Exhibit 10.8

EXECUTION COPY

 

 

BACKUP SERVICING AGREEMENT

AMONG

NAVISTAR FINANCIAL CORPORATION

as Servicer

NAVISTAR FINANCIAL SECURITIES CORPORATION

as Seller

THE BANK OF NEW YORK MELLON

as Master Trust Trustee

and

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Backup Servicer

DATED AS OF November 10, 2009

 

 

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

Table of Contents

 

          Page ARTICLE I Statement of Agreement    1

Section 1.01

   Definitions    1

Section 1.02

   Other Definitional Provisions    4 ARTICLE II Backup Servicing    5

Section 2.01

   Acceptance of Appointment and Other Matters Relating to Backup Servicer    5

Section 2.02

   Backup Servicing Compensation    6

Section 2.03

   Representations, Warranties and Covenants of Backup Servicer    7

Section 2.04

   Regulation AB    8 ARTICLE III Other Matters Relating To Backup Servicer    9

Section 3.01

   Liability of Backup Servicer    9

Section 3.02

   Merger or Consolidation of, or Assumption of, Obligations of Backup Servicer
   9

Section 3.03

   Limitation on Liability of Backup Servicer and Others    9

Section 3.04

   Backup Servicer Indemnification    11

Section 3.05

   Backup Servicer Not to Resign    11

Section 3.06

   Confidential Information    12

Section 3.07

   Audits of Backup Servicer    12

Section 3.08

   Indemnification: Third Party Claims    13 ARTICLE IV Termination    13

Section 4.01

   Termination of Backup Servicer    13

Section 4.02

   Termination of Agreement    14 ARTICLE V Miscellaneous Provisions    14

Section 5.01

   Amendment    14

Section 5.02

   No Petition    15

Section 5.03

   Governing Law    15

Section 5.04

   Notices    15

Section 5.05

   Severability of Provisions    16

Section 5.06

   Further Assurances    16

Section 5.07

   No Waiver; Cumulative Remedies    16

Section 5.08

   Counterparts    16

Section 5.09

   Third Party Beneficiaries    16

Section 5.10

   Merger and Integration    17

Section 5.11

   Headings    17

Section 5.12

   Limitation of Owner Trustee Liability    17

Exhibit A – Terms and Conditions as Successor Servicer

Exhibit B – Information to be Confirmed by Backup Servicer

Exhibit C – Form of Backup Servicer Notice

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

THIS BACKUP SERVICING AGREEMENT, dated as of November 10, 2009, by and among
NAVISTAR FINANCIAL CORPORATION, a Delaware corporation, as Servicer (the
“Servicer”), NAVISTAR FINANCIAL SECURITIES CORPORATION, a Delaware corporation,
as Seller (the “Seller”), THE BANK OF NEW YORK MELLON, a New York banking
corporation, not in its individual capacity but solely as Master Trust Trustee
(the “Master Trust Trustee”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a
national banking association, as Backup Servicer (the “Backup Servicer”).

Recitals

A. The Seller, the Servicer and the Master Trust Trustee have entered into the
Pooling and Servicing Agreement, dated as of June 8, 1995 (as amended and
supplemented through the date hereof and as may be further amended, restated,
supplemented or modified from time to time, the “Pooling and Servicing
Agreement”), pursuant to which the Seller, in its capacity as holder of the NFSC
Certificate, agreed to cause the Servicer to, among other things service and
administer the Dealer Notes owned by the Master Trust.

B. The Seller, the Servicer and the Master Trust Trustee desire that the Backup
Servicer perform certain backup servicing duties in accordance with the terms of
this Agreement, and assume the role of Successor Servicer if the Servicer is
terminated under the Pooling and Servicing Agreement.

C. The Backup Servicer is willing to perform the backup servicing duties
specified herein and to assume the role of Successor Servicer under the terms of
the Pooling and Servicing Agreement pursuant to the conditions described
therein.

In consideration of the mutual covenants and agreements contained in this
Agreement, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows.

ARTICLE I

Statement of Agreement

Definitions

Section 1.01 Definitions. Whenever used in this Agreement, the following words
and phrases have the following meanings, and the definitions of such terms are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.

“Agreement” means this Backup Servicing Agreement, as the same may be further
amended, supplemented or otherwise modified from time to time.

“Backup Servicer” has the meaning specified in the first paragraph of this
Agreement.

“Backup Servicing Expenses” has the meaning specified in the Pooling and
Servicing Agreement.

“Backup Servicing Fee” has the meaning specified in the Pooling and Servicing
Agreement.

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

“Backup Servicing Officer” means any officer of the Backup Servicer involved in,
or responsible for, the backup servicing of the Dealer Notes whose name appears
on a list of servicing officers furnished to the Servicer by the Backup
Servicer, as such list may be amended from time to time.

“Business Day” has the meaning specified in the Pooling and Servicing Agreement
and shall include a day on which banking institutions in Minneapolis, Minnesota
are authorized or obligated by law or executive order to be closed ore remain
closed.

“Collections Account” has the meaning specified in the Pooling and Servicing
Agreement.

“Data Dictionary” has the meaning specified in Section 2.01(b)(ii).

“Dealer Note” has the meaning specified in the Pooling and Servicing Agreement.

“Determination Date” has the meaning specified in the Pooling and Servicing
Agreement.

“Due Period” has the meaning specified in the Pooling and Servicing Agreement.

“Eligible Servicer” has the meaning specified in Section 3.05.

“Governmental Authority” means, with respect to any Person, the United States of
America or any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to the government of the United States of America or
any state or other political subdivision thereof having jurisdiction over such
Person.

“Indenture” means the Indenture, dated as of June 10, 2004, between the Issuer
and the Indenture Trustee, as the same may be amended, supplemented or otherwise
modified from time to time.

“Indenture Supplement” has the meaning specified in the Indenture.

“Indenture Trustee” means The Bank of New York Mellon, a New York banking
corporation, in its capacity as indenture trustee under the Indenture, its
successors in interest and any successor indenture trustee under the Indenture.

“Insolvency Event” has the meaning specified in the Pooling and Servicing
Agreement as would be applicable to the Backup Servicer.

“Issuer” means Navistar Financial Dealer Note Master Owner Trust created by the
Trust Agreement.

“Losses” has the meaning specified in Section 3.08(a).

 

2

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

“Master Trust” has the meaning specified in the Pooling and Servicing Agreement.

“Master Trust Trustee” has the meaning specified in the first paragraph of this
Agreement.

“Monthly Data File” has the meaning specified in Section 2.01(c).

“Monthly Servicer and Settlement Statement” has the meaning specified in the
Pooling and Servicing Agreement.

“Opinion of Counsel” means a written opinion of counsel, who may be counsel for,
or an employee of, the Person providing the opinion and who is reasonably
acceptable to the Indenture Trustee.

“Owner Trustee” means Deutsche Bank Trust Company Delaware, a Delaware banking
corporation, in its capacity as master owner trust trustee under the Trust
Agreement, its successors in interest and any successor owner trustee under the
Trust Agreement.

“Payment Date” has the meaning specified in the Pooling and Servicing Agreement.

“Person” means any legal person, including any individual, corporation,
partnership, association, joint stock company, limited liability company, trust,
unincorporated organization, governmental entity or other entity of similar
nature.

“Regulation AB” means Subpart 229.1100- Asset Backed Securities (Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as clarified and interpreted by the
Securities and Exchange Commission or its staff.

“Requirements of Law” for any Person means the certificate of incorporation and
bylaws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation, or determination of an arbitrator or
Governmental Authority, whether federal, state or local, in each case applicable
to or binding upon such Person or to which such Person is subject.

“Seller” has the meaning specified in the first paragraph of this Agreement.

“Series 2004-1 Supplement to the Pooling and Servicing Agreement” means the
Series 2004-1 Supplement to the Pooling and Servicing Agreement, dated as of
June 10, 2004, among the Seller, the Servicer and the Master Trust Trustee, as
the same may be amended, supplemented or otherwise modified from time to time.

“Servicer” initially has the meaning specified in the first paragraph of this
Agreement, and after the removal, resignation or termination of Navistar
Financial Corporation as Servicer pursuant to Article X of the Pooling and
Servicing Agreement, the Successor Servicer.

“Servicer Certificate” has the meaning specified in each Indenture Supplement.

“Servicer Transition Fee Account” has the meaning specified in Section 4.06 of
the Series 2004-1 Supplement to the Pooling and Servicing Agreement.

 

3

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

“Successor Servicer” has the meaning specified in the Pooling and Servicing
Agreement.

“Supplement” has the meaning specified in the Pooling and Servicing Agreement.

“Transaction Documents” means the Purchase Agreement (as defined in the Pooling
and Servicing Agreement), each Supplement, the Pooling and Servicing Agreement
and the Issuer Documents (as defined in the Indenture).

“Transition Costs” means the Backup Servicer’s reasonable out-of-pocket costs
and expenses relating to the transition of the servicing of the Dealer Notes
from the Servicer to the Backup Servicer.

“Trust Agreement” means the Master Owner Trust Agreement relating to the Issuer,
dated as of June 10, 2004, between the Seller and the Owner Trustee, as the same
may be amended, supplemented or otherwise modified from time to time.

Section 1.02 Other Definitional Provisions.

(a) All terms used herein and not otherwise defined herein have the meanings
ascribed to them in the Pooling and Servicing Agreement or the Indenture, as
applicable.

(b) All terms defined in this Agreement have the defined meanings when used in
any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.

(c) As used in this Agreement and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document to
the extent not defined, have the respective meanings given to them under
generally accepted accounting principles or regulatory accounting principles, as
applicable and as in effect on the date of this Agreement. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles or regulatory accounting principles in
the United States, the definitions contained in this Agreement or in any such
certificate or other document will control.

(d) Any reference to each Rating Agency only applies to any specific rating
agency if such rating agency is then rating any outstanding Series.

(e) Unless otherwise specified, references to any dollar amount as of any
particular date mean such amount at the close of business on such day.

(f) The words “hereof,” “herein” and “hereunder” and words of similar import
when used in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to any subsection, Section,
Schedule or Exhibit are references to subsections, Sections, Schedules and
Exhibits in or to this Agreement, unless otherwise specified. The term
“including” means “including without limitation.”

 

4

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

ARTICLE II

Backup Servicing

Section 2.01 Acceptance of Appointment and Other Matters Relating to Backup
Servicer.

(a) The Backup Servicer hereby accepts and agrees to perform the backup
servicing duties specified in this Agreement and, after receipt of a copy of the
Termination Notice (as defined in Section 10.01 of the Pooling and Servicing
Agreement), agrees to assume the role of Successor Servicer under the terms of
the Pooling and Servicing Agreement pursuant to the conditions described in the
Pooling and Servicing Agreement and subject to the terms, provisions and
limitations specified in Exhibit A hereto. The Backup Servicer agrees to perform
the backup servicing duties specified in this Agreement in accordance with its
customary and usual procedures for providing backup servicing for other pools of
receivables similar to the Dealer Notes.

(b) The Backup Servicer has conducted an on-site visit of the Servicer’s
servicing operations for Dealer Notes and met with appropriate operations
personnel to discuss the processes and procedures used by the Servicer in
performing its servicing duties under the Pooling and Servicing Agreement.
Within 90 days of the date of this Agreement, the Servicer shall provide the
Backup Servicer a data dictionary of the principal terms used in its source
Dealer Note system that are required to perform the duties set forth in
subsection (c) below and to service the Dealer Notes (the “Data Dictionary”),
and the Backup Servicer shall acknowledge that it has received the Data
Dictionary and shall confirm that it has reviewed the Data Dictionary and that
the Data Dictionary is sufficient for it to perform its duties set forth in
subsection (c) below.

(c) No later than the second Business Day after each Payment Date (beginning
with the December 2009 Payment Date), the Servicer will deliver to the Backup
Servicer a computer tape, make an electronic posting to a password-protected
website to which the Backup Servicer has been provided access or provide
information in another format, each in a format reasonably acceptable to the
Backup Servicer, containing the Monthly Servicer and Settlement Statements and
Servicer Certificates for such Payment Date and the information with respect to
the Investor Certificates, the Notes and the Dealer Notes necessary for
preparation of such Monthly Servicer and Settlement Statements and Servicer
Certificates (the “Monthly Data File”). The Backup Servicer will use the Monthly
Data File to confirm the information specified in Exhibit B hereto which
information is contained in the Monthly Servicer and Settlement Statements and
Servicer Certificates, to the extent such information is contained in the
Monthly Data File. On or before the fifth Business Day after the Payment Date,
the Backup Servicer will deliver to the Servicer, the Indenture Trustee and the
Master Trust Trustee a notice in the form of Exhibit C to this Agreement either
(i) certifying that it has confirmed the accuracy of the information specified
in Exhibit B hereto contained in the Monthly Servicer and Settlement Statements
and Servicer Certificates, as described above, or (ii) describing any
discrepancies discovered in the information specified in Exhibit B hereto
contained in the Monthly Servicer and Settlement Statements and Servicer
Certificates. The Servicer will deliver a copy of the notice to the Rating
Agencies. If the Backup Servicer reports any discrepancies, the Servicer and the
Backup Servicer will use reasonable efforts to reconcile such discrepancies in
good faith

 

5

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

prior to the next Payment Date or, if such reconciliation cannot be completed by
the next Payment Date, as soon as reasonably practicable thereafter; provided,
however, that, in the absence of a reconciliation, the Monthly Servicer and
Settlement Statements and Servicer Certificates prepared by the Servicer will
control for the purpose of calculations and distributions with respect to each
succeeding Payment Date until such reconciliation is complete. The Servicer will
notify the Indenture Trustee and the Master Trust Trustee of the results of such
reconciliation on or prior to the Payment Date following such reconciliation
(which notice may be included in the related Monthly Servicer and Settlement
Statement or Servicer Certificate, as applicable).

(d) The Backup Servicer will conduct annual on-site visits of the Servicer’s
servicing operations for dealer floorplan finance receivables to meet with
appropriate operations personnel to discuss any material changes in processes
and procedures that have occurred since the last visit; provided, that the
Backup Servicer will not conduct any such visit (including the on-site visit
described in Section 2.01(b)(i)) more than once in any 12-month period.

(e) The Servicer agrees to provide the Backup Servicer with any information it
may reasonably request.

Section 2.02 Backup Servicing Compensation.

(a) As full compensation for its Backup servicing activities hereunder and
reimbursement for its expenses, the Backup Servicer is entitled to receive the
Backup Servicing Fee and Backup Servicing Expenses on each Payment Date
(beginning with the December 2009 Payment Date) on or before the termination
date of this Agreement pursuant to Section 4.02, payable in arrears. The Backup
Servicing Fee and Backup Servicing Expenses are payable to the Backup Servicer
solely to the extent amounts are available for payment in accordance with the
terms of the Supplements and the Indenture Supplements.

(b) The Servicer will also pay, or cause to be paid, the following amounts to
the Backup Servicer:

(i) on or prior to the date of this Agreement, a one-time acceptance fee of
$10,000 for undertaking the obligations of the Backup Servicer hereunder;

(ii) on or prior to the closing date of any new series of Investor Certificates
under the Pooling and Servicing Agreement or new series of Notes under the
Indenture, an acceptance fee of $5,000; and

(iii) within 30 days of receipt of a detailed billing statement, the reasonable
fees and expenses, including travel expenses, incurred by the Back-up Servicer
in connection with the annual on-site visits pursuant to Section 2.01(d),
subject to an annual cap of $10,000.

(c) The parties acknowledge that, if the Backup Servicer is appointed as the
Successor Servicer under the Pooling and Servicing Agreement, the Backup
Servicer will be entitled to be reimbursed for Transition Costs. Such Transition
Costs will be paid to the Backup Servicer by the Master Trust Trustee solely
from the funds on deposit in the Servicer Transition

 

6

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

Fee Account and any Transition Costs in excess of such amount will be paid to
the Backup Servicer by the Servicer in accordance with the provisions of
Section 4.06 of the Series 2004-1 Supplement to the Pooling and Servicing
Agreement. Reimbursement of any Transition Costs shall be made within 30 days of
the delivery to the Master Trust Trustee and the Servicer of a detailed billing
statement setting forth such Transition Costs. In no event will the Master Trust
Trustee be personally responsible for the payment of any Transition Costs.

Except as otherwise set forth in this Section 2.02, the Backup Servicer will be
required to pay all expenses incurred by it in connection with its backup
servicing activities hereunder.

Section 2.03 Representations, Warranties and Covenants of Backup Servicer.

(a) Representations and Warranties. The Backup Servicer hereby makes the
following representations, warranties and covenants:

(i) Organization and Good Standing. It is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States of America and has, in all material respects, full corporate or other
power, authority and legal rights to own its properties and conduct its
floorplan receivable servicing business as such properties are currently owned
and as such business is currently conducted, and to execute, deliver and perform
its obligations under this Agreement.

(ii) Due Qualification. It is duly qualified to do business and, where
necessary, is in good standing as a foreign corporation or other legal entity
(or is exempt from such requirements) and has obtained all necessary licenses
and approvals in each jurisdiction where the servicing of the Dealer Notes 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 under this Agreement.

(iii) Due Authorization. It has duly authorized, by all necessary action on its
part, the execution and delivery of this Agreement and the consummation of the
transactions provided for or contemplated by this Agreement.

(iv) No Conflict. Its execution and delivery of this Agreement, its performance
of the transactions contemplated by this Agreement and the fulfillment of the
terms hereof applicable to it 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 material
indenture, contract, agreement, mortgage, deed of trust or other instrument to
which it is a party or by which it or its properties are bound.

(v) No Violation. Its execution and delivery of this Agreement, its performance
of the transactions contemplated by this Agreement and its fulfillment of the
terms hereof applicable to it will not conflict with or violate any material
Requirement of Law applicable to it.

(vi) No Proceedings. There are no proceedings pending or, to the best of its
knowledge, threatened or investigations pending or threatened against it before
or by any Governmental Authority (A) asserting the invalidity of this Agreement,
(B) seeking to prevent

 

7

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

the consummation of any of the transactions contemplated by this Agreement,
(C) seeking any determination or ruling that, in its reasonable judgment, would
materially and adversely affect its performance of its obligations under this
Agreement or (D) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement.

(vii) All Consents Required. All material authorizations, consents, orders,
approvals or other actions of any Governmental Authority required to be obtained
or effected by it in connection with its execution and delivery of this
Agreement, its performance of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof applicable to it have been duly obtained
or effected and are in full force and effect.

(viii) Enforceability. This Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with the terms hereof, 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).

(ix) Compliance with Requirements of Law. It will duly satisfy all obligations
on its part to be fulfilled under or in connection with the Dealer Notes and the
Accounts, will maintain in effect all qualifications required under Requirements
of Law in order to service properly the Dealer Notes and the Accounts and will
comply in all material respects with all Requirements of Law in connection with
its obligations under this Agreement, the failure to comply with which would
have a material adverse effect on the interests of the Noteholders, the Investor
Certificateholders, the holders of the NFSC Certificate or any Enhancement
Providers.

(b) Notice of Breach. The representations and warranties set forth in this
Section 2.03(a) will survive the termination of any Investor Certificates and
series of Notes. Upon discovery by the Seller, the Master Trust, the Issuer, the
Master Trust Trustee, the Owner Trustee, the Indenture Trustee or the Servicer
of a material breach of any of the foregoing representations and warranties, the
party discovering such breach will give prompt written notice to the other
parties.

Section 2.04 Regulation AB. To the extent Regulation AB is applicable to the
Seller, the Master Trust, the Issuer or any Investor Certificate or series of
Notes, the Backup Servicer acknowledges, in its capacity as Backup Servicer
under this Agreement, that to the extent it is deemed to be participating in the
servicing function pursuant to Item 1122 of Regulation AB, it will take any
action reasonably requested by the Servicer to ensure compliance with the
requirements of Regulation AB. Such required documentation will be delivered to
the Servicer by March 15 of each calendar year.

 

8

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

ARTICLE III

Other Matters Relating To Backup Servicer

Section 3.01 Liability of Backup Servicer. The Backup Servicer will be liable
under this Article III only to the extent of the obligations specifically
undertaken by the Backup Servicer in its capacity as Backup Servicer and as
otherwise provided in Section 3.04.

Section 3.02 Merger or Consolidation of, or Assumption of, Obligations of Backup
Servicer. Any Person (i) into which the Backup Servicer may be merged or
consolidated, (ii) resulting from any merger or consolidation to which the
Backup Servicer will be a party, (iii) which acquires by conveyance, transfer or
lease substantially all of the assets of the Backup Servicer, or (iv) succeeding
to the business of the Backup Servicer, which Person in any of the foregoing
cases is an Eligible Servicer, will be the successor to the Backup 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, anything in this
Agreement to the contrary notwithstanding; provided, however, that nothing
contained herein will be deemed to release the Backup Servicer from any
obligation.

Section 3.03 Limitation on Liability of Backup Servicer and Others.

(a) Subject to Section 3.01, neither the Backup Servicer nor any of its
directors, shareholders, officers, employees or agents will be under any
liability to the Master Trust, the Master Trust Trustee, the Issuer, the Owner
Trustee, the Indenture Trustee, the Servicer, the Seller, the Investor
Certificateholders, the Noteholders, any Enhancement Providers or any other
Person for any action taken or for refraining from the taking of any action in
the capacity as Backup Servicer under this Agreement whether arising from
express or implied duties under this Agreement; provided, however, that this
provision does not protect the Backup Servicer or any such Person against any
liability that would otherwise be imposed by reason of (i) willful wrongdoing,
bad faith, negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder, (ii) the breach of this Agreement
by the Backup Servicer, (iii) the Backup Servicer’s failure to comply with
requirements of applicable federal, state and local laws and regulations
thereunder, in performing its duties as Backup Servicer hereunder or (iv) any
failure of the representations and warranties made by the Backup Servicer
hereunder or in connection herewith to be true and correct in all material
respects when made or deemed made. The Backup Servicer and any of its directors,
shareholders, officers, employees or agents 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. The Backup Servicer will not be under
any obligation to appear in, prosecute or defend any legal action which is not
incidental to its servicing responsibilities hereunder and that in its
reasonable opinion may involve it in any expense or liability.

(b) The Backup Servicer will not be liable for any obligation of the Servicer
contained in this Agreement or for any errors of the Servicer contained in any
computer tape, certificate or other data or document delivered to the Backup
Servicer hereunder or on which the Backup Servicer must rely in order to perform
its obligations hereunder, and the Master Trust, the Master Trust Trustee, the
Issuer, the Owner Trustee, the Indenture Trustee, the Servicer, the Seller, the
Investor Certificateholders, the Noteholders, any Enhancement Providers or any
other

 

9

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

Person will look only to the Servicer to perform such obligations. The Backup
Servicer will have no responsibility and will not be in default hereunder or
incur any liability for any failure, error, malfunction or any delay in carrying
out any of their respective duties under this Agreement if such failure or delay
results from the Backup Servicer acting in accordance with information prepared
or supplied by any Person other than the Backup Servicer or the failure of any
such other Person to prepare or provide such information. In the event the
Backup Servicer becomes aware of errors, which in the opinion of the Backup
Servicer, impairs its ability to perform its services hereunder, the Backup
Servicer shall immediately notify the Servicer of such errors. The Backup
Servicer will have no responsibility, will not be in default and will incur no
liability for (i) any act or failure to act of any third party, including the
Servicer, (ii) any inaccuracy or omission in a notice or communication received
by the Backup Servicer from any third party, (iii) the invalidity or
unenforceability of any Dealer Note under applicable law, (iv) the breach or
inaccuracy of any representation or warranty made with respect to any Dealer
Note, or (v) the acts or omissions of any successor Backup Servicer. Except for
the obligations undertaken by the Backup Servicer in this Agreement, the Backup
Servicer will have no obligation to take any action, or to perform any of the
duties of the Servicer, under the Pooling and Servicing Agreement or the other
Transaction Documents until such time as the Backup Servicer has become the
Successor Servicer pursuant to Section 10.02 of the Pooling and Servicing
Agreement. Without limiting the foregoing, the Backup Servicer shall have no
obligation for the items described on Exhibit B hereto (other than in connection
with its backup servicing activities as described in Section 2.01), and shall
have (i) no obligation to pay any taxes required to be paid by the Servicer,
(ii) no obligation to pay any of the fees and expenses of any other party
involved in the transaction and (iii) no liability or obligation with respect to
any Servicer indemnification obligations of any prior servicer, including the
original Servicer.

(c) The Backup Servicer offers no representations concerning, and shall have no
liability hereunder with respect to, the collectibility, enforceability or other
characteristics of the Dealer Notes. The Backup Servicer shall have no
responsibility and shall not be in default hereunder nor incur any liability for
any failure, error, malfunction or any delay in carrying out any of its duties
under this Agreement or any Transaction Document if any such failure or delay
results from the Backup Servicer acting in accordance with applicable laws,
regulations or rules or from acts of God, war or terrorism, insurrection,
strikes, stoppages of labor, power or equipment failure or malfunction
(including that of any common carrier or transmission line), loss or malfunction
of communications or computer (hardware or software) services, emergency
conditions, tornado, flood, fire, earthquake or similar event, adverse weather
conditions or any other factor, medium, instrumentality or any cause or
circumstances, directly or indirectly, beyond the Backup Servicer’s control or
for information prepared or supplied by a Person other than the Backup Servicer
as contemplated hereunder or the failure of any such Person to prepare or
provide such information.

(d) Without limiting the foregoing, any liability of the Backup Servicer under
or in connection with this Agreement or any Transaction Document shall be
limited to direct damages caused as a result of its negligence, bad faith,
willful misfeasance or recklessness or its failure to perform its obligations
hereunder, and the Backup Servicer shall in no event have any liability for any
indirect, consequential or punitive damages (including, but not limited to, loss
of profit) irrespective of whether the Backup Servicer has been advised of the
likelihood of such loss or damage and regardless of the form of action.

 

10

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

(e) The Backup Servicer may conclusively rely on, and shall be fully protected
in acting upon, the contents of any electronic file prepared by the Servicer,
and any certificate, instrument, opinion, notice, letter, telegram or other
document delivered to it and that in good faith it reasonably believes to be
genuine and that has been signed by the proper party or parties. The Backup
Servicer may rely conclusively on and shall be fully protected in acting upon
the written instructions of any designated officer of the parties to this
Agreement.

(f) The Backup Servicer may consult counsel reasonably satisfactory to it and
the written advice or opinion of such counsel shall be full and complete
authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with such
written advice or opinion of such counsel.

Section 3.04 Backup Servicer Indemnification.

(a) Notwithstanding Section 3.03 to the contrary, the Backup Servicer will
indemnify and hold harmless each of the Master Trust, the Master Trust Trustee,
the Issuer, the Seller, the Servicer, the Owner Trustee, the Indenture Trustee,
the Investor Certificateholders, the Noteholders and any Enhancement Providers
and any trustees predecessor thereto and their respective directors, officers,
employees and agents from and against any and all loss, liability, claim,
expense, damage or injury suffered or sustained thereby by reason of (i) the
breach of this Agreement by the Backup Servicer, (ii) the violation of federal
or state securities laws by the Backup Servicer, (iii) the willful wrongdoing,
bad faith or negligence of the Backup Servicer in the performance of its duties,
(iv) the reckless disregard of its obligations and duties under this Agreement
or (v) any failure of the representations and warranties made by the Backup
Servicer hereunder or in connection herewith to be true and correct in all
material respects when made or deemed made.

(b) The Backup Servicer’s obligations under this Section 3.04 will survive the
termination of this Agreement, the Master Trust and/or the Issuer as well as the
resignation or removal of the Backup Servicer.

Section 3.05 Backup Servicer Not to Resign. The Backup Servicer may not resign
from the obligations and duties hereby imposed on it, except:

(i) upon determination that (A) the performance of its duties hereunder is no
longer permissible under applicable law and (B) there is no reasonable action
that the Backup Servicer could take to make the performance of its duties
hereunder permissible under applicable law; or

(ii) with the consent of the Servicer, upon the assumption of such obligations
and duties by a successor Backup Servicer that meets the eligibility
requirements of a Successor Servicer described in the Pooling and Servicing
Agreement (an “Eligible Servicer”).

Any determination permitting the resignation of the Backup Servicer must be
evidenced as to clause (i) above by an Opinion of Counsel to such effect
delivered to the Master Trust, the Issuer, the Servicer, the Owner Trustee, the
Master Trust Trustee and the Indenture Trustee. Upon the resignation of the
Backup Servicer, the Servicer will appoint a successor backup servicer that
satisfies the eligibility criteria for a Successor Servicer under the Pooling
and

 

11

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

Servicing Agreement. No resignation pursuant to clause (i) above will become
effective until a successor Backup Servicer that is an Eligible Servicer has
been appointed by the Servicer and executes an agreement of assumption to
perform every obligation of the Backup Servicer under this Agreement; provided,
that, if a successor Backup Servicer is not appointed within 60 days of the
giving of notice of resignation and the delivery of the Opinion of Counsel, the
Backup Servicer may petition a court of competent jurisdiction to appoint any
Person qualifying as an Eligible Servicer as the successor Backup Servicer
hereunder. The resigning Backup Servicer agrees to cooperate with any successor
Backup Servicer appointed by the Servicer in effecting the transfer of the
responsibilities and rights of the resigning Backup Servicer under this
Agreement, including the delivery to the successor Backup Servicer of all
documents, records and electronic information related to the Dealer Notes in the
possession of the resigning Backup Servicer. The Servicer shall provide written
notice to each Rating Agency upon the resignation of the Backup Servicer
hereunder.

Section 3.06 Confidential Information. The Backup Servicer will preserve the
confidentiality of any non-public information obtained by it in connection with
its performance of its responsibilities hereunder; provided, however, that
nothing herein shall prevent the Backup Servicer from disclosing such
information to (a) the Backup Servicer’s directors, officers, employees, agents,
subservicers and professional consultants in connection with the Backup
Servicer’s obligations under this Agreement, (b) any federal or state regulatory
agency having jurisdiction over the Backup Servicer, (c) any federal or state
regulatory agency or governmental authority to which such disclosure is required
(1) to effect compliance with any law, rule, regulation or order applicable to
the Backup Servicer, (2) in response to any subpoena or legal process, (3) in
connection with any litigation or adversary proceedings to which the Backup
Servicer or any other party hereto is a party, or (4) as required to execute and
administer this Agreement or (d) to the extent such information becomes public
through no act or fault of the Backup Servicer. In the case of any disclosure
permitted by clause (b) or (c), the Backup Servicer shall use commercially
reasonable efforts to (x) provide the Servicer with advance notice of any such
disclosure and (y) cooperate with the Servicer in limiting the extent or effect
of any such disclosure. This Section 3.06 shall survive the termination of this
Agreement or the removal or resignation of the Backup Servicer.

Section 3.07 Audits of Backup Servicer. The Backup Servicer agrees that, with
reasonable prior notice, it will permit any authorized representative of the
Servicer, the Master Trust Trustee or the Indenture Trustee, during the Backup
Servicer’s normal business hours, to examine and audit the books of account,
records, reports and other documents and materials of the Backup Servicer
relating to (a) the performance of the Backup Servicer’s obligations under this
Agreement, (b) any payments of fees and expenses of the Backup Servicer in
connection with such performance and (c) any claim made by the Backup Servicer
under this Agreement. In addition, the Backup Servicer will permit such
representatives to make copies and extracts of any such books and records and to
discuss the same with the Backup Servicer’s officers and employees. Each of the
Servicer, the Master Trust Trustee and the Indenture Trustee will, and will
cause its authorized 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 it may reasonably determine that such disclosure is consistent with its
obligations under this Agreement. The Backup Servicer will maintain all such
pertinent books, records, reports and other documents and materials for a period
of two years after the termination of its obligations under this Agreement.

 

12

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

Section 3.08 Indemnification: Third Party Claims.

(a) Each of the Seller and the initial Servicer agrees to defend, indemnify and
hold the Backup Servicer and any officers, directors, employees or agents of the
Backup Servicer harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees,
and expenses (collectively, “Losses”) that the Backup Servicer may sustain under
this Agreement in connection with claims asserted at any time by third parties
against the Backup Servicer which result from any act taken or any omission by
the Backup Servicer acting in good faith in conformity with the written consent
or approval of the Servicer, the Seller or the Master Trust Trustee or the
Backup Servicer’s performance (or lack of performance) under this Agreement,
unless such Losses are the result of (i) the breach of this Agreement by the
Backup Servicer, (ii) the Backup Servicer’s failure to comply with requirements
of applicable federal, state and local laws and regulations thereunder, in
performing its duties as Backup Servicer hereunder, (iii) the willful
wrongdoing, bad faith or negligence of the Backup Servicer in the performance of
its duties, (iv) the reckless disregard of the Backup Servicer’s obligations and
duties under this Agreement or (v) any failure of the representations and
warranties made by the Backup Servicer hereunder or in connection herewith to be
true and correct in all material respects when made or deemed made.

(b) The indemnities in this Section 3.08 shall survive the termination of this
Agreement or the removal or resignation of the Backup Servicer.

ARTICLE IV

Termination

Section 4.01 Termination of Backup Servicer.

(a) The Servicer may terminate all of the rights and obligations of the Backup
Servicer under this Agreement (a) upon a breach of any of the representations,
warranties, covenants or obligations of the Backup Servicer contained in this
Agreement, (b) if the long-term, unsecured debt ratings of the Backup Servicer
are lower than “BBB-” from S&P or “Baa3” from Moody’s or (c) upon the occurrence
of an Insolvency Event with respect to the Backup Servicer. Upon the termination
of the Backup Servicer, the Servicer will appoint a successor backup servicer
that satisfies the eligibility criteria for a Successor Servicer under the
Pooling and Servicing Agreement. No termination pursuant to Section 4.01 will
become effective until a successor Backup Servicer that is an Eligible Servicer
has been appointed by the Servicer and executes an agreement of assumption to
perform every obligation of the Backup Servicer under this Agreement.

(b) The terminated Backup Servicer agrees to cooperate with any successor Backup
Servicer appointed by the Servicer in effecting the transfer of the
responsibilities and rights of the terminated Backup Servicer under this
Agreement, including the delivery to the successor Backup Servicer of all
documents, records and electronic information related to the Dealer Notes in the
possession of the terminated Backup Servicer. The Servicer will notify the
Rating Agencies prior to any termination of the Backup Servicer.

 

13

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

Section 4.02 Termination of Agreement. This Agreement and the respective
obligations and responsibilities of the Seller, the Servicer, the Master Trust
Trustee and the Backup Servicer under this Agreement will terminate, except with
respect to the duties described in Sections 3.04, 3.06 and 3.08, on the earliest
to occur of (a) the appointment of the Backup Servicer as Successor Servicer
under the Pooling and Servicing Agreement, (b) in the sole discretion of the
Servicer, without cause, not less than 30 days’ notice to the Backup Servicer,
if the long-term, unsecured debt ratings of the Servicer are at least “BBB-”
from S&P or “Baa3” from Moody’s, (c) in the sole discretion of the Servicer, the
payment in full of all outstanding Investor Certificates and Notes and the
satisfaction and discharge of the Pooling and Servicing Agreement and the
Indenture and (d) the termination of the Master Trust and the Issuer. The
Servicer will notify the Rating Agencies prior to any termination of this
Agreement pursuant to clause (b) above.

ARTICLE V

Miscellaneous Provisions

Section 5.01 Amendment.

(a) This Agreement may be amended from time to time by the Master Trust Trustee,
the Servicer, the Seller and the Backup Servicer, by a written instrument signed
by each of them, without the consent of any of the Investor Certificateholders;
provided, that:

(i) the Seller has delivered to the Master Trust Trustee, the Indenture Trustee
and the Owner Trustee an Officer’s Certificate, dated the date of any such
amendment, stating that the Seller reasonably believes that such amendment will
not adversely affect in any material respect the interests of any Investor
Certificateholder; and

(ii) the Rating Agency Condition has been satisfied with respect to any such
amendment; provided, however, that the Servicer, the Seller, the Master Trust
Trustee and the Back-up Servicer may enter into one or more amendments, without
the consent of the Indenture Trustee, the Investor Certificateholders or the
Noteholders or satisfaction of the Rating Agency Condition in order (A) to cure
any ambiguity, to correct or supplement any provision herein or in any amendment
hereto that may be inconsistent with any other provision herein or in any
amendment hereto or (B) to make any other provisions with respect to matters or
questions arising under this Agreement or in any amendment hereto so long as a
final amendment to this Agreement signed by the parties hereto is delivered to
each Rating Agency and the Indenture Trustee within ten days of its execution
and the Seller has delivered to each Rating Agency, the Master Trust Trustee and
the Indenture Trustee an Officer’s Certificate, dated the date of any such
amendment, stating that the Seller reasonably believes that such amendment will
not adversely affect in any material respect the interests of any Investor
Certificateholder or Noteholder.

 

14

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

(b) This Agreement may also be amended from time to time by the Master Trustee,
the Servicer, the Seller and the Backup Servicer, with the consent of the
Holders of Investor Certificates evidencing not less than 66 2/3% of the
aggregate Invested Amount of the senior most outstanding Class of the Investor
Certificates of each adversely affected series of Investor Certificates and
without the requirement that the Rating Agency Condition be satisfied or that
the Seller deliver an Officer’s Certificate provided in Section 5.01(a), for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Investor Certificateholders hereunder; provided, however, that no such
amendment may reduce the aforesaid percentage required to consent to any such
amendment without the consent of each affected series of Investor Certificates.
Any amendment to be effected pursuant to this Section 5.01(b) will be deemed to
adversely affect all outstanding series of Investor Certificates, other than any
series of Investor Certificates with respect to which such action will not, as
evidenced by an Opinion of Counsel for the Seller, addressed and delivered to
the Master Trust Trustee, the Owner Trustee and the Indenture Trustee, adversely
affect the interests of any Investor Certificateholder of such series.

(c) Promptly after the execution of any amendment or consent pursuant to
Section 5.01(a), the Servicer will notify the Indenture Trustee, the Owner
Trustee, the Rating Agencies and each Enhancement Provider, of the substance of
such amendment. Prior to the execution of any amendment or consent (other than
an amendment pursuant to Section 5.01(a)), the Servicer will provide written
notice to each Rating Agency of the substance of such proposed amendment.

(d) If Investor Certificateholders are required to consent to any proposed
amendments pursuant to this Section, such Investor Certificateholders need not
consent to or approve the particular form of such amendment. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Investor Certificateholders is subject to such reasonable
requirements as the Master Trust Trustee and the Indenture Trustee prescribe.

Section 5.02 No Petition. Each of the Servicer, Navistar Financial Corporation
(if it is no longer the Servicer) and the Backup Servicer, by entering into this
Agreement, each Investor Certificateholder and Noteholder, by accepting an
Investor Certificate or Note, as applicable, each holder of an interest in the
NFSC Certificate, by accepting such interest, and each of the Owner Trustee, the
Master Trust Trustee, the Indenture Trustee and the Enhancement Providers, by
accepting the benefits of this Agreement, hereby covenants and agrees that it
will not at any time institute against, or join in any institution against,
Seller, the Master Trust or the Issuer any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law.

Section 5.03 Governing Law. This Agreement is to be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
are to be determined in accordance with such laws.

Section 5.04 Notices. All notices, demands, instructions and other
communications required or permitted under this Agreement must be in writing and
will be deemed to have been duly given: (i) upon delivery or, in the case of a
letter mailed by registered first class mail, postage prepaid, three days after
deposit in the mail, (ii) in the case of a fax, when receipt is confirmed by
telephone, reply email or reply fax from the recipient, (iii) in the case of an
email,

 

15

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

when receipt is confirmed by telephone or reply email from the recipient, and
(iv) in the case of an electronic posting to a password-protected website to
which the recipient has been provided access, upon delivery of an email to such
recipient stating that such electronic posting has occurred. Unless otherwise
specified in a notice sent in accordance with the provisions of this Section,
notices, demands, instructions and other communications in writing will be given
to the respective parties at their respective addresses as follows: (i) in the
case of the Seller, Navistar Financial Securities Corporation, 425 N. Martingale
Road, Suite 1800, Attention: General Counsel, Schaumburg, IL 60173, Telecopy:
(630) 753-4410, (ii) in the case of the Servicer or Navistar Financial
Corporation, Navistar Financial Corporation, 425 N. Martingale Road, Suite 1800,
Attention: General Counsel, Schaumburg, IL 60173, Telecopy: (630) 753-4410,
(iii) in the case of the Issuer and the Owner Trustee, Deutsche Bank Trust
Company Delaware, 1011 Centre Road, Suite 200, Wilmington, DE 19805, (iv) in the
case of the Master Trust Trustee and the Indenture Trustee, The Bank of New York
Mellon, 101 Barclay Street, Floor 4W, New York, New York, 10286, Attn: Corporate
Trust ABS Unit, and (v) in the case of the Backup Servicer, Wells Fargo Bank,
National Association, MAC N9311-161, Sixth Street and Marquette Avenue,
Minneapolis, MN 55479, Attention: Corporate Trust Services - Asset-Backed
Administration, Telephone: (612) 667-8058, Telecopy: (612) 667-3464; or, as to
each party, at such other address as may be designated by such party in a
written notice to each other party. All notices are effective on receipt.

Section 5.05 Severability of Provisions. If one or more of the covenants,
agreements, provisions or terms of this Agreement is for any reason whatsoever
held invalid, then such covenants, agreements, provisions or terms will be
deemed severable from the remaining covenants, agreements, provisions or terms
of this Agreement and will in no way affect the validity or enforceability of
the other provisions of this Agreement.

Section 5.06 Further Assurances. The Servicer and the Backup 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 Seller, the Master
Trust Trustee, the Owner Trustee or the Indenture Trustee in order to effect
more fully the purposes of this Agreement.

Section 5.07 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Master Trust Trustee, the Owner Trustee, the
Indenture Trustee, the Investor Certificateholders or the Noteholders, any
right, remedy, power or privilege under this Agreement will operate as a waiver
thereof; nor will 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.

Section 5.08 Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties on separate counterparts), each of which
will be an original, but all of which together will constitute one and the same
instrument.

Section 5.09 Third Party Beneficiaries. This Agreement will inure to the benefit
of and be binding upon the parties hereto, the Owner Trustee, the Indenture
Trustee, the Noteholders, the Investor Certificateholders, the holders of the
NFSC Certificate, any Enhancement Providers, the Master Trust, the Issuer 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.

 

16

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

Section 5.10 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 5.11 Headings. The headings herein are for purposes of reference only
and are not intended to otherwise affect the meaning or interpretation or any
provision of this Agreement.

Section 5.12 Limitation of Owner Trustee Liability. Notwithstanding anything to
the contrary, this Agreement has been countersigned by Deutsche Bank Trust
Company Delaware, not in its individual capacity but solely in its capacity as
Owner Trustee. In no event shall Deutsche Bank Trust Company Delaware in its
individual capacity or, except as expressly provided in the Trust Agreement, as
Owner Trustee have any liability for the representations, warranties, covenants,
agreement or other obligations of Navistar Financial Dealer Note Master Owner
Trust hereunder or in any certificates, notices or agreements delivered pursuant
hereto, as to all of which recourse shall be had solely to the assets of
Navistar Financial Dealer Note Master Owner Trust. 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 Navistar Financial Dealer Note
Master Owner Trust hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of the Trust Agreement.

[Remainder of Page Intentionally Left Blank]

 

17

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

In Witness Whereof, the Servicer, the Seller, the Master Trust Trustee and the
Backup Servicer have caused this Backup Servicing Agreement to be duly executed
by their respective duly authorized officers, all as of the day and year first
above written.

 

NAVISTAR FINANCIAL CORPORATION as Servicer By:  

/s/ William V. McMenamin

Name:   William V. McMenamin Title:   Vice President, Chief Financial Officer  
and Treasurer

NAVISTAR FINANCIAL SECURITIES

CORPORATION

as Seller By:  

/s/ William V. McMenamin

Name:   William V. McMenamin Title:   Vice President, Chief Financial Officer  
and Treasurer

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

THE BANK OF NEW YORK MELLON as Master Trust Trustee By:  

/s/ Michael Burack

Name:   Michael Burack Title:   Senior Associate

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

WELLS FARGO BANK, NATIONAL ASSOCIATION as Backup Servicer By:  

/s/ Marianna Stershic

Name:   Marianna Stershic Title:   Vice President

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

Acknowledged and Accepted: NAVISTAR FINANCIAL DEALER NOTE MASTER OWNER TRUST,
By:    DEUTSCHE BANK TRUST COMPANY DELAWARE,   
as Master Owner Trust Trustee and not in its individual capacity By:   

/s/ Jenna Kaufman

      Name:    Jenna Kaufman       Title:    Attorney-in-Fact       By:   

/s/ Irene Siegel

      Name:    Irene Siegel       Title:    Attorney-in-Fact      

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

Exhibit A

Terms and Conditions as Successor Servicer

All of the terms and conditions of the Pooling and Servicing Agreement and the
other Transaction Documents shall apply to the Backup Servicer in its capacity
as Successor Servicer under the Pooling and Servicing Agreement and the other
Transaction Documents if appointed by the Master Trust Trustee in accordance
with the Pooling and Servicing Agreement; provided, that, the following
modifications to the Pooling and Servicing Agreement and the other Transaction
Documents (in lieu of the otherwise applicable provisions) shall apply to the
Backup Servicer if so appointed as Successor Servicer:

 

1. Removed Servicer: Notwithstanding the removal of Navistar Financial
Corporation as Servicer under the Pooling and Servicing Agreement, Navistar
Financial Corporation shall (following such removal) continue to perform the
duties and have the liabilities described in this Exhibit B as the “Removed
Servicer.”

 

2. Purchases of Dealer Notes. The Backup Servicer, as Successor Servicer, will
not be obligated to purchase any Dealer Notes under any circumstance.

 

3. Advances: Notwithstanding anything in the Pooling and Servicing Agreement or
the other Transaction Documents, neither the Backup Servicer, as Successor
Servicer, nor the Removed Servicer shall be obligated to make any Advances. The
Backup Servicer’s or the Removed Servicer’s failure to make any Advances shall
not result in a Servicer Termination Event, Early Amortization Event, Early
Redemption Event, Event of Default or other breach of the Transaction Documents.

 

4. Fees, Expenses and Indemnification of Trustees. Notwithstanding Sections
3.02, 10.02(b) and 11.05 of the Pooling and Servicing Agreement, Sections 3.02
and 3.03 of the Series 2004-1 Supplement to the Pooling and Servicing Agreement,
Section 8.07 of the Indenture and Section 6.9 of the Trust Agreement or as
otherwise provided in the Transaction Documents, the Backup Servicer, as
Successor Servicer, shall not become responsible for any costs, fees or other
expenses of any independent accountants engaged by the Master Trust, the Master
Trust Trustee, the Issuer, the Indenture Trustee or the Owner Trustee; provided,
that, the Removed Servicer shall remain responsible for such expenses, including
(without limitation) (a) compensation, reimbursement and indemnification of the
Master Trust Trustee pursuant to Section 11.05 of the Pooling and Servicing
Agreement, (b) compensation, reimbursement and indemnification of the Owner
Trustee and Indenture Trustee pursuant to Section 3.02 and 3.03 of the Series
2004-1 Supplement to the Pooling and Servicing Agreement, Section 8.07 of the
Indenture and Section 6.9 of the Trust Agreement, as applicable and
(c) compensation of any independent accountants engaged by the Master Trust as
provide in Section 3.02 of the Pooling and Servicing Agreement.

 

5. Credit Guidelines. The definition of “Credit Guidelines” in the Pooling and
Servicing Agreement shall not apply to the Backup Servicer as Successor
Servicer. The Backup Servicer as Successor Servicer shall service in accordance
with its customary and usual collection policies and practices.

 

A-1

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

6. Merger. Section 8.02 of the Pooling and Servicing Agreement shall not apply
to the Backup Servicer as Successor Servicer. Instead, the merger and
consolidation provisions of Section 3.02 of this Agreement shall apply to the
Backup Servicer as Successor Servicer.

 

7. Successor Administrator. Notwithstanding anything in the Administration
Agreement to the contrary (including, but not limited to, Section 8(g) thereof),
the Backup Servicer, as the Successor Servicer, shall not succeed to the role of
Administrator.

 

8. Servicer Transition Fee Account. Notwithstanding anything in Section 4.06(b)
of the Series 2004-1 Supplement to the Pooling and Servicing Agreement, the
Servicer Transition Fee Account shall not be closed so long as this Agreement
has not been terminated.

 

9. Indemnification. The indemnification obligations of the Backup Servicer, upon
becoming a Successor Servicer under the Transaction Documents, are expressly
limited to those instances of negligence, bad faith, willful misfeasance or
recklessness of the Backup Servicer in its role as Successor Servicer.

 

10. Predecessor Work Product. Notwithstanding anything contained in this
Agreement to the contrary, the Backup Servicer, acting as Successor Servicer, is
authorized to accept and rely on all of the accounting, records (including
computer records) and work of the prior Servicer relating to the Dealer Notes
(collectively, the “Predecessor Servicer Work Product”) without any audit or
other examination thereof, and the Backup Servicer as Successor Servicer shall
have no duty, responsibility, obligation or liability for the acts and omissions
of the prior Servicer. If any error, inaccuracy, omission or incorrect or
non-standard practice or procedure (collectively, “Errors”) exist in any
Predecessor Servicer Work Product and such Errors make it materially more
difficult to service or should cause or materially contribute to the Backup
Servicer, acting as the Successor Servicer, making or continuing any Errors
(collectively, “Continued Errors”), the Backup Servicer as Successor Servicer
shall have no duty, responsibility, obligation or liability for such Continued
Errors; provided, however, that the Backup Servicer as Successor Servicer agrees
to use its best efforts to prevent further Continued Errors. In the event that
the Backup Servicer as Successor Servicer becomes aware of Errors or Continued
Errors, it shall, with the prior consent of the Master Trust Trustee, use its
best efforts to reconstruct and reconcile such data as is commercially
reasonable to correct such Errors and Continued Errors and to prevent future
Continued Errors. The Backup Servicer as Successor Servicer shall be entitled to
recover its costs thereby expended.

 

11. Business Day. The definition of “Business Day” shall have the meaning
specified in the Pooling and Servicing Agreement and shall include a day on
which banking institutions in Minneapolis, Minnesota are authorized or obligated
by law or executive order to be closed or remain closed.

 

2

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

Exhibit B

Information to be Confirmed by Backup Servicer

 

1. Ending Dealer Note Balance

 

2. Aging Schedule

 

3. Dollar amount of defaults

 

A-1

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

Exhibit C

Form of Backup Servicer Notice

[Backup Servicer]

[address]

[date]

The Bank of New York Mellon],

as Master Trust Trustee and Indenture Trustee

[address]

Navistar Financial Corporation

425 N. Martingale Road

Suite 1800

Attention: General Counsel,

Schaumburg, IL 60173

 

Re: Navistar Financial Dealer Note Master Trust

Reference is made to the Backup Servicing Agreement, dated as of             ,
20     (the “Agreement”), among Navistar Financial Corporation, a Delaware
corporation, as Servicer, Navistar Financial Securities Corporation, a Delaware
corporation, as Seller, Navistar Financial Dealer Note Master Trust, a Delaware
statutory trust, The Bank of New York Mellon, a New York banking corporation,
not in its individual capacity but solely as Master Trust Trustee, and Wells
Fargo Bank, National Association, a national banking association, as Backup
Servicer (the “Backup Servicer”). Capitalized terms used but not defined herein
have the meanings specified in the Agreement.

Pursuant to Section 2.01(c) of the Agreement, the Backup Servicer confirms that
it has reviewed the information specified in Exhibit B to the Agreement
contained in the Monthly Servicer and Settlement Statement[s] and Servicer
Certificate[s] and the Monthly Data File provided by the Servicer for the
[                    ] Due Period and [certifies that it has confirmed the
accuracy of the information specified in Exhibit B to the Agreement contained in
the Monthly Servicer and Settlement Statement[s] and Servicer
Certificate[s]][notifies you that it has discovered the following discrepancies
in the information specified in Exhibit B to the Agreement contained in the
Monthly Servicer and Settlement Statement[s] and Servicer Certificate[s]:
[describe discrepancies]].

 

A-1

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

Very Truly Yours,

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Backup Servicer

By:  

 

Name:   Title:  

 

2