Indenture
      Trustee is hereby  authorized to join in the execution of any
      such   supplemental   indenture   and  to  make  any  further
      appropriate  agreements and stipulations  that may be therein
      contained;

(8)   to modify the definitions of "Base Amount,"  "Warranty Ratio"
      or any of their  constituent terms (as such terms are defined
      in the applicable  Series  Supplement) in connection with the
      adoption   by   International   and  Ford  of  any   warranty
      arrangement,  agreement  or  practice  which is  inconsistent
      with the  methodology  used to calculate the Warranty  Ratio;
      provided,   that  the  Rating   Agency   Condition  has  been
      satisfied with respect to such amendment; and

(9)   to  modify  the  definitions  of  "Base  Amount,"  "Warehouse
      Reserve"  or any of their  constituent  terms (as such  terms
      are  defined  in  the   applicable   Series   Supplement)  in
      connection  with the  adoption by  International  and Ford of
      any  warehouse  arrangement,  agreement or practice  which is
      inconsistent  with  the  methodology  used to  calculate  the
      Warehouse   Reserve;   provided,   that  the  Rating   Agency
      Condition has been satisfied with respect to such amendment.

(2)   The Issuer and the Indenture  Trustee,  when authorized by an
Issuer  Order,  may,  also  without  the  consent  of  any  of  the
Noteholders  but with prior notice to the Rating  Agencies,  at any
time  and  from  time to time  enter  into  one or more  indentures
supplemental   hereto  or  amend  any  Series  Supplement  for  the
purpose of adding any  provisions  to,  changing in any manner,  or
eliminating  any  of  the  provisions  of,  this  Indenture  or any
Series  Supplement  or  modifying  in any  manner the rights of the
Noteholders   under  this  Indenture  or  any  Series   Supplement;
provided,  however,  that such action shall not, as evidenced by an
Opinion of Counsel,  adversely  affect in any material  respect the
interests of any  Noteholder  unless such  Noteholder's  consent is
obtained.

SECTION 9.2     Supplemental    Indentures   With   Consent   of
Noteholders.

(1)   In addition  to the rights to enter into  Series  Supplements
as provided in Section  2.1 of this  Indenture,  the Issuer and the
Indenture  Trustee,  when authorized by an Issuer Order,  also may,
with  prior  notice to the  Rating  Agencies  and with the  written
consent  of  the  Holders  of  not  less  than  a  majority  of the
principal  amount of each Series of Notes  affected in any material
respect  thereby,  by Act of such  Holders  delivered to the Issuer
and the  Indenture  Trustee,  enter into an indenture or indentures
supplemental   hereto  or  amend  any  Series  Supplement  for  the
purpose of adding any  provisions  to,  changing in any manner,  or
eliminating  any  of  the  provisions  of,  this  Indenture  or any
Series  Supplement  or  modifying  in any  manner the rights of the
Noteholders   under  this  Indenture  or  any  Series   Supplement;
provided,   however,   that  no  such  supplemental   indenture  or
amendment  to a Series  Supplement  shall,  without  the consent of
the Holder of each outstanding Note affected thereby:

(1)   change the due date of any  installment  of  principal  of or
      interest  on  any  Note,  or  reduce  the  principal   amount
      thereof,   the  interest  rate  applicable  thereto,  or  the
      Redemption  Price with respect  thereto,  change any place of
      payment where, or the coin or currency in which,  any Note or
      any  interest  thereon  is  payable,  or impair  the right to
      institute suit for the  enforcement of the provisions of this
      Indenture   requiring  the  application  of  funds  available
      therefor,  as  provided  in Article V, to the  payment of any
      such amount due on the Notes on or after the  respective  due
      dates  thereof  (or, in the case of  redemption,  on or after
      the Redemption Date);

(2)   reduce the percentage of the aggregate  outstanding principal
      amount of the Notes,  the  consent of the Holders of which is
      required for any such supplemental  indenture, or the consent
      of the  Holders  of  which  is  required  for any  waiver  of
      compliance  with the provisions of this Indenture or defaults
      hereunder  and their  consequences  as  provided  for in this
      Indenture;

(3)   impair the right to  institute  suit for the  enforcement  of
      specified provisions of this Indenture regarding payment;

(4)   reduce the percentage of the aggregate  outstanding principal
      amount of the Notes required to direct the Indenture  Trustee
      to sell or liquidate  the Trust  Assets  pursuant to Section
      5.4 if the  proceeds  of such sale would be  insufficient  to
      pay the principal  amount of and accrued but unpaid  interest
      on the outstanding Notes;

(5)   modify any  provision  of this  Section 9.2 to  decrease  the
      required   minimum   percentage   necessary  to  approve  any
      amendments to any provisions of this Indenture;

(6)   modify or alter the  provisions  of the  Indenture  regarding
      the  voting of Notes  held by the  Issuer,  the Seller or any
      Affiliate of either of them; or

(7)   permit  the  creation  of any Lien  ranking  prior to or on a
      parity with the Lien of this  Indenture  with  respect to any
      part of the Trust Assets or,  except as  otherwise  permitted
      or contemplated herein,  terminate the Lien of this Indenture
      on any  property  at any time  subject  hereto or deprive the
      Holder of any Note of the  security  afforded  by the lien of
      this Indenture.

(2)   The  Indenture  Trustee  shall be provided  with and shall be
entitled  to  rely  upon an  Officer's  Certificate  of the  Seller
stating  whether or not any Notes would be affected  (such that the
consent of each Noteholder  would be required) by any  supplemental
indenture  proposed  pursuant  to this  Section  9.2  and any  such
determination  shall be conclusive  and binding upon the Holders of
all Notes,  whether  authenticated and delivered  thereunder before
or after the date upon which such  supplemental  indenture  becomes
effective.  The  Indenture  Trustee  shall  not be  liable  for any
such determination made in good faith.

(3)   It shall be sufficient if an Act of Noteholders  approves the
substance,   but  not  the  form,  of  any  proposed   supplemental
indenture.

(4)   Promptly  after the execution by the Issuer and the Indenture
Trustee of any  supplemental  indenture  pursuant to this  Section
9.2, the Indenture  Trustee shall mail to the  Noteholders to which
such amendment or supplemental  indenture  relates a notice setting
forth  in  general  terms  the   substance  of  such   supplemental
indenture.  Any  failure  of the  Indenture  Trustee  to mail  such
notice,  or any  defect  therein,  shall not,  however,  in any way
impair or affect the validity of any such supplemental indenture.


SECTION 9.3     Execution   of    Supplemental    Indentures.    In
executing,  or  permitting  the  additional  trusts  created by any
supplemental   indenture  permitted  by  this  Article  IX  or  the
modifications  thereby  of the trusts  created  by this  Indenture,
the  Indenture  Trustee  shall be entitled to receive,  and subject
to  Sections  6.1 and  6.2,  shall be fully  protected  in  relying
upon,  an Opinion of Counsel and an Officer's  Certificate  stating
that the  execution of such  supplemental  indenture is  authorized
or permitted by this  Indenture and that all  conditions  precedent
to the execution of any such  amendment  have been  satisfied.  The
Indenture  Trustee may,  but shall not be obligated  to, enter into
any  such   supplemental   indenture  that  affects  the  Indenture
Trustee's  own rights,  duties,  liabilities  or  immunities  under
this Indenture or otherwise.

SECTION 9.4     Effect   of   Supplemental   Indenture.   Upon  the
execution   of  any   supplemental   indenture   pursuant   to  the
provisions  hereof,  this  Indenture  shall be and be  deemed to be
modified and amended in  accordance  therewith  with respect to the
Notes affected thereby,  and the respective rights,  limitations of
rights,  obligations,  duties,  liabilities  and  immunities  under
this  Indenture  of the  Indenture  Trustee,  the  Issuer  and  the
Noteholders   shall   thereafter  be   determined,   exercised  and
enforced  hereunder  subject in all respects to such  modifications
and  amendments,  and all the  terms  and  conditions  of any  such
supplemental  indenture  shall be and be  deemed  to be part of the
terms and conditions of this Indenture for any and all purposes.

SECTION 9.5     Conformity   with  Trust   Indenture   Act.   Every
amendment  of  this  Indenture  and  every  supplemental  indenture
executed   pursuant  to  this  Article  IX  shall  conform  to  the
requirements  of the TIA as then in effect if this Indenture  shall
then be required to be qualified and is, in fact,  qualified  under
the TIA.

SECTION 9.6     Reference  in  Notes  to  Supplemental  Indentures.
Notes  authenticated  and  delivered  after  the  execution  of any
supplemental  indenture  pursuant  to this  Article IX may,  and if
required by the Indenture  Trustee  shall,  bear a notation in form
approved by the  Indenture  Trustee as to any matter  provided  for
in such  supplemental  indenture.  If the  Issuer or the  Indenture
Trustee  shall so  determine,  new Notes so modified as to conform,
in the opinion of the  Indenture  Trustee  and the  Issuer,  to any
such  supplemental  indenture  may be prepared  and executed by the
Issuer and  authenticated  and delivered by the  Indenture  Trustee
in exchange for Outstanding Notes of the same Series.


ARTICLE 10
                         REDEMPTION OF NOTES

SECTION 10.1    Redemption.

(1)   A Series of Notes  shall be subject to  redemption  if and to
the extent provided in the related Series Supplement.

(2)   Each  Series of Notes shall be subject to  redemption  as set
forth in this  Section  10.1(b).  In the event  that any  breach of
any of the  representations  and  warranties  set forth in Section
2.3  of  the  Trust  Sale  and  Servicing  Agreement  shall  have a
material  adverse  effect  on  the  Noteholders,  then  either  the
Indenture  Trustee  or the  Holders  of Notes  evidencing  not less
than a  majority  in  aggregate  unpaid  principal  amount  of each
Series  of  Notes,   by  written  notice  to  the  Issuer  and  the
Indenture  Trustee  may  direct  the  Issuer to  redeem  all of the
Notes then  outstanding  on the second  Payment Date  following the
date of such  notice  (or such later  date as may be  specified  in
such notice);  provided,  however, that no such redemption shall be
required  to be made if on or prior to the  earlier of the date the
Redemption  Notice  is or is  required  to be sent to  Noteholders,
the  representations  and  warranties  set forth in Section  2.3 of
the  Trust  Sale  and  Servicing  Agreement  are  satisfied  in all
material   respects  and  any  material   adverse   effect  on  the
Noteholders  caused  thereby  shall  have been  cured.  The  Issuer
shall promptly furnish a copy of such notice to the Seller.

(3)   The  redemption  price  for any  Notes  shall be equal to the
applicable  Redemption  Price  set  forth  in  the  related  Series
Supplement.  The Issuer  shall only be required to redeem  Notes if
it has available  funds  sufficient to pay such amount.  The Issuer
shall furnish the Rating  Agencies  notice of any such  redemption.
If any Notes are to be redeemed  pursuant to this Section  10.1(a),
the Issuer shall furnish  notice  thereof to the Indenture  Trustee
not later  than 10 days  prior to the  applicable  Redemption  Date
and  the  Issuer  shall  deposit  into  the  applicable   Principal
Funding Account,  on or before the applicable  Redemption Date, the
aggregate  Redemption Price of the Notes to be redeemed,  whereupon
all such Notes shall be due and payable on the Redemption Date.

SECTION 10.2    Form of Redemption Notice.

(1)   Notice of  redemption  of any Notes under  Section 10.1 shall
be given by the  Indenture  Trustee by  first-class  mail,  postage
prepaid,  mailed  not less than five days  prior to the  applicable
Redemption  Date to each  Noteholder  of  record of the Notes to be
redeemed  at  such  Noteholder's  address  appearing  in  the  Note
Register.

(2)   All notices of redemption shall state:

(1)   the applicable Redemption Date;

(2)   the applicable Redemption Price;

(3)   the place where the Notes are to be  surrendered  for payment
      of the Redemption  Price (which shall be the Agency Office of
      the  Indenture  Trustee  to  be  maintained  as  provided  in
      Section 3.2);

(4)   the CUSIP number, if applicable; and

(5)   the principal amount of Notes to be redeemed.

(3)   Notice  of  redemption  of the  Notes  shall  be given by the
Indenture  Trustee in the name and at the  expense  of the  Issuer.
Failure to give notice of  redemption,  or any defect  therein,  to
any Holder of any Note shall not impair or affect the  validity  of
the redemption of any other Note.


SECTION 10.3    Notes Payable on Redemption Date.

           With respect to any Notes,  such Notes shall,  following
notice of  redemption  as required by Section  10.2 (in the case of
redemption   pursuant   to  Section   10.1),   on  the   applicable
Redemption  Date  cease  to be  Outstanding  for  purposes  of this
Indenture  and  shall  thereafter   represent  only  the  right  to
receive  the  applicable  Redemption  Price and  (unless the Issuer
shall  default  in  the  payment  of  such  Redemption   Price)  no
interest  shall  accrue on such  Redemption  Price  for any  period
after  the  date  to  which  accrued  interest  is  calculated  for
purposes of calculating such Redemption Price.


ARTICLE 11
                            MISCELLANEOUS

SECTION 11.1    Compliance Certificates and Opinions, etc.

(1)   Upon  any  application  or  request  by  the  Issuer  to  the
Indenture  Trustee to take any action  under any  provision of this
Indenture,  the Issuer shall furnish to the Indenture  Trustee upon
request:    (i) an   Officer's   Certificate   stating   that   all
conditions  precedent,  if  any,  provided  for in  this  Indenture
relating  to the  proposed  action  have  been  complied  with  and
(ii) an  Opinion of  Counsel  stating  that in the  opinion of such
counsel all such conditions  precedent,  if any, have been complied
with,  except that, in the case of any such  application or request
as to  which  the  furnishing  of such  documents  is  specifically
required  by  any  provision  of  this  Indenture,   no  additional
certificate  or opinion need be  furnished.  Every  certificate  or
opinion  with  respect to  compliance  with a condition or covenant
provided for in this Indenture shall include:

(1)   a  statement  that  each  signatory  of such  certificate  or
      opinion  has read or has caused to be read such  covenant  or
      condition and the definitions herein relating thereto;

(2)   a  brief  statement  as  to  the  nature  and  scope  of  the
      examination  or  investigation  upon which the  statements or
      opinions contained in such certificate or opinion are based;

(3)   a statement  that,  in the  judgment of each such  signatory,
      such signatory has made such  examination or investigation as
      is necessary to enable such  signatory to express an informed
      opinion as to whether or not such  covenant or condition  has
      been complied with; and

(4)   a  statement  as to  whether,  in the  opinion  of each  such
      signatory, such condition or covenant has been complied with.

           (b)  (i)  Prior  to  the  deposit  with  the   Indenture
      Trustee of any  Collateral  or other  property or  securities
      that is to be made the basis for the release of any  property
      or  securities  subject  to the lien of this  Indenture,  the
      Issuer  shall,  in  addition  to any  obligation  imposed  in
      Section  11.1(a) or elsewhere in this  Indenture,  furnish to
      the Indenture Trustee an Officers' Certificate  certifying or
      stating the opinion of each Person  signing such  certificate
      as to the fair value  (within 90 days of such deposit) to the
      Issuer of the  Collateral or other  property or securities to
      be so deposited.

                (ii) Whenever  the Issuer is required to furnish to
      the Indenture Trustee an Officers' Certificate  certifying or
      stating the  opinion of any signer  thereof as to the matters
      described  in clause  (b)(i)  above,  the  Issuer  shall also
      deliver to the Indenture  Trustee an Independent  Certificate
      as to the same  matters,  if the fair  value to the Issuer of
      the  securities  to be so  deposited  and of all  other  such
      securities  made the basis of any such  withdrawal or release
      since the  commencement  of the then  current  fiscal year of
      the  Issuer,  as  set  forth  in the  certificates  delivered
      pursuant to clause (i) above and this clause (b)(ii),  is 10%
      or more of the  Outstanding  Amount of the Notes,  but such a
      certificate  need  not  be  furnished  with  respect  to  any
      securities  so  deposited,  if the fair value  thereof to the
      Issuer as set forth in the related  Officers'  Certificate is
      less  than   $25,000   or  less  than  one   percent  of  the
      outstanding Notes.

                (iii)Other than with  respect to the release of any
      Defaulted Receivables or Disqualified  Receivables,  whenever
      any property or  securities  are to be released from the lien
      of this  Indenture,  the  Issuer  shall  also  furnish to the
      Indenture  Trustee an  Officer's  Certificate  certifying  or
      stating the opinion of each Person  signing such  certificate
      as to the fair value  (within 90 days of such release) of the
      property or  securities  proposed to be released  and stating
      that in the opinion of such Person the proposed  release will
      not   impair   the   security   under   this   Indenture   in
      contravention of the provisions hereof.

                (iv) Whenever  the Issuer is required to furnish to
      the Indenture Trustee an Officer's Certificate  certifying or
      stating  the  opinion  of  any  signatory  thereof  as to the
      matters  described in clause (b)(iii) above, the Issuer shall
      also  furnish  to  the  Indenture   Trustee  an   Independent
      Certificate  as to the same  matters if the fair value of the
      property or securities and of all other property,  other than
      Defaulted   Receivables  or  Disqualified   Receivables,   or
      securities  released  from the lien of this  Indenture  since
      the  commencement  of the then current  calendar year, as set
      forth in the  certificates  required by clause (b)(iii) above
      and  this  clause   (b)(iv),   equals  10%  or  more  of  the
      Outstanding  Amount of the Notes,  but such  certificate need
      not be  furnished  in the case of any  release of property or
      securities  if the fair  value  thereof  as set  forth in the
      related  Officer's  Certificate  is less than $25,000 or less
      than one percent of the outstanding Notes.

                (v)  Notwithstanding   Section  2.9  or  any  other
      provision of this Section  11.1,  the Issuer may (A) collect,
      liquidate,  sell or  otherwise  dispose of  Receivables,  the
      Related  Security and  proceeds  thereof as and to the extent
      permitted  or required by the Basic  Documents  and  (B) make
      cash  payments out of the Trust  Accounts and Group  Accounts
      as and to the  extent  permitted  or  required  by the  Basic
      Documents.

SECTION 11.2    Form of Documents Delivered to Indenture Trustee.

(1)   In  any  case  where  several  matters  are  required  to  be
certified  by, or covered by an opinion of, any  specified  Person,
it is not  necessary  that all such  matters  be  certified  by, or
covered by the opinion of,  only one such  Person,  or that they be
so certified or covered by only one  document,  but one such Person
may  certify or give an opinion  with  respect to some  matters and
one or more other such  Persons as to other  matters,  and any such
Person may  certify  or give an  opinion as to such  matters in one
or several documents.

(2)   Any  certificate  or opinion of an Authorized  Officer of the
Issuer may be based,  insofar as it relates to legal matters,  upon
a  certificate  or  opinion  of, or  representations  by,  counsel,
unless such officer  knows,  or in the exercise of reasonable  care
should know,  that the  certificate  or opinion or  representations
with respect to the matters upon which his  certificate  or opinion
is based  are  erroneous.  Any such  certificate  of an  Authorized
Officer or Opinion of Counsel  may be based,  insofar as it relates
to  factual   matters,   upon  a  certificate  or  opinion  of,  or
representations  by, an officer or  officers of the  Servicer,  the
Seller,  the  Issuer  or  the   Administrator,   stating  that  the
information  with  respect  to  such  factual  matters  is  in  the
possession  of  the  Servicer,   the  Seller,  the  Issuer  or  the
Administrator,  unless such  counsel  knows,  or in the exercise of
reasonable  care should know,  that the  certificate  or opinion or
representations with respect to such matters are erroneous.

(3)   Where any Person is required to make,  give or execute two or
more applications,  requests, consents,  certificates,  statements,
opinions or other instruments  under this Indenture,  they may, but
need not, be consolidated and form one instrument.

(4)   Whenever  in  this   Indenture,   in   connection   with  any
application or certificate or report to the Indenture  Trustee,  it
is  provided  that the  Issuer  shall  deliver  any  document  as a
condition  of the granting of such  application,  or as evidence of
the Issuer's  compliance with any term hereof,  it is intended that
the  truth  and  accuracy,  at the  time  of the  granting  of such
application  or at  the  effective  date  of  such  certificate  or
report (as the case may be),  of the facts and  opinions  stated in
such  document  shall in such case be  conditions  precedent to the
right of the  Issuer to have  such  application  granted  or to the
sufficiency  of such  certificate  or report.  The foregoing  shall
not,  however,  be  construed  to affect  the  Indenture  Trustee's
right to rely upon the  truth  and  accuracy  of any  statement  or
opinion contained in any such document as provided in Article VI.

SECTION 11.3    Acts of Noteholders.

(1)   Any  request,  demand,   authorization,   direction,  notice,
consent,  waiver or other action  provided by this  Indenture to be
given or taken by  Noteholders  or a Series of  Noteholders  may be
embodied  in  and   evidenced  by  one  or  more   instruments   of
substantially  similar tenor signed by such  Noteholders  in person
or by agents  duly  appointed  in  writing  and shall be subject to
Section  5.11  hereof;  and  except as herein  otherwise  expressly
provided such action shall become  effective  when such  instrument
or instruments are delivered to the Indenture  Trustee,  and, where
it is hereby  expressly  required,  to the Issuer.  Such instrument
or  instruments  (and the action  embodied  therein  and  evidenced
thereby)  are  herein  sometimes  referred  to as the  "Act" of the
Noteholders  signing  such  instrument  or  instruments.  Proof  of
execution of any such  instrument  or of a writing  appointing  any
such agent shall be  sufficient  for any purpose of this  Indenture
and (subject to Section 6.1)  conclusive  in favor of the Indenture
Trustee  and the  Issuer,  if made in the manner  provided  in this
Section 11.3.

(2)   The fact and date of the  execution by any Person of any such
instrument  or  writing  may be  proved  in  any  manner  that  the
Indenture Trustee deems sufficient.

(3)   The ownership of Notes shall be proved by the Note Register.

(4)   Any  request,  demand,   authorization,   direction,  notice,
consent,  waiver  or other  action  by the  Holder of any Notes (or
any one or more  Predecessor  Notes) shall bind the Holder of every
Note issued upon the registration  thereof or in exchange  therefor
or in lieu  thereof,  in  respect  of  anything  done,  omitted  or
suffered  to be done by the  Indenture  Trustee  or the  Issuer  in
reliance  thereon,  whether or not  notation of such action is made
upon such Note.

SECTION 11.4    Notices,  etc., to Indenture  Trustee,  Issuer and
Rating Agencies.  Any request,  demand,  authorization,  direction,
notice,  consent,  waiver or Act of Noteholders or other  documents
provided or permitted by this  Indenture to be made upon,  given or
furnished to or filed with:

(1)   the  Indenture  Trustee  by any  Noteholder  or by the Issuer
shall be  sufficient  for every purpose  hereunder if made,  given,
furnished or filed in writing to or with the  Indenture  Trustee at
its Corporate Trust Office, or

(2)   any party  hereunder  shall be  sufficient  for every purpose
hereunder  if in writing  and either sent by  electronic  facsimile
transmission  (with  hard copy to follow via first  class  mail) or
mailed,  by  certified  mail,  return  receipt  requested,   or  by
overnight  mail to the  Issuer  and the Owner  Trustee  each at the
address  specified  in  Appendix B to the Trust Sale and  Servicing
Agreement.

                The  Issuer  shall  promptly  transmit  any  notice
received by it from the  Noteholders  to the Indenture  Trustee and
the Indenture  Trustee shall likewise  promptly transmit any notice
received by it from the Noteholders to the Issuer.

(3)   Notices  required  to be given to the Rating  Agencies by the
Issuer,  the  Indenture  Trustee  or the  Owner  Trustee  shall  be
delivered  as  specified  in  Appendix  B to  the  Trust  Sale  and
Servicing Agreement.


SECTION 11.5    Notices to Noteholders; Waiver.

(1)   Where this  Indenture  provides for notice to  Noteholders of
any  condition or event,  such notice shall be  sufficiently  given
(unless  otherwise herein  expressly  provided) if it is in writing
and  mailed,  first-class,   postage  prepaid  to  each  Noteholder
affected by such event,  at such Person's  address as it appears on
the  Note  Register,  not  later  than  the  latest  date,  and not
earlier than the earliest  date,  prescribed for the giving of such
notice.  If notice to  Noteholders  is given by mail,  neither  the
failure  to mail  such  notice  nor any  defect  in any  notice  so
mailed to any particular  Noteholder  shall affect the  sufficiency
of such notice with  respect to other  Noteholders,  and any notice
that is mailed in the manner  herein  provided  shall  conclusively
be  presumed  to have been duly given  regardless  of whether  such
notice is in fact actually received.

(2)   Where this Indenture provides for notice in any manner,  such
notice may be waived in writing by any Person  entitled  to receive
such  notice,  either  before or after the event,  and such  waiver
shall be the  equivalent  of such  notice.  Waivers  of  notice  by
Noteholders  shall be filed  with the  Indenture  Trustee  but such
filing  shall not be a condition  precedent  to the validity of any
action taken in reliance upon such a waiver.

(3)   In case, by reason of the  suspension of regular mail service
as a result of a strike,  work  stoppage  or similar  activity,  it
shall be  impractical  to mail  notice of any event of  Noteholders
when  such  notice  is  required  to  be  given   pursuant  to  any
provision  of this  Indenture,  then  any  manner  of  giving  such
notice as shall be satisfactory  to the Indenture  Trustee shall be
deemed to be a sufficient giving of such notice.

(4)   Where  this  Indenture  provides  for  notice  to the  Rating
Agencies,  failure to give such  notice  shall not affect any other
rights or obligations  created  hereunder,  and shall not under any
circumstance constitute an Event of Default.

SECTION 11.6    Alternate Payment and Notice Provisions.

           Notwithstanding  any provision of this  Indenture or any
of the  Notes  to the  contrary,  the  Issuer  may  enter  into any
agreement  with any  Holder  of a Note  providing  for a method  of
payment,  or notice by the  Indenture  Trustee or any Paying  Agent
to such  Holder,  that is different  from the methods  provided for
in this  Indenture for such  payments or notices.  The Issuer shall
furnish  to the  Indenture  Trustee a copy of each  such  agreement
and the  Indenture  Trustee  shall  cause  payments  to be made and
notices to be given in accordance with such agreements.

SECTION 11.7    Effect of Headings and Table of Contents.

           The Article and  Section  headings  herein and the Table
of  Contents  are for  convenience  only and shall not  affect  the
construction hereof.


SECTION 11.8    Successors and Assigns.

(1)   All covenants and  agreements in this Indenture and the Notes
by the Issuer shall bind its  successors  and  assigns,  whether so
expressed or not.

(2)   All  covenants and  agreements  of the  Indenture  Trustee in
this Indenture  shall bind its  successors and assigns,  whether so
expressed or not.

SECTION 11.9    Separability.

           In case any provision in this  Indenture or in the Notes
shall  be  invalid,   illegal  or   unenforceable,   the  validity,
legality and  enforceability of the remaining  provisions shall not
in any way be affected or impaired thereby.

SECTION 11.10   Benefits of Indenture.

           Nothing in this  Indenture  or in the Notes,  express or
implied,  shall give to any Person,  other than the parties  hereto
and  their  successors  hereunder,  the  Noteholders  and the  Note
Owners  and any  other  party  secured  hereunder,  and  any  other
Person  with  an  ownership  interest  in any  part  of  the  Trust
Assets,  any  benefit or any legal or  equitable  right,  remedy or
claim under this Indenture.

SECTION 11.11   Legal Holidays.

           If the date on which any  payment  is due shall not be a
Business  Day,  then  (notwithstanding  any other  provision of the
Notes or this  Indenture)  payment  need not be made on such  date,
but may be made on the next  succeeding  Business Day with the same
force  and  effect as if made on the date on which  nominally  due,
and no  interest  shall  accrue for the  period  from and after any
such nominal date.

SECTION 11.12   GOVERNING LAW.

           THIS  INDENTURE  SHALL BE CONSTRUED IN  ACCORDANCE  WITH
THE LAWS OF THE  STATE OF  ILLINOIS,  WITHOUT  REFERENCE  TO ITS OR
ANY  OTHER  JURISDICTION'S  CONFLICT  OF LAW  PROVISIONS,  AND  THE
OBLIGATIONS,  RIGHTS AND  REMEDIES OF THE PARTIES  HEREUNDER  SHALL
BE  DETERMINED  IN ACCORDANCE  WITH SUCH LAWS;  PROVIDED,  HOWEVER,
THAT THE RIGHTS AND  LIABILITIES OF THE INDENTURE  TRUSTEE SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


SECTION 11.13   Counterparts.

           This   Indenture  may  be  executed  in  any  number  of
counterparts,  each of which so  executed  shall be deemed to be an
original,  but all such counterparts shall together  constitute but
one and the same instrument.

SECTION 11.14   Recording of Indenture.

           If  this  Indenture  is  subject  to  recording  in  any
appropriate  public  recording  offices,  such  recording  is to be
effected  by  the  Issuer  and  at its  expense  accompanied  by an
Opinion of Counsel to the effect that such  recording  is necessary
either for the  protection of the  Noteholders  or any other Person
secured  hereunder  or for the  enforcement  of any right or remedy
granted to the Indenture Trustee under this Indenture.

SECTION 11.15   No Recourse.

(1)   Each  Noteholder  will  agree  by  acceptance  of a Note  (or
interest  therein)  that no  recourse  may be  taken,  directly  or
indirectly,  with  respect to the  obligations  of the Issuer,  the
Owner Trustee or the  Indenture  Trustee on the Notes or under this
Indenture  or  any  certificate  or  other  writing   delivered  in
connection herewith or therewith, against:

(1)   the Indenture  Trustee or the Owner Trustee in its individual
      capacity;

(2)   any owner of a beneficial interest in the Issuer; or

(3)   any partner, owner, beneficiary,  agent, officer, director or
      employee  of the  Indenture  Trustee or the Owner  Trustee in
      its individual capacity,  any holder of a beneficial interest
      in the Issuer,  the Owner Trustee or the Indenture Trustee or
      of any  successor or assign of the  Indenture  Trustee or the
      Owner Trustee in its individual capacity,  except as any such
      Person may have expressly  agreed (it being  understood  that
      the  Indenture  Trustee  and the  Owner  Trustee  has no such
      obligation  in its  individual  capacity) and except that any
      such partner,  owner or beneficiary shall be fully liable, to
      the  extent  provided  by  applicable  law,  for  any  unpaid
      consideration  for  stock,  unpaid  capital  contribution  or
      failure  to  pay  any  installment  or  call  owing  to  such
      entity.   For  all  purposes  of  this   Indenture,   in  the
      performance  of any  duties  or  obligations  of  the  Issuer
      hereunder,  the  Owner  Trustee  shall  be  subject  to,  and
      entitled  to the  benefits  of, the terms and  provisions  of
      Articles IV, V and VI of the Trust Agreement.


(2)   Except as expressly provided in the Basic Documents,  neither
the  Seller,  the  Servicer,  the  Indenture  Trustee nor the Owner
Trustee in their respective individual  capacities,  any owner of a
beneficial  interest  in the  Issuer,  nor any of their  respective
partners,  owners,  beneficiaries,   agents,  officers,  directors,
employees or  successors  or assigns,  shall be  personally  liable
for,  nor shall  recourse be had to any of them for, the payment of
principal  of or  interest  on, or  performance  of, or omission to
perform,  any of the  covenants,  obligations  or  indemnifications
contained  in the  Notes  or this  Indenture,  it  being  expressly
understood  that such covenants,  obligations and  indemnifications
have been made by the  Issuer.  Each  Noteholder  or Note  Owner by
the  acceptance  of a Note (or  beneficial  interest  therein) will
agree that,  except as expressly  provided in the Basic  Documents,
in the  case of an Event  of  Default  under  this  Indenture,  the
Holder  shall have no claim  against any of the  foregoing  for any
deficiency,  loss  or  claim  therefrom;  provided,  however,  that
nothing  contained  herein  shall be taken to prevent  recourse to,
and enforcement  against,  the assets of the Issuer for any and all
liabilities,   obligations  and  undertakings   contained  in  this
Indenture or in the Notes.

SECTION 11.16   No Petition.

           The Indenture Trustee,  by entering into this Indenture,
and  each  Noteholder  and  Note  Owner,  by  accepting  a Note (or
interest  therein)  issued  hereunder,  hereby  covenant  and agree
that they  shall  not,  prior to the date which is one year and one
day after the  termination  of the Indenture,  acquiesce,  petition
or  otherwise  invoke or cause the  Seller or the  Issuer to invoke
the process of any court or  government  authority  for the purpose
of  commencing  or  sustaining  a case  against  the  Seller or the
Issuer  under  any   Insolvency   Law  or  appointing  a  receiver,
liquidator,  assignee,  trustee,  custodian,  sequestrator or other
similar  official  of the Seller or the  Issuer or any  substantial
part of its  property,  or ordering  the winding up or  liquidation
of the affairs of the Seller or the Issuer.

SECTION 11.17   Inspection.

           The Issuer agrees that, on reasonable  prior notice,  it
shall permit any  representative of the Indenture  Trustee,  during
the Issuer's  normal  business  hours,  to examine all the books of
account,  records,  reports and other papers of the Issuer, to make
copies  and  extracts   therefrom   and  to  discuss  the  Issuer's
affairs,  finances  and  accounts  with the  Issuer's  officers and
employees,  during  normal  business  hours  and as often as may be
reasonably   requested   (with   reasonable   prior  notice).   The
Indenture  Trustee  shall and shall  cause its  representatives  to
hold in  confidence  all  such  information  except  to the  extent
disclosure   may  be   required   by  law   (and   all   reasonable
applications  for   confidential   treatment  are  unavailing)  and
except to the extent  that the  Indenture  Trustee  may  reasonably
determine that such  disclosure is consistent  with its obligations
hereunder.

SECTION 11.18   No Substantive Review of Compliance Documents.

           Other than as  specifically  set forth in this Indenture
for notices which  specifically  contain  information  of which the
Indenture  Trustee is to have notice,  any reports,  information or
other  documents  provided  to the  Indenture  Trustee  are for the
purposes  only of  enabling  the  sending  party to comply with its
document delivery  requirements  hereunder and such party's receipt
of any such  information  shall not,  in and of itself,  constitute
constructive  or actual  notice  to the  Indenture  Trustee  of any
information    contained   therein   or   determinable   from   any
information   contained  therein,   including  the  Issuer  or  the
Servicer's  compliance  with any of its covenants,  representations
or warranties hereunder.


SECTION 11.19   Amendment of Basic Documents.

           The Issuer shall not amend,  modify or grant any consent
or  waiver  with  respect  to the  provisions  of any of the  Basic
Documents  without  the  prior  written  consent  of the  Indenture
Trustee,  except (a)  pursuant to Section 8.1 of the Trust Sale and
Servicing   Agreement,   (b)   pursuant   to  Section  7.1  of  the
Receivables  Purchase  Agreement,  (c)  pursuant  to Section 9.1 of
this  Indenture  or (d) where the Basic  Documents  do not  require
the  consent  of  the   Indenture   Trustee  for  such   amendment,
modification, consent or waiver.


                      *     *     *     *     *


           IN  WITNESS  WHEREOF,   the  Issuer  and  the  Indenture
Trustee  have caused this  Indenture  to be duly  executed by their
respective officers,  thereunto duly authorized,  all as of the day
and year first above written.


                               TRUCK  ENGINE   RECEIVABLES   MASTER
                               TRUST


                               By:   Chase   Manhattan   Bank  USA,
                                     National  Association,  not in
                                     its individual capacity  but
                                     solely as Owner Trustee

                               By:________________________________________
                                     Name:
                                     Title:


                               THE BANK OF NEW YORK
                               as Indenture Trustee

                               By:________________________________________
                                     Name:
                                     Title:


Acknowledged and Accepted:

NAVISTAR FINANCIAL
CORPORATION,
Servicer


By:_____________________________
Name:
Title:



 
 
                                                                EXHIBIT 10.64





                          TRUST AGREEMENT


                          BY AND BETWEEN


              TRUCK ENGINE RECEIVABLES FINANCING CO.
                           (TRANSFEROR)


                                AND


          CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
                          (OWNER TRUSTEE)


                   DATED AS OF NOVEMBER 21, 2000



                         TABLE OF CONTENTS


                                                               Page

ARTICLE IDEFINITIONS..............................................1
         SECTION 1.1 Definitions..................................1

ARTICLE IIORGANIZATION............................................1
         SECTION 2.1 Name.........................................1
         SECTION 2.2 Office.......................................1
         SECTION 2.3 Purposes and Powers..........................1
         SECTION 2.4 Appointment of Owner Trustee.................2
         SECTION 2.5 Initial Capital Contribution of Trust Assets.2
         SECTION 2.6 Declaration of Trust.........................3
         SECTION 2.7 Liability of the Certificate Owners..........3
         SECTION 2.8 Title to Trust Property......................3
         SECTION 2.9 Situs of Trust...............................3
         SECTION 2.10Representations and Warranties of the Seller.3
         SECTION 2.11Tax Treatment................................4

ARTICLE IIITHE CERTIFICATES.......................................5
         SECTION 3.1 Initial Certificate Ownership................5
         SECTION 3.2 Form of Certificates.........................5
         SECTION 3.3 Execution, Authentication and Delivery.......5
         SECTION 3.4 New Issuances................................6
         SECTION 3.5 Registration; Registration of Transfer;
                     Exchange of Certificates.....................6
         SECTION 3.6 Mutilated, Destroyed, Lost or Stolen
                     Certificates.................................8
         SECTION 3.7 Persons Deemed Certificateholders............9
         SECTION 3.8 Access to List of Certificateholders' Names
                     and Addresses................................9
         SECTION 3.9 Maintenance of Corporate Trust Office........9
         SECTION 3.10Appointment of Paying Agent..................9
         SECTION 3.11Seller as Certificateholder.................10

ARTICLE IVACTIONS BY OWNER TRUSTEE...............................10
         SECTION 4.1 Notice to Certificateholders with Respect to
                     Certain Matters............................ 10
         SECTION 4.2 Action by Certificateholders with Respect to
                     Certain Matters............................ 11
         SECTION 4.3 Action by Certificateholders with Respect to
                     Bankruptcy................................. 11
         SECTION 4.4 Restrictions on Certificateholders' Power.  11
         SECTION 4.5 Majority Control............................11

ARTICLE VAPPLICATION OF TRUST FUNDS; CERTAIN DUTIES..............12
         SECTION 5.1 Establishment of Certificate Distribution
                     Account.....................................12
         SECTION 5.2 Application of Trust Funds..................12
         SECTION 5.3 Method of Payment...........................13
         SECTION 5.4 Accounting; Reports to Certificateholders and
                     Others......................................13
         SECTION 5.5 Signature on Returns; Tax Matters Partner...14

ARTICLE VITHE OWNER TRUSTEE......................................14
         SECTION 6.1 Duties of Owner Trustee.....................14
         SECTION 6.2 Rights of Owner Trustee.  ..................15
         SECTION 6.3 Acceptance of Trusts and Duties.............15
         SECTION 6.4 Action upon Instruction by Certificateholders17
         SECTION 6.5 Furnishing of Documents.....................17
         SECTION 6.6 Representations and Warranties of Owner
                     Trustee.....................................17
         SECTION 6.7 Reliance; Advice of Counsel.................18
         SECTION 6.8 Owner Trustee May Own Certificates and Notes19
         SECTION 6.9 Compensation and Indemnity..................19
         SECTION 6.10Replacement of Owner Trustee................20
         SECTION 6.11Merger or Consolidation of Owner Trustee....21
         SECTION 6.12Appointment of Co-Trustee or Separate Trustee21
         SECTION 6.13Eligibility Requirements for Owner Trustee..22

ARTICLE VIITERMINATION OF TRUST AGREEMENT........................23
         SECTION 7.1 Termination of Trust Agreement..............23



ARTICLE VIIIAMENDMENTS...........................................24

ARTICLE IXMISCELLANEOUS..........................................24
         SECTION 9.1 No Legal Title to Trust Assets.  ...........24
         SECTION 9.2 Limitations on Rights of Others.............25
         SECTION 9.3 Notices.....................................25
         SECTION 9.4 Severability of Provisions..................25
         SECTION 9.5 Counterparts................................25
         SECTION 9.6 Successors and Assigns......................25
         SECTION 9.7 No Petition Covenant........................25
         SECTION 9.8 No Recourse.................................26
         SECTION 9.9 Headings....................................26
         SECTION 9.10GOVERNING LAW...............................26
         SECTION 9.11Certificate Transfer Restrictions...........26
         SECTION 9.12Administrator...............................26
         SECTION 9.13Third-Party Beneficiaries...................27



                              EXHIBITS

Exhibit A  Form of Certificate
Exhibit B  Form of Certificate of Trust




                           TRUST AGREEMENT

           THIS TRUST  AGREEMENT  (this  "Agreement") is made as of
November   21,  2000,  by  and  between  TRUCK  ENGINE  RECEIVABLES
FINANCING CO., a Delaware  corporation,  as Seller (the  "Seller"),
and CHASE  MANHATTAN  BANK USA,  NATIONAL  ASSOCIATION,  a national
banking  association,  as  Owner  Trustee  (not  in its  individual
capacity but solely as Owner Trustee, the "Owner Trustee").

           In   consideration   of  the  premises  and  the  mutual
covenants herein contained, the parties hereto agree as follows:

                              ARTICLE I

                             DEFINITIONS

           SECTION I.1  Definitions.   Unless   otherwise   defined
herein,  capitalized  terms used in this  Agreement  shall have the
respective  meanings  assigned to them in Part I of  Appendix A  to
the  Trust  Sale  and  Servicing  Agreement,  dated  as of the date
hereof,  by and among the Seller,  the  Servicer and the Trust (the
"Trust Sale and Servicing  Agreement").  All  references  herein to
"the  Agreement" or "this  Agreement"  are to this Trust  Agreement
as it may be amended and  supplemented  from time to time,  and all
references  herein to  Articles,  Sections and  subsections  are to
Articles,   Sections  and  subsections  of  this  Agreement  unless
otherwise  specified.  The rules of construction  set forth in Part
II of Appendix A to the Trust Sale and  Servicing  Agreement  shall
be applicable to this Agreement.

                             ARTICLE II

                            ORGANIZATION

           SECTION II.1 Name.  The Trust  created  hereby  shall be
known as Truck  Engine  Receivables  Master Trust in which name the
Owner  Trustee  may conduct  the  business  of the Trust,  make and
execute  contracts  and  other  instruments  on behalf of the Trust
and sue and be sued on behalf of the Trust.

           SECTION II.2 Office.  The  office of the Trust  shall be
in care of the Owner  Trustee at the  Corporate  Trust Office or at
such other  address in Delaware as the Owner  Trustee may designate
by written notice to the Certificateholders and the Seller.

           SECTION II.3 Purposes  and  Powers.  The  purpose of the
Trust is,  and the Trust  shall  have the power and  authority,  to
engage in the following activities:

           (a)  to acquire,  manage and hold the  Receivables to be
transferred  to the Trust from time to time  pursuant  to the Trust
Sale and Servicing Agreement;

           (b)  to  issue  and  sell  the  Notes  pursuant  to  the
Indenture  or to another  indenture,  note  purchase  agreement  or
similar   agreement   and  the   Certificates   pursuant   to  this
Agreement,  and to sell,  transfer  or  exchange  the Notes and the
Certificates;

           (c)  to  acquire  property  and  assets  from the Seller
pursuant  to the  Trust  Sale  and  Servicing  Agreement,  to  make
payments   or    distributions    on   the    Securities   to   the
Securityholders,    to   make   withdrawals   from   the   accounts
established  pursuant  to  the  Basic  Documents  and  to  pay  the
organizational, start-up and transactional expenses of the Trust;

           (d)  to   establish,   acquire,   hold   and   terminate
liquidity,  credit and other enhancement arrangements,  and perform
its obligations thereunder;

           (e)  to assign, grant,  transfer,  pledge,  mortgage and
convey  the Trust  Assets  pursuant  to the terms of the  Indenture
and to hold,  manage such Trust Assets and distribute  funds to the
Certificateholders  pursuant  to the  terms of this  Agreement  and
the Trust Sale and  Servicing  Agreement,  any portion of the Trust
Assets  released  from the  lien  of,  and  remitted  to the  Trust
pursuant to, the Indenture;

           (f)  to  enter  into and  perform  its  obligations  and
exercise  its rights  under the Basic  Documents  to which it is to
be a party;

           (g)  to engage in those activities,  including  entering
into  agreements,  that are  necessary,  suitable or  convenient to
accomplish  the  foregoing or are  incidental  thereto or connected
therewith; and

           (h)  subject to compliance with the Basic Documents,  to
engage in such other  activities  as may be required in  connection
with   conservation   of  the  Trust   Assets  and  the  making  of
distributions to the Securityholders.

The  Trust  shall  not  engage  in  any  activity   other  than  in
connection  with  the  foregoing  or  other  than  as  required  or
authorized by the terms of this Agreement or the Basic Documents.

           SECTION II.4 Appointment  of Owner  Trustee.  The Seller
hereby   appoints  the  Owner  Trustee  as  trustee  of  the  Trust
effective  as of the date  hereof,  to have all the rights,  powers
and duties set forth herein.

           SECTION II.5 Initial  Capital  Contribution  of  Trust
Assets.  Pursuant  to the Trust Sale and  Servicing  Agreement,  on
the date hereof,  the Seller will sell,  assign,  transfer,  convey
and set over to the Owner  Trustee,  the  assets  specified  in the
Trust  Sale and  Servicing  Agreement.  The  Owner  Trustee  hereby
acknowledges  receipt  in  trust  from the  Seller,  as of the date
hereof, of the foregoing  contribution,  which shall constitute the
initial   Trust  Assets.   The  Seller  shall  pay   organizational
expenses  of the  Trust  as they  may  arise  or  shall,  upon  the
request  of  the  Owner  Trustee,   promptly  reimburse  the  Owner
Trustee for any such expenses paid by the Owner Trustee.

           SECTION II.6 Declaration  of Trust.  The  Owner  Trustee
hereby  declares  that it shall hold the Trust Assets in trust upon
and subject to the  conditions  and  obligations  set forth  herein
and  in  the  Trust  Sale  and  Servicing  Agreement.   It  is  the
intention  of the  parties  hereto  that  the  Trust  constitute  a
business  trust  under  the  Business  Trust  Statute,   that  this
Agreement  constitute  the  governing  instrument  of such business
trust and that the  Certificates  represent  the  equity  interests
therein.   The   rights   of  the   Certificateholders   shall   be
determined  as set forth herein and in the Business  Trust  Statute
and  the   relationship   between  the  parties   created  by  this
Agreement  shall not  constitute  indebtedness.  The parties hereto
agree  that,  unless  otherwise   required  by  appropriate  taxing
authorities,  the Trust  shall file or cause to be filed  annual or
other necessary  returns,  reports and other forms  consistent with
the  characterization  of the Trust as a  partnership  for such tax
purposes.  Effective  as of the  date  hereof,  the  Owner  Trustee
shall  have  all  rights,  powers  and  duties  set  forth  in this
Agreement,   the  Trust  Sale  and  Servicing   Agreement  and  the
Business Trust Statute with respect to  accomplishing  the purposes
of the  Trust.  The Owner  Trustee  agrees to file the  certificate
of trust  required  underss. 3810  et seq.  of the  Business  Trust
Statute  in the form of  Exhibit B  hereto  (the  "Certificate  of
Trust")  in  connection  with  the  formation  of  the  Trust  as a
business trust under the Business Trust Statute.

           SECTION II.7 Liability   of  the   Certificate   Owners.
Certificateholders  and  holders of  beneficial  interests  therein
shall be entitled  to the same  limitation  of  personal  liability
extended  to  stockholders  of  private   corporations  for  profit
organized under the Delaware General Corporation Law.

           SECTION II.8 Title to  Trust  Property.  Legal  title to
all the Trust  Assets  shall be vested at all times in the Trust as
a  separate  legal  entity  except  where  applicable  law  in  any
jurisdiction  requires  title to any part of the Trust Assets to be
vested in a trustee  or  trustees,  in which  case  title  shall be
deemed to be vested in the Owner  Trustee,  a  co-trustee  and/or a
separate trustee, as the case may be.

           SECTION II.9 Situs  of  Trust.   The   Trust   shall  be
located  and  administered  in the  State  of  Delaware.  All  bank
accounts  maintained  by the Owner  Trustee  on behalf of the Trust
shall be  located  in the  State of  Delaware  or the  State of New
York.  The Trust  shall not have any  employees  in any state other
than  Delaware;   provided,  however,  that  nothing  herein  shall
restrict  or  prohibit  the Owner  Trustee  from  having  employees
within  or  without  the  State  of  Delaware.  Payments  shall  be
received by the Trust only in Delaware  or New York,  and  payments
and  distributions  shall be made by the Trust  only from  Delaware
or New York.  The only office of the Trust  shall be the  Corporate
Trust Office in Delaware.

           SECTION II.10            Representations       and
Warranties  of  the  Seller.   The  Seller  hereby  represents  and
warrants to the Owner Trustee and the Indenture Trustee that:

           (a)  The Seller has been duly  organized  and is validly
existing as a corporation  in good  standing  under the laws of the
State of Delaware,  with power and authority to own its  properties
and to  conduct  its  business  as such  properties  are  presently
owned and such  business  is  presently  conducted,  and had at all
relevant times,  and now has,  power,  authority and legal right to
acquire  and  own  the   Receivables   and  all  Related   Security
contemplated  to be  transferred to the Trust pursuant to the Trust
Sale and Servicing Agreement.

           (b)  The Seller is duly  qualified  to do business  and,
where  necessary  is in  good  standing  (or is  exempt  from  such
requirement),   and  has  obtained  all   necessary   licenses  and
approvals in all  jurisdictions  in which the ownership or lease of
property   or  the   conduct   of  its   business   requires   such
qualifications,  except  where the  failure to so qualify or obtain
licenses or approvals  would not have a material  adverse effect on
its ability to perform its  obligations  under the Basic  Documents
to which it is a party.

           (c)  The Seller has the power and  authority  to execute
and  deliver  this  Agreement,  to  carry  out  its  terms  and  to
consummate   the   transactions   contemplated   herein;   and  the
execution,  delivery  and  performance  of this  Agreement  and the
consummation  of the  transactions  contemplated  herein  have been
duly authorized by the Seller by all necessary corporate action.

           (d)  The   execution   of   this   Agreement   and   the
consummation  of  the  transactions   contemplated  herein  by  the
Seller and the  fulfillment  of the terms of this  Agreement by the
Seller  shall not  conflict  with,  result in any  breach of any of
the terms and  provisions of or constitute  (with or without notice
or  lapse  of  time)  a   default   under,   the   certificate   of
incorporation   or  bylaws  of  the  Seller,   or  any   indenture,
agreement,  mortgage,  deed of trust or other  instrument  to which
the  Seller  is a party or by which it is  bound,  or result in the
creation  or  imposition  of any Lien  upon  any of its  properties
pursuant to the terms of any such indenture,  agreement,  mortgage,
deed of trust or  other  instrument  (other  than  pursuant  to the
Basic  Documents),  or  violate  any  law  or,  to the  best of the
Seller's  knowledge,  any order,  rule or regulation  applicable to
the Seller of any Governmental  Authority having  jurisdiction over
the Seller or any of its properties.

           SECTION II.11            Tax   Treatment.   As  long  as
the  Seller is the sole owner of the  Certificates,  the Seller and
Owner Trustee,  by entering into this Agreement,  (i) express their
intention  that the Trust will be  disregarded  for federal  income
tax  purposes  and will be treated  as a division  or branch of the
Seller and (ii) agree that Section 5.5 of this  Agreement  will not
be  applicable,  and for so long as the  Seller  remains  the  sole
record  Certificateholder,  the  Owner  Trustee  shall not sign tax
returns.   If  the   Seller   is  not  the   sole   owner   of  the
Certificates,  through sale of Certificates,  issuance by the Trust
of additional  Certificates  to a Person other than the Seller,  or
otherwise,  the Seller and Owner  Trustee,  by  entering  into this
Agreement,   and   the   Certificateholders,   by   acquiring   any
Certificate or interest in the Trust,  (i) express their  intention
that the  Certificates  shall qualify under  applicable  tax law as
partnership  interests  in a  partnership,  with the  assets of the
partnership held by the Trust,  (ii) unless  otherwise  required by
appropriate  taxing  authorities,  agree to treat the  Certificates
as partnership  interests for purposes of federal,  state and local
income  and  franchise  taxes,  single  business  tax and any other
taxes  imposed  upon,  measured  by or  based  upon  gross  or  net
income,  and (iii)  agree that  immediately  upon there  being more
than  one  owner of  Certificates,  Section  5.5 of this  Agreement
will  become  applicable.  Notwithstanding  anything  herein to the
contrary,  the Owner  Trustee shall have no duty to take any action
pursuant  to  Section  5.5 or  execute  tax  returns  until  it has
actual    knowledge    that   the    Seller   is   not   the   sole
Certificateholder.


                             ARTICLE III

                          THE CERTIFICATES

           SECTION III.1            Initial       Certificate
Ownership.  Upon the formation of the Trust by the  contribution by
the Seller  pursuant to Section  2.5 and until the  issuance of the
Certificates,  the  Seller  shall  be the sole  beneficiary  of the
Trust.

           SECTION III.2            Form of Certificates.

           (a)  The  Certificates  shall  be  substantially  in the
form set forth in Exhibit  A. The  Certificates  shall be  executed
on  behalf  of the Trust by  manual  or  facsimile  signature  of a
Responsible  Officer  of the Owner  Trustee.  Certificates  bearing
the manual or facsimile  signatures  of  individuals  who were,  at
the time when such signatures  shall have been affixed,  authorized
to  sign  on  behalf  of  the  Trust,  shall  be,  when  authorized
pursuant  to  Section  3.3,  validly  issued  and  entitled  to the
benefits of the Agreement,  notwithstanding  that such  individuals
or any of them shall have ceased to be so  authorized  prior to the
authentication  and delivery of such  certificates  or did not hold
such  offices at the date of  authentication  and  delivery of such
certificates.

           (b)  The  Certificates  shall be  typewritten,  printed,
lithographed  or engraved or produced by any  combination  of these
methods   (with  or  without   steel   engraved   borders)  all  as
determined  by  the  officers  executing  such   Certificates,   as
evidenced by their execution of such Certificates.

           (c)  The    Certificates     shall    be    issued    in
fully-registered  form and shall be in  definitive  form only.  The
terms of the  Certificates  set forth in Exhibit A  shall form part
of this Agreement.

           SECTION III.3            Execution,  Authentication and
Delivery.  Concurrently  with  the sale of the  Receivables  to the
Trust  pursuant  to the Trust  Sale and  Servicing  Agreement,  the
Owner  Trustee  shall  cause the  Certificates  to be  executed  on
behalf of the Trust,  authenticated  and  delivered  to or upon the
written  order of the Seller,  signed by the chairman of the board,
the president,  any vice president,  the treasurer or any assistant
treasurer of the Seller without  further  action by the Seller,  in
authorized   denominations.   No  Certificate   shall  entitle  its
holder to any benefit under this  Agreement,  or shall be valid for
any  purpose,  unless  there  shall  appear on such  Certificate  a
certificate of  authentication  substantially in the form set forth
in  Exhibit  A,   executed  by  the  Owner  Trustee  or  The  Chase
Manhattan  Bank as the Owner  Trustee's  authenticating  agent,  if
any, by manual  signature.  Such  authentication  shall  constitute
conclusive  evidence  that such  Certificate  shall  have been duly
authenticated and delivered  hereunder.  All Certificates  shall be
dated  the date of their  authentication.  The  Owner  Trustee  may
appoint  an  agent  to act  as its  authenticating  agent  for  the
purpose of  authenticating  the Certificates  (an  "Authenticating
Agent")  (who shall be a bank or trust  company).  Each holder of a
Certificate  (who  is  an  individual)   shall  provide  the  Owner
Trustee or the Certificate Registrar with a form W-9.

           SECTION III.4            New Issuances.

           (a)  The   Seller  may   surrender   a  portion  of  its
Certificate  to the Owner  Trustee in exchange  for a newly  issued
Certificate  and  one  or  more  additional  certificates  (each  a
"Supplemental  Certificate"),  the terms of which  shall be defined
in a  supplement  to this  Agreement  (which  supplement  shall  be
subject  to Article  VIII to the  extent  that it amends any of the
terms of this  Agreement),  to be delivered to or upon the order of
the  Seller (or the holder of a  Supplemental  Certificate,  in the
case of the  registration  of transfer  and  exchange  thereof,  as
provided below), upon satisfaction of the following conditions:

                (i) the   Seller   shall   have  given  the  Rating
      Agencies   notice  5  days   prior  to  such   exchange   (or
      registration  of transfer and exchange as provided below) and
      the Rating Agency  Condition  shall have been  satisfied with
      respect to such  exchange  (or  registration  of transfer and
      exchange as provided below); and

                (ii)    the  Seller  shall  have  delivered  to the
      Owner Trustee,  the Indenture Trustee and the Rating Agencies
      (A) a Tax  Opinion  dated  the  date  of  such  exchange  (or
      registration  of transfer and exchange as provided below) and
      (B) an Officers'  Certificate  certifying that all conditions
      precedent   in   this   Agreement   to  such   exchange   (or
      registration of transfer and exchange) have been satisfied.

Any  Supplemental  Certificate  may be  registered  for transfer or
exchanged  only upon  satisfaction  of the  conditions set forth in
clauses (i) and (ii) above.

           SECTION III.5            Registration;  Registration of
Transfer; Exchange of Certificates.

           (a)  The  Certificate  Registrar  shall keep or cause to
be kept,  at the office or agency  maintained  pursuant to Section
3.9, a Certificate  Register in which,  subject to such  reasonable
regulations  as it may  prescribe,  the Owner Trustee shall provide
for  the   registration  of  Certificates   and  of  transfers  and
exchanges  of  Certificates  as provided  herein.  The  Certificate
Registrar  shall give the Indenture  Trustee  written notice of any
transfer  of any  Certificate.  The Chase  Manhattan  Bank shall be
the initial  Certificate  Registrar.  The Owner Trustee may appoint
a successor  to act as the  Certificate  Registrar  (who shall be a
bank or trust company).

           (b)  Unless otherwise  specified in a supplement to this
Agreement,  a  Certificateholder  may at any time,  without consent
of  the  Noteholders,  sell,  transfer,  convey  or  assign  in any
manner its rights to and  interests in the  Certificates,  provided
that certain  conditions are satisfied  including:  (i) such action
will not result in a reduction or  withdrawal  of the rating of any
series or class of Notes;  (ii) the  Certificateholder  provides to
the  Owner  Trustee  and  the  Indenture   Trustee  an  opinion  of
independent  counsel  that such  action will not cause the Trust to
be treated  as an  association  (or  publicly  traded  partnership)
taxable as a corporation  for federal  income tax  purposes;  (iii)
such  transferee  or assignee  agrees in writing to take  positions
for tax purposes  consistent  with the tax  positions  agreed to be
taken by the  initial  Certificateholder;  and (iv) the  conditions
set forth in Section  9.11 have been  satisfied.  In  addition,  no
transfer  of  a  Certificate   shall  be   registered   unless  the
transferee  shall  have  provided  to the  Owner  Trustee  and  the
Certificate  Registrar  an opinion of  counsel  that in  connection
with  such  transfer  no  registration   of  the   Certificates  is
required under the  Securities Act or applicable  state law or that
such  transfer  is  otherwise  being  made in  accordance  with all
applicable federal and state securities laws.

           (c)  Subject  to  Section  3.5(b),  upon  surrender  for
registration  of  transfer  of any  Certificate  at the  office  or
agency  maintained  pursuant  to  Section 3.9,  the  Owner  Trustee
shall  execute on behalf of the  Trust,  authenticate  and  deliver
(or shall cause the  Authenticating  Agent, if any, to authenticate
and  deliver),   in  the  name  of  the  designated  transferee  or
transferees,  one or more new  Certificates  of the  same  class in
authorized  denominations  of a like  aggregate  amount  dated  the
date of authentication  by the Owner Trustee or any  authenticating
agent.

           (d)  At the option of a Certificateholder,  Certificates
may  be  exchanged  for  other  Certificates  of a  like  aggregate
percentage  interest  upon  surrender  of  the  Certificates  to be
exchanged  at the  Corporate  Trust Office  maintained  pursuant to
Section  3.9.  Whenever any  Certificates  are so  surrendered  for
exchange,  the Owner  Trustee shall execute on behalf of the Trust,
authenticate  and  deliver  (or  shall  cause  the   Authenticating
Agent,   if  any,  to   authenticate   and  deliver)  one  or  more
Certificates   dated  the  date  of  authentication  by  the  Owner
Trustee or any  authenticating  agent. Such  Certificates  shall be
delivered to the Certificateholder making the exchange.

           (e)  Every  Certificate  presented  or  surrendered  for
registration  of  transfer or exchange  shall be  accompanied  by a
written  instrument of transfer in form  satisfactory  to the Owner
Trustee  and  the  Certificate   Registrar  duly  executed  by  the
Certificateholder  or his attorney  duly  authorized in writing and
such  other  documents  and  instruments  as  may  be  required  by
Section 3.5(b).  Each  Certificate  surrendered for registration of
transfer or exchange shall be canceled and  subsequently  destroyed
or  otherwise  disposed  of by the  Owner  Trustee  or  Certificate
Registrar in accordance with its customary practice.

           (f)  No   service   charge   shall   be  made   for  any
registration  of  transfer or  exchange  of  Certificates,  but the
Owner Trustee or the  Certificate  Registrar may require payment of
a sum sufficient to cover any tax or  governmental  charge that may
be  imposed  in  connection   with  any  transfer  or  exchange  of
Certificates.

           (g)  The Owner  Trustee shall not permit the exchange of
the Certificates  unless,  in addition to the conditions  contained
in this  Agreement,  the Rating  Agency  Condition  shall have been
satisfied with respect to such exchange.

           SECTION III.6            Mutilated,  Destroyed, Lost or
Stolen Certificates.

           (a)  If (i) any mutilated  Certificate is surrendered to
the Certificate  Registrar,  or the Certificate  Registrar receives
evidence to its satisfaction of the  destruction,  loss or theft of
any  Certificate  and  (ii) there  is delivered to the  Certificate
Registrar,  the  Owner  Trustee  and the  Trust  such  security  or
indemnity  as  may be  required  by  them  to  hold  each  of  them
harmless,  then,  in the  absence  of  notice  to  the  Certificate
Registrar  or the  Owner  Trustee  that such  Certificate  has been
acquired  by  a  protected  purchaser,   the  Owner  Trustee  shall
execute  on  behalf  of the  Trust  and  the  Owner  Trustee  shall
authenticate  and  deliver  (or  shall  cause  the   Authenticating
Agent,  if any, to  authenticate  and deliver),  in exchange for or
in  lieu  of  any  such  mutilated,   destroyed,   lost  or  stolen
Certificate,  one or more  replacement  Certificates  in authorized
denominations  of a like  amount;  provided,  however,  that if any
such  destroyed,  lost or stolen  Certificate,  but not a mutilated
Certificate,  shall have  become or within  seven days shall be due
and  payable,  then  instead of issuing a  replacement  Certificate
the Owner Trustee may pay  distributions  to the  Certificateholder
of  such  destroyed,  lost  or  stolen  Certificate  when so due or
payable.

           (b)  If,   after   the   delivery   of   a   replacement
Certificate  or  distribution  in respect of a  destroyed,  lost or
stolen   Certificate   pursuant  to  Section  3.6(a),  a  protected
purchaser  of the  original  Certificate,  in  lieu of  which  such
replacement  Certificate  was issued,  presents  for  payment  such
original  Certificate,  the  Owner  Trustee  shall be  entitled  to
recover  such  replacement  Certificate  from the Person to whom it
was  delivered or any Person  taking such  replacement  Certificate
(or such  distribution)  from such Person to whom such  replacement
Certificate  was  delivered or any assignee of such Person,  except
a protected  purchaser,  and shall be entitled to recover  upon the
security  or  indemnity  provided  therefor  to the  extent  of any
loss,  damage,  cost or expense  incurred  by the Owner  Trustee in
connection therewith.

           (c)  In connection  with the issuance of any replacement
Certificate  under this Section 3.6, the Owner  Trustee may require
the payment by the Holder of such  Certificate  of a sum sufficient
to cover any tax or other  governmental  charge that may be imposed
in relation  thereto and any other reasonable  expenses  (including
the fees and  expenses  of the Owner  Trustee  and the  Certificate
Registrar) connected therewith.

           (d)  Any duplicate  Certificate  issued pursuant to this
Section 3.6 in  replacement of any  mutilated,  destroyed,  lost or
stolen   Certificate   shall  constitute  an  original   additional
contractual   obligation   of  the   Trust,   whether  or  not  the
mutilated,  destroyed,  lost or stolen  Certificate  shall be found
at any time or be  enforced  by anyone,  and shall be  entitled  to
all the  benefits of this  Agreement  equally  and  proportionately
with any and all other Certificates duly issued hereunder.

           (e)  The  provisions  of this Section 3.6 are  exclusive
and shall  preclude  (to the extent  lawful)  all other  rights and
remedies with respect to the  replacement  or payment of mutilated,
destroyed, lost or stolen Certificates.


           SECTION III.7            Persons         Deemed
Certificateholders.  Prior  to due  presentation  of a  Certificate
for   registration   of   transfer,   the  Owner   Trustee  or  the
Certificate  Registrar  may  treat  the  Person  in whose  name any
Certificate  shall be  registered  in the  Certificate  Register as
the  Certificateholder  of  such  Certificate  for the  purpose  of
receiving  distributions  pursuant to  Article V  and for all other
purposes  whatsoever,   and  neither  the  Owner  Trustee  nor  the
Certificate   Registrar  shall  be  bound  by  any  notice  to  the
contrary.

           SECTION III.8            Access     to    List    of
Certificateholders'  Names and  Addresses.  The Owner Trustee shall
furnish or cause to be  furnished  to the  Servicer and the Seller,
within 15 days  after  receipt  by the Owner  Trustee  of a request
therefor  from the  Servicer or the Seller in writing,  a list,  in
such form as the  Servicer  or the Seller may  reasonably  require,
of the  names and  addresses  of the  Certificateholders  as of the
most recent  Record Date.  Each Holder,  by receiving and holding a
Certificate,  shall be  deemed  to have  agreed  not to hold any of
the  Servicer,  the  Seller or the  Owner  Trustee  accountable  by
reason of the  disclosure  of its name and address,  regardless  of
the source from which such information was derived.

           SECTION III.9            Maintenance   of   Corporate
Trust Office.  The Owner  Trustee shall  maintain in the Borough of
Manhattan,  the City of New York,  an office or  offices  or agency
or   agencies   where   Certificates   may   be   surrendered   for
registration   of  transfer  or  exchange  and  where  notices  and
demands   to  or  upon  the  Owner   Trustee   in  respect  of  the
Certificates  and the  Basic  Documents  may be  served.  The Owner
Trustee  initially  designates  the offices of The Chase  Manhattan
Bank,  55 Water  Street,  New  York,  New  York,  as its  principal
office for such  purposes.  The Owner  Trustee  shall  give  prompt
written notice to the Seller and to the  Certificateholders  of any
change in the  location  of the  Certificate  Register  or any such
office or agency.

           SECTION III.10           Appointment  of  Paying  Agent.
The Owner  Trustee may  appoint a Paying  Agent.  If so  appointed,
such Paying Agent shall make  distributions  to  Certificateholders
from the Certificate  Distribution  Account pursuant to Section 5.2
and shall  report the  amounts of such  distributions  to the Owner
Trustee and the  Servicer;  provided  that no such reports shall be
required  so  long as the  Seller  is the  sole  Certificateholder.
Pursuant  to Section  8.2(g) of the  Indenture,  for so long as the
Indenture   is  in  effect,   notwithstanding   anything   in  this
Agreement to the  contrary,  all amounts to be  distributed  by the
Indenture  Trustee  to the  Certificateholders  or the  Certificate
Distribution  Account  shall be  distributed  to the  Seller to the
account  specified  by the Seller.  Any Paying Agent shall have the
revocable   power  to   withdraw   funds   from   the   Certificate
Distribution  Account for the  purpose of making the  distributions
referred  to above.  The Owner  Trustee  may revoke  such power and
remove any Paying  Agent  appointed  by it. Any Paying  Agent shall
be  permitted  to  resign  as Paying  Agent  upon 30 days'  written
notice to the  Owner  Trustee,  whereupon  the  Owner  Trustee  may
appoint a successor  to act as the Paying  Agent  (which shall be a
bank  or  trust  company).  The  Owner  Trustee  shall  cause  such
successor  Paying Agent or any  additional  Paying Agent  appointed
by the Owner  Trustee to execute and  deliver to the Owner  Trustee
an  instrument in which such  successor  Paying Agent or additional
Paying  Agent  shall  agree with the Owner  Trustee  that as Paying
Agent,  such  successor  Paying  Agent or  additional  Paying Agent
shall hold all sums,  if any,  held by it for  distribution  to the
Certificateholders    in   trust   for   the    benefit    of   the
Certificateholders  entitled  thereto until such sums shall be paid
to such  Certificateholders.  The Paying  Agent shall  initially be
The Chase  Manhattan  Bank and any  co-paying  agent  chosen by the
Chase  Manhattan  Bank, and  acceptable to the Owner  Trustee.  The
Paying  Agent  shall  return  all  unclaimed  funds  to  the  Owner
Trustee  and upon  removal  of a Paying  Agent  such  Paying  Agent
shall  also  return  all  funds  in its  possession  to  the  Owner
Trustee.  The  provisions  of Sections  6.3, 6.6, 6.7 and 6.9 shall
apply  to The  Chase  Manhattan  Bank  also in its  role as  Paying
Agent,  for so  long  as The  Chase  Manhattan  Bank  shall  act as
Paying  Agent and, to the extent  applicable,  to any other  paying
agent  appointed  hereunder.  Any  reference  in this  Agreement to
the Paying  Agent shall  include  any  co-paying  agent  unless the
context requires otherwise.

           SECTION III.11           Seller  as   Certificateholder.
The Seller in its  individual or any other  capacity may become the
owner or pledgee of  Certificates  and may otherwise  deal with the
Owner Trustee or its Affiliates as if it were not the Seller.

                             ARTICLE IV

                      ACTIONS BY OWNER TRUSTEE

           SECTION IV.1 Notice to Certificateholders  with Respect
to Certain  Matters.  The Owner  Trustee shall not take action with
respect to the  following  matters,  unless  (i) the  Owner Trustee
shall  have  notified  the  Certificateholders  in  writing  of the
proposed  action  at  least  30  days  before  the  taking  of such
action,  and (ii) a  majority of the  Certificateholders  shall not
have  notified the Owner  Trustee in writing  prior to the 30th day
after  such  notice  is given  that  such  Certificateholders  have
withheld consent or provided alternative direction:

           (a)  the  initiation  of any  claim  or  lawsuit  by the
Trust  (other  than an  action to  collect  on a  Receivable  or an
action by the  Indenture  Trustee  pursuant to the  Indenture)  and
the  compromise  of any  action,  claim or  lawsuit  brought  by or
against   the  Trust   (other  than  an  action  to  collect  on  a
Receivable  or an action by the Indenture  Trustee  pursuant to the
Indenture);

           (b)  the  election by the Trust to file an  amendment to
the Certificate of Trust;

           (c)  the  amendment of the  Indenture by a  supplemental
indenture in  circumstances  where the consent of any Noteholder is
required;

           (d)  the  amendment of the  Indenture by a  supplemental
indenture in  circumstances  where the consent of any Noteholder is
not required and such amendment  materially  adversely  affects the
interest of the  Certificateholders  (it being  understood that the
issuance of additional  Certificates  as  contemplated  by Section
3.4  shall  be  deemed  to  not  materially  adversely  affect  the
interests of the Certificateholders);

           (e)  the  amendment,   change  or  modification  of  the
Administration  Agreement,  except  to  cure  any  ambiguity  or to
amend or  supplement  any  provision  in a manner  that  would  not
materially     adversely    affect    the    interests    of    the
Certificateholders; or

           (f)  the  appointment  pursuant  to the  Indenture  of a
successor  Note  Registrar,  Paying Agent or  Indenture  Trustee or
pursuant to this  Agreement of a successor  Certificate  Registrar,
or the  consent to the  assignment  by the Note  Registrar,  Paying
Agent  or  Indenture  Trustee  or  Certificate   Registrar  of  its
obligations under the Indenture or this Agreement, as applicable.

           SECTION IV.2 Action by Certificateholders  with Respect
to Certain  Matters.  The Owner  Trustee  shall not have the power,
except upon the written  direction  of the  Certificateholders,  as
described  in the last  sentence of this Section 4.2, to (a) remove
the Administrator  under the  Administration  Agreement pursuant to
Section  10  thereof,   (b)   appoint  a  successor   Administrator
pursuant  to  Section  10  of  the  Administration  Agreement,  (c)
remove the Servicer  under the Trust Sale and  Servicing  Agreement
pursuant  to  Section  7.2  thereof  or  (d)  except  as  expressly
provided in the Basic Documents,  sell the Receivables  transferred
to the Trust  pursuant  to the Trust Sale and  Servicing  Agreement
or any interest  therein after the  termination  of the  Indenture.
The  Owner  Trustee  shall  take  the  actions  referred  to in the
preceding  sentence  only  upon  the  affirmative  vote  of,  or  a
written  consent  signed  by,  the  holders  of a  majority  of the
Voting Interests upon at least 30 days prior notice thereof.

           SECTION IV.3 Action by Certificateholders  with Respect
to  Bankruptcy.  The  Owner  Trustee  shall  not have the  power to
commence a  voluntary  proceeding  in  bankruptcy  relating  to the
Trust  without  the  unanimous  prior  approval  of all  Holders of
Certificates  (including  the Seller) and the delivery to the Owner
Trustee   by  each   such   Certificateholder   of  a   certificate
certifying  that such  Certificateholder  reasonably  believes that
the  Trust  is  insolvent.  By its  acceptance  of any  Certificate
issued to it on the  Closing  Date,  the Seller  agrees that it, at
any time that it is the  holder  thereof,  shall not  approve or be
deemed  to  have   approved   the   commencement   of  a  voluntary
proceeding  in  bankruptcy  relating  to the Trust for  purposes of
this  Section  4.3 unless  such  commencement  is  approved  by the
affirmative  vote of all of the  members of the  Seller's  board of
directors.

           SECTION IV.4 Restrictions   on    Certificateholders'
Power.  The  Certificateholders  shall not direct the Owner Trustee
to take or  refrain  from  taking  any  action  if such  action  or
inaction  would be contrary to any  obligation  of the Trust or the
Owner  Trustee under this  Agreement or any of the Basic  Documents
or would be contrary to Section  2.3,  nor shall the Owner  Trustee
be obligated to follow any such direction, if given.

           SECTION IV.5 Majority   Control.   Except  as  expressly
provided  herein,  any action that may be taken or consent that may
be  given  or  withheld  by  the   Certificateholders   under  this
Agreement  shall  be  effective  if such  action  is  taken or such
consent  is  given  or  withheld  by the  Holders  of  Certificates
evidencing  not  less  than  a  majority  of the  Voting  Interests
thereof.  Except as expressly  provided herein,  any written notice
of the  Certificateholders  delivered  pursuant  to this  Agreement
shall  be   effective   if  signed  by  Holders   of   Certificates
evidencing  not less than a  majority  of the Voting  Interests  at
the time of the delivery of such notice.

                              ARTICLE V

             APPLICATION OF TRUST FUNDS; CERTAIN DUTIES

           SECTION V.1  Establishment of Certificate  Distribution
Account.

           (a)  The  Servicer  shall  cause to be  established  and
maintained  in the name of the Owner  Trustee an  Eligible  Deposit
Account  known  as  the  Truck  Engine   Receivables  Master  Trust
Certificate  Distribution  Account (the "Certificate  Distribution
Account"),  bearing an additional  designation  clearly  indicating
that the funds  deposited  therein  are held for the benefit of the
Certificateholders.  The  Certificate  Distribution  Account  shall
initially be established with The Chase Manhattan Bank.

           (b)  The Owner Trustee  shall  possess all right,  title
and  interest  in and to all funds on deposit  from time to time in
the Certificate  Distribution  Account and in all proceeds  thereof
for the  benefit  of the  Certificateholders.  Except as  otherwise
provided herein or in the Trust Sale and Servicing  Agreement,  the
Certificate  Distribution  Account shall be under the sole dominion
and   control  of  the  Owner   Trustee  for  the  benefit  of  the
Certificateholders.    If,   at   any   time,    any    Certificate
Distribution  Account  ceases to be an  Eligible  Deposit  Account,
the Servicer,  within 10 days of determining  that such Certificate
Distribution  Account  is no longer an  Eligible  Deposit  Account,
shall  establish  a  substitute  Eligible  Deposit  Account as such
Certificate  Distribution  Account,  instruct the Owner  Trustee in
writing to transfer any cash to such new  Certificate  Distribution
Account  and,  from  the  date  any  such  substitute   account  is
established,  such account  shall be the  Certificate  Distribution
Account.

           SECTION V.2  Application of Trust Funds.

           (a)  On each  Payment  Date,  the  Owner  Trustee  shall
distribute,  or  cause  the  Paying  Agent  to  distribute,  to the
Certificateholders   the  amounts   deposited  in  the  Certificate
Distribution   Account  as  set  forth  in  the  applicable  Series
Supplement.  Notwithstanding  the  foregoing  or  anything  else to
the  contrary in this  Agreement or the other Basic  Documents,  so
long  as   Certificates   representing  in  the  aggregate  a  100%
beneficial  interest  in the Trust are held by the  Seller,  (i) no
Certificate   Distribution   Account   shall  be   required  to  be
established or maintained and (ii) all  distributions  and payments
on  the   Certificates   (including  the  final   distribution   as
contemplated  by  Section  7.1(c)  hereof)  required  hereunder  or
under the Indenture or the applicable  Series  Supplement  shall be
made  directly to the Seller by the Indenture  Trustee  (whether or
not the Indenture or the  applicable  Series  Supplement  otherwise
contemplates  deposit into the  Certificate  Distribution  Account)
and the Owner  Trustee  shall have no duty or  liability  to see to
such distribution.

           (b)  On  any  Payment   Date  on  which   payments   are
distributed from the Certificate  Distribution  Account,  the Owner
Trustee  shall  send  to  each   Certificateholder   the  statement
provided to the Owner Trustee by the Servicer  pursuant to Section
3.4 of the  Trust  Sale and  Servicing  Agreement  on such  Payment
Date.

           (c)  If  the  Owner  Trustee  determines,  whether  as a
result of advice  from the  Administrator  or  otherwise,  that any
withholding  tax  is  imposed  on  the  Trust's   distribution  (or
allocations  of  income)  to a  Certificateholder,  such tax  shall
reduce    the    amount    otherwise     distributable    to    the
Certificateholder  in  accordance  with this Section 5.2;  provided
that the Owner  Trustee  shall not have an  obligation  to withhold
any   such   amount   so   long   as  the   Seller   is  the   sole
Certificateholder.  The  Owner  Trustee  is hereby  authorized  and
directed  to retain from  amounts  otherwise  distributable  to the
Certificateholders  sufficient  funds  for the  payment  of any tax
that is  legally  owed by the Trust (but such  authorization  shall
not prevent the Owner  Trustee  (without any  obligation  to do so)
from  contesting  any  such  tax  in  appropriate  proceedings  and
withholding  payment of such tax, if permitted by law,  pending the
outcome of such  proceedings).  The amount of any  withholding  tax
imposed  with  respect to a  Certificateholder  shall be treated as
cash  distributed  to  such  Certificateholder  at the  time  it is
withheld  by the  Trust  and  remitted  to the  appropriate  taxing
authority.  If  there  is a  possibility  that  withholding  tax is
payable with respect to a distribution  (such as a distribution  to
a non-U.S.  Certificateholder),  the Owner  Trustee may in its sole
discretion  (but shall not be required  to)  withhold  such amounts
in  accordance  with this Section  5.2(c).  If a  Certificateholder
wishes  to apply  for a refund  of any such  withholding  tax,  the
Owner    Trustee    shall    reasonably    cooperate    with   such
Certificateholder   in   making   such   claim   so  long  as  such
Certificateholder  agrees to  reimburse  the Owner  Trustee for any
out-of-pocket expenses incurred.

           SECTION V.3  Method  of  Payment.  Subject  to  Section
7.1(c),  distributions  required  to be made to  Certificateholders
on any  Payment  Date  shall be made to each  Certificateholder  of
record on the  related  Record  Date  either by wire  transfer,  in
immediately  available  funds,  to the  account of such Holder at a
bank or other entity having  appropriate  facilities  therefor,  if
such  Certificateholder  shall  have  provided  to the  Certificate
Registrar  appropriate written  instructions at least five Business
Days prior to such  Record  Date,  or, if not,  by check  mailed to
such  Certificateholder  at the address of such Holder appearing in
the Certificate Register.

           SECTION V.4  Accounting;  Reports to Certificateholders
and Others.  The Owner  Trustee  shall (a) maintain (or cause to be
maintained)  the books of the Trust on an  October 31  fiscal  year
basis  on the  cash  method  of  accounting,  (b)  deliver  to each
Certificateholder,  as may be required  by the Code and  applicable
Treasury  Regulations  or  otherwise,  such  information  as may be
required  to enable each  Certificateholder  to prepare its federal
income  tax  return,  (c) file  such tax  returns  relating  to the
Trust  and  make  such  elections  as may  from  time  to  time  be
required  or  appropriate  under any  applicable  state or  federal
statute or rule or  regulation  thereunder  so as to  maintain  the
Trust's   characterization   as,   for  so   long  as  all  of  the
Certificates  are owned by the Seller,  a division or branch of the
Seller  and,  if not,  as  determined  by the  Seller  for  federal
income tax  purposes,  in all such cases on forms  prepared  by the
Administrator,  (d)  cause  such tax  returns  to be  signed in the
manner  required  by law and (e)  collect or cause to be  collected
any  withholding  tax required to be withheld by the Owner  Trustee
in  accordance  with  Section  5.2(c)  with  respect  to  income or
distributions to Certificateholders.

           SECTION V.5  Signature   on   Returns;   Tax   Matters
Partner.  Subject to Section 2.11,  the Owner Trustee shall sign on
behalf of the Trust any and all tax  returns  of the Trust that are
prepared and  delivered to it for  execution by the  Administrator,
unless  applicable  law requires a  Certificateholder  to sign such
documents,  in which  case  such  documents  shall be signed by the
Seller.  The  Seller  shall be the  "tax  matters  partner"  of the
Trust pursuant to the Code.

                             ARTICLE VI

                          THE OWNER TRUSTEE

           SECTION VI.1 Duties of Owner Trustee.

           (a)  The  Owner  Trustee   undertakes  to  perform  such
duties,  and only such  duties,  as are  specifically  set forth in
this  Agreement  and  the  other  Basic  Documents,  including  the
administration    of   the   Trust   in   the   interest   of   the
Certificateholders,   subject  to  the  Basic   Documents   and  in
accordance  with  the  provisions  of this  Agreement.  No  implied
covenants or obligations shall be read into this Agreement.

           (b)  Notwithstanding  the  foregoing,  the Owner Trustee
shall   be   deemed   to   have    discharged    its   duties   and
responsibilities  hereunder  and under the Basic  Documents  to the
extent  the   Administrator   has  agreed  in  the   Administration
Agreement  to  perform  any  act or to  discharge  any  duty of the
Owner  Trustee  hereunder  or under  any  Basic  Document,  and the
Owner  Trustee  shall not be liable  for the  default or failure of
the   Administrator   to  carry  out  its  obligations   under  the
Administration Agreement.

           (c)  The Owner Trustee may  conclusively  rely and shall
be fully  protected  in acting  or  refraining  from  acting on any
document  believed  by it to be genuine  and to have been signed or
presented  by the proper  Person.  The Owner  Trustee  shall not be
bound to make any  investigation  into any fact or matter stated in
any  resolution,   certificate,   statement,  instrument,  opinion,
report, notice,  request,  consent,  order, approval, bond or other
paper or document.

           (d)  The  Owner   Trustee  may  not  be  relieved   from
liability for its own negligent  action,  its own negligent failure
to act or its own willful misconduct, except that:

                (i) this Section  6.1(d) shall not limit the effect
      of Section 6.1(a) or (b);

                (ii)    the Owner  Trustee  shall not be liable for
      any error of  judgment  made in good  faith by a  Responsible
      Officer  unless  it is  proved  that the  Owner  Trustee  was
      negligent in ascertaining the pertinent facts; and

                (iii)   the Owner  Trustee shall not be liable with
      respect  to any  action  it  takes  or  omits to take in good
      faith in accordance with a direction  received by it pursuant
      to Section 4.1, 4.2 or 6.4.

           (e)  Subject to Sections  5.1 and 5.2,  monies  received
by the  Owner  Trustee  hereunder  need  not be  segregated  in any
manner  except to the extent  required by law or the Trust Sale and
Servicing  Agreement  and  may  be  deposited  under  such  general
conditions  as may be  prescribed  by law,  and the  Owner  Trustee
shall not be liable for any interest thereon.

           (f)  The Owner  Trustee  shall not take any action  that
(i) is  inconsistent  with the  purposes  of the Trust set forth in
Section  2.3  or   (ii) would,   to  the  actual   knowledge  of  a
Responsible  Officer  of the  Owner  Trustee,  result  in the Trust
becoming taxable as a corporation for federal income tax purposes.

           (g)  The  Certificateholders  shall not direct the Owner
Trustee to take action that would  violate the  provisions  of this
Section 6.1.

           SECTION VI.2 Rights   of  Owner   Trustee.   The   Owner
Trustee is  authorized  and  directed  to execute  and  deliver the
Basic  Documents and each  certificate or other  document  attached
as an exhibit to or  contemplated  by the Basic  Documents to which
the  Trust  is to be a  party,  in such  form as the  Seller  shall
approve  as   evidenced   conclusively   by  the  Owner   Trustee's
execution  thereof.  In  addition  to  the  foregoing,   the  Owner
Trustee  is  authorized,  but shall not be  obligated,  to take all
actions  required  of the Trust  pursuant  to the Basic  Documents.
The Owner Trustee is further  authorized  from time to time to take
such action as the  Administrator  recommends  with  respect to the
Basic Documents.

           SECTION VI.3 Acceptance  of Trusts  and  Duties.  Except
as otherwise  provided in this Article VI, in accepting  the trusts
hereby  created,  Chase  Manhattan Bank USA,  National  Association
acts solely as Owner Trustee  hereunder  and not in its  individual
capacity  and all  Persons  having  any  claim  against  the  Owner
Trustee  by  reason  of  the  transactions   contemplated  by  this
Agreement  or any  Basic  Document  shall  look  only to the  Trust
Assets  for  payment or  satisfaction  thereof.  The Owner  Trustee
accepts  the  trusts  hereby  created  and  agrees to  perform  its
duties  hereunder  with  respect  to such  trusts but only upon the
terms  of  this  Agreement.   The  Owner  Trustee  also  agrees  to
disburse all monies actually  received by it  constituting  part of
the Trust  Assets  upon the terms of the Basic  Documents  and this
Agreement.  The Owner  Trustee  shall not be liable or  accountable
hereunder  or under any  Basic  Document  under any  circumstances,
except  (i)  for  its  own  negligent  action,  its  own  negligent
failure  to act or its own  wilful  misconduct  or (ii) in the case
of the inaccuracy of any  representation  or warranty  contained in
Section  6.6  and  expressly   made  by  the  Owner   Trustee.   In
particular,  but  not by  way of  limitation  (and  subject  to the
exceptions set forth in the preceding sentence):

           (a)  the  Owner  Trustee  shall  at  no  time  have  any
responsibility  or liability  for or with respect to the  legality,
validity and  enforceability  of any Receivable  held by the Trust,
or for or with  respect to the  sufficiency  of the Trust Assets or
its ability to generate the  distributions  and payments to be made
to  Certificateholders  under  this  Agreement  or  to  Noteholders
under the Indenture,  including,  without limitation: the existence
and  contents  of any  such  Receivable  on any  computer  or other
record  thereof;  the  validity  of  the  assignment  of  any  such
Receivable  to the  Trust  or of any  intervening  assignment;  the
completeness   of  any  such   Receivable;   the   performance   or
enforcement  of any such  Receivable;  the compliance by the Seller
or the  Servicer  with any  warranty or  representation  made under
any Basic  Document or in any related  document or the  accuracy of
any  such  warranty  or   representation   or  any  action  of  the
Administrator,  the  Indenture  Trustee  or  the  Servicer  or  any
subservicer taken in the name of the Owner Trustee;

           (b)  the Owner  Trustee shall not be liable with respect
to any  action  taken or  omitted  to be taken by it in  accordance
with   the    instructions    of   the    Administrator    or   any
Certificateholder;

           (c)  no  provision  of  this   Agreement  or  any  Basic
Document  shall  require the Owner  Trustee to expend or risk funds
or otherwise  incur any financial  liability in the  performance of
any  of  its  rights  or  powers   hereunder  or  under  any  Basic
Document,  if the Owner Trustee shall have  reasonable  grounds for
believing  that  repayment  of such  funds  or  adequate  indemnity
against  such  risk  or  liability  is not  reasonably  assured  or
provided to it;

           (d)  under no  circumstances  shall the Owner Trustee be
liable for  indebtedness  evidenced by or arising  under any of the
Basic  Documents,  including  the  principal of and interest on the
Notes or any amounts payable with respect to the Certificates;

           (e)  the Owner Trustee shall not be  responsible  for or
in respect of and makes no  representation  as to the  validity  or
sufficiency  of any  provision  of  this  Agreement  or for the due
execution  hereof  by  the  Seller  or  for  the  form,  character,
genuineness,  sufficiency,  value or  validity  of any of the Trust
Assets or for or in respect of the validity or  sufficiency  of the
Basic  Documents,  the  Notes,  the  Certificates  (other  than the
certificate  of  authentication  on  the  Certificates)  or of  any
Receivables  held by the Trust or any  related  documents,  and the
Owner  Trustee  shall in no event  assume or incur  any  liability,
duty or obligation to any  Noteholder or to any  Certificateholder,
other  than as  expressly  provided  for  herein  and in the  Basic
Documents;

           (f)  the  Owner  Trustee  shall  not be  liable  for the
default  or   misconduct  of  the   Administrator,   the  Indenture
Trustee,  the  Seller  or the  Servicer  under  any  of  the  Basic
Documents  or  otherwise,  and  the  Owner  Trustee  shall  have no
obligation  or  liability to perform the  obligations  of the Trust
under this  Agreement or the Basic  Documents  that are required to
be  performed  by  the  Administrator   under  the   Administration
Agreement,  the  Indenture  Trustee  under  the  Indenture  or  the
Servicer under the Trust Sale and Servicing Agreement; and

           (g)  the Owner  Trustee  shall be under no obligation to
exercise  any  of  the  rights  or  powers  vested  in it  by  this
Agreement,  or to  institute,  conduct  or  defend  any  litigation
under  this   Agreement   or  otherwise  or  in  relation  to  this
Agreement  or  any  Basic  Document,  at  the  request,   order  or
direction   of   any  of  the   Certificateholders,   unless   such
Certificateholders  have offered to the Owner  Trustee  security or
indemnity  satisfactory  to it  against  the  costs,  expenses  and
liabilities  that may be incurred by the Owner  Trustee  therein or
thereby.   The  right  of  the  Owner   Trustee  to   perform   any
discretionary  act  enumerated  in this  Agreement  or in any Basic
Document  shall not be construed as a duty,  and the Owner  Trustee
shall not be  answerable  for other than its  negligence  or wilful
misconduct in the performance of any such act.

           SECTION VI.4 Action     upon     Instruction     by
Certificateholders.

           (a)  Subject  to  Section  4.4 , the  Certificateholders
may  by  written  instruction  direct  the  Owner  Trustee  in  the
management  of the Trust.  Such  direction  may be exercised at any
time by written instruction of the  Certificateholders  pursuant to
Section 4.5.

           (b)  Notwithstanding  the  foregoing,  the Owner Trustee
shall not be  required  to take any action  hereunder  or under any
Basic   Document  if  the  Owner  Trustee  shall  have   reasonably
determined,  or shall  have  been  advised  by  counsel,  that such
action is likely  to result in  liability  on the part of the Owner
Trustee  or is  contrary  to  the  terms  hereof  or of  any  Basic
Document or is otherwise contrary to law.

           (c)  Whenever  the  Owner  Trustee  is  unable to decide
between  alternative  courses of action  permitted  or  required by
the terms of this  Agreement  or any Basic  Document,  or is unsure
as to the  application,  intent,  interpretation  or meaning of any
provision  of this  Agreement  or the  Basic  Documents,  the Owner
Trustee  shall  promptly  give  notice  (in  such  form as shall be
appropriate  under  the  circumstances)  to the  Certificateholders
requesting  instruction  as to the course of action to be  adopted,
and,  to the  extent  the  Owner  Trustee  acts  in good  faith  in
accordance with any such  instruction  received,  the Owner Trustee
shall not be liable on account  of such  action to any  Person.  If
the   Owner   Trustee   shall   not   have   received   appropriate
instructions  within  ten  days  of such  notice  (or  within  such
shorter  period  of time as  reasonably  may be  specified  in such
notice or may be  necessary  under the  circumstances)  it may, but
shall be  under  no duty  to,  take or  refrain  from  taking  such
action which is  consistent,  in its view,  with this  Agreement or
the  Basic  Documents,  and as it  shall  deem  to be in  the  best
interests of the  Certificateholders,  and the Owner  Trustee shall
have no liability to any Person for any such action or inaction.

           SECTION VI.5 Furnishing   of   Documents.    The   Owner
Trustee  shall  furnish  (a)  to the  Certificateholders,  promptly
upon receipt of a written  request  therefor,  duplicates or copies
of  all  reports,   notices,   requests,   demands,   certificates,
financial  statements  and any other  instruments  furnished to the
Owner   Trustee   under  the  Basic   Documents   and  (b)  to  the
Noteholders  and the  Certificateholders,  promptly upon receipt of
a written  request  therefor,  copies of the  Receivables  Purchase
Agreement,   the   Trust   Sale  and   Servicing   Agreement,   the
Administration Agreement  and this Agreement.

           SECTION VI.6 Representations  and  Warranties  of Owner
Trustee.  The Owner Trustee  hereby  represents and warrants to the
Seller that:

           (a)  It  is  a   national   banking   association   duly
organized,  validly  existing and in good  standing  under the laws
of the United States.

           (b)  It has full  power,  authority  and legal  right to
execute,  deliver and  perform  this  Agreement,  and has taken all
necessary   action  to  authorize  the   execution,   delivery  and
performance   by   it   of   this   Agreement.    The   eligibility
requirements  set forth in Section 6.13  are satisfied with respect
to it.

           (c)  The  execution,  delivery and  performance by it of
this  Agreement  (i) shall  not violate any provision of any law or
regulation  governing  the  banking  and trust  powers of the Owner
Trustee  or any  order,  writ,  judgment  or decree  of any  court,
arbitrator  or  governmental  authority  applicable  to  the  Owner
Trustee  or  any  of  its  assets,   (ii) shall   not  violate  any
provision  of the  charter  or  by-laws  of the Owner  Trustee  and
(iii) shall  not violate any provision of, or  constitute,  with or
without  notice  or lapse of time,  a default  under,  or result in
the creation or imposition of any lien on any  properties  included
in  the  Trust   pursuant  to  the   provisions  of  any  mortgage,
indenture,  contract,  agreement or other  undertaking  to which it
is a party,  which  violation,  default or lien could reasonably be
expected  to  have  a  materially   adverse  effect  on  the  Owner
Trustee's  performance  or ability  to perform  its duties as Owner
Trustee under this  Agreement or on the  transactions  contemplated
in this Agreement.

           (d)  The  execution,  delivery  and  performance  by the
Owner   Trustee   of  this   Agreement   shall  not   require   the
authorization,  consent  or  approval  of, the giving of notice to,
the  filing  or  registration  with,  or the  taking  of any  other
action in respect of, any  Governmental  Authority  regulating  the
banking  and   corporate   trust   activities  of  banks  or  trust
companies in the jurisdiction in which the Trust was formed.

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

           SECTION VI.7 Reliance; Advice of Counsel.

           (a)  The  Owner  Trustee  shall  incur no  liability  to
anyone  in  acting   upon  any   signature,   instrument,   notice,
resolution,   request,   consent,   order,   certificate,   report,
opinion,  bond or  other  document  or paper  believed  by it to be
genuine  and  believed  by it to be signed by the  proper  party or
parties  and need not  investigate  any fact or  matter in any such
document.  The  Owner  Trustee  may  accept a  certified  copy of a
resolution  of the board of  directors or other  governing  body of
any  corporate  party as conclusive  evidence that such  resolution
has been  duly  adopted  by such  body and that the same is in full
force  and  effect.  As to any  fact or  matter  the  method of the
determination of which is not specifically  prescribed  herein, the
Owner  Trustee  may for  all  purposes  hereof  rely,  without  any
inquiry  or  investigation   into  the  factual  matters  addressed
therein,  on a  certificate,  signed by the  president  or any vice
president or by the treasurer or other  authorized  officers of the
relevant  party,  as to such fact or matter,  and such  certificate
shall  constitute  full  protection  to the Owner  Trustee  for any
action  taken  or  omitted  to be  taken  by it in  good  faith  in
reliance thereon.

           (b)  In the  exercise  or  administration  of the trusts
hereunder  and in the  performance  of its duties  and  obligations
under this  Agreement or the Basic  Documents,  the Owner  Trustee:
(i) may act directly or through its agents,  attorneys,  custodians
or nominees  pursuant to agreements  entered into with any of them,
and the  Owner  Trustee  shall  not be liable  for the  conduct  or
misconduct  of such agents,  attorneys,  custodians  or nominees if
such  agents,  attorneys,  custodians  or nominees  shall have been
selected by the Owner Trustee with  reasonable  care;  and (ii) may
consult with counsel,  accountants and other skilled  professionals
to be  selected  with  reasonable  care  and  employed  by it.  The
Owner  Trustee shall not be liable for anything  done,  suffered or
omitted  in good  faith by it in  accordance  with the  opinion  or
advice of any such counsel,  accountants  or other such Persons and
not contrary to this Agreement or any Basic Document.

           SECTION VI.8 Owner  Trustee  May Own  Certificates  and
Notes.  The Owner Trustee in its  individual or any other  capacity
may become the owner or  pledgee of  Certificates  or Notes and may
deal with the Seller,  the  Administrator,  the  Indenture  Trustee
and the  Servicer  in  transactions  in the same manner as it would
have if it were not the Owner Trustee.

           SECTION VI.9 Compensation and Indemnity.

           (a)  The Owner  Trustee  shall receive from the Servicer
as compensation  for its services  hereunder such fees as have been
separately  agreed upon  before the date hereof  between the Seller
and the Owner  Trustee,  and the Owner Trustee shall be entitled to
be  reimbursed  by the Servicer for its other  reasonable  expenses
hereunder,  including  the  reasonable  compensation,  expenses and
disbursements    of    such    agents,    custodians,     nominees,
representatives,  experts  and  counsel  as the Owner  Trustee  may
employ in  connection  with the  exercise  and  performance  of its
rights and its  duties  hereunder.  The  Servicer  shall  indemnify
the  Owner  Trustee  and  its  successors,   assigns,   agents  and
servants in  accordance  with the  provisions of Section 6.4 of the
Trust Sale and Servicing  Agreement.  The indemnities  contained in
this Section 6.9 shall survive the  resignation  or  termination of
the  Owner  Trustee  or the  termination  of  this  Agreement.  Any
amounts  paid to the Owner  Trustee  pursuant  to this  Section 6.9
shall be deemed  not to be a part of the Trust  Assets  immediately
after such payment.

           (b)  The Owner  Trustee  acknowledges  and  accepts  the
conditions   and   limitations   with  respect  to  the  Servicer's
obligation  to  indemnify,   defend  and  hold  the  Owner  Trustee
harmless  as  set  forth  in  Section  6.4 of the  Trust  Sale  and
Servicing Agreement.


           SECTION VI.10            Replacement of Owner Trustee.

           (a)  The Owner  Trustee  may at any time give  notice of
its  intent to resign  and be  discharged  from the  trusts  hereby
created by giving  written  notice  thereof  to the  Administrator;
provided that no such resignation shall become  effective,  and the
Owner  Trustee  shall  not  resign,  prior to the time set forth in
Section 6.10(c).  The  Administrator  may appoint a successor Owner
Trustee by delivering  written  instrument,  in  duplicate,  to the
resigning  Owner Trustee and the  successor  Owner  Trustee.  If no
successor   Owner  Trustee  shall  have  been  appointed  and  have
accepted  appointment  within  30 days  after  the  giving  of such
notice,   the  resigning  Owner  Trustee  giving  such  notice  may
petition any court of competent  jurisdiction  for the  appointment
of a successor Owner Trustee.  The  Administrator  shall remove the
Owner Trustee if:

                (i) the Owner  Trustee  shall  cease to be eligible
      in accordance  with the  provisions of Section 6.13 and shall
      fail  to  resign  after  written  request   therefor  by  the
      Administrator;

                (ii)    the  Owner   Trustee   shall  be   adjudged
      bankrupt or insolvent;

                (iii)   a receiver or other  public  officer  shall
      be appointed  or take charge or control of the Owner  Trustee
      or  of  its   property   or  affairs   for  the   purpose  of
      rehabilitation, conservation or liquidation; or

                (iv)    the  Owner  Trustee   shall   otherwise  be
      incapable of acting.

           (b)  If the Owner Trustee  resigns or is removed or if a
vacancy  exists in the office of Owner  Trustee  for any reason the
Administrator  shall promptly  appoint a successor Owner Trustee by
written  instrument,  in  duplicate  (one copy of which  instrument
shall be  delivered to the  outgoing  Owner  Trustee so removed and
one copy to the  successor  Owner  Trustee)  and shall pay all fees
owed to the outgoing Owner Trustee.

           (c)  Any  resignation  or removal  of the Owner  Trustee
and  appointment  of a successor  Owner Trustee  pursuant to any of
the  provisions  of this Section  6.10 shall not become  effective,
and no such resignation  shall be deemed to have occurred,  until a
written  acceptance  of  appointment  is delivered by the successor
Owner   Trustee   to   the   outgoing   Owner   Trustee   and   the
Administrator,  and  all  fees  and  expenses  due to the  outgoing
Owner  Trustee are paid.  Any  successor  Owner  Trustee  appointed
pursuant  to this  Section  6.10 shall be  eligible  to act in such
capacity  in   accordance   with   Section   6.13  and,   following
compliance with the preceding  sentence,  shall become fully vested
with  all  the  rights,  powers,  duties  and  obligations  of  its
predecessor   under  this   Agreement,   with  like  effect  as  if
originally  named  as  Owner  Trustee.   The  Administrator   shall
provide  notice  of  such  resignation  or  removal  of  the  Owner
Trustee to each of the Rating Agencies.

           (d)  The  predecessor  Owner  Trustee shall upon payment
of its fees and expenses  deliver to the  successor  Owner  Trustee
all  documents,  computer  files and  statements and monies held by
it under this  Agreement.  The  Administrator  and the  predecessor
Owner  Trustee shall  execute and deliver such  instruments  and do
such  other  things as may  reasonably  be  required  for fully and
certainly  vesting and  confirming in the  successor  Owner Trustee
all such rights, powers, duties and obligations.

           (e)  Upon  acceptance  of  appointment  by  a  successor
Owner  Trustee  pursuant to this Section  6.10,  the  Administrator
shall mail  notice of the  successor  of such Owner  Trustee to all
Certificateholders,  the Indenture  Trustee,  the  Noteholders  and
the Rating Agencies.

           SECTION VI.11            Merger  or  Consolidation  of
Owner  Trustee.  Any  Person  into which the Owner  Trustee  may be
merged or  converted or with which it may be  consolidated,  or any
corporation    resulting    from   any   merger,    conversion   or
consolidation  to which the Owner Trustee shall be a party,  or any
Person  succeeding  to all or  substantially  all of the  corporate
trust  business of the Owner  Trustee,  shall be the  successor  of
the  Owner  Trustee  hereunder,   provided  such  Person  shall  be
eligible  pursuant to Section  6.13,  and without the  execution or
filing of any  instrument  or any further act on the part of any of
the  parties  hereto;  provided,  however,  that the Owner  Trustee
shall mail  notice of such  merger or  consolidation  to the Rating
Agencies.

           SECTION VI.12            Appointment  of  Co-Trustee or
Separate Trustee.

           (a)  Notwithstanding   any  other   provisions  of  this
Agreement,  at any  time,  for the  purpose  of  meeting  any legal
requirement  of any  jurisdiction  in which  any part of the  Trust
Assets or Ford may at the time be located,  the  Administrator  and
the Owner  Trustee  acting  jointly  shall have the power and shall
execute  and  deliver  all  instruments  to  appoint  one  or  more
Persons  approved  by the  Owner  Trustee  to  act  as  co-trustee,
jointly  with  the  Owner  Trustee,   or  as  separate  trustee  or
trustees,  of all or any part of the Trust  Assets,  and to vest in
such  Person,  in such  capacity,  such title to the Trust,  or any
part  thereof,  and,  subject  to  the  other  provisions  of  this
Section 6.12, such powers, duties,  obligations,  rights and trusts
as the Administrator  and the Owner Trustee may consider  necessary
or desirable.  If the  Administrator  shall not have joined in such
appointment  within 15 days  after the  receipt  by it of a request
so to do,  the Owner  Trustee  alone  shall  have the power to make
such  appointment.  No  co-trustee  or separate  trustee under this
Agreement  shall be required to meet the terms of  eligibility as a
successor  trustee  pursuant  to Section  6.13 and no notice of the
appointment  of  any  co-trustee  or  separate   trustee  shall  be
required pursuant to Section 6.10.

           (b)  Each separate trustee and co-trustee  shall, to the
extent  permitted  by law,  be  appointed  and act  subject  to the
following provisions and conditions:

                (i) all  rights,  powers,  duties  and  obligations
      conferred  or  imposed  upon  the  Owner   Trustee  shall  be
      conferred  upon  and  exercised  or  performed  by the  Owner
      Trustee and such separate  trustee or co-trustee  jointly (it
      being  understood that such separate trustee or co-trustee is
      not  authorized to act  separately  without the Owner Trustee
      joining  in such act),  except to the  extent  that under any
      law of any  jurisdiction  in which any particular act or acts
      are to be performed,  the Owner Trustee shall be  incompetent
      or  unqualified  to perform such act or acts,  in which event
      such rights,  powers,  duties and obligations  (including the
      holding of title to the Trust or any  portion  thereof in any
      such  jurisdiction)  shall be exercised and performed  singly
      by such  separate  trustee or  co-trustee,  but solely at the
      direction of the Owner Trustee;

                (ii)    no trustee  under this  Agreement  shall be
      personally  liable by reason  of any act or  omission  of any
      other trustee under this Agreement; and

                (iii)   the  Administrator  and the  Owner  Trustee
      acting  jointly may at any time accept the  resignation of or
      remove any separate trustee or co-trustee.

           (c)  Any notice,  request or other  writing given to the
Owner  Trustee  shall be deemed  to have been  given to each of the
then  separate  trustees  and  co-trustees,  as  effectively  as if
given to each of them.  Every  instrument  appointing  any separate
trustee  or  co-trustee  shall  refer  to  this  Agreement  and the
conditions   of   this   Article.   Each   separate   trustee   and
co-trustee,  upon its acceptance of the trusts conferred,  shall be
vested  with the estates or property  specified  in its  instrument
of   appointment,   either   jointly  with  the  Owner  Trustee  or
separately,  as  may  be  provided  therein,  subject  to  all  the
provisions  of  this   Agreement,   specifically   including  every
provision of this Agreement  relating to the conduct of,  affecting
the liability of, or affording  protection  to, the Owner  Trustee.
Each such  instrument  shall be filed with the Owner  Trustee and a
copy thereof given to the Administrator.

           (d)  Any separate  trustee or co-trustee may at any time
appoint  the Owner  Trustee as its agent or  attorney-in-fact  with
full power and  authority,  to the extent not prohibited by law, to
do any  lawful act under or in  respect  of this  Agreement  on its
behalf  and in its name.  If any  separate  trustee  or  co-trustee
shall die, become  incapable of acting,  resign or be removed,  all
of its  estates,  properties,  rights,  remedies  and trusts  shall
vest  in and be  exercised  by the  Owner  Trustee,  to the  extent
permitted  by law,  without the  appointment  of a new or successor
trustee.

           SECTION VI.13            Eligibility  Requirements  for
Owner  Trustee.  The Owner  Trustee  shall at all  times:  (a) be a
corporation  satisfying  the  provisions of Section  3807(a) of the
Business Trust  Statute;  (b) be  authorized to exercise  corporate
trust   powers;   (c) have  an  aggregate   capital,   surplus  and
undivided  profits  of at  least  $50,000,000  and  be  subject  to
supervision  or examination  by federal or state  authorities;  and
(d) have  (or have a parent which has) a long-term  unsecured  debt
rating of at least BBB- by  Standard &  Poor's and at least Baa3 by
Moody's.  If such  corporation  shall publish  reports of condition
at least  annually,  pursuant to law or to the  requirements of the
aforesaid   supervising  or  examining  authority,   then  for  the
purpose of this Section 6.13,  the aggregate  capital,  surplus and
undivided  profits  of such  corporation  shall be deemed to be its
aggregate  capital,  surplus and undivided  profits as set forth in
its most recent  report of condition so  published.  If at any time
the Owner  Trustee  shall cease to be eligible in  accordance  with
the  provisions  of this  Section  6.13,  the Owner  Trustee  shall
resign  immediately in the manner and with the effect  specified in
Section 6.10.


                             ARTICLE VII

                   TERMINATION OF TRUST AGREEMENT

           SECTION VII.1            Termination     of    Trust
Agreement.

           (a)  The  Trust  shall  dissolve  and  be  wound  up  in
accordance  with Section 3808 of the Business  Trust Statute on the
date  (the  "Trust  Termination  Date")  on which  the first of the
following  occurs:  (i) if the Seller so elects,  the day following
the Payment  Date on which all  amounts  required to be paid to the
Securityholders  pursuant  to the  Basic  Documents  have been paid
(or  deposited  in  the   Principal   Funding   Accounts,   or  the
Certificate  Distribution  Account) and the  aggregate  Outstanding
Amount  of all  Series  of Notes is zero and (ii) the  twenty-first
anniversary  of the  execution of this  Agreement.  This  Agreement
and the obligations of the parties  hereunder  (other than Section
6.9  hereof  and as  otherwise  expressly  provided  herein)  shall
terminate  and be of no  further  force or effect  (i) if the Trust
Termination  Date is determined  pursuant to clause  (i) above,  on
the Trust  Termination Date and (ii) if the Trust  Termination Date
is  determined   pursuant  to  clause   (ii) above,   on  the  date
following  the Payment Date on which the final  payments to be made
to the  Securityholders  pursuant to the Basic  Documents have been
paid (or  deposited  in the  appropriate  Trust  Accounts  or Group
Accounts).

           (b)  Except as provided in Section  7.1(a),  neither the
Seller nor any  Certificateholder  shall be  entitled  to revoke or
terminate   the   Trust   or  this   Agreement.   The   bankruptcy,
liquidation,    dissolution,    death   or    incapacity   of   any
Certificateholder   shall  not   (x) operate   to  terminate   this
Agreement or the Trust,  nor (y) entitle  such  Certificateholder's
legal  representatives  or heirs to claim an  accounting or to take
any  action  or   proceeding  in  any  court  for  a  partition  or
winding-up  of all or any  part of the  Trust or the  Trust  Assets
nor  (z) otherwise  affect the rights,  obligations and liabilities
of the parties hereto.

           (c)  Notice of any  termination of the Trust  specifying
the   Payment   Date  upon  which  the   Certificateholders   shall
surrender  their  Certificates  to the Paying  Agent for payment of
the  final  distribution  and  cancellation,  shall be given by the
Owner  Trustee by letter to the  Certificateholders  mailed  within
five  Business Days of receipt of notice of such  termination  from
the Servicer,  stating:  (i) the  Payment Date upon or with respect
to  which   the  final   distribution   of  the   balance   of  the
Certificates  shall be made upon  presentation and surrender of the
Certificates   at  the   office  of  the   Paying   Agent   therein
designated;  (ii) the amount of any such final  distribution of the
balance  of  the  Certificates;  and  (iii) that  the  Record  Date
otherwise  applicable  to  such  Payment  Date  is not  applicable,
distributions  being made only upon  presentation  and surrender of
the  Certificates  at  the  office  of  the  Paying  Agent  therein
specified.  The  Owner  Trustee  shall  give  such  notice  to  the
Certificate  Registrar  (if other than the Owner  Trustee)  and the
Paying    Agent   at   the   time   such   notice   is   given   to
Certificateholders.   Upon   presentation   and  surrender  of  the
Certificates,  the Paying  Agent shall cause to be  distributed  to
Certificateholders  amounts  distributable  on  such  Payment  Date
pursuant to Section 5.2.

           (d)  If  all  of  the   Certificateholders   shall   not
surrender their  Certificates  for  cancellation  within six months
after  the  date  specified  in the  written  notice  specified  in
Section  7.1(c),  the Owner  Trustee  shall  give a second  written
notice  to the  remaining  Certificateholders  to  surrender  their
Certificates for  cancellation  and receive the final  distribution
with respect  thereto.  If within one year after the second  notice
all  the   Certificates   shall  not  have  been   surrendered  for
cancellation,  the Owner  Trustee may take  appropriate  steps,  or
may  appoint an agent to take  appropriate  steps,  to contact  the
remaining   Certificateholders   concerning   surrender   of  their
Certificates,  and the cost thereof  shall be paid out of the funds
and other  assets  that shall  remain  subject  to this  Agreement.
Subject to  applicable  laws with respect to escheat of funds,  any
funds  remaining in the Trust after  exhaustion of such remedies in
the preceding  sentence shall be deemed  property of the Seller and
distributed  by the  Owner  Trustee  to the  Seller  and the  Owner
Trustee shall have no further  liability to the  Certificateholders
with respect thereto.

           (e)  Upon  the   winding   up  of  the   Trust  and  its
termination,  the Owner  Trustee  shall  cause the  Certificate  of
Trust to be canceled by filing a certificate of  cancellation  with
the  Secretary  of State of the  State of  Delaware  in  accordance
with the provisions of Section 3810 of the Business Trust Statute.

           (f)  Within   sixty   days  of  the  later  of  (i)  the
cancellation  of all  Certificates  pursuant  to Section  7.1(c) or
Section  7.1(d),  or (ii) payment to the Seller of funds  remaining
in the Trust  pursuant to Section  7.1(d),  the Owner Trustee shall
provide each of the Rating  Agencies  with written  notice  stating
that all  Certificates  have been so  canceled  or such  funds have
been so paid to the Seller.

                            ARTICLE VIII

                             AMENDMENTS

           Subject to the  provisions of  Section 8.1  of the Trust
Sale and Servicing  Agreement,  this  Agreement may be amended from
time to time in a writing executed by each of the parties hereto.

                             ARTICLE IX

                            MISCELLANEOUS

           SECTION IX.1 No  Legal  Title  to  Trust   Assets.   The
Certificateholders  shall not have  legal  title to any part of the
Trust  Assets.   The   Certificateholders   shall  be  entitled  to
receive  distributions  with respect to their  undivided  ownership
interest  therein only in  accordance  with  Articles V and VII. No
transfer,  by operation of law or otherwise,  of any right,  title,
and interest of the  Certificateholders  to and in their  ownership
interest  in the Trust  Assets  shall  operate  to  terminate  this
Agreement or the trusts  hereunder or entitle any  transferee to an
accounting  or to the  transfer to it of legal title to any part of
the Trust Assets.

           SECTION IX.2 Limitations  on  Rights of  Others.  Except
for Sections 2.7,  7.1(c),  7.1(f) and 9.12, the provisions of this
Agreement  are solely for the  benefit  of the Owner  Trustee,  the
Seller,  the  Certificateholders,  the  Administrator  and,  to the
extent  expressly  provided herein,  the Indenture  Trustee and the
Noteholders,  and  nothing in this  Agreement,  whether  express or
implied,  shall be  construed to give to any other Person any legal
or  equitable  right,  remedy or claim in the Trust Assets or under
or in respect of this  Agreement or any  covenants,  conditions  or
provisions contained herein.

           SECTION IX.3 Notices.    All   demands,    notices   and
communications   upon  or  to  the  Seller,   the   Servicer,   the
Administrator,  the  Indenture  Trustee,  the Owner  Trustee or the
Rating  Agencies  or any  Certificateholder  under  this  Agreement
shall be delivered as  specified  in  Appendix B  to the Trust Sale
and Servicing Agreement.

           SECTION IX.4 Severability  of Provisions.  If any one or
more of the  covenants,  agreements,  provisions  or  terms of this
Agreement  shall be for any reason  whatsoever  held invalid,  then
such  covenants,  agreements,  provisions  or terms shall be deemed
enforceable  to  the  fullest  extent  permitted,  and  if  not  so
permitted,   shall  be   deemed   severable   from  the   remaining
covenants,  agreements,  provisions or terms of this  Agreement and
shall  in no way  affect  the  validity  or  enforceability  of the
other  provisions of this Agreement or of the  Certificates  or the
rights of the Holders thereof.

           SECTION IX.5 Counterparts.   This   Agreement   may   be
executed in two or more  counterparts  (and by different parties on
separate  counterparts),  each of which shall be an  original,  but
all  of  which   together   shall   constitute  one  and  the  same
instrument.

           SECTION IX.6 Successors  and Assigns.  All covenants and
agreements  contained  herein shall be binding  upon,  and inure to
the   benefit  of,  the   Seller,   the  Owner   Trustee  and  each
Certificateholder  and their  respective  successors  and permitted
assigns, all as herein provided.  Any request,  notice,  direction,
consent,    waiver   or   other   instrument   or   action   by   a
Certificateholder  shall bind the  successors  and  assigns of such
Certificateholder.

           SECTION IX.7 No Petition Covenant.  Notwithstanding  any
prior  termination  of this  Agreement,  the  Trust  (or the  Owner
Trustee on behalf of the  Trust),  and each  Certificateholder,  by
accepting a Certificate  (or interest  therein)  issued  hereunder,
hereby  covenant  and agree that they  shall not,  prior to the day
that  is one  year  and  one  day  after  the  termination  of this
Agreement,  acquiesce,  petition or  otherwise  invoke or cause the
Seller  or  the  Trust  to  invoke  in  any  court  or   government
authority  for the  purpose  of  commencing  or  sustaining  a case
against  the  Seller  or the  Trust  under  any  federal  or  state
bankruptcy,  insolvency  or similar law or  appointing  a receiver,
liquidator,  assignee,  trustee,  custodian,  sequestrator or other
similar  official  of the  Seller or the  Trust or any  substantial
part of its  property,  or ordering  the winding up or  liquidation
of the  affairs  of the  Seller or the  Trust.  The  covenants  set
forth in this  Section 9.7 shall  survive the  termination  of this
Agreement.

           SECTION IX.8 No  Recourse.  Each  Certificateholder,  by
accepting a Certificate (or interest  therein),  acknowledges  that
such  Person's   Certificate  (or  interest   therein)   represents
beneficial  interests  in the  Trust  only and  does not  represent
interests  in or  obligations  of the  Seller,  the  Servicer,  the
Administrator,  the Owner  Trustee,  the  Indenture  Trustee or any
Affiliate  thereof and no recourse,  either directly or indirectly,
may be had against such parties or their  assets,  except as may be
expressly  set  forth  or  contemplated  in  this  Agreement,   the
Certificates   or  the  Basic   Documents.   Except  as   expressly
provided in the Basic Documents,  neither the Seller,  the Servicer
nor the Owner Trustee in their  respective  individual  capacities,
nor  any  of  their  respective  partners,  beneficiaries,  agents,
officers,  directors,  employees or successors or assigns, shall be
personally  liable  for,  nor shall  recourse be had to any of them
for,   the   distribution   of  any  amount  with  respect  to  the
Certificates,  or the Owner  Trustee's  performance of, or omission
to perform,  any of the covenants or  obligations  contained in the
Certificates  or this  Agreement,  it  being  expressly  understood
that said  covenants  and  obligations  have been made by the Owner
Trustee  solely  in  its  capacity  as  the  Owner  Trustee.   Each
Certificateholder   by  the   acceptance  of  a   Certificate   (or
beneficial   interest   therein)   shall  agree  that,   except  as
expressly  provided  in  the  Basic  Documents,   in  the  case  of
nonpayment  of any amounts  with  respect to the  Certificates,  it
shall  have  no  claim   against  any  of  the  foregoing  for  any
deficiency, loss or claim therefrom.

           SECTION IX.9 Headings.   The  headings  herein  are  for
purposes  of  reference  only and shall not affect  the  meaning or
interpretation of any provision hereof.

           SECTION IX.10            GOVERNING       LAW.       THIS
AGREEMENT  SHALL BE GOVERNED BY AND  CONSTRUED IN  ACCORDANCE  WITH
THE INTERNAL  LAWS OF THE STATE OF DELAWARE,  WITHOUT  REFERENCE TO
THE  PRINCIPLES  OF  CONFLICTS  OF  LAW  THEREOF  OR OF  ANY  OTHER
JURISDICTION,  AND THE  OBLIGATIONS,  RIGHTS  AND  REMEDIES  OF THE
PARTIES  HEREUNDER  SHALL BE  DETERMINED  IN  ACCORDANCE  WITH SUCH
LAWS.

           SECTION IX.11            Certificate      Transfer
Restrictions.  The  Certificates  may not be acquired by or for the
account  of (i) an  employee  benefit  plan (as  defined in Section
3(3) of ERISA)  that is  subject  to the  provisions  of Title I of
ERISA,  (ii) a plan described in Section  4975(e)(1) of the Code or
(iii) any entity  whose  underlying  assets  include plan assets by
reason  of a plan's  investment  in the  entity  (each a  "Benefit
Plan").  By  accepting  and  holding  a  Certificate,   the  Holder
thereof  shall be deemed to have  represented  and  warranted  that
it is not a Benefit Plan.

           SECTION IX.12            Administrator.              The
Administrator  is  authorized to execute on behalf of the Trust all
such documents,  reports,  filings,  instruments,  certificates and
opinions as it shall be the duty of the Trust to  prepare,  file or
deliver  pursuant to the Basic Documents.  Upon request,  the Owner
Trustee shall execute and deliver to the  Administrator  a power of
attorney    appointing    the    Administrator    its   agent   and
attorney-in-fact to execute all such documents,  reports,  filings,
instruments, certificates and opinions.

           SECTION IX.13            Third-Party      Beneficiaries.
This  Agreement  will inure to the  benefit of and be binding  upon
the parties  hereto,  the  Securityholders,  the Indenture  Trustee
and their respective  successors and permitted  assigns.  Except as
otherwise  expressly  provided in this  Agreement,  no other Person
will have any right or obligation hereunder.


                            *  *  *  *  *


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

                          CHASE MANHATTAN BANK USA,
                          NATIONAL ASSOCIATION,
                          not in its individual capacity, but
                          solely as
                          Owner Trustee



By:
Name:

Title:



                          TRUCK ENGINE RECEIVABLES FINANCING CO.,
                          Seller



By:
                         Name: R. Wayne Cain
                          Title: Vice President and Treasurer


Acknowledged and Accepted:

NAVISTAR FINANCIAL CORPORATION,
Servicer


By:
     Name: R. Wayne Cain
     Title: Vice President and Treasurer


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


                                                          EXHIBIT A


NUMBER
R-1
OWNERSHIP INTEREST:  100%

                 SEE REVERSE FOR CERTAIN DEFINITIONS

           THIS  CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE
      ACCOUNT OF (i) AN  "EMPLOYEE  BENEFIT  PLAN" (AS DEFINED
      IN  SECTION  3(3)  OF  THE  EMPLOYEE  RETIREMENT  INCOME
      SECURITY  ACT OF 1974,  AS AMENDED,  ("ERISA"))  THAT IS
      SUBJECT TO THE  PROVISIONS  OF TITLE I OF ERISA,  (ii) A
      PLAN  DESCRIBED  IN SECTION  4975(e)(1)  OF THE INTERNAL
      REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),  OR (iii)
      ANY ENTITY WHOSE  UNDERLYING  ASSETS INCLUDE PLAN ASSETS
      BY  REASON  OF A PLAN'S  INVESTMENT  IN THE  ENTITY.  BY
      ACCEPTING  AND  HOLDING  THIS  CERTIFICATE,  THE  HOLDER
      HEREOF AND THE  CERTIFICATE  OWNER  SHALL EACH BE DEEMED
      TO  HAVE  REPRESENTED  AND  WARRANTED  THAT  IT IS NOT A
      BENEFIT PLAN.

           THE  SECURITIES  REPRESENTED  BY  THIS  CERTIFICATE
      WERE         ORIGINALLY         ISSUED        ON
      , 2000.  HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES
      ACT OF 1933,  AS  AMENDED  (THE  "ACT"),  AND MAY NOT BE
      SOLD  OR  TRANSFERRED  IN THE  ABSENCE  OF AN  EFFECTIVE
      REGISTRATION  STATEMENT  UNDER  THE ACT OR AN  EXEMPTION
      FROM REGISTRATION THEREUNDER.


                TRUCK ENGINE RECEIVABLES MASTER TRUST

                            CERTIFICATE

      evidencing  a  fractional   undivided  interest  in  the
      Trust, as defined below,  the property of which includes
      a pool of  receivables  generated  from  time to time by
      indebtedness  of Ford  Motor  Company  ("Ford")  arising
      from the  sale of  diesel  engines  and  engine  service
      parts to Ford.

      (This  Certificate  does not represent an interest in or
      obligation  of  Navistar  Financial  Corporation,  Truck
      Engine  Receivables  Financing  Co.,  ("TERFCO"),  Chase
      Manhattan  Bank  USA,  National  Association,  as  owner
      trustee   (the   "Owner   Trustee")   or  any  of  their
      respective  affiliates,  except to the extent  described
      below.)


           THIS CERTIFIES THAT TERFCO is the registered  owner of a
nonassessable,  fully-paid,  fractional undivided interest in Truck
Engine Receivables Master Trust (the "Trust").

           The Trust was  created  pursuant  to a trust  agreement,
dated    as    of    ,    2000    (as    amended     restated    or
supplemented  from time to time,  the "Trust  Agreement"),  between
Truck  Engine   Receivables   Financing  Co.,  as  transferor  (the
"Seller")  and the Owner  Trustee,  a  summary  of  certain  of the
pertinent  provisions  of which is set forth  below.  To the extent
not otherwise  defined herein,  the  capitalized  terms used herein
have the meanings assigned to them in the Trust Agreement.

           This  Certificate  is issued under and is subject to the
terms,  provisions  and  conditions  of the  Trust  Agreement,  the
terms of which  are  incorporated  herein by  reference  and made a
part  hereof,   to  which  Trust   Agreement  the  Holder  of  this
Certificate  by  virtue of the  acceptance  hereof  assents  and by
which such Holder is bound.

           The Holder of this  Certificate  acknowledges and agrees
that  its  rights  to  receive  distributions  in  respect  of this
Certificate  are  subordinated  to the rights of the Noteholders as
and  to the  extent  described  in the  Trust  Sale  and  Servicing
Agreement and the Indenture.

           Each  Certificateholder  with respect to a  Certificate,
by its  acceptance  of a  Certificate,  covenants  and agrees  that
such  Certificateholder  with respect to a Certificate,  shall not,
prior  to the  date  which  is one  year  and  one  day  after  the
termination  of  the  Trust  Agreement,   acquiesce,   petition  or
otherwise  invoke or cause the Seller to invoke the  process of any
court or  governmental  authority  for the purpose of commencing or
sustaining  a case  against  the Seller  under any federal or state
bankruptcy,   insolvency,   reorganization   or   similar   law  or
appointing a receiver,  liquidator,  assignee,  trustee, custodian,
sequestrator  or  other  similar  official  of  the  Seller  or any
substantial  part of its  property,  or ordering  the winding up or
liquidation of the affairs of the Seller.

           Distributions  on  this  Certificate  shall  be  made as
provided in the Trust  Agreement  by wire  transfer,  check  mailed
or,    where    possible,    intra-bank    book    entry   to   the
Certificateholder  of record in the  Certificate  Register  without
the  presentation  or surrender of this  Certificate  or the making
of  any  notation  hereon.  Except  as  otherwise  provided  in the
Trust   Agreement  and   notwithstanding   the  above,   the  final
distribution  on this  Certificate  shall be made  after due notice
by the Owner  Trustee  of the  pendency  of such  distribution  and
only upon  presentation  and surrender of this  Certificate  at the
office  maintained  for such  purpose  by the Owner  Trustee in the
Borough of Manhattan, the City of New York.

           Reference is hereby made to further  provisions  of this
Certificate  set  forth  on  the  reverse  hereof,   which  further
provisions  shall for all  purposes  have the same effect as if set
forth at this place.

           Unless the  certificate of  authentication  hereon shall
have been  executed by an  authorized  officer of the Owner Trustee
by  manual  signature,  this  Certificate  shall  not  entitle  the
Holder  hereof to any  benefit  under the  Trust  Agreement  or the
Trust Sale and Servicing Agreement or be valid for any purpose.

 

THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS OR ANY OTHER JURISDICTION'S CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in its individual capacity, has caused this Certificate to be duly executed. Dated: , 2000 TRUCK ENGINE RECEIVABLES MASTER TRUST By: CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By: Name: Title:  
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Certificates referred to in the within-mentioned Trust Agreement. CHASE MANHATTAN BANK USA, OR CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, NATIONAL ASSOCIATION, not in its individual capacity not in its individual capacity but solely as Owner Trustee but solely as Owner Trustee By: THE CHASE MANHATTAN BANK Authenticating Agent By: Authorized Officer By: Authorized Officer -------------------------------------------------------------------------------- REVERSE OF CERTIFICATE The Certificates do not represent an obligation of, or an interest in, the Seller, the Servicer, Navistar Financial Corporation, the Indenture Trustee, the Owner Trustee or any affiliates of any of them and no recourse may be had against such parties or their assets, except as may be expressly set forth or contemplated herein or in the Trust Agreement or the Basic Documents. In addition, this Certificate is not guaranteed by any governmental agency or instrumentality and is limited in right of payment to certain collections and recoveries with respect to the Receivables (and certain other amounts), all as more specifically set forth herein, in the Trust Agreement and the Trust Sale and Servicing Agreement. A copy of each of the Trust Sale and Servicing Agreement and the Trust Agreement may be examined during normal business hours at the principal office of the Seller, and at such other places, if any, designated by the Seller, by any Certificateholder upon written request. The Trust Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Seller and the rights of the Certificateholders under the Trust Agreement at any time by the Seller and the Owner Trustee with the consent of (i) the Holders of the Notes evidencing not less than a majority of the Outstanding Amount of the Voting Interests, and (ii) Certificateholders whose Certificates evidence not less than a majority of the ownership interest in the Trust, each as of the close of the preceding Payment Date. Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and on all future Holders of this Certificate and of any Certificate issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Trust Agreement also permits the amendment thereof, in certain circumstances, without the consent of the Holders of any of the Certificates or the Notes. As provided in the Trust Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies of the Certificate Registrar maintained by the Owner Trustee in the State of Delaware, accompanied by (i) a written instrument of transfer in form satisfactory to the Owner Trustee and the Certificate Registrar duly executed by the Holder hereof or such Holder's attorney duly authorized in writing and (ii) certain opinions required by Section 3.4 of the Trust Agreement, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate interest in the Trust will be issued to the designated transferee. The initial Certificate Registrar appointed under the Trust Agreement is The Chase Manhattan Bank. The Owner Trustee, the Certificate Registrar and any agent of the Owner Trustee or the Certificate Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Owner Trustee, the Certificate Registrar or any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Trust Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Trust Agreement and the Trust Sale and Servicing Agreement. CERTIFICATE OF TRANSFER FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE (Please print or type name and address, including postal zip code, of assignee) the within Certificate, and all rights thereunder, hereby irrevocably constituting and appointing _________________________________________________________ Attorney to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated: * Signature Guaranteed: * * NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ______________________________________________________________ (Please print or type name and address, including postal zip code, of assignee ________________________________________________________________ the within Certificate, and all rights thereunder, hereby irrevocably constituting and appointing ________________________________________________Attorney to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated: _______________________________* Signature Guaranteed: _______________________________* *NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. EXHIBIT B CERTIFICATE OF TRUST OF TRUCK ENGINE RECEIVABLES MASTER TRUST THIS CERTIFICATE OF TRUST of Truck Engine Receivables Master Trust (the "Trust"), dated as of , 2000, is being duly executed and filed by Chase Manhattan Bank USA, National Association, a national banking association, as trustee, to form a business trust under the Delaware Business Trust Act (12 Del. C.ss.3801 et seq.). 1. Name. The name of the business trust formed hereby is Truck Engine Receivables Master Trust. 2. Delaware Trustee. The name and business address of the trustee of the Trust in the State of Delaware is Chase Manhattan Bank USA, National Association, 1201 Market Street, Corporate Trust, 9th Floor, Wilmington, Delaware 19801. 3. This Certificate of Trust shall be effective on , 2000. IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust, has executed this Certificate of Trust as of the date first-above written. Chase Manhattan Bank USA, National Association, not in its individual capacity but solely as Owner Trustee under a Trust Agreement as of, 2000 By: Name: Title:
 
 
                                                                 EXHIBIT 10.65

                 TRUST SALE AND SERVICING AGREEMENT


                            BY AND AMONG


                   NAVISTAR FINANCIAL CORPORATION
                             (SERVICER)


                TRUCK ENGINE RECEIVABLES FINANCING CO.
                              (SELLER)


                                 AND


                TRUCK ENGINE RECEIVABLES MASTER TRUST
                               (TRUST)


                    DATED AS OF NOVEMBER 21, 2000






                                      -i-

                          TABLE OF CONTENTS
                                                               Page

ARTICLE  IDEFINITIONS.............................................1
1.1   Definitions.................................................1

ARTICLE  IICONVEYANCE OF RECEIVABLES..............................1
2.1   Conveyance of Receivables...................................1
2.2   Acceptance by the Trust.....................................2
2.3   Representations  and  Warranties  of Seller  Relating
      to Seller  and the Agreement................................2
2.4   Representations and Warranties of the Seller Relating
      to the Receivables..........................................4
2.5   Covenants of the Seller and Navistar Financial..............6
2.6   Covenants of the Seller.....................................7

ARTICLE  IIIADMINISTRATION AND SERVICING OF RECEIVABLES...........9
3.1   Acceptance of Appointment and Other Matters Relating
      to the Servicer.............................................9
3.2   Servicing Compensation.....................................10
3.3   Representations, Warranties and Covenants of the Servicer..10
3.4   Reports and Records........................................13
3.5   Annual Servicer's Certificate..............................14
3.6   Annual Independent Public Accountants' Servicing Report....15
3.7   Tax Treatment..............................................15
3.8   Notices to Navistar Financial..............................15
3.9   Adjustments................................................15

ARTICLE  IVALLOCATION AND APPLICATION OF COLLECTIONS.............16
4.1   [Reserved].................................................16
4.2   Establishment of Accounts..................................16
4.3   General Provisions Regarding Trust Accounts and
      Group Accounts.............................................16
4.4   Lock-Box Account; Collection Account.......................19
4.5   Equalization Account.......................................20
4.6   Net Deposits...............................................21
4.7   New Issuances..............................................21
4.8   Allocations Amongst the Groups.............................21

ARTICLE  VDISTRIBUTIONS AND REPORTS TO SECURITYHOLDERS ..........22

ARTICLE  VIOTHER MATTERS RELATING TO THE SERVICER................22
6.1   Liability of the Servicer..................................22
6.2   Merger or  Consolidation  of, or Assumption  of, the
      Obligations  of the Servicer...............................22
6.3   Limitation on Liability of the Servicer and Others.........23
6.4   Servicer  Indemnification  of the Trust,  the  Indenture
      Trustee and the Owner Trustee..............................23
6.5   Resignation of Servicer....................................24
6.6   Access to the Documentation and Information Regarding
      the Receivables............................................25
6.7   Delegation of Duties.......................................25
6.8   Examination of Records.....................................25
6.9   Additional Expenses........................................25

ARTICLE  VIISERVICING DEFAULTS...................................26
7.1   Servicing Defaults.........................................26
7.2   Indenture Trustee to Act; Appointment of Successor.........27
7.3   Notification to Securityholders............................29

ARTICLE  VIIIMISCELLANEOUS PROVISIONS............................29
8.1   Amendment..................................................29
8.2   No Petition Covenant.......................................31
8.3   GOVERNING LAW..............................................31
8.4   Notices....................................................31
8.5   Severability of Provisions.................................31
8.6   Assignment.................................................31
8.7   Further Assurances.........................................31
8.8   No Waiver; Cumulative Remedies.............................32
8.9   Counterparts...............................................32
8.10  Third-Party Beneficiaries..................................32
8.11  Action by Owner Trustee....................................32
8.12  Merger and Integration.....................................32
8.13  Headings...................................................32
8.14  Exchange of Seller Certificates............................32
8.15  ...........................................................32


--------------------------------------------------------------------------------
Exhibit A       Form of Daily Activity Report
Exhibit B       Form of Annual Servicer's Certificate
Exhibit C       Form of Lock-Box Agreement

Appendix A      Definitions and Rules of Construction
Appendix B      Notice Addresses and Procedures

Schedule 1      Proceedings
Schedule 2      List of Trust Accounts

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


                 TRUST SALE AND SERVICING AGREEMENT

           THIS TRUST SALE AND SERVICING  AGREEMENT (this  "Agreement") is made
as of  November 21,  2000,  by and  among  NAVISTAR  FINANCIAL  CORPORATION,  a
Delaware  corporation  (the  "Servicer"),  TRUCK ENGINE  RECEIVABLES  FINANCING
CO.,  a Delaware  corporation  (the  "Seller"),  and TRUCK  ENGINE  RECEIVABLES
MASTER TRUST, a Delaware business trust (the "Trust").

           In  consideration  of the mutual  agreements  herein  contained  and
other   good  and   valuable   consideration,   receipt   of  which  is  hereby
acknowledged,  each  party  agrees  as  follows  for the  benefit  of the other
parties and for the  benefit of the  Certificateholders  and the  Beneficiaries
to the extent provided herein:

                              ARTICLE  I
                             DEFINITIONS

           I.1  Definitions.   Unless  otherwise  defined  herein,  capitalized
terms used in this  Agreement  are  defined  in and shall  have the  respective
meanings  assigned  to them  in Part I of  Appendix  A to this  Agreement.  All
references  herein to "the  Agreement"  or "this  Agreement"  are to this Trust
Sale and Servicing  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  Appendix A,  and all  references  herein  to  Articles,
Sections and  subsections  are to  Articles,  Sections or  subsections  of this
Agreement  unless otherwise  specified.  The rules of construction set forth in
Part II of Appendix A shall be applicable to this Agreement.

                             ARTICLE  II
                      CONVEYANCE OF RECEIVABLES

           II.1 Conveyance of  Receivables.  In  consideration  of the Issuer's
delivery to the Seller of the  Certificate(s),  the Seller  does  hereby  sell,
transfer,  assign,  set over and otherwise convey,  without recourse (except as
expressly   provided   herein),   to  the   Trust  for  the   benefit   of  the
Certificateholders  and the other  Beneficiaries on the Closing Date (a) all of
its  right,  title  and  interest  in, to and  under  the  Receivables  and all
Related  Security  with  respect  thereto  owned by the  Seller at the close of
business  on  the  Business  Day   immediately   preceding  the  Closing  Date,
Collections  and all other  monies due or to become due thereon and all amounts
received with respect thereto and Recoveries  thereof,  (b) all of the Seller's
rights,  remedies,  powers and privileges with respect to such  Receivables and
the Lock-Box  Account  under the  Receivables  Purchase  Agreement  and (c) all
proceeds of all of the foregoing in clauses (a) and (b)  (including  "proceeds"
as  defined  in the UCC as in effect  in the  applicable  jurisdiction).  As of
each  Business  Day after the  Closing  Date,  prior to the  earlier of (i) the
occurrence  of an Early  Amortization  Event  and  (ii) the  Trust  Termination
Date,  on which  Receivables  are acquired by the Seller (a  "Transfer  Date"),
the Seller does hereby sell,  transfer,  assign, set over and otherwise convey,
without recourse  (except as expressly  provided  herein),  to the Trust all of
its  right,  title  and  interest  in, to and  under  the  Receivables  and all
Related  Security  with  respect  thereto  owned by the  Seller at the close of
business on such Transfer Date and not theretofore  conveyed to the Trust,  all
monies due or to become due and all amounts  received with respect  thereto and
all proceeds  (including  "proceeds"  as defined in the UCC as in effect in the
applicable  jurisdiction,   and  Recoveries)  of  all  of  the  foregoing.  The
foregoing  sale,  transfer,   assignment,   set-over  and  conveyance  and  any
subsequent  sales,  transfers,  assignments,  set-overs and  conveyances do not
constitute,  and are not intended to result in, the  creation or an  assumption
by the Trust,  the Owner Trustee,  the Indenture  Trustee or any Beneficiary of
any   obligation   of   the   Servicer,   the   Seller,   Navistar   Financial,
International,  any other  Originator  or any other Person in  connection  with
the Receivables.

           In  connection  with such  sales,  the  Seller  agrees to record and
file,  at its own  expense,  a financing  statement  on form UCC-1 or any other
applicable form (and  continuation  statements when applicable) with respect to
the  Receivables  now  existing and  hereafter  created for the sale of chattel
paper,  accounts,  payment  intangibles and general  intangibles (as defined in
the  UCC as in  effect  in the  applicable  jurisdiction  from  time  to  time)
meeting  the  requirements  of  applicable  law in  such  manner  and  in  such
jurisdictions  as are  necessary  to  perfect  the sale and  assignment  of the
Receivables  and  the  Related   Security  to  the  Trust,  and  to  deliver  a
file-stamped  copy of such  financing  statements  or  other  evidence  of such
filing  to the  Owner  Trustee  on or  prior to the  Closing  Date.  The  Owner
Trustee  shall  be  under  no  obligation  whatsoever  to file  such  financing
statement,  or a  continuation  statement to such  financing  statement,  or to
make any other filing under the UCC in connection with such sales.

           In connection  with such sales,  the Seller further  agrees,  at its
own  expense,  on or prior  to the  Closing  Date,  to cause  the  Servicer  to
indicate  in its  computer  files,  as  required  by the  Receivables  Purchase
Agreement,  that the  Receivables  have been  sold,  and the  Related  Security
assigned,  to the Seller in accordance with the Receivables  Purchase Agreement
and sold to the Trust pursuant to this  Agreement.  In addition,  in connection
with such sales,  the Seller  shall  deliver  within ten days after the Closing
Date  to  the  Owner   Trustee  all  documents   related  to  the   Receivables
constituting  "instruments"  (as  defined  in  the  UCC  as in  effect  in  the
applicable  jurisdiction) with such endorsements  attached as the Owner Trustee
may reasonably require.

           II.2 Acceptance  by the Trust.  The Trust  hereby  acknowledges  its
acceptance of all right,  title and interest  previously  held by the Seller to
the  property,  now  existing  and  hereafter  created,  conveyed  to the Trust
pursuant to Section 2.1.

           The Owner  Trustee  shall have no power to  create,  assume or incur
indebtedness  or other  liabilities  in the  name of the  Trust  other  than as
contemplated in the Basic Documents.

           II.3 Representations  and  Warranties of Seller  Relating to Seller
and the  Agreement.  The Seller  hereby  represents  and warrants to the Trust,
the Indenture Trustee and to the Owner Trustee as of the Closing Date that:

(1)   Organization  and  Good  Standing.  The  Seller  is  a  corporation  duly
organized,  validly  existing and in good standing  under the laws of the State
of  Delaware  and  has,  in  all  material  respects,   full  corporate  power,
authority  and legal right to own its  properties  and conduct its  business as
such properties are presently  owned and such business is presently  conducted,
and to execute, deliver and perform its obligations under this Agreement.

(2)   Due  Qualification.  The Seller is duly  qualified  to do  business  and,
where  necessary,  is in good standing as a foreign  corporation  (or is exempt
from such  requirement)  and has obtained all necessary  licenses and approvals
in each  jurisdiction  in which  the  conduct  of its  business  requires  such
qualification  except  where the  failure to so qualify or obtain  licenses  or
approvals  would not have a material  adverse  effect on its ability to perform
its obligations hereunder.

(3)   Due  Authorization.  The execution and delivery of this Agreement and the
other Basic  Documents and the  consummation of the  transactions  provided for
or  contemplated  by  this  Agreement  and the  other  Basic  Documents  by the
Seller,  have been duly  authorized  by the Seller by all  necessary  corporate
action on the part of the Seller.

(4)   No Conflict.  The execution and delivery of this  Agreement and the other
Basic  Documents,  the  performance of the  transactions  contemplated  by this
Agreement  and the  other  Basic  Documents  and the  fulfillment  of the terms
hereof and  thereof,  will not  conflict  with,  result in any breach of any of
the material  terms and  provisions  of, or constitute  (with or without notice
or lapse of time or both) a material  default under,  any indenture,  contract,
agreement,  mortgage,  deed of trust,  or other  instrument to which the Seller
is a party or by which it or its properties are bound.

(5)   No Violation.  The execution  and delivery of this  Agreement,  the other
Basic  Documents,  the  performance of the  transactions  contemplated  by this
Agreement  and the  other  Basic  Documents  and the  fulfillment  of the terms
hereof  and  thereof  applicable  to the  Seller,  will  not  conflict  with or
violate any material Requirements of Law applicable to the Seller.

(6)   No  Proceedings.  There are no  proceedings  or, to the best knowledge of
the Seller,  investigations  pending or  threatened  against the Seller  before
any  Governmental  Authority (i) asserting the  invalidity of this Agreement or
the other Basic  Documents,  (ii) seeking to prevent the consummation of any of
the   transactions   contemplated   by  this  Agreement  and  the  other  Basic
Documents,  (iii) seeking any  determination  or ruling that, in the reasonable
judgment of the Seller,  would  materially and adversely affect the performance
by the Seller of its  obligations  under  this  Agreement  and the other  Basic
Documents,  (iv) seeking any  determination or ruling that would materially and
adversely  affect the  validity or  enforceability  of this  Agreement  and the
other  Basic  Documents  or (v)  seeking  to affect  adversely  the  income tax
attributes  of the  Trust  under  the  United  States  federal,  or  any  other
applicable state, local or foreign  jurisdiction's,  income, single business or
franchise tax systems.

(7)   All  Consents  Required.   All  appraisals,   authorizations,   consents,
orders,  approvals  or  other  actions  of any  Person  or of any  Governmental
Authority  required  in  connection  with the  execution  and  delivery of this
Agreement and the other Basic  Documents,  the performance of the  transactions
contemplated  by  this  Agreement  and  the  other  Basic  Documents,  and  the
fulfillment of the terms hereof and thereof, have been obtained.

(8)   Enforceability.  Each of this  Agreement  and the other  Basic  Documents
constitutes a legal,  valid and binding  obligation  of the Seller  enforceable
against   the   Seller  in   accordance   with  its   terms,   except  as  such
enforceability   may  be  limited   by   applicable   bankruptcy,   insolvency,
reorganization,  moratorium  or other  similar  laws now or hereafter in effect
affecting the  enforcement  of creditors'  rights in general and except as such
enforceability  may  be  limited  by  general  principles  of  equity  (whether
considered in a suit at law or in equity).

(9)   Valid  Transfer.  This Agreement  constitutes a valid sale,  transfer and
assignment  to the Trust of all right,  title and interest of the Seller in the
related  Receivables and the Related  Security and the proceeds thereof and all
of the Seller's  rights,  remedies,  powers and privileges  with respect to the
Receivables  under the Receivables  Purchase  Agreement and, upon the filing of
the financing  statements  described in Section 2.1 with the Secretary of State
in  the  applicable   jurisdiction   where  either  the  Seller's  or  Navistar
Financial's  chief  executive  offices  or books and  records  relating  to the
Receivables are located and, in the case of the Receivables  hereafter  created
and the proceeds  thereof,  upon the creation  thereof,  the Trust shall have a
perfected first priority  security  interest in such property (except for Liens
permitted  under   Section 2.5(a)).   Except  as  otherwise  provided  in  this
Agreement,  or the other  Basic  Documents,  neither  the Seller nor any Person
claiming  through  or under  the  Seller  has any claim to or  interest  in the
Collateral.

           The  representations  and  warranties  set forth in this Section 2.3
shall  survive the transfer and  assignment  of the  Receivables  to the Trust.
Upon discovery by the Seller,  the Owner Trustee,  the Indenture Trustee or the
Servicer of a breach of any of the foregoing  representations  and  warranties,
the party  discovering  such  breach  shall give prompt  written  notice to the
other parties.

           In the event the  Noteholders of a Series shall have exercised their
right  to  have  such  Notes  redeemed  pursuant  to  Section  10.1(b)  of  the
Indenture  as a  result  of  any  breach  of any  of  the  representations  and
warranties  set forth in this Section  2.3,  the Seller shall  deposit into the
applicable  Principal  Funding  Account in immediately  available  funds on the
Business Day preceding the  Redemption  Date, an amount equal to the sum of the
amounts  specified  therefor  with  respect to each  outstanding  Series in the
related  Series  Supplement.  The  obligation of the Seller to make the deposit
specified  in this  Section 2.3 will  constitute  the sole remedy to the Trust,
the  Noteholders  (the Indenture  Trustee on behalf of the  Noteholders) or any
other Person as a result of the breach of the  representations  and  warranties
set forth in this Section 2.3.

           II.4 Representations  and Warranties of the Seller  Relating to the
Receivables.

(10)  Representations   and  Warranties.   The  Seller  hereby  represents  and
warrants to the Trust that:

(1)   Eligible  Receivable.  Except as otherwise  disclosed  to the Trust,  for
      each  Receivable  conveyed to the Trust on the  Closing  Date and on each
      Transfer Date, the Receivable is an Eligible Receivable.

(2)   No Liens.  Each  Receivable  and all  Related  Security  conveyed  to the
      Trust on the  Closing  Date  and on each  Transfer  Date,  and all of the
      Seller's  right,   title  and  interest  in  the   Receivables   Purchase
      Agreement, have been conveyed to the Trust free and clear of any Liens.

(3)   All Consents  Required.  With respect to each  Receivable and all Related
      Security  existing on the Closing  Date and on each  Transfer  Date,  all
      consents,  licenses,  approvals or  authorizations of or registrations or
      declarations  with any  Governmental  Authority  required to be obtained,
      effected  or given by the Seller in  connection  with the  conveyance  of
      such  Receivable  or  Related  Security  to  the  Trust  have  been  duly
      obtained, effected or given and are in full force and effect.

(11)  Notice  of  Breach.  The  representations  and  warranties  set  forth in
Section 2.4(a)  shall survive the transfer and  assignment  of the  Receivables
to the  Trust and the  pledge to the  Indenture  Trustee  under the  Indenture.
Upon discovery by the Seller,  the Owner Trustee,  the Indenture Trustee or the
Servicer,  of a breach of any of the  representations  and warranties set forth
in  Section  2.4(a),  the party  discovering  such  breach  shall  give  prompt
written notice to the other parties.

(12)  Reassignment.   In  the  event  any   representation  or  warranty  under
Section 2.4(a)  is not true and correct as of the date  specified  therein with
respect to any  Receivable  and such  breach has a material  adverse  effect on
the Noteholders,  then,  within 30 days (or such longer period as may be agreed
to in  writing  by the  Indenture  Trustee)  of the  earlier  to  occur  of the
discovery  of any such event by the Seller or the  Servicer,  or receipt by the
Seller or the  Servicer of written  notice of any such event given by the Owner
Trustee  or  the  Indenture   Trustee,   such   Receivables   ("Disqualified
Receivables")  will be reassigned to the Seller on the terms and conditions set
forth  in the  next  succeeding  paragraph;  provided,  however,  that  no such
reassignment  shall be  required  to be made with  respect to such  Receivables
if, by the end of such 30-day  period (or such  longer  period as may be agreed
to in  writing  by the  Indenture  Trustee),  the  breached  representation  or
warranty  shall  then be true and  correct  in all  material  respects  and any
material adverse effect caused thereby shall have been cured.

           Each such Disqualified  Receivable shall be reassigned to the Seller
on or  before  the end of the  Collection  Period  in  which  the  reassignment
obligation  arises.  The  Seller  shall  accept  a  reassignment  of each  such
Disqualified  Receivable  by directing  the Servicer to deduct,  subject to the
next sentence,  the principal  balance of such  Disqualified  Receivables  from
the  Base  Amount  on or  prior  to the  end of  such  Collection  Period.  If,
following such  deduction,  the Base Amount would be less than the Net Invested
Amount on such  date,  then not later  than 12:00 noon on the day on which such
reassignment  occurs,  the Seller shall  deposit in the  Collection  Account in
immediately  available  funds the amount by which the Base Amount would be less
than  the  Net  Invested   Amount  (up  to  the   principal   balance  of  such
Disqualified  Receivables),   and  such  amount  shall  constitute  a  Transfer
Deposit Amount;  provided that if the Transfer  Deposit Amount is not deposited
as required by this sentence,  then the principal  balance of such Disqualified
Receivables  shall only be  deducted  from the Base  Amount to the extent  that
the  Base  Amount  is not  reduced  below  the  Net  Invested  Amount  and  the
Disqualified  Receivables,  the  principal  balance  of which  have not been so
deducted,  shall not be  reassigned  to the Seller and shall remain part of the
Trust,   it  being   understood   that  the  failure  to  remove   Disqualified
Receivables  pursuant to this  proviso  shall not limit the  obligation  of the
Seller  to  deposit  the  portion  of  the  Transfer   Deposit  Amount  not  so
deposited.  Upon  reassignment of any such  Disqualified  Receivable,  but only
after payment by the Seller of the Transfer  Deposit Amount,  if any, the Trust
shall  automatically  and without  further action be deemed to sell,  transfer,
assign,  set  over  and  otherwise  convey  to the  Seller,  without  recourse,
representation or warranty,  all the right,  title and interest of the Trust in
and to such  Disqualified  Receivable,  all Related Security and all monies due
or to become due with  respect  thereto  and all  proceeds  thereof.  The Owner
Trustee  shall  execute  such   documents  and   instruments   of  transfer  or
assignment  and take such other  actions as shall  reasonably  be  requested by
the  Seller to effect  the  conveyance  of such  Receivables  pursuant  to this
Section 2.4.  The  obligation  of the  Seller to accept a  reassignment  of any
such  Receivable  and  to  pay  any  related   Transfer  Deposit  Amount  shall
constitute   the  sole  remedy   respecting  the  event  giving  rise  to  such
obligation  available to the Trust,  the Noteholders (or the Indenture  Trustee
on behalf of Noteholders) or any other Person.

           II.5 Covenants  of the Seller  and  Navistar  Financial.  The Seller
and Navistar Financial hereby covenant that:

(13)  No  Liens.  Except  for  the  conveyances  hereunder  or as  provided  in
Section 2.1  of the  Indenture,  the Seller  will not sell,  pledge,  assign or
transfer to any other  Person,  or grant,  create,  incur,  assume or suffer to
exist  any Lien  on,  any  Receivable  or any  Related  Security,  whether  now
existing  or  hereafter  created,  or any  interest  therein,  or the  Seller's
rights,  remedies,  powers or privileges with respect to the Receivables  under
the  Receivables  Purchase  Agreement,  and the Seller  shall defend the right,
title and  interest  of the Trust  in,  to and  under the  Receivables  and the
Related Security,  whether now existing or hereafter created,  and such rights,
remedies,  powers and privileges,  against all claims of third parties claiming
through or under Navistar Financial.

(14)  Delivery  of  Collections.   In  the  event  that  the  Seller,  Navistar
Financial  or  any   Affiliate   thereof   receives   payments  in  respect  of
Receivables,  the Seller  and  Navistar  Financial  agree to pay or cause to be
paid  into  the  Lock-Box  Account  or  the  Collection  Account  all  payments
received  thereby in respect of the  Receivables as soon as  practicable  after
receipt  thereof,  but in no event  later  than two  Business  Days  after  the
receipt by the Seller, Navistar Financial or any Affiliate thereof.

(15)  Agreement  Matters.  If Navistar  Financial breaches any of the covenants
in  Section 2.4  of the  Receivables  Purchase  Agreement and such breach has a
material  adverse  effect on the interests of the  Securityholders,  the Seller
shall  enforce its rights  under the  Receivables  Purchase  Agreement  arising
from such breach.

(16)  Receivables  Allocations.  In the event that the Seller is unable for any
reason to transfer  Receivables  to the Trust,  then the Seller  agrees that it
shall  allocate,   after  the  occurrence  of  such  event,  payments  on  each
Receivable with respect to the principal  balance of such  Receivable  first to
the oldest  principal  balance  of such  Receivable  and to have such  payments
applied as Collections in accordance with the terms of this Agreement.

           II.6 Covenants of the Seller.  The Seller hereby covenants that:

(17)  The  Seller  will  maintain  in full  effect  its  existence,  rights and
franchises  as a corporation  under the laws of the state of its  incorporation
and  will  obtain  and  preserve  its  qualification  to do  business  in  each
jurisdiction  in which such  qualification  is or shall be necessary to protect
the  validity  and   enforceability  of  this  Agreement  and  the  Receivables
Purchase  Agreement  and  each  other  instrument  or  agreement  necessary  or
appropriate  to proper  administration  hereof and permit  and  effectuate  the
transactions contemplated hereby.

(18)  The Seller will  maintain its own deposit  account or accounts,  separate
from those of any of its  Affiliates,  with  commercial  banking  institutions.
The funds of the Seller will not be  diverted to any other  Person or for other
than  the  corporate  use of  the  Seller  and,  except  as  may  be  expressly
permitted by this  Agreement,  the funds of the Seller shall not be  commingled
with those of any of its Affiliates.

(19)  To the extent that the Seller  contracts or does business with vendors or
service  providers where the goods and services  provided are partially for the
benefit of any other  Person,  the costs  incurred  in so doing shall be fairly
allocated  to or among the  Seller  and such  entities  for whose  benefit  the
goods and  services  are  provided,  and the Seller and each such entity  shall
bear its fair  share of such  costs.  All  material  transactions  between  the
Seller and any of its Affiliates shall be only on an arm's length basis.

(20)  The  Seller  will  maintain a separate  office in which its  affairs  are
conducted  separate from those of its stockholders  and Affiliates.  The Seller
will  hold   itself  out  as  a  separate   entity   and   correct   any  known
misunderstandings regarding its separate identity.

(21)  The Seller  will  conduct its affairs  strictly  in  accordance  with its
Certificate  of  Incorporation  and  observe  all  necessary,  appropriate  and
customary  corporate  formalities,  including,  but not limited to, holding all
regular  and special  stockholders'  and  directors'  meetings  appropriate  to
authorize all corporate  action,  keeping separate and accurate minutes of such
meetings,  passing all resolutions or consents  necessary to authorize  actions
taken or to be taken,  and  maintaining  accurate and separate  books,  records
and  accounts,   including,   but  not  limited  to,  intercompany  transaction
accounts.  In  addition,  the Seller  shall  conduct  its  affairs  strictly in
accordance  with all factual  assumptions  with  respect to the Seller taken by
Kirkland & Ellis in its bankruptcy  opinion delivered  pursuant to Section 5(a)
of  the  Note  Purchase   Agreement.   Regular   stockholders'  and  directors'
meetings shall be held at least annually.

(22)  The Seller will ensure that  decisions  with  respect to its business and
daily  operations  shall be  independently  made by the  Seller  (although  the
officer  making any  particular  decision may also be an  employee,  officer or
director  of an  Affiliate  of the  Seller)  and  shall not be  dictated  by an
Affiliate  of the  Seller.  The  Seller  shall at all times  during the term of
this  Agreement  have at least one  independent  director  except  during  such
times (if any)  during  which the  Seller is using its best  efforts to replace
(as quickly as practicable)  any independent  director that has died,  resigned
or is otherwise unable or unwilling to serve.

(23)  The Seller will act solely in its own corporate  name and through its own
authorized  officers  and  agents,  and no  Affiliate  of the  Seller  shall be
appointed  to act as its  agent,  except  as  expressly  contemplated  by  this
Agreement.  The Seller shall at all times use its own stationery.

(24)  The Seller will  ensure that no  Affiliate  of the Seller  shall  advance
funds  to the  Seller,  other  than (i)  capital  contributions  from  Navistar
Financial,  made to enable the Seller to pay the purchase  price of Receivables
or  (ii)  as is  otherwise  provided  herein  or in  the  Receivables  Purchase
Agreement,  and no Affiliate of the Seller will  otherwise  supply funds to, or
guaranty  debts of, the Seller;  provided,  however,  that an  Affiliate of the
Seller may provide  funds to the Seller in connection  with the  capitalization
of the Seller,  including  the  provision  of capital  necessary to assure that
the Seller  has  "substantial  assets"  as  described  in  Treasury  Regulation
Section 301.7701-2(d)(2).

(25)  Other than organizational  expenses and as expressly provided herein, the
Seller will pay all expenses,  indebtedness and other  obligations  incurred by
it.

(26)  The Seller will not enter into any guaranty,  or otherwise become liable,
with respect to any  obligation of any of its  Affiliates.  The Seller will not
acquire  obligations  or  securities of its  stockholders.  The Seller will not
pledge  its assets for the  benefit of any  non-affiliate  or make any loans or
advances to any  non-affiliate,  provided  that the Seller may enter into those
certain intercompany transactions contemplated by the Basic Documents.

(27)  The Seller will ensure that any financial  reports required of the Seller
shall  comply  with  generally  accepted  accounting  principles  and  shall be
issued  separately  from, but may be  consolidated  with, any reports  prepared
for any of its Affiliates.

(28)  The Seller will ensure that at all times it is adequately  capitalized to
engage in the  transactions  contemplated in its Certificate of  Incorporation,
this Agreement and the Receivables Purchase Agreement.



                            ARTICLE  III
             ADMINISTRATION AND SERVICING OF RECEIVABLES

           III.1 Acceptance of  Appointment  and Other Matters  Relating to the
Servicer.

(29)  The Servicer shall service and administer the Receivables,  shall collect
payments  due  under the  Receivables  and shall  charge-off  as  uncollectible
Receivables,   all  in  accordance  with  its  customary  and  usual  servicing
procedures  for servicing  receivables  generated by Ford.  The Servicer  shall
have full  power and  authority,  acting  alone or through  any party  properly
designated  by it hereunder,  to do any and all things in connection  with such
servicing  and  administration  which  it  may  deem  necessary  or  desirable.
Without  limiting the  generality  of the foregoing and subject to Section 7.1,
the  Servicer  is  hereby  authorized  and  empowered,  unless  such  power and
authority is revoked by the Indenture  Trustee on account of the  occurrence of
a Servicing  Default  pursuant to Section 7.1,  (i) to  instruct the  Indenture
Trustee  in  writing  to make  withdrawals  and  payments  from the  Collection
Account or any other  Series  Account as set forth in this  Agreement,  (ii) to
execute  and  deliver,  on  behalf of the  Trust,  any and all  instruments  of
satisfaction or cancellation,  or of partial or full release or discharge,  and
all other  comparable  instruments,  with respect to the Receivables and, after
the  delinquency  of any Receivable  and to the extent  permitted  under and in
compliance  with  applicable  Requirements  of  Law,  to  commence  enforcement
proceedings  with  respect  to such  Receivables,  (iii) to  make any  filings,
reports,  notices,  applications,  registrations with, and seek any consents or
authorizations  from,  the  Securities  and Exchange  Commission  and any state
securities  authority  on behalf of the Trust as may be  necessary or advisable
to comply with any federal or state  securities laws or reporting  requirement,
and (iv) to delegate all or any of its servicing,  collection,  enforcement and
administrative  duties  hereunder with respect to the Receivables to any Person
who  agrees  to  conduct  such  duties  in  accordance   with  this  Agreement;
provided,  however,  that the  Servicer  shall  notify the Owner  Trustee,  the
Indenture  Trustee and the Rating  Agencies  in writing of any such  delegation
of its duties  which is not in the  ordinary  course of its  business,  that no
delegation will relieve the Servicer of its liability and  responsibility  with
respect to such  duties and that the Rating  Agency  Condition  shall have been
satisfied  with  respect to any such  delegation;  provided  further,  that the
Servicer may delegate its duties to  International  without the satisfaction of
the Rating  Agency  Condition.  The Owner  Trustee  shall  furnish the Servicer
with any  powers  of  attorney  and other  documents  reasonably  necessary  or
appropriate   to  enable  the   Servicer  to  carry  out  its   servicing   and
administrative duties hereunder.

(30)  In the  event  that the  Seller  is unable  for any  reason  to  transfer
Receivables  to the Trust in accordance  with the  provisions of this Agreement
then,  in any such  event,  the  Servicer  agrees  (i) to give  prompt  written
notice  thereof to the Owner  Trustee,  the  Indenture  Trustee and each Rating
Agency  and  (ii)  that  it  shall  in  any  such  event  allocate,  after  the
occurrence of such event,  payments on the  Receivables  first to the principal
balance  of the  oldest  Receivable,  and to  have  such  payments  applied  as
Collections in accordance with Section 8.2 of the Indenture.

(31)  The  Servicer  shall  not,  and  any  Successor  Servicer  shall  not  be
obligated  to, use separate  servicing  procedures,  offices or  employees  for
servicing the  Receivables  from the customary  and usual  procedures,  offices
and  employees  used by the Servicer  for  servicing  receivables  generated by
Ford.

           III.2 Servicing   Compensation.   As  full   compensation   for  its
servicing  activities  hereunder  and  reimbursement  for its  expenses  as set
forth in the immediately  following  paragraph,  the Servicer shall be entitled
to receive  the  Servicing  Fee on each  Payment  Date on or prior to the Trust
Termination  Date  payable  in  arrears.  The  "Servicing  Fee"  shall  be  the
aggregate of the Monthly  Servicing  Fees  specified in the Series  Supplement.
The  Servicing  Fee shall be  payable  to the  Servicer  solely  to the  extent
amounts  are  available  for  payment  in  accordance  with  the  terms  of the
applicable Series Supplement.

           The  Servicer's  expenses  include  the  amounts  due to  the  Owner
Trustee  pursuant  to  Section 6.9  of the Trust  Agreement  and the  Indenture
Trustee  pursuant to Section 6.7  of the Indenture and the reasonable  fees and
disbursements  of attorneys,  independent  accountants  and all other  expenses
incurred by the Servicer in connection with its activities  hereunder,  and all
fees and  expenses  of the  Trust  not  expressly  stated  herein to be for the
account of the  Certificateholders  or the  Beneficiaries.  Except as otherwise
provided in a Series  Supplement,  the  Servicer  shall be required to pay such
expenses  for its  own  account,  and  shall  not be  entitled  to any  payment
therefor  other than the  Servicing  Fee.  Except as  otherwise  provided  in a
Series  Supplement,  the Servicer will be solely  responsible  for all fees and
expenses  incurred by or on behalf of the Servicer in  connection  herewith and
the Servicer  will not be entitled to any fee or other  payment  from, or claim
on, any of the Collateral (other than the Servicing Fee).

           III.3 Representations, Warranties and Covenants of the Servicer.

(32)  Navistar  Financial,  as  Servicer,   hereby  makes,  and  any  Successor
Servicer by its  appointment  hereunder shall make, on the Closing Date (and on
the date of any such  appointment)  the following  representations,  warranties
and covenants:

(1)   Organization  and  Good  Standing.  Such  party  is  a  corporation  duly
      organized,  validly  existing and in good standing  under the  applicable
      laws  of the  state  of  its  incorporation  and  has,  in  all  material
      respects,  full  corporate  power,  authority and legal rights to own its
      properties  and  conduct  its  receivable   servicing  business  as  such
      properties  are  presently  owned  and  as  such  business  is  presently
      conducted,  and to execute,  deliver and  perform its  obligations  under
      this  Agreement and the other Basic  Documents to which the Servicer is a
      party.

(2)     Due  Qualification.  Such party is duly qualified to do business and is
      in good  standing  as a  foreign  corporation  (or is  exempt  from  such
      requirements)  and has obtained all  necessary  licenses and approvals in
      each  jurisdiction  in which the servicing of the Receivables as required
      by this Agreement requires such  qualification,  except where the failure
      to so qualify or obtain  licenses or approvals  would not have a material
      adverse effect on its ability to perform its obligations hereunder.
(1)

(3)   Due  Authorization.  The  execution,  delivery  and  performance  of this
      Agreement and the other Basic  Documents to which the Servicer is a party
      have  been  duly  authorized  by such  party by all  necessary  corporate
      action on the part thereof.

(4)   Binding   Obligation.   Each  of  this  Agreement  and  the  other  Basic
      Documents to which the  Servicer is a party  constitutes  a legal,  valid
      and binding obligation of such party,  enforceable in accordance with its
      terms, except as enforceability may be limited by applicable  bankruptcy,
      insolvency,  reorganization,  moratorium  or  other  similar  laws now or
      hereinafter in effect,  affecting the  enforcement  of creditors'  rights
      and except as such  enforceability  may be limited by general  principles
      of equity (whether considered in a proceeding at law or in equity).

(5)    No  Violation.  The  execution  and  delivery  by  such  party  of  this
      Agreement and the other Basic  Documents  applicable  to such party,  the
      performance of the  transactions  contemplated  by this Agreement and the
      other  Basic  Documents  to  which  the  Servicer  is  a  party  and  the
      fulfillment  of the terms  hereof and  thereof  applicable  to such party
      will not  conflict  with,  violate,  result  in any  breach of any of the
      material terms and  provisions of, or constitute  (with or without notice
      or lapse of time or both) a material  default under,  any  Requirement of
      Law  applicable  to such  party or any  indenture,  contract,  agreement,
      mortgage,  deed of trust,  or other  instrument  to which such party is a
      party or by which it is bound.

(6)    No  Proceedings.   Except  as  provided  on  Schedule 1,  there  are  no
      proceedings  or, to the best  knowledge  of such  party,  investigations,
      pending or  threatened  against such party  before any court,  regulatory
      body,   administrative   agency  or  other   tribunal   or   governmental
      instrumentality  seeking  to  prevent  the  consummation  of  any  of the
      transactions   contemplated   by  this  Agreement  and  the  other  Basic
      Documents,  seeking any  determination  or ruling that, in the reasonable
      judgment  of such  party,  would  materially  and  adversely  affect  the
      performance  by such party of its  obligations  under this  Agreement and
      the other Basic  Documents,  or seeking any  determination or ruling that
      would materially and adversely affect the validity or  enforceability  of
      this Agreement and the other Basic Documents.

(7)   Compliance  with  Requirements  of Law. Such party shall duly satisfy all
      obligations on its part to be fulfilled  under or in connection  with the
      Receivables,  will maintain in effect all  qualifications  required under
      Requirements  of Law in order to service  properly  the  Receivables  and
      will comply in all  material  respects  with all  Requirements  of Law in
      connection  with  servicing the  Receivables,  the failure to comply with
      which  would  have a  material  adverse  effect on the  interests  of the
      Certificateholders or the Beneficiaries.

(8)   No  Rescission  or   Cancellation.   Such  party  shall  not  permit  any
      rescission or cancellation  of a Receivable  except as ordered by a court
      of competent jurisdiction or other Governmental Authority.

(9)   Protection  of  Beneficiaries'  Rights.  Such  party  shall  not take any
      action,  nor omit to take any  action,  which  action or  omission  would
      impair  the  rights of  Beneficiaries  in the  Receivables,  nor shall it
      reschedule,  revise or defer  payments  due on any  Receivable  except in
      accordance  with  its  existing   credit  and  collection   policies  for
      servicing receivables generated by Ford.

(10)       Negative Pledge.  Except for the conveyance  hereunder to the Trust,
      the pledge to the  Indenture  Trustee  under the  Indenture and the Liens
      contemplated by the Basic Documents,  the Servicer will not sell, pledge,
      assign or transfer to any other Person, or grant,  create,  incur, assume
      or suffer to exist any Lien on, any  Receivable  sold and assigned to the
      Trust,  whether  now  existing  or  hereafter  created,  or any  interest
      therein,  and the Servicer shall defend the rights, title and interest of
      the  Trust  in, to and under  any  Receivable  sold and  assigned  to the
      Trust,  whether now existing or hereafter created,  against all claims of
      third parties claiming through or under the Seller or the Servicer.

(33)  Notice of Breach.  The  representations  and warranties set forth in this
Section 3.3  shall survive the transfer and  assignment of the  Receivables  to
the Trust and the pledge of the Receivables to the Indenture  Trustee  pursuant
to the  Indenture.  Upon  discovery  by the  Seller,  the  Servicer,  the Owner
Trustee,  or the  Indenture  Trustee of a breach of any of the  representations
and  warranties  set forth in this  Section  3.3,  the party  discovering  such
breach shall give prompt written notice to the other parties.

(34)  Purchase.  In the event that any  covenant of the  Servicer  set forth in
Section  3.3(a)(vii),  (viii)  or  (ix)  has  not  been  complied  with  in any
material  respect  with  respect  to  any  Receivable  and  such  breach  has a
material adverse effect on the value of such Receivable,  then,  within 30 days
(or such  longer  period as may be agreed to by the  Indenture  Trustee) of the
earlier  to  occur of the  discovery  of any such  event by the  Seller  or the
Servicer,  or receipt by the Seller or the  Servicer  of written  notice of any
such event given by the Owner  Trustee or the Indenture  Trustee,  the Servicer
shall  purchase  such  Receivable  on  the   Determination   Date   immediately
succeeding  the  expiration of such 30-day  period on the terms and  conditions
set forth in the next succeeding  paragraph;  provided,  however,  that no such
purchase  shall be required to be made with respect to such  Receivable  if, by
the end of such  30-day  period (or such  longer  period as may be agreed to by
the Indenture  Trustee) the breached  representation  or warranty shall then be
true and correct in all  material  respects  and any  material  adverse  effect
caused  thereby  shall  have  been  cured.   The  Servicer  shall  effect  such
purchase by  depositing  in the  Collection  Account in  immediately  available
funds an  amount  equal to the  Purchase  Price  of such  Receivable.  Any such
deposit  of  such  Purchase  Price  into  the   Collection   Account  shall  be
considered a Transfer  Deposit  Amount and shall be applied in accordance  with
the terms of this Agreement.


           Upon each such  payment  of such  Purchase  Price,  the Trust  shall
automatically and without further action be deemed to sell,  transfer,  assign,
set  over  and   otherwise   convey   to  the   Servicer,   without   recourse,
representation or warranty,  all right,  title and interest of the Trust in and
to such  Receivables,  all monies due or to become due with respect thereto and
all proceeds  thereof and the Related  Security.  The Trust shall  execute such
documents  and  instruments  of  transfer  or  assignment  and take such  other
actions  as shall  be  reasonably  requested  by the  Servicer  to  effect  the
conveyance  of  any  such  Receivables   pursuant  to  this  Section  3.3.  The
obligation  of the  Servicer  to  purchase  such  Receivables,  and to make the
deposits  required  to be made to the  Collection  Account as  provided  in the
preceding  paragraph,  shall  constitute  the sole remedy  respecting the event
giving rise to such obligation  available to the Trust, the  Certificateholders
or the Noteholders.

           III.4 Reports and Records.

(35)  On  each  Business  Day on  which  the  aggregate  principal  balance  of
Receivables  in the Trust  changes,  the  Servicer  will prepare and provide to
the Indenture  Trustee a report in  substantially  the form attached  hereto as
Exhibit A (the "Daily Activity Report") to be delivered to the Noteholders.

(36)  On or before each Payment Date, with respect to each outstanding  Series,
the Servicer shall deliver to the Rating Agencies,  the Owner Trustee,  and the
Indenture  Trustee a Payment  Statement for such Payment Date  substantially in
the form set forth in the  Series  Supplement  for that  Series of Notes.  Each
such  statement  to  be  delivered  to  Securityholders  shall  set  forth  the
following  information  concerning  the  Notes  with  respect  to that  Payment
Date,  the period since the previous  Payment Date,  or the related  Collection
Period:

(1)   the total amount distributed to the Noteholders;

(2)   the amount,  if any, of the  distribution  allocable to principal on each
      Series or class of Notes;

(3)   the amount, if any, of the distribution  allocable to interest on or with
      respect to each Series or class of Notes;

(4)   the aggregate  Outstanding Amount for each Series or class of Notes, each
      as of such date and after giving  effect to all payments  reported  under
      clause (ii) above;

(5)   the  amount  of the  Monthly  Servicing  Fee  paid to the  Servicer  with
      respect to the related Collection Period or Periods, as the case may be;

(6)   the per annum  interest  rate for the next Payment Date for any Series or
      class of  Securities  with a variable or  adjustable  interest  rate,  if
      determinable prior to such date;

(7)   the amount of Receivables  that become  Disqualified  Receivables  during
      the related Collection Period;

(8)    the  accumulated  but unpaid  interest,  if any, and Investor  Allocable
      Losses  and  Investor  Dilution/Warranty  Charge-Offs,  if  any,  on each
      Series or class of Notes and the change in each of such  amounts from the
      preceding Payment Date;

(9)    the  balance  of  Equalization  Account  on the last day of the  related
      Collection   Period  after  giving  effect  to  changes  therein  or  any
      distributions therefrom on such date;

(10)        the balance of carrying cost  receivables  reserve  accounts on the
      last day of the related  Collection Period after giving effect to changes
      therein or any distributions therefrom on such date; and

(11)       with  respect  to each  Series of Notes,  the items set forth in the
      applicable Series Supplement.

Each amount set forth  pursuant  to clauses (i) and (ii) above with  respect to
the  Notes  shall be  expressed  as a  dollar  amount  per  $1,000  of  initial
principal balance of the Notes.

(37)  Within the  prescribed  period of time for tax reporting  purposes  after
the  end of  each  calendar  year  during  the  term  of  this  Agreement,  the
Indenture  Trustee  shall  furnish (or cause to be  furnished),  to each Person
who at any time  during such  calendar  year shall have been a Holder of record
of Notes or Certificates,  respectively,  and received any payment  thereon,  a
statement  containing  such  information  as may be  required  by the  Code and
applicable  Treasury  Regulations to enable such  Securityholder to prepare its
federal  income  tax  returns.  As long as the Holder of record of the Notes is
Cede & Co.,  as  nominee  of the  Depository,  beneficial  owners of Notes will
receive tax and other  information  from Clearing  Agency  Participants  rather
than from the Indenture Trustee.

(38)  A copy of each  statement  provided  pursuant  to Section  3.4(a) and (b)
shall be made available for inspection at the Corporate Trust Office.


           III.5 Annual Servicer's  Certificate.  The Servicer  will deliver to
the Rating Agencies,  the Owner Trustee and the Indenture  Trustee on or before
February 1,  of  each  calendar  year,  beginning  with  February 1,  2002,  an
Officers'  Certificate  substantially in the form of Exhibit B stating that (a)
a review of the activities of the Servicer  during the preceding  calendar year
and of its  performance  under this Agreement was made under the supervision of
the officers  signing such  certificate  and (b) to the best of such  officers'
knowledge,  based on such review,  the  Servicer has  performed in all material
respects its  obligations  under this  Agreement  throughout  such year, or, if
there has been a material  default in the  performance of any such  obligation,
specifying  each such default  known to such officers and the nature and status
thereof.  A copy of such certificate may be obtained by any  Securityholder  by
a request in writing to the Owner  Trustee  addressed  to the  Corporate  Trust
Office.

           III.6 Annual Independent Public  Accountants'  Servicing Report. The
Servicer shall cause a firm of independent  certified public  accountants,  who
may also render  other  services to the  Servicer or to the Seller,  to deliver
to the Owner  Trustee,  the  Indenture  Trustee  and the Rating  Agencies on or
before  February 1,  of  each  year,  beginning  February 1,   2002,  a  report
addressed to the board of  directors  of the Servicer and to the Owner  Trustee
and the  Indenture  Trustee,  to the  effect  that such firm has  examined  the
financial  statements  of the Servicer and issued its report  thereon and that:
(a)  such   examination  was  made  in  accordance   with  generally   accepted
accounting  principles,  and accordingly  included such tests of the accounting
records and such other auditing  procedures as such firm  considered  necessary
in the  circumstances,  (b) as a part of such  examination,  certain  documents
and  records  of  the  Servicer   relating  to  the  servicing  of  receivables
generated  by  Ford  were  reviewed  and  tested  and (c)  nothing  came to the
attention  of such firm that  caused  them to believe  that the  provisions  of
this Agreement were not being  complied  with,  except for (i) such  exceptions
as such firm shall believe to be immaterial  and (ii) such other  exceptions as
shall be set forth in such  statement.  A copy of such  report may be  obtained
by any  Securityholder  by a request in writing to the Owner Trustee  addressed
to the Corporate Trust Office.

           III.7Tax  Treatment.  The Seller has entered into this Agreement and
the  Notes  have been (or will be)  issued  with the  intention  that the Notes
will  qualify  under  applicable  tax  law  as  indebtedness   secured  by  the
Collateral.  The Seller,  each  Beneficiary,  each  Certificateholder  and each
Note Owner,  by the  acceptance of its Note or Book-Entry  Note, as applicable,
agrees  to treat  the  Notes as  indebtedness  secured  by the  Collateral  for
federal  income taxes,  and any other  income,  franchise  taxes,  or any other
taxes  imposed  on or  measured  by income of any  applicable  state,  local or
foreign jurisdiction.

           III.8Notices  to   Navistar   Financial.   In  the  event   Navistar
Financial is no longer  acting as Servicer,  any Successor  Servicer  appointed
pursuant  to  Section  7.2  shall   deliver  or  make   available  to  Navistar
Financial,  as the case may be,  each  certificate  and report  required  to be
prepared,  forwarded  or delivered  thereafter  pursuant to Section 3.4, 3.5 or
3.6.

           III.9Adjustments.

(39)  If the Servicer adjusts downward the principal  balance of any Receivable
because of a rebate,  refund,  credit  adjustment  or billing error to Ford, or
because such  Receivable  was created in respect of an engine which was refused
or returned by Ford,  or if any other type of Dilution  occurs with  respect to
a  Receivable,  then, in any such case,  the Base Amount will be  automatically
reduced by the amount of the  Dilution in  accordance  with the  provisions  of
the applicable Series  Supplement.  Furthermore,  if following such a reduction
the Base Amount  would be less than the Net Invested  Amount on such day,  then
the Seller shall be required to pay an amount equal to such  deficiency  (up to
the amount of such Dilution)  into the  Collection  Account on the day on which
such  Dilution  occurs,  and each such  payment  shall  constitute  a  Transfer
Deposit Amount.
(1)

(40)  If the Servicer adjusts downward the principal  balance of any Receivable
because  of  a  Warranty   Set-Off  to  Ford  then  the  Base  Amount  will  be
automatically  reduced by the amount of the Warranty Set-Off.  Furthermore,  if
following  such a  reduction  the  Base  Amount  would  be  less  than  the Net
Invested  Amount on such  day,  then the  Seller  shall be  required  to pay an
amount equal to such  deficiency  (up to the amount of such  Warranty  Set-Off)
into the Collection  Account on the day on which such Warranty  Set-Off occurs,
and each such payment shall constitute a Transfer Deposit Amount.

(41)  If (i) the  Servicer  makes a  deposit  into the  Collection  Account  in
respect of a collection  of a Receivable  and such  collection  was received by
the  Servicer  in the form of a check  which is not  honored  for any reason or
(ii)  the  Servicer  makes  a  mistake  with  respect  to  the  amount  of  any
Collections  and  deposits  an amount that is less than or more than the actual
amount  of such  Collections,  the  Servicer  shall  appropriately  adjust  the
amount  subsequently  deposited  into the  Collection  Account to reflect  such
dishonored  check or mistake.  Any  Receivable in respect of which a dishonored
check is received shall be deemed not to have been paid.

                             ARTICLE  IV
              ALLOCATION AND APPLICATION OF COLLECTIONS

           IV.1 [Reserved].

           IV.2 Establishment  of Accounts.  The  Servicer,  for the benefit of
the  Securityholders,  shall cause to be established and maintained in the name
of the  Indenture  Trustee an Eligible  Deposit  Account  bearing a designation
clearly  indicating that the funds  deposited  therein are held for the benefit
of the  Securityholders  into which the Servicer will deposit  Collections (the
"Collection Account").

           IV.3 General Provisions Regarding Trust Accounts and Group Accounts.

(42)  Subject to Section 6.4,  the  Indenture  Trustee  shall not in any way be
held  liable by reason of any  insufficiency  in any of the Trust  Accounts  or
Group  Accounts  resulting  from any loss on any Eligible  Investment  included
therein  (including  losses  incurred  as a result  of the  liquidation  of any
Eligible  Investment  prior to its stated  maturity or failure of the  Servicer
to provide  timely written  direction)  except for losses  attributable  to the
Indenture  Trustee's  failure to make  payments  on such  Eligible  Investments
issued by the  Indenture  Trustee,  in its  commercial  capacity  as  principal
obligor  and not as  trustee,  in  accordance  with  their  terms.  In no event
shall the  Indenture  Trustee be liable or  responsible  for the  selection  of
Eligible Investments.

(43)  The  funds  on  deposit  in the  Trust  Accounts  shall  be  invested  in
accordance with Section 8.3(b) of the Indenture.

(44)  The Indenture  Trustee or another  Person  holding the Trust Accounts and
Group Accounts as provided in this Agreement and the Series  Supplements  shall
be the "Securities  Intermediary."  If the Securities  Intermediary  shall be a
Person other than the  Indenture  Trustee,  the Issuer shall obtain the express
agreement  of such Person to the  obligations  of the  Securities  Intermediary
set forth in Section  6.8(c) of the  Indenture  and an Opinion of Counsel  that
such Person can perform such obligations.

(45)  With  respect  to the  Trust  Account  Property  and  the  Group  Account
Property, the Indenture Trustee agrees, by its acceptance hereof, that:

(1)   Any Trust  Account  Property or Group  Account  Property  that is held in
      deposit accounts shall be held solely in Eligible Deposit  Accounts.  The
      Trust  Accounts and the Group Accounts are accounts to which a "financial
      asset" (as  defined in Section  8-102(a)(9)  of the New York UCC) will be
      credited.

(2)   All property  delivered to the Securities  Intermediary  pursuant to this
      Indenture  will  be  credited  upon  receipt  of  such  property  to  the
      appropriate Trust Account or Group Account.

(3)   Each  item  of  property  (whether   investments,   investment  property,
      security,  instrument  or  cash)  credited  to a Trust  Account  or Group
      Account  shall be treated as a  "financial  asset"  within the meaning of
      Section 8-102(a)(9) of the New York UCC.

(4)   If at any time the Securities  Intermediary  shall receive any order from
      the Indenture Trustee directing  transfer or redemption of any "financial
      asset" (as defined in Section  8-102(a)(9)  of the New York UCC) relating
      to the Trust Accounts or the Group Accounts, the Securities  Intermediary
      shall  comply with such order  without  further  consent by the Issuer or
      the Servicer or any other Person.

(5)   The Trust  Accounts and the Group  Accounts shall be governed by the laws
      of the  State of New  York,  regardless  of any  provision  in any  other
      agreement.  For  purposes of the UCC,  New York shall be deemed to be the
      Securities  Intermediary's  jurisdiction and the Trust Accounts and Group
      Accounts shall be governed by the laws of the State of New York.

(6)   The  Securities   Intermediary  has  not  entered  into,  and  until  the
      termination  of this  Indenture  will not enter into,  any agreement with
      any other  Person  relating  to the Trust  Accounts,  the Group  Accounts
      and/or any  "financial  asset" (as defined in Section  8-102(a)(9) of the
      New York UCC) or other  property  credited  thereto  pursuant to which it
      has  agreed to comply  with  entitlement  orders  (as  defined in Section
      8-102(a)(8)  of the New York UCC) of such other Person and the Securities
      Intermediary  has not entered  into,  and until the  termination  of this
      Indenture  will not enter  into,  any  agreement  with the  Issuer or the
      Servicer or the  Indenture  Trustee  purporting to limit or condition the
      obligation  of the  Securities  Intermediary  to comply with  entitlement
      orders as set forth in clause (iv) above.

(7)   Except for the claims and interest of the Indenture  Trustee in the Trust
      Accounts  and the Group  Accounts,  the  Securities  Intermediary  has no
      knowledge of claims to, or interests  in, the Trust  Accounts,  the Group
      Accounts or in any "financial  asset" (as defined in Section  8-102(a)(9)
      of the New York UCC) credited  thereto.  If any other Person  asserts any
      lien,  encumbrance  or adverse claim  (including  any writ,  garnishment,
      judgment,  warrant of attachment,  execution or similar  process) against
      the Trust  Accounts,  the Group Accounts or in any "financial  asset" (as
      defined in Section 8-102(a)(9) of the New York UCC) carried therein,  the
      Securities  Intermediary will promptly notify the Indenture Trustee,  the
      Servicer and the Issuer thereof.

(8)   The Securities  Intermediary will promptly send copies of all statements,
      confirmations  and other  correspondence  concerning the Trust  Accounts,
      the Group Accounts,  any Trust Account  Property and/or any Group Account
      Property  simultaneously  to  each  of the  Servicer  and  the  Indenture
      Trustee, at the addresses set forth in Appendix B hereto.

(9)   The Indenture  Trustee shall maintain each item of Trust Account Property
      and Group  Account  Property  in the  particular  Trust  Account or Group
      Account to which such item  originated and shall not commingle items from
      different Trust Accounts or Group Accounts.

(10)       The Servicer or other Person  directing  the  investment of funds in
      the Trust  Accounts and the Group Accounts shall not direct the Indenture
      Trustee to:

           (A)  invest in any Physical Property,  any  uncertificated  security
                that is not a Federal  Book-Entry  Security or any Certificated
                Security  unless the Indenture  Trustee takes  Delivery of such
                item; or

           (B)  invest  in  any  Security  Entitlement  or  Federal  Book-Entry
                Security  unless the  Indenture  Trustee  obtains  Control over
                such investment.

(46)  If,  at any time,  any Trust  Account  or Group  Account  ceases to be an
Eligible  Deposit  Account,  the  Servicer,  within ten Business  Days (or such
longer  period,  not to exceed 30 calendar days, as to which each Rating Agency
may consent) of  determining  or receiving  notice from the  Indenture  Trustee
that such Trust  Account  or Group  Account  is no longer an  Eligible  Deposit
Account,  shall establish a substitute  Eligible  Deposit Account as such Trust
Account  or Group  Account,  instruct  the  Indenture  Trustee  or the Trust as
applicable,  in writing,  to transfer any cash and/or any Eligible  Investments
to such  new  Trust  Account  or  Group  Account  and,  from  the date any such
substitute  account is established,  such account shall be the Trust Account or
Group  Account.  Neither the Seller nor the Servicer,  nor any Person  claiming
by,  through or under the Seller or  Servicer,  shall have any right,  title or
interest in, or any right to withdraw any amount  from,  the Trust  Accounts or
the Group  Accounts.  Pursuant  to the  authority  granted to the  Servicer  in
Section  3.1,  the Servicer  shall have the power,  revocable by the  Indenture
Trustee  (or by the Owner  Trustee  with the written  consent of the  Indenture
Trustee),  to instruct the  Indenture  Trustee or the Trust as  applicable,  to
make  withdrawals  and payments from the Trust  Accounts and the Group Accounts
for  the  purposes  of  carrying  out  the  Servicer's  or the  Trust's  duties
specified in this  Agreement or permitting  the Indenture  Trustee to carry out
its duties under the Indenture.

           IV.4 Lock-Box Account; Collection Account.

(47)  The  Lock-Box   Account   shall  be  subject  to  a  Lock-Box   Agreement
substantially  in the form of  Exhibit C  attached  hereto.  Unless  instructed
otherwise by the Servicer  (or,  after the  occurrence  and  continuance  of an
Early  Amortization  Event,  the Owner  Trustee),  the  Lock-Box  Bank shall be
instructed  by the  Servicer  to remit,  on a daily  basis (but  subject to the
Lock-Box Bank's customary funds availability  schedule),  all amounts deposited
in the Lock-Box  Account  maintained  with it to the  Collection  Account.  The
Collection  Account shall be  maintained  in the name of the Indenture  Trustee
on behalf of the  Noteholders.  Except as  provided in this  Agreement  and the
applicable Basic  Documents,  none of the Seller,  the Servicer,  or any Person
claiming  by,  through or under the Seller or  Servicer  shall have any control
over  the use of,  or any  right  to  withdraw  any item or  amount  from,  any
Lock-Box  Account  or  Collection  Account.  The  Servicer  and  the  Indenture
Trustee are each  hereby  irrevocably  authorized  and  empowered,  as Seller's
attorney-in-fact,  to endorse any item  deposited or presented for deposit,  in
the Lock-Box  Account or Collection  Account  requiring the  endorsement of the
Seller, which authorization is coupled with an interest and is irrevocable.

(48)  The Servicer  shall instruct (or shall cause the Seller to instruct) Ford
to  make  all  payments  due  to  the  Seller   relating  to  or   constituting
Collections  (or any proceeds  thereof) (i) to the Lock-Box  Account or (ii) to
the Collection  Account.  If the Seller  receives any  Collections or any other
payment of proceeds  with  respect to any  Related  Security  related  thereto,
the  Servicer  shall cause the Seller to (x)  segregate  such  payment and hold
it in  trust  for the  benefit  of the  Indenture  Trustee,  and (y) as soon as
practicable,  but no later than the second  Business Day  following  receipt of
such item by such Person,  deposit such payment in the Lock-Box  Account or the
Collection  Account.  The  Servicer  shall,  and shall cause the Seller to, use
reasonable   efforts  to  prevent  the  deposit  of  any  amounts   other  than
Collections  in the Lock-Box  Account or  Collection  Account.  If the Servicer
is  notified  by the Seller  that any amount  other than  Collections  has been
deposited in the Lock-Box  Account or Collection  Account,  the Servicer  shall
promptly  instruct the  Lock-Box  Bank and the  Indenture  Trustee to segregate
such amount,  and shall  direct such  Lock-Box  Bank or  Indenture  Trustee (as
appropriate)  to turn over such  amounts to the Seller or an  affiliate  of the
Seller (or their designees) to whom such amounts are owed.

(49)  (i) The  Servicer  may,  from  time  to  time  after  the  Closing  Date,
designate  a new account as a Lock-Box  Account or a  Collection  Account,  and
such account  shall become a Lock-Box  Account or  Collection  Account (and the
bank at which  such  account  is  maintained  shall  become a  Lock-Box  Bank);
provided  that the  Indenture  Trustee  shall have  received not less than five
Business  Days' prior  written  notice of the account  and/or the bank that are
proposed to be added as a Lock-Box  Bank and, not less than five  Business Days
prior  to the  effective  date of any such  proposed  addition,  the  Indenture
Trustee  shall have  received (A)  counterparts  of a Lock-Box  Agreement  with
each new Lock-Box  Bank,  duly executed by such new Lock-Box Bank and all other
parties  thereto and (B) copies of all other  agreements  and documents  signed
by the  new  Lock-Box  Bank or  such  other  parties  with  respect  to any new
Lock-Box Account or Collection Account, as applicable.

                (ii)  Servicer  may,  from time to time after the Closing Date,
terminate an account as a Lock-Box  Account or a  Collection  Account or a bank
as a Lock-Box Bank;  provided that (A) no such  termination  shall occur unless
the Indenture  Trustee  shall have  received not less than five Business  Days'
prior  written  notice of the  account  and/or the bank that is  proposed to be
terminated  as a Lock-Box  Bank and, not less than five  Business Days prior to
the effective  date of any such  proposed  termination,  the Indenture  Trustee
shall  have  received  counterparts  of an  agreement,  duly  executed  by  the
applicable  Lock-Box Bank and reasonably  satisfactory in form and substance to
the  Indenture  Trustee,  pursuant to which such  Lock-Box Bank agrees that, if
it  receives  any funds or items that  constitute  Collections  on or after the
effective  date  of the  termination  of the  applicable  bank  account  or the
effective  date of its  termination  as a  Lock-Box  Bank (as the case may be),
such Lock-Box Bank or former  Lock-Box  Bank (as  applicable)  shall cause such
funds and items to be delivered in the form  received to another  Lock-Box Bank
or  transferred  to another  Lock-Box  Account or Collection  Account  promptly
after such Lock-Box  Bank or former  Lock-Box  Bank (as  applicable)  discovers
that  it has  received  any  such  funds  or  items,  and  (B)  notwithstanding
clause (A),  the Seller and the Servicer may at any time establish  alternative
collection  procedures  that do not require the use of Lock-Box  Accounts  upon
satisfaction of the Rating Agency Condition.

           IV.5 Equalization Account.

(50)  In addition to any other  amounts  permitted  or required to be deposited
into  the  Equalization  Account  pursuant  to  the  Basic  Documents,  at  the
direction  of  the  Certificateholders  to  the  Servicer,  Owner  Trustee  and
Indenture    Trustee,    any   amounts   otherwise    distributable   to   such
Certificateholders  pursuant  to the  terms of this  Agreement,  the  Indenture
(including any Series  Supplement) and the Trust Agreement,  shall be deposited
into the Equalization Account.

(51)  The net  proceeds  from any  increase  in the  principal  balance  of any
Series of Notes shall be deposited into the  Equalization  Account in an amount
equal to the  excess  of the Net  Invested  Amount  over the Base  Amount.  The
remainder  of  such  funds  may be  distributed  to the  Certificateholders  as
provided  in  the  Trust   Agreement  or,  to  the  extent   requested  by  the
Certificateholders,    the    amount    otherwise    distributable    to   such
Certificateholders shall be deposited into the Equalization Account.

(52)  Unless an Early  Amortization  Event  shall  have  occurred,  amounts  on
deposit  in the  Equalization  Account  may be used to  repay  the  outstanding
principal  balance of any Series of Notes to the extent  required or  permitted
by the terms of the related Series Supplement.
(1)

(53)  Any  amount  held in the  Equalization  Account  in excess of the  amount
required  so that the Base  Amount  is not less  than the Net  Invested  Amount
shall be paid to the  Certificateholders  as  provided  in the Trust  Agreement
or, to the extent  requested by the  Certificateholders,  the amount  otherwise
payable  to such  Certificateholders  shall  be  retained  in the  Equalization
Account  at the time and to the  extent  requested  by the  Certificateholders;
provided,  however,  that amounts on deposit in the Equalization Account at any
time   during   which  any  Series  is  in  its  early   amortization   period,
accumulation  period,   amortization  period  or  investment  period  shall  be
allocated and distributed in accordance with the Series Supplement.

           IV.6 Net Deposits.  The Servicer,  the Seller, the Indenture Trustee
and the Owner  Trustee may make any  remittances  pursuant  to this  Article IV
net  of  amounts  to  be  distributed  by  the  applicable  recipient  to  such
remitting  party.  Nonetheless,  each such party  shall  account for all of the
above  described   remittances  and   distributions  as  if  the  amounts  were
deposited and/or transferred separately.

           IV.7 New  Issuances.  The  Seller  may from  time to time  after the
Closing  Date direct the Owner  Trustee,  on behalf of the Trust,  to issue one
or more Series of Notes  pursuant to Section  2.1 of the  Indenture,  with such
Principal  Terms as shall be specified  by the Seller.  The  obligation  of the
Trust to issue a new Series of Notes and to execute  and  deliver  any  related
documents,   including   the   related   Series   Supplement,   is  subject  to
satisfaction  of the  conditions  set forth in  Section  2.1 of the  Indenture.
Upon  satisfaction  of those  conditions,  the Owner Trustee,  on behalf of the
Trust,  shall execute the Notes,  the related  Series  Supplement and any other
related documents and deliver the  authenticated  Notes to or upon the order of
the Seller;  provided,  however, that the Seller shall make or cause to be made
any  deposit  required  to be  made  by  it  pursuant  to  the  related  Series
Supplement;  provided,  further,  that  if,  after  giving  effect  to all  the
withdrawals,  deposits and  allocations to be made on such day, the Base Amount
would be less than the Net  Invested  Amount,  the net  proceeds of the sale of
such Notes  shall be  deposited  into the  Equalization  Account in  accordance
with Section 4.5(b) of this Agreement;  provided,  further,  that the remainder
of such  funds  may  distributed  in  accordance  with  Section 4.5(b)  of this
Agreement.

           IV.8 Allocations Amongst the Groups.

(54)  Allocation  of  Collections.  On each  Business  Day, the Servicer  shall
determine  the amount of collected  funds  received in the  Collection  Account
(other then (a) funds  transferred  to the Collection  Account  pursuant to any
Series  Supplement  and (b)  funds  that are  required  to be  returned  to the
Seller  or an  affiliate  of  the  Seller  (or  their  designees)  pursuant  to
Section 4.4(b))  since the  preceding  Business Day and shall  allocate to each
outstanding  Group a share of such funds in an amount  equal to the  product of
the applicable  Group Collection  Allocation  Percentage and the amount of such
funds.  The  portion  of such  funds  allocated  to any Group  shall be further
allocated  and  otherwise  dealt  with in  accordance  with  the  terms  of the
related Series Supplement.

(55)  Allocation  of Dilution,  Warranty  Set-Offs,  Write-Offs,  Recoveries,
Investor  Allocable  Losses  and  Investor  Dilution/Warranty  Charge-Offs.  In
each  Payment  Statement  relating  to a Group that is in a Group  Amortization
Period,  the  Servicer  shall  calculate  the  amount  of  Dilution,   Warranty
Set-Offs,  Write-Offs,  Recoveries,  Investor  Allocable  Losses  and  Investor
Dilution/Warranty  Charge-Offs as to which no settlement  payment has been made
pursuant  to the  Receivables  Purchase  Agreement,  in each  case  during  the
related  Settlement  Period (or the portion of that  Settlement  Period falling
in the Group Amortization  Period),  and shall allocate to such Group a portion
of  such  amounts  equal  to the  product  of each  such  amount  and the  Loss
Allocation Percentage for the related Group.

                             ARTICLE  V
            DISTRIBUTIONS AND REPORTS TO SECURITYHOLDERS

           Distributions  shall be made to, and reports  shall be provided  to,
the  Securityholders  as set forth in the  Indenture,  the Trust  Agreement and
the applicable Series Supplement.

                             ARTICLE  VI
               OTHER MATTERS RELATING TO THE SERVICER

           VI.1 Liability of the Servicer.  The Servicer  shall be liable under
this Article VI only to the extent of the obligations  specifically  undertaken
by the Servicer in its capacity as Servicer.

           VI.2 Merger or Consolidation  of, or Assumption of, the Obligations
of the  Servicer.  The Servicer  shall not  consolidate  with or merge into any
other   corporation   or  convey  or  transfer   its   properties   and  assets
substantially as an entirety to any Person, unless:

(56)  the corporation  formed by such  consolidation or into which the Servicer
is  merged  or  the  Person  which  acquires  by  conveyance  or  transfer  the
properties and assets of the Servicer  substantially  as an entirety shall be a
corporation  organized  and  existing  under the laws of the  United  States of
America or any state or the  District of Columbia  and, if the  Servicer is not
the surviving entity,  such corporation shall assume,  without the execution or
filing  of any  paper  or any  further  act on the  part of any of the  parties
hereto,  the  performance  of every  covenant  and  obligation  of the Servicer
hereunder;

(57)  if the Servicer is not the surviving entity,  such corporation shall file
such  financing  statements  or  amendments  as may be necessary  under Revised
Article 9 to continue the perfection of the Seller's  security  interest in the
Receivables and the proceeds thereof; and

(58)  the  Servicer  has  delivered  to the  Owner  Trustee  and the  Indenture
Trustee an  Officers'  Certificate  and an Opinion of Counsel each stating that
such  consolidation,  merger,  conveyance  or  transfer  will  comply with this
Section 6.2 and that all conditions  precedent  herein provided for relating to
such transaction have been complied with.
(1)

The  Servicer   shall  promptly   notify  the  Rating   Agencies  of  any  such
consolidation, merger, conveyance or transfer.

           VI.3 Limitation on Liability of the Servicer and Others.

(59)  Except as provided in Section  6.4,  neither the  Servicer nor any of the
directors or officers or employees  or agents of the  Servicer,  shall be under
any  liability to the Trust,  the Owner  Trustee,  the Indenture  Trustee,  the
Securityholders  or any other  Person  for any action  taken or for  refraining
from the taking of any action in its  capacity  as  Servicer  pursuant  to this
Agreement;  provided,  however,  that  this  provision  shall not  protect  the
Servicer or any such person  against any  liability  which would  otherwise  be
imposed  by reason  of  wilful  misfeasance,  bad  faith or  negligence  in the
performance  of duties or by reason of reckless  disregard of  obligations  and
duties  hereunder.  The  Servicer  and any  director  or officer or employee or
agent of the  Servicer  may  rely in good  faith  on any  document  of any kind
prima facie  properly  executed  and  submitted  by any Person  respecting  any
matters arising hereunder.

(60)  Except as provided in this  Agreement,  the  Servicer  shall not be under
any  obligation to appear in,  prosecute or defend any legal action that is not
incidental to its duties to service the  Receivables  in  accordance  with this
Agreement  and that in its opinion may involve it in any expense or  liability;
provided,  however,  that the Servicer may, in its sole  discretion,  undertake
any  reasonable  action that it may deem  necessary  or desirable in respect of
this  Agreement and the rights and duties of the parties to this  Agreement and
the  interests  of  the  Noteholders  and  the  Certificateholders  under  this
Agreement,  the  interests  of the  Noteholders  under  the  Indenture  and the
interests of the Certificateholders under the Trust Agreement.

           VI.4 Servicer  Indemnification  of the Trust, the Indenture Trustee
and the Owner Trustee.

(61)  The  Servicer  out of its own  funds  shall  indemnify,  defend  and hold
harmless   the  Trust,   for  the  benefit  of  the   Certificateholders,   the
Beneficiaries,   the  Owner  Trustee  and  the  Indenture  Trustee,  and  their
respective  officers,  directors,  employees  and agents,  from and against any
taxes that may at any time be asserted  against  any such  Person with  respect
to  the  transactions  contemplated  in  this  Agreement,   including,  without
limitation, any sales, gross receipts,  general corporation,  tangible personal
property,  privilege or license  taxes (but not  including  any taxes  asserted
with  respect to, or arising out of, (i) the sale of any  Eligible  Receivables
to  the  Trust   hereunder,   (ii)  the  issuance  and  original  sale  of  any
Securities,  (iii)  ownership  or  sale  of  any  Eligible  Receivables  or the
Securities,  (iv)  distributions or the receipt of payment on the Securities or
(v) any fees or other compensation  payable to any such Person),  and costs and
expenses in defending against the same.


(62)  The Servicer out of its own funds shall  indemnify  and hold harmless the
Trust,  for the  benefit  of the  Certificateholders,  the  Beneficiaries,  the
Owner  Trustee  and the  Indenture  Trustee,  and  their  respective  officers,
directors,  employees  and  agents,  from  and  against  any  loss,  liability,
expense,  damage  or  injury  suffered  or  sustained  by  reason  of any acts,
omissions  or  alleged  acts or  omissions  arising  out of  activities  of the
Servicer  pursuant to this  Agreement;  provided,  however,  that the  Servicer
shall not  indemnify  if such  acts,  omissions  or alleged  acts or  omissions
constitute  fraud,  gross  negligence,  breach  of  fiduciary  duty  or  wilful
misconduct  by  the  Owner  Trustee  or the  Indenture  Trustee;  and  provided
further that the Servicer  shall not  indemnify  for any  liabilities,  cost or
expense of the Trust with respect to any action  taken by the Owner  Trustee or
the  Indenture  Trustee  at  the  request  of  the  Certificateholders  or  any
Beneficiaries  to the extent  the Owner  Trustee  or the  Indenture  Trustee is
fully indemnified by such  Certificateholders  or Beneficiaries with respect to
such action.

(63)  The  Servicer  out of its own  funds  shall  indemnify,  defend  and hold
harmless the  Indenture  Trustee and the Owner  Trustee,  and their  respective
officers,  directors,   employees  and  agents,  from  and  against  any  loss,
liability,  expense,  damage or injury arising out of or incurred in connection
with  (x) in the  case  of  the  Indenture  Trustee,  the  Indenture  Trustee's
performance  of its duties  under the  Indenture,  (y) in the case of the Owner
Trustee,  the  Owner  Trustee's  performance  of its  duties  under  the  Trust
Agreement or (z) the  acceptance,  administration  or performance by, or action
or inaction of, the Indenture Trustee or the Owner Trustee,  as applicable,  of
the Trust and duties contained in the Basic  Documents,  except in each case to
the extent that such cost, expense,  loss, claim,  damage or liability:  (A) is
due to the wilful  misfeasance,  bad faith or negligence  (except for errors in
judgment)  of  the  Person  seeking  to  be  indemnified,  (B)  to  the  extent
otherwise  payable  to  the  Indenture  Trustee,   arises  from  the  Indenture
Trustee's  breach of any of its  representations  or warranties in Section 6.13
of the  Indenture,  (C) to the extent  otherwise  payable to the Owner Trustee,
arises  from  the  Owner  Trustee's  breach  of any of its  representations  or
warranties set forth in Section 6.6 of the Trust  Agreement or (D) shall  arise
out of or be incurred  in  connection  with the  performance  by the  Indenture
Trustee of the duties of a Successor Servicer hereunder.

(64)  Indemnification   under  this   Section   6.4  shall   include,   without
limitation,  any judgment,  award,  settlement,  reasonable attorneys' fees and
expenses  and other  costs or  expenses  as  incurred  in  connection  with the
defense of any actual or  threatened  action,  proceeding  or claim;  provided,
however,  that if the  Servicer  has made any  indemnity  payments  pursuant to
this  Section 6.4 and the  recipient  thereafter  collects  any of such amounts
from others,  the recipient shall promptly repay such amounts  collected to the
Servicer, without interest.

(65)  Any indemnification  under this Section 6.4 shall survive the termination
of this Agreement and the  resignation  and removal of the Owner Trustee or the
Indenture Trustee.

           VI.5 Resignation  of Servicer.  The  Servicer  shall not resign from
the obligations  and duties hereby imposed on it except (a) upon  determination
that (i) the  performance  of its  duties  hereunder  is no longer  permissible
under  applicable  law  and  (ii)  there  is no  reasonable  action  which  the
Servicer  could  take  to  make  the   performance  of  its  duties   hereunder
permissible  under  applicable  law  or (b)  upon  satisfaction  of the  Rating
Agency  Condition.  Any such  determination  permitting the  resignation of the
Servicer  shall be  evidenced  as to clause  (a) above by an Opinion of Counsel
to such effect  delivered to the Owner  Trustee and the Indenture  Trustee.  No
such  resignation  shall  become  effective  until the  Indenture  Trustee or a
Successor Servicer shall have assumed the  responsibilities  and obligations of
the Servicer in accordance  with Section 7.2 hereof.  If the Indenture  Trustee
is  unable  within  120 days of the date of such  determination  to  appoint  a
Successor  Servicer,  the Indenture  Trustee shall serve as Successor  Servicer
hereunder.

           VI.6 Access to the  Documentation  and  Information  Regarding  the
Receivables.   The  Servicer  shall  provide  to  the  Owner  Trustee  and  the
Indenture   Trustee  access  to  any  and  all   documentation   regarding  the
Receivables  in such cases where the Owner  Trustee and the  Indenture  Trustee
are  required  in  connection  with  the  enforcement  of  the  rights  of  the
Securityholders,  or by  applicable  statutes  or  regulations  to review  such
documentation,  such access  being  afforded  without  charge but only (a) upon
reasonable  request,  (b) during  normal  business  hours,  (c)  subject to the
Servicer's  normal security and  confidentiality  procedures and (d) at offices
designated by the Servicer.

           VI.7 Delegation of Duties.

(66)  Subject to Section 3.1, in the ordinary course of business,  the Servicer
may at any time  delegate  any  duties  hereunder  to any  Person who agrees to
conduct such duties in  accordance  with this  Agreement.  The  Servicer  shall
give prompt  written  notice of any such  delegation of a material  function to
the  Owner  Trustee,   the  Indenture   Trustee  and  Rating   Agencies.   Such
delegation  shall not relieve the Servicer of its liability and  responsibility
with respect to such duties,  shall not  constitute  a  resignation  within the
meaning of Section  6.5, and written  notice shall have been  delivered to each
applicable  Rating  Agency  with  respect  to  such  delegation  prior  to such
delegation;  provided,  however,  that the  Servicer  may  delegate  any duties
hereunder to International without prior notice to any party.

(67)  If in any  enforcement  suit or  legal  proceeding  it is held  that  the
Servicer  may not  enforce a  Receivable  on the  ground  that it is not a real
party in interest or a holder  entitled to enforce such  Receivable,  the Trust
shall,  at the  Servicer's  expense,  take  such  steps as the  Servicer  deems
necessary to enforce the Receivable,  including  bringing suit in the Indenture
Trustee's name, the names of the Noteholders or the name of the Issuer.

           VI.8 Examination  of  Records.  The  Seller and the  Servicer  shall
indicate   generally  in  its  computer   files  or  other   records  that  the
Receivables  have been  conveyed to the Trust  pursuant to this  Agreement  for
the benefit of the  Certificateholders  and the  Beneficiaries.  The Seller and
the  Servicer  shall,  prior to the sale or  transfer  to a third  party of any
receivable  held in its  custody,  examine its  computer  and other  records to
determine that such receivable is not a Receivable.

           VI.9 Additional  Expenses.  The Servicer covenants and agrees to pay
from  time to  time  out of its own  funds  such  reasonable  costs,  fees  and
expenses  as may be  incurred  by third  parties  designated  by the  Seller in
connection  with the provision of services  directly or indirectly to the Trust
or otherwise in connection  with the  facilitation  of an offering of the Notes
of one or more classes issued hereunder.

                            ARTICLE  VII
                         SERVICING DEFAULTS

           VII.1 Servicing  Defaults. The occurrence and continuance of any one
of the  following  events  with  respect to the  Servicer  shall  constitute  a
"Servicing Default":

(68)  any failure by the Servicer to make any  payment,  transfer or deposit or
to give  instructions  or to give notice to the Owner  Trustee or the Indenture
Trustee  to make such  payment,  transfer  or  deposit  on or  before  the date
occurring  five Business Days after the date such payment,  transfer or deposit
or such  instruction  or notice is  required  to be made or given,  as the case
may be, under the terms of this Agreement;

(69)  failure on the part of the Servicer  duly to observe or perform any other
covenants or agreements of the Servicer set forth in this  Agreement  which has
a material  adverse effect on the  Noteholders of any Series,  which  continues
unremedied  for a period of 30 days after the date on which  written  notice of
such failure,  requiring the same to be remedied,  shall have been given to the
Servicer by the  Indenture  Trustee or Owner  Trustee;  or the  Servicer  shall
delegate its duties under this Agreement,  except as permitted by Sections 3.1
and 6.7;

(70)  any  representation,  warranty or  certification  made by the Servicer in
this  Agreement  or in any  certificate  delivered  pursuant to this  Agreement
shall  prove to have been  incorrect  when made,  which has a material  adverse
effect on the  rights  of the  Noteholders  of any  Series  and which  material
adverse  effect  continues  for a  period  of 60 days  after  the date on which
written  notice  thereof,  requiring  the same to be remedied,  shall have been
given to the Servicer by the Indenture Trustee or Owner Trustee; or

(71)  the  Servicer  shall  consent  to the  appointment  of a  conservator  or
receiver  or  liquidator  or  other   similar   official  in  any   bankruptcy,
insolvency,  readjustment  of debt,  marshaling  of assets and  liabilities  or
similar  proceedings  of or relating  to the  Servicer or of or relating to all
or  substantially  all of its  property,  or a  decree  or  order of a court or
agency or supervisory  authority  having  jurisdiction  in the premises for the
appointment  of a  conservator  or  receiver  or  liquidator  or other  similar
official in any  insolvency,  readjustment  of debt,  marshaling  of assets and
liabilities  or similar  proceedings,  or for the  winding-up or liquidation of
its affairs,  shall have been  entered  against the Servicer and such decree or
order shall have remained in force  undischarged  or unstayed,  or the Servicer
shall  admit in  writing  its  inability  to pay its  debts  generally  as they
become due,  file a petition to take  advantage of any  applicable  bankruptcy,
insolvency or  reorganization  statute,  make any assignment for the benefit of
its creditors or voluntarily suspend payment of its obligations.

           In the event any  Servicing  Default  occurs of which a  Responsible
Officer  of  the  Indenture  Trustee  has  actual  knowledge,  so  long  as the
Servicing  Default  shall not have been  remedied,  the Indenture  Trustee,  by
notice then given in writing to the Servicer (a  "Termination  Notice")  with a
copy to the  Owner  Trustee,  may  terminate  all but not less  than all of the
rights and  obligations  (other than its  obligations  that have  accrued up to
the  time  of  such  termination)  of  the  Servicer  as  Servicer  under  this
Agreement  and in and  to the  Receivables  and  the  proceeds  thereof.  After
receipt  by the  Servicer  of a  Termination  Notice,  and on the  date  that a
Successor   Servicer  shall  have  been  appointed  by  the  Indenture  Trustee
pursuant to Section 7.2,  all  authority  and power of the Servicer  under this
Agreement  shall pass to and be vested in a Successor  Servicer (a  "Servicing
Transfer")  and,   without   limitation,   the  Indenture   Trustee  is  hereby
authorized  and  empowered  (upon the failure of the Servicer to  cooperate) to
execute  and  deliver,  on  behalf  of the  Servicer,  as  attorney-in-fact  or
otherwise,  all  documents  and  other  instruments  upon  the  failure  of the
Servicer to execute or deliver  such  documents or  instruments,  and to do and
accomplish  all other acts or things  necessary  or  appropriate  to effect the
purposes of such  Servicing  Transfer.  The Servicer  agrees to cooperate  with
the   Indenture   Trustee  and  such   Successor   Servicer  in  effecting  the
termination  of the  responsibilities  and  rights of the  Servicer  to conduct
servicing  hereunder,  including the transfer to such Successor Servicer of all
authority  of the Servicer to service the  Receivables  provided for under this
Agreement,  including all  authority  over all  Collections  which shall on the
date of  transfer  be held by the  Servicer  for  deposit,  or which  have been
deposited  by  the  Servicer,   in  the  Collection  Account,  or  which  shall
thereafter  be received with respect to the  Receivables,  and in assisting the
Successor  Servicer.  The  Servicer  shall  promptly  transfer  its  electronic
records  relating  to  the  Receivables  to  the  Successor  Servicer  in  such
electronic  form as the  Successor  Servicer may  reasonably  request and shall
promptly transfer to the Successor  Servicer all other records,  correspondence
and documents  necessary for the continued  servicing of the Receivables in the
manner and at such times as the Successor  Servicer shall  reasonably  request.
To the  extent  that  compliance  with  this  Section  7.1  shall  require  the
Servicer to disclose to the Successor  Servicer  information  of any kind which
the  Servicer  reasonably  deems to be  confidential,  the  Successor  Servicer
shall be required to enter into such  customary  licensing and  confidentiality
agreements as the Servicer shall deem necessary to protect its interest.

           Notwithstanding the foregoing,  a delay in or failure of performance
under  Section 7.1(a)  for a period of ten  Business  Days,  or under  Section
7.1(b)  or (c) for a  period  of 60  Business  Days,  shall  not  constitute  a
Servicing  Default  if such  delay or  failure  could not be  prevented  by the
exercise of  reasonable  diligence  by the  Servicer  and such delay or failure
was  caused  by an act  of  God  or the  public  enemy,  acts  of  declared  or
undeclared  war, a computer  virus,  public  disorder,  rebellion  or sabotage,
epidemics,  landslides,  lightning,  fire, hurricanes,  earthquakes,  floods or
similar  causes.  The  preceding  sentence  shall not relieve the Servicer from
using its best  efforts  to  perform  its  respective  obligations  in a timely
manner in accordance  with the terms of this  Agreement and the Servicer  shall
provide the Owner Trustee,  Indenture  Trustee,  the Seller and the Noteholders
with an Officers'  Certificate  giving  prompt  notice of such failure or delay
by  it,  together  with  a  description  of  its  efforts  so  to  perform  its
obligations.  The  Servicer  shall  immediately  notify  the Owner  Trustee  in
writing of any Servicing Default.

           VII.2 Indenture  Trustee to Act;  Appointment of  Successor.  On and
after the receipt by the Servicer of  a Termination  Notice pursuant to Section
7.1, the  Servicer  shall  continue to perform all  servicing  functions  under
this  Agreement  until  the  date  specified  in  the  Termination   Notice  or
otherwise  specified  by the  Indenture  Trustee in writing or, if no such date
is  specified  in  such  Termination  Notice,  or  otherwise  specified  by the
Indenture  Trustee,  until a date mutually  agreed upon by the Servicer and the
Indenture  Trustee.  The Indenture  Trustee shall as promptly as possible after
the  giving  of  a  Termination  Notice  appoint  an  Eligible  Servicer  as  a
successor  Servicer (the  "Successor  Servicer")  and such  Successor  Servicer
shall accept its  appointment by a written  assumption in a form  acceptable to
the  Indenture  Trustee.  In the event that a Successor  Servicer  has not been
appointed  or has not accepted  its  appointment  at the time when the Servicer
ceases to act as Servicer,  the Indenture  Trustee without further action shall
automatically be appointed the Successor  Servicer.  The Indenture  Trustee may
delegate  any  of  its  servicing  obligations  to an  affiliate  or  agent  in
accordance  with  Sections  3.1  and  6.7.   Notwithstanding   the  above,  the
Indenture  Trustee shall,  if it is legally unable so to act,  petition (at the
expense  of the  Servicer)  a court of  competent  jurisdiction  to  appoint an
Eligible  Servicer.  The  Indenture  Trustee shall  immediately  give notice to
the  Owner  Trustee,   the  Rating  Agencies  and  the  Noteholders   upon  the
appointment  of a Successor  Servicer.  Notwithstanding  anything  herein or in
the  Indenture  to the  contrary,  in no event shall the  Indenture  Trustee be
liable  for any  Servicing  Fee or for any  differential  in the  amount of the
Servicing Fee paid  hereunder and the amount  necessary to induce any Successor
Servicer  to  act  as  Successor   Servicer   under  this   Agreement  and  the
transactions  contemplated  hereby.  In the event  that the  Indenture  Trustee
becomes the  Successor  Servicer,  (i) copies of all  sub-servicing  agreements
shall be  provided to the  Indenture  Trustee  and (ii) the  Indenture  Trustee
shall have the right to terminate any sub-servicing agreements.

(72)  Upon its  appointment,  the Successor  Servicer shall be the successor in
all respects to the Servicer  with  respect to servicing  functions  under this
Agreement  and  shall  be  subject  to all  the  responsibilities,  duties  and
liabilities   relating  thereto  placed  on  the  Servicer  by  the  terms  and
provisions  hereof (except that the Successor  Servicer shall not be liable for
any liabilities  incurred by the predecessor  Servicer),  and all references in
this  Agreement  to the  Servicer  shall be  deemed  to refer to the  Successor
Servicer.

(73)  In connection with any  Termination  Notice,  the Indenture  Trustee will
review  any  bids  which  it  obtains  from  Eligible  Servicers  and  shall be
permitted  to  appoint  any  Eligible  Servicer  submitting  such  a  bid  as a
Successor  Servicer for servicing  compensation  not in excess of the Servicing
Fee;  provided,  however,  that the Seller shall be responsible  for payment of
the  Seller's  portion of the  Servicing  Fee as  determined  pursuant  to this
Agreement.  The  Certificateholders  agree that if Navistar  Financial  (or any
Successor  Servicer)  is  terminated  as  Servicer  hereunder,  the  portion of
Collections  to be paid to the Seller shall be reduced by an amount  sufficient
to pay the Seller's share of the compensation of the Successor Servicer.

(74)  All  authority and power  granted to the  Successor  Servicer  under this
Agreement  shall  automatically  cease and terminate  upon  termination  of the
Trust  pursuant to Section 7.1  of the Trust  Agreement,  and shall pass to and
be  vested  in the  Seller  and,  without  limitation,  the  Seller  is  hereby
authorized  and  empowered to execute and deliver,  on behalf of the  Successor
Servicer,   as   attorney-in-fact   or  otherwise,   all  documents  and  other
instruments,  and to do and  accomplish  all other acts or things  necessary or
appropriate  to effect the purposes of such transfer of servicing  rights.  The
Successor  Servicer  agrees  to  cooperate  with the  Seller in  effecting  the
termination  of the  responsibilities  and rights of the Successor  Servicer to
conduct  servicing on the  Receivables.  The Successor  Servicer shall transfer
its  electronic  records  relating  to the  Receivables  to the  Seller in such
electronic  form as the Seller may  reasonably  request and shall  transfer all
other  records,  correspondence  and  documents to the Seller in the manner and
at such  times as the  Seller  shall  reasonably  request  in  writing.  To the
extent  that  compliance  with this  Section 7.2 shall  require  the  Successor
Servicer  to  disclose  to  the  Seller  information  of  any  kind  which  the
Successor  Servicer deems to be  confidential,  the Seller shall be required to
enter into such  customary  licensing  and  confidentiality  agreements  as the
Successor Servicer shall deem necessary to protect its interests.

           VII.3 Notification to  Securityholders.  Upon any termination of, or
appointment  of a successor to, the Servicer  pursuant to this Article VII, the
Indenture  Trustee shall give prompt written notice thereof to the  Noteholders
and the  Rating  Agencies  and the Owner  Trustee  shall  give  prompt  written
notice thereof to the Certificateholders.

           VII.4 Waiver of Past Defaults.  Noteholders whose Notes evidence not
less than a  majority  of the  Outstanding  Amount of the Notes as of the close
of the  preceding  Payment Date (or, if all of the Notes have been paid in full
and the  Indenture  has been  discharged  in  accordance  with its  terms,  the
Certificateholders)   voting  as  a  single  class,   may,  on  behalf  of  all
Securityholders,  waive any default by the Servicer in the  performance  of its
obligations  hereunder  and under the  Receivables  Purchase  Agreement and its
consequences,   except  a  Servicing  Default  under  Section  7.1(a)  of  this
Agreement.  Upon any such waiver of a past  default,  such default  shall cease
to exist, and any Servicing  Default arising  therefrom shall be deemed to have
been  remedied  for  every  purpose  of  this  Agreement  and  the  Receivables
Purchase  Agreement.  No such waiver  shall extend to any  subsequent  or other
default or impair any right consequent thereon.

                                 ARTICLE  VIII
                          MISCELLANEOUS PROVISIONS

           VIII.1    Amendment.

(75)  Each  of the  Basic  Documents  may be  amended  by the  parties  thereto
without the consent of the Securityholders:

(1)   to cure any ambiguity,

(2)   to correct or supplement  any provision  therein that may be defective or
      inconsistent with any other provision therein,

(3)   to  add  or  supplement  any  credit,   liquidity  or  other  enhancement
      arrangement  for the  benefit of any  Noteholders  (provided  that if any
      such  addition  affects any series of  Noteholders  differently  than any
      other series of  Noteholders,  then such  addition will not, as evidenced
      by an opinion of counsel,  adversely  affect in any material  respect the
      interests of any series of Noteholders),

(4)   to add to the  covenants,  restrictions  or  obligations of the Servicer,
      the Seller,  the Trust,  the Owner Trustee or the  Indenture  Trustee for
      the benefit of Noteholders,

(5)   to add,  change or eliminate any other provision of such agreement in any
      manner  that  will  not,  as  evidenced  by  an  officer's   certificate,
      adversely   affect  in  any  material   respect  the   interests  of  the
      Noteholders,

(6)   to modify the  definitions of "Base Amount,"  "Warranty  Ratio" or any of
      their  constituent terms in connection with the adoption by International
      and Ford of any  warranty  arrangement,  agreement  or practice  which is
      inconsistent  with the methodology  used to calculate the Warranty Ratio;
      provided,  that the  Rating  Agency  Condition  has been  satisfied  with
      respect to such amendment; or

(7)   to modify the  definitions of "Base Amount,"  "Warehouse  Reserve" or any
      of  their   constituent   terms  in  connection   with  the  adoption  by
      International  and  Ford  of  any  warehouse  arrangement,  agreement  or
      practice which is  inconsistent  with the  methodology  used to calculate
      the Warehouse  Reserve;  provided,  that the Rating Agency  Condition has
      been satisfied with respect to such amendment.

(76)  Each of the Basic  Documents  may also be amended by the parties  thereto
with  either  (1) the  consent of the  holders  of at least a  majority  of the
principal  balance of each Series of Notes  adversely  affected in any material
respect  thereby  and  notice  to  each  Rating  Agency  of such  amendment  or
(2) confirmation  from each Rating Agency that such  amendment  will not result
in the  reduction or  withdrawal of any ratings of the Notes for the purpose of
adding any  provisions to or changing in any manner or  eliminating  any of the
provisions  of such  agreement or of modifying in any manner the rights of such
Noteholders, except that no such amendment may:

(1)   reduce in any manner the  amount  of, or  accelerate  or delay the timing
      of,  distributions  or payments  that are required to be made on any Note
      without the consent of the holder thereof,

(2)   change the  definition  of or the manner of  calculating  the interest of
      any Note without the consent of the holder thereof,

(3)   adversely  affect  the  rating  of any  Series  or  class of Notes by any
      Rating Agency without the consent of two-thirds of the principal  balance
      of the outstanding Notes of such series, or

(4)   reduce  the  aforesaid   percentage  required  to  consent  to  any  such
      amendment   without  the  consent  of  such   aforesaid   percentage   of
      Noteholders.

(77)  In executing  any  amendment  permitted by this Article  VIII,  the Owner
Trustee  shall be  entitled to receive an Opinion of Counsel  stating  that the
execution of such  amendment is authorized  or permitted by this  Agreement and
that all  conditions  precedent to the execution and delivery of such amendment
have been  satisfied.  The Owner  Trustee may,  but shall not be obligated  to,
enter into any such  amendment  that  affects the Owner  Trustee's  own rights,
duties, liabilities or immunities under this Agreement or otherwise.

           VIII.2    No Petition  Covenant.  The Servicer,  Navistar  Financial
(if it is no  longer  the  Servicer)  and the  Trust,  by  entering  into  this
Agreement,  each Noteholder,  by accepting a Note, each Certificateholder,  any
Successor  Servicer and the  Indenture  Trustee,  by accepting  the benefits of
this  Agreement,  hereby  covenant  and  agree  that  they will not at any time
institute   against  TERFCO  any   bankruptcy,   reorganization,   arrangement,
insolvency or liquidation  proceedings,  or other  proceedings under any United
States  federal or state  bankruptcy  or similar law. The  covenants  set forth
in this section shall survive the termination of this Agreement.

           VIII.3    GOVERNING   LAW.   EXCEPT   AS   OTHERWISE   PROVIDED   IN
SECTION 4.3(d)(v),  THIS  AGREEMENT  SHALL BE CONSTRUED IN ACCORDANCE  WITH THE
LAWS OF THE  STATE  OF  ILLINOIS,  WITHOUT  REFERENCE  TO ITS  CONFLICT  OF LAW
PROVISIONS,  EXCEPT THAT THE OBLIGATIONS,  RIGHTS AND REMEDIES OF THE INDENTURE
TRUSTEE  HEREUNDER  SHALL BE DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS.

           VIII.4    Notices.  All demands,  notices and communications upon or
to the Servicer,  the Seller,  the Administrator,  the Indenture  Trustee,  the
Trust or the Rating  Agencies  or any  Certificateholder  or  Noteholder  under
this  Agreement   shall  be  delivered  as  specified  in  Appendix B  to  this
Agreement.

           VIII.5    Severability  of  Provisions.  If any  one or  more of the
covenants,  agreements,  provisions  or terms of this  Agreement  shall for any
reason   whatsoever  be  held  invalid,   then  such   covenants,   agreements,
provisions  or  terms  shall  be  deemed  enforceable  to  the  fullest  extent
permitted,  and if  not so  permitted,  shall  be  deemed  severable  from  the
remaining  covenants,  agreements,  provisions  or terms of this  Agreement and
shall in no way affect the validity or  enforceability  of the other provisions
of this Agreement or of the Notes or rights of the Noteholders.

           VIII.6    Assignment.   Notwithstanding  anything  to  the  contrary
contained  herein,  except as provided in  Section 6.2,  this Agreement may not
be assigned by the Servicer.

           VIII.7    Further  Assurances.  The Seller and the Servicer agree to
do and  perform,  from time to time,  any and all acts and to  execute  any and
all further  instruments  required or  reasonably  requested  by the Trust more
fully to effect the  purposes of this  Agreement,  including  the  execution of
any  financing   statements  or   continuation   statements   relating  to  the
Receivables  for  filing  under  the  provisions  of the UCC of any  applicable
jurisdiction.

           VIII.8    No Waiver;  Cumulative  Remedies.  No failure to  exercise
and no delay in exercising,  on the part of the Trust or the  Noteholders,  any
right,  remedy,  power or privilege  under this  Agreement  shall  operate as a
waiver  thereof;  nor  shall any  single  or  partial  exercise  of any  right,
remedy,  power or privilege under this Agreement  preclude any other or further
exercise  thereof  or the  exercise  of  any  other  right,  remedy,  power  or
privilege.  The rights,  remedies,  powers and  privileges  provided under this
Agreement are  cumulative and not  exhaustive of any rights,  remedies,  powers
and privileges provided by law.

           VIII.9    Counterparts.  This  Agreement  may be  executed in two or
more  counterparts (and by different  parties on separate  counterparts),  each
of which shall be an original,  but all of which together shall  constitute one
and the same instrument.

           VIII.10   Third-Party  Beneficiaries.  This  Agreement will inure to
the benefit of and be binding upon the parties hereto,  the Indenture  Trustee,
the  Securityholders  and their  respective  successors and permitted  assigns.
Except as  otherwise  expressly  provided in this  Agreement,  no other  Person
will have any right or obligation hereunder.

           VIII.11   Action by Owner Trustee.  Upon any  application or request
by the Seller or  Servicer  to the Owner  Trustee to take any action  under any
provision  under this  Agreement,  the Seller or Servicer,  as the case may be,
shall  furnish to the Owner Trustee an Officers'  Certificate  stating that all
conditions  precedent,  if any, provided for in this Agreement  relating to the
proposed  action have been complied  with.  The Owner Trustee shall be entitled
to conclusively  rely on the Officers'  Certificate as authority for any action
undertaken in connection therewith.

           VIII.12   Merger  and  Integration.  Except as  specifically  stated
otherwise  herein,  this Agreement sets forth the entire  understanding  of the
parties  relating to the subject matter hereof,  and all prior  understandings,
written or oral,  are superseded by this  Agreement.  This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.

           VIII.13   Headings.   The  headings   herein  are  for  purposes  of
reference  only and shall not  otherwise  affect the meaning or  interpretation
or any provision hereof.

           VIII.14   Exchange of Seller  Certificates.  The Owner Trustee shall
not  permit  the  exchange  of the  Certificates  unless,  in  addition  to the
conditions  contained  in the Trust  Agreement,  the  Rating  Agency  Condition
shall have been satisfied with respect to such exchange.

           VIII.15   Limitation   on   Liability   of   the   Owner    Trustee.
Notwithstanding  anything contained herein to the contrary,  this Agreement has
been executed by Chase  Manhattan  Bank USA,  National  Association  not in its
individual  capacity but solely in its  capacity as Owner  Trustee of the Trust
under the Trust  Agreement  and in no event  shall  Chase  Manhattan  Bank USA,
National  Association  in its  individual  capacity  or,  except  as  expressly
provided  in the  Trust  Agreement,  as Owner  Trustee  of the  Trust  have any
liability for the representations,  warranties,  covenants, agreements or other
obligations of the Trust  hereunder or in any of the  certificates,  notices or
agreements  delivered  pursuant  hereto,  as to all of which  recourse shall be
solely  to the  Trust  Assets.  For  all  purposes  of this  Agreement,  in the
performance  of its duties or  obligations  hereunder or in the  performance of
any duties or  obligations of the Trust  hereunder,  the Owner Trustee shall be
subject  to, and  entitled  to the  benefits  of, the terms and  provisions  of
Article VI of the Trust Agreement.
                          *    *    *    *

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

           IN WITNESS WHEREOF,  the undersigned have caused this Trust Sale and
Servicing  Agreement  to be duly  executed and  delivered  by their  respective
officers as of the day and year first above written.

                          NAVISTAR  FINANCIAL CORPORATION,
                          Servicer


                          By:
                                Name:
                                Title:


                          TRUCK ENGINE RECEIVABLES FINANCING CO.,
                          Seller


                          By:
                                Name:
                                Title:


                          TRUCK ENGINE RECEIVABLES MASTER TRUST

                          By:  Chase Manhattan Bank USA, National Association,
                                    not  in  its   individual   capacity,   but
                               solely as Owner
                               Trustee on behalf of the Trust


                          By:
                                Name: ________________
                                Title:_________________


Acknowledged and Accepted:

THE BANK OF NEW YORK,
not its individual capacity, but
solely as Indenture Trustee


By:
      Name:_______________
      Title:________________

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


                                      A-1

                             APPENDIX A

                        PART  I - DEFINITIONS

      Whenever used in this  Agreement,  the following  words and phrases shall
have the following meanings:

      "Accumulation  Period"  shall mean,  with respect to any Series of Notes,
the period specified in the related Series Supplement, if any.

      "Act  "  shall  mean  an Act  as  specified  in  Section  11.3(a)  of the
Indenture.

      "Administration   Agreement"  shall  mean  that  certain   Administration
Agreement,  dated  as  of  the  Closing  Date,  among  Navistar  Financial,  as
Administrator,   the  Issuer  and  the  Indenture   Trustee,   as  amended  and
supplemented from time to time.

      "Administrator"   shall  mean   Navistar   Financial  or  any   successor
Administrator under the Administration Agreement.

      "Advance  Date" shall have the meaning  specified  in the related  Series
Supplement.

      "Affiliate" shall mean, with respect to any specified  Person,  any other
Person  controlling  or  controlled  by  or  under  common  control  with  such
specified  Person.  For the purposes of this  definition,  "control"  when used
with respect to any specified  Person means the power to direct the  management
and  policies of such  Person,  directly  or  indirectly,  whether  through the
ownership  of  voting  securities,  by  contract  or  otherwise;  and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.

      "Agency Office" shall mean the office of the Issuer  maintained  pursuant
to Section 3.2 of the Indenture.

      "Aggregate  Retained  Balances"  shall mean, on any day, the aggregate of
the  balances  retained in the related  Lock-Box  Accounts on account of checks
or other  items in the  process  of  collection  that have been  credited  to a
Lock-Box  Account  but for  which  funds  have not been made  available  by the
Lock-Box  Bank  (and as to which no  notice  of  non-sufficient  funds or other
similar situation has been received).

      "Amortization  Period"  shall mean,  with respect to any Series of Notes,
the period specified in the related Series Supplement, if any.


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


                                      A-4

      "Authorized  Officer" shall mean with respect to the Issuer,  any officer
of the  Owner  Trustee  who is  authorized  to act for  the  Owner  Trustee  in
matters  relating  to  the  Issuer  and  who  is  identified  on  the  list  of
Authorized  Officers  delivered by the Owner Trustee to the  Indenture  Trustee
on the Closing  Date (as such list may be modified  or  supplemented  from time
to  time  thereafter)  and,  so  long  as the  Administration  Agreement  is in
effect,  any Vice President or more senior officer of the  Administrator who is
authorized to act for the  Administrator  in matters relating to the Issuer and
to  be  acted  upon  by  the  Administrator   pursuant  to  the  Administration
Agreement and who is identified  on the list of Authorized  Officers  delivered
by the  Administrator  to the  Indenture  Trustee on the Closing  Date (as such
list may be  modified  or  supplemented  from  time to time  thereafter).  With
respect to any other  Person,  any Vice  President  or more  senior  officer of
such  Person who is  authorized  to act for such  Person  with  respect to such
matters.

      "Available  Subordinated  Amount" shall mean,  with respect to any Series
at any time of  determination,  an amount equal to the  available  subordinated
amount specified in the related Series Supplement at such time.

      "Base  Amount"  shall  mean,  with  respect  to any  Group at any time of
determination,  the amount  calculated  as specified in the  applicable  Series
Supplement.

      "Base Rate" shall mean,  for any day, the prime rate  announced from time
to time by Chase  Manhattan Bank USA,  National  Association  (or any successor
lending institution).

      "Basic  Documents"  shall  mean  the  Certificate  of  Trust,  the  Trust
Agreement,  the Receivables  Purchase  Agreement,  the Trust Sale and Servicing
Agreement,  the Administration  Agreement,  the Indenture (including all Series
Supplements) and the other documents and  certificates  delivered in connection
therewith from time to time.

      "Beneficiary" shall mean any of the Holders of the Notes.

      "Benefit  Plan" shall mean any one of (a) an  employee  benefit  plan (as
described  in  Section  3(3) of ERISA)  that is subject  to the  provisions  of
Title I of ERISA,  (b) a plan  described in Section  4975(e)(1)  of the Code or
(c) any  entity  whose  underlying  assets  include  plan assets by reason of a
plan's investment in such entity.

      "Book-Entry  Note"  shall mean  Notes in which  ownership  and  transfers
shall be made  through  book  entries  by a  Clearing  Agency as  described  in
Section 2.10 of the Indenture.

      "Business  Day" shall mean any day other than a  Saturday,  Sunday or any
other day on which  banks in New York,  New York or Chicago,  Illinois  may, or
are required to, remain closed.

      "Business  Trust  Statute"  shall  mean  Chapter  38 of  Title  12 of the
Delaware  Code,  12 Del.  Codess.3801 et seq.,  as the same may be amended from
time to time.

      "Carrying  Cost  Account"  shall have the meaning  ascribed  such term in
applicable Series Supplement.

      "Certificate" shall mean a Certificate  executed by the Owner Trustee and
authenticated  by the Owner  Trustee,  in  substantially  the form set forth in
Exhibit A to the Trust Agreement,  evidencing the Seller's  ownership  interest
in the Trust.

      "Certificate  Distribution  Account" shall mean the account designated as
such,  established  and  maintained  pursuant  to  Section  5.1(a) of the Trust
Agreement.

      "Certificate  of  Trust"  shall  mean  the  certificate  of  trust of the
Issuer,  substantially in the form of Exhibit B to the Trust  Agreement,  to be
filed for the Trust pursuant to Section 3810(a) of the Business Trust Statute.

      "Certificate  Register" shall mean the register of Certificates specified
in Section 3.5(a) of the Trust Agreement.

      "Certificate  Registrar"  shall  mean  the  registrar  at any time of the
Certificate  Register,  appointed  pursuant  to  Section  3.5(a)  of the  Trust
Agreement.

      "Certificated  Security" shall mean, as of any date, the meaning given to
such term under the applicable UCC in effect on such date.

      "Certificateholder"  shall mean the Person in whose name a Certificate is
registered on the Certificate Register.

      "Clearing  Agency" shall mean an  organization  registered as a "clearing
agency"  pursuant to Section 17A of the Exchange  Act. The Clearing  Agency for
the Notes and the Certificates shall be The Depository Trust Company.

      "Clearing Agency  Participant"  shall mean a securities  broker,  dealer,
bank,  trust company,  clearing  corporation or other financial  institution or
other  Person for whom from time to time a Clearing  Agency  effects book entry
transfers and pledges of securities deposited with the Clearing Agency.

      "Clearstream" means Clearstream Banking, societe anonyme.

      "Closing Date" shall mean,  with respect to any Series,  the Closing Date
specified in the related Series Supplement.

      "Code" shall mean the Internal  Revenue Code of 1986 as amended,  and the
Treasury Regulations promulgated thereunder.

      "Collateral"  shall  mean  the  collateral  specified  in  the  "granting
clause" of the Indenture.

      "Collection  Account" shall have the meaning set forth in  Section 4.2(a)
of the Trust Sale and Servicing Agreement.

      "Collection Period" shall mean any fiscal month of Navistar Financial.

      "Collections"  shall mean (i) all amounts received as payments in respect
of the  Receivables  and (ii) all  Transfer  Deposit  Amounts  deposited in the
Collection Account.

      "Corporate  Trust  Office"  shall  mean  with  respect  to the  Indenture
Trustee or the Owner Trustee,  the principal  office at which at any particular
time the corporate  trust  business of the Indenture  Trustee or Owner Trustee,
respectively,  shall be  administered,  which  offices at the Closing  Date are
located:

      in the case of the Indenture Trustee, at:
      The Bank of New York
      101 Barclay Street, Floor 12 East
      New York, New York 10286
      Attention: Corporate Trust Administration - ABS Unit
      Facsimile No.: (212) 815-5544

      and in the case of the Owner Trustee, at:
      Chase Manhattan Bank USA, National Association
      1201 North Market Street
      8th Floor
      Wilmington, Delaware 19801
      Attention: John Cashin
      Facsimile No.: (302) 984-4903

      provided that,  when the  definition of "Corporate  Trust Office" is used
      in connection with providing notice to the Owner Trustee,  a copy of such
      notice shall also be sent to the Administrator at:
      Navistar Financial Corporation, as Administrator
      2850 West Golf Road
      Rolling Meadows, Illinois 60008
      Attention:General Counsel
                Vice President and Treasurer
      Facsimile No.: (847) 734-4090

      "Daily   Activity   Report"   shall  have  the   meaning   set  forth  in
Section 3.4(a) of the Trust Sale and Servicing Agreement.

      "Days Sales  Outstanding"  shall mean, for any Monthly Period,  an amount
equal to the product of (i) a  fraction,  the  numerator of which is the sum of
the  Unpaid  Balance  of all  Receivables  at  the  end of  each  of the  three
immediately  preceding  Monthly  Periods,  and the  denominator of which is the
aggregate  amount  of  Receivables  acquired  by the  Seller  during  the three
immediately preceding Monthly Periods and (ii) 30.

      "Definitive  Notes" shall mean the Notes issued pursuant to the Indenture
in  definitive  form  either upon  original  issuance  or upon  termination  of
book-entry  registration with respect to such Notes pursuant to Section 2.12 of
the Indenture.

      "Delivery"  shall mean,  with respect to Trust Account  Property or Group
      Account Property:

           (i)  (a)  with  respect to  Physical  Property  or any  Certificated
Security,  transfer  thereof  to  the  Indenture  Trustee  or  its  nominee  or
custodian  by  physical  delivery  to the  Indenture  Trustee or its nominee or
custodian  endorsed to, or registered in the name of, the Indenture  Trustee or
its nominee or custodian or endorsed in blank; and

                (b)  with  respect to a security  certificate  (as such term is
defined in Revised  Article 8 of the UCC) or any other Trust  Account  Property
or Group Account  Property that constitutes  Physical  Property and that is not
a security  entitlement  (as such term is defined in Revised  Article 8  of the
UCC) transfer of such security  certificate or other Trust Account  Property or
Group  Account  Property to the  Indenture  Trustee or its nominee or custodian
by physical  delivery  to the  Indenture  Trustee or its  nominee or  custodian
endorsed  to,  or  registered  in the name of,  the  Indenture  Trustee  or its
nominee or custodian or endorsed in blank; and

           (ii) with  respect  to any  Uncertificated  Security  that  is not a
Federal Book-Entry Security:

                (a)  if  the  issuer  of  such   Uncertificated   Security   is
organized  under  the  laws of a  jurisdiction  that  has not  adopted  Revised
Article 8,  registration  on the books and records of the issuer thereof in the
name of the  financial  intermediary,  the  sending  of a  confirmation  by the
financial  intermediary  of  the  transfer  to  the  Indenture  Trustee  or its
nominee or  custodian  of such  Uncertificated  Security and the making by such
financial  intermediary  of entries on its books and records  identifying  such
Uncertificated  Securities  as  belonging  to  the  Indenture  Trustee  or  its
nominee or custodian; and

                (b)  if  the  issuer  of  such   Uncertificated   Security   is
organized  under the laws of a jurisdiction  that has adopted  Revised  Article
8, (x) the issuer  registers the Indenture  Trustee as the registered  owner or
(y) the Indenture  Trustee  otherwise  satisfies the requirements for obtaining
"control" under Section 8-106(c) of Revised Article 8.

      "Depository"  shall  mean  The  Depository  Trust  Company,   as  initial
Depository,  the  nominee  of which is Cede & Co.,  or any  other  organization
registered  as a "clearing  agency"  pursuant  to Section  17A of the  Exchange
Act.  The  Depository  shall  at  all  times  be a  "clearing  corporation"  as
defined in Section  8-102(3)  of the  Uniform  Commercial  Code of the State of
New York.

      "Depository  Agreement"  shall mean, with respect to any Series or class,
the  agreement  among  the  Seller,  the  Indenture  Trustee  and  the  initial
Depository, dated as of the related Closing Date.

      "Depository  Participant"  shall  mean a  broker,  dealer,  bank or other
financial  institution  or other Person for whom from time to time a Depository
effects  book-entry  transfers  and pledges of  securities  deposited  with the
Depository.

      "Designated  Balance"  shall  have  the  meaning  specified  in  Section
2.6(b)(ii) of the Receivables Purchase Agreement.

      "Determination  Date" shall mean,  with respect to any Payment Date,  the
day that is two Business Days prior to such date.

      "Dilution" shall mean a non-cash  reduction in the principal balance of a
Receivable  on account of  discounts,  incorrect  billings,  credits,  rebates,
allowances,   chargebacks,   set-offs,   returned  or   repossessed   goods  or
allowances  for early  payments  or any other  reduction  in the  balance  of a
Receivable  for  any  reason  unrelated  to the  inability  of  Ford to pay the
Receivable.  Dilution does not include Warranty Set-Offs.

      "Disqualified   Receivables"   shall  have  the   meaning  set  forth  in
Section 2.4(c) of the Trust Sale and Servicing Agreement.

      "Early  Amortization  Event" shall have the meaning specified in Section
5.17 of the  Indenture  and,  with  respect to any Series or class,  shall also
mean any Early Amortization Event specified in the related Series Supplement.

      "Early  Amortization  Period" shall mean, with respect to any Series, the
period  beginning  at the close of  business  on the  Business  Day on which an
Early  Amortization  Event is deemed to have occurred,  and in each case ending
upon the  earlier  to  occur  of  (a) the  payment  in full of the  outstanding
principal  balance of the Notes of that Series,  (b) the  Stated Final Maturity
Date with respect to such Series,  (c) the Redemption  Date for such Series and
(d) the recommencement of the Revolving Period for that Series.

      "Eligible  Deposit  Account"  shall mean either (a) a segregated  account
with an  Eligible  Institution  or (b) a  segregated  trust  account  with  the
corporate  trust  department of a depository  institution  organized  under the
laws  of the  United  States  of  America  or any  one of the  states  thereof,
including  the  District  of  Columbia  (or any  domestic  branch  of a foreign
bank),   having  corporate  trust  powers  and  acting  as  trustee  for  funds
deposited  in  such  account,  so  long  as  any  of  the  securities  of  such
depository  institution  or trust  company shall have a credit rating from each
Rating  Agency  in  one  of  its  generic  rating  categories  which  signifies
investment grade.

      "Eligible  Institution"  shall mean (a) the corporate trust department of
the  Indenture  Trustee  or  the  Chase  Manhattan  Bank  or  (b) a  depository
institution or trust company  organized  under the laws of the United States of
America or any one of the states  thereof,  or the District of Columbia (or any
domestic  branch of a foreign  bank),  which at all times (i) has  either (A) a
long-term  unsecured  debt rating of Aa2 or better by Moody's,  AA or better by
Standard & Poor's and,  if rated by Fitch,  AA or better by Fitch or such other
rating that is  acceptable  to each Rating  Agency,  as  evidenced  by a letter
from such  Rating  Agency to the  Indenture  Trustee  or (B) a  certificate  of
deposit  rating of P-1 by  Moody's,  A-1 by  Standard & Poor's and, if rated by
Fitch,  F-1 by Fitch or such other  rating  that is  acceptable  to each Rating
Agency,  as  evidenced  by a letter  from such Rating  Agency to the  Indenture
Trustee and (ii) whose deposits are insured by the FDIC.

      "Eligible Investments" shall mean:

           (a)  book-entry  securities,  negotiable  instruments  or securities
      represented by  instruments  in bearer or registered  form having (except
      in the case of clause  (4)  below)  remaining  maturities  occurring  not
      later  than  the  next  succeeding  Payment  Date,  except  as  otherwise
      described herein or the related supplement, that evidence:

                (1)  direct  obligations of, and obligations  fully  guaranteed
           as to timely payment by, the United States of America;

                (2)  demand deposits,  time deposits or certificates of deposit
           of, or bankers'  acceptances  issued by, any depository  institution
           or trust  company  incorporated  under the laws of the United States
           of  America  or any  state  thereof  (or any  domestic  branch  of a
           foreign bank) and subject to supervision  and examination by federal
           or state banking or depository  institution  authorities;  provided,
           however,  that at the time of the Trust's  investment or contractual
           commitment  to  invest  therein,   the  commercial  paper  or  other
           short-term  unsecured debt obligations  (other than such obligations
           the  rating  of which is based on the  credit  of a person or entity
           other than such  depository  institution  or trust  company) of such
           depository  institution  or trust company shall have a credit rating
           not lower  than the  highest  investment  category  for  short  term
           unsecured debt obligations  granted by the applicable  Rating Agency
           from each Rating Agency then rating the Rated Securities;

                (3)  commercial  paper  having,  at the  time  of  the  Trust's
           investment or  contractual  commitment to invest  therein,  a rating
           not lower  than the  highest  investment  category  for  short  term
           unsecured debt obligations  granted by the applicable  Rating Agency
           from each Rating Agency then rating the Rated Securities;

                (4)  investments  in money  market  funds or common trust funds
           having a rating not lower than the highest  investment  category for
           short term  unsecured  debt  obligations  granted by the  applicable
           Rating  Agency  from  each  Rating  Agency  then  rating  the  Rated
           Securities  or otherwise  approved in writing by each of such Rating
           Agencies  (including funds for which the Owner Trustee or any of its
           respective  affiliates is investment manager or advisor,  so long as
           such fund shall have such rating);

                (5)  repurchase  obligations  (x) with  respect to any security
           that is a direct  obligation of, or fully  guaranteed by, the United
           States of  America  or any  agency or  instrumentality  thereof  the
           obligations  of which are backed by the full faith and credit of the
           United  States of  America,  in  either  case,  entered  into with a
           depository  institution  or  trust  company  (acting  as  principal)
           described  in clause  (ii) or (y) the  counterparty  for which has a
           rating  not lower than the  highest  investment  category  for short
           term unsecured  debt  obligations  granted by the applicable  Rating
           Agency  from each Rating  Agency  then rating the Rated  Securities,
           the  collateral  for  which  is held  by a  custodial  bank  for the
           benefit of the Trust or the Indenture  Trustee,  is marked to market
           daily and is  maintained  in an amount  that  exceeds the amounts of
           such repurchase  obligation,  and which required  liquidation of the
           collateral  immediately  upon the  amount of such  collateral  being
           less  than the  amount of such  repurchase  obligation  (unless  the
           counterparty  immediately  satisfies the repurchase  obligation upon
           being notified of such shortfall); or

                (6)  commercial  paper  master  notes  where the issuer has, at
           the time of the Trust's  investment  or  contractual  commitment  to
           invest  therein,  a rating  not lower  than the  highest  investment
           category for short term  unsecured debt  obligations  granted by the
           applicable  Rating  Agency from each  Rating  Agency then rating the
           Rated Securities; and

           (b)  any other  investment  consisting of a financial  asset that by
      its terms converts to cash within a finite period of time,  provided that
      the Rating Agency Condition is satisfied.

Notwithstanding   anything  to  the  contrary   contained   in  the   foregoing
definition, no Eligible Investment may be purchased at a premium.

      "Eligible Receivable" shall mean each Receivable:

           (a)  which was originated by International  and acquired by Navistar
      Financial in the ordinary course of business;

           (b)  which  is  owned  by  International  at the  time  of  sale  by
      International  to Navistar  Financial and is owned by Navistar  Financial
      at the time of sale by Navistar Financial to the Seller;

           (c)  which  was  created  in  compliance  in all  respects  with all
      requirements of law applicable  thereto and pursuant to a Supply Contract
      which  complies in all respects with all  requirements  of law applicable
      to any party thereto;

           (d)  with  respect to which all material  consents and  governmental
      authorizations  required  to  be  obtained  by  International,   Navistar
      Financial  or  the  Seller  in  connection   with  the  creation  of  the
      Receivable or the transfer  thereof to the Trust,  or the  performance by
      International  of the Supply  Contract  pursuant to which the  Receivable
      was created, have been duly obtained;

           (e)  as to  which  at  all  times  following  the  transfer  of  the
      Receivable to the Trust,  the Trust will have good and  marketable  title
      thereto  free and clear of all liens  arising  prior to the  transfer  or
      arising at any time,  other than liens  permitted  pursuant  to the Trust
      Sale and Servicing Agreement;

           (f)  which has been the subject of a valid  transfer and  assignment
      from  the  Seller  to the  Trust of all the  Seller's  right,  title  and
      interest therein (including any proceeds thereof);

           (g)  which  will at all  times  be the  legal,  valid,  binding  and
      assignable  payment  obligation  of  Ford,  enforceable  against  Ford in
      accordance  with its terms,  except as  enforceability  may be limited by
      applicable bankruptcy or other similar laws;

           (h)  which at the time of  transfer  to the Trust is not  subject to
      any  right of  rescission,  setoff,  counterclaim  or any  other  defense
      (including  defenses  arising out of  violations of usury laws) which has
      been asserted by Ford,

           (i)  as to which,  at the time of transfer of the  Receivable to the
      Trust,  International,  Navistar  Financial and the Seller have satisfied
      all their respective  obligations relating to that Receivable required to
      be satisfied at that time;

           (j)  as to which,  at the time of transfer of the  Receivable to the
      Trust,  neither  International,  Navistar  Financial  nor the  Seller has
      taken or failed to take any action  which would  impair the rights of the
      Trust, the Certificateholder or the Noteholders therein;

           (k)  which  constitutes  an "account" or a "general  intangible"  as
      defined  in  Article 9  of the UCC as  then in  effect  in the  State  of
      Illinois;

           (l)  which  was   transferred  to  the  Trust  with  all  applicable
      governmental authorizations;

           (m)  which is payable in U.S. dollars in the United States;

           (n)  which is not 90 days or more past due; and

           (o)  which,   if  such   Receivable   is   subject   to  a  warranty
      arrangement,  is  subject  to a  warranty  arrangement  specified  in the
      applicable Series  Supplement or any other warranty  arrangement that has
      been  approved  by each  Rating  Agency as  specified  in the  applicable
      Series Supplement.

      "Eligible  Servicer" shall mean Navistar Financial or an entity which, at
the time of its appointment as Servicer,  (a) is legally  qualified and has the
capacity  to service  the  Receivables,  (b) in the sole  determination  of the
Indenture Trustee,  which  determination  shall be conclusive and binding,  has
demonstrated  the  ability  to   professionally   and  competently   service  a
portfolio of similar  accounts in accordance  with high  standards of skill and
care and (c) is  qualified  to use the software  that is then  currently  being
used to service  the  Receivables  or  obtains  the right to use or has its own
software which is adequate to perform its duties under this Agreement.

      "Engine  Accounts Sale Agreement" shall mean the agreement by and between
International  and Navistar  Financial  governing the terms and conditions upon
which Navistar  Financial is acquiring the Receivables from  International,  as
the same may from time to time be amended, modified or otherwise supplemented.

      "Equalization  Account" shall have the meaning  ascribed such term in the
applicable Series Supplement.

      "ERISA" shall mean the Employee  Retirement  Income Security Act of 1974,
as amended.

      "Euroclear" means the Euroclear System.

      "Event of Default"  shall mean an event  described  in Section 5.1 of the
Indenture.

      "Exchange  Act"  shall  mean the  Securities  Exchange  Act of  1934,  as
amended.

      "Excluded  Series"  shall mean any Series of Notes so  designated  in the
applicable Series Supplement, if any.

      "Executive  Officer"  shall mean,  with respect to any  corporation,  the
Chief Executive  Officer,  Chief Operating  Officer,  Chief Financial  Officer,
President,  Executive Vice President,  any Vice President,  the Secretary,  the
Treasurer,  Assistant  Secretary  or Assistant  Treasurer of such  corporation;
and with respect to any partnership, any general partner thereof.

      "FDIC"  shall  mean the  Federal  Deposit  Insurance  Corporation  or any
successor entity thereto.

      "Federal  Book-Entry  Security"  shall mean an  obligation  issued by the
U.S.  Treasury,  the  Federal  Home Loan  Mortgage  Corporation  or the Federal
National  Mortgage   Association,   or  any  other  direct  obligation  of,  or
obligation  fully  guaranteed  as to timely  payment of principal  and interest
by, the United  States of America,  that is a book-entry  security held through
the Federal Reserve System pursuant to Federal Book-entry regulations.

      "Fitch" shall mean Fitch, Inc. or its successor.

      "Ford" shall mean Ford Motor  Company,  or any successor by merger or any
company  acquiring  all or  substantially  all  of the  assets  of  Ford  Motor
Company.

      "Governmental  Authority" shall mean the United States of America, or any
other  jurisdiction  applicable  to  International,   Navistar  Financial,  the
Seller or other  Originator  of the  Receivables  as  specified  in the related
Series  Supplement,  any  state,  possession,   territory  or  other  political
subdivision  thereof,  and  any  entity  exercising   executive,   legislative,
judicial,   regulatory  or   administrative   functions  of  or  pertaining  to
government.

      "Group Account  Property" shall mean the Group Accounts,  all amounts and
investments  held from time to time in any Group  Account  (whether in the form
of deposit accounts, physical property,  book-entry securities,  uncertificated
securities or otherwise) and all proceeds of the foregoing.

      "Group Accounts" shall mean,  collectively,  those accounts so designated
in a Series Supplement.

      "Group  Amortization  Period" shall mean the period, if any, during which
all Series in all Groups are in an Early Amortization Period.

      "Group  Collections"  shall  mean,  with  respect to a Business  Day,  an
amount  equal  to the  sum of (i)  the  product  of (a)  the  Group  Collection
Allocation  Percentage and (b) Collections  received in the Collection  Account
on that  Business  Day and  (ii) if any  Series  Amortization  Period  or Group
Amortization  Period has  commenced and is  continuing,  the product of (a) the
Group Collection  Allocation  Percentage and (b) all amounts then on deposit in
the Equalization Account.

      "Group I  Amortization  Period"  shall mean the  period,  if any,  during
which all Series in Group I are in an Early Amortization Period.

      "Group I Final  Allocation  Date"  shall mean the first day  falling in a
Group I  Amortization  Period  on  which  there  are  funds on  deposit  in the
Carrying Cost  Account,  the Negative  Carry Account and the Principal  Funding
Accounts  that,  in the  aggregate,  equal or  exceed  the  Investor  Repayment
Amount and any  Servicing  Fee payable on the first  Payment Date falling after
that date.

      "Group I" means a group of Series of Notes  designated  as  belonging  to
Group I in the Series Supplement applicable to such Series of Notes.

      "Group Invested  Amount" shall mean, with respect to a Group on any date,
the amount  specified  in the related  Series  Supplement.  The Group  Invested
Amount  for any  Group  may be  increased  or  decreased  from  time to time as
specified in the related Series Supplement.

      "Groups" shall mean any groups of Series of Notes including Group I.

      "Holder"  shall mean the Person in whose  name a Note or  Certificate  is
registered on the Note Register or the Certificate Register, as applicable.

      "Indenture"  shall mean the Indenture between the Trust and the Indenture
Trustee,  dated as of the  date  hereof,  as the same may from  time to time be
amended, modified or otherwise supplemented.

      "Indenture  Trustee"  shall mean The Bank of New York, a New York banking
corporation,  not in its  individual  capacity but solely as trustee  under the
Indenture, or any successor trustee under the Indenture.

      "Independent"  shall  mean,  when  used  with  respect  to any  specified
Person,  that the Person (a) is in fact  independent  of the Issuer,  any other
obligor upon the Notes,  the Seller and any  Affiliate of any of the  foregoing
Persons,  (b) does  not have any  direct  financial  interest  or any  material
indirect financial  interest in the Issuer, any such other obligor,  the Seller
or any  Affiliate  of any of the  foregoing  Persons  and (c) is not  connected
with the Issuer,  any such other  obligor,  the Seller or any  Affiliate of any
of the  foregoing  Persons  as an  officer,  employee,  promoter,  underwriter,
trustee, partner, director or person performing similar functions.

      "Independent  Certificate"  shall  mean a  certificate  or  opinion to be
delivered to the Indenture  Trustee under the  circumstances  described in, and
otherwise  complying  with, the applicable  requirements of Section 11.1 of the
Indenture,  made by an  Independent  appraiser or other expert  appointed by an
Issuer  Order  and  approved  by  the  Indenture  Trustee  in the  exercise  of
reasonable  care, and such opinion or  certificate  shall state that the signer
has read the  definition of  "Independent"  and that the signer is  Independent
within the meaning thereof.

      "Ineligible  Receivable"  shall mean any  Receivable  that at the time of
determination is not an Eligible Receivable.

      "Insolvency  Event" shall mean any event specified in Section 5.17(a) or
(b) of the Indenture.

      "Insolvency   Laws"  shall  mean  the  Bankruptcy   Code  and  any  other
applicable federal or state bankruptcy, insolvency or other similar law.

      "Internal  Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended.

      "International" shall mean International Truck and Engine Corporation,  a
Delaware  corporation,  and its successors in interest to the extent  permitted
in the Basic Documents.

      "Investment  Company Act" shall mean the Investment  Company Act of 1940,
as amended.

      "Investment  Event" shall mean, with respect to any Series of Notes,  any
event, if any, so defined in the Indenture and the related Series Supplement.

respect to any Series of Notes the  amounts  specified  in the  related  Series
Supplement, if any.

      "Investor  Dilution/Warranty  Charge-Offs" shall mean, for any Collection
Period,  with  respect  to any  Series of Notes the  amounts  specified  in the
related Series Supplement, if any.

      "Investor  Repayment Amount" shall have the meaning ascribed such term in
the applicable Series Supplement.

      "Involuntary  Case" shall have the meaning specified in Article VI of the
Receivables Purchase Agreement.

      "Issuer" shall mean,  initially,  the Trust (and the Trust shall be named
as such in the Indenture) until a successor  replaces it and,  thereafter,  the
successor and, for purposes of any provision  contained  herein and required by
the TIA, each other obligor on the Notes.

      "Issuer Order" or "Issuer  Request" shall mean a written order or request
signed in the name of the  Issuer  by any one of its  Authorized  Officers  and
delivered to the Indenture Trustee.

      "Lien" shall mean any  mortgage,  deed of trust,  pledge,  hypothecation,
assignment,  deposit  arrangement,  encumbrance,  lien  (statutory  or  other),
preference,  priority or other security  agreement or preferential  arrangement
of any kind or  nature  whatsoever,  including  any  conditional  sale or other
title  retention  agreement and any financing  lease having  substantially  the
same economic effect as any of the foregoing.

      "Lock-Box  Account" shall mean a segregated  lock-box account  maintained
by the  Servicer  with the Lock-Box  Bank into which the  Servicer  will direct
Ford to make payments on the Receivables.

      "Lock-Box  Bank" shall mean Bank One,  National  Association,  a national
banking association, or any successor.

      "Monthly Period" shall mean a calendar month.

      "Monthly  Servicing  Fee" shall mean,  with  respect to any  Series,  the
amount specified therefor in the related Series Supplement.

      "Moody's" shall mean Moody's Investors Service, Inc., or its successor.

      "Navistar  Financial"  shall  mean  Navistar  Financial  Corporation,   a
Delaware corporation, and its successors in interest.


      "Negative  Carry  Account"  shall have the meaning  ascribed such term in
the applicable Series Supplement.

      "Net Invested  Amount"  shall have the meaning  ascribed such term in the
applicable Series Supplement.

      "Note" shall mean any asset-backed  Note executed by the Issuer by any of
its  Authorized  Officers and  authenticated  by the  Indenture  Trustee in the
form attached to the Series Supplement applicable to such Series of Notes.

      "Note  Depository"  shall mean with respect to any  Book-Entry  Notes for
which  Definitive  Notes have not been issued,  any  depository  selected  from
time to time by the  Indenture  Trustee  on behalf of the Trust in whose name a
Series of Notes is  registered.  The Note  Depository  shall be Cede & Co., the
nominee of the Clearing Agency for such Series.

      "Note  Depository  Agreement"  shall  mean with  respect to any Series of
Notes originally  issued as Book-Entry  Notes,  the agreement,  dated as of the
Closing Date for such Series,  among the Issuer,  the Indenture Trustee and the
Clearing  Agency  relating  to such  Notes,  as the  same  may be  amended  and
supplemented from time to time.

      "Note Owner" shall mean,  with respect to a Book-Entry  Note,  any Person
who is a beneficial owner of a Book-Entry Note.

      "Note Purchase  Agreement" shall mean the note purchase agreement between
TERFCO and Banc One Capital Markets,  Inc., as initial  purchaser,  dated as of
November 15, 2000.

      "Note  Rate" shall mean,  with  respect to any Series or class,  the note
rate specified therefor in the related Series Supplement.

      "Note  Register"  shall have the meaning  specified in Section  2.4(a) of
the Indenture.

      "Note  Registrar"  shall  mean  the  registrar  at any  time of the  Note
Register, appointed pursuant to Section 2.4 of the Indenture.

      "Noteholder" shall mean any Holder of a Note.

      "Notice of Default"  shall have the  meaning set forth in Section  5.1(d)
of the Indenture.

      "Officers'  Certificate"  shall mean (a) with respect to any corporation,
unless otherwise  specified in this Agreement,  a certificate signed by (i) the
Chairman  of the  Board,  Vice  Chairman  of the Board,  President  or any Vice
President  and (ii) a Treasurer,  Assistant  Treasurer,  Secretary or Assistant
Secretary of such  corporation  and (b) with  respect to any limited  liability
company,  unless otherwise  specified in this Agreement,  a certificate  signed
by any manager of such limited liability company.

      "Opinion of Counsel"  shall mean a written  opinion of counsel,  who may,
except for Tax  Opinions and as otherwise  expressly  provided,  be an employee
of the Seller, the Servicer or Navistar  Financial.  In addition,  for purposes
of  the  Indenture:  (a) the  opinion  shall  be  addressed  to  the  Indenture
Trustee as  trustee  and  (b) the  opinion  shall  comply  with any  applicable
requirements of Section 11.1(a) of the Indenture.

      "Order"   shall  have  the  meaning   specified  in  Article  VI  of  the
Receivables Purchase Agreement.

      "Originator" shall mean International.

      "Outstanding"   shall  mean,  with  respect  to  any  Notes,  as  of  any
Determination  Date,  all such Notes  theretofore  authenticated  and delivered
under the Indenture except:

           (a)  Notes   theretofore   canceled  by  the  Indenture  Trustee  or
      delivered to the Indenture Trustee for cancellation;

           (b)  Notes or  portions  thereof  the payment for which money in the
      necessary  amount  has been  theretofore  deposited  with  the  Indenture
      Trustee  or any  Paying  Agent in trust for the  Holders  of such  Notes;
      provided,  however, that if such Notes are to be redeemed, notice of such
      redemption  has been duly given  pursuant to the  Indenture  or provision
      therefore, satisfactory to the Indenture Trustee, has been made; and

           (c)  Notes in  exchange  for or in lieu of other  Notes  which  have
      been  authenticated and delivered pursuant to this Indenture unless proof
      satisfactory  to the Indenture  Trustee is presented  that any such Notes
      are held by a bona fide purchaser;

provided,  however,  that in  determining  whether the Holders of the requisite
Outstanding   Amount   of  the  Notes   have   given   any   request,   demand,
authorization,  direction,  notice,  consent or waiver  hereunder  or under any
Basic  Document,  Notes owned by the Issuer,  any other obligor upon the Notes,
the  Seller  or  any  Affiliate  of  any  of the  foregoing  Persons  shall  be
disregarded  and deemed not to be  Outstanding,  except  that,  in  determining
whether the  Indenture  Trustee  shall be  protected  in relying  upon any such
request,  demand,  authorization,  direction,  notice,  consent or waiver, only
Notes that a Responsible  Officer of the Indenture  Trustee  actually  knows to
be so owned  shall be so  disregarded.  Notes so owned  that have been  pledged
in good faith may be regarded as  Outstanding  if the  pledgee  establishes  to
the  satisfaction  of the Indenture  Trustee the pledgor's right so to act with
respect  to such  Notes  and that the  pledgee  is not the  Issuer,  any  other
obligor  upon the Notes,  the Seller or any  Affiliate  of any of the  forgoing
Persons.

      "Outstanding  Amount"  shall mean,  as of any date,  with  respect to any
Series of Notes, the aggregate  principal  balance of such Notes Outstanding at
such date.

      "Owner   Trustee"  shall  mean  Chase   Manhattan   Bank  USA,   National
Association,  a national banking  association,  or any successor  trustee under
the Trust Agreement.

      "Paying  Agent" shall mean with respect to the  Indenture,  the Indenture
Trustee  or any other  Person  that  meets the  eligibility  standards  for the
Indenture   Trustee   specified  in  Section  6.11  of  the  Indenture  and  is
authorized  by the Issuer to make the  payments to and  distributions  from the
Collection  Account and any Principal  Funding  Account,  including  payment of
principal  of or interest on the Notes on behalf of the  Issuer.  With  respect
to the  Trust  Agreement,  "Paying  Agent"  shall  mean  any  paying  agent  or
co-paying agent appointed  pursuant to Section 3.10 of the Trust Agreement that
meets the  eligibility  standards for the Owner  Trustee  specified in Section
6.13(c) of the Trust Agreement.

      "Payment  Date"  shall mean the  fifteenth  day of each month or, if such
day is not a Business Day, the next succeeding Business Day.

      "Payment  Statement"  shall mean,  with  respect to any Series,  a report
prepared by the Servicer for the  immediately  preceding  Collection  Period in
substantially the form set forth in the related Series Supplement.

      "PBGC" shall mean the Pension Benefit  Guaranty  Corporation  established
pursuant to Subtitle A of Title IV of ERISA.

      "Person"  shall  mean  any  legal  person,   including  any   individual,
corporation,  partnership, limited liability company, association,  joint-stock
company,  trust,  unincorporated  organization,  governmental  entity  or other
entity of similar nature.

      "Physical  Property" shall mean bankers'  acceptances,  commercial paper,
negotiable  certificates  of  deposit  and other  obligations  that  constitute
"instruments"  within the  meaning of  Section  9-105(1)(i)  of the UCC and are
susceptible of physical delivery.

      "Predecessor  Note" shall mean with respect to any particular Note, every
previous Note  evidencing  all or a portion of the same debt as that  evidenced
by such  particular  Note;  and, for the purpose of this  definition,  any Note
authenticated  and delivered  under  Section 2.5  of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note.

      "Principal  Funding  Account"  shall  mean any  account  designated  as a
"Principal Funding Account" in the applicable Series Supplement.

      "Principal  Terms" shall mean,  with respect to any Series:  (a) the name
or designation;  (b) the initial  principal  balance (or method for calculating
such  amount);   (c)  the  interest  rate  (or  method  for  the  determination
thereof);  (d) the  date on which  such  Series  will  begin  its  Accumulation
Period  or  Amortization   Period,  if  any;  (e)  the  method  for  allocating
principal and interest to  Noteholders;  (f) the  percentage  used to calculate
Monthly  Servicing  Fees;  (g) the issuer and terms of any form of  enhancement
with  respect   thereto  or  the  level  of   subordination   provided  by  the
Certificate(s);  (h) the  terms  on  which  the  Notes  of such  Series  may be
exchanged  for Notes of another  Series,  be subject  to  repurchase,  optional
redemption  or  mandatory  redemption  by the  Seller or be  remarketed  by any
remarketing  agent to other investors;  (i) the stated final maturity date; and
(j) any other terms permitted by the Indenture.

      "Proceeding"  shall  mean  any  suit in  equity,  action  at law or other
judicial or administrative proceeding.

      "Purchase  Price" with  respect to any  Receivable  for any date on which
such  Receivable  is to be  purchased  pursuant to Section  3.3(c) of the Trust
Sale  and  Servicing  Agreement  or  Section 2.1  of the  Receivables  Purchase
Agreement,  as  applicable,  shall have the meaning set forth in Section 2.1 of
the Receivables Purchase Agreement.

      "Rated  Securities"  shall mean each class of  Securities  which has been
rated by a Rating Agency at the request of the Seller.

      "Rating  Agency" shall mean,  with respect to any  outstanding  Series or
class, each nationally  recognized  statistical rating organization selected by
the  Seller  to rate the  Notes  of such  Series  or  class,  unless  otherwise
specified in the Series Supplement.

      "Rating Agency  Condition"  shall mean, with respect to any action,  that
each Rating Agency (other than Moody's)  shall have given its written  approval
that the  contemplated  action will not result in a  reduction,  qualification,
downgrading or withdrawal of the rating of any  outstanding  Series or class of
Notes then rated by that Rating Agency and that prior  written  notice shall be
given to Moody's.

      "Receivables"  shall mean all amounts shown on the Servicer's  records as
amounts  payable by Ford from time to time arising  from the sales  pursuant to
the Supply  Contracts of diesel engines and service parts by  International  to
Ford for use in Ford  trucks  and vans,  together  with the  group of  writings
evidencing  such  amounts  and the  security  interest  created  in  connection
therewith.  Receivables  which  become  Ineligible  Receivables  shall  not  be
shown  on the  Servicer's  records  as  amounts  payable  by Ford on the day on
which  they  become   Ineligible   Receivables.   Receivables   which  Navistar
Financial  is unable to  transfer  to the Seller  pursuant  to the  Receivables
Purchase  Agreement  or which the  Seller is  unable to  transfer  to the Trust
pursuant  to the Trust Sale and  Servicing  Agreement  shall not be included in
calculating the amount of Receivables.

      "Receivables  Purchase Agreement" shall mean the agreement by and between
Navistar Financial and the Seller,  dated as of the date hereof,  governing the
terms  and   conditions   upon  which  the  Seller  is  acquiring  the  initial
Receivables  transferred  to the Trust on the Closing Date and all  Receivables
acquired  thereafter,  as the same may from time to time be  amended,  modified
or otherwise supplemented.

      "Record Date" shall mean,  with respect to any Payment Date, the close of
business on the day  preceding  such Payment  Date;  provided that with respect
to any Payment  Date for a Series for which Notes have been issued  pursuant to
the  Indenture,  subsequent to the issuance of such Notes,  the Record Date for
such  Payment  Date shall be the last day of the month  preceding  the month in
which such Payment Date occurs.

      "Recoveries"  shall  mean  all  Collections  received  by  the  Indenture
Trustee in respect of any Write-Off.

      "Redemption  Date" shall mean the date specified as such by the Issuer as
described in Sections 10.1 and 10.2 of the Indenture.

      "Redemption  Price"  shall  mean the price  specified  in the  applicable
Series Supplement.

      "Related  Security" shall mean,  with respect to any Receivable,  (a) all
of International's or Navistar  Financial's  rights,  title and interest in and
to the goods, if any,  relating to the sale that gave rise to the  Receivables,
(b) all other  security  interests or liens and property  subject  thereto from
time to time  purporting  to secure  payment  of the  Receivables  and  (c) all
letters  of  credit,   guarantees  and  other  agreements  or  arrangements  of
whatever  character  from time to time  supporting  or securing  payment of the
Receivables.

      "Required  Rating" shall mean (1) a rating on  commercial  paper or other
short  term  unsecured  debt  obligations  of  Prime-1  by  Moody's  so long as
Moody's is a Rating  Agency, A-1 by  Standard & Poor's so long as Standard &
Poor's is a Rating  Agency  and,  if rated by  Fitch,  F-1+ by Fitch so long as
Fitch is a Rating  Agency;  or (2) such lower  credit  rating (as  approved  in
writing  by  each  Rating   Agency)  as  will  not  result  in  the  reduction,
qualification,  downgrading  or  withdrawal  of the rating then assigned to any
Rated  Securities by such Rating Agency.  Any requirement that deposits or debt
obligations  have the  "Required  Rating" shall mean that such deposits or debt
obligations  have the  foregoing  required  ratings  from  Moody's,  Standard &
Poor's and Fitch.

      "Requirements  of Law"  for any  Person  shall  mean the  certificate  of
incorporation  and by-laws or other  organizational  or governing  documents of
such Person,  and any law, treaty,  rule or regulation,  or determination of an
arbitrator or  Governmental  Authority,  in each case  applicable to or binding
upon such  Person or to which such Person is subject,  whether  federal,  state
or local (including usury laws and the federal Truth in Lending Act).

      "Responsible  Officer" shall mean, (i) with respect to any Person,  other
than the Indenture Trustee,  the president,  the  vice-president-controller  or
the  vice-president-treasurer  of such  Person  and  (ii) with  respect  to the
Indenture  Trustee,  any officer  within the  Corporate  Trust and Agency Group
(or  any  successor  group  of  the  Indenture   Trustee)  including  any  vice
president,  assistant vice president,  assistant secretary, assistant treasurer
or  any  other  officer  of  the  Indenture  Trustee   customarily   performing
functions  similar to those  performed  by the persons who at the time shall be
such  officers,  respectively,  or  to  whom  any  corporate  trust  matter  is
referred  because  of his  knowledge  of and  familiarity  with the  particular
subject.

      "Revolving  Period"  shall mean with  respect to any  Series,  the period
specified as such in the related Series Supplement.

      "Securities" shall mean the Notes and the Certificate(s).

      "Securities Act" shall mean the Securities Act of 1933, as amended.

      "Securities   Intermediary"   shall  have  the   meaning   set  forth  in
Section 4.3(c) of the Trust Sale and Servicing Agreement.

      "Securitization  Party" shall mean International,  Navistar International
Corporation, Navistar Financial, the Seller, the Trust, or Ford.

      "Securityholders" shall mean the Noteholders and the Certificateholders.

      "Seller"  shall mean Truck Engine  Receivables  Financing Co., a Delaware
corporation,  and its  successors  in interest to the extent  permitted  in the
Basic Documents.

      "Series"  shall  mean any  series of Notes so  designated  in the  Series
Supplement.

      "Series  Account"  shall  mean any  deposit,  trust,  escrow,  reserve or
similar  account  maintained  for the benefit of the  Noteholders of any Series
or class, as specified in any Series Supplement.

      "Series  Allocation  Percentage"  shall have the meaning set forth in the
Series Supplement.

      "Series  Amortization  Period"  shall have the  meaning  set forth in the
Series Supplement.

      "Series  Issuance Date" shall mean, with respect to any Series,  the date
on which the Notes of such  Series are to be  originally  issued in  accordance
with the Indenture and the related Series Supplement.

      "Series  Supplement" shall mean, with respect to any Series, a supplement
to the  Indenture,  executed  and  delivered  in  connection  with the original
issuance  of  the  Notes  of  such  Series  pursuant  to  Section  2.1  of  the
Indenture, and all amendments thereof and supplements thereto.

      "Servicer" shall mean, initially,  Navistar Financial, in its capacity as
Servicer  under  the  Trust  Sale  and  Servicing  Agreement,   and  after  any
Servicing Transfer, the Successor Servicer.

      "Servicing Charge Rate" shall equal 1%.

      "Servicing  Default"  shall have the meaning set forth in  Section 7.1 of
the Trust Sale and Servicing Agreement.

      "Servicing  Fee" shall have the meaning set forth in  Section 3.2  of the
Trust Sale and Servicing Agreement.

      "Servicing  Officer" shall mean any officer of the Servicer  involved in,
or responsible for, the  administration  and servicing of the Receivables whose
name  appears  on a list  of  servicing  officers  furnished  to the  Indenture
Trustee by the Servicer as such list may from time to time be amended.

      "Servicing  Transfer" shall have the meaning set forth in  Section 7.1(d)
of the Trust Sale and Servicing Agreement.

      "Standard  & Poor's"  shall mean  Standard & Poor's  Rating  Services,  a
division of the McGraw-Hill Companies, Inc. or its successor.

      "Stated Final  Maturity  Date" shall mean,  with respect to any Series of
Notes, the date specified in any Series Supplement.

      "Successor  Servicer"shall  have the meaning set forth in  Section 7.2 of
the Trust Sale and Servicing Agreement.

      "Supplemental  Certificate"  shall have the meaning specified in Section
3.4 of the Trust Agreement.

      "Supply  Contracts"  shall mean the following  supply  contracts  between
International   and  Ford  governing  the  terms  and  conditions   upon  which
International  supplies  diesel  engines and service parts to Ford, as the same
may from time to time be amended,  modified or otherwise  supplemented:  (a)  a
supply  contract,  under  the  terms  of  which  International  and  Ford  have
continued to operate,  which was originally  effective beginning in Ford's 1991
model year and  scheduled  to  terminate  at the end of Ford's 2000 model year;
(b) a  supply  contract  which was  negotiated  and signed in 1997 under  which
International  will  supply  diesel  engines to Ford in the  future;  and (c) a
supply   contract   which  was  negotiated  and  signed  in  1999  under  which
International will supply diesel engines to Ford in the future.

      "Tax  Opinion"  shall mean,  with  respect to any  action,  an Opinion of
Counsel to the effect  that,  for U.S.  federal  income  tax  purposes  (a) the
Trust will not be treated as an  association  or  publicly  traded  partnership
taxable  as  a  corporation  and  (b) in  the  case  of  Section  2.14  of  the
Indenture, the Notes will be characterized as debt issued by the Trust.

      "Temporary  Notes"  shall mean the Notes  specified in Section 2.3 of the
Indenture.

      "Termination   Date"  shall  mean,  with  respect  to  any  Series,   the
termination date specified in the related Series Supplement.

      "Termination  Notice" shall have the meaning set forth in  Section 7.1(d)
of the Trust Sale and Servicing Agreement.

      "TERFCO"  shall mean Truck Engine  Receivables  Financing Co., a Delaware
corporation,  and its  successors  in interest to the extent  permitted  in the
Basic Documents.

      "Transfer  Date" shall have the meaning set forth in  Section 2.1  of the
Trust Sale and Servicing Agreement.

      "Transfer  Deposit Amount" shall mean the amount of each deposit into the
Collection  Account  in  respect  of  a  Disqualified  Receivable,   breach  of
Servicer  covenant,  Dilution or Warranty Set-Off as and to the extent required
by Sections 2.4(c),  3.3(c),  3.9(a) and 3.9(b) of the Trust Sale and Servicing
Agreement, as applicable.

      "Trust" shall mean the Truck Engine  Receivables Master Trust, a Delaware
business trust.

      "Trust Account  Property" shall mean the Trust Accounts,  all amounts and
investments  held from time to time in any Trust  Account  (whether in the form
of deposit accounts, physical property,  book-entry securities,  uncertificated
securities or otherwise) and all proceeds of the foregoing.

      "Trust  Accounts" shall mean,  collectively,  the Collection  Account and
any other account so designated in a Series Supplement.

      "Trust  Agreement" shall mean the Trust Agreement  between the Seller and
the Owner  Trustee,  dated as of the date hereof,  as the same may from time to
time be amended, modified or otherwise supplemented.

      "Trust Assets"shall consist of an ownership interest in:

           (a)  the  Receivables,  any Related  Security,  all  Collections and
      other amounts received with respect thereto,  including  recoveries,  and
      all proceeds  thereof  (excluding the sale price of the Receivables  paid
      to the Seller) received on or after the Closing Date;

           (b)  all of the  Seller's  rights  under  the  Receivables  Purchase
      Agreement;

           (c)  all monies on deposit in certain accounts of the Trust;  and

           (d)  all of Navistar  Financial's  rights under the Engine  Accounts
      Sale Agreement.

      "Trust  Indenture Act or TIA" shall mean the Trust Indenture Act of 1939,
as amended.

      "Trust  Sale and  Servicing  Agreement"  shall  mean this  Agreement,  as
amended and supplemented from time to time.

      "Trust  Termination Date" shall have the meaning specified in Section 7.1
of the Trust Agreement.

      "UCC" shall mean the Uniform  Commercial  Code,  as amended  from time to
time, as in effect in any specified jurisdiction.

      "Uncertificated  Security"  shall  have the  meaning  given to such  term
under the applicable UCC as in effect on such date.

      "Unpaid  Balance" of any  Receivable  shall mean,  at any time,  the then
outstanding balance thereof.

      "Unregistered  Note"  shall  mean any Note  that has not been  registered
under the  Securities  Act and is subject to the  provisions of Section 2.15 of
the Indenture.

      "Warranty  Ratio" shall have,  with  respect to any Series of Notes,  the
meaning ascribed such term in the related Series Supplement, if any.

      "Warranty  Set-Offs" shall have, with respect to any Series of Notes, the
meaning ascribed such term in the related Series Supplement, if any.

      "Warehouse  Reserve" shall have, with respect to any Series of Notes, the
meaning ascribed such term in the related Series Supplement, if any.

      "Write-Offs"   shall  mean  any  Receivables  that  are  written  off  as
uncollectible due to Ford's inability to pay.

                             APPENDIX A

                        PART II - RULES OF CONSTRUCTION


(A)   Accounting  Terms.  As used  in this  Appendix  or the  Basic  Documents,
      accounting  terms which are not  defined,  and  accounting  terms  partly
      defined,  herein or therein shall have the  respective  meanings given to
      them under generally accepted accounting  principles.  To the extent that
      the  definitions  of  accounting  terms  in this  Appendix  or the  Basic
      Documents  are  inconsistent  with  the  meanings  of  such  terms  under
      generally accepted accounting  principles,  the definitions  contained in
      this Appendix or the Basic Documents will control.

(B)   "Hereof," etc. The words  "hereof,"  "herein" and  "hereunder"  and words
      of similar  import when used in this Appendix or any Basic  Document will
      refer to this  Appendix or such Basic  Document as a whole and not to any
      particular  provision  of this  Appendix  or  such  Basic  Document;  and
      Section,  Schedule and Exhibit  references  contained in this Appendix or
      any Basic Document are references to Sections,  Schedules and Exhibits in
      or to this Appendix or such Basic Document  unless  otherwise  specified.
      The word "or" is not exclusive.

(C)   Reference  to Payment  Dates.  With  respect  to any  Payment  Date,  the
      "related  Collection  Period," and the "related  Record  Date," will mean
      the  Collection  Period  and  Record  Date,   respectively,   immediately
      preceding  such Payment  Date,  and the  relationships  among  Collection
      Periods  and  Record  Dates  will  be   correlative   to  the   foregoing
      relationships.

(D)   Number and Gender.  Each defined term used in this  Appendix or the Basic
      Documents  has a  comparable  meaning when used in its plural or singular
      form.  Each  gender-specific  term  used in this  Appendix  or the  Basic
      Documents has a comparable meaning whether used in a masculine,  feminine
      or gender-neutral form.

(E)   Including.  Whenever  the term  "including"  (whether or not that term is
      followed by the phrase "but not  limited to" or "without  limitation"  or
      words of similar  effect) is used in this Appendix or the Basic Documents
      in   connection   with  a   listing   of  items   within   a   particular
      classification,  that listing will be interpreted to be illustrative only
      and will not be interpreted as a limitation on, or exclusive  listing of,
      the items within that classification.

(E)   UCC  References.  References  to sections or  provisions  of Article 9 of
      the  UCC  in  any  of  the  Basic   Documents   shall  be  deemed  to  be
      automatically   updated  to  reflect  the   successor,   replacement   or
      functionally  equivalent  sections or  provisions  of Revised  Article 9,
      Secured  Transactions  (2000) at any time in any  jurisdiction  which has
      made such revised article effective.

--------------------------------------------------------------------------------
                                      B-3

                             APPENDIX B

                   NOTICE ADDRESSES AND PROCEDURES

           All  requests,  demands,  directions,  consents,  waivers,  notices,
authorizations  and  communications  provided  or  permitted  under  any  Basic
Document to be made upon,  given or furnished to or filed with the Seller,  the
Servicer,  the  Administrator,  the Indenture  Trustee,  the Issuer,  the Owner
Trustee or the  Rating  Agencies  shall be in  writing,  personally  delivered,
sent by facsimile  with a copy to follow via first class mail,  overnight  mail
or mailed by certified  mail-return  receipt requested,  and shall be deemed to
have been duly given upon receipt:

(1)   in the case of the Seller, at the following address:

                Truck Engine Receivables Financing Co.
                c/o Navistar Financial Corporation
                2850 West Golf Road
                Rolling Meadows, Illinois 60008
                Attn:General Counsel
                     Vice President and Treasurer
                Facsimile: (847) 734-4090

(2)   in the  case  of the  Servicer  or the  Administrator,  at the  following
address:

                Navistar Financial Corporation
                2850 West Golf Road
                Rolling Meadows, Illinois 60008
                Attn:General Counsel
                     Vice President and Treasurer
                Facsimile: (847) 734-4090

(3)   in the case of the  Indenture  Trustee,  at its  Corporate  Trust  Office
(which address is set forth in Part I of Appendix A),

(4)   in the case of the Owner  Trustee,  at its Corporate  Trust Office (which
address is set forth in Part I of Appendix A),

(5)   in the case of the  Issuer,  care of the Owner  Trustee at its  Corporate
Trust  Office  (which  address  is set forth in Part I of  Appendix A),  with a
copy to the Administrator at the following address:


                     Navistar Financial Corporation, as Administrator
                     2850 West Golf Road
                     Rolling Meadows, Illinois 60008
                     Attn:General Counsel
                          Vice President and Treasurer
                     Facsimile: (847) 734-4090

      The Issuer shall  promptly  transmit  any notice  received by it from the
      Noteholders  to the  Indenture  Trustee and the  Indenture  Trustee shall
      likewise   promptly   transmit  any  notice   received  by  it  from  the
      Noteholders to the Issuer.

(6)   in the case of Moody's Investors Service, Inc., to:

                Moody's Investors Service, Inc.
                ABS Monitoring Department
                99 Church Street
                New York, New York 10007

(7)   in the case of Standard & Poor's Ratings Services, to:

                Standard & Poor's Ratings Services
                55 Water Street
                40th Floor
                New York, NY 10041-0003
                Attn: Asset Backed Surveillance Department

(8)   in the case of Fitch, Inc., to:

                Fitch, Inc.
                55 East Monroe
                Suite 3500
                Chicago, Illinois 60603
                Attn: Asset Backed Surveillance
                Facsimile: (312) 368-2069


or at such other  address as shall be  designated  by such  Person in a written
notice to the other parties to this Agreement.

           Where any Basic  Document  provides  for  notice to  Noteholders  or
Certificateholders   of  any   condition   or  event,   such  notice  shall  be
sufficiently  given (unless  otherwise herein  expressly  provided) if it is in
writing and mailed,  first-class,  postage prepaid or by overnight mail to each
Noteholder or  Certificateholder  affected by such condition or event,  at such
Person's  address as it appears on the Note Register or  Certificate  Register,
as  applicable,  not later  than the  latest  date,  and not  earlier  than the
earliest  date,  prescribed  in such  Basic  Document  for the  giving  of such
notice.  If  notice  to  Noteholders  or  Certificateholders  is given by mail,
neither  the  failure  to mail such  notice  nor any  defect  in any  notice so
mailed to any  particular  Noteholders or  Certificateholders  shall affect the
sufficiency  of such notice with respect to other  Noteholders,  and any notice
that is mailed in the manner herein  provided  shall  conclusively  be presumed
to have been duly given  regardless  of whether such notice is in fact actually
received.






                                                          EXHIBIT B


                   NAVISTAR FINANCIAL CORPORATION
                FORM OF ANNUAL SERVICER'S CERTIFICATE

    (As required to be delivered on or before February 1 of each
     calendar year beginning with February 1, 2002, pursuant to
       Section 3.5 of the Trust Sale and Servicing Agreement)

      The undersigned,  duly authorized  representatives  of Navistar Financial
Corporation  ("Navistar  Financial"),  as Servicer,  pursuant to the Trust Sale
and  Servicing  Agreement  dated as of  _____________,  200__ (as  amended  and
supplemented,  or  otherwise  modified  and in effect  from  time to time,  the
"Agreement"),  by and among  Navistar  Financial,  as  Servicer,  Truck  Engine
Receivables  Financing  Co., as Seller,  and Truck  Engine  Receivables  Master
Trust, as the Trust, do hereby certify that:

           1.   Navistar  Financial  is, as of the date  hereof,  the  Servicer
under the Agreement.

           2.   The undersigned are Servicing  Officers and are duly authorized
pursuant  to the  Agreement  to execute  and deliver  this  Certificate  to the
Rating Agencies, the Owner Trustee and the Indenture Trustee.

           3.   A review of the  activities  of the Servicer  during its fiscal
year ended  October 31,  ____, and of its  performance  under the Agreement was
conducted under our supervision.

           4.   Based on such  review,  the  Servicer  has,  to the best of our
knowledge,  performed in all material  respects  all of its  obligations  under
the Agreement  throughout  such year and no default in the  performance of such
obligations  has occurred or is  continuing  except as set forth in paragraph 5
below.

           5.   The  following  is  a  description   of  each  default  in  the
performance  of  the  Servicer's   obligations  under  the  provisions  of  the
Agreement  known to us to have  been made by the  Servicer  during  its  fiscal
year ended  October  31,  ____,  which sets forth in detail the  (a) nature  of
each such  default,  (b) the  action taken by the  Servicer,  if any, to remedy
each  such  default  and  (c) the  current  status of each  such  default:  [If
applicable, insert "None."]

      Capitalized  terms used but not defined herein are used as defined in the
Agreement.

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




           IN WITNESS  WHEREOF,  each of the undersigned has duly executed this
Certificate this ____ day of __________.





                          By:
                               Name:
                               Title:



                          By:
                               Name:
                               Title:

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

                                                         SCHEDULE 1

                             PROCEEDINGS

      None.


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

                                                         SCHEDULE 2

                       LIST OF TRUST ACCOUNTS


Collection Account
The Bank of New York
ABA No.: XXXXXXXXX
Ref: XXXXXXXXX
Account No.: XXXXXXXXX

 
 
                                                      EXHIBIT 10.66



                TRUCK ENGINE RECEIVABLES MASTER TRUST


              $100,000,000 Aggregate Principal Balance
   of Floating Rate Trade Receivables Backed Notes, Series 2000-1



                         PURCHASE AGREEMENT






                    Dated as of November 15, 2000







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

                                 i


                          TABLE OF CONTENTS


SECTION 1.  Representations, Warranties and Agreements............2
      (a)  Seller and Navistar Financial..........................2
      (b)  Initial Purchaser......................................5

SECTION 2. Sale and Delivery to Initial Purchaser -- Closing......6
      (a)  Notes..................................................6
      (b)  Payment................................................6
      (c)  Denominations; Registration............................6

SECTION 3. Covenants of the Seller and Navistar Financial.........6
      (a)  Offering Memorandum....................................6
      (b)  Notice and Effect of Material Events...................6
      (c)  Amendment to Offering Memorandum and Supplements.......6
      (d)  Qualification of Notes for Offer and Sale..............7
      (e)  Rating of Notes........................................7
      (f)  DTC....................................................7
      (g)  Use of Proceeds........................................7
      (h)  Information............................................7
      (i)  Compliance Statements..................................7

SECTION 4. Payment of Expenses....................................7

SECTION 5. Conditions of Initial Purchaser's Obligations..........8
      (a)  Opinion of Counsel for Seller and Navistar
           Financial..............................................8
      (b)  Opinion of Counsel for Indenture Trustee and Owner
           Trustee................................................8
      (c)  Opinion of Counsel for Initial Purchaser...............8
      (d)  Officers' Certificate..................................8
      (e)  Procedures Letter......................................8
      (f)  Rating of Notes........................................9
      (g)  Additional Documents...................................9
      (h)  Termination of Agreement...............................9

SECTION 6. Subsequent Offers and Resales of the Notes.............9
      (a)  Offer and Sale Procedures..............................9
      (b)  Covenants of the Seller and Navistar Financial........10

SECTION 7. Indemnification.......................................10
      (a)  Indemnification of lnitial Purchasers.................10
      (b)  Indemnification of Seller and Navistar Financial,
           Directors and Officers................................11
      (c)  Actions against Parties; Notification.................12

SECTION 8. Contribution..........................................12

SECTION 9. Representations, Warranties and Agreements to
           Survive Delivery......................................13

SECTION 10. Termination of Agreement.............................14
       (a)  Termination; General.................................14
       (b)  Liabilities..........................................14

SECTION 11.  Notices.............................................14

SECTION 12.  No-Petition.........................................14

SECTION 13.  Parties.............................................14

SECTION 14.  Governing Law.......................................15

SECTION 15.  Effect of Headings..................................15


Schedule A -    Initial Purchasers

Exhibit A  -    Opinion of Kirkland & Ellis (in re enforceability
                and corporate matters)

Exhibit B  -    Opinion of Kirkland & Ellis (in re disclosure
                matters)

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


                            $100,000,000
     Floating Rate Trade Receivables Backed Notes, Series 2000-1

                TRUCK ENGINE RECEIVABLES MASTER TRUST



                         PURCHASE AGREEMENT



                                    November 15, 2000


Banc One Capital Markets, Inc.
One First National Plaza
Chicago, Illinois 60670

Ladies and Gentlemen:

      Truck   Engine   Receivables   Financing   Co.,   a  Delaware
corporation (the "Seller"),  and Navistar Financial Corporation,  a
Delaware corporation ("Navistar  Financial"),  hereby confirm their
agreement  with  Banc One  Capital  Markets,  Inc.  (the  "Initial
Purchaser"),   with   respect  to  the   purchase  by  the  Initial
Purchaser of $100,000,000  aggregate  principal balance of Floating
Rate Trade  Receivables  Backed Notes,  Series 2000-1 (the "Notes")
of Truck Engine Receivables Master Trust (the "Trust").

      The Notes are to be issued  pursuant  to an  Indenture  to be
dated  as  of  November 21,   2000,  among  the  Seller,   Navistar
Financial,  as  Servicer  (the  "Servicer"),  and  The  Bank of New
York, as Indenture Trustee (the "Indenture  Trustee"),  and related
Series   2000-1   Supplement   to  the   Indenture   to  be   dated
November 21,  2000 (the "Supplement").  The Notes will be issued in
book-entry  form  in the  name  of Cede & Co.,  as  nominee  of The
Depository  Trust Company  ("DTC"),  pursuant to a letter agreement
to be dated as of the  Closing  Date (as  defined in Section  2(b))
(the "DTC  Agreement"),  among the Seller,  the  Indenture  Trustee
and DTC.

      The  Seller  and  Navistar  Financial   understand  that  the
Initial  Purchaser  proposes  to make an  offering  of the Notes on
the terms and in the  manner  set forth  herein  and agree that the
Initial  Purchaser may resell,  subject to the conditions set forth
herein,  all or a portion of the Notes to purchasers  ("Subsequent
Purchasers")  at any time  after  the date of this  Agreement.  The
Notes are to be offered  and sold to and by the  Initial  Purchaser
without  being  registered  under the  Securities  Act of 1933,  as
amended (the "1933 Act"),  in reliance upon  exemptions  therefrom.
Pursuant  to  the  terms  of  the  Notes  and  the   Indenture  and
Supplement  and subject to the conditions  therein,  investors that
acquire  Notes may only  resell or  otherwise  transfer  such Notes
(i) if  such  Notes are  hereafter  registered  under the 1933 Act,
(ii) outside  the United  States to  certain  persons  pursuant  to
Regulation  S of the  1933 Act  ("Regulation S"),  or  (iii) if  an
exemption  from the  registration  requirements  of the 1933 Act is
available  (including  the exemption  afforded by Rule 144A ("Rule
144A")  of the  rules and  regulations  promulgated  under the 1933
Act by the Securities and Exchange Commission (the "Commission").

      The  Seller  has  prepared  and   delivered  to  the  Initial
Purchaser an electronic copy of a preliminary  offering  memorandum
dated  November 2,  2000 (the  "Preliminary  Offering  Memorandum")
and  has  prepared  and  will  promptly   deliver  to  the  Initial
Purchaser an electronic copy of a final offering  memorandum  dated
as of the date hereof (the "Final Offering  Memorandum"),  each for
use by such Initial  Purchaser in connection with its  solicitation
of   purchases   of,  or  offering   of,  the  Notes.   "Offering
Memorandum"  means, with respect to any date or time referred to in
this Agreement,  the most recent offering  memorandum  (whether the
Preliminary  Offering Memorandum or the Final Offering  Memorandum,
or  any  amendment  or   supplement   to  either  such   document),
including exhibits thereto and any documents  incorporated  therein
by  reference,  which has been prepared and delivered by the Seller
to the Initial  Purchaser in connection  with its  solicitation  of
purchases  of, or offering  of, the Notes.  Capitalized  terms used
herein  that are not  otherwise  defined  shall  have the  meanings
ascribed thereto in the Offering Memorandum.

      SECTION (a)  Representations, Warranties and Agreements.

      (a)  Seller and Navistar  Financial.  The Seller and Navistar
Financial,  jointly  and  severally,  represent  and warrant to the
Initial  Purchaser  as of the  date  hereof  and as of the  Closing
Date  referred  to in  Section  2(b)  hereof,  and  agree  with the
Initial Purchaser, as follows:

           (a)  None  of the  Seller,  Navistar  Financial,  any of
      their   respective   affiliates   (other   than  the  Initial
      Purchaser),  as such term is defined in Rule 501(b) under the
      1933 Act  (each,  an  "Affiliate")  or any  person  acting on
      their behalf  (other than the Initial  Purchaser,  as to whom
      the Seller and Navistar  Financial  make no  representation),
      has,  directly  or  indirectly,  solicited  any offer to buy,
      sold or offered to sell or  otherwise  negotiated  in respect
      of,  or will  solicit  any  offer  to buy or offer to sell or
      otherwise  negotiate in respect of, any security  which is or
      would be  integrated  with the sale of the  Notes in a manner
      that would require the Notes to be registered  under the 1933
      Act.

           (b)  None  of  the  Seller,  Navistar  Financial  any of
      their  respective  Affiliates,  or any person acting on their
      behalf  (other  than the  Initial  Purchaser,  as to whom the
      Seller and Navistar  Financial  make no  representation)  has
      engaged or will engage,  in  connection  with the offering of
      the  Notes,  in any form of general  solicitation  or general
      advertising  within the meaning of Rule 502(c) under the 1933
      Act,  or has  engaged or will  engage in any  direct  selling
      efforts  (as  that  term is  defined  in  Regulation S)  with
      respect to the Notes, and the Seller and Navistar  Financial,
      any of their respective Affiliates,  and any person acting on
      their behalf  (other than the Initial  Purchaser,  as to whom
      the Seller and  Navistar  Financial  make no  representation)
      have  complied and will comply with the offering  restriction
      requirement of Regulation S.

           (c)  Subject  to  compliance  by the  Initial  Purchaser
      with the representations and warranties set forth in Section
      2 and the  procedures  set forth in  Section 6 hereof,  it is
      not  necessary  in  connection  with  the  offer,   sale  and
      delivery  of the Notes to the Initial  Purchaser  and to each
      Subsequent  Purchaser  in the  manner  contemplated  by  this
      Agreement  and the Offering  Memorandum to register the Notes
      under  the  1933  Act  or  to  qualify  the   Indenture   and
      Supplement  under the Trust Indenture Act of 1939, as amended
      (the "1939 Act").

           (d)  Since the respective dates as of which  information
      is  given  in the  Preliminary  Offering  Memorandum  and the
      Final  Offering  Memorandum,  (A) there  has been no material
      adverse  change or  development  which  would  reasonably  be
      expected  to  result  in a  material  adverse  change  in the
      condition,  financial or otherwise, of the Seller or Navistar
      Financial,  whether or not arising in the ordinary  course of
      business,  other  than as set  forth or  contemplated  in the
      Final   Offering   Memorandum  and  (B) there  have  been  no
      transactions   entered   into  by  the  Seller  or   Navistar
      Financial,  other  than  those  in  the  ordinary  course  of
      business,  that are material  with respect to the  condition,
      financial or otherwise,  of the Seller or Navistar Financial,
      other  than  as  set  forth  or  contemplated  in  the  Final
      Offering  Memorandum and other than the proposed  offering of
      $400 million of senior notes of Navistar Financial.

           (e)  Each of the Seller and Navistar  Financial has been
      duly formed and is validly  existing as a  corporation  under
      the laws of the State of Delaware  and all  filings  required
      at the date  hereof  under the laws of the State of  Delaware
      with respect to the due formation  and valid  existence of it
      as a  corporation  thereunder  have  been  made;  each of the
      Seller and Navistar  Financial  has all  requisite  power and
      authority  to own,  lease and operate its  properties  and to
      conduct its business as described in the Offering  Memorandum
      and to enter into and to perform  its  obligations;  and each
      of the Seller and  Navistar  Financial  is duly  qualified or
      registered as a foreign  corporation to transact business and
      is in  good  standing  in each  jurisdiction  in  which  such
      qualification or registration is required,  whether by reason
      of the  ownership  of property  or the  conduct of  business,
      except where the failure to so qualify  would not result in a
      material  adverse  change  in  its  condition,  financial  or
      otherwise.

           (f)  This Agreement has been duly  authorized,  executed
      and  delivered  by,  and  constitutes  a  valid  and  binding
      agreement  of, the Seller and Navistar  Financial,  except as
      the  enforceability  thereof  may be limited  by  bankruptcy,
      insolvency (including,  without limitation, all laws relating
      to  fraudulent  transfers),  moratorium,   reorganization  or
      other  similar  laws  affecting   enforcement  of  creditors'
      rights   generally  and  by  general   principles  of  equity
      (regardless of whether such  enforceability  is considered in
      a proceeding in equity or at law).

           (g)  As of the Closing Date, each  Transaction  Document
      to which it is a party  shall  have  been duly  executed  and
      delivered by the Seller and Navistar  Financial and, assuming
      the due authorization,  execution and delivery thereof by the
      other parties thereto,  shall constitute the legal, valid and
      binding  agreement  of the  Seller  and  Navistar  Financial,
      enforceable  in  accordance  with its  terms,  except  as the
      enforceability   thereof   may  be  limited  by   bankruptcy,
      insolvency (including,  without limitation, all laws relating
      to  fraudulent  transfers),  moratorium,   reorganization  or
      other  similar  laws  affecting   enforcement  of  creditors'
      rights   generally  and  by  general   principles  of  equity
      (regardless of whether such  enforceability  is considered in
      a proceeding in equity or at law).

           (h)  The Notes have been duly  authorized and, as of the
      Closing Date,  will have been duly executed by the Trust and,
      when  authenticated,  issued  and  delivered  in  the  manner
      provided for in the  Indenture and  Supplement  and delivered
      against  payment of the purchase  price  therefor as provided
      in this  Agreement,  will  constitute  the  legal,  valid and
      binding obligations of the Seller,  enforceable in accordance
      with their terms,  except as the  enforcement  thereof may be
      limited  by  bankruptcy,   insolvency   (including,   without
      limitation,  all  laws  relating  to  fraudulent  transfers),
      moratorium,  reorganization  or other similar laws  affecting
      enforcement  of  creditors'  rights  generally and by general
      principles of equity  (regardless of whether such enforcement
      is considered in a proceeding in equity or at law),  and will
      be in the form  contemplated by, and entitled to the benefits
      of, the Indenture and Supplement.

           (i)  Neither  the Seller nor  Navistar  Financial  is in
      violation  of  its  charter  or  bylaws,  in  default  in the
      performance   or  observance  of  any  material   obligation,
      agreement,  covenant or condition  contained in any contract,
      indenture,  mortgage,  loan agreement,  note,  lease or other
      instrument  to  which  it is a party  or by  which  it may be
      bound,  or to  which  any  of its  properties  or  assets  is
      subject  or  in  violation  of  any  law,   order,   rule  or
      regulation  applicable to it or any of its  properties of any
      court or of any federal or state  regulatory,  administrative
      agency   or   other   governmental   instrumentality   having
      jurisdiction  over  it or  any  of its  properties;  and  the
      execution,  delivery  and  performance  by each of the Seller
      and  Navistar  Financial of this  Agreement,  and each of the
      Transaction  Documents  to  which  it  is  a  party  and  the
      consummation  of the  transactions  contemplated  herein  and
      therein  and  in  the  Offering  Memorandum   (including  the
      issuance  and sale of the Notes  and the use of the  proceeds
      from  the  sale of the  Notes as  described  in the  Offering
      Memorandum   under  the  caption  "Use  of   Proceeds")   and
      compliance   by  it  with  its   obligations   hereunder  and
      thereunder  have  been  duly and  validly  authorized  by all
      necessary  corporate  action  and will not  conflict  with or
      constitute  a breach of, or default  under,  or result in the
      creation or imposition of any lien,  charge or encumbrance (a
      "Lien") upon any of its properties or assets  pursuant to any
      material  contract,  indenture,   mortgage,  loan  agreement,
      note,  lease or other instrument to which it is a party or by
      which it may be bound,  or to which any of its  properties or
      assets  is  subject,  nor  will  such  action  result  in any
      violation of the  provisions  of its charter or bylaws or any
      applicable law, order, rule,  regulation or administrative or
      court decree.

           (j)  There is no  action,  suit,  proceeding  or inquiry
      before  or by any  court  or  governmental  agency  or  body,
      domestic or foreign,  now  pending,  or, to the  knowledge of
      the  Seller or  Navistar  Financial,  threatened,  against or
      affecting  the  Seller  or  Navistar  Financial  which  might
      result  in  a  material  adverse  change  in  its  condition,
      financial   or   otherwise,   and  all   pending   legal   or
      governmental  proceedings  to  which  either  the  Seller  or
      Navistar  Financial  is a  party  or  of  which  any  of  its
      properties  or assets is the subject are,  considered  in the
      aggregate, not material.

           (k)  Subject  to  compliance  by the  Initial  Purchaser
      with the representations and warranties set forth in Section
      2(c) and the  procedures  set forth in  Section 6 hereof,  no
      filing with,  or  authorization,  approval or consent of, any
      court,  governmental  authority or agency or any other person
      is necessary in connection  with the execution,  delivery and
      performance  by the  Seller  or  Navistar  Financial  of this
      Agreement,   the  Notes  or  any  of  the  other  Transaction
      Documents  or  the  consummation  by it of  the  transactions
      contemplated  hereby or  thereby,  except for any  filings in
      accordance with applicable  state securities laws and such as
      will have been  obtained  and are in full force and effect as
      of the Closing Date.

           (l)  Each  of  the   Seller   and   Navistar   Financial
      possesses all material  certificates,  authorities,  licenses
      or  permits  issued  by the  appropriate  state,  federal  or
      foreign  regulatory  agencies or bodies as are  necessary  to
      conduct  the  business  now  operated  by it,  and it has not
      received   any  notice  of   proceedings   relating   to  the
      revocation   or   modification   of  any  such   certificate,
      authority,  license or permit  that,  individually  or in the
      aggregate, if the subject of an unfavorable decision,  ruling
      or finding,  would result in a material adverse change in its
      condition, financial or otherwise.

           (m)  On the  Closing  Date (after  giving  effect to all
      transactions  occurring  on  such  date),  the  Net  Invested
      Amount shall not exceed the Base Amount.

           (n)  No  event  has  occurred  and  is  continuing  that
      constitutes,  or with the  passage  of time or the  giving of
      notice or both would constitute,  an Early Amortization Event
      or a Servicing Default.

           (o)  Neither the Seller nor  Navistar  Financial is now,
      nor as a  result  of the  transactions  contemplated  by this
      Agreement will it become, an "investment  company," nor is it
      "controlled"  by an  "investment  company"  as such terms are
      defined in the Investment Company Act of 1940, as amended.

           (p)  As of the Closing  Date,  the  representations  and
      warranties  of each of the Seller and  Navistar  Financial in
      each Transaction  Document to which it is a party and in each
      officers'  certificate of the Seller and Navistar  Financial,
      delivered  as of the Closing  Date will be true and  correct,
      and the Initial  Purchaser  may rely on such  representations
      as if they were set forth herein in full.

      (b)  Initial  Purchaser.  The  Initial  Purchaser  represents
and  warrants to the Seller and  Navistar  Financial as of the date
hereof and as of the  Closing  Date  referred  to in  Section  2(b)
hereof,  and  agrees  with the Seller and  Navistar  Financial,  as
follows:

           (a)  The Initial  Purchaser  represents and warrants to,
      and  agrees  with  the  Seller,  that  it is  an  "accredited
      investor"  within the meaning of Rule  501(a)  under the 1933
      Act (an  "Accredited  Investor"),  with  such  knowledge  and
      experience   in  financial   and  business   matters  as  are
      necessary  in order to  evaluate  the  merits and risks of an
      investment in the Notes,  it is purchasing the Notes pursuant
      to a private  sale  exempt from  registration  under the 1933
      Act,  it has not  engaged  and will not engage in  connection
      with  the  offering  of the  Notes  in any  form  of  general
      solicitation  or general  advertising  within the  meaning of
      Rule 502(c) under the 1933 Act,  and it will  solicit  offers
      for the Notes,  and will offer,  sell or deliver the Notes as
      part of  their  initial  offering,  only in  accordance  with
      Section 6.

           (b)  With respect to any  information  not  contained in
      the Offering  Memorandum  and designated as  confidential  by
      the Seller and  Navistar  Financial,  the  Initial  Purchaser
      hereby agrees to cause any prospective  purchaser of Notes to
      execute that certain  Confidentiality  Letter  agreed upon by
      the  parties  hereto  prior  to  the  dissemination  of  such
      confidential information to such purchaser.

      SECTION (b)    Sale and  Delivery  to  Initial  Purchaser  --
Closing.

      (a)  Notes.   On  the  basis  of  the   representations   and
warranties   herein   contained   and  subject  to  the  terms  and
conditions  herein  set  forth,  the  Seller  agrees to sell to the
Initial  Purchaser  and the  Initial  Purchaser  agrees to purchase
from the  Seller  the  respective  principal  balance  of Notes set
forth  opposite  the name of such  Initial  Purchaser in Schedule A
hereto  at  a  purchase  price  equal  to  the  principal   balance
thereof.   As  compensation  to  the  Initial   Purchaser  for  its
commitment  and obligation  hereunder in respect of the Notes,  the
Seller will pay to the  Initial  Purchaser  on the Closing  Date an
amount  equal to 37.5  basis  points  multiplied  by the  aggregate
principal   balance  of  the  Notes   purchased   by  such  Initial
Purchaser hereunder (or $375,000).

      (b)  Payment.   Payment  of  the  purchase   price  for,  and
delivery  of the Notes  shall be made at the  office of  Kirkland &
Ellis,  Chicago,  Illinois,  or at such  other  place  as  shall be
agreed  upon by the  Initial  Purchaser  and the  Seller,  at 10:00
A.M.  (Chicago  time) on  November 21,  2000, or such other time on
the  same or  such  other  date  as  shall  be  agreed  upon by the
Initial  Purchaser  and the  Seller  (such time and date of payment
and delivery  being  herein  called the  "Closing  Date").  Payment
shall  be  made  to the  Seller  by wire  transfer  of  immediately
available  funds  to a  bank  account  designated  by  the  Seller,
against delivery to the Initial  Purchaser,  through the facilities
of DTC, of the Notes to be purchased by them.

      (c)  Denominations;   Registration.   The   Notes   shall  be
registered  in  the  name  of  Cede  &  Co.  pursuant  to  the  DTC
Agreement  and  shall  be made  available  for  examination  by the
Initial  Purchaser  in Chicago,  Illinois not later than 10:00 A.M.
(Chicago time) on the last business day prior to the Closing Date.

      SECTION (c)    Covenants   of   the   Seller   and   Navistar
Financial.   The  Seller  and  Navistar  Financial  each  severally
covenant and agree as follows:

      (a)  Offering    Memorandum.    The   Seller   and   Navistar
Financial,  as promptly as  possible,  will  furnish to the Initial
Purchaser  an  electronic  copy of the  Final  Offering  Memorandum
and,  with respect to any  documents  which were not or will not be
provided  electronically to the Initial  Purchaser,  at the expense
of the  Seller and  Navistar  Financial,  such  number of copies of
any  amendments  and  supplements  to the Offering  Memorandum  and
documents   incorporated  by  reference   therein  as  the  Initial
Purchaser may reasonably request.

      (b)  Notice and  Effect of  Material  Events.  The Seller and
Navistar  Financial will immediately  notify the Initial Purchaser,
and confirm  such notice in writing,  of (x) any filing made by the
Seller  or  Navistar  Financial  of  information  relating  to  the
offering  of the Notes with any  securities  exchange  or any other
regulatory  body in the  United  States or any other  jurisdiction,
and (y) prior to the  completion  of the  placement of the Notes by
the Initial  Purchaser  as  evidenced  by a notice in writing  from
the Initial  Purchaser to the Seller,  any  material  changes in or
affecting  the  Seller,  Navistar  Financial,   the  Trust  or  the
Receivables  that make any  statement  in the  Offering  Memorandum
false or  misleading  in any  material  respect  or which  requires
additions  to or changes  in the  Offering  Memorandum  in order to
make the statements therein not misleading.

      (c)  Amendment to Offering  Memorandum and  Supplements.  The
Seller and  Navistar  Financial  will advise the Initial  Purchaser
promptly  of  any  proposal  to  amend  or  supplement   the  Final
Offering   Memorandum   and  will  not  effect  such  amendment  or
supplement  without  the consent of the  Initial  Purchaser,  which
consent  will not  unreasonably  be  withheld.  Neither the consent
of the Initial Purchaser,  nor the Initial Purchaser's  delivery of
any such  amendment  or  supplement,  shall  constitute a waiver of
any of the conditions set forth in Section 5 hereof.

      (d)  Qualification  of Notes for Offer and Sale.  Each of the
Seller  and  Navistar  Financial  will  use its  best  efforts,  in
cooperation  with the Initial  Purchaser,  to take  actions  within
its  control to qualify the Notes for  offering  and sale under the
applicable  securities  laws of such  jurisdictions  as the Initial
Purchaser  may designate  and to maintain  such  qualifications  in
effect as long as  required  for the sale of the  Notes;  provided,
however,  that  the  Seller  shall  not be  obligated  to file  any
general  consent  to  service of process or to qualify as a foreign
corporation  or as a dealer in  securities in any  jurisdiction  in
which it is not so  qualified  or to subject  itself to taxation in
respect of doing  business in any  jurisdiction  in which it is not
otherwise so subject.

      (e)  Rating  of  Notes.  Each  of  the  Seller  and  Navistar
Financial  shall use its best  efforts  to take all  action  within
its control that is necessary to enable  Standard & Poor's  Ratings
Services,  a  division  of  McGraw  Hill,  Inc.  ("S&P").   Moody's
Investors  Service,  Inc.  ("Moody's")  and Fitch to provide  their
respective  credit ratings of the Notes and to the extent,  if any,
that any rating  provided with respect to the Notes is  conditional
upon  the  furnishing  of  documents  or the  taking  of any  other
actions  by the  Seller or  Navistar  Financial,  to  furnish  such
documents and take such actions as soon as is practicable.

      (f)  DTC.  Each of the Seller  and  Navistar  Financial  will
cooperate  with the Initial  Purchaser  and use its best efforts to
take  actions  within  its  control  to  permit  the  Notes  to  be
eligible for clearance  and  settlement  through the  facilities of
DTC and  through  the  Euroclear  System  and  Coldstream  Banking,
societe anonyme.

      (g)  Use of  Proceeds.  The  Seller  and  Navistar  Financial
will use the  proceeds  received by them from the sale of the Notes
in the manner  specified in the Offering  Memorandum  under "Use of
Proceeds."

      (h)  Information.  So long as any Notes are outstanding,  the
Seller  and  Navistar  Financial  agree to provide to any holder of
the Notes, or any prospective  purchaser thereof,  pursuant to Rule
144A,  such  information  as is  available  to it  and  as  may  be
required to render the Notes eligible for resale pursuant thereto.

      (i)  Compliance   Statements.   So  long  as  any  Notes  are
outstanding,  the  Seller  and  Navistar  Financial  will make good
faith  efforts to deliver or cause to be  delivered  to the Initial
Purchaser the annual  statements  as to  compliance  and the annual
statements  of a  firm  of  independent  public  accountants  as to
compliance.

      SECTION (d)    Payment  of  Expenses.  Each of the Seller and
Navistar  Financial  agree,  jointly  and  severally,  to  pay  all
expenses  incident  to the  performance  of its  obligations  under
this  Agreement,  including:  (a) the  preparation  and printing of
the Offering  Memorandum  (including  financial  statements and any
schedules  or exhibits  and any  document  incorporated  therein by
reference)  and of each  amendment or supplement  thereto,  (b) the
preparation,  printing  and  delivery to the Initial  Purchaser  of
this  Agreement,  the  Indenture  and  Supplement  and  such  other
documents  as may be  required  in  connection  with the  offering,
purchase,   sale,  issuance  or  delivery  of  the  Notes,  (c) the
preparation,  issuance  and  delivery  of the Notes to the  Initial
Purchaser,  including any charges of DTC in  connection  therewith,
(d) the  fees and  disbursements  of the counsel,  accountants  and
other  advisors  to the  Seller  and  Navistar  Financial,  (e) the
qualification  of the Notes  under  securities  laws in  accordance
with the provisions of Section 3(d) hereof,  including  filing fees
and  the  fees  and   disbursements  of  counsel  for  the  Initial
Purchaser  in  connection  therewith  and in  connection  with  the
preparation  of the Blue Sky  Survey  and any  supplement  thereto,
(f) the  fees and expenses of the Owner  Trustee and the  Indenture
Trustee,  including the fees and  disbursements  of counsel for the
Owner  Trustee and the  Indenture  Trustee in  connection  with the
Indenture,  the Supplement and the Notes;  and (g) any fees payable
in connection with the rating of the Notes.

      In  addition,   the  Seller  and  Navistar  Financial  agree,
jointly and  severally,  to pay all  out-of-pocket  expenses of the
Initial  Purchaser  incurred by the Initial Purchaser in connection
with the  transactions  contemplated by this Agreement,  including,
but not  limited to,  reasonable  legal fees and  expenses  and due
diligence travel and expenses.

      SECTION (e)    Conditions     of     Initial      Purchaser's
Obligations.  The  obligations of the Initial  Purchaser  hereunder
are subject to the accuracy of the  representations  and warranties
of  the  Seller  and  Navistar  Financial  contained  in  Section 1
hereof,  to the  performance  by the Seller and Navistar  Financial
of their  respective  covenants  and other  obligations  hereunder,
and to the following further conditions:

      (a)  Opinion  of   Counsel   Regarding   Enforceability   and
Corporate   Matters.   As  of  the   Closing   Date,   the  Initial
Purchaser,  Navistar  Financial  and the Seller shall have received
the  opinions,  dated as of the Closing  Date, of Kirkland & Ellis,
special counsel to the Seller,  Navistar  Financial and the Initial
Purchaser, to the effect set forth in Exhibit A hereto.

      (b)  Opinion  of  Counsel  for  Indenture  Trustee  and Owner
Trustee.  As of the  Closing  Date,  the  Initial  Purchaser  shall
have  received  the  opinions,  dated as of the  Closing  Date,  of
special  counsel to the Owner  Trustee and the  Indenture  Trustee,
in form and  substance  satisfactory  to  counsel  for the  Initial
Purchaser,  with  respect to such matters as counsel to the Initial
Purchaser may reasonably request.

      (c)  Opinion of Counsel Regarding  Disclosure  Matters. As of
the Closing Date,  the Initial  Purchaser,  Navistar  Financial and
the  Seller  shall  have  received  the  opinions,  dated as of the
Closing Date, of Kirkland & Ellis,  special  counsel to the Initial
Purchaser,  Navistar  Financial  and the  Seller to the  effect set
forth in Exhibit B hereto.

      (d)  Officers'  Certificate.  As of  the  Closing  Date,  the
Initial  Purchaser  shall have received  certificates,  dated as of
the Closing  Date,  of the  President,  any Vice  President  or the
Treasurer  or any  Assistant  Treasurer  of each of the  Seller and
Navistar  Financial,   in  which  such  officer  shall  state  that
(i) the  representations  and  warranties of the Seller or Navistar
Financial,  as the case  may be,  in this  Agreement  or any of the
Transaction  Documents  are  true  and  correct  on  and  as of the
Closing Date,  (ii) the Seller or Navistar  Financial,  as the case
may  be,  has  complied  with  all  agreements  and  satisfied  all
conditions  on its part to be performed  or satisfied  hereunder or
under the  Transaction  Documents on or prior to the Closing  Date,
and  (iii) subsequent  to the  date of this  Agreement,  there  has
been no material  adverse  change in the  condition,  financial  or
otherwise,  or  in  the  earnings,  business  affairs  or  business
prospects  of  International  Truck  and  Engine  Corporation,  the
Seller or  Navistar  Financial,  as the case may be,  except as set
forth in or contemplated by the Offering Memorandum.

      (e)  Procedures  Letter.  At the  time  of the  execution  of
this  Agreement,  the Initial  Purchaser shall have received from a
firm  of  independent,   nationally  recognized,  certified  public
accountants   acceptable   to  the   Initial   Purchaser  a  letter
("Procedures  Letter"),  in form and substance  satisfactory to the
Initial  Purchaser,  verifying  the accuracy of such  financial and
statistical data contained in the Preliminary  Offering  Memorandum
as the Initial Purchaser shall deem advisable.

      (f)  Rating  of  Notes.  As of the  Closing  Date,  the Notes
shall be rated in the "A"  category  or its  equivalent  by each of
S&P,  Moody's and Fitch.  The Seller  shall have  delivered  to the
Initial  Purchaser  a letter  dated as of the  Closing  Date,  from
each such rating  agency,  or other  evidence  satisfactory  to the
Initial Purchaser, confirming that the Notes have such ratings.

      (g)  Additional  Documents.  As of the Closing Date,  counsel
for the  Initial  Purchaser  shall  have been  furnished  with such
documents  and  opinions  as they may  reasonably  require  for the
purpose  of  enabling  them to pass upon the  issuance  and sale of
the  Notes as  herein  contemplated,  or in order to  evidence  the
accuracy  of any  of  the  representations  or  warranties,  or the
fulfillment of any of the  conditions,  herein  contained;  and all
proceedings  taken by the  Seller,  Navistar  Financial,  the Owner
Trustee or the Indenture  Trustee in  connection  with the issuance
and sale of the Notes as herein  contemplated  shall be  reasonably
satisfactory  in form and  substance to the Initial  Purchaser  and
counsel for the Initial Purchaser.

      (h)  Termination  of Agreement.  If any  condition  specified
in  this  Section  shall  not  have  been  fulfilled  when  and  as
required to be fulfilled,  this  Agreement may be terminated by the
Initial  Purchaser  by notice to the Seller at any time on or prior
to  the  Closing  Date,  and  such  termination  shall  be  without
liability  of any party to any other  party  except as  provided in
Section 4  and except  that  Sections  1, 7, 8 and 9 shall  survive
any such termination and remain in full force and effect.

      All opinions,  letters,  evidence and certificates  mentioned
above  or   elsewhere  in  this   Agreement   shall  be  deemed  in
compliance  with the  requirements  hereof only if they are in form
and substance  reasonably  satisfactory  to counsel for the Initial
Purchaser.

      SECTION (f)    Subsequent Offers and Resales of the Notes.

      (a)  Offer and Sale Procedures.  The Initial  Purchaser,  the
Seller  and  Navistar  Financial  hereby  establish  and  agree  to
observe the following  procedures in connection  with the offer and
sale of the Notes:

           (a)  Offers  and Sales only to  Qualified  Institutional
      Buyers.  Offers  and  sales of the Notes  shall  only be made
      (A) in the  case of  offers  inside  the  United  States,  to
      persons whom the offeror or seller reasonably  believes to be
      Qualified  Institutional  Buyers,  or, if any such  person is
      buying for one or more  institutional  accountants  for which
      such person is acting as fiduciary  or agent,  only when such
      person has  represented  to such  offeror or seller that such
      account is a Qualified  Institutional  Buyer,  to whom notice
      has been  given that such sale or  delivery  is being made in
      reliance on Rule 144A,  and (B) in the case of offers outside
      the  United  States,  to  persons  other  than  U.S.  persons
      ("foreign  purchasers,"  which term shall include  dealers or
      other  professional  fiduciaries  in the United States acting
      on  a  discretionary  basis  for  foreign  beneficial  owners
      (other than an estate or trust));  provided,  however, in the
      case of clause (B),  in  purchasing  such Notes such  persons
      are deemed to have  represented  and agreed as provided under
      the  caption   "Transfer   Restrictions"   in  the   Offering
      Memorandum.

           (b)  No General  Solicitation.  No general  solicitation
      or general  advertising  (within  the  meaning of Rule 502(c)
      under  the 1933  Act)  will be used in the  United  States in
      connection with the offering or sale of the Notes.

           (c)  Subsequent Purchaser  Notification.  In the case of
      offers  and sales  inside  the  United  States,  the  Initial
      Purchaser  will take  reasonable  steps to inform,  and cause
      each of its  Affiliates  doing  business in the United States
      to take reasonable steps to inform,  persons  acquiring Notes
      from the Initial Purchaser or Affiliate,  as the case may be,
      that the Notes  (A) have not been and will not be  registered
      under  the  1933  Act,  (B) are  being  sold to them  without
      registration  under the 1933 Act in  reliance on Rule 144A or
      in accordance with another exemption from registration  under
      the  1933  Act,  as the  case  may  be,  and  (C)  may not be
      offered,  sold  or  otherwise  transferred  except  (1)  to a
      person whom the seller  reasonably  believes is a  "qualified
      institutional  buyer" as defined in Rule 144A that  purchases
      for its own account or for the  account of another  qualified
      institutional  buyer to whom notice is given that the resale,
      pledge or  transfer  is being made in  reliance on Rule 144A,
      (2) in offshore  transactions  in accordance with Rule 903 or
      904 of  Regulation  S,  (3)  pursuant  to  another  exemption
      available  under  the  1933  Act or (4)  pursuant  to a valid
      registration statement.

           (d)  Restrictions    on    Transfer.     The    transfer
      restrictions  and  the  other  provisions  set  forth  in the
      Offering    Memorandum    under   the    heading    "Transfer
      Restrictions,"  including the legend required thereby,  shall
      apply to the  Notes  except  as  otherwise  agreed  among the
      Seller, Navistar Financial and the Initial Purchaser.

      (b)  Covenants  of the Seller and  Navistar  Financial.  Each
of the Seller and Navistar  Financial,  severally  and not jointly,
covenants with the Initial Purchaser as follows:

           (a)  Integration.   Each  of  the  Seller  and  Navistar
      Financial  agrees  that  it  will  not  and  will  cause  its
      Affiliates  not to solicit any offer to buy or make any offer
      or sale of, or otherwise  negotiate in respect of, securities
      of  any  class  if,   as  a  result   of  the   doctrine   of
      "integration"  referred  to in Rule 502  under  the 1933 Act,
      such offer or sale would  render  invalid (for the purpose of
      (A) the  sale  of the  Notes  by the  Seller  to the  Initial
      Purchaser,  (B) the  resale  of  the  Notes  by  the  Initial
      Purchaser to Subsequent  Purchasers or (C) the  resale of the
      Notes by such Subsequent  Purchasers to others) the exemption
      from the  registration  requirements of the 1933 Act provided
      by  Section  4(2)  thereof  or by  Rule  144A  thereunder  or
      otherwise.

           (b)  Rule  144A  Information.  Each  of the  Seller  and
      Navistar  Financial agrees that, in order to render the Notes
      eligible  for  resale  pursuant  to Rule 144A  under the 1933
      Act, while any of the Notes remain outstanding,  it will make
      available,   upon   request,   to  any  holder  of  Notes  or
      prospective  purchasers of Notes the information specified in
      Rule 144A(d)(4)  available to it (such  information is herein
      referred to as "Additional Information").

      SECTION (g)    Indemnification

      (a)  Indemnification  of  lnitial  Purchasers.  Each  of  the
Seller and Navistar  Financial  agrees,  jointly and severally,  to
indemnify  and  hold  harmless  the  Initial   Purchaser  and  each
person,  if any,  who  controls  the Initial  Purchaser  within the
meaning  of  Section  15 of the 1933 Act or  Section 20 of the 1934
Act as follows:

           (a)  against any and all loss, liability,  claim, damage
      and  expense  whatsoever,  as  incurred,  arising  out of any
      untrue  statement or alleged  untrue  statement of a material
      fact contained in any Preliminary  Offering Memorandum or the
      Final  Offering  Memorandum  (or any  amendment or supplement
      thereto),  or the omission or alleged omission therefrom of a
      material  fact  necessary  in order  to make  the  statements
      therein,  in the light of the circumstances  under which they
      were made, not misleading;

           (b)  against any and all loss, liability,  claim, damage
      and expense  whatsoever,  as  incurred,  to the extent of the
      aggregate  amount paid in  settlement of any  litigation,  or
      any  investigation or proceeding by any  governmental  agency
      or body, commenced or threatened,  or of any claim whatsoever
      based upon any such  untrue  statement  or  omission,  or any
      such alleged untrue statement or omission;  provided that any
      such  settlement is effected with the written  consent of the
      Seller and Navistar Financial;

           (c)  against   any  and  all  expense   whatsoever,   as
      incurred  (including the reasonable fees and disbursements of
      counsel   chosen  by  the  Initial   Purchaser),   reasonably
      incurred in  investigating,  preparing or  defending  against
      any  litigation,  or any  investigation  or proceeding by any
      governmental agency or body, commenced or threatened,  or any
      claim  whatsoever  based upon any such  untrue  statement  or
      omission  of the Seller or  Navistar  Financial,  or any such
      alleged  untrue  statement  or  omission  of  the  Seller  or
      Navistar  Financial,  to the extent that any such  expense is
      not paid under (i) or (ii) above;

provided,  however,  that (x) the indemnity  provided in (i), (ii),
and (iii)  shall not apply to any loss,  liability,  claim,  damage
or expense to the extent  arising  out of any untrue  statement  or
omission or alleged  untrue  statement or omission made in reliance
upon and in conformity  with written  information  furnished to the
Seller or Navistar  Financial  by the Initial  Purchaser  expressly
for use in the Offering  Memorandum (or any amendment  thereto) and
(y) the foregoing  indemnity  with respect to any untrue  statement
contained  in  or  any  omission  from  the  Preliminary   Offering
Memorandum   shall  not  inure  to  the   benefit  of  the  Initial
Purchaser (or any person  controlling such Initial  Purchaser) from
whom the person asserting any such loss,  liability,  claim, damage
or  expense  purchased  any of  the  Notes  that  are  the  subject
thereof if the  Seller or  Navistar  Financial  shall  sustain  the
burden  of  proving  that  (i) the  untrue  statement  or  omission
contained in the Preliminary  Offering  Memorandum was corrected in
the Final  Offering  Memorandum;  (ii) such  person was not sent or
given a copy of the Final Offering  Memorandum  which corrected the
untrue   statement   or   omission  at  or  prior  to  the  written
confirmation  of the sale of such Notes to such  person;  and (iii)
the Seller  satisfied  its  obligation  pursuant to Section 3(b) of
this  Agreement to provide to the Initial  Purchaser an  electronic
copy of the Final Offering  Memorandum  which  corrected the untrue
statement or omission.

      (b)  Indemnification   of  Seller  and  Navistar   Financial,
Directors and Officers.

           (a)  The  Initial  Purchaser  agrees  to  indemnify  and
      hold  harmless  the Seller and  Navistar  Financial  and each
      person,   if  any,   who  controls  the  Seller  or  Navistar
      Financial,  respectively, within the meaning of Section 15 of
      the 1933 Act or  Section 20 of the 1934 Act  against  any and
      all loss,  liability,  claim, damage and expense described in
      the indemnity  contained in  subsection  (a) of this Section,
      as incurred,  but only with respect to untrue  statements  or
      omissions,  or alleged untrue  statements or omissions,  made
      in  the  Offering   Memorandum   in  reliance   upon  and  in
      conformity with written  information  furnished to the Seller
      or Navistar Financial by the Initial Purchaser  expressly for
      use in the  Offering  Memorandum.  The  Seller  and  Navistar
      Financial  acknowledge  that the  statements set forth in the
      eighth  paragraph under the caption "Plan of Distribution" in
      the   Offering   Memorandum   constitute   the  only  written
      information  furnished to the Seller or Navistar Financial by
      the  Initial  Purchaser  expressly  for  use in the  Offering
      Memorandum.

           (b)  The  Initial  Purchaser  agrees  to  indemnify  and
      hold  harmless  the Seller and  Navistar  Financial  and each
      person,   if  any,   who  controls  the  Seller  or  Navistar
      Financial,  respectively, within the meaning of Section 15 of
      the 1933 Act or Section 20 of the 1934 Act,  against  any and
      all loss, liability,  claim, damage and expense, as incurred,
      arising from a breach of Section 1(b)(ii).

      (c)  Actions    against    Parties;    Notification.     Each
indemnified  party  shall give  notice as  promptly  as  reasonably
practicable  to each  indemnifying  party of any  action  commenced
against it in respect of which  indemnity may be sought  hereunder,
but  failure to so notify an  indemnifying  party shall not relieve
such  indemnifying  party  from  any  liability  hereunder  to  the
extent it is not  materially  prejudiced as a result thereof and in
any event  shall not  relieve  it from any  liability  which it may
have  otherwise  than on account of this  indemnity  agreement.  In
the case of parties  indemnified  pursuant  to Section  7(a) above,
counsel  to  the  indemnified  parties  shall  be  selected  by the
Initial   Purchaser  and,  in  the  case  of  parties   indemnified
pursuant  to  Section  7(b)  above,   counsel  to  the  indemnified
parties  shall be  selected by the Seller and  Navistar  Financial.
An  indemnifying  party may  participate  at its own expense in the
defense of any such  action;  provided,  however,  that  counsel to
the  indemnifying  party shall not (except  with the consent of the
indemnified  party) also be counsel to the  indemnified  party.  In
no event  shall the  indemnifying  parties  be liable  for fees and
expenses  of more  than  one  counsel  (in  addition  to any  local
counsel)  separate  from  their  own  counsel  for all  indemnified
parties in  connection  with any one action or separate but similar
or related  actions  in the same  jurisdiction  arising  out of the
same general  allegations or circumstances.  No indemnifying  party
shall,  without  the  prior  written  consent  of  the  indemnified
parties,  settle  or  compromise  or  consent  to the  entry of any
judgment with respect to any litigation,  or any  investigation  or
proceeding  by  any  governmental  agency  or  body,  commenced  or
threatened,   or  any  claim   whatsoever   in   respect  of  which
indemnification   or  contribution   could  be  sought  under  this
Section 7  or  Section 8  hereof  (whether  or not the  indemnified
parties  are actual or  potential  parties  thereto),  unless  such
settlement,  compromise  or consent (i)  includes an  unconditional
release of each  indemnified  party from all liability  arising out
of such  litigation,  investigation,  proceeding  or claim and (ii)
does not  include  a  statement  as to or an  admission  of  fault,
culpability   or  a  failure   to  act  by  or  on  behalf  of  any
indemnified party.

      SECTION (h)    Contribution.     If    the    indemnification
provided for in Section 7 hereof is for any reason  unavailable  to
or  insufficient  to hold harmless an indemnified  party in respect
of any losses,  liabilities,  claims,  damages or expenses referred
to therein,  then each  indemnifying  party shall contribute to the
aggregate amount of such losses,  liabilities,  claims, damages and
expenses  incurred by such indemnified  party, as incurred,  (i) in
such   proportion  as  is   appropriate  to  reflect  the  relative
benefits  received by the Seller and Navistar  Financial on the one
hand  and  the  Initial  Purchaser  on  the  other  hand  from  the
offering  of the Notes  pursuant to this  Agreement  or (ii) if the
allocation  provided by clause (i) is not  permitted by  applicable
law, in such  proportion as is  appropriate to reflect not only the
relative  benefits  referred  to in  clause  (i) above but also the
relative  fault of the Seller  and  Navistar  Financial  on the one
hand and of the Initial  Purchaser on the other hand in  connection
with the  statements  or omissions  which  resulted in such losses,
liabilities,  claims,  damages  or  expenses,  as well as any other
relevant equitable considerations.

      The  relative  benefits  received by the Seller and  Navistar
Financial  on the one hand and the Initial  Purchaser  on the other
hand in  connection  with the  offering  of the Notes  pursuant  to
this  Agreement  shall  be  deemed  to be in  the  same  respective
proportions  as the total net  proceeds  from the  offering  of the
Notes  pursuant  to  this  Agreement  (before  deducting  expenses)
received  by the Seller and the  discount  received  by the Initial
Purchaser,  bear to the  aggregate  initial  offering  price of the
Notes.

      The relative  fault of the Seller and  Navistar  Financial on
the one hand and the Initial  Purchaser  on the other hand shall be
determined by reference  to, among other  things,  whether any such
untrue or alleged  untrue  statement of a material fact or omission
or  alleged   omission  to  state  a  material   fact   relates  to
information  supplied by the Seller and Navistar Financial,  on the
one hand, or by the Initial  Purchaser,  on the other hand, and the
parties'  relative  intent,  knowledge,  access to information  and
opportunity to correct or prevent such statement or omission.

      Each  of the  Seller,  Navistar  Financial  and  the  Initial
Purchaser  agree  that  it  would  not be  just  and  equitable  if
contribution  pursuant  to this  Section 8 were  determined  by pro
rata  allocation  or by any other method of  allocation  which does
not  take  account  of the  equitable  considerations  referred  to
above in this Section 8.

      Notwithstanding   the  provisions  of  this  Section  8,  the
Initial  Purchaser  shall not be required to contribute  any amount
that in the  aggregate  exceeds  the total price at which the Notes
were  purchased  and resold by such  Initial  Purchaser  under this
Agreement,  less the  aggregate  amount of any  damages  which such
Initial  Purchaser has otherwise  been required to pay by reason of
such  untrue or alleged  untrue  statement  or  omission or alleged
omission or breach.

      No person guilty of fraudulent  misrepresentation (within the
meaning of  Section  11(f) of the 1933 Act)  shall be  entitled  to
contribution   from  any   person   who  was  not  guilty  of  such
fraudulent misrepresentation.

      For  purposes of this  Section 8, each  person,  if any,  who
controls  the  Initial  Purchaser  within the meaning of Section 15
of the 1933 Act or  Section  20 of the 1934 Act shall have the same
rights to contribution as the Initial  Purchaser,  and each person,
if any,  who  controls  either  the  Seller or  Navistar  Financial
within  the  meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act  shall  have the same  rights to  contribution  as the
Seller or Navistar Financial, as the case may be.

      SECTION (i)    Representations,  Warranties and Agreements to
Survive Delivery.  All  representations,  warranties and agreements
of  any  party   hereto   contained   in  this   Agreement   or  in
certificates  of  officers  of the  Seller and  Navistar  Financial
submitted  pursuant  hereto  shall  remain  operative  and in  full
force and effect,  regardless  of any  investigation  made by or on
behalf of the Initial  Purchaser or any controlling  person,  or by
or on  behalf  of the  Seller  and  Navistar  Financial,  and shall
survive delivery of the Notes to the Initial Purchaser.

      SECTION (j)    Termination of Agreement.

      (a)  Termination;   General.   The  Initial   Purchaser   may
terminate this Agreement,  by notice to the Seller,  at any time on
or prior to the  Closing  Date (i) if there  has  been,  since  the
time of execution of this Agreement or since the  respective  dates
as of which  information is given in the Offering  Memorandum,  any
material  adverse change in the condition,  financial or otherwise,
or in the earnings,  business affairs or business  prospects of the
Seller,  Navistar  Financial  or the  Trust  created  by the  Trust
Agreement  whether  or  not  arising  in  the  ordinary  course  of
business,  (ii)  if  there  has  occurred  any  downgrading  in the
rating of the securities of the Seller,  Navistar  Financial or the
Trust   by   any   "nationally    recognized   statistical   rating
organization"  (as  such  term  is  defined  for  purposes  of Rule
436(g)  under the 1933  Act) or any  public  announcement  that any
such  organization  has under  surveillance  or  review  any of the
securities  of the Seller,  Navistar  Financial or the Trust (other
than an  announcement  with  positive  implications  of a  possible
upgrading,  and no  implication  of a possible  downgrading of such
rating),  (iii) if there has occurred any material  adverse  change
in the  financial  markets in the  United  States or  financial  or
economic   conditions  in  the  United  States,   any  outbreak  of
hostilities or escalation  thereof or other calamity or crisis,  in
each case the  effect of which is such as to,  in the  judgment  of
the Initial  Purchaser,  materially impair the Initial  Purchaser's
ability to market the Notes or to  enforce  contracts  for the sale
of the Notes,  or (iv) if a banking  moratorium  has been  declared
by either Federal, New York or Illinois authorities.

      (b)  Liabilities.  If this  Agreement is terminated  pursuant
to this Section,  such  termination  shall be without  liability of
any  party to any  other  party  except as  provided  in  Section 4
hereof,  and  provided  further  that  Sections 1, 7, 8 and 9 shall
survive such termination and remain in full force and effect.

      SECTION (k)    Notices.     All     notices     and     other
communications  hereunder  shall be in writing  and shall be deemed
to have been duly given if mailed or  transmitted  by any  standard
form  of  telecommunication.   Notices  to  the  Initial  Purchaser
shall be directed to Banc One  Capital  Markets,  Inc. at One First
National Plaza, Chicago,  Illinois 60670,  attention of Christopher
J.  Gilker;  notices  to the  Seller  shall  be  directed  to Truck
Engine  Receivables  Financing  Co.,  2850 West Golf Road,  Rolling
Meadows,  Illinois  60008,  attention Vice President and Treasurer;
and  notices to  Navistar  Financial  shall be directed to Navistar
Financial  Corporation,  2850  West  Golf  Road,  Rolling  Meadows,
Illinois 60008, attention Vice President and Treasurer.

      SECTION (l)    No-Petition.   The  Initial  Purchaser  agrees
that  prior to a date  that is one year and one day  after the date
on which  all  amounts  owing  under  the  Notes  have been paid in
full,  it will not  commence,  or join with any other  creditor  of
the Seller in  commencing,  against  the  Seller,  any  bankruptcy,
insolvency,  arrangement,  reorganization,  receivership, relief or
similar   proceeding   under  any  bankruptcy  or  similar  law  or
assignment  for the  benefit  of  creditors  or any  marshaling  of
assets and liabilities.

      SECTION (m)    Parties.  This  Agreement  shall  inure to the
benefit of and be binding  upon the Initial  Purchaser,  the Seller
and Navistar  Financial and their  respective  successors.  Nothing
expressed or  mentioned  in this  agreement is intended or shall be
construed  to give any person,  other than the  Initial  Purchaser,
the Seller and Navistar  Financial and their respective  successors
and the  controlling  persons and officers and  directors  referred
to in Sections 7 and 8 and their  heirs and legal  representatives,
any legal or equitable  right,  remedy or claim under or in respect
of  this  Agreement  or  any  provision  herein   contained.   This
Agreement and all  conditions  and  provisions  hereof are intended
to  be  for  the  sole  and   exclusive   benefit  of  the  Initial
Purchaser,  the Seller and Navistar  Financial and their respective
successors,   and  said   controlling   persons  and  officers  and
directors  and their heirs and legal  representatives,  and for the
benefit  of no  other  person.  No  purchaser  of  Notes  from  the
Initial  Purchaser  shall be  deemed  to be a  successor  by reason
merely of such purchase.

      SECTION (n)    Governing Law. This  Agreement  shall governed
by and  construed  in  accordance  with  the  laws of the  State of
Illinois.

      SECTION (o)    Effect of  Headings.  The  Article and Section
headings herein are for  convenience  only and shall not affect the
construction hereof.

                      *     *     *     *     *

      If the foregoing is in accordance with your  understanding of
our  agreement,  please sign and return to the Seller a counterpart
hereof,  whereupon this  instrument,  along with all  counterparts,
will become a binding  agreement  between  the  Initial  Purchaser,
Navistar Financial, and the Seller in accordance with its terms.

                               Very truly yours,

                               TRUCK ENGINE  RECEIVABLES  FINANCING
CO.



                               By:
                                     Name:
                                     Its:


                               NAVISTAR FINANCIAL CORPORATION



                               By:
                                     Name:
                                     Its:


CONFIRMED AND ACCEPTED,
as of the date first above written:

BANC ONE CAPITAL MARKETS, INC.



By:             .....
      Name:     .....
      Its: Authorized Signatory



 

-------------------------------------------------------------------------------- SCHEDULE A INITIAL PURCHASERS ----------------------------------------------------- Name of Initial Principal Balance Purchaser of Notes ----------------------------------------------------- Banc One Capital Markets, Inc. $100,000,000 ------------------- $100,000,000 =================== -------------------------------------------------------------------------------- EXHIBIT A OPINION OF KIRKLAND & ELLIS (Counsel for Seller and Navistar Financial) -------------------------------------------------------------------------------- EXHIBIT B OPINION OF KIRKLAND & ELLIS (Counsel for Initial Purchaser)
 
 
                                                      EXHIBIT 10.67




                   SERIES 2000-1 SUPPLEMENT

                 Dated as of November 21, 2000

                              to

                           INDENTURE

                 Dated as of November 21, 2000

             TRUCK ENGINE RECEIVABLES MASTER TRUST

                           as Issuer

                              and


                     THE BANK OF NEW YORK,

                     as Indenture Trustee
               _________________________________

             TRUCK ENGINE RECEIVABLES MASTER TRUST
                      SERIES 2000-1 NOTES





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


                                iii

                       TABLE OF CONTENTS

                                                          Page

ARTICLE IDEFINITIONS.........................................1

ARTICLE IICREATION OF THE SERIES 2000-1 NOTES................8
      SECTION 2.01.  Designation.............................8
      SECTION 2.02.  Denomination, Form, Book Entry
      Registration and Transfer Restrictions.................8

ARTICLE IIISERVICING FEE.....................................9
      SECTION 3.01.  Servicing Compensation..................9

 

ARTICLE IVRIGHTS OF SERIES 2000-1 NOTEHOLDERS AND ALLOCATION AND APPLICATION OF COLLECTIONS........................10 SECTION 4.01. Monthly Interest.......................10 SECTION 4.02. Establishment of the Series 2000-1 Principal Funding Account and the Group I Accounts....10 SECTION 4.03. Allocation of Group Collections to the Group I Noteholders...................................12 SECTION 4.04. Subordination of the Certificates......15 SECTION 4.05. Negative Carry Account.................17 SECTION 4.06. Equalization Account...................17 ARTICLE VDISTRIBUTIONS AND REPORTSTO SERIES 2000-1 NOTEHOLDERS...........................................18 SECTION 5.01. Distributions..........................18 SECTION 5.02. Reports and Statements to Series 2000-1 Noteholders 19  
ARTICLE VIEARLY AMORTIZATION EVENTS.........................21 SECTION 6.01. Additional Early Amortization Events...21 SECTION 6.02. Recommencement of the Revolving Period.23 ARTICLE VIIOPTIONAL REDEMPTION, TRANSFER RESTRICTIONS.......23 SECTION 7.01. Optional Repurchase....................23 SECTION 7.02. Transfer Restrictions..................23 ARTICLE VIIIFINAL DISTRIBUTIONS, STATED FINAL MATURITY......24 SECTION 8.01. Acquisition of Notes Pursuant to Section 10.1 of the Indenture; Distributions Pursuant to  
Section 7.01 of this Series 2000-1 Supplement or Section 8.04 of the Indenture.........................24 SECTION 8.02. Stated Final Maturity Date.............25 ARTICLE IXMISCELLANEOUS PROVISIONS..........................25 SECTION 9.01. Ratification of Agreement..............25 SECTION 9.02. Counterparts...........................25 SECTION 9.03. GOVERNING LAW..........................25 -------------------------------------------------------------------------------- EXHIBITS Exhibit A-1 Form of 144A Global Note Exhibit A-2 Form of Regulation S Global Note Exhibit B Calculation of Base Amount SCHEDULES Schedule 1 Series 2000-1 Principal Funding Account and Group I Accounts -------------------------------------------------------------------------------- THIS SERIES 2000-1 SUPPLEMENT is dated as of November 21, 2000 (as amended, supplemented or otherwise modified, this "Series 2000-1 Supplement") to the Indenture dated as of November 21, 2000 (as amended, supplemented or otherwise modified, the "Indenture"), among Truck Engine Receivables Master Trust (the "Issuer" or the "Trust") and The Bank of New York, as Indenture Trustee (as indenture trustee and not in its individual capacity, the "Indenture Trustee"). Section 2.1 of the Indenture provides that the Issuer may from time to time issue one or more new Series of Notes. The Principal Terms of any new Series of Notes are to be set forth in a Series Supplement. Pursuant to this Series 2000-1 Supplement, the Issuer and the Indenture Trustee shall create the Series 2000-1 Notes and specify the Principal Terms thereof. The Servicer is acknowledging this Series 2000-1 Supplement to agree to the terms hereof applicable to the Servicer. ARTICLE I DEFINITIONS (1) Capitalized terms used, but not defined, in this Series 2000-1 Supplement shall have the respective meanings assigned them in Part I of Appendix A to the Trust Sale and Servicing Agreement dated as of November 21, 2000 among Navistar Financial Corporation, as servicer, the Seller and the Trust. Certain capitalized terms used in this Series 2000-1 Supplement shall have the respective meanings assigned them in Exhibit B to this Series 2000-1 Supplement. Whenever used in this Series 2000-1 Supplement, the following words shall have the following meanings: "Amortization Period" for the Series 2000-1 Notes will be the period commencing on the Amortization Period Commencement Date and ending on the earlier to occur of (1) payment of the entire principal balance of the Series 2000-1 Notes, (2) the recommencement of the Revolving Period under the circumstances set forth herein and (3) the Stated Final Maturity Date. "Amortization Period Commencement Date" shall be the date of the earliest of (i) the commencement of an Early Amortization Period and (ii) the Scheduled Amortization Period Commencement Date. "ASA Measuring Period" means, for any Cut-Off Date falling in a Group I Amortization Period, the Collection Period ending on that Cut-Off Date (or the portion thereof falling after the Group I Amortization Calculation Date, in the case of the first Cut-Off Date falling in the Group I Amortization Period). "Available Subordinated Amount" means, (x) as of the Group I Amortization Calculation Date, the product of (a) the Investor Allocation Percentage, multiplied by (b) the result of: -------------------------------------------------------------------------------- 7 (1) the product of (A) the unpaid balance of Receivables at the opening of business on the Group I Amortization Calculation Date and (B) the Group Collection Allocation Percentage on that date; minus (2) the sum of (A) the lesser of (1) the Base Amount and (2) the Net Invested Amount and (B) the sum of the Carrying Cost Receivables Reserve and the Negative Carry Receivables Reserve, each at the opening of business on the Group I Amortization Calculation Date and (y) for any Cut-Off Date falling in a Group I Amortization Period, an amount equal to (a) the Available Subordinated Amount as of the Group I Amortization Calculation Date, minus (b) the amount of the Investor Allocable Dilution/Warranty Amount with respect to the ASA Measuring Period ending on that Cut-Off Date, plus (c) the amount of any Investor Allocable Dilution/Warranty Adjustments with respect to the ASA Measuring Period ending on that Cut-Off Date (to the extent not applied to reinstate Investor Dilution/Warranty Charge-Offs). In no event will the Available Subordinated Amount at any time be less than zero or greater than the Available Subordinated Amount calculated as of the Group I Amortization Calculation Date. "Base Amount" shall mean the amount calculated as set forth in Part I of Exhibit B hereto. "Calculation Agent" shall mean the Indenture Trustee or any other Calculation Agent selected by the Seller which is reasonably acceptable to the Indenture Trustee. "Carrying Cost Account Specified Amount" means the product of (a) the amount of Current Carrying Costs payable on the Payment Date relating to the Collection Period during which such Business Day falls multiplied by (b) 2. "Current Carrying Costs" shall mean, for any Payment Period, the sum of (i) the Monthly Interest on the Series 2000-1 Notes that will be payable on the next Payment Date, (ii) the amount of interest payable on the next Payment Date on all Notes in Series other than Series 2000-1 that are within Group I and (iii) the Monthly Servicing Fee that will be payable on the next Payment Date. "Cut-Off Date" means the last day of any Collection Period or ASA Measuring Period. "Dilution/Warranty Allocation Percentage" means, for any ASA Measuring Period, for all Series in Group I, the percentage equivalent of a fraction the numerator of which is the Group Invested Amount and the denominator of which is the sum of the principal balances of all outstanding Series, in each case determined as of the beginning of such ASA Measuring Period. "Group I Amortization Calculation Date" means the day before a Group I Amortization Period begins. "Group I Amortization Event" means an event which is an Early Amortization Event for all Series in Group I. "Group I Amortization Period" means the period, if any, during which all Series in Group I are in an Early Amortization Period. "Group Collection Allocation Percentage" means, with respect to a Business Day, the amount calculated as set forth in Part II of Exhibit B hereto. "Group Collections" means, with respect to a Business Day, an amount equal to the sum of (i) the product of (a) the Group Collection Allocation Percentage on that Business Day and (b) Collections received in the Collection Account on that Business Day and (ii) if any Series Amortization Period or Group I Amortization Period has commenced and is continuing, all amounts then on deposit in the Equalization Account. "Group I Final Allocation Date" shall mean the first day falling in a Group I Amortization Period on which there are funds on deposit in the Carrying Cost Account, the Negative Carry Account and the Principal Funding Accounts that, in the aggregate, equal or exceed the Investor Repayment Amount and any Servicing Fee payable on the first Payment Date falling after that date. "Group Invested Amount" means, at any time, (a) the sum of the aggregate principal balances of each Series in Group I (including the aggregate principal balance of the Series 2000-1 Notes), all determined at that time, minus (b) the aggregate amount of Investor Allocable Losses allocated to all Series in Group I plus (c) the aggregate amount of Investor Allocable Recoveries allocated to all Series in Group I. "Holdback Account Termination Date" will be the earlier to occur of (i) the date that falls twelve months after the beginning of the Group I Amortization Period and (ii) the Group I Final Allocation Date. "Investment Proceeds" shall mean, with respect to any Payment Date, all interest and other investment earnings (net of losses and investment expenses) with respect to funds on deposit in the Trust Accounts, the Group Accounts and the Principal Funding Accounts. "Investor Allocable Dilution/Warranty Adjustments" means, for any ASA Measuring Period, the product of (a) the aggregate amount of the Transfer Deposit Amount received during that ASA Measuring Period relating to Dilution or Warranty Set-Offs that occurred during or prior to that ASA Measuring Period, multiplied by (b) the Dilution/Warranty Allocation Percentage as of the beginning of that ASA Measuring Period. "Investor Allocable Dilution/Warranty Amount" means, for any ASA Measuring Period, the product (a) the sum of (1) of the aggregate amount of Dilution for that ASA Measuring Period as to which the Seller has not paid the Transfer Deposit Amount and (2) the Warranty Set-Off for that ASA Measuring Period as to which the Seller has not paid the Transfer Deposit Amount multiplied by (b) the Dilution/Warranty Allocation Percentage as of the beginning of that ASA Measuring Period, multiplied by (c) the Investor Allocation Percentage as of the beginning of that ASA Measuring Period. "Investor Allocable Losses" means, for any ASA Measuring Period, the product of (a) the Net Losses for that ASA Measuring Period, multiplied by (b) the Loss Allocation Percentage as of the beginning of that ASA Measuring Period. "Investor Allocable Recoveries" means, for any ASA Measuring Period, the product of (a) the Net Recoveries for that ASA Measuring Period, multiplied by (b) the Loss Allocation Percentage as of the beginning of that ASA Measuring Period, multiplied by (c) the Investor Allocation Percentage as of the beginning of that ASA Measuring Period. "Investor Allocation Percentage" means, on any Business Day falling in any Series Amortization Period or the Group I Amortization Period, a fraction (expressed as a percentage, which in any event may not exceed 100% or be less than 0%) (a) the numerator of which is the Net Invested Amount as of the beginning of the Series Amortization Period or the Group I Amortization Calculation Date, as applicable, and (b) the denominator of which is the Base Amount as of (i) that Business Day, if it falls in any Series Amortization Period, and (ii) otherwise, the Group I Amortization Calculation Date. If multiple Series Amortization Periods are in effect at the same time, the highest Investor Allocation Percentage for any of them will control. "Investor Dilution/Warranty Charge-Offs" means, for any ASA Measuring Period, if the Available Subordinated Amount is zero at the end of such ASA Measuring Period, the excess (if any) of (x) the Investor Allocable Dilution/Warranty Amount for such ASA Measuring Period, over (y) the Available Subordinated Amount as of the beginning of such ASA Measuring Period. "Investor Repayment Amount" means, on any Business Day, the sum of (a) the outstanding principal balance of the Series 2000-1 Notes and all Notes in each other Series in Group I, plus (b) the interest known to be payable on the Series 2000-1 Notes and all Notes in each other Series in Group I on the first Payment Date falling on or after that date. "LIBOR Determination Date" shall mean the second London Business Day prior to the Payment Date on which that Payment Period begins. "London Business Day" shall mean a day upon which dealings in deposits in dollars are transacted in the London interbank market. "Loss Allocation Percentage" means, for Group I, as of the beginning of any ASA Measuring Period, the percentage equivalent of a fraction (a) the numerator of which is (i) the Group Invested Amount plus (ii) the Carrying Cost Receivables Reserve (as defined in Exhibit B hereto), and (b) the denominator of which is (i) the greater of (x) the sum of (A) the principal balances of all outstanding Series plus (B) the Carrying Cost Receivables Reserve plus (C) any reserves for Series in Groups other than Group I which are identified for inclusion in calculation of the Loss Allocation Percentage and (y) the aggregate unpaid balance of all Receivables, in each case determined as of the beginning of that ASA Measuring Period. "Monthly Interest" shall have the meaning specified in Section 4.01(a). "Monthly Servicing Fee" shall have the meaning specified in Section 3.01. "Negative Carry Account" shall have the meaning specified in Section 4.02(c) "Negative Carry Account Funded Date" means the earliest to occur of (i) the date on which the amount on deposit in the Negative Carry Account equals the sum of clause (a) and clause (b) of the definition of Negative Carry Receivables Reserve, (ii) the date on which (a) the amount on deposit in the Equalization Account equals at least the sum of the Group Invested Amount and the Carrying Cost Receivables Reserve and (b) either (1) no Receivables remain unpaid which are owned by the Trust other than Eligible Receivables which are more than 30 days past due or which are Ineligible Receivables or (2) the unpaid balance of Eligible Receivables which remain outstanding and which are less than 30 days past due is less than the Negative Carry Receivables Reserve and (iii) the Group I Amortization Period Commencement Date. "Net Invested Amount" means, on any Business Day, the Group Invested Amount minus the sum of (a) the balances on deposit in the Equalization Account and the Principal Funding Accounts with respect to Series in Group I and (b) the Aggregate Retained Balances. "Net Losses" means, with respect to any ASA Measuring Period, an amount equal to the excess (if any) of (a) the unpaid balance of Receivables that became Write-Offs during that ASA Measuring Period, over (b) the amount of Recoveries received during that ASA Measuring Period. "Net Recoveries" means, with respect to any ASA Measuring Period, an amount equal to the excess (if any) of (a) the amount of Recoveries received in that ASA Measuring Period over (b) the amount of Receivables that became Write-Offs in that ASA Measuring Period. "One -Month LIBOR" means, with respect to any Payment Period, the rate per annum equal to the rate at which deposits in dollars having a one-month maturity are offered, as such rate appears on Telerate Page 3750 as of 11:00 a.m., London time, on the LIBOR Determination Date. Notwithstanding the foregoing, in the event that no rate for one-month dollar deposits appears on Telerate Page 3750 on the applicable date for determining One- Month LIBOR with respect to any Payment Date, then One-Month LIBOR shall be determined as the arithmetic mean (rounded upwards to the nearest one-sixteenth of 1%) of the rates at which one-month dollar deposits are offered to prime banks in the London interbank market by four major banks in that market selected by the Indenture Trustee as of the determination date and time specified above. If fewer than two quotations are provided by such banks, then One-Month LIBOR shall be determined as the arithmetic mean (rounded upwards as above) of the rates at which one-month loans in dollars are offered to leading European banks by three major banks in New York City selected by the Indenture Trustee as of 11:00 a.m. New York City time on the determination date specified above. If the Trust is unable to determine One-Month LIBOR using any of the above methods, One-Month LIBOR shall be the rate as defined for the previous Payment Period. "Payment Period" shall mean, with respect to any Payment Date, the period from and including the Payment Date immediately preceding such Payment Date (or, in the case of the initial Payment Date, the Closing Date) to but excluding such Payment Date. "Principal Deposit Amount" shall mean, for any Collection Period falling in the Amortization Period or an Early Amortization Period, until an amount equal to the outstanding principal balance of the Series 2000-1 Notes has been deposited in the Series 2000-1 Principal Funding Account, the outstanding principal balance of the Series 2000-1 Notes. "Principal Payment Date" means each Payment Date falling in the Amortization Period or an Early Amortization Period (beginning with the Payment Date falling in the Collection Period after the Collection Period in which the Amortization Period or Early Amortization Period begins). "Redemption Price" equals the sum of (1) the aggregate outstanding principal balance of the Series 2000-1 Notes to be repurchased on the Business Day preceding the Payment Date on which the repurchase is scheduled to be made and (2) Monthly Interest. "Revolving Period" shall mean the period beginning at the close of business on the Closing Date and ending on the earlier of (a) the close of business on the day immediately preceding the Amortization Period Commencement Date and (b) the close of business on the day immediately preceding the day on which an Early Amortization Event occurs; provided, however, that the Revolving Period may recommence in certain circumstances as provided in Section 6.02 hereof. "Required Holders" means, for Series 2000-1, at least a majority of the principal balance of the Series 2000-1 Notes. "Scheduled Amortization Period Commencement Date" means November 1, 2005. "Series 2000-1 Noteholders" shall mean the Holders of Series 2000-1 Notes. "Series 2000-1 Note Owner" shall mean, with respect to a Series 2000-1 Note in Book Entry form, any person who is a beneficial owner of such Series 2000-1 Note. "Series 2000-1 Note Rate" shall mean One-Month LIBOR plus 0.95%. "Series 2000-1 Notes" shall mean the Floating Rate Trade Receivables Backed Notes, Series 2000-1, substantially in the form of Exhibit A. "Series 2000-1 Principal Funding Account" shall have the meaning specified in Section 4.02. "Series Allocation Percentage" means, for the Series 2000-1 Notes, on any Business Day prior to a Group I Amortization Period, the result of (1) the outstanding principal balance of the Series 2000-1 Notes as of that Business Day divided by (2) the Group Invested Amount as of that Business Day; and on any Business Day during a Series Amortization Period, the Series Allocation Percentage as of the Business Day prior to the Amortization Period Commencement Date for the Series 2000-1 Notes. "Series Amortization Period" means (a) as to Series 2000-1, the Amortization Period or any Early Amortization Period and (b) as to any other Series, any period identified in the related Series Supplement for repayment of the principal balance of that Series. "Series Issuance Date" shall mean November 21, 2000. "Servicing Fee Rate" shall mean 0.25% with respect to Series 2000-1. "Stated Final Maturity Date" shall mean December 15, 2006. "Telerate Page 3750" shall mean the display page so designated on the Bridge Information Systems Telerate Service (or such other pages as may replace that page on that service or such other service or services as may be nominated by the British Banker's Association for the purpose of displaying London interbank offered rates for dollar deposits). "Unpaid Dilution" means the aggregate amount of Dilution for an ASA Measuring Period as to which the Seller has not paid the Transfer Deposit Amount required by the Trust Sale and Servicing Agreement. "Warranty Set-Offs" means, with respect to any Collection Period or ASA Measuring Period, the aggregate amount by which Ford has reduced the balance of, or withheld payment on, Receivables as a result of the failure of International to pay to Ford any amount asserted by Ford to be due to Ford in respect of any Warranty Arrangement. (2) The words "hereof," "herein" and "hereunder" and words of similar import when used in this Series 2000-1 Supplement shall refer to this Series 2000-1 Supplement as a whole and not to any particular provision of this Series 2000-1 Supplement; references to any Article, Section or Exhibit are references to Articles, Sections and Exhibits in or to this Series 2000-1 Supplement unless otherwise specified; and the term "including" means "including without limitation." ARTICLE II CREATION OF THE SERIES 2000-1 NOTES SECTION 1.2. Designation. (1) There is hereby created a Series of Notes to be issued pursuant to the Indenture and this Series 2000-1 Supplement to be known as the "Floating Rate Trade Receivables Backed Notes, Series 2000-1" (the "Series 2000-1 Notes"). The Series 2000-1 Notes shall be part of Group I. (2) In the event that any term or provision contained herein shall conflict with or be inconsistent with any term or provision contained in the Indenture, the terms and provisions of this Series 2000-1 Supplement shall govern. (3) The Issuer shall issue and the Indenture Trustee shall authenticate and deliver to the Issuer the Series 2000-1 Notes in the initial aggregate principal amount of $100,000,000. (4) Notwithstanding Section 2.15(c) of the Indenture, the Series 2000-1 Notes shall be issued in the form of Book-Entry Notes, and Sections 2.10, 2.11 and 2.12 of the Indenture shall apply to the Series 2000-1 Notes. SECTION 1.3. Denomination, Form, Book Entry Registration and Transfer Restrictions. (1) Upon original issuance, the Series 2000-1 Notes shall be issued as Book Entry Notes in the form of typewritten Global Notes ("Global Notes"). (2) The Global Notes in substantially the form set forth in Exhibit A-1 shall represent the Series 2000-1Notes which have been issued and sold to the initial purchasers pursuant to the Purchase Agreement and initially resold in reliance upon the exemption from registration under the Securities Act provided by Rule 144A under the Securities Act (the "Rule 144A Global Note"). (3) The Global Notes in substantially the forms set forth in Exhibit A-2 shall initially represent the Series 2000-1 Notes which have been initially sold to non-U.S. Persons in reliance on the exemption from registration under the Securities Act provided by Regulation S (the "Temporary Regulation S Global Notes"). The Temporary Regulation S Global Notes will not be exchangeable for Definitive Notes in any circumstances. (4) Interests in the Temporary Regulation S Global Notes may be exchanged in accordance with the terms thereof for interests in the Permanent Regulation S Global Notes not earlier than the day following the last day of the Distribution Compliance Period (the "Exchange Date"). Such exchange shall be made only upon certification as to non-U.S. beneficial ownership. (5) On or before the Exchange Date, the Indenture Trustee will execute one or more Global Notes (the "Permanent Regulation S Global Notes") to be issued and delivered in exchange for all or part of the interests in the Temporary Regulation S Global Notes upon presentation to the Indenture Trustee through the Clearing Agency by Euroclear and Clearstream of a certification of non-U.S. beneficial ownership, substantially in the form attached to the Temporary Regulation S Global Note. (6) Each of the Global Notes will be in fully registered form, without interest coupons attached. Each of the Global Notes will be registered on the Note Register in the name of the Clearing Agency. ARTICLE III SERVICING FEE SECTION 1.4. Servicing Compensation. The monthly servicing fee with respect to Series in Group I (including Series 2000-1) (the "Monthly Servicing Fee") shall be payable to the Servicer, in arrears, on each Payment Date in respect of any Collection Period (or portion thereof) occurring on or prior to the earlier of the first Payment Date following the Stated Final Maturity Date and the first Payment Date on or after the Group I Final Allocation Date, in an amount equal to one-twelfth of the product of (a) the Servicing Fee Rate, (b) the Group Collection Allocation Percentage and (c) the aggregate balance of Receivables held in the Trust, in each case as of the last Business Day of the Collection Period preceding such Payment Date. The Monthly Servicing Fee shall be payable to the Servicer solely to the extent amounts are available for distribution in accordance with the terms of the Trust Sale and Servicing Agreement and Section 4.03(a) of this Series 2000-1 Supplement. The Monthly Servicing Fee shall be withdrawn from the Carrying Cost Account and paid to the Servicer on each Payment Date prior to any withdrawal or payment in respect of Monthly Interest pursuant to Section 5.01(a)(i). ARTICLE IV RIGHTS OF SERIES 2000-1 NOTEHOLDERS AND ALLOCATION AND APPLICATION OF COLLECTIONS SECTION 1.5. Monthly Interest. (1) Interest shall accrue on the Series 2000-1 Notes at the Series 2000-1 Note Rate and shall be payable on each Payment Date, to the extent funds are available as provided in Section 4.03 of this Series 2000-1 Supplement. "Monthly Interest" with respect to the Series 2000-1 Notes shall be an amount equal to the sum of (a) the product of (i) the Series 2000-1 Note Rate, (ii) the outstanding principal balance of the Series 2000-1 Notes as of the close of business on the preceding Payment Date (after giving effect to all repayments of principal made to Series 2000-1 Noteholders on such preceding Payment Date, if any) and (iii) a fraction, the numerator of which is the actual number of days elapsed in such Payment Period and the denominator of which is 360 and (b) any additional interest described in the second following sentence. Monthly Interest due on any Payment Date will accrue from and including the preceding applicable Payment Date or, in the case of the first Payment Date, from and including the Closing Date, to but excluding such Payment Date. Monthly Interest due but not paid on any Payment Date will be due on the next Payment Date with additional interest on such unpaid amount, which additional interest will also accrue at the Series 2000-1 Note Rate. SECTION 1.6. Establishment of the Series 2000-1 Principal Funding Account and the Group I Accounts. (1) The Servicer, for the benefit of the Noteholders, shall establish and maintain in the name of the Indenture Trustee, on behalf of the Trust, an Eligible Deposit Account (the "Series 2000-1Principal Funding Account"), which shall be identified as the "Principal Funding Account for Truck Engine Receivables Master Trust, Series 2000-1" and shall bear a designation clearly indicating that the funds deposited therein are held for the benefit of the Series 2000-1 Noteholders. All interest and other investment earnings (net of losses and investment expenses) on funds on deposit therein shall be deposited in the Series 2000-1 Principal Funding Account. (2) The Servicer, for the benefit of the Noteholders, shall establish and maintain in the name of the Indenture Trustee, on behalf of the Trust, an Eligible Deposit Account (the "Carrying Cost Account"), which shall be identified as the "Carrying Cost Account for Truck Engine Receivables Master Trust, Group I" and shall bear a designation clearly indicating that the funds deposited therein are held for the benefit of the Noteholders of those Series which are part of Group I. All interest and other investment earnings (net of losses and investment expenses) on funds on deposit therein shall be deposited in the Carrying Cost Account. (1) (3) The Servicer, for the benefit of the Noteholders, shall establish and maintain in the name of the Indenture Trustee, on behalf of the Trust, an Eligible Deposit Account (the "Negative Carry Account"), which shall be identified as the "Negative Carry Account for Truck Engine Receivables Master Trust, Group I" and shall bear a designation clearly indicating that the funds deposited therein are held for the benefit of the Noteholders of those Series which are part of Group I. The Negative Carry Account may be a sub-account of the Equalization Account, although references herein to the Equalization Account will not inlcude the Negative Carry Account. All interest and other investment earnings (net of losses and investment expenses) on funds on deposit therein shall be deposited in the Collection Account. On any day on which funds on deposit in the Negative Carry Account exceed the sum of clause (a) and (b) in the definition of Negative Carry Receivables Reserve, the Servicer shall instruct the Indenture Trustee to deposit such excess in the Collection Account (and such funds shall be deemed to be Collections). (4) The Servicer, for the benefit of the Noteholders, shall establish and maintain in the name of the Indenture Trustee, on behalf of the Trust, an Eligible Deposit Account (the "Holdback Account"), which shall be identified as the "Holdback Account for Truck Engine Receivables Master Trust, Group I" and shall bear a designation clearly indicating that the funds deposited therein are held for the benefit of the Noteholders of those Series which are part of Group I. All interest and other investment earnings (net of losses and investment expenses) on funds on deposit therein shall be deposited in the Holdback Account. (5) The Servicer, for the benefit of the Noteholders, shall establish and maintain in the name of the Indenture Trustee, on behalf of the Trust, an Eligible Deposit Account (the "Equalization Account"), which shall be identified as the "Equalization Account for Truck Engine Receivables Master Trust, Group I" and shall bear a designation clearly indicating that the funds deposited therein are held for the benefit of the Noteholders of those Series which are part of Group I. All interest and other investment earnings (net of losses and investment expenses) on funds on deposit therein shall be deposited in the Collection Account and deemed to be Collections. (6) The Carrying Cost Account, the Negative Carry Account, the Holdback Account, and the Equalization Account are collectively referred to herein as the "Group I Accounts." At the written direction of the Servicer, funds on deposit in the Series 2000-1 Principal Funding Account and the Group I Accounts shall be invested by the Indenture Trustee in Eligible Investments selected by the Servicer that will mature so that such funds will be available on or before the close of business on the Business Day before the following Payment Date (or on or before 10:00 a.m. on such following Payment Date in the case of Eligible Investments in respect of which the Indenture Trustee is the obligor). All such Eligible Investments in respect of the Series 2000-1 Principal Funding Account and the Group I Accounts shall be held by the Indenture Trustee for the benefit of the Series 2000-1 Noteholders and the Noteholders of those Series which are part of Group I, respectively. In no event shall the Indenture Trustee be liable for the selection of Eligible Investments or for investment losses incurred thereon. The Indenture Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any Eligible Investment prior to its stated maturity or failure of the Servicer to provide timely written direction. (7) The Indenture Trustee shall possess all right, title and interest in and to all funds on deposit from time to time in, and all Eligible Investments credited to, the Series 2000-1 Principal Funding Account, the Group I Accounts and in all proceeds of each. The Series 2000-1 Principal Funding Account and the Group I Accounts shall be under the sole dominion and control of the Indenture Trustee for the benefit of the Series 2000-1 Noteholders and the Noteholders of those Series which are part of Group I, respectively. If, at any time, the Series 2000-1 Principal Funding Account or any Group I Account ceases to be an Eligible Deposit Account, the Indenture Trustee (or the Servicer on its behalf) shall within ten Business Days (or such longer period, not to exceed 30 calendar days, as to which each Rating Agency has consented) establish and maintain in the name of the Indenture Trustee a new Principal Funding Account or a new Group I Account, as applicable (which shall be an Eligible Deposit Account and which shall bear a designation clearly indicating that the funds deposited therein are held for the benefit of the Series 2000-1 Noteholders or the Noteholders of those Series which are part of Group I, as applicable) and shall transfer any cash and/or any investments to such new Principal Funding Account or Group I Account, as applicable. Neither the Seller, the Servicer nor any person or entity claiming by, through or under the Seller, the Servicer or any such person or entity shall have any right, title or interest in, or any right to withdraw any amount from, the Series 2000-1 Principal Funding Account or any Group I Account, except as expressly provided herein. Schedule 1 to this Series 2000-1 Supplement, which is hereby incorporated into and made part of this Series 2000-1 Supplement, identifies the Series 2000-1 Principal Funding Account and each Group I Account by setting forth the account number of such account, the account designation of such account and the name of the institution with which such account has been established. If a substitute Principal Funding Account or a substitute for any of the Group I Accounts is established pursuant to this Section, the Servicer shall provide to the Indenture Trustee an amended Schedule 1, setting forth the relevant information for such substitute Principal Funding Account or Group I Account. (8) Pursuant to the authority granted to the Servicer in Section 8.2 of the Indenture and Section 3.1(a) and Section 4.2 of the Trust Sale and Servicing Agreement, the Servicer shall have the power, revocable by the Indenture Trustee to instruct the Indenture Trustee to make withdrawals and payments from the Series 2000-1 Principal Funding Account or any of the Group I Accounts for the purposes of carrying out the Servicer's or Indenture Trustee's duties hereunder. SECTION 1.7. Allocation of Group Collections to the Group I Noteholders. On each Business Day, Group Collections will be allocated to all Series in Group I in the following amounts and priorities: (1) Prior to Group I Amortization Period. On each Business Day (other than a Business Day falling in a Group I Amortization Period), the Servicer shall allocate to Group I an amount equal to the Group Collections for the following purposes, in the priority indicated (and to the extent Group Collections are available): (1) first, to the Carrying Cost Account to the extent that the balance therein is less than the Carrying Cost Account Specified Amount. (2) second, if the Net Invested Amount is greater than the Base Amount, to the Equalization Account in an amount sufficient to reduce the Net Invested Amount to an amount equal to the greater of (a) zero and (b) the Base Amount; provided that during any Series Amortization Period for any Series in Group I, funds that would otherwise be required to be deposited (or retained) in the Equalization Account pursuant to this priority second shall instead be deposited in the Principal Funding Account for the related Series (and, if there is more than one such Series, shall be divided ratably between such Series, on the basis of the respective Principal Deposit Amounts of each such Series), but the amount deposited in any Principal Funding Account shall in no event cause the balance therein to exceed the applicable Principal Deposit Amount (and any remaining amount not deposited in a Principal Funding Account because of this limitation shall be shared among the other Series in Group I (ratably as described above), in each case to the extent that it will not cause the balance in each Principal Funding Account to exceed the applicable Principal Deposit Amount, and any remaining amount shall be deposited (or retained) in the Equalization Account); (3) third, if the Base Amount is less than zero after the allocations pursuant to priority second, to the Equalization Account until the amount on deposit in the Equalization Account equals the result of (a) the Group Invested Amount minus (b) the balances on deposit in the Principal Funding Accounts for all Series in Group 1 minus (c) the Aggregate Retained Balances plus (d) the Carrying Cost Receivables Reserve; (4) fourth, if the Base Amount is less than zero after the allocations pursuant to priority third and if the Negative Carry Account Funded Date has not occurred, to the Negative Carry Account until the aggregate amount on deposit in the Negative Carry Account equals the sum of clause (a) and clause (b) of the definition of Negative Carry Receivables Reserve; (5) fifth, during any Series Amortization Period for any Series in Group I, to the principal funding account for such Series until the amount on deposit in such Principal Funding Account for such Series equals the Principal Deposit Amount; provided that (1) the amount allocated to all Series in the aggregate pursuant to this priority fifth on any Business Day shall not exceed the product of (x) the Investor Allocation Percentage, multiplied by (y) the excess of Group Collections over the amounts allocated on that Business Day pursuant to priorities first through fourth, and (2) if more than one Series in Group I is in a Series Amortization Period, the amount so allocated shall be divided ratably between each Series, on the basis of the respective Principal Deposit Amounts of each such Series, but the amount deposited in the Principal Funding Account for each Series shall in no event cause the balance therein to exceed the applicable Principal Deposit Amount (and any remaining amount not deposited in a Principal Funding Account because of this limitation shall be shared among the other Series in Group I (ratably as described above), in each case to the extent that it will not cause the balance therein to exceed the applicable Principal Deposit Amount); and (6) sixth, the balance to the Seller in respect of the Certificates, provided that following the occurrence of the Early Amortization Event set forth in Section 6.01(a)(vi), funds otherwise allocable to the Seller will instead be deposited in the Equalization Account in accordance with Section 6.01(a)(vi); and provided further, that the Seller may, from time to time, direct the Servicer to direct the Indenture Trustee to hold all or part of the funds to be paid pursuant to this priority sixth in the Collection Account to be applied as Group Collections (or applied as collections for a Series which is not in Group I) on the following Business Day. (2) During Group I Amortization Period. On each Business Day falling in a Group I Amortization Period and prior to or on the Group I Final Allocation Date, the Servicer shall allocate Group Collections to the following purposes, in the priority indicated (and to the extent of the availability of Group Collections): (1) first, to the Carrying Cost Account to the extent that the balance therein is less than the Carrying Cost Account Specified Amount. (2) second, to each Principal Funding Account and to the Seller (or, prior to the Holdback Account Termination Date, to the Holdback Account) in the following amounts: (1) the amount to be transferred to the Principal Funding Accounts in the aggregate shall equal the product of (i) the Investor Allocation Percentage, multiplied by (ii) the excess of Group Collections over the amount allocated on that Business Day pursuant to priority first, provided that such amount shall be divided among the Principal Funding Accounts for all Series in Group I on the basis of the respective outstanding principal balance of each such Series, and provided further that the amount so deposited in each Principal Funding Account shall in no event cause the balance therein to exceed the Principal Deposit Amount for that Series; and (2) the amount to be transferred to the Seller (or, prior to the Holdback Account Termination Date, to the Holdback Account) shall equal the product of (i) 100% minus the Investor Allocation Percentage multiplied by (ii) the excess of Group Collections over the amount allocated on that Business Day pursuant to priority first; and (3) third, the balance to the Seller (or at the Seller's option, to a Series in a group other than Group I), provided that prior to the Holdback Account Termination Date, amounts payable to the Seller pursuant to this priority third shall be deposited into the Holdback Account and held as provided below. SECTION 1.8. Subordination of the Certificates. (1) Allocation of Dilution and Warranty Set-Offs. The Certificates will be subordinated to the Notes in the allocation of Dilution and Warranty Set-Offs to the extent described below and in right of payment to the extent described under Section 4.03. (1) Prior to a Group I Amortization Period, all Dilution as to which the Seller has not paid the Transfer Deposit Amount and all Warranty Set-Offs will reduce the principal amount of the Certificates. During a Group I Amortization Period, all Dilution as to which the Seller has not paid the Transfer Deposit Amount and all Warranty Set-Offs will be allocated to the Certificates until the Available Subordinated Amount has been reduced to zero. (2) The Available Subordinated Amount will be reduced on each Cut-Off Date during a Group I Amortization Period by the amount of the Investor Allocable Dilution/Warranty Amount with respect to the ASA Measuring Period ending on that Cut-Off Date but will be reinstated in the amount of any Investor Allocable Dilution/Warranty Adjustments with respect to that ASA Measuring Period (to the extent not applied to reinstate Investor Dilution/Warranty Charge-Offs). In no event will the Available Subordinated Amount at any time be less than zero or greater than the initial Available Subordinated Amount as of the Group I Amortization Calculation Date. (3) In each Monthly Report required to be delivered during each Group I Amortization Period, if any, the Servicer will calculate the Investor Dilution/Warranty Charge-Offs, if any, for the most recently ended ASA Measuring Period. If the Investor Dilution/Warranty Charge-Offs calculated in any Monthly Report exceed zero, the Group Invested Amount will be reduced by the amount of the Investor Dilution/Warranty Charge-Offs with effect from the related Payment Date. Any such reduction shall be allocated to the principal balance of each Series in Group I ratably in accordance with such principal balances. (4) In each Monthly Report required to be delivered during a Group I Amortization Period, the Servicer will also calculate the Investor Allocable Dilution/Warranty Amount and the Investor Allocable Dilution/Warranty Adjustments for the most recently ended ASA Measuring Period. If the Investor Allocable Dilution/Warranty Amount calculated in any Monthly Report is greater than zero, and there are funds in the Holdback Account, then those funds (up to an amount equal to the amount of the Investor Allocable Dilution/Warranty Amount), will be applied (A) first, to cover Current Carrying Costs, (B) second, to the Principal Funding Accounts to cover the Principal Deposit Amounts with respect to all outstanding Series in Group I (ratably, in accordance with such Principal Deposit Amounts), (C) third, to cover any additional amounts owed to Noteholders of any Series in Group I and (D) fourth, to cover any Servicing Fee owed to Navistar Financial or any of its affiliates. (5) If the Available Subordinated Amount or the Group Invested Amount has been reduced on account of any Investor Allocable Dilution/Warranty Amount, then (A) any Investor Allocable Dilution/Warranty Adjustments with respect to any Collection Period ending after the reduction takes place and (B) any additional funds deposited in the Holdback Account shall be allocated (x) first, to reinstate the Group Invested Amount and (y) second, to reinstate the Available Subordinated Amount, in each case to the extent not previously reinstated. Any funds allocated as provided in the preceding sentence on any day shall be applied in accordance with the priorities set forth in the preceding paragraph. (2) Allocation of Losses. The Certificates will not be subordinated to the Series 2000-1 Notes in the allocation of Write-Offs. Instead, any Write-Offs will be allocated between the Certificateholders and the Noteholders, as described in this Section 4.04(b). (1) During a Group I Amortization Period, Net Losses for an ASA Measuring Period (including any Write-Off which gives rise to a Group I Amortization Period) will be allocated to all Series of Notes in Group I in an amount equal to the Investor Allocable Losses. (2) In each Monthly Report required to be delivered during each Group I Amortization Period, if any, the Servicer will calculate the Investor Allocable Losses and the Investor Allocable Recoveries for the most recently ended ASA Measuring Period. If there are any Investor Allocable Losses for an ASA Measuring Period, the Group Invested Amount will be reduced by the amount of such Investor Allocable Losses with effect from the related Payment Date. Any such reduction shall be allocated to the principal balance of each Series in Group I ratably in accordance with such principal balances. (1) (3) If the Group Invested Amount has been reduced on account of any Investor Allocable Losses, then any Investor Allocable Recoveries with respect to any Collection Period ending after the reduction takes place will be allocated to reinstate the Group Invested Amount, to the extent of such prior reductions that have not previously been reinstated, with effect from the related Payment Date. Any such reinstatement will be allocated to the principal balances of all outstanding Series in Group I (ratably in accordance with their principal balances) until all prior reductions to such principal balances on account of Investor Allocable Losses have been reinstated. (3) Holdback Account. If at any time prior to the Holdback Account Termination Date, the amount of funds on deposit in the Holdback Account exceeds the difference of (i) the Investor Repayment Amount minus (ii) the amount of funds then held in the Carrying Cost Account, the Negative Carry Account and the Principal Funding Accounts that are available to pay the Investor Repayment Amount, then the amount of such excess funds shall be released from the Holdback Account and paid to the Seller. On the Holdback Account Termination Date, the Servicer shall calculate an amount equal to (A) the aggregate amount of funds held in the Holdback Account, minus (B) the aggregate Investor Allocable Dilution for the Group I Amortization Period as to which no Investor Allocable Dilution Adjustments have been received. The amount of such difference, if positive, will be paid to the Seller. The funds remaining in the Holdback Account after the payment of such amount to the Seller shall be transferred to the Collection Account and applied to the items listed in Section 4.03(b), in that order (except that no such funds shall be allocated to the Seller or the Holdback Account pursuant to Section 4.03(b)(ii) and the amount allocable to each Principal Funding Account shall not be limited by application of the Investor Allocation Percentage). SECTION 1.9. Negative Carry Account. (1) The Negative Carry Account may be a sub-account of the Equalization Account, although references herein to the Equalization Account will not include the Negative Carry Account. The Negative Carry Account shall be designated a "Group Account" as provided in the definition thereof in Part I to Exhibit A of the Trust Sale and Servicing Agreement. SECTION 1.10. Equalization Account. (1) On any day on which the Base Amount exceeds the Net Invested Amount, the Servicer shall cause an amount equal to the excess of the Base Amount over the Net Invested Amount to be withdrawn from the Equalization Account and paid to the Seller. (2) The Servicer will deposit in the Equalization Account the net proceeds from the issuance of any new Series of Notes which are part of Group I or any increase in the principal balance of any Series of Notes which are part of Group I, in either case in an amount equal to the excess of the Net Invested Amount over the Base Amount. The remainder of such funds may be distributed to the Certificateholders or, at their direction, deposited in the Equalization Account. In addition, the Certificateholders may direct the Servicer, Owner Trustee and Indenture Trustee to deposit any amounts otherwise distributable to the Certificateholders into the Equalization Account. SECTION 1.11. Incorporation of Exhibit B. (1) The terms and computations set forth in Exhibit B are incorporated into the terms of this Series 2000-1 Supplement. ARTICLE V DISTRIBUTIONS AND REPORTS TO SERIES 2000-1 NOTEHOLDERS SECTION 1.12. Distributions. (1) On each Payment Date, the Indenture Trustee, acting upon instructions from the Servicer, shall pay to the Noteholders in each Series in Group I (including the Series 2000-1 Notes) the following amounts in the following order of priority from amounts available for allocations thereto: (1) Monthly Interest, to the extent funds are available for such amounts from: first, the Carrying Cost Account (after payment of the Monthly Servicing Fee as provided in Section 3.01); second, the Negative Carry Account; and third, to the extent that funds in the Equalization Account exceed the Group Invested Amount minus the aggregate balance in each Principal Funding Account for Series in Group I, the Equalization Account (and in the event of any shortfall, Monthly Interest will be paid ratably in accordance with the total amount of interest owed to each Series); (2) on each Principal Payment Date, the Indenture Trustee shall distribute to each Series 2000-1 Noteholder of record on the preceding Record Date (other than as provided in Section 2.7(c) of the Indenture respecting a final distribution) such Series 2000-1 Noteholder's pro rata share (based on the aggregate fractional undivided interests represented by such Series 2000-1 Notes held by such Series 2000-1 Noteholder) of the amounts on deposit in the Series 2000-1 Principal Funding Account as is payable to such Series 2000-1 Noteholder on such Payment Date pursuant to Section 4.03; and (3) if, on any Payment Date falling in a Group I Amortization Period, the funds on deposit in the Carrying Cost Account and the Negative Carry Account are equal to or greater than the Net Invested Amount (after giving effect to all payments required by the preceding paragraphs), then an amount equal to the Net Invested Amount shall be withdrawn from the Carrying Cost Account and the Negative Carry Account and paid to the Noteholders to reduce the Net Invested Amount to zero. (2) Except as provided in Section 2.7(c) of the Indenture with respect to a final distribution, distributions to Series 2000-1 Noteholders hereunder shall be made by check mailed to each Series 2000-1 Noteholder at such Noteholder's address appearing in the Note Register without presentation or surrender of any Series 2000-1 Note or the making of any notation thereon; provided, however, that, with respect to Series 2000-1 Notes registered in the name of a Depository, such distributions shall be made to such Depository in immediately available funds. SECTION 1.13. Reports and Statements to Series 2000-1 Noteholders. (1) On or prior to each Payment Date (including each date that corresponds to a Principal Payment Date), commencing with the initial Payment Date, the Servicer will provide to the Indenture Trustee, and on each Payment Date, the Indenture Trustee shall forward to each Series 2000-1 Noteholder (provided the Indenture Trustee has received such report from the Servicer), a statement prepared by the Servicer, substantially in the form attached as Exhibit C hereto, setting forth the following information relating to the Trust and the Series 2000-1 Notes: (1) the total amount paid to Noteholders; (2) the amount, if any, of the payment allocable to principal on the Series 2000-1 Notes; (3) the amount of the payment allocable to interest on the Series 2000-1 Notes; (4) the aggregate outstanding principal balance for the Series 2000-1 Notes, after giving effect to all payments reported under (ii) above on that date; (5) the amount of the Monthly Servicing Fee paid to the Servicer with respect to the related Collection Period or Periods, as the case may be; (6) the interest rate applicable for the next Payment Date for the Series 2000-1 Notes if determinable prior to such date; (7) the amount of Receivables that became Disqualified Receivables during the related Collection Period; (8) the accumulated but unpaid interest, if any, and Investor Dilution/Warranty Charge-Offs and Investor Allocable Losses, if any, on the Series 2000-1 Notes and the change in each of such amounts from the preceding Payment Date; (9) the balance of the Equalization Account on the last day of the related Collection Period after giving effect to changes therein or payments therefrom on such date; (10) the balance of the Carrying Cost Account on the last day of the related Collection Period after giving effect to changes therein or payments therefrom on such date; (11) the balance of the Negative Carry Account. Each amount set forth pursuant to subclauses (i) and (ii) will be expressed as a dollar amount per $1,000 of the initial principal balance of the Series 2000-1 Notes. (2) A copy of each statement provided pursuant to paragraph (a) will be made available for inspection at the Corporate Trust Office of the Indenture Trustees. (3) On or before April 30 of each calendar year, beginning with calendar year 2001, the Indenture Trustee shall furnish or cause to be furnished to each Person who at any time during the preceding calendar year was a Series 2000-1 Noteholder (or Note Owner), a report prepared by the Servicer containing the information which is required to be contained in the statement to Series 2000-1 Noteholders as set forth in paragraph (a) above, aggregated for such calendar year or the applicable portion thereof during which such Person (or any related Note Owner) was a Series 2000-1 Noteholder (or Note Owner). The Servicer shall prepare and the Indenture Trustee shall furnish to each person who was a Series 2000-1 Noteholder (or Note Owner) during the preceding calendar year in the time and manner required by the Code such information as is required to be provided by an issuer of indebtedness under the Code, including Forms 1099 and such other customary information as is necessary to enable the Series 2000-1 Noteholders (or Note Owners) to prepare their tax returns. Such obligation of the Indenture Trustee shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by the Indenture Trustee pursuant to any requirements of the Code as from time to time in effect. ARTICLE VI EARLY AMORTIZATION EVENTS SECTION 1.14. Additional Early Amortization Events. (1) In addition to the Early Amortization Events set forth in Section 5.17 of the Indenture, except as provided in Section 6.01(b), the occurrence of any of the following events shall, immediately upon the occurrence thereof without notice or other action on the part of the Indenture Trustee or the Series 2000-1 Noteholders, be deemed to be an Early Amortization Event solely with respect to Series 2000-1: (1) failure on the part of Seller: (1) to make any payment or deposit required within five Business Days after the date such payment or deposit is required to be made; or (2) to observe or perform in any material respect any other material covenants or agreements of the Seller contained in any of the Transfer and Servicing Agreements which continues unremedied for a period of 60 days after written notice to the Seller from the Indenture Trustee or the Series 2000-1 Noteholders, as provided herein; (2) any representation or warranty made by the Seller pursuant to the Transfer and Servicing Agreements proves to have been incorrect in any material respect when made or when delivered, and such representation and warranty continues to be incorrect or uncured in any material respect for a period of 60 days after written notice to the Seller and as a result of which the interest of the Series 2000-1 Noteholders are materially and adversely affected; provided, however, that such an Early Amortization Event shall not be deemed to occur if the Seller has repurchased the related Receivables; (3) International fails to convey Receivables to Navistar Financial pursuant to the Engine Accounts Sale Agreement as required thereby, Navistar Financial fails to convey the Receivables to the Seller pursuant to the Receivables Purchase Agreement as required thereby or the Seller fails to convey the Receivables to the Trust pursuant to the Trust Sale and Servicing Agreement as required thereby, and any such failure has a material adverse effect upon the Series 2000-1 Noteholders; (4) a Servicing Default that has a material adverse effect on the Series 2000-1 Noteholders shall occur and be continuing; (5) the Net Invested Amount exceeds the Base Amount for a period of five or more consecutive Business Days; (6) the senior unsecured debt rating of Navistar Financial Corporation (or if there is no such rating for Navistar Financial Corporation, the senior unsecured debt rating of Navistar International Corporation) is (a) withdrawn or reduced on any occasion to a level at or below "BB-" by Standard & Poor's, (b) withdrawn or reduced on any occasion to a level at or below "B1" by Moody's, or (c) withdrawn or reduced on any occasion to a level at or below "BB-" by Fitch, and such withdrawal or downgrade continues in effect for 30 days (unless within such 30 days the Rating Agency which withdrew or reduced such rating has reconfirmed the rating of the Notes which was in effect immediately prior to such withdrawal or downgrade; provided, however, that until such Rating Agency has reconfirmed such rating, all Collections otherwise allocable to the Seller or any Certificateholders will instead be deposited into the Equalization Account); and (7) Navistar International Corporation no longer owns at least a majority of the common stock of International, or either Ford or International assigns all of the Supply Contracts to one or more non-affiliates, and 30 days have passed since the occurrence of either such event (unless within such 30 days each Rating Agency has reconfirmed the rating of the Series 2000-1 Notes which was in effect immediately prior to such event). (2) Upon the occurrence of an Early Amortization Event described in Section 5.17 of the Indenture, an Early Amortization Period will commence immediately without any notice or other action on the part of any other party. On the fifth day after the Seller receives notice or otherwise becomes aware of the occurrence of an Early Amortization Event described in clause (i), (ii), (iii), (iv), (vi) or (vii) above, an Early Amortization Period will commence without any notice or other action on the part of any other party, unless waived by the Required Holders (or in the case of clauses (vi) and (vii), all Series 2000-1 Noteholders) or otherwise cured prior to such fifth day. Upon the occurrence of an Early Amortization Event described in clause (v) above, an Early Amortization Period will commence without any notice or any other action on the part of any other party; provided, however, that if such Early Amortization Event has been cured, it may be waived by the holders of 66 2/3% of the principal balance of the Series 2000-1 Notes. Upon the occurrence of any Early Amortization Event described in any clause above, after the applicable grace period, if any, set forth in such clause, the Indenture Trustee may (and, at the direction of the Required Holders, shall) by notice then given in writing to the Seller and Navistar Financial, declare that an Early Amortization Period has commenced as of the date of the Seller's receipt of the notice. SECTION 1.15. Recommencement of the Revolving Period. If any Early Amortization Event (other than an Early Amortization Event described in Section 5.17 of the Indenture) occurs, the Revolving Period will recommence following (i) satisfaction of the Rating Agency Condition and (ii) receipt of the consent of Noteholders evidencing at least a majority of the aggregate unpaid principal amount of the Series 2000-1 Notes to such recommencement, provided that no other Early Amortization Event that has not been cured or waived as described herein has occurred and the scheduled termination of the Revolving Period has not occurred. ARTICLE VII OPTIONAL REDEMPTION, TRANSFER RESTRICTIONS SECTION 1.16. Optional Repurchase. (1) The Series 2000-1 Notes will be subject to optional repurchase in an amount equal to the Redemption Price by the Seller on any Payment Date following the Amortization Period Commencement Date after the aggregate outstanding principal balance of the Series 2000-1 Notes is reduced to an amount less than or equal to $10,000,000 (10% of the initial outstanding principal balance of the Series 2000-1 Notes). (2) The Servicer shall give the Indenture Trustee at least 10 days' prior written notice of the Payment Date on which the Servicer intends to exercise such purchase option. Not later than 10:00 a.m. (New York City time) on the day preceding such Payment Date, the Servicer shall deposit an amount equal to the Redemption Price (less any amount held in the Carrying Cost Account to be distributed on that Payment Date to the Series 2000-1 Noteholders) into the Collection Account. Such repurchase option is subject to payment in full of the Redemption Price. Such amount deposited in the Collection Account shall be distributed as set forth in Section 8.01. SECTION 1.17. Transfer Restrictions. (1) During the period commencing on the Closing Date for the Series 2000-1 Notes and ending on the 40th day thereafter (the "Distribution Compliance Period"), a beneficial interest in any Temporary Regulation S Global Note may not be transferred to a U.S. Person, unless the beneficial interest in the Temporary Regulation S Global Note is exchanged for a beneficial interest in the Rule 144A Global Note, and then only if such exchange occurs in connection with a transfer pursuant to Rule 144A under the Securities Act and the transferor first delivers to the Indenture Trustee a written certificate to the effect that such transfer is being made to a Person that the transferor reasonably believes is a QIB purchasing for its own account or the account of a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) (a "QIB") in a transaction meeting the requirements of Rule 144A under the Securities Act and in accordance with all applicable securities laws of all U.S. states and other jurisdictions. (2) Beneficial interests in a Rule 144A Global Note may be transferred to a Person that takes delivery in the form of an interest in a Temporary Regulation S Global Note, prior to the expiration of the Distribution Compliance Period, only if the transferor first delivers to the Indenture Trustee a written certificate to the effect that such transfer is being made in accordance with Rule 903 or 904 of Regulation S under the Securities Act. (3) Any beneficial interest in one of the Global Notes that is transferred to a Person that takes delivery in the form of an interest in another Global Note will, upon transfer, cease to be an interest in the first such Global Note and will become an interest in the other Global Note and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to such beneficial interest in such other Global Note for so long as it remains such an interest. (4) In addition to the foregoing restrictions, the transfer of the Series 2000-1 Notes, or beneficial interests therein, shall be subject to the restrictions set forth in the respective Global Notes attached hereto. ARTICLE VIII FINAL DISTRIBUTIONS, STATED FINAL MATURITY SECTION 1.18. Acquisition of Notes Pursuant to Section 10.1 of the Indenture; Distributions Pursuant to Section 7.01 of this Series 2000-1 Supplement or Section 8.04 of the Indenture. (1) The amount to be paid by the Issuer to the Series 2000-1 Principal Funding Account in connection with a purchase of the Notes pursuant to Section 10.1 of the Indenture shall equal the Redemption Price (less any amount held in the Carrying Cost Account to be distributed on that Payment Date to the Series 2000-1 Noteholders) for the Payment Date on which such repurchase occurs. (2) With respect to the amount deposited into the Collection Account pursuant to Section 7.01 of Series 2000-1 Supplement, the Indenture Trustee shall, not later than 10:00 a.m. (New York City time), on the Payment Date on which such amounts are deposited (or, if such date is not a Payment Date, on the immediately following Payment Date) deposit such amount into the Series 2000-1 Principal Funding Account. (3) Notwithstanding anything to the contrary in this Series 2000-1 Supplement or the Indenture, the entire amount deposited in the Series 2000-1 Principal Funding Account pursuant to Section 8.01 hereof and amounts on deposit in the Carrying Cost Account in respect of Monthly Interest on the Series 2000-1 Notes shall be distributed in full to the Series 2000-1 Noteholders on such date and any distribution made pursuant to paragraph (b) above shall be deemed to be a final distribution pursuant to Section 8.4 of the Indenture with respect to the Series 2000-1 Notes. SECTION 1.19. Stated Final Maturity Date. (1) Following the occurrence of the Stated Final Maturity Date for the Series 2000-1 Notes, Series 2000-1 Noteholders will no longer have any interest in the Receivables and all the representations and covenants of the Seller and the Servicer relating to the Receivables, as well as other specified provisions of the Indenture and all remedies for breaches thereof, will no longer accrue to the benefit of the Series 2000-1 Noteholders. In addition, following the Stated Final Maturity Date, no Group Collections, Recoveries, or Transfer Deposit Amounts in respect of Dilution or Warranty Set-Offs will be allocated to the Series 2000-1 Notes. ARTICLE IX MISCELLANEOUS PROVISIONS SECTION 1.20. Ratification of Agreement. As supplemented by this Series 2000-1 Supplement, the Indenture is in all respects ratified and confirmed and the Indenture as so supplemented by this Series 2000-1 Supplement shall be read, taken and construed as one and the same instrument. SECTION 1.21. Counterparts. This Series 2000-1 Supplement may be executed in two or more counterparts (and by different parties on separate counterparts) each of which shall be an original, but all of which together shall constitute one and the same instrument. SECTION 1.22. GOVERNING LAW. THIS Series 2000-1 Supplement SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REFERENCE TO ITS OR ANY OTHER JURISDICTION'S CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTION 1.1. IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Series 2000-1 Supplement to be duly executed by their respective officers, thereunto duly authorized, all as of the day and year first above written. TRUCK ENGINE RECEIVABLES MASTER TRUST By: Chase Manhattan Bank USA, National Association, not in its individual capacity but solely as Owner Trustee By: _________________________________ Name: Title: THE BANK OF NEW YORK, not in its individual capacity but solely as Indenture Trustee By: _________________________________ Name: Title: Acknowledged and Accepted: NAVISTAR FINANCIAL CORPORATION, Servicer By:_____________________________ Name: R. Wayne Cain Title: Vice President and Treasurer -------------------------------------------------------------------------------- A1-1 EXHIBIT A-1 [FORM OF RULE 144A GLOBAL NOTE] REGISTERED $__________ No. R-_ THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE (OR AN INTEREST HEREIN) IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE (OR SUCH INTEREST) MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER ("RULE 144A"). THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN OFF SHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND, IN EACH OF CASES (I) THROUGH (III), IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. SEE REVERSE FOR CERTAIN DEFINITIONS CUSIP NO. _____________ -------------------------------------------------------------------------------- A1-9 Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for registration of transfer, exchange or payment, and any Note issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. TRUCK ENGINE RECEIVABLES MASTER TRUST FLOATING RATE TRADE RECEIVABLES BACKED NOTES, SERIES 2000-1 RULE 144A GLOBAL NOTE Evidencing an indebtedness of the Trust, the corpus of which consists of trade receivables (collectively the "Receivables") originated from time to time in the ordinary course of business pursuant to certain supply agreements by International Truck and Engine Corporation, a Delaware corporation (the "International"). This Note (the "Note") does not represent any interest in, or recourse obligation of, International, Navistar Financial Corporation, a Delaware corporation and wholly-owned subsidiary of the International (the "Servicer"), Truck Engine Receivables Financing Co. (the "Seller"), Ford Motor Company or any affiliate thereof. This Floating Rate Trade Receivables Backed Note, Series 2000-1 (this "Note") evidences the indebtedness of TRUCK ENGINE RECEIVABLES MASTER TRUST (the "Trust" or the "Issuer") to Cede & Co., or registered assigns (the "Noteholder"). This Note was created pursuant to an Indenture (the "Indenture"; such term to include any amendment or Supplement thereto) dated as of November __, 2000, among the Issuer, the Servicer and The Bank of New York, as Indenture Trustee (the "Indenture Trustee"), and the Series 2000-1 Supplement (the "Series 2000-1 Supplement") thereto dated as of November __, 2000, among the Issuer, the Servicer and the Indenture Trustee. This Note is issued under, and is subject to, the terms and conditions of the Indenture to which, as amended and supplemented from time to time, this Noteholder by virtue of acceptance hereof is bound. The Issuer has entered into the Indenture and the Notes have been (or will be) issued with the intention that the Notes will qualify under applicable tax law as indebtedness. Each Noteholder and Note Owner, by the acceptance of its Note, agrees to treat the Notes as indebtedness for all Federal income taxes, state and local income, single business and franchise taxes and any other taxes imposed on or measured by income. -------------------------------------------------------------------------------- The Issuer, for value received, hereby promises to pay to the Noteholders, the principal sum of ______________ DOLLARS ($_______) pursuant to and in accordance with the terms of the Indenture but no sooner than the earlier to occur of (i) the Amortization Period Commencement Date and (ii) an Event of Default and declaration by a majority of the principal balance of the outstanding Notes that the principal balance of the Notes is immediately due and payable; provided, however, that the entire unpaid principal balance of this Note shall be due and payable on December 15, 2006 (the "Stated Final Maturity Date"). The Issuer will pay interest on this Note, to the extent of available funds as provided in the Indenture and the Series 2000-1 Supplement, at the rate per annum equal to One-Month LIBOR plus 0.__% on each Payment Date on the principal amount of this Note outstanding on the preceding Payment Date (after giving effect to all payments of principal made on the preceding Payment Date) until the principal of this Note is paid in full. Interest on this Note (and interest on unpaid interest) will accrue for each Payment Date from and including the most recent Payment Date on which interest has been paid to but excluding the then current Payment Date or, with respect to the first Payment Date, from and including the date hereof to but excluding the first Payment Date. Interest on this Note will be calculated on the basis of the actual number of days elapsed since the Closing Date or the preceding Payment Date divided by 360. Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof. Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note. Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed. -------------------------------------------------------------------------------- Dated: November __, 2000 TRUCK ENGINE RECEIVABLES MASTER TRUST By Chase Manhattan Bank USA, National Association, not in its individual capacity, but solely as Owner Trustee By: ______________________ Name: Title: -------------------------------------------------------------------------------- INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes designated above and referred to in the within-mentioned Indenture and Series 2000-1 Supplement. Dated: November __, 2000 THE BANK OF NEW YORK, not in its individual capacity but solely as Indenture Trustee By: _________________________ Authorized Officer -------------------------------------------------------------------------------- REVERSE OF NOTE This Note is one of a duly authorized issue of the Issuer designated as its Floating Rate Trade Receivables Backed Notes, Series 2000-1 (herein called the "Notes"), all issued under an Indenture, dated as of November __, 2000, (such Indenture, as supplemented by a Series 2000-1 Supplement or amended, is herein called the "Indenture"), among the Issuer and The Bank of New York, a New York banking corporation, as indenture trustee (the "Indenture Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Noteholders. The Notes are governed by and subject to all terms of the Indenture (which terms are incorporated herein and made a part hereof), to which Indenture the holder of this Note by virtue of acceptance hereof assents and by which such holder is bound. All capitalized terms used and not otherwise defined in this Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture. Principal Amount. Upon initial issuance, this Rule 144A Global Note shall have an initial principal balance equal to the principal balance of the Series 2000-1 Notes which were sold to the initial purchasers and initially resold in reliance on the exemption from registration under the Securities Act provided by Rule 144A. Such initial principal balance shall be indicated on Schedule 1 to this Rule 144A Global Note. Concurrently with the issuance of this Rule 144A Global Note, the Issuer will issue another Global Note (the "Temporary Regulation S Global Note"), the initial principal balance of which shall equal the principal amount of the Series 2000-1 Notes which were sold to non-U.S. Persons in reliance on the exemption from registration under the Securities Act provided by Regulation S. Under certain circumstances, all or part of the interests in the Temporary Regulation S Global Note may be exchanged for interests in a permanent Global Note (the "Permanent Regulation S Global Note" and, together with the Temporary Regulation S Global Note, the "Regulation S Global Notes"). Upon a transfer in compliance with the requirements of the Indenture by any Note Owner holding a beneficial interest in this Rule 144A Global Note of all or a portion of such beneficial interest to a non-U.S. Person who will hold such beneficial interest through either Regulation S Global Note, the principal amount represented by such transferred beneficial interest shall cease to be an interest in this Rule 144A Global Note and shall become an interest in the applicable Regulation S Global Note. Similarly, upon a transfer in compliance with the requirements of the Series 2000-1 Supplement by any Note Owner holding a beneficial interest in a Regulation S Global Note of all or a portion of such beneficial interest to a Person who will hold such beneficial interest through this Rule 144A Global Note, the principal amount represented by such transferred beneficial interest shall cease to be an interest in such Regulation S Global Note and shall become an interest in this Rule 144A Global Note. In either such case, the Issuer shall procure that the principal amount of this Rule 144A Global Note and of the Regulation S Global Note is increased or decreased appropriately and that the remaining principal balance of this Rule 144A Global Note is noted on Schedule 1 hereto, whereupon the principal amount of this Rule 144A Global Note shall be as most recently so noted. No Recourse Against Persons in Individual Capacity. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Indenture Trustee or the Issuer in their individual capacities, (ii) any owner of a beneficial interest in the Trust or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Indenture Trustee or the Issuer in their individual capacities, any holder of a beneficial interest in the Trust, the Issuer or the Indenture Trustee or of any successor or assign of the Indenture Trustee or the Issuer in their individual capacities, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee and the Issuer have no such obligations in their individual capacities) and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any instalment or call owing to such entity. No Petition Covenant. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that by accepting the benefits of the Indenture such Noteholder will not, prior to the date which is one year and one day after the termination of such Indenture with respect to the Issuer, acquiesce, petition or otherwise invoke or cause the Seller or the Issuer to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Seller, the Trust, or the Trust Estate under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Seller or the Issuer or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Seller, or the Trust. Tax Characterization. Each Noteholder, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, unless otherwise required by appropriate taxing authorities, agrees to treat the Notes as indebtedness secured by the Collateral for the purpose of federal income taxes, state and local income and franchise taxes, and any other taxes imposed upon, measured by or based upon gross or net income. Ownership Treatment. Prior to the due presentment for registration of transfer of this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Note shall be overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall be affected by notice to the contrary. Amendments to Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Noteholders under the Indenture at any time by the Issuer with the consent of the Holders of Notes representing a majority of the principal amount of the outstanding Notes. The Indenture also contains provisions permitting the Holders of Notes representing a majority of the principal amount of the outstanding Notes, on behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note (or any one or more Predecessor Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Note. The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of the Noteholders. Miscellaneous. The term "Issuer" as used in this Note includes any successor to the Issuer under the Indenture. The term "Payment Date" mean the fifteenth day of each calendar month, or, if such fifteenth day is not a Business Day, the next succeeding Business Day. The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate, subject to the rights of the Indenture Trustee and the Holders of Notes under the Indenture. The Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations therein set forth. This Note and the Indenture shall be construed in accordance with the laws of the State of Illinois, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency herein prescribed. Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, neither the Seller, the Servicer, the Indenture Trustee nor the Issuer in their respective individual capacities, any owner of a beneficial interest in the Trust, nor any of their respective partners, beneficiaries, agents, officers, directors, employees or successors or assigns, shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on, or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in this Note or the Indenture, it being expressly understood that said covenants, obligations and indemnifications have been made by the Issuer and the Individual Trustee. The Holder of this Note by the acceptance hereof agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Holder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the Collateral for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note. -------------------------------------------------------------------------------- ASSIGNMENT Social Security or taxpayer I.D. or other identifying number of assignee _________________________________ FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _________________________________________________________________ _________________________________________________________________ (name and address of assignee) the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ____________________________________, as attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises. Dated:__________________ __________________________________1 Signature Guaranteed: _________________________ __________________________________ -------------------------------------------------------------------------------- A2-10 EXHIBIT A-2 REGISTERED $__________ No. R-_ [FORM OF TEMPORARY REGULATION S GLOBAL NOTE] THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE " SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE U.S. SECURITIES ACT PROVIDED BY REGULATION S THEREUNDER ("REGULATION S"). THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE U.S. SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN OFF-SHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S, OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, AND, IN EACH OF CASES (I) THROUGH (III), IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN CLAUSE (A) ABOVE. SEE REVERSE FOR CERTAIN DEFINITIONS CUSIP NO. _____________ -------------------------------------------------------------------------------- Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for registration of transfer, exchange or payment, and any Note issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. TRUCK ENGINE RECEIVABLES MASTER TRUST FLOATING RATE TRADE RECEIVABLES BACKED NOTES, SERIES 2000-1 Evidencing an indebtedness of the Trust, the corpus of which consists of trade receivables (collectively the "Receivables") originated from time to time in the ordinary course of business pursuant to certain supply agreements by International Truck and Engine Corporation, a Delaware corporation (the "International"). This Note (the "Note") does not represent any interest in, or recourse obligation of, International, Navistar Financial Corporation, a Delaware corporation and wholly-owned subsidiary of the International (the "Servicer"), Truck Engine Receivables Financing Co. (the "Seller"), Ford Motor Company or any affiliate thereof. TEMPORARY REGULATION S GLOBAL NOTE This Floating Rate Trade Receivables Backed Note, Series 2000-1 (this "Note") evidences the indebtedness of TRUCK ENGINE RECEIVABLES MASTER TRUST (the "Trust" or the "Issuer") to Cede & Co., or registered assigns (the "Noteholder"). This Note was created pursuant to an Indenture (the "Indenture"; such term to include any amendment or Supplement thereto) dated as of November __, 2000, among the Issuer, the Servicer and The Bank of New York, as Indenture Trustee (the "Indenture Trustee"), and the Series 2000-1 Supplement (the "Series 2000-1 Supplement") thereto dated as of November __, 2000, among the Issuer, the Servicer and the Indenture Trustee. This Note is issued under, and is subject to, the terms and conditions of the Indenture to which, as amended and supplemented from time to time, this Noteholder by virtue of acceptance hereof is bound. -------------------------------------------------------------------------------- The Issuer has entered into the Indenture and the Notes have been (or will be) issued with the intention that the Notes will qualify under applicable tax law as indebtedness. Each Noteholder and Note Owner, by the acceptance of its Note, agrees to treat the Notes as indebtedness for all Federal income taxes, state and local income, single business and franchise taxes and any other taxes imposed on or measured by income. The Issuer, for value received, hereby promises to pay to the Noteholders, the principal sum of ______________ DOLLARS ($_______) pursuant to and in accordance with the terms of the Indenture but no sooner than the earlier to occur of (i) the Amortization Period Commencement Date and (ii) an Event of Default and declaration by a majority of the principal balance of the outstanding Notes that the principal balance of the Notes is immediately due and payable; provided, however, that the entire unpaid principal balance of this Note shall be due and payable on December 15, 2006 (the "Stated Final Maturity Date"). The Issuer will pay interest on this Note, to the extent of available funds as provided in the Indenture and the Series 2000-1 Supplement, at the rate per annum equal to One-Month LIBOR plus 0.__% on each Payment Date on the principal amount of this Note outstanding on the preceding Payment Date (after giving effect to all payments of principal made on the preceding Payment Date) until the principal of this Note is paid in full. Interest on this Note (and interest on unpaid interest) will accrue for each Payment Date from and including the most recent Payment Date on which interest has been paid to but excluding the then current Payment Date or, with respect to the first Payment Date, from and including the date hereof to but excluding the first Payment Date. Interest on this Note will be calculated on the basis of the actual number of days elapsed since the Closing Date or the preceding Payment Date divided by 360. Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof. Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note. Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed. -------------------------------------------------------------------------------- Dated: November __, 2000 TRUCK ENGINE RECEIVABLES MASTER TRUST By Chase Manhattan Bank USA, National Association, not in its individual capacity, but solely as Owner Trustee By: ______________________ Name: Title:  
-------------------------------------------------------------------------------- INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes designated above and referred to in the within-mentioned Indenture and Series 2000-1 Supplement. Dated: November __, 2000 THE BANK OF NEW YORK, not in its individual capacity but solely as Indenture Trustee By: _________________________ Authorized Officer -------------------------------------------------------------------------------- REVERSE OF NOTE This Note is one of a duly authorized issue of the Issuer designated as its Floating Rate Trade Receivables Backed Notes, Series 2000-1 (herein called the "Notes"), all issued under an Indenture, dated as of November __, 2000, (such Indenture, as supplemented by a Series 2000-1 Supplement or amended, is herein called the "Indenture"), among the Issuer and The Bank of New York, a New York banking corporation, as indenture trustee (the "Indenture Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Noteholders. The Notes are governed by and subject to all terms of the Indenture (which terms are incorporated herein and made a part hereof), to which Indenture the holder of this Note by virtue of acceptance hereof assents and by which such holder is bound. All capitalized terms used and not otherwise defined in this Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture. Exchange for Permanent Regulation S Global Note. On or after 40 days after the date of issue of this Temporary Regulation S Global Note (the "Exchange Date"), the Issuer shall procure the delivery of a permanent global note (the "Permanent Regulation S Global Note"), in full or partial exchange for this Temporary Regulation S Global Note against: (a) presentation and surrender of this Temporary Regulation S Global Note at the specified office of the Indenture Trustee; and (b) receipt by the Indenture Trustee of a certificate or certificates issued by each Clearing Agency dated not earlier than the Exchange Date and in substantially the form set out in Exhibit A-3 to this Temporary Regulation S Global Note. The principal amount of the Permanent Regulation S Global Note on such date shall be equal to the aggregate of the principal amounts specified in the certificates issued by the Clearing Agencies and received by the Indenture Trustee. -------------------------------------------------------------------------------- Any person who would, but for the provisions of this Temporary Regulation S Global Note, the Permanent Global Note and the Indenture, otherwise be entitled to receive a definitive Note or definitive Notes shall not be entitled to require the exchange of an appropriate part of this Temporary Regulation S Global Note for a like part of the Permanent Regulation S Global Note unless and until he shall have delivered or caused to be delivered to Euroclear or Clearstream a certificate substantially in the form of the certificate attached as Exhibit A-4 (copies of which form of certificate will be available at the offices of Euroclear in Brussels and Clearstream in Luxembourg and the specified office of each of the Paying Agents). Principal Amount. Upon initial issuance, this Temporary Regulation S Global Note shall have an initial principal balance equal to the principal balance of the Series 2000-1 Notes which were sold to the Initial Purchasers and initially resold in reliance on the exemption from registration under the Securities Act provided by Regulation S. Such initial principal balance shall be indicated on Schedule 1 to this Temporary Regulation S Global Note. Concurrently with the issuance of this Temporary Regulation S Global Note, the Issuer will issue another Global Note (the "Rule 144A Global Note"), the initial principal balance of which shall equal the principal amount of the Series 2000-1 Notes which were sold to the Initial Purchasers and initially resold in reliance on the exemption from registration under the Securities Act provided by Rule 144A. Upon a transfer in compliance with the requirements of the Indenture by any Note Owner holding a beneficial interest in this Temporary Regulation S Global Note of all or a portion of such beneficial interest to a Person who will hold such beneficial interest through the Rule 144A Global Note, the principal amount represented by such transferred beneficial interest shall cease to be an interest in this Temporary Regulation S Global Note and shall become an interest in the Rule 144A Global Note. Similarly, upon a transfer in compliance with the requirements of the Series 2000-1 Supplement by any Note Owner holding a beneficial interest in the Rule 144A Global Note of all or a portion of such beneficial interest to a non-U.S. Person who will hold such beneficial interest through this Temporary Regulation S Global Note, the principal amount represented by such transferred beneficial interest shall cease to be an interest in the Rule 144A Global Note and shall become an interest in this Temporary Regulation S Global Note. In either such case, the Issuer shall procure that the principal amount of this Temporary Regulation S Global Note and of the Rule 144A Global Note is increased or decreased appropriately and that the remaining principal balance of this Temporary Regulation S Global Note is noted on Schedule 1 hereto, whereupon the principal amount of this Temporary Regulation S Global Note shall be as most recently so noted. -------------------------------------------------------------------------------- No Recourse Against Persons in Individual Capacity. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Indenture Trustee or the Issuer in their individual capacities, (ii) any owner of a beneficial interest in the Trust or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Indenture Trustee or the Issuer in their individual capacities, any holder of a beneficial interest in the Trust, the Issuer or the Indenture Trustee or of any successor or assign of the Indenture Trustee or the Issuer in their individual capacities, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee and the Issuer have no such obligations in their individual capacities) and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any instalment or call owing to such entity. No Petition Covenant. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that by accepting the benefits of the Indenture such Noteholder will not, prior to the date which is one year and one day after the termination of such Indenture with respect to the Issuer, acquiesce, petition or otherwise invoke or cause the Seller or the Issuer to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Seller, the Trust, or the Trust Estate under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Seller or the Issuer or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Seller, or the Trust. Tax Characterization. Each Noteholder, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, unless otherwise required by appropriate taxing authorities, agrees to treat the Notes as indebtedness secured by the Collateral for the purpose of federal income taxes, state and local income and franchise taxes, and any other taxes imposed upon, measured by or based upon gross or net income. Ownership Treatment. Prior to the due presentment for registration of transfer of this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Note shall be overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall be affected by notice to the contrary. Amendment to Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Noteholders under the Indenture at any time by the Issuer with the consent of the Holders of Notes representing a majority of the principal amount of the outstanding Notes. The Indenture also contains provisions permitting the Holders of Notes representing a majority of the principal amount of the outstanding Notes, on behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note (or any one or more Predecessor Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Note. The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of the Noteholders. Miscellaneous. The term "Issuer" as used in this Note includes any successor to the Issuer under the Indenture. The term "Payment Date" mean the fifteenth day of each calendar month, or, if such fifteenth day is not a Business Day, the next succeeding Business Day. The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate, subject to the rights of the Indenture Trustee and the Holders of Notes under the Indenture. The Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations therein set forth. This Note and the Indenture shall be construed in accordance with the laws of the State of Illinois, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency herein prescribed. Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, neither the Seller, the Servicer, the Indenture Trustee nor the Issuer in their respective individual capacities, any owner of a beneficial interest in the Trust, nor any of their respective partners, beneficiaries, agents, officers, directors, employees or successors or assigns, shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on, or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in this Note or the Indenture, it being expressly understood that said covenants, obligations and indemnifications have been made by the Issuer and the Individual Trustee. The Holder of this Note by the acceptance hereof agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Holder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the Collateral for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note. -------------------------------------------------------------------------------- ASSIGNMENT Social Security or taxpayer I.D. or other identifying number of assignee _________________________________ FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _________________________________________________________________ _________________________________________________________________ (name and address of assignee) the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ____________________________________, as attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises. Dated:__________________ _________________________________2 Signature Guaranteed: _________________________ __________________________________ --------------------------------------------------------------------------------  
B1-23 EXHIBIT B I. CALCULATION OF BASE AMOUNT On each Business Day prior to the Group I Amortization Period, the Servicer will calculate the Base Amount. On any Business Day, the "Base Amount" will equal the result of the following formula: [NER x GCAP x (100% - DWRR)] - (CCRR + NCRR) where: NER = the "Net Eligible Receivables," which is the greater of (i) (ER-AP-WHR-EETB) and (ii) zero; ER = the aggregate unpaid balance of Eligible Receivables as reported in the Daily Activity Report for that Business Day; AP = the balance of any accounts payable from International or Navistar Financial to Ford which are unrelated to engine warranty or dilution, as reported in the Daily Activity Report for that Business Day; WHR = the Warehouse Reserve, as reported in the Daily Activity Report for that Business Day; EETB = the Excess Extended Term Balance, as reported in the Daily Activity Report for that Business Day; GCAP = the Group Collection Allocation Percentage for that Business Day (see II below); DWRR = the Dilution/Warranty Reserve Ratio in effect for that Business Day (see I.A. below); CCRR = the Carrying Cost Receivables Reserve as reported in the Daily Activity Report for that Business Day (see I.C. below); and NCRR = the Negative Carry Receivables Reserve as reported in the Daily Activity Report for that Business Day (see I.D. below). A. Calculation of Dilution/Warranty Reserve Ratio. The "Dilution/Warranty Reserve Ratio" means, during any Payment Period, the lesser of (i) 100% and (ii) the sum of the Reserve Ratio (see I.B below) plus the Warranty Ratio (see I.E. below). B. Calculation of Reserve Ratio. The "Reserve Ratio" means, during any Payment Period, the greater of (a) the Minimum Required Reserve Ratio and (b) the Required Reserve Ratio as calculated in the Monthly Report required to be delivered on the Report Date immediately prior to the start of that Payment Period. 1. Minimum Required Reserve Ratio. "Dilution" means a non-cash reduction in the principal balance of a Receivable on account of discounts, incorrect billings, credits, rebates, allowances, chargebacks, set-offs, returned or repossessed goods or allowances for early payments or any other reduction in the balance of a Receivable for any reason unrelated to the inability of Ford to pay the Receivable. "Dilution" does not include Warranty Set-Offs. "Dilution Horizon Variable" means, at any time, a fraction having (a) a numerator equal to the sum of the aggregate amounts payable pursuant to invoices giving rise to Receivables and generated by the Originator during the Collection Period ending on the most recent Cut-Off Date (as of that Cut-Off Date) and (b) a denominator equal to the Net Eligible Receivables as of the most recent Cut-Off Date; provided, however that if Net Eligible Receivables equals zero, the Dilution Horizon Variable shall equal zero. "Dilution Ratio" means, as calculated in each Monthly Report as of the most recent Cut-Off Date, a fraction (expressed as a percentage) having (a) a numerator equal to the aggregate amount of Dilution on the Receivables occurring during the Collection Period ending on the most recent Cut-Off Date, and (b) a denominator equal to the aggregate amount of Receivables that were generated by the Originator during the Collection Period ending on the most recent Cut-Off Date; provided, however that if such amount of Receivables generated equals zero, the Dilution Ratio shall equal the Dilution Ratio that was calculated for the prior Monthly Report. The "Minimum Required Reserve Ratio" means, as of any Cut-Off Date, the product of the average of the Dilution Ratios for the period of 12 preceding Collection Periods ending on that Cut-Off Date, multiplied by the Dilution Horizon Variable for that Cut-Off Date. 2. Required Reserve Ratio. The "Required Reserve Ratio" means, as calculated in each Monthly Report, the Dilution Reserve Ratio, calculated using an Applicable Ratings Factor which shall at all times equal 2.0. The "Dilution Reserve Ratio" means, as calculated in each Monthly Report, the result (expressed as a percentage) calculated in accordance with the following formula:  
DRR = {(ARF x ADR) + [(HDR-ADR) x (HDR/ADR)]} x DHV where: DRR = the Dilution Reserve Ratio; ARF = the Applicable Ratings Factor (which shall at all times equal 2.0); ADR = the average of the Dilution Ratios during the period of 12 consecutive Collection Periods ending on the related Cut-Off Date; HDR = the highest Dilution Ratio for any Collection Period within the 12 consecutive Collection Periods ending on the related Cut-Off Date; and DHV = the Dilution Horizon Variable. C. Carrying Cost Receivables Reserve. The "Carrying Cost Receivables Reserve" is used to allocate a portion of the value of the aggregate unpaid balance of Receivables held by the Trust to cover certain estimated carrying costs (including interest on the Notes). The amount of the Carrying Cost Receivables Reserve on any Business Day will equal: (a) the Current Carrying Costs; plus (b) the product of (i) the outstanding principal balance of the Series 2000-1 Notes multiplied by (ii) 1.5 multiplied by the Series 2000-1 Note Rate, multiplied by (iii) a fraction the numerator of which is the Assumed Liquidation Days and the denominator of which is 360; plus (c) the product of (i) the aggregate unpaid balance of Receivables on the next preceding Payment Date, multiplied by (ii) 0.25%, multiplied by (iii) a fraction the numerator of which is the Assumed Liquidation Days and the denominator of which is 365 or 366, as applicable; plus (d) additional amounts specified for each other Series in Group I in the related supplement; minus (e) the balance on deposit in the Carrying Cost Account at the beginning of that Business Day. "Assumed Liquidation Days" means the greater of (a) 30 and (b) two multiplied by the number of Turnover Days. "Turnover Days" means, at any time, an amount equal to the product of (i) a fraction, the numerator of which is the sum of the unpaid balances of Receivables at the end of each of the three immediately preceding Collection Periods, and the denominator of which is the aggregate amount of Receivables generated during the three immediately preceding Collection Periods and (ii) 30. D. Negative Carry Receivables Reserve. The amount of the "Negative Carry Receivables Reserve" means, on any Business Day prior to the Negative Carry Account Funded Date: (a) the product of (i) the outstanding principal balance of the Series 2000-1 Notes multiplied by (ii) 0.55%, multiplied by (iii) a fraction the numerator of which is the lesser of (A) 380 and (B) the number of days remaining until the Scheduled Amortization Period Commencement Date, and the denominator of which is 360; plus (b) additional amounts specified for each other Series in Group I in the related supplement; minus (c) the balance on deposit in the Negative Carry Account on that Business Day. On and after the Negative Carry Account Funded Date, the amount of the Negative Carry Receivables Reserve will equal zero. E. Calculation of the Warranty Ratio. The Warranty Ratio set forth below is calculated on the basis of the present warranty arrangements between International and Ford. In the event that International and Ford enter into a different warranty arrangement in the future which is not consistent with methodology used to calculate the Warranty Ratio as set forth below, then (i) those Receivables subject to such different warranty arrangement will not be Eligible Receivables unless and until the Rating Agency Condition is satisfied with respect to such different warranty arrangement and (ii) the definition of "Base Amount," "Warranty Ratio" and their constituent terms may be amended, modified and supplemented by the Seller, the Trust and the Indenture Trustee, without the consent of Noteholders, in such manner as is necessary to accommodate such different warranty arrangement, provided that the Rating Agency Condition has been satisfied in connection with such amendments. The phrase "per engine," as used in the calculation of the Warranty Ratio, means the average of an item, expressed on a per engine basis. The "Warranty Ratio" means, as calculated in each Monthly Report as of the most recent Cut-Off Date, a fraction (expressed as a percentage) having (a) a numerator equal to the Warranty Receivables Reserve, and (b) a denominator equal to the Net Eligible Receivables as of the most recent Cut-Off Date. The "Warranty Receivables Reserve" is used to allocate a portion of the value of the aggregate unpaid balance of Receivables held by the Trust to cover the risk that Ford will offset the amounts due on the Receivables by the amount of payments due from International to Ford under the New Warranty Arrangement or any Future Warranty Arrangement (in the event that International breaches its obligation to make the payments directly). In no event shall the Warranty Receivables Reserve be greater than the principal balance of the Receivables. If on any Business Day the Warranty Receivables Reserve increases, and such increase causes the Net Invested Amount to exceed the Base Amount, the Seller shall be obligated to deposit into the Equalization Account the amount required to maintain the Base Amount at a level that is at least equal to the Net Invested Amount. The amount of the Warranty Receivables Reserve on any Business Day will be calculated as follows:  
WRR = PWAR + FWSP + FWCR where: WRR = the Warranty Receivables Reserve; PWAR = the Pre-1999.5 Warranty Agreement Reserve in effect for that Business Day; FWSP = the Ford Warranty Settlement Payments in effect for that Business Day; and FWCR = the Future Warranty Claims Reserve in effect for that Business Day. 1. Pre-1999.5 Warranty Agreement Reserve "Pre-1999.5 Warranty Agreement Reserve" means, as calculated in each Monthly Report as of the most recent Cut-Off Date the greater of (a) the aggregate amount paid by International to Ford in respect of the Prior Warranty Agreement during the six consecutive Collection Periods ending on the most recent Cut-Off Date and (b) the highest amount paid by International to Ford in respect of the Prior Warranty Agreement during any one Collection Period within the 12 consecutive Collection Periods ending on the most recent Cut-Off Date. The Pre-1999.5 Warranty Agreement Reserve will include amounts for both general engine warranty claims and also for emissions-related warranty claims. -------------------------------------------------------------------------------- 2. Ford Warranty Settlement Payments "Ford Warranty Settlement Payments" means (1) the aggregate amount of payments received by International from Ford as a result of the related New Warranty Costs being less than the Interim Warranty Target for any Model Year Group, minus (2) the aggregate amount of payments made by International to Ford representing repayment of amounts described in clause (1), which amounts were repaid as a result of related New Warranty Costs for any Model Year Group subsequently increasing to an amount equal to or closer to the Interim Warranty Target. "New Warranty Costs" means the dollar amount per engine of actual expenditures in respect of warranty claims made by purchasers of Ford trucks for a given Model Year Group that are covered under the New Warranty Arrangement or any Future Warranty Arrangement. New Warranty Costs for each Model Year Group will be calculated by Ford and International periodically. The New Warranty Costs are based on the warranty costs incurred by each engine in a Model Year Group during the period that begins on the date such engine went into service and that ends on a date that is a specified number of months after such date of service (such period, the "Applicable Interval"). For the New Warranty Arrangement, the Applicable Intervals are 6 months, 18 months, 30 months and 45 months. Therefore, for example, the New Warranty Costs for the Applicable Interval of 18 months for a given Model Year Group will equal the average warranty expenditures per engine in that Model Year Group during the first 18 months of service for each such engine. "Warranty Costs" means the aggregate dollar amount per engine of actual expenditures in respect of warranty claims made by purchasers of Ford trucks and vans that are covered under the New Warranty Arrangement, the Prior Warranty Arrangement and any Future Warranty Arrangement. "Interim Warranty Target" means the targeted Warranty Cost per engine for a Model Year Group, which is specified for the Applicable Intervals in the New Warranty Arrangement or Future Warranty Arrangement. For the New Warranty Arrangement, the Interim Warranty Target is specified for the Applicable Intervals for each Model Year Group of 6 months, 18 months and 30 months. The amount of the Interim Warranty Targets, and the Applicable Intervals at which the Interim Warranty Targets may be specified, for any Future Warranty Arrangement may differ from that specified in the New Warranty Arrangement. 3. Future Warranty Claims Reserve "Future Warranty Claims Reserve" will be the greater of (a) the product of (i) the Net Eligible Receivables as reported in the Daily Activity Report for that Business Day, multiplied by (ii) 5% and (b) the amount calculated as follows:  
FWCR = [ (SIGMA) (NMYx x EWEMYx x ASFMYx) - NIWSPMYx] where: FWCR = Future Warranty Claims Reserve for that Business Day; NMYx = the number of engines for the applicable Model Year Group covered under the New Warranty Arrangement or a Future Warranty Arrangement, as applicable; EWEMYx = the Excess Warranty Expense for the applicable Model Year Group; ASFMYx = the Applicable Stress Factor for the applicable Model Year Group; and NIWSPMYx = the Net International Warranty Settlement Payments for the applicable Model Year Group. The above calculation will be performed separately for each Model Year Group in service until such time as the Final Warranty Settlement Date has occurred for a Model Year Group and all payments owing by International on such date have been made; thereafter, there shall be no Future Warranty Claims Reserve calculation in respect of such Model Year Group. The Future Warranty Claims Reserve shall equal the sum of the results of performing the above calculation for each Model Year Group. The Future Warranty Claims Reserve will be calculated semi-annually on, and will be effective on, each Warranty Estimation Date. F. Calculation of the Warehouse Reserve. Although there have been Warehouse Engines in the past, there are currently no Warehouse Engines. In the event that International and Ford decide to enter into warehouse arrangements in the future, the Warehouse Reserve will be calculated as set forth below. In the event that International and Ford enter into a warehouse arrangement in the future which is not consistent with methodology used to calculate the Warehouse Reserve as set forth below, then (i) those Receivables subject to such warehouse arrangement will not be Eligible Receivables unless and until the Rating Agency Condition is satisfied with respect to such warehouse arrangement and (ii) the definition of "Base Amount," "Warehouse Reserve" and their constituent terms may be amended, modified and supplemented by the Seller, the Trust and the Indenture Trustee, without the consent of Noteholders, in such manner as is necessary to accommodate such warehouse arrangement, provided that the Rating Agency Condition has been satisfied in connection with such amendments. "Warehouse Reserve" means the product of (a) the excess, if any, of (i) the Proxy Price over (ii) the Deemed Warehouse Price and (b) the number of Warehouse Engines. "Deemed Warehouse Price" means the lowest actual stated price per engine for any Engine then being sold by International to Ford. "Proxy Price" means the price per engine invoiced to Ford for Warehouse Engines, calculated as of the date that such engines are shipped to such Warehouse. The Proxy Price is agreed upon by International and Ford. "Warehouse Engine" means any engine (a) which has been shipped by International to a Warehouse to be held on behalf of Ford pending shipment to a Ford production facility and (b) for which International has invoiced Ford at the Proxy Price. G. Calculation of the Excess Extended Term Balance. "Excess Extended Term Balance" means, the minimum aggregate unpaid balance of Receivables (beginning with those Receivables with the longest Payment Term) needed to be removed from the Trust in order to reduce the Weighted Average Payment Term to 45 days or less. "Payment Term" means, with respect to each Receivable, the number of days between the date that such Receivable was transferred to the Trust and the date that such Receivable is due. "Weighted Average Payment Term" means, for any Business Day, the quotient of: (a) the sum of (1) the product of (A) the unpaid balance of each Eligible Receivable (other than any Eligible Receivable, the unpaid balance of which is included in the Excess Extended Term Balance) in the Trust and (B) the Payment Term with respect to such Receivable, divided by (b) the aggregate unpaid balance of all Eligible Receivables as of such Business Day (other than any Eligible Receivable, the unpaid balance of which is included in the Excess Extended Term Balance). 4. Definitions. "Anticipated Warranty Expense" means the expected Warranty Cost per engine for a Model Year Group under the New Warranty Arrangement or any Future Warranty Arrangement for the applicable Warranty Settlement Date. Before a Model Year Group has reached its first Warranty Settlement Date, the Anticipated Warranty Expense shall equal the Interim Warranty Target for the first Warranty Settlement Date and the Final Warranty Target for the final Warranty Settlement Date. After International and Ford have calculated the actual Warranty Cost per engine for a Model Year Group for any Warranty Settlement Date, the Anticipated Warranty Expense, for purposes of calculating the Excess Warranty Expense, shall equal such actual Warranty Cost per engine as calculated by International and Ford. "Applicable Stress Factor" means 1.5 for a Model Year Group, unless a Forecasting Shortfall with respect to such Model Year Group is in effect, in which case the Applicable Stress Factor means 2.0 for such affected Model Year Group. "Excess Warranty Expense" for a Model Year Group means the portion of the following amount per engine which is payable by International to Ford: the greater of (1) the result of (a) the Anticipated Warranty Expense per engine for the final Warranty Settlement Date for that Model Year Group minus (b) the Final Warranty Target per engine for that Model Year Group and (2) the result of (a) the Anticipated Warranty Expense per engine for the next following Warranty Settlement Date for that Model Year Group minus (b) the Interim Warranty Target per engine for the next following Warranty Settlement Date for that Model Year Group; provided, however, that if the Anticipated Warranty Expense is less than or equal to the Final Warranty Target and the Interim Warranty Target (as applicable) for a Model Year Group, then the Excess Warranty Expense for that Model Year Group shall be zero. "Final Warranty Target" means the targeted Warranty Cost per engine for a Model Year Group, which is specified at the final Warranty Settlement Date for such Model Year Group. For the New Warranty Arrangement, the Final Warranty Target is specified at the point at which each Model Year Group has been in service for 45 months. The amount of the Final Warranty Target and the date at which the Final Warranty Target may be specified for any Future Warranty Arrangement may differ from that specified in the New Warranty Arrangement. "Forecasting Shortfall" means, for any Model Year Group, as of a Warranty Settlement Date, that (a) the International Warranty Settlement Payments (calculated on a per engine basis) paid on such Warranty Settlement Date minus (b) the Reserved Amount as of the immediately preceding Warranty Estimation Date exceeds (c) $5 per engine. A Forecasting Shortfall shall be in effect from such Warranty Settlement Date to, but not including, the next Warranty Settlement Date. "Future Warranty Arrangement" means any future agreement or practice pursuant to which International and Ford agree to allocate payments due in respect of engine warranty claims from Ford customers, provided however, that the provisions of such agreement or practice are compatible with the calculation of the Base Amount as set forth in this Exhibit A. "International Warranty Settlement Payments" for a Model Year Group means the aggregate amount of payments made by International to Ford as a result of the related New Warranty Costs for such Model Year Group being greater than any Interim Warranty Target for such Model Year Group. "Model Year Group" means all engines sold by International to Ford during a given model year. "Net International Warranty Settlement Payments" for a Model Year Group means (1) the International Warranty Settlement Payments for such Model Year Group, minus (2) the aggregate amount of payments made by Ford to International representing repayment of amounts described in clause (1), which amounts were repaid as a result of related New Warranty Costs subsequently being less than the Interim Warranty Target for such Model Year Group. "Reserved Amount" means the Excess Warranty Expense multiplied by 1.5. "Warranty Estimation Date" means, with respect to a Model Year Group, the Payment Date which is in the month in which a Warranty Settlement Date occurs and the Payment Date which is in the month six months after a Warranty Settlement Date. "Warranty Settlement Date" means the date on which International and Ford settle payments under the New Warranty Arrangement or any Future Warranty Arrangement. Under the New Warranty Arrangement, the Warranty Settlement Dates shall be in March after the last engine in a Model Year Group has been in service 6 months, 18 months and 30 months, and in July after the last engine in a Model Year Group has been in service 45 months. II. GROUP COLLECTION ALLOCATION PERCENTAGE So long as all outstanding Series are in Group I, the Group Collection Allocation Percentage will equal 100%. If additional Series are issued that are not in Group I, then the Group Collection Allocation Percentage will equal (i) on any Business Day prior to the Group I Amortization Calculation Date (a) the percentage equivalent of a fraction (1) the numerator of which is the Required Receivables for Group I on that Business Day and (2) the denominator of which is the sum of the Required Receivables for Group I and all other outstanding Series on that Business Day and (ii) on and following the Group I Amortization Calculation Date, the Group Collection Allocation Percentage calculated as of the Group I Amortization Calculation Date. On any Business Day on which a group amortization period commences for a group other than Group I, the Group Collection Allocation Percentage will be recalculated in the manner set forth in this paragraph. The "Required Receivables" means, on any Business Day, collectively for all Series in Group I: (a) So long as a Group I Amortization Period has not commenced, the result of the following formula: (GIIA + CCRR + NCRR) x R (1-DWRR) (NER) where:  
NER = the Net Eligible Receivables, which is the greater of (i) (ER-AP-WHR-EETB) and (ii) zero; NCRR = the Negative Carry Receivables Reserve as reported in the Daily Activity Report for that Business Day; CCRR = the Carrying Cost Receivables Reserve as reported in the Daily Activity Report for that Business Day; WHR = the Warehouse Reserve, as reported in the Daily Activity Report for that Business Day; DWRR = the Dilution/Warranty Reserve Ratio in effect for that Business Day; EETB = the Excess Extended Term Balance, as reported in the Daily Activity Report for that Business Day; GIIA = the "Group Initial Invested Amount" (defined as the sum of the Series 2000-1 initial principal balance plus the aggregate of the initial principal balance of each other Series in Group I, all determined at that time); ER = the aggregate unpaid balance of Eligible Receivables as reported in the Daily Activity Report for that Business Day; AP = the balance of any accounts payable from International or Navistar Financial to Ford which are unrelated to engine warranty or dilution, as reported in the Daily Activity Report for that Business Day; and R = the aggregate unpaid balance of Receivables held by the Trustee as reported in the Daily Activity Report for that Business Day. - (b) If a Group I Amortization Period has commenced, the result of the following formula:  
AGIIA + ASA + UCCRR + WRR + NCRR where: AGIIA = the adjusted Group Initial Invested Amount on that Business Day (which shall equal the Group Initial Invested Amount, reduced (but not below zero) by the amount of the Investor Allocable Dilution/Warranty Amount (net of Investor Allocable Recoveries and Investor Allocable Dilution/Warranty Adjustments that have been applied to reinstate the Group Invested Amount)); UCCRR = the Unfunded Carrying Cost Receivables Reserve on that Business Day; ASA = the Available Subordinated Amount on that Business Day; WRR = the Warranty Receivables Reserve on the Business Day; and NCRR = the Negative Carry Receivables Reserve as reported in the Daily Activity Report for that Business Day. "Unfunded Carrying Cost Receivables Reserve" means, on any Business Day falling in a Group I Amortization Period, the difference (but not less than zero) of (a) the Carrying Cost Receivables Reserve as of the Group I Amortization Calculation Date, minus (b) the aggregate Group Collections deposited into the Carrying Cost Account during the portion of the Group I Amortization Period up to and including that Business Day. The Required Receivables for any Series not included in Group I will be calculated in a similar manner, subject to such variations as may be specified in the applicable supplement. -------------------------------------------------------------------------------- SCHEDULE 1 PRINCIPAL FUNDING ACCOUNT and GROUP I ACCOUNTS Series 2000-1 Principal Funding Account The Bank of New York ABA No.: XXXX Account Number: XXXX Ref: XXXX Carrying Cost Account The Bank of New York ABA No.: XXXX Account Number: XXXX Ref: GLA XXXX Negative Carry Account The Bank of New York ABA No. XXXX Account Number: XXXX Ref: GLA XXXX Holdback Account The Bank of New York ABA No.: XXXX Account Number: XXXX Ref: GLA XXXX Equalization Account The Bank of New York ABA No. XXXX Account Number: XXXX Ref: GLA XXXX -------- 1 NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever. 2 NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever.
 
 
                                                      EXHIBIT 10.68




                    RECEIVABLES SALE AGREEMENT



                              BETWEEN



         NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION

                                AND



                  NAVISTAR FINANCIAL CORPORATION




                     DATED AS OF JULY 30, 2004

--------------------------------------------------------------------------------
                                - ii -

                         TABLE OF CONTENTS


ARTICLE I.........................................................2
      SECTION 1.01.  Definitions..................................2

ARTICLE II........................................................2
      SECTION 2.01.  Purchase and Sale of Receivables.............2
      SECTION 2.02.  Purchase Price...............................2
      SECTION 2.03.  The Closing..................................2
      SECTION 2.04.  Payments and Default Fee.....................2
      SECTION 2.05.  Transfer of Records..........................2
      SECTION 2.06.  Intended Characterization....................2

ARTICLE III.......................................................2
      SECTION 3.01.  Representations and Warranties as to
           Receivables............................................2
      SECTION 3.02.  Additional Representations and
           Warranties of NFC......................................2
      SECTION 3.03.  Representations and Warranties of NFRRC......2

ARTICLE IV........................................................2
      SECTION 4.01.  Conditions to Obligation of NFRRC............2
      SECTION 4.02.  Conditions To Obligation of NFC..............2

ARTICLE V.........................................................2
      SECTION 5.01.  Conflicts With Further Transfer and
           Servicing Agreements...................................2
      SECTION 5.02.  Protection of Title..........................2
      SECTION 5.03.  Other Liens or Interests.....................2
      SECTION 5.04.  Repurchase Events............................2
      SECTION 5.05.  Indemnification..............................2
      SECTION 5.06.  Further Assignments..........................2
      SECTION 5.07.  Pre-Closing Collections......................2
      SECTION 5.08.  Limitation on Transfer of International
           Purchase Obligations....................................
           2
      SECTION 5.09.  Sale Treatment...............................2
      SECTION 5.10.  Schedule of Receivables......................2

ARTICLE VI........................................................2
      SECTION 6.01.  Indemnities by the Originator................2

ARTICLE VII.......................................................2
      SECTION 7.01.  Amendment....................................2
      SECTION 7.02.  Survival.....................................2
      SECTION 7.03.  Notices......................................2
      SECTION 7.04.  Governing Law................................2
      SECTION 7.05.  Waivers......................................2
      SECTION 7.06.  Costs and Expenses...........................2
      SECTION 7.07.  Confidential Information.....................2
      SECTION 7.08.  Headings.....................................2
      SECTION 7.09.  Counterparts.................................2
      SECTION 7.10.  Severability of Provisions...................2
      SECTION 7.11.  Further Assurances...........................2
      SECTION 7.12.  No Other Third-Party Beneficiaries...........2
      SECTION 7.13.  Merger and Integration.......................2
      SECTION 7.14.  Bankruptcy Petition..........................2
      SECTION 7.15.  Limitation of Liability......................2
      SECTION 7.16.  Assignments..................................2
      SECTION 7.17.  CONSENT TO JURISDICTION......................2
      SECTION 7.18.  WAIVER OF JURY TRIAL.........................2

                             EXHIBITS

Exhibit A - Form of Assignment


--------------------------------------------------------------------------------
                                - 1 -

      RECEIVABLES  SALE  AGREEMENT,  dated  as  of  July  30,  2004
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.

      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:


                                13
                             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;

(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
$298,788,749.69  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,  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.

                            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  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;

(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;

(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 6  months  and not
greater  than  85  months  and,  as  of  the  Cutoff  Date,  had  a
remaining  term to  maturity  of not  less  than 3  months  and not
greater than 84 months;

(s)   Annual  Percentage  Rate. The Annual  Percentage Rate of each
Designated Receivable is not less than 4.00%;

(t)   Scheduled  Payments;  Delinquency.  As of  the  Cutoff  Date,
each  Designated  Receivable  had a first  scheduled  payment  that
was due on or before  August 31, 2004;  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 August 31, 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
2.00% 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

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

      SECTION 3.02.  Additional Representations and Warranties of
NFC.  NFC hereby  represents  and  warrants to NFRRC as of the date
hereof and as of the related  closing  under the  Further  Transfer
and  Servicing  Agreements,  in its  capacity  as the seller of the
Receivables hereunder, that:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                            ARTICLE IV
                            CONDITIONS

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

(a)   Representations  and  Warranties  True.  The  representations
and  warranties  of NFC in Sections 3.01 and 3.02 shall be true and
correct  on the  Closing  Date,  and NFC shall have  performed  all
obligations  to be  performed  by it  hereunder  on or prior to the
Closing Date.

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

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

(d)   Documents to be Delivered By NFC

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

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

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

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

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

(a)   Representations  and  Warranties  True.  The  representations
and  warranties  of NFRRC in Section 3.03 shall be true and correct
as of  the  Closing  Date,  and  NFRRC  shall  have  performed  all
obligations  to be  performed  by it  hereunder  on or prior to the
Closing Date.

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

                             ARTICLE V
                       ADDITIONAL AGREEMENTS

      NFC agrees with NFRRC as follows:

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

      SECTION 5.02.  Protection of Title.

(a)   Filings.   NFC  shall   execute   and  file  such   financing
statements  and cause to be  executed  and filed such  continuation
and other  statements,  all in such  manner  and in such  places as
may be  required  by law fully to  preserve,  maintain  and protect
the  interest  of NFRRC  under  this  Agreement  in the  Designated
Receivables  and  the  Related  Security.  NFC  shall  deliver  (or
cause to be delivered) to NFRRC  file-stamped  copies of, or filing
receipts  for, any  document  filed as provided  above,  as soon as
available following such filing.

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

(c)   Jurisdiction  of  Organization;  Maintenance of Offices.  NFC
shall  give  NFRRC at least 60 days  prior  written  notice  of any
change in its  jurisdiction  of  formation  if, as a result of such
change,  the  applicable  provisions  of the UCC would  require the
filing  of any  amendment  of any  previously  filed  financing  or
continuation  statement  or of any  new  financing  statement.  NFC
shall at all times  maintain  each  office  from which it  services
Designated  Receivables and its principal  executive  office within
the United States of America.

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

      SECTION 5.04.  Repurchase  Events.  By its  execution  of the
Further  Transfer and Servicing  Agreements to which it is a party,
NFC shall be  deemed  to  acknowledge  the  assignment  by NFRRC of
such of its  right,  title  and  interest  in,  to and  under  this
Agreement  to the  Subsequent  Transferee  as shall be  provided in
the  Further   Transfer  and  Servicing   Agreements.   NFC  hereby
covenants  and agrees  with NFRRC for the  benefit of NFRRC and any
Subsequent  Transferee  that in the  event  of a  breach  of any of
NFC's  representations  and  warranties  contained  in Section 3.01
hereof with respect to any  Designated  Receivable (a  "Repurchase
Event")  as  of  the  second   Accounting   Date  following   NFC's
discovery  or its  receipt of notice of breach  (or, if a Servicing
Default has  occurred  and is  continuing,  or, at NFC's  election,
the first  Accounting Date following such  discovery),  unless such
breach  shall have been cured in all  material  respects,  NFC will
repurchase  such  Designated  Receivable  from NFRRC on the related
Distribution  Date for an  amount  equal to the  Warranty  Payment,
without  further  notice  from NFRRC  hereunder.  It is  understood
and  agreed  that  the   obligation  of  NFC  to   repurchase   any
Designated  Receivable  as to which a breach  has  occurred  and is
continuing,  shall,  if such  obligation is  fulfilled,  constitute
the sole  remedy  against  NFC for  such  breach  available  to any
Person.

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

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

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

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

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

      SECTION 5.10.  Schedule    of    Receivables.    Until   this
Agreement  has  terminated,  each of NFC and NFRRC  shall  maintain
the  Schedule  of  Receivables  at  its  office  set  forth  on the
signature page hereof for inspection  during normal  business hours
by interested parties.


                            ARTICLE VI
                          INDEMNIFICATION

      SECTION 6.01.  Indemnities   by   the   Originator.   Without
limiting  any other  rights that NFRRC may have  hereunder or under
applicable  law,  NFC  hereby  agrees  to  indemnify  NFRRC and its
officers,  directors,  agents and  employees  and its assigns under
the   Further   Transfer   and   Servicing   Agreement   (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  NFRRC  or  its
assigns under the Further  Transfer and Servicing  Agreements of an
interest in the Designated Receivables, excluding, however:

(a)   Indemnified  Amounts  to the  extent  that  such  Indemnified
Amounts  resulted from gross  negligence  or willful  misconduct on
the part of the Indemnified Party seeking indemnification;

(b)   Indemnified  Amounts to the extent the same  includes  losses
in respect of Designated Receivables that are uncollectible; or

(c)   taxes imposed by the  jurisdiction in which such  Indemnified
Party's  principal  executive office is located,  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
Intended   Characterization;   provided,   however,   that  nothing
contained  in this  sentence  shall limit the  liability  of NFC or
limit  the   recourse  of  NFRRC  to  NFC  for  amounts   otherwise
specifically  provided  to be paid by NFC  under  the terms of this
Agreement.

Without  limiting the generality of the foregoing  indemnification,
NFC shall  indemnify  NFRRC  for  Indemnified  Amounts  (including,
without   limitation,    losses   in   respect   of   uncollectible
receivables,  regardless of whether  reimbursement  therefor  would
constitute recourse to NFC) relating to or resulting from:

(a)   any  representation  or warranty made by NFC (or any officers
of NFC)  under or in  connection  with  this  Agreement,  any other
Transaction  Document or any other  information or report delivered
by NFC pursuant  hereto or thereto,  which shall have been false or
incorrect when made or deemed made;

(b)   the failure by NFC to comply with any  applicable  law, rule,
order,  writ,  judgment,  award,  injunction,  decree or regulation
with  respect to any  Designated  Receivable  or  Contract  related
thereto,  or the  nonconformity  of any  Designated  Receivable  or
Contract  included  therein with any such  applicable  law, rule or
regulation  or any  failure  of the NFC to keep or  perform  any of
its obligations, express or implied, with respect to any Contract;

(c)   any failure of NFC to perform its duties,  covenants or other
obligations  in accordance  with the  provisions of this  Agreement
or any other Transaction Document;

(d)   any  products  liability,  personal  injury or damage suit or
similar  claim arising out of or in  connection  with  merchandise,
insurance or services that are the subject of any Contract;

(e)   any dispute,  claim,  counterclaim,  offset or defense (other
than  discharge  in  bankruptcy  of the  Obligor) of the Obligor to
the  payment  of  any  Designated  Receivable  (including,  without
limitation,  a defense based on such  Designated  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  Designated  Receivable or
the furnishing or failure to furnish such merchandise or services;

(f)   the  commingling of Collections of Designated  Receivables at
any time with other funds;

(g)   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
the  sale  of   Designated   Receivables,   the  ownership  of  the
Designated  Receivables or any other  investigation,  litigation or
proceeding  relating to NFC in which any Indemnified  Party becomes
involved  as a  result  of  any of  the  transactions  contemplated
hereby;

(h)   any  inability to litigate  any claim  against any Obligor in
respect of any  Designated  Receivable  as a result of such Obligor
being  immune  from  civil  and  commercial  law  and  suit  on the
grounds of  sovereignty  or otherwise  from any legal action,  suit
or proceeding;

(i)   any  failure  of  NFC  to  acquire  and  maintain  legal  and
equitable  title to, and  ownership  of any  Designated  Receivable
and the  Related  Security  free  and  clear of any  Adverse  Claim
(other  than as created  hereunder);  or any  attempt by any Person
to void such transfer under  statutory  provisions or common law or
equitable  action  (other  than  as a  result  of  the  actions  or
inactions of NFRRC or a Subsequent Transferee);

(j)   any  failure  to vest and  maintain  vested in  NFRRC,  or to
transfer  to NFRRC,  legal and  equitable  title to, and  ownership
of, the Designated  Receivables  and the Related  Security free and
clear of any Adverse Claim;

(k)   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 Designated Receivable and the Related Security;

(l)   any action or  omission  by NFC which  reduces or impairs the
rights of NFRRC with respect to any  Designated  Receivable  or the
value of any such Designated Receivable; and

(m)   any  attempt  by any  Person to void the  purchase  hereunder
under statutory provisions or common law or equitable action; and

(n)   any claim by any party arising from the  activities of NFC in
administering, servicing or collecting any Designated Receivable.

                            ARTICLE VII
                     MISCELLANEOUS PROVISIONS

SECTION 7.01....Amendment.  This Agreement may be amended from
time to time (subject to any expressly applicable amendment
provision of the Further Transfer and Servicing Agreements) by a
written amendment duly executed and delivered by NFC and NFRRC.
Prior to the execution of any such amendment, NFC shall furnish
written notification of the substance of such amendment to each
of the Rating Agencies.

      SECTION 7.02.  Survival.   The  representations,   warranties
and  covenants  of NFC set forth in  Article  III and  Article V of
this  Agreement  shall  remain in full  force and  effect and shall
survive  the  Closing  Date  and  the  closing  under  the  Further
Transfer and  Servicing  Agreements.  This  Agreement  shall not be
terminated  prior to the  termination  of the Further  Transfer and
Servicing Agreements.

      SECTION 7.03.  Notices.    All    demands,     notices    and
communications   under  this   Agreement   shall  be  delivered  as
specified in Section 14.2 of the Purchase Agreement.

      SECTION 7.04.  Governing  Law. All questions  concerning  the
construction,  validity and  interpretation  of this  Agreement and
each  Assignment  shall be governed by and  construed  and enforced
in  accordance  with the  internal  laws of the  State of New York,
without  giving  effect to any choice of law or conflict  provision
or  rule   (whether   of  the  State  of  New  York  or  any  other
jurisdiction)  that would cause the  application of the laws of any
jurisdiction other than the State of New York.

      SECTION 7.05.  Waivers.  No  failure  or delay on the part of
NFRRC  in  exercising  any  power,   right  or  remedy  under  this
Agreement  or the  Assignment  shall  operate as a waiver  thereof,
nor shall any single or partial  exercise of any such power,  right
or remedy  preclude  any other or further  exercise  thereof or the
exercise of any other power, right or remedy.

      SECTION 7.06.  Costs  and  Expenses.  NFC  agrees  to pay all
reasonable  out-of-pocket  costs and  expenses of NFRRC,  including
fees and expenses of counsel,  in  connection  with the  perfection
as against third parties of NFRRC's  right,  title and interest in,
to and under the  Designated  Receivables  and the  enforcement  of
any obligation of NFC hereunder.

      SECTION 7.07.  Confidential  Information.  NFRRC  agrees that
it shall  neither  use nor  disclose  to any  person  the names and
addresses  of  the  Obligors,   except  in   connection   with  the
enforcement  of  NFRRC's  rights  hereunder,  under the  Designated
Receivables,  under the Further  Transfer and Servicing  Agreements
or as required by law.

      SECTION 7.08.  Headings.   The   various   headings  in  this
Agreement  are for purposes of reference  only and shall not affect
the meaning or interpretation of any provision of this Agreement.

      SECTION 7.09.  Counterparts.  This  Agreement may be executed
in two or more  counterparts,  and by different parties on separate
counterparts,  each  of  which  shall  be an  original,  but all of
which  together  shall  constitute  one  and the  same  instrument.
Delivery of an  executed  counterpart  of a signature  page to this
Agreement  by  facsimile  shall  be  effective  as  delivery  of  a
manually executed counterpart of this Agreement.

      SECTION 7.10.  Severability  of  Provisions.  If  any  one or
more of the  covenants,  agreements,  provisions  or  terms of this
Agreement  shall for any reason  whatsoever be held  invalid,  then
such  covenants,  agreements,  provisions  or terms shall be deemed
enforceable  to  the  fullest  extent  permitted,  and  if  not  so
permitted,   shall  be   deemed   severable   from  the   remaining
covenants,  agreements,  provisions or terms of this  Agreement and
shall  in no way  affect  the  validity  or  enforceability  of the
other  provisions of this  Agreement or of any Securities or rights
of any Subsequent Transferee.

      SECTION 7.11.  Further  Assurances.  NFC and  NFRRC  agree to
do and  perform,  from  time  to  time,  any and  all  acts  and to
execute any and all further  instruments and documents  required or
reasonably  requested  by  the  other  more  fully  to  effect  the
purposes  of  this  Agreement,   including  the  execution  of  any
financing  statements or  continuation  statements  relating to the
Designated  Receivables  for filing under the provisions of the UCC
of any applicable jurisdiction.

      SECTION 7.12.  No  Other  Third-Party   Beneficiaries.   This
Agreement  shall  inure to the  benefit of and be binding  upon the
parties hereto,  any Subsequent  Transferees  and their  respective
successors  and permitted  assigns.  Except as otherwise  expressly
provided in this  Agreement,  no other  Person shall have any right
or obligation hereunder.

      SECTION 7.13.  Merger    and    Integration.     Except    as
specifically  stated  otherwise  herein,  this Agreement sets forth
the entire  understanding  of the  parties  relating to the subject
matter hereof, and all prior  understandings,  written or oral, are
superseded   by  this   Agreement.   This   Agreement  may  not  be
modified,  amended,  waived,  or  supplemented  except as  provided
herein.

      SECTION 7.14.  Bankruptcy Petition.

(a)   NFC and NFRRC each 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 the Company or any
Financial  Institution that is a special purpose  bankruptcy remote
entity,  it will not  institute  against,  or join any other Person
in  instituting  against,  the  Company  or  any  such  entity  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.

(b)   NFC covenants and agrees that,  prior to the date that is one
year  and one day  after  the  payment  in full of all  outstanding
obligations  of NFRRC  under the  Purchase  Agreement,  it will not
institute  against,   or  join  any  other  Person  in  instituting
against,   NFRRC  any  bankruptcy,   reorganization,   arrangement,
insolvency   or   liquidation    proceedings   or   other   similar
proceedings  under  the laws of the  United  States or any state of
the United States.

      SECTION 7.15.  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
NFC,  NFRRC  or any  other  Person  against  the  Agent or any such
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 NFC and NFRRC each 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 7.16.  Assignments.  NFC  may not  assign  any of its
rights and  obligations  hereunder or any interest  herein  without
the  prior  written  consent  of NFRRC  and the  Agent.  NFRRC  may
assign  at any  time  its  rights  and  obligations  hereunder  and
interests  herein to any other  Person  without the consent of NFC.
Without  limiting  the  foregoing,  NFC  acknowledges  that  NFRRC,
pursuant to the Purchase  Agreement,  may assign to the Agent,  for
the benefit of the  Purchasers,  its rights,  remedies,  powers and
privileges  hereunder  and that the  Agent and the  Purchasers  may
further  assign such rights,  remedies,  powers and  privileges  to
the extent  permitted  in the Purchase  Agreement.  NFC agrees that
the  Agent,  as the  assignee  of  NFRRC,  shall  have the right to
enforce  this  Agreement  and to exercise  directly  all of NFRRC's
rights  and  remedies  under  this  Agreement  (including,  without
limitation,   the  right  to  give  or  withhold  any  consents  or
approvals  of  NFRRC to be given  or  withheld  hereunder)  and NFC
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 NFC pursuant to Article III;
(ii) the  indemnification  and payment provisions of Article VI and
(iii)  Sections  7.14  and  7.15  shall  be  continuing  and  shall
survive any termination of this Agreement.

      SECTION 7.17.  CONSENT TO  JURISDICTION.  EACH  PARTY  HEREBY
IRREVOCABLY  SUBMITS  TO  THE  NONEXCLUSIVE   JURISDICTION  OF  ANY
UNITED  STATES  FEDERAL  OR NEW YORK  STATE  COURT  SITTING  IN NEW
YORK,  NEW YORK,  IN ANY  ACTION OR  PROCEEDING  ARISING  OUT OF OR
RELATING  TO  THIS  AGREEMENT  OR ANY  DOCUMENT  EXECUTED  BY  SUCH
PERSON   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.

      SECTION 7.18.  WAIVER  OF  JURY  TRIAL.   EACH  PARTY  HERETO
HEREBY WAIVES TRAIL 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  THE
SELLER PURSUANT TO THIS AGREEMENT OR THE  RELATIONSHIP  ESTABLISHED
HEREUNDER OR THEREUNDER.

                             * * * * *


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


                          NAVISTAR FINANCIAL CORPORATION

                          By:


                          NAVISTAR FINANCIAL RETAIL RECEIVABLES
                          CORPORATION

                          By


--------------------------------------------------------------------------------
                                                        EXHIBIT A

                        FORM OF ASSIGNMENT

      For value received,  in accordance with the Receivables  Sale
Agreement,  dated  as of July  30,  2004  (the  "Sale  Agreement"),
between  Navistar  Financial  Corporation,  a Delaware  corporation
("NFC"),  and Navistar Financial Retail  Receivables  Corporation a
Delaware  corporation  ("NFRRC"),  NFC does  hereby  sell,  assign,
transfer  and  otherwise   convey  unto  NFRRC,   without  recourse
(except to the extent  expressly  provided in the Sale  Agreement),
all  right,  title  and  interest  of NFC in,  to and under (i) the
Receivables  listed  on  Schedule  I  hereto,  (having  an  Initial
Aggregate    Receivables   Balance   of    $324,999,999.66)    (the
"Designated  Receivables")  and all monies paid thereon  (including
Liquidation  Proceeds)  and due  thereunder on and after the Cutoff
Date;  (ii)  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;  (iii) all other  security  interests or liens and
property  subject thereto from time to time, if any,  purporting to
secure payment of such Designated  Receivable,  whether pursuant to
a contract  related to such  Designated  Receivable  or  otherwise,
together  with all  financing  statements  and security  agreements
describing  any  collateral  securing such  Designated  Receivable;
(iv) the  benefits  of any lease  assignments  with  respect to the
Financed  Vehicles;  (v) any proceeds from any  Insurance  Policies
with  respect  to the  Designated  Receivables;  (vi) 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  of  the  Sale   Agreement);   (vii)  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);
(viii)  all of NFC's  right,  title and  interest  in, to and under
the Designated  Accounts and all monies  therein;  (ix) all Records
and  Receivables  Files  relating to such  Designated  Receivables;
and      (x)      any      proceeds      of      any     of     the
foregoing.

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

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

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

                             * * * * *

--------------------------------------------------------------------------------
      IN  WITNESS   WHEREOF,   the   undersigned  has  caused  this
Assignment to be duly executed as of July 30, 2004.

                          NAVISTAR FINANCIAL CORPORATION

                          By
                          Name:
                          Title:


 
 
                                                      EXHIBIT 10.69



                  RECEIVABLES PURCHASE AGREEMENT


                     dated as of July 30, 2004


                               Among

   NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION, as Seller,

            NAVISTAR FINANCIAL CORPORATION, as Servicer,




                     THUNDER BAY FUNDING, LLC,

                            as Company,



                                and

                       ROYAL BANK OF CANADA,
                             as Agent


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

                         TABLE OF CONTENTS


                                                               Page

ARTICLE I PURCHASE ARRANGEMENTS...................................2
      Section 1.1  Purchase of Purchaser Interest.................2
      Section 1.2  Transfers and Assignments; Custody
                   of Receivables Files.......................... 2
      Section 1.3  Payment Requirements...........................2
      Section 1.4  Establishment of Designated Accounts...........2

ARTICLE II PAYMENTS AND COLLECTIONS...............................2
      Section 2.1  General Settlement Procedures..................2
      Section 2.2  Withdrawals from Reserve Account...............2
      Section 2.3  Payment Rescission.............................2
      Section 2.4  Clean Up Call..................................2
      Section 2.5  Monthly Report.................................2
      Section 2.6  Deposits Net of Total Servicing Fee............2
      Section 2.7  Investment Policy and Procedure................2
      Section 2.9  Distributions by Agent.........................2

ARTICLE III REPRESENTATIONS AND WARRANTIES........................2
      Section 3.1  Representations and Warranties of
                   Seller Parties.................................2

ARTICLE IV CONDITIONS OF PURCHASES................................2
      Section 4.1  Conditions Precedent to Purchase...............2

ARTICLE V COVENANTS...............................................2
      Section 5.1  Affirmative Covenants of the Seller Parties....2
      Section 5.2  Covenants of the Servicer......................2
      Section 5.3  Covenant of the Agent..........................2
      Section 5.4  Replacement of Financial Institutions..........2

ARTICLE VI ADMINISTRATION AND COLLECTION..........................2
      Section 6.1  General Duties of the Servicer.................2
      Section 6.2  Collection of Receivables Payments.............2
      Section 6.3  Realization Upon Liquidating Receivables.......2
      Section 6.4  Maintenance of Insurance Policies..............2
      Section 6.5  Maintenance of Security Interests
                   in Vehicles....................................2
      Section 6.6  Total and Supplemental Servicing Fees;
                   Payment of Certain Expenses by Servicer........2
      Section 6.7  Monthly Advances...............................2
      Section 6.8  Additional Deposits............................2
      Section 6.9  Annual Statement as to Compliance..............2
      Section 6.10  Annual Independent Accountants'Report.........2
      Section 6.11  Assignment of Administrative Receivables
                    and Warranty Receivables......................2
      Section 6.12  Collection Account............................2
      Section 6.13  Delegation of Duties..........................2
      Section 6.14  Servicer Not to Resign........................2
      Section 6.15  Appointment of Successor......................2
      Section 6.16  Merger or Consolidation of or Assumption
                    of the Obligations of, the Servicer...........2

ARTICLE VII SERVICER DEFAULTS.....................................2
      Section 7.1   Servicer Defaults.............................2
      Section 7.2   Remedies......................................2

ARTICLE VIII INDEMNIFICATION......................................2
      Section 8.1   Indemnities by the Seller Parties.............2
      Section 8.2   Increased Cost and Reduced Return.............2
      Section 8.3   Other Costs and Expense.......................2

ARTICLE IX MISCELLANEOUS..........................................2
      Section 9.1   Waivers and Amendments........................2
      Section 9.2   Notices.......................................2
      Section 9.3   Ratable Payments..............................2
      Section 9.4   Protection of Ownership Interests
                    of the Purchasers.............................2
      Section 9.5   Confidentiality...............................2
      Section 9.6   Bankruptcy Petition...........................2
      Section 9.7   Limitation of Liability.......................2
      Section 9.8   CHOICE OF LAW.................................2
      Section 9.9   CONSENT TO JURISDICTION.......................2
      Section 9.10  WAIVER OF JURY TRIAL..........................2
      Section 9.11  Integration; Binding Effect; Survival of
                    Terms.........................................2
      Section 9.12  Counterparts; Severability; Section
                    References....................................2
      Section 9.14  Characterization..............................2
      Section 9.15  Non-Recourse Obligations......................2

 

EXHIBITS Exhibit I Definitions Exhibit II Places of Business of the Seller Parties; Locations of Records; Federal Employer Identification Number(s) Exhibit III Form of Monthly Report SCHEDULES Schedule A Documents to be Delivered to Agent Schedule B Schedule of Receivables -------------------------------------------------------------------------------- NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION RECEIVABLES PURCHASE AGREEMENT This Receivables Purchase Agreement dated as of July 30, 2004, is among Navistar Financial Retail Receivables Corporation, a Delaware corporation ("Seller" or "NFRRC"), Navistar Financial Corporation, a Delaware corporation ("NFC"), as Servicer (the Servicer together with the Seller, the "Seller Parties" and each a "Seller Party"), Thunder Bay Funding, LLC (the "Company"), and Royal Bank of Canada, as agent for the Purchasers hereunder or any successor agent hereunder (together with its successors and assigns hereunder, the "Agent"). Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I. PRELIMINARY STATEMENTS Seller desires to transfer and assign an undivided ownership interest in a specified pool of Receivables (as defined herein) to the Company on the date of this Agreement (as defined herein) which it acquired from NFC, and the Company desires to acquire such interest on the date of this Agreement, in each case subject to the terms of this Agreement. The Seller, the Company, and the Agent desire to appoint NFC as the Servicer under this Agreement, and NFC desires to act as Servicer, in consideration of the fees and other benefits and subject to the terms and conditions set forth in this Agreement. ARTICLE I PURCHASE ARRANGEMENTS Section 1.1 Purchase of Purchaser Interest. (a) Upon the terms and subject to the conditions hereof, on the date hereof Seller hereby sells and assigns the Purchaser Interest to the Agent for the benefit of the Purchasers. (b) The aggregate Purchase Price for the Purchaser Interest conveyed hereunder shall be $324,999,999.66, which is payable by wire transfer of immediately available funds to a bank account of Seller designated in writing by Seller to the Agent. Section 1.2 Transfers and Assignments; Custody of Receivables Files. (a) On the date hereof, the Seller shall deposit the Initial Reserve Account Deposit into the Reserve Account. (b) Within two Business Days after the date hereof, the Servicer shall cause to be deposited into the Collection Account all Collections (from whatever source) on or with respect to Receivables received by the Servicer on or after the Cutoff Date and on or prior to the date hereof. (c) In connection with the sale, transfer and assignment of Receivables to the Seller from NFC pursuant to the Sale Agreement, the Seller, simultaneously with the execution and delivery of this Agreement, shall enter into the Custodian Agreement with the Custodian, pursuant to which the Seller shall revocably appoint the Custodian, and the Custodian shall accept such appointment, to act as Custodian. (d) The Purchasers acknowledge and agree that (a) the rights pursuant to the International Purchase Obligations are personal to NFC, and only the proceeds of such rights are being assigned to the Purchasers pursuant to the terms hereof, (b) the Purchasers are not, and are not intended to be, third party beneficiaries of such rights, and (c) accordingly such rights are not exercisable by, enforceable by, or for the benefit of, or preserved for the benefit of, the Purchasers. The Purchasers hereby agree to and accept the appointment and authorization of NFC as Servicer hereunder subject to the terms and conditions set forth in this Agreement. Section 1.3 Payment Requirements. All amounts to be paid or deposited by the Seller or the Servicer to the Agent or any Purchaser pursuant to any provision of this Agreement shall be paid or deposited in immediately available funds in accordance with the terms hereof no later than 11:00 a.m. (Chicago time) on the day when due; provided however, that (i) with respect to any intrabank transfer from any Designated Account to the Agent, the Purchasers or another Designated Account, it will be sufficient if the Servicer shall provide the Agent with notice that such transfer should be made, no later than 12:30 p.m. (Chicago time) on the day when due, and (ii) with respect to any transfer into the Collection Account, it shall be sufficient if such transfer is received by the Securities Intermediary at any time on the day it is due, it being understood that if such transfer into the Collection Account is received by the Securities Intermediary after its internal payment deadline, Investment Earnings may not be credited to the Collection Account for that night for such late arriving funds. Amounts payable to the Agent shall be paid to the Agent by deposit into Account No. XXXXXXX at Deutsche Bank Trust Company Americas, ABA #XXXXXX, Reference Navistar Pool 2004-RBC, until otherwise notified by the Agent. Except as otherwise provided herein, all computations of Yield, per annum fees hereunder and per annum fees under the Fee Letter shall be made on the basis of a year of 360 days for the actual number of days elapsed; provided however, that computations of interest at the Base Rate shall be made on the basis of a year of 365 days or 366 days, as applicable, for the actual number of day elapsed. If any amount hereunder shall be payable on a day which is not a Business Day, such amount shall be payable on the next succeeding Business Day. Section 1.4 Establishment of Designated Accounts. (a) The Servicer, for the benefit of the Agent and the Purchasers, shall establish and maintain in the name of the Agent, an account titled "Royal Bank of Canada, as Agent-Navistar Financial 2004-RBC Collection Account" (the "Collection Account") and an account titled "Royal Bank of Canada, as Agent-Navistar Financial 2004-RBC Reserve Account" (the "Reserve Account"), each of which will be an Eligible Account bearing a designation that the funds deposited therein are held for the benefit of the Agent and Purchasers. The Designated Accounts and any Eligible Investments on deposit in the Designated Accounts shall be subject to the exclusive custody and control of the Agent and the Agent shall have sole signature authority with respect thereto. (b) The Securities Intermediary when requested by the Servicer shall invest the funds in the Reserve Account in Eligible Investments selected by the Servicer, held in the name of the Securities Intermediary for the benefit of the Agent and the Purchasers. Funds deposited in the Reserve Account shall be invested in Eligible Investments which mature on or prior to the next Settlement Date. Any income or other gain from such Eligible Investments shall be retained in the Reserve Account, to the extent the amount on deposit is less than the Specified Reserve Account Balance. Any Investment Earnings on funds in the Reserve Account not required to be retained in the Reserve Account pursuant to the preceding sentence shall be deposited into the Collection Account one Business Day prior to each Settlement Date and shall be treated as a part of Collected Interest for the Monthly Period related to such Settlement Date. The Servicer shall determine the Specified Reserve Account Balance for each Settlement Date. (c) The Securities Intermediary when requested by the Servicer shall invest the funds in the Collection Account in Eligible Investments selected by the Servicer, held in the name of the Securities Intermediary for the benefit of the Agent and the Purchasers, which shall mature no later than the Business Day preceding the Settlement Date. Any income or other gain from such Eligible Investments in the Collection Account shall be retained in the Collection Account and shall be treated as a part of Collected Interest for the Monthly Period related to such Settlement Date. ARTICLE II PAYMENTS AND COLLECTIONS Section 2.1 General Settlement Procedures. (a) The Servicer shall remit to the Collection Account all Collections including all Insurance Proceeds, all Liquidation Proceeds, proceeds from any Dealer Liability, and proceeds from any International Purchase Obligations, within two Business Days after receipt thereof. The Agent shall notify the Servicer of the Yield and Net Swap Amount with respect to any Settlement Period within three (3) Business Days after the end of such Settlement Period. On or before each Determination Date, with respect to the preceding Monthly Period and the related Settlement Date, the Servicer shall calculate the Total Available Amount, Collected Interest, Collected Principal, the Total Servicing Fee, and, provided that the Agent has supplied the Servicer with the Yield and Net Swap Amount for the related Settlement Period, other amounts required to determine the amounts to be deposited in or paid from each of the Collection Account and the Reserve Account on the next succeeding Settlement Date. If at any time the Seller receives any Collections, the Seller shall promptly pay such Collections to the Servicer and, at all times prior to such payment, such Collections shall be held in trust by the Seller for the exclusive benefit of the Purchasers and the Agent. (b) On or before (but not more than two Business Days before) the Business Day preceding each Settlement Date, the Servicer shall cause to be made (including, in the case of clause (ii), by instructing the Securities Intermediary in accordance with Section 2.2 (a)) the following withdrawals, deposits, transfers and distributions in the amounts set forth in the Monthly Report for such Settlement Date: (i) from the Collection Account to the Servicer, in immediately available funds, reimbursement of Outstanding Monthly Advances pursuant to Section 6.7, payments of Liquidation Expenses with respect to Receivables which became Liquidating Receivables during the related Monthly Period pursuant to Section 6.3 and any unpaid Liquidation Expenses from prior periods; (ii) from the Reserve Account to the Collection Account, the lesser of (A) the amount of cash or other immediately available funds therein on such date and (B) the amount, if any, by which (I) the sum of the Total Servicing Fee with respect to the preceding Monthly Period, the Yield for such Settlement Period and the Net Swap Amount for the related Settlement Period, the Facility Fee with respect to the related Settlement Period, and the Principal Distributable Amount for the related Settlement Date, exceeds (II) the Available Amount for such Settlement Date; and (iii) the Servicer shall deposit, out of its own funds, the Net Swap Adjustment Amount into the Collection Account and Reserve Account as follows: (A) into the Collection Account, the excess, if any, of the amount specified in clause (B) of Section 2.1(b)(ii) over the amount specified in clause (A) of Section 2.1(b)(ii) and (B) the remainder, if any, into the Reserve Account. (c) On each Settlement Date, the Agent at the request of the Servicer shall apply amounts on deposit in the Collection Account, to the extent of the Total Available Amount, as follows: (i) first, if the Servicer is not the Seller or an Affiliate of the Seller, to pay the Total Servicing Fee to the Servicer with respect to the related Monthly Period, (ii) second, to the reimbursement of the Agent's costs of collection and enforcement of this Agreement, (iii) third, to pay the Agent for distribution to the Purchasers an amount equal to the sum of (A) the sum of the Yield for the related Settlement Period and the Net Swap Amount for the related Settlement Period and (B) the Facility Fee for such Settlement Period, (iv) fourth, if the Servicer is the Seller or an Affiliate of the Seller, to pay the Total Servicing Fee to the Servicer with respect to the related Monthly Period, (v) fifth, to pay to the Agent for distribution to the Purchasers, an amount equal to the Principal Distributable Amount for such Settlement Date to be applied to reduce the Capital of the Purchaser Interest, (vi) sixth, to pay to the Reserve Account, an amount equal to the excess, if any, of the Specified Reserve Account Balance over the amount of funds then on deposit in the Reserve Account, (vii) seventh, for payment of all other Obligations which are payable on or before such Settlement Date to the Agent or the Purchasers and which have not otherwise been paid (other than Warranty Payments owed by NFC or the Servicer and Optional Purchase Proceeds), and (viii) eighth, if no Servicer Default has occurred and is continuing, the remaining balance, if any, to the Seller, unless there is a Servicer Default, at which time the remaining balance shall be used to reduce the Capital and any other Aggregate Unpaids. (d) All payments by or on behalf of an Obligor with respect to a Receivable (excluding Supplemental Servicing Fees) shall be applied (i) first, to reduce Outstanding Monthly Advances, if any, with respect to such Receivable, as described in Section 6.7, (ii) second, to the Scheduled Payment for such Monthly Period with respect to such Receivable, and (iii) third, the remainder shall constitute, with respect to such Receivable, a Full Prepayment or Partial Prepayment. (e) A Partial Prepayment made on a Receivable is applied to reduce the final Scheduled Payment and will thereafter, to the extent the Partial Prepayment exceeds the final Scheduled Payment, reduce Scheduled Payments in reverse chronological order beginning with the penultimate Scheduled Payment. The Rebate related to such Partial Prepayment will reduce the final Scheduled Payment and will thereafter, to the extent the Rebate exceeds the final Scheduled Payment, reduce Scheduled Payments in reverse chronological order beginning with the penultimate Scheduled Payment. Section 2.2 Withdrawals from Reserve Account. (a) The Servicer shall notify (with a copy to the Agent) the Securities Intermediary of the amount of, and the Securities Intermediary shall make, the withdrawals from the Reserve Account required pursuant to Sections 1.4(b) and 2.1(b)(ii). On each Settlement Date, to the extent that the funds in the Reserve Account exceed the Specified Reserve Account Balance and so long as no Servicer Default shall have occurred and be continuing, the Servicer may notify (with a copy to the Agent) the Securities Intermediary of the amount of, and the Securities Intermediary shall withdraw the amount of, such excess from the Reserve Account and distribute the same to the Seller. Upon the occurrence of a Servicer Default, the Servicer shall notify (with a copy to the Agent) the Securities Intermediary of the amount of, and the Securities Intermediary shall withdraw, all amounts on deposit in the Reserve Account for application in accordance with Section 2.1(c). To the extent that any funds remain in the Reserve Account after the Aggregate Unpaids have been indefeasibly reduced to zero, such funds shall be withdrawn and distributed to, or as directed by, the Seller. Each Monthly Report shall specify the amount, if any, which is scheduled to be withdrawn from the Reserve Account and distributed to the Seller on the next succeeding Settlement Date. (b) If the Servicer, pursuant to Section 6.7, determines on any Settlement Date that it is required to make a Monthly Advance and does not do so from its own funds, the Servicer shall notify (with a copy to the Agent) the Securities Intermediary of the amount of such shortfall, and the Securities Intermediary shall withdraw, funds from the Reserve Account up to the amount of such shortfall and deposit them in the Collection Account to cover any such shortfall. Such payment shall be deemed to have been made by the Servicer pursuant to Section 2.1 for purposes of making distributions pursuant to this Agreement, but shall not otherwise satisfy the Servicer's obligation to deliver the amount of the Monthly Advances to the Collection Account, and the Servicer shall within two Business Days replace any funds in the Reserve Account so used. The Servicer shall not be entitled to reimbursement for any such deemed Monthly Advances unless and until the Servicer shall have replaced such funds in the Reserve Account. Section 2.3 Payment Rescission. No payment of any of the Aggregate Unpaids shall be considered paid or applied hereunder to the extent that, at any time, all or any portion of such payment or application is rescinded by application of law or judicial authority, or must otherwise be returned or refunded for any reason. Seller shall remain obligated for the amount of any payment or application so rescinded, returned or refunded, and shall promptly pay to the Agent (for application to the Person or Persons who suffered such rescission, return or refund) the full amount thereof, plus the Default Fee from the date of any such rescission, return or refunding. Section 2.4 Clean Up Call. As of the last day of any Monthly Period as of which the Capital is 10% or less of the Initial Aggregate Receivables Balance, the Servicer shall have the option to purchase all (but not less than all) of the Purchaser Interest (the "Clean-up Call"); provided, however, that the Servicer may not exercise the Clean-up Call if the Optional Purchase Proceeds are insufficient to repay all Aggregate Unpaids. To exercise such option, the Servicer shall provide the Agent with not less than 10 Business Days' prior written notice of its intention to do so (the "Clean-up Call Notice"). On or before the day preceding the related Settlement Date, the Servicer shall deposit in the Collection Account an amount equal to the aggregate Administrative Purchase Payments for the Receivables (including Liquidating Receivables), included in the Purchaser Interest (less the Liquidation Expenses to be incurred in connection with the recovery thereof). The foregoing amounts (the "Optional Purchase Proceeds") shall be paid by the Servicer into the Collection Account for distribution to the Agent and the Purchasers in accordance with Section 2.1. Section 2.5 Monthly Report Not later than 10:00 a.m. (Chicago time) on each Determination Date, the Servicer shall deliver to the Agent a Monthly Report with respect to the immediately preceding Monthly Period, executed by any Authorized Officer of the Servicer, containing all information necessary for making the calculations, withdrawals, deposits, transfers and distributions required by this Article II. Section 2.6 Deposits Net of Total Servicing Fee. Any provision herein to the contrary notwithstanding, for so long as (i) NFC is the Servicer hereunder and (ii) no Servicer Default has occurred and is continuing, the deposits into the Collection Account pursuant to Section 2.1(a) may be made net of the Total Servicing Fee to be distributed to the Servicer pursuant to Sections 2.1(c)(iv) (so long as Collected Interest not yet distributed is sufficient therefor). Nonetheless, the Servicer shall account for the Total Servicing Fee in the Monthly Report as if such amount had been deposited into the Collection Account and/or transferred separately. Section 2.7 Investment Policy and Procedure. Investments in Eligible Investments shall be made in the name of the Securities Intermediary, and such investments shall not be sold or disposed of prior to their maturity. The Servicer shall from time to time appoint a person, which shall initially be JPMorgan Chase Bank, to act as "Securities Intermediary" , who shall qualify as a "securities intermediary" within the meaning of Section 8-102 of the UCC in effect in the State of New York. The Servicer shall provide notice of such appointment to the Agent and shall use reasonable efforts to obtain the express agreement of such Person to the obligations of the Securities Intermediary set forth in Sections 1.4, 2.1, 2.2, 2.7 and 6.12, a copy of which agreement shall be delivered to the Agent. (a) With respect to the Designated Account Property, the Securities Intermediary agrees, by its acceptance hereof, that: (i) The Designated Accounts are accounts to which Financial Assets will be credited and are "securities accounts" within the meaning of Section 8-501 of the UCC. (ii) All securities or other property underlying any Financial Assets credited to the Designated Accounts shall be registered in the name of the Securities Intermediary, indorsed to the Securities Intermediary or in blank or credited to another securities account maintained in the name of the Securities Intermediary and in no case will any Financial Asset credited to any of the Designated Accounts be registered in the name of the Agent, the Company, the Servicer or the Seller, payable to the order of the Agent, the Company, the Servicer or the Seller or specially indorsed to the Agent, the Company, the Servicer or the Seller except to the extent the foregoing have been specially indorsed to the Securities Intermediary or in blank. (iii) All property delivered to the Securities Intermediary pursuant to this Agreement will be promptly credited to the appropriate Designated Account as directed by the Servicer or as otherwise provided herein. (iv) Each item of property (whether investment property, Financial Asset, security, instrument or cash) credited to a Designated Account shall be treated as a "financial asset" within the meaning of Section 8-102(a)(9) of the New York UCC. (v) If at any time the Securities Intermediary shall receive any order from the Agent directing transfer or redemption of any Financial Asset relating to the Securities Accounts, the Securities Intermediary shall comply with such entitlement order without further consent by the Financial Institutions, the Company, the Servicer, the Seller or any other Person. (vi) The Designated Accounts shall be governed by the laws of the State of New York, regardless of any provision in any other agreement. For purposes of the UCC, New York shall be deemed to be the Securities Intermediary's jurisdiction and the Designated Accounts (as well as the Securities Entitlements related thereto) shall be governed by the laws of the State of New York. (vii) The Securities Intermediary has not entered into, and until the termination of this Agreement will not enter into, any agreement with any other Person relating to the Designated Accounts and/or any Financial Assets credited thereto pursuant to which it has agreed to comply with entitlement orders (as defined in Section 8-102(a)(8) of the New York UCC) of such other Person and the Securities Intermediary has not entered into, and until the termination of this Agreement will not enter into, any agreement with the Financial Institutions, any Company, the Seller, the Servicer or the Agent purporting to limit or condition the obligation of the Securities Intermediary to comply with entitlement orders as set forth in Section 2.7(a)(v) above. (viii) Except for the claims and interest of the Agent, and the Company in the Designated Accounts, the Securities Intermediary knows of no claim to, or interest in, the Designated Accounts or in any Financial Asset credited thereto. If any other person asserts any lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process) against the Designated Accounts or in any Financial Asset carried therein, the Securities Intermediary will promptly notify the Agent, the Company, and the Servicer thereof. (ix) The Securities Intermediary will promptly send copies of all statements, confirmations and other correspondence concerning the Designated Accounts and/or any Designated Account Property simultaneously to each of the Servicer and the Agent at the addresses set forth in the signature pages hereof. (b) The Servicer shall have the right, revocable by the Agent to notify the Securities Intermediary (with a copy to the Agent) of the amounts to be withdrawn and paid, and the Securities Intermediary shall make such withdrawals and payments, from the Designated Accounts for the purpose of permitting the Servicer to carry out its duties hereunder or permitting the Agent to carry out its duties hereunder. (c) The Agent shall possess all right, title and interest in and to all funds on deposit from time to time in the Designated Accounts and in all proceeds thereof. The Designated Accounts shall be under the sole dominion and control of the Agent for the benefit of the Agent and the Purchasers. (d) The Servicer shall not direct the Securities Intermediary to make any investment of any funds or to sell any investment held in any of the Designated Accounts unless the security interest granted and perfected in such account shall continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Agent to make any such investment or sale, if requested by the Securities Intermediary, the Servicer shall deliver to the Securities Intermediary an opinion of counsel, acceptable to the Securities Intermediary, to such effect. (e) The Seller shall pay all fees and expenses of the Securities Intermediary. The Securities Intermediary shall have no right of offset against amounts in the Designated Accounts. Section 2.8 Default Fees. If any Person fails to pay any of the Obligations when due, such Person agrees to pay, on demand, the Default Fee in respect thereof until paid. Notwithstanding the foregoing, no provision of this Agreement or the Fee Letter shall require the payment or permit the collection of any amounts hereunder in excess of the maximum permitted by applicable law. Section 2.9 Distributions by Agent. All distributions to the Agent under any clause of Section 2.1(c) or any other provision of this Agreement in respect of amounts owing to the Agent and the Purchasers shall be allocated and paid by the Agent to the Purchasers as the Agent and the Purchasers shall agree. ARTICLE III REPRESENTATIONS AND WARRANTIES Section 3.1 Representations and Warranties of Seller Parties. As of the date hereof (or with respect to representations and warranties that speak expressly as of another date, then as of such other date), each Seller Party hereby represents and warrants to the Agent and the Purchasers, as to itself, that: (a) Corporate Existence and Power. Such Seller Party is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, and is duly qualified to do business and is in good standing as a foreign corporation, and has and holds all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted. (b) Power and Authority; Due Authorization Execution and Delivery. The execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and, in the case of Seller only, Seller's use of the proceeds of sales made hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part. This Agreement and each other Transaction Document to which such Seller Party is a party has been duly executed and delivered by such Seller Party. (c) No Conflict. The execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any material agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property. (d) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder. (e) Actions, Suits. There are no actions, suits or proceedings pending, or to the best of such Seller Party's knowledge, threatened, against or affecting such Seller Party, or any of its properties, in or before any court, arbitrator or other body, that would result in a Material Adverse Change. (f) Binding Effect. This Agreement and each other Transaction Document to which such Seller Party is a party constitute the legal, valid and binding obligations of such Seller Party enforceable against such Seller Party in accordance with their respective 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). (g) Use of Proceeds. No proceeds of any sale hereunder will be used (i) for a purpose that violates, or would be inconsistent with, Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time 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) Good Title. Immediately prior to each purchase hereunder, the Seller shall be the legal and beneficial owner of the Receivables and Related Security with respect thereto, free and clear of any Adverse Claim. All necessary actions have been taken, including 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 Seller's ownership interest in each Receivable and the Related Security. (i) Perfection. This Agreement, together with the filing of the financing statements contemplated hereby, is effective to, and shall transfer to the Agent for the benefit of the Purchaser (and the Agent for the benefit of the Purchaser shall acquire from Seller) a valid and perfected first priority undivided ownership interest in each Receivable existing or hereafter arising and in the Related Security with respect thereto, free and clear of any Adverse Claim. All necessary actions have been taken, including 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 the Agent's (on behalf of the Purchaser) ownership interest in the Receivables and, the Related Security. (j) Places of Business. The principal place of business and chief executive office of such Seller Party and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit II or such other locations of which the Agent has been notified in accordance with Section 5.2(a) in jurisdictions where all action required to continue the perfection of the Agent's security interest in the Receivables and the Related Security has been taken and completed. Seller's Federal Employer Identification Number is correctly set forth on Exhibit II. (k) Not a Holding Company or an Investment Company. Such Seller Party is not a "holding company" or a "subsidiary holding company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or any successor statute. Such Seller Party is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or any successor statute. (l) Taxes. Such Seller Party will do nothing to materially impair the rights, title and interest of any Purchaser in and to the Purchaser Interest and will pay when due (or contest in good faith) any taxes, including without limitation any sales tax, excise tax or other similar tax or charge, payable in connection with the Receivables and their creation and satisfaction. (m) Financial Condition. In the case of the Seller only, the Seller is solvent and able to pay its debts when due, and is not the subject of any case or proceeding, domestic or foreign, relating to bankruptcy, insolvency, reorganization, arrangement, adjustment of debts, winding-up, liquidation, dissolution, composition, receivership, trusteeship, custodianship, or any other proceeding regarding relief of debtors or enforcement of creditors' rights; Seller shall not take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing cases or proceedings; and Seller is not a defendant in any case, proceeding or other action seeking issuance of a writ or warrant of attachment, execution, distraint or similar process against all or any part of its assets. ARTICLE IV CONDITIONS OF PURCHASES Section 4.1 Conditions Precedent to Purchase. The purchase of a Purchaser Interest under this Agreement is subject to the conditions precedent that (a) the Agent shall have received on or before the date of such purchase those documents listed on Schedule A and (b) the Agent shall have received all fees and expenses required to be paid on such date pursuant to the terms of this Agreement and the Fee Letter. ARTICLE V COVENANTS Section 5.1 Affirmative Covenants of the Seller Parties. Until the date on which the Aggregate Unpaids have been indefeasibly paid in full and this Agreement terminates in accordance with its terms, each Seller Party hereby covenants, as to itself, as set forth below: (a) Financial Reporting. Such Seller Party will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with generally accepted accounting principles, and furnish to the Agent: (i) Annual Reporting. Within 120 days after the close of its fiscal year, the annual report for Servicer for such fiscal year on Form 10-K, in the form filed with the Securities and Exchange Commission. (ii) Quarterly Reporting. Within 45 days after the close of the first three (3) quarterly periods of its fiscal year, the quarterly reports for Servicer on Form 10-Q, in the form filed with the Securities and Exchange Commission, as at the close of each such period. (iii) 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 such Seller Party as the Agent may from time to time reasonably request in order to protect the interests of the Agent and the Purchasers under or as contemplated by this Agreement. (b) Notices. Such Seller Party will notify the Agent 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: (i) Servicer Defaults. The occurrence of each Servicer Default, by a statement of an Authorized Officer of such Seller Party. (ii) Sale Agreement. Any request for waivers, consents or modifications of the Sale Agreement. (c) Compliance with Laws and Preservation of Corporate Existence. Such Seller Party will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject. Such Seller Party 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 preserve and maintain or qualify would not result in a Material Adverse Change. (d) Audits. Such Seller Party will furnish to the Agent from time to time such information with respect to it and the Receivables as the Agent may reasonably request. Such Seller Party shall permit the Agent and its agents and representatives, at their own expense (unless a Servicer Default has occurred and is continuing (including, without limitation, by reason of a failure to deliver the reports required by Section 6.9 or Section 6.10 and the expiration of the grace period specified in Section 7.1(c)), in which case, at the expense of the Servicer) during normal business hours on 48 hours prior notice: (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 such Person's financial condition or 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 the executive officers of Seller or the Servicer. Nothing in this Section 5.1(d) shall affect the obligations of the Servicer to observe any applicable law prohibiting the disclosure of information regarding the Obligors, and the failure of the Servicer to provide access to information as a result of this obligation shall not constitute a breach of this Section 5.1(d). (e) Keeping and Marking of Records and Books. The Servicer will keep proper books and records of account containing full, true and correct entries in conformity with GAAP (to the extent applicable). The Servicer will ensure that its computer files are at all times marked in the fashion specified in Section 4.01(c) of the Sale Agreement. (f) Taxes on Receivables. Seller will pay when due any taxes payable in connection with the Receivables, exclusive of taxes on or measured by income or gross receipts of the Company, the Agent or any Financial Institution. (g) Ownership. Seller shall take all necessary action to (i) vest legal and equitable title to the Designated Receivables, and the Related Security purchased under the Sale Agreement irrevocably in Seller, free and clear of any Adverse Claims other than Adverse Claims in favor of the Agent and the Purchasers (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 Seller's interest in such Designated Receivables and Related Security and such other action to perfect, protect or more fully evidence the interest of Seller therein as the Agent may reasonably request), and (ii) establish and maintain, in favor of the Agent, for the benefit of the Purchasers, a valid and perfected first priority undivided ownership interest (and/or a valid and perfected first priority security interest) in all Receivables and Related Security, free and clear of any Adverse Claims other than Adverse Claims in favor of the Agent for the benefit of the Purchasers (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 the Agent's (for the benefit of the Purchasers) interest in such Receivables and Related Security and such other action to perfect, protect or more fully evidence the interest of the Agent for the benefit of the Purchasers as the Agent may reasonably request). (h) Representations and Warranties as to the Receivables. As collateral security for the performance by the Seller of all the terms, covenants and agreements on the part of the Seller (whether as Seller or otherwise) to be performed under this Agreement or any document delivered in connection with this Agreement in accordance with the terms thereof, including the punctual payment when due of all obligations of the Seller hereunder or thereunder, whether for indemnification payments, fees, expenses or otherwise, the Seller hereby assigns to the Agent for its benefit and the ratable benefit of the Purchasers a security interest in, all of the Seller's right, title and interest in, to and under (but none of the Seller's obligations under) all of the following, whether now or hereafter existing or arising: (i) the Sale Agreement, including, without limitation, (a) all rights of the Seller to receive moneys due or to become due under or pursuant to the Sale Agreement, (b) all security interests and property subject thereto from time to time purporting to secure payment of monies due or to become due under or pursuant to the Sale Agreement, (c) all rights of the Seller to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the Sale Agreement, (d) claims of the Seller for damages arising out of or for breach of or default under the Sale Agreement, and (e) the right of the Seller to compel performance and otherwise exercise all remedies thereunder; (ii) all Receivables, the Related Security with respect thereto and the Collections not otherwise purchased or scheduled to be purchased under this Agreement; (iii) to the extent not included in the foregoing, all proceeds of any and all of the foregoing. Such assigned right, title and interest includes the representations and warranties of NFC made to the Seller pursuant to Sections 3.01 and 3.02 of the Sale Agreement. The Seller hereby represents and warrants to the Purchasers that the Seller has taken no action which would cause such representations and warranties to be false in any material respect as of the date of this Agreement. The Seller further acknowledges that each Purchaser relies on the representations and warranties of the Seller under this Agreement and of NFC under the Sale Agreement in accepting the Receivables. The foregoing representation and warranty speaks as of the date of this Agreement, but shall survive the sale, transfer and assignment of the Receivables to the Purchasers. (i) Repurchase of Receivables Upon Breach of Warranty. Upon discovery by the Seller or the Servicer of a breach of any of the representations and warranties in Section 3.01 of the Sale Agreement (and, with respect to Subsection 3.01(j) of the Sale Agreement, irrespective of any limitation regarding knowledge of NFC) or in Article III of this Agreement that materially and adversely affects the interests of a Purchaser in any Receivable, the party discovering such breach shall give prompt written notice thereof to the Agent and the Purchasers. As of the second Settlement Date following its discovery or its receipt of notice of such a breach (or, if a Servicer Default has occurred and is continuing, or, at the applicable Seller Party's election, the first Accounting Date following such discovery), unless such breach shall have been cured in all material respects, the applicable Seller Party shall repurchase the interests of the Purchasers in such Receivable from the Purchasers on the related Settlement Date. A Purchaser shall have no affirmative duty to conduct any investigation as to the occurrence of any event requiring the repurchase of any Receivable pursuant to this Section 5.1(i). The repurchase price to be paid by any Warranty Purchaser shall be an amount equal to the Warranty Payment. It is understood and agreed that the obligations of the Warranty Purchaser to repurchase any Receivable as to which a breach has occurred and is continuing, shall, if such repurchase obligations are fulfilled, constitute the sole remedy against the Seller, the Servicer or NFC for such breach available to any Person. The Servicer acknowledges its obligations to repurchase Administrative Receivables from the Purchaser pursuant to Section 5.2(b) hereof and to repurchase Warranty Receivables pursuant to Section 5.04 of the Sale Agreement. (j) Corporate Separateness. Seller will maintain its corporate separateness and distinctiveness from NFC and all other Affiliates through observation of the following covenants: (i) Seller shall at all times restrict its activities to (i) providing financing facilities through the purchase of any instalment sale contracts, loans, notes, leases, accounts or other rights to payment from retail customers in respect of trucks, buses, trailers and related equipment (including notes of dealers and other persons that finance the acquisition by such dealer or other person of a truck, bus, trailer or related equipment that is leased to a third person or persons) from NFC and (ii) conducting any ancillary business or activity as it deems necessary or appropriate to accomplish its primary purpose. Seller will not amend its certificate of incorporation ("Certificate of Incorporation") in any manner which would affect such restrictions on Seller's activities. (ii) Seller shall keep separate books and records such that its own separate financial statements may be readily prepared and presented apart from any financial statements consolidated to include NFC or any subsidiary or affiliate of NFC other than Seller. Any financial statements of NFC which are presented on a consolidated basis to include Seller shall contain notes clearly stating that the Receivables have been sold to a third party and are not assets of the consolidated group. (iii) Seller shall conduct its business solely in its individual corporate name and otherwise so as not to mislead others with whom it deals regarding its independent identity and existence. (iv) Seller has and will maintain its own separate mailing address, telephone number and stationery. (v) Seller will cause to be elected and compensate its Independent Directors as described in Section 5.1 (j)(xi) below. (vi) Any allocations of direct, indirect or overhead expenses for items shared between Seller on the one hand and NFC on the other hand have been and will be made to the extent practical on the basis of actual use or value of services rendered and otherwise on a basis reasonably related to actual use or the value of services rendered. (vii) Seller has paid and will pay its own operating expenses and liabilities from its own funds, except NFC shall pay a portion of the expenses of Seller incurred in connection with the transactions contemplated by the Transaction Documents. Such payment by NFC shall be treated by NFC as Advances under the Amended and Restated Intercompany Advance Agreement (the "Intercompany Advance Agreement") dated as of May 3, 1994, between NFC and Seller. (viii) Seller shall not commingle or pool its funds or other assets with those of NFC or any other subsidiary or affiliate of NFC except as specifically provided in transaction documents executed in connection with past pools of receivables and in the Amended and Restated Operating Agreement dated as of May 3, 1994 (the "Operating Agreement") between NFC and Seller. Except as provided in the Operating Agreement, Seller shall not maintain joint bank accounts or other depository accounts to which NFC or any other Affiliate of NFC, other than NFC in its capacity as Servicer, has independent access. (ix) Seller is not named, and has not entered any agreement to be named, directly or indirectly, as a direct or contingent beneficiary or loss payee on any insurance policy covering the property of NFC or of any other subsidiary or Affiliate of NFC. (x) Each officer and director of Seller shall discharge his or her respective fiduciary duties and obligations in accordance with all applicable laws. (xi) Seller has, and shall continue at all times to have, at least two Independent Directors (as defined in Seller's restated Certificate of Incorporation as in effect on the date hereof) on its board of directors. (k) Taxes. Such Seller Party shall file all tax returns and reports required by law to be filed by it and shall promptly pay all taxes and governmental charges at any time owing, except 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 generally accepted accounting principles shall have been set aside on its books. (l) Transfers, Liens, Etc. Except for the Lien in favor of a Purchaser created by this Agreement, the Seller Parties shall not transfer, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Lien (including, without limitation, the filing of any financing statement) upon or with respect to any Receivable or Related Security. (m) Liens in Force. Except as contemplated in Sections 6.1, 6.4 or 6.5 of this Agreement, the Seller Parties shall not release in whole or in part any Financed Vehicle or related insurance contract rights from the security interest securing the Receivable. (n) No Impairment. The Seller Parties shall do nothing to impair the rights of the Seller or any Purchasers in and to the Receivables. (o) No Modifications. The Seller Parties shall not amend or otherwise modify any Receivable such that the Initial Receivable Balance, the Annual Percentage Rate or the total number of Scheduled Payments is altered or such that the final scheduled payment on such Receivable will be due later than August 31, 2012. Any such extension of the final scheduled payment will be made by the Servicer in accordance with its customary servicing procedures. (p) Sale Agreement. The Seller Parties shall not grant any waiver or consent under, amend or otherwise modify, or terminate the Sale Agreement without the prior written consent of the Agent. (q) Name Change. No Seller Party shall change its (i) name, identity, or corporate structure in any manner that would make any financing statement or continuation statement filed by it in connection with the Transaction Documents seriously misleading within the meaning of Section 9-506(b) of the UCC, or (ii) jurisdiction of formation, unless it shall have given the Agent at least 60 days prior written notice thereof and shall file such financing statements or amendments as may be necessary to continue the perfection of the Agent's security interest in the Receivables and the Related Security. Section 5.2 Covenants of the Servicer. At all times from the date hereof to the date on which the Aggregate Unpaids shall be equal to zero, unless the Agent shall otherwise consent in writing: (a) Conduct of Business. The Servicer will do all things necessary to remain duly incorporated, validly existing and in good standing as a domestic corporation in its jurisdiction of incorporation and will maintain all requisite authority to conduct its business in each jurisdiction in which its business requires such authority except where the failure to so preserve and maintain or qualify would not result in a Material Adverse Change. (b) Purchase of Receivables Upon Breach of Covenant. Upon discovery by any of the Seller or the Servicer, the Agent and the Purchasers of a breach of any of the covenants set forth in Section 6.5 and Sections 5.1 (m), (n) or (o), the party discovering such breach shall give prompt written notice thereof to the Agent and the Purchasers. As of the second Accounting Date following its discovery or receipt of notice of such breach (or, at the Servicer's election, the first Accounting Date so following), the Servicer shall, unless it shall have cured such breach in all material respects, purchase from the Purchasers their interests in any Receivable materially and adversely affected by such breach and, on the related Settlement Date, the Servicer shall pay the Administrative Purchase Payment. It is understood and agreed that the obligation of the Servicer to purchase any Receivable with respect to which such a breach has occurred and is continuing shall, if such obligation is fulfilled, constitute the sole remedy against the Servicer for such breach available to any Person. (c) Servicing Procedures. The Servicer shall not change or amend its customary servicing procedures in any manner that would reasonably be expected to materially and adversely affect the collectibility of the Receivables generally. Section 5.3 Covenant of the Agent. Until this Agreement has terminated, the Agent shall maintain the Schedule of Receivables at its office set forth on the signature page hereof for inspection during normal business hours by interested parties. Section 5.4 Replacement of Financial Institutions. In the event that the Discount Rate applicable to any portion of the Purchaser Interest is calculated using the Base Rate as a result of clause (a) of the definition of "Discount Rate," the Agent, Seller and Servicer will cooperate to have such Financial Institution replaced with a Financial Institution that would be able to fund using the LIBO Rate. ARTICLE VI ADMINISTRATION AND COLLECTION Section 6.1 General Duties of the Servicer. The Servicer is hereby appointed and authorized by the Agent and the Purchasers to act as agent for the Agent and the Purchasers and in such capacity shall manage, service, administer and make collections on the Receivables with reasonable care using that degree of skill and attention that the Servicer exercises with respect to comparable medium and heavy duty truck, bus and trailer receivables that it services for itself or others. The Servicer hereby accepts such appointment and authorization and agrees to perform the duties of Servicer with respect to the Receivables set forth herein. The Servicer's duties shall include collection and posting of all payments, responding to inquiries of Obligors on the Receivables, investigating delinquencies, sending payment coupons to Obligors, reporting tax information to Obligors, policing the collateral, accounting for collections and furnishing monthly and annual statements to the Purchasers with respect to distributions, generating federal income tax information and performing the other duties specified herein. Subject to the provisions of Section 6.2, the Servicer shall follow its customary standards, policies and procedures and shall have full power and authority, acting alone, to do any and all things in connection with such managing, servicing, administration and collection that it may deem necessary or desirable. Without limiting the generality of the foregoing, the Servicer is hereby authorized and empowered by the Agent and the Purchasers, pursuant to this Section 6.1, to execute and deliver, on behalf of the Agent and the Purchasers, any and all instruments of satisfaction or cancellation, or of partial or full release or discharge, and all other comparable instruments, with respect to the Receivables and the Financed Vehicles. The Servicer is hereby authorized to commence in the name of the Agent and the Purchasers or, to the extent necessary, in its own name, a legal proceeding to enforce a Liquidating Receivable as contemplated by Section 6.3, to enforce all obligations of NFC and Seller in its capacity as the Seller or otherwise, under each of the Sale Agreement and this Agreement or to commence or participate in a legal proceeding (including a bankruptcy proceeding) relating to or involving a Receivable or a Liquidating Receivable. If the Servicer commences or participates in such a legal proceeding in its own name, the Agent and the Purchasers shall thereupon be deemed to have automatically assigned such Receivable to the Servicer for purposes of commencing or participating in any such proceeding as a party or claimant. The Servicer is hereby authorized and empowered by the Agent and the Purchasers to execute and deliver in the Servicer's name any notices, demands, claims, complaints, responses, affidavits or other documents or instruments in connection with any such proceeding. The Agent and each Purchaser, upon the written request of the Servicer, shall furnish the Servicer with any powers of attorney and other documents and take any other steps which the Servicer may deem necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties under this Agreement and the Purchase Agreement. Except to the extent required by the preceding two sentences, the authority and rights granted to the Servicer in this Section 6.1 shall be nonexclusive and shall not be construed to be in derogation of the retention by the Agent or the Purchasers of equivalent authority and rights. Section 6.2 Collection of Receivables Payments. The Servicer shall make reasonable efforts to collect all payments called for under the terms and provisions of the Receivables as and when the same shall become due, and shall follow such collection practices, policies and procedures as it follows with respect to comparable medium and heavy duty truck, bus and trailer receivables that it services for itself or others. Except as provided in Section 5.1(o), the Servicer is hereby authorized to grant extensions, rebates or adjustments on a Receivable without the prior consent of the Agent or the Purchasers and to rewrite, in its ordinary course of business, a Receivable with respect to any remaining Financed Vehicle or Vehicles to reflect the Full Prepayment of the portion of such Receivable relating to one or more of the Financed Vehicles securing such Receivable without the prior consent of the Agent or the Purchasers. The Servicer is authorized in its discretion to waive any prepayment charge, late payment charge or any other fees that may be collected in the ordinary course of servicing the Receivables. Section 6.3 Realization Upon Liquidating Receivables. The Servicer shall use reasonable efforts, consistent with its customary servicing procedures, to repossess or otherwise comparably convert the ownership of each Financed Vehicle that it has reasonably determined should be repossessed or otherwise converted following a default under the Receivable secured by each such Financed Vehicle. The Servicer is authorized to follow such practices, policies and procedures as it shall deem necessary or advisable and as shall be customary and usual in its servicing of medium and heavy duty truck, bus and trailer receivables that it services for itself or others, which practices, policies and procedures may include reasonable efforts to realize upon or obtain benefits of any lease assignments, proceeds from any Dealer Liability, proceeds from any International Purchase Obligations, proceeds from any Insurance Policies and proceeds from any Guaranties, in each case with respect to the Receivables, selling the related Financed Vehicle or Financed Vehicles at public or private sale or sales and other actions by the Servicer in order to realize upon such a Receivable. The foregoing is subject to the provision that, in any case in which the Financed Vehicle shall have suffered damage, the Servicer shall not be required to expend funds in connection with any repair or towards the repossession of such Financed Vehicle unless it shall determine in its discretion that such repair and/or repossession is reasonably likely to increase the proceeds of liquidation of the related Receivable by an amount greater than the amount of such expenses. The Servicer shall be entitled to receive Liquidation Expenses from Collections with respect to each Liquidating Receivable at such time as the Receivable becomes a Liquidating Receivable in accordance with Section 2.1(b). Following the occurrence and continuation of a Servicer Default, the Agent may, but shall have no obligation to take any action or commence any proceeding to realize upon any Liquidating Receivable, any such action or commencement of proceeding to be at the sole expense of the Servicer. At such time as the Servicer or the Seller, as the case may be, has any obligation to pursue the collection of Receivables and the Agent or a Purchaser possesses any documents necessary therefor, the Agent or such Purchaser, as the case may be, agrees to furnish such documents to the Servicer or the Seller, as the case may be, to the extent and for the period necessary for the Servicer or the Seller, as the case may be, to comply with its obligations hereunder. Section 6.4 Maintenance of Insurance Policies. The Servicer shall, in accordance with its customary servicing procedures, require that each Obligor shall have obtained physical damage insurance covering each Financed Vehicle as of the execution of the related Receivable, unless the Servicer has in accordance with its customary servicing procedures permitted an Obligor to self-insure the Financed Vehicle or Financed Vehicles securing such Receivable. The Servicer shall, in accordance with its customary servicing procedures, monitor such physical damage insurance with respect to each Financed Vehicle that secures each Receivable. Section 6.5 Maintenance of Security Interests in Vehicles. The Servicer shall, in accordance with its customary servicing procedures and at its own expense, take such steps as are necessary to maintain perfection of the first priority security interest created by each Receivable in the related Financed Vehicle or Financed Vehicles. The Purchasers hereby authorize the Servicer to re-perfect such security interest as necessary because of the relocation of a Financed Vehicle or for any other reason. Section 6.6 Total and Supplemental Servicing Fees; Payment of Certain Expenses by Servicer. The Servicer is entitled to receive the Total Servicing Fee and Supplemental Servicing Fees out of Collections as provided herein. Subject to any limitation on the Servicer's liability hereunder, the Servicer shall be required to pay all expenses incurred by it in connection with its activities under this Agreement (including fees and disbursements of the Purchaser, the Financial Institution, the Agent, and any independent accountants, taxes imposed on the Servicer, expenses incurred in connection with distributions and reports to the Agent and the Purchasers and all other fees and expenses not expressly stated under this Agreement to be for the account of the Purchasers, but excluding federal, state and local income and franchise taxes, if any, of any Purchaser). The Servicer will not have any obligation to deposit Supplemental Servicing Fees in the Collection Account. To the extent that any such amount shall be held in the Collection Account, such amount may be withdrawn therefrom by the Servicer. Section 6.7 Monthly Advances. Subject to the following sentence, as of each Settlement Date, if the payments during the related Monthly Period by or on behalf of the Obligor on a Receivable (other than an Administrative Receivable, a Warranty Receivable or a Liquidating Receivable) after application under Section 2.1 shall be less than the Scheduled Payment, whether as a result of any extension granted to the Obligor or otherwise, then the Servicer shall, subject to the following sentence, advance any such shortfall (such amount, a "Monthly Advance"). The Servicer shall be obligated to make a Monthly Advance in respect of a Receivable only to the extent that the Servicer, in its sole discretion, shall determine that such advance shall be recoverable (in accordance with the two immediately following sentences) from subsequent Collections or recoveries on such Receivable. Subject to Section 2.1, the Servicer shall be reimbursed for Outstanding Monthly Advances with respect to a Receivable from the following sources with respect to such Receivable, in each case as set forth in this Agreement: (i) subsequent payments by or on behalf of the Obligor, (ii) collections of Liquidation Proceeds, (iii) the Administrative Purchase Payment and (iv) the Warranty Payment. At such time as the Servicer shall determine that any Outstanding Monthly Advances with respect to any Receivable shall not be recoverable from payments with respect to such Receivable, the Servicer shall be reimbursed from any collections made on other Receivables. Section 6.8 Additional Deposits. The Servicer shall deposit in the Collection Account the aggregate Monthly Advances pursuant to this Section 6.7. The Servicer and the Warranty Purchaser shall deposit in the Collection Account the aggregate Administrative Purchase Payments and Warranty Payments with respect to Administrative Receivables and Warranty Receivables, respectively. All such deposits with respect to a Monthly Period shall be made in immediately available funds on the day before the Settlement Date related to such Monthly Period. Section 6.9 Annual Statement as to Compliance. The Servicer shall deliver to the Agent on or before February 1 of each year, beginning February 1, 2005, an officer's certificate signed by the President or any Vice President of the Servicer, dated as of the immediately preceding October 31, stating that (i) a review of the activities of the Servicer during the preceding 12-month period (or, with respect to the first such certificate, such period as shall have elapsed from the date of this Agreement to the date of such certificate) and of its performance under this Agreement has been made under such officer's supervision and (ii) to such officer's knowledge, based on such review, the Servicer has fulfilled its obligations under this Agreement in all material respects throughout such period, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof. Section 6.10 Annual Independent Accountants' Report. (a) The Servicer shall cause a firm of independent accountants, who may also render other services to the Servicer or the Seller, to deliver to the Agent, on or before February 1 of each year, beginning February 1, 2005 with respect to the twelve months ended on the immediately preceding October 31 (or, with respect to the first such report, such period as shall have elapsed from the date of this Agreement to the date of such certificate), a report (the "Accountants' Report") addressed to the board of directors of the Servicer and to the Agent, to the effect that such firm has audited the financial statements of the Servicer and issued its report thereon and that such audit (i) was made in accordance with generally accepted auditing standards, (ii) included tests relating to retail notes serviced for others in accordance with the requirements of the Uniform Single Audit Program for Mortgage Bankers (the "Program,") to the extent the procedures in the Program are applicable to the servicing obligations set forth in this Agreement and (iii) except as described in the report, disclosed no exceptions or errors in the records relating to retail notes serviced for others that, in the firm's opinion, paragraph four of the Program requires such firm to report. (b) The Accountants' Report shall also indicate that the firm is independent of the Seller and the Servicer within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants. Section 6.11 Assignment of Administrative Receivables and Warranty Receivables. Upon receipt of the Administrative Purchase Payment or the Warranty Payment with respect to an Administrative Receivable or a Warranty Receivable, respectively, the Agent, on behalf of the Purchasers, shall assign, without recourse, representation or warranty, to the Servicer or the Warranty Purchaser, as applicable, all of such Person's right, title and interest in, to and under (a) such Administrative Receivable or Warranty Receivable and all monies due thereon, (b) the security interests in the related Financed Vehicle and, to the extent permitted by law, any accessions thereto which are financed by NFC, (c) benefits of any lease assignments with respect to the Financed Vehicles, (d) proceeds from any Insurance Policies with respect to such Receivable, (e) proceeds from Dealer Liability with respect to such Receivable, proceeds from any International Purchase Obligations with respect to such Receivable and proceeds from any Guaranties of such Receivable, (f) the interests of such Person in certain rebates of premiums and other amounts relating to the Insurance Policies and any document relating thereto and (g) the rights of such Person under the Purchase Agreement and the Custodian Agreement with respect to such Receivable, such assignment being an assignment outright and not for security. Upon the assignment of such Receivable described in the preceding sentence, the Servicer or the Warranty Purchaser, as applicable, shall own such Receivable, and all such security and documents, free of any further obligations to the Agent or any Purchaser with respect thereto. If in any Proceeding it is held that the Servicer may not enforce a Receivable on the grounds that it is not a real party in interest or a holder entitled to enforce the Receivable, the Agent shall, at the Servicer's expense, take such steps as the Servicer deems necessary to enforce the Receivable, including bringing suit in the name of such Person or the names of the Purchasers. Section 6.12 Collection Account. The Servicer shall maintain, for the benefit of the Agent and the Purchasers, the Collection Account for the purpose of receiving and disbursing all Collections, and all other payments to be made into the Collection Account. The Collection Account will be an Eligible Account maintained in the name of the Agent, for the benefit of the Agent and the Purchasers, and shall be used only for the collection of the amounts and for application of such amounts as described in Section 1.4(c) of this Agreement. In the event there shall have been deposited in the Collection Account any amount not required to be deposited therein and so identified to the Agent, such amount shall be withdrawn from the Collection Account by the Securities Intermediary after notice thereof by the Servicer to the Securities Intermediary (with a copy to the Agent) and the Securities Intermediary shall pay such amount to or in accordance with the instructions of the Servicer, and any such amounts shall not be deemed to be a part of the Collection Account. If the Collection Account ceases to be an Eligible Account, the Agent shall, within ten days of receipt of notice of such change in eligibility, transfer the Collection Account to an account meeting the requirements of an Eligible Account. The Servicer and the Seller agree to take all actions reasonably necessary, including the filing of appropriate financing statements and the giving of proper registration instructions relating to any investments, to protect the Agent's and the Purchasers' interest in the Collection Account and any Eligible Investments acquired with moneys therein. Section 6.13 Delegation of Duties. So long as NFC acts as Servicer, the Servicer may, at any time without notice or consent, delegate any duties under this Agreement to any corporation more than 50% of the voting stock of which is owned, directly or indirectly, by NFC. The Servicer may at any time perform specific duties as Servicer through sub-contractors who are in the business of servicing medium and heavy duty truck, bus and trailer receivables; provided, however, that no such delegation shall relieve the Servicer of its responsibility with respect to such duties. Section 6.14 Servicer Not to Resign. Subject to the provisions of Section 7.2, the Servicer shall not resign from the obligations and duties imposed on it by this Agreement as Servicer except upon determination that the performance of its duties under this Agreement is no longer permissible under applicable law. Any such determination permitting the resignation of the Servicer shall be evidenced by an opinion of counsel to such effect delivered to the Agent. No such resignation shall become effective until the Agent, its designee or a successor Servicer shall have assumed the responsibilities and obligations of the Servicer in accordance with Section 6.15. Section 6.15 Appointment of Successor. On and after the time the Servicer receives a notice of termination and the appointment of a successor Servicer pursuant to Section 7.2, such successor Servicer shall be the successor in all respects to the Servicer in its capacity as servicer under this Agreement and the transactions set forth or provided for in this Agreement; provided however, that the predecessor Servicer shall remain liable for, and the successor Servicer shall have no liability for, any indemnification obligations of the Servicer arising as a result of acts, omissions or occurrences during the period in which the predecessor Servicer was the Servicer; and provided further, that NFC shall remain liable for all such indemnification obligations of the Servicer without regard to whether it is still Servicer hereunder. As compensation therefor, the successor Servicer shall be entitled to such compensation (whether payable out of the Collection Account or otherwise) as the predecessor Servicer would have been entitled to under this Agreement if no such notice of termination had been given including, but not limited to, the Total Servicing Fee and Supplemental Servicing Fees; provided, however, in the event the Agent shall be unable to appoint a successor Servicer reasonably acceptable to the Agent for the compensation specified herein, the Agent may make such arrangements for compensation of such successor Servicer out of payments on the Receivables as it and such successor Servicer shall agree provided that such compensation shall not exceed 110% of such successor Servicer's reasonable costs and expenses in performing its obligations hereunder as successor Servicer. Section 6.16 Merger or Consolidation of or Assumption of the Obligations of, the Servicer. Any corporation (a) into which the Servicer may be merged or consolidated, (b) resulting from any merger, conversion or consolidation to which the Servicer shall be a party, (c) succeeding to the business of the Servicer, or (d) more than 50% of the voting stock of which is owned directly or indirectly by NIC and which is otherwise servicing the Seller's receivables, which corporation in the foregoing cases (c) or (d) executes an agreement of assumption to perform every obligation of the Servicer under this Agreement shall be the successor to the Servicer under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties to this Agreement, notwithstanding anything in this Agreement to the contrary. The Servicer shall provide notice of any merger, consolidation or succession pursuant to this Section 6.16 to the Agent. ARTICLE VII SERVICER DEFAULTS Section 7.1 Servicer Defaults. The occurrence of any one or more of the following events shall constitute a Servicer Default: (a) the Servicer shall fail to instruct the Securities Intermediary to remit to the Agent on any day any amount required to be remitted to the Agent on such day in respect of Yield, Net Swap Amounts, Facility Fees or Capital and such failure shall continue for three (3) Business Days after the date when such amounts became due; (b) the Servicer shall fail to deposit, or fail to pay, or fail to cause to be deposited or paid when due any other amount due hereunder, and any such failure shall continue for five (5) Business Days after the earlier of the date on which it has actual knowledge thereof or the date on which it has received written notice thereof by the Agent to the Servicer; (c) failure on the part of the Seller or the Servicer to duly observe or perform any other covenants or agreements of the Seller or the Servicer set forth in the Sale Agreement, this Agreement, or any of the other Transaction Documents, which failure continues unremedied for a period of thirty (30) days after the earlier of knowledge thereof or the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Seller or the Servicer, as applicable, by the Agent; (d) any representation, warranty, certification or statement made by the Servicer under this Agreement or in any agreement, certificate, report, appendix, schedule or document furnished by the Seller or Servicer to the Agent pursuant to or in connection with this Agreement shall prove to have been false or misleading in any material respect as of the time made or deemed made (including by omission of material information necessary to make such representation, warranty, certification or statement not misleading); (e) the entry of a decree or order by a court or agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator, receiver or liquidator for the Seller or the Servicer, in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings, or for the winding up or liquidation of their respective affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; (f) the consent by the Seller or the Servicer to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities, or similar proceedings of or relating to the Seller or the Servicer or of or relating to substantially all of their respective property; or the Seller or the Servicer shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations; or (g) a default by the Servicer in the performance of any term, provision or condition contained in any agreement under which any indebtedness of the Servicer in excess of $10 million was created or is governed, the effect of which is to cause any such indebtedness to become due prior to its stated maturity; or any such indebtedness shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment or as a result of the voluntary sale or transfer of the property or assets) prior to the stated maturity date thereof. Section 7.2 Remedies. (a) If a Servicer Default shall occur and be continuing, the Agent by notice then given in writing to the Servicer may, in addition to other rights and remedies available in a court of law or equity to damages, injunctive relief and specific performance, terminate all of the rights and obligations of the Servicer under this Agreement ("Servicing Transfer"). On or after the receipt by the Servicer of such written notice, all authority and power of the Servicer under this Agreement, whether with respect to the Receivables or otherwise, shall pass to and be vested in a successor Servicer appointed by the Agent pursuant to and under this Section 7.2. The successor Servicer is hereby authorized and empowered to execute and deliver, on behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such notice of termination, whether to complete the transfer and endorsement of the Receivables and related documents, or otherwise. The predecessor Servicer agrees to cooperate with the successor Servicer and the Agent in effecting the termination of the responsibilities and rights of the predecessor Servicer under this Agreement, including the transfer to the successor Servicer for administration by it of all cash amounts that shall at the time be held by the predecessor Servicer for deposit, or that shall have been deposited by the predecessor Servicer in the Collection Account or the Reserve Account or thereafter received with respect to the Receivables that shall at that time be held by the predecessor Servicer. In addition to any other amounts that are then payable to the predecessor Servicer under this Agreement, the predecessor Servicer shall be entitled to receive from the successor Servicer reimbursements for any Outstanding Monthly Advances made during the period prior to the termination of the predecessor Servicer as Service