EXHIBIT 99.3
Execution Copy
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SERVICING AGREEMENT
AMONG
NAVISTAR LEASING COMPANY,
HARCO LEASING COMPANY, INC.,
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
THE BANK OF NEW YORK
AS COLLATERAL AGENT,
THE BANK OF NEW YORK
AS INDENTURE TRUSTEE,
BANK ONE, NATIONAL ASSOCIATION,
AS PORTFOLIO TRUSTEE
NAVISTAR FINANCIAL 2003-A OWNER TRUST,
AS ISSUER
AND
NAVISTAR FINANCIAL CORPORATION,
AS SERVICER
DATED AS OF JUNE 5, 2003
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS; SERVICING SUPPLEMENT........................................................2
SECTION 1.01 Certain Defined Terms.........................................................2
SECTION 1.02 Supplement to Titling Trust Servicing Agreement...............................2
ARTICLE II ADMINISTRATION AND SERVICING OF RECEIVABLES.............................................3
SECTION 2.01 Duties of the Servicer........................................................3
SECTION 2.02 Establishment of Accounts.....................................................4
SECTION 2.03 Collection of Receivables Payments............................................8
SECTION 2.04 Realization Upon Liquidating Receivables......................................8
SECTION 2.05 Maintenance of Insurance Policies.............................................9
SECTION 2.06 Maintenance of Security Interests in Vehicles.................................9
SECTION 2.07 Covenants of the Servicer.....................................................9
SECTION 2.08 Purchase of Receivables Upon Breach of Covenant..............................10
SECTION 2.09 Servicing Fee................................................................11
SECTION 2.10 Servicer Expenses............................................................11
SECTION 2.11 Deposits to Collection Account...............................................11
SECTION 2.12 Collections..................................................................11
SECTION 2.13 Application of Collections...................................................12
SECTION 2.14 Monthly Advances.............................................................12
SECTION 2.15 Additional Deposits..........................................................13
SECTION 2.16 Net Deposits.................................................................13
SECTION 2.17 Servicer's Certificate.......................................................13
ARTICLE III STATEMENTS AND REPORTS................................................................14
SECTION 3.01 Annual Statement as to Compliance; Notice of Servicer Default; Tax Reports...14
SECTION 3.02 Annual Accountants' Report...................................................15
SECTION 3.03 Access to Certain Documentation and Information Regarding Receivables........15
SECTION 3.04 Maintenance of Composite Schedule of Receivables.............................15
SECTION 3.05 Amendments to Composite Schedule of Receivables..............................16
SECTION 3.06 Maintenance of Systems and Receivables List..................................16
ARTICLE IV THE CUSTODIAN..........................................................................17
SECTION 4.01 Custody of Receivable Files..................................................17
SECTION 4.02 Duties of Servicer as Custodian..............................................17
SECTION 4.03 Custodian's Indemnification..................................................18
SECTION 4.04 Effective Period and Termination.............................................18
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SERVICER..........................................19
SECTION 5.01 Representations and Warranties of the Servicer...............................19
ARTICLE VI THE SERVICER...........................................................................20
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SECTION 6.01 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer ................................................20
SECTION 6.02 Limitation on Liability of Servicer and Others...............................20
SECTION 6.03 Delegation of Duties.........................................................21
SECTION 6.04 Servicer Not to Resign.......................................................21
SECTION 6.05 Servicer Indemnification of the Indenture Trustee and the Owner Trustee......21
SECTION 6.06 Backup Servicer..............................................................23
ARTICLE VII DEFAULT...............................................................................24
SECTION 7.01 Servicer Defaults............................................................24
SECTION 7.02 Consequences of a Servicer Default...........................................24
SECTION 7.03 Indenture Trustee to Act; Appointment of Successor...........................25
SECTION 7.04 Notification to Securityholders..............................................26
SECTION 7.05 Repayment of Advances........................................................26
SECTION 7.06 Waiver of Past Defaults......................................................26
ARTICLE VIII MISCELLANEOUS........................................................................26
SECTION 8.01 Amendment....................................................................26
SECTION 8.02 Termination..................................................................27
SECTION 8.03 Notices......................................................................27
SECTION 8.04 Governing Law................................................................27
SECTION 8.05 Severability.................................................................27
SECTION 8.06 Assignment...................................................................27
SECTION 8.07 Successors and Assigns.......................................................27
SECTION 8.08 Counterparts.................................................................27
SECTION 8.09 Headings and Cross-References................................................28
SECTION 8.10 No Petition Covenants........................................................28
SECTION 8.11 Limitation of Liability of the Trustees......................................28
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SERVICING AGREEMENT
SERVICING AGREEMENT, dated as of June 5, 2003 (as it may be further
amended, supplemented or modified, this "Agreement"), among Navistar Financial
Retail Receivables Corporation, a Delaware corporation ("NFRRC"), Navistar
Financial 2003-A Owner Trust, a Delaware statutory trust (the "Issuer"),
Navistar Leasing Company, a Delaware statutory trust (the "Titling Trust"),
Navistar Financial Corporation, a Delaware corporation (hereinafter, together
with its successors and assigns, "NFC" or, in its capacity as servicer
hereunder, the "Servicer"), The Bank of New York, a New York banking corporation
(the "Collateral Agent"), The Bank of New York, a New York banking corporation,
acting in its capacity as Indenture Trustee pursuant to the Indenture (the
"Indenture Trustee"), Bank One, National Association, a national banking
association, as Portfolio Trustee (the "Series 2003-A Portfolio Interest
Trustee") and Harco Leasing Company, Inc., a wholly owned subsidiary of NFC and
a Delaware corporation (hereinafter, together with its successors and assigns,
"Harco Leasing").
R E C I T A L S:
WHEREAS, NFC has been performing servicing obligations relating to the
Titling Trust Assets pursuant to the Titling Trust Servicing Agreement;
WHEREAS, pursuant to the Titling Trust Agreement a portion of the
General Trust Assets have been allocated to the Series 2003-A Portfolio
Interest;
WHEREAS, NFRRC and NFC are parties to the Purchase Agreement, pursuant
to which NFRRC will purchase the Series 2003-A Portfolio Interest and the Retail
Leases and other Titling Trust Assets allocated thereto and certain Retail Notes
and the Related Retail Note Assets with respect thereto from NFC;
WHEREAS, the Issuer will issue Notes pursuant to the Indenture between
the Issuer and The Bank of New York, a New York banking corporation, as
indenture trustee (the "Indenture Trustee"), and exchange the Notes and the
Certificates for the Series 2003-A Portfolio Interest (and the Retail Leases
allocated thereto) and certain Retail Notes and the Related Retail Note Assets
with respect thereto from NFRRC pursuant to the Pooling Agreement;
WHEREAS, the Servicer is willing to continue its servicing functions
as it relates to the Titling Trust Assets comprising the Series 2003-A Portfolio
Interest pursuant to the Titling Trust Servicing Agreement and this Agreement
for and in consideration of the fees and other benefits set forth in this
Agreement;
WHEREAS, the Servicer desires to perform the servicing obligations set
forth herein relating to the Retail Notes owned by the Issuer for and in
consideration of the fees and other benefits set forth in this Agreement; and
WHEREAS, the parties wish to set forth the terms and conditions upon
which the Receivables (including the Retail Leases and Related Titling Trust
Assets allocated to the Series 2003-A Portfolio Interest) are to be serviced by
the Servicer.
NOW, THEREFORE, in consideration of the foregoing, the other good and
valuable consideration and the mutual terms and covenants contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS; SERVICING SUPPLEMENT
SECTION 1.01 Certain Defined Terms. Capitalized terms used in the
above recitals and in this Agreement shall have the respective meanings assigned
them in Appendix A to the Pooling Agreement dated as of the date hereof between
the Issuer and NFRRC, unless otherwise defined herein. The rules of construction
set forth in Part II of Appendix A to the Pooling Agreement shall be applicable
to this Agreement.
SECTION 1.02 Supplement to Titling Trust Servicing Agreement.
(a) Pursuant to Section 5.13 of the Titling Trust Agreement, each
of the Titling Trust, Harco Leasing, NFC, NFRRC and the Issuer hereby appoints
NFC as the Servicer with respect to the Series 2003-A Portfolio Interest and the
Series 2003-A Portfolio Assets, to serve in accordance with, and subject to, the
terms of the Titling Trust Servicing Agreement, this Agreement and the other
Basic Documents.
(b) The Servicer shall account to the Series 2003-A Portfolio
Trustee, the Issuer and the Indenture Trustee with respect to the Series 2003-A
Portfolio Interest separately from any other Portfolio Interests.
(c) This Agreement shall constitute a "Portfolio Servicing
Agreement Supplement" under the Titling Trust Servicing Agreement with respect
to the Series 2003-A Portfolio Interest and the Series 2003-A Portfolio Assets.
Except as otherwise specifically provided herein or in the other Basic
Documents, the parties to the Titling Trust Servicing Agreement shall continue
to be bound by all provisions of the Titling Trust Servicing Agreement with
respect to the Series 2003-A Portfolio Interest and the Series 2003-A Portfolio
Assets, including the provisions of Article III thereof relating to the
administration and servicing of the Retail Leases. To the extent that the
provisions of the Titling Trust Servicing Agreement (as expressly amended,
supplemented or waived by this Agreement) are not directly inconsistent with the
provisions set forth herein, the provisions of the Titling Trust Servicing
Agreement shall be made a part of this Agreement and shall govern the servicing
of the Series 2003-A Portfolio Interest and the Series 2003-A Portfolio Assets.
However, in the event of any conflict between
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the provisions of the Titling Trust Servicing Agreement (as expressly amended,
supplemented or waived by this Agreement) and the provisions set forth herein or
in any other Basic Document, the provisions set forth herein or in such other
Basic Document shall prevail.
(d) For purposes of determining the Servicer's obligations with
respect to the servicing of the Series 2003-A Portfolio Interest and the Series
2003-A Portfolio Assets under this Agreement, general references in the Titling
Trust Servicing Agreement to: (i) a Portfolio Interest shall be deemed to refer
more specifically to the Series 2003-A Portfolio Interest; (ii) a Portfolio
Servicing Agreement Supplement shall be deemed to refer more specifically to
this Agreement; and (iii) a Portfolio Supplement shall be deemed to refer more
specifically to the Series 2003-A Portfolio Supplement.
(e) The Servicer shall perform the obligations specified for it in
the Series 2003-A Portfolio Supplement.
ARTICLE II
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 2.01 Duties of the Servicer. The Servicer is hereby
appointed and authorized to act as agent for the Owner with respect to servicing
the Receivables 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, truck chassis, 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 with respect to all
Receivables 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 securing the Receivables, accounting for collections with respect
thereto and performing the other duties specified herein. With respect to
Receivables which are Retail Leases and the related Financed Vehicles, the
Servicer's duties shall also include those matters specified in the Titling
Trust Servicing Agreement. Subject to the provisions of Section 2.02, 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 Owner and the Collateral Agent pursuant to this
Section 2.01, to execute and deliver 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 related Financed
Vehicles. The Servicer is hereby authorized to commence in the name of the Owner
or, to the extent necessary, in its own name, a legal proceeding to enforce a
Liquidating Receivable as contemplated by Section 2.04, and to commence or
participate in any legal proceeding (including a bankruptcy proceeding) relating
to or involving a Receivable (including a Liquidating Receivable). If the
Servicer commences or participates in any such legal proceeding in its own name,
the Owner and the Collateral Trustee shall thereupon be deemed to have
automatically assigned such Receivable to the Servicer solely for purposes of
commencing
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and participating in any such proceeding as a party or claimant, and the
Servicer is hereby authorized and empowered by the Owner and the Collateral
Trustee, 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. If in any 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 the Receivable, each of the Owner
and the Collateral Trustee shall, at the Servicer's expense and written
directions, take such reasonable steps as the Servicer reasonably deems
necessary to enforce the Receivable, including bringing suit in the name of such
Person. The Owner and the Collateral Trustee, 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 reasonably deem
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement and the other Basic Documents. Except
to the extent required by the preceding three sentences, the authority and
rights granted to the Servicer in this Section 2.01 shall be nonexclusive and
shall not be construed to be in derogation of any equivalent authority and
rights of the Owner and the Collateral Trustee.
SECTION 2.02 Establishment of Accounts.
(a) (i) The Servicer, for the benefit of the Financial
Parties, shall establish and maintain in the name of the Indenture Trustee an
Eligible Deposit Account known as the Navistar Financial 2003-A Owner Trust
Collection Account (the "Collection Account"), bearing an additional designation
clearly indicating that the funds deposited therein are held for the benefit of
the Financial Parties.
(ii) The Servicer, for the benefit of the Noteholders, shall
establish and maintain in the name of the Indenture Trustee an Eligible Deposit
Account known as the Navistar Financial 2003-A Owner Trust Note Distribution
Account (the "Note Distribution Account"), bearing an additional designation
clearly indicating that the funds deposited therein are held for the benefit of
the Noteholders.
(iii) Pursuant to the Trust Agreement, the Servicer, for the
benefit of the Certificateholders, shall establish and maintain in the name of
the Owner Trustee an Eligible Deposit Account known as the Navistar Financial
2003-A Owner 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.
(iv) The Servicer, for the benefit of the Financial Parties,
shall establish and maintain in the name of the Indenture Trustee an Eligible
Deposit Account known as the Navistar Financial 2003-A Owner Trust Reserve
Account (the "Reserve Account"), bearing an additional designation clearly
indicating that the funds deposited therein are held for the benefit of the
Financial Parties.
(v) The Servicer, for the benefit of the Noteholders, shall
establish and maintain in the name of the Indenture Trustee an Eligible Deposit
Account known as the Navistar Financial 2003-A Owner Trust Pre-Funding Account
(the "Pre-Funding Account"),
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bearing an additional designation clearly indicating that the funds deposited
therein are held for the benefit of the Noteholders.
(vi) The Servicer, for the benefit of the Financial Parties,
shall establish and maintain in the name of the Indenture Trustee an Eligible
Deposit Account known as the Navistar 2003-A Owner Trust Negative Carry Account
(the "Negative Carry Account") bearing an additional designation clearly
indicating that the funds deposited therein are held for the benefit of the
Financial Parties.
(b) (i) Each of the Designated Accounts shall be initially
established with the Indenture Trustee and shall be maintained with the
Indenture Trustee so long as (A) the short-term unsecured debt obligations of
the Indenture Trustee have the Required Deposit Rating or (B) each of the
Designated Accounts are maintained in the corporate trust department of the
Indenture Trustee. All amounts held in such accounts (including amounts, if any,
which the Servicer is required to remit daily to the Collection Account pursuant
to Section 2.11) shall, to the extent permitted by applicable laws, rules and
regulations, be invested, at the written direction of the Servicer, by such bank
or trust company in Eligible Investments; provided, that funds in the Collection
Account in an amount not in excess of 20% of the Aggregate Receivables Balance
as of the preceding Accounting Date may be invested in investments which have a
rating from S&P of "A-1" rather than "A-1+," if such investments otherwise
constitute Eligible Investments. Such written direction shall constitute
certification by the Servicer that any such investment is authorized by this
Section 2.02. Funds deposited in the Reserve Account, the Negative Carry Account
and the Pre-Funding Account shall be invested in Eligible Investments which
mature prior to the next Distribution Date; provided, that such investments may
mature on a later date if the Rating Agency Condition is satisfied with respect
thereto. Investments in Eligible Investments shall be made in the name of the
Indenture Trustee or its nominee, and such investments shall not be sold or
disposed of prior to their maturity. Should the short-term unsecured debt
obligations of the Indenture Trustee (or any other bank or trust company with
which the Designated Accounts are maintained) no longer have the Required
Deposit Rating, then the Servicer shall within 10 Business Days (or such longer
period, not to exceed 30 calendar days, upon satisfaction of the Rating Agency
Condition with respect thereto), with the Indenture Trustee's assistance as
necessary, cause the Designated Accounts (A) to be moved to a bank or trust
company, the short-term unsecured debt obligations of which shall have the
Required Deposit Rating, or (B) to be moved to the corporate trust department of
the Indenture Trustee. Except with respect to Investment Earnings on amounts on
deposit in the Pre-Funding Account, Investment Earnings on funds deposited in
the Designated Accounts shall be deposited into the Certificate Distribution
Account for distribution to the Certificateholders, except when the Indenture
Trustee is acting as successor Servicer in which case such Investment Earnings
shall be payable to the Indenture Trustee as successor Servicer. The Indenture
Trustee or the other Person holding the Designated Accounts as provided in this
Section 2.02(b)(i) shall be the "Securities Intermediary." If the Securities
Intermediary shall be a Person other than the Indenture Trustee, the Servicer
shall obtain the express agreement of such Person to the obligations of the
Securities Intermediary set forth in this Section 2.02.
(ii) With respect to the Designated Account Property, the
Securities Intermediary agrees, by its acceptance hereof, that:
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(A) The Designated Accounts are accounts to which Financial
Assets will be credited.
(B) 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 Issuer, the Servicer or the Seller, payable
to the order of the Issuer, the Servicer or the Seller or specially
endorsed to the Issuer, the Servicer or the Seller except to the extent the
foregoing have been specially indorsed to the Securities Intermediary or in
blank.
(C) All property delivered to the Securities Intermediary
pursuant to this Agreement will be promptly credited to the appropriate
Designated Account.
(D) 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.
(E) If at any time the Securities Intermediary shall
receive any order from the Indenture Trustee directing transfer or
redemption of any Financial Asset relating to the Designated Accounts, the
Securities Intermediary shall comply with such entitlement order without
further consent by the Issuer, the Servicer, the Seller or any other
Person.
(F) 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.
(G) 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 Issuer, the Seller, the Servicer, the Indenture Trustee
purporting to limit or condition the obligation of the Securities
Intermediary to comply with entitlement orders as set forth in Section
2.02(b)(ii)(E).
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(H) Except for the claims and interest of the Indenture
Trustee and of the Issuer 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 Indenture Trustee, the
Servicer and the Issuer thereof.
(I) 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 Indenture Trustee at the addresses set
forth in Appendix B to the Pooling Agreement.
(iii) The Servicer shall have the power, revocable by the
Indenture Trustee (or by the Issuer with the consent of the Indenture Trustee)
to instruct the Indenture Trustee to make withdrawals and payments from the
Designated Accounts for the purpose of permitting the Servicer or the Issuer to
carry out its respective duties hereunder or permitting the Indenture Trustee to
carry out its duties under the Indenture.
(iv) The Indenture Trustee 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 (except Investment Earnings). Except as
otherwise provided herein or in the Indenture, the Designated Accounts shall be
under the sole dominion and control of the Indenture Trustee for the benefit of
the Securityholders.
(v) The Servicer shall not direct the Indenture Trustee 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 Indenture Trustee to make any such
investment or sale, if requested by the Indenture Trustee, the Servicer shall
deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the
Indenture Trustee, to such effect.
(c) Pursuant to the Trust Agreement, the Issuer 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. Except as
otherwise provided herein or in the Trust Agreement, the Certificate
Distribution Account shall be under the sole dominion and control of the Issuer
for the benefit of the Certificateholders. If, at any time, the Certificate
Distribution Account ceases to be an Eligible Deposit Account, the Servicer
shall within 10 Business Days (or such longer period, not to exceed 30 calendar
days, as to which each Rating Agency may consent) establish a new Certificate
Distribution Account as an Eligible Deposit Account and shall cause the Issuer
to transfer any cash and/or any investments in the old Certificate Distribution
Account to such new Certificate Distribution Account.
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(d) The Indenture Trustee, the Issuer, the Securities Intermediary
and each other Eligible Deposit Institution with whom a Designated Account or
the Certificate Distribution Account is maintained waives any right of set-off,
counterclaim, security interest or bankers' lien to which it might otherwise be
entitled.
SECTION 2.03 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, truck chassis, bus and
trailer receivables that it services for itself or others. Except as provided in
Section 2.07(c), the Servicer is hereby authorized to grant extensions, rebates
or adjustments on a Receivable without the prior consent of the Owner of such
Receivable and to rewrite, in the ordinary course of its business, a Receivable
to reflect the Full Prepayment of a Receivable with respect to any related
Financed Vehicle without the prior consent of the Owner of such Receivable. 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 such Receivable. Subject to Section 2.13 of this Agreement, the
Servicer shall allocate payments on Receivables between principal and interest
in accordance with the customary servicing procedures it follows with respect to
all comparable medium and heavy duty truck, truck chassis, bus and trailer
receivables that it services for itself or others.
SECTION 2.04 Realization Upon Liquidating Receivables.
(a) The Servicer shall use commercially reasonable efforts,
consistent with its customary servicing procedures, to repossess or otherwise
comparably convert the ownership or otherwise take possession of each Financed
Vehicle that it has reasonably determined should be repossessed or otherwise
converted following a default under the Receivable secured by or relating to
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, truck
chassis, 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 Vehicles at
public or private sale or sales and other actions by the Servicer in order to
realize upon any 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 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 or repossession shall increase the proceeds of liquidation of the related
Receivable by an amount greater than or equal to the amount of such expenses.
The Servicer shall be entitled to receive Liquidation Expenses with respect to
each Liquidating Receivable at such time as the Receivable becomes a Liquidating
Receivable in accordance with Section 8.2(b)(i) of the Indenture.
(b) The Servicer shall pay all costs, expenses and liabilities
incurred by it in connection with any action taken in respect of a Financed
Vehicle; provided, however, that it
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shall be entitled to reimbursement of such costs and expenses to the extent they
constitute Liquidation Expenses or expenses recoverable under an applicable
Insurance Policy.
(c) The second sentence of Section 3.5(b) of the Titling Trust
Servicing Agreement shall not be applicable to the Series 2003-A Portfolio
Assets.
SECTION 2.05 Maintenance of Insurance Policies.
(a) The Servicer shall, in accordance with its customary servicing
procedures, require that each Obligor under a Retail Note shall have obtained
physical damage insurance covering each Financed Vehicle as of the execution of
such Retail Note, unless the Servicer has in accordance with its customary
procedures permitted an Obligor to self-insure the Financed Vehicle or Financed
Vehicles securing such Retail Note. The Servicer shall, in accordance with its
customary servicing procedures, monitor such physical damage insurance with
respect to each Financed Vehicle that secures or is related to each Receivable.
(b) With respect to Retail Leases and the related Financed
Vehicles, the Servicer shall comply with the obligations specified in Section
3.8 of the Titling Trust Servicing Agreement.
(c) With respect to Retail Leases, the Servicer shall maintain one
or more contingent and excess liability insurance policies (the "primary
contingent policies") naming the Titling Trust as the insured with at least a $1
million limit for each accident and no annual or aggregate limit on the number
of accidents covered. The primary contingent policies will respond if, at the
time of an accident involving a vehicle owned by the Titling Trust that causes
bodily injury and property damages to a third person, the insurance required to
be provided by the Obligor in accordance with the related Retail Lease has not
been provided, is not collectible or has inadequate limits to protect the
Titling Trust. In addition, the Servicer shall maintain excess insurance
coverage for which the Titling Trust is an additional named insured, which
coverage has a deductible not greater than the amount of coverage provided by
the primary contingent policies, and which provides insurance coverage of more
than $10 million per occurrence.
SECTION 2.06 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 of the Seller created by a Retail Note in the
related Financed Vehicle or Financed Vehicles and of the first priority security
interest of the Collateral Agent in the Financed Vehicle or Financed Vehicles
related to any Retail Lease. The Owner of each Receivable hereby authorizes the
Servicer to re-perfect such security interests as necessary because of the
relocation of a Financed Vehicle or for any other reason.
SECTION 2.07 Covenants of the Servicer. The Servicer hereby makes
the following covenants on which the Issuer is relying in acquiring the
Receivables under the Pooling Agreement and issuing the Securities under the
Further Transfer and Servicing Agreements:
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(a) except as contemplated by the other Basic Documents (including
the Titling Trust Servicing Agreement), the Servicer shall not release any
Financed Vehicle from the security or ownership interest securing the related
Receivable;
(b) the Servicer shall do nothing to impair the rights of NFRRC,
the Issuer, the Securityholders or the Indenture Trustee in and to such
Receivables;
(c) the Servicer shall not amend or otherwise modify any
Receivable such that the Starting 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 any later than October 31,
2009; and
(d) other than solely for the purpose of collecting or enforcing
the Receivables for the benefit of the Owner and the Collateral Agent, (i) the
Servicer shall not at any time have or in any way attempt to assert any interest
in any Receivables or Related Assets or records related to the Collateral and
(ii) the entire legal and equitable interest of the Owner of a Receivable in
such Receivable and the Related Assets shall at all times be vested in such
Owner.
SECTION 2.08 Purchase of Receivables Upon Breach of Covenant.
(a) Upon discovery by the Servicer or a Responsible Officer of any
of the Interested Parties or the Collateral Agent of a breach of any of the
covenants set forth in Sections 2.06 and 2.07 with respect to any Receivable,
the party discovering such breach shall give prompt written notice thereof to
the others. As of the second Accounting Date (or, at the Servicer's election,
the first Accounting Date) following notice to or discovery by the Servicer of a
breach of any covenant of the Servicer that materially and adversely affects any
Receivable, unless such breach is cured in all material respects, the Servicer
shall, with respect to such Receivable (an "Administrative Receivable") purchase
such Administrative Receivable from the Issuer at a price equal to the
Administrative Purchase Payment. The Servicer shall pay the Administrative
Purchase Payment as described in Section 2.10.
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 Interested Party or the
Collateral Agent for any such uncured breach.
(b) Upon receipt of the Administrative Purchase Payment with
respect to a Receivable which is an Administrative Receivable, the Owner and the
Collateral Agent shall each assign, without recourse, representation or
warranty, to the Servicer (and shall take such other actions as the Servicer may
reasonably request in writing to perfect or confirm such assignment) all of such
Person's right, title and interest in, to and under (i) such Administrative
Receivable and all monies due thereon and (ii) all Related Assets with respect
to such Administrative Receivable, such assignment being an assignment outright
and not for security. Upon the assignment of such Administrative Receivable
described in the preceding sentence, the Servicer shall own such Administrative
Receivable, and all such Related Assets, free of any further obligations to such
Person with respect thereto. The Servicer shall contribute any
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Administrative Receivable that is a Retail Lease and its Related Assets to the
General Interest in the Titling Trust (or to such other person as shall be
designated by Harco Leasing).
SECTION 2.09 Servicing Fee. In consideration for its services
hereunder and as compensation for expenses paid as contemplated by Section 2.10,
the Servicer shall be entitled to receive on each Distribution Date a servicing
fee (the "Basic Servicing Fee") for the related Monthly Period equal to
one-twelfth of 1% (the "Basic Servicing Fee Rate") multiplied by the Aggregate
Receivables Balance as of the last day of the preceding Monthly Period. On each
Distribution Date, the Servicer will be paid the Basic Servicing Fee and any
unpaid Basic Servicing Fees from all prior Distribution Dates (collectively, the
"Total Servicing Fee") pursuant to Section 8.2(c) of the Indenture to the extent
of funds available therefor. In addition, the Servicer will be entitled to
receive any late fees, prepayment charges or certain similar fees and charges
collected during a Monthly Period (the "Supplemental Servicing Fee"). The
Servicer shall retain all Supplemental Servicing Fees and shall not be obligated
to deposit them into the Collection Account.
SECTION 2.10 Servicer Expenses. The Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of the Issuer, any trustees and independent
accountants, taxes imposed on the Servicer and expenses incurred in connection
with distributions and reports and all other fees and expenses not expressly
stated under this Agreement to be for the account of the Interested Parties or
the Collateral Agent, but excluding federal, state and local income taxes, if
any, of the Issuer or any Securityholder.
SECTION 2.11 Deposits to Collection Account. The Servicer shall
remit to the Indenture Trustee for deposit to the Collection Account all
Collections it receives during each Monthly Period within two Business Days
after receipt thereof. However, Collections received (i) during the period from
the Initial Cutoff Date to the Closing Date and (ii) during the period from the
Subsequent Cutoff Date to the Subsequent Transfer Date, shall be deposited to
the Collection Account within 48 hours after the Closing Date or the Subsequent
Transfer Date, as applicable. The Servicer shall remit to the Indenture Trustee
for deposit (in immediately available funds) in the Collection Account the
aggregate Administrative Purchase Payments with respect to Administrative
Receivables to be purchased as of the last day of any Monthly Period on the
Business Day immediately preceding the immediately succeeding Distribution Date.
SECTION 2.12 Collections. In the event that:
(a) NFC is the Servicer,
(b) a Servicer Default shall not have occurred and be continuing,
and
(c) (i) the Servicer satisfies the requirements for monthly
remittances of Collections established by each Rating Agency, and upon
satisfaction of such requirements, each Rating Agency reaffirms the rating of
the Notes at the level at which they would be rated if Collections were remitted
within two Business Days of receipt,
(ii) the short-term unsecured debt of the Servicer is rated
at least A-1 by S&P and P-1 by Xxxxx'x, or
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(iii) a standby letter of credit has been issued by an
Eligible Institution which, as of each date during the period that the Servicer
is making monthly remittances of Collections, has an undrawn amount at least
equal to 150% of all Scheduled Payments due in respect of the Receivables for
the latest Monthly Period ended prior to the next succeeding Distribution Date
(and the aggregate amount of unremitted Collections does not at any time exceed
90% of the undrawn amount of such letter of credit), (each, a "Monthly
Remittance Condition")
then, the Servicer shall not be required to deposit Collections into the
Collection Account until the Business Day preceding the Distribution Date
following the Monthly Period during which such Collections were received.
Pending deposit into the Collection Account, Collections may be employed by the
Servicer at its own risk and for its own benefit and will not be segregated from
its own funds.
SECTION 2.13 Application of Collections. For the purposes of this
Agreement, all Collections for the related Monthly Period with respect to each
Receivable shall be applied by the Servicer as follows:
(a) All payments by or on behalf of the Obligor or other
collections on a Receivable (including Warranty Payments and Administrative
Purchase Payments but excluding Supplemental Servicing Fees and Investment
Earnings) shall be applied (i) first to reduce Outstanding Monthly Advances, if
any, with respect to such Receivable, (ii) second, to the Scheduled Payment on
such Receivable for such Monthly Period, and (iii) third, the remainder shall
constitute, with respect to such Receivable, a Full Prepayment or Partial
Prepayment; and
(b) A Partial Prepayment made on a Receivable, if such a
Receivable is a Retail Note, 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. With respect to Retail Leases, Prepayments (not constituting Full
Prepayments) received in excess of Scheduled Payments will be held in the
Collection Account and applied as Collected Amount in the Monthly Period during
which the applicable prepaid Scheduled Payment is due.
SECTION 2.14 Monthly Advances. Subject to the following sentence, as
of each Accounting Date, if the payments received by the Servicer 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 of such payments under Section 2.13(a) shall be
less than the Scheduled Payment on such Receivable for such Monthly Period,
whether as a result of any extension granted to the Obligor or otherwise, then
the Servicer shall 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 8.2 of the Indenture, the Servicer shall
be
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reimbursed for unreimbursed 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) Liquidation Proceeds, (iii) the Administrative Purchase
Payment and (iv) the Warranty Payment. At such time as the Servicer shall
determine that 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 2.15 Additional Deposits. The Servicer shall deposit in the
Collection Account the aggregate Monthly Advances pursuant to Section 2.14. 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 Transfer Date with respect to the Distribution Date related to such
Monthly Period.
SECTION 2.16 Net Deposits. At any time that (i) NFC shall be the
Servicer and (ii) the Servicer shall be permitted by Section 2.12 of this
Agreement to remit collections on a basis other than a daily basis, the
Servicer, the Seller, the Issuer, and each Trustee may make any remittances
pursuant to this Article II of this Agreement or Article VIII of the Indenture
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.
SECTION 2.17 Servicer's Certificate
(a) Not later than 10:00 a.m. (Chicago, Illinois time) on each
Determination Date, the Servicer shall deliver to each Trustee and the Rating
Agencies a Servicer's Certificate with respect to the immediately preceding
Monthly Period executed by the President or any Vice President of the Servicer
containing all information necessary to each such party for making the
calculations, withdrawals, deposits, transfers and distributions required by
Sections 8.2, 8.10, 8.11 and 8.12 of the Indenture, and all information required
to be provided to the Interested Parties under Section 8.8 of the Indenture.
Receivables to be purchased by the Servicer under Section 2.08 hereof, by NFC
pursuant to Section 5.04 of the Purchase Agreement or by NFRRC under Section
2.06 of the Pooling Agreement as of the last day of any Monthly Period shall be
identified by Receivable number with respect to Retail Notes and by asset number
with respect to Retail Leases (in each case, as set forth in the Composite
Schedule of Receivables). With respect to any Receivables for which the Seller
is the Owner, the Servicer shall deliver to the Seller such accountings relating
to such Receivables and the actions of the Servicer with respect thereto as the
Seller may reasonably request.
(b) On or before each Determination Date, with respect to the
preceding Monthly Period and the related Distribution Date, the Servicer shall
calculate the Total Available Amount, Collected Amount, the Total Servicing Fee,
the Aggregate Class A Noteholders' Interest Distributable Amount, the Class B
Noteholders' Interest Distributable Amount, the Principal Payment Amount, the
Noteholders' Principal Distributable Amount and all other amounts required to
determine the amounts to be deposited in or paid from each of the Collection
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Account, the Pre-Funding Account, the Negative Carry Account, the Note
Distribution Account, the Certificate Distribution Account and the Reserve
Account on the next succeeding Distribution Date and supply such information to
the Issuer and the Indenture Trustee.
(c) On the Closing Date (with respect to the remainder of calendar
year 2003) and thereafter, within 15 days prior to the end of each calendar year
while this Agreement remains in effect (with respect to the next succeeding
calendar year), the Servicer shall deliver to either the Indenture Trustee or
the Owner Trustee, following receipt of a written request, an Officers'
Certificate specifying the days on which banking institutions in Chicago,
Illinois are authorized or obligated by law or executive order to be closed.
ARTICLE III
STATEMENTS AND REPORTS
SECTION 3.01 Annual Statement as to Compliance; Notice of Servicer
Default; Tax Reports.
(a) The Servicer shall deliver to the Issuer, the Indenture
Trustee and the Collateral Agent, on or before February 1 of each year,
beginning with the first February 1 which is at least twelve months after the
Closing Date, an officer's certificate signed by the Chairman of the Board, Vice
Chairman of the Board, 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 Servicer's immediately preceding
fiscal year (or, with respect to the first such certificate, such period as
shall have elapsed from the Closing Date to the last day of the Servicer's
immediately preceding fiscal year) and of its performance under this Agreement
and the Titling Trust Servicing Agreement has been made under such officer's
supervision, and (ii) to such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement and the Titling
Trust Servicing Agreement 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. A copy of such
certificate may be obtained by any Noteholder or Certificateholder by a request
in writing to the Indenture Trustee or Issuer, respectively, addressed to the
Corporate Trust Office of the Indenture Trustee or the Owner Trustee,
respectively.
(b) The Servicer shall deliver to the Issuer, each Trustee, the
Collateral Agent and each Rating Agency, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice in an Officer's Certificate of any event which with the giving of
notice or lapse of time, or both, would become a Servicer Default under Section
7.01.
(c) The Servicer shall furnish to the Issuer, each Trustee and the
Rating Agencies, on or before February 1 of each year, beginning February 1,
2004, an officer's certificate signed by the Chairman of the Board, Vice
Chairman of the Board, the President or any Vice President of the Servicer,
dated as of the immediately preceding October 31, that discloses the existence
of any vicarious tort liability claims relating to the Portfolio Assets on such
date, if any, and the estimated or actual costs of any such claims.
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(d) The Servicer shall prepare and deliver to the Issuer and the
Indenture Trustee the annual report described in Section 8.8(b) of the
Indenture.
SECTION 3.02 Annual Accountants' Report.
(a) The Servicer shall cause a firm of independent accountants,
who may also render other services to the Servicer or NFRRC, to deliver to the
Issuer, each Trustee, the Collateral Agent and each Rating Agency, on or before
February 1 of each year, beginning with February 1, 2004 with respect to the
Servicer's immediately preceding fiscal year, (or, with respect to the first
such report, such period as shall have elapsed from the Closing Date to the last
day of the Servicer's immediately preceding fiscal year), a report (the
"Accountants' Report") addressed to the board of directors of the Servicer, the
Issuer, and to each Trustee 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 Receivables 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 the Titling Trust
Servicing Agreement and (iii) except as described in the report, disclosed no
exceptions or errors in the records relating to the Receivables 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 NFRRC and the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
(c) A copy of the Accountant's Report may be obtained by any
Noteholder or Certificateholder by a request in writing to the Indenture Trustee
or the Issuer, addressed to the Corporate Trust Office of the Indenture Trustee
or the Owner Trustee, respectively.
SECTION 3.03 Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide to the Issuer, each Trustee
and Securityholders reasonable access to the Servicer's records regarding the
Receivables owned by the Issuer. The Servicer shall provide such access to any
Securityholder only in such cases where a Securityholder is required by
applicable statutes or regulations to review such documentation. In each case,
such access shall be afforded without charge but only upon reasonable request
and during normal business hours at offices of the Servicer designated by the
Servicer. Nothing in this Section 3.03 shall derogate from the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding Obligors, and the failure of the Servicer to provide access as
provided in this Section 3.03 as a result of such obligation shall not
constitute a breach of this Section 3.03.
SECTION 3.04 Maintenance of Composite Schedule of Receivables. The
Servicer shall maintain at all times a composite schedule (the "Composite
Schedule of Receivables") which shall list separately (i) all Retail Notes which
are owned by the Issuer and (ii) all Retail Leases which are allocated to the
Series 2003-A Portfolio Interest. The Composite Schedule of Receivables shall be
updated to reflect all purchases of Receivables during the Funding Period by the
Issuer and all sales of Receivables as a result of a Receivable becoming a
Warranty
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Receivable or an Administrative Receivable. The Servicer shall deliver to the
Owner Trustee, the Indenture Trustee and the Collateral Agent (provided that the
Servicer need deliver to the Collateral Agent just the portion of the Composite
Schedule of Leases which lists Retail Leases) an updated Composite Schedule of
Receivables on or before each Purchase Date and each Distribution Date.
SECTION 3.05 Amendments to Composite Schedule of Receivables. If the
Servicer, during a Monthly Period, assigns to a Receivable an account number
that differs from the account number previously identifying such Receivable on
the Composite Schedule of Receivables, the Servicer shall amend the Composite
Schedule of Receivables to report the newly assigned account number. Each
Composite Schedule of Receivables delivered on a Distribution Date pursuant to
Section 3.04 shall list all new account numbers assigned to Receivables during
such Monthly Period and shall show by cross reference the prior account numbers
identifying such Receivables on the previously distributed Composite Schedule of
Receivables.
SECTION 3.06 Maintenance of Systems and Receivables List.
(a) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know the status of such Receivable, including payments and recoveries made
and payments owing (and the nature of each) and extensions of any scheduled
payments made not less than 45 days prior thereto, and (ii) reconciliation
between payments or recoveries on (or with respect to) each Receivable and the
amounts from time to time deposited in the Collection Account with respect to
such Receivable.
(b) The Servicer shall maintain its computer systems so that the
Servicer's master computer records (including any backup archives) that refer to
any Receivable shall indicate clearly that the Receivable is owned by the Issuer
and that such Receivable has been pledged by the Issuer to the Indenture
Trustee. Indication of the Issuer's and the Indenture Trustee's interest in a
Receivable shall be deleted from or modified on the Servicer's computer systems
when, and only when, the Receivable shall have been paid in full, repurchased by
Navistar Financial, purchased by the Servicer or become a Liquidating
Receivable.
(c) If at any time the Servicer shall propose to sell, grant a
security interest in, or otherwise transfer any interest in truck, truck
chassis, bus or trailer receivables to any prospective purchaser, lender or
other transferee, the Servicer shall give to such prospective purchaser, lender
or other transferee, computer tapes, records or printouts (including any of
those restored from backup archives) that, if they refer in any manner
whatsoever to any Receivable, indicate clearly that such Receivable has been
sold and is owned by the Issuer and has been pledged to the Indenture Trustee
unless such Receivable has been paid in full, repurchased by Navistar Financial
or purchased by the Servicer.
(d) The Servicer will furnish to the Issuer and the Indenture
Trustee at any time upon request a list of all Receivables then held as part of
the Owner Trust Estate, together with a reconciliation of such list to the
Composite Schedule of Receivables and to each of the
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Servicer's Certificates furnished before such request indicating removal of
Receivables from the Owner Trust Estate. Upon request, the Servicer shall
furnish a copy of any such list to the Seller.
(e) The Servicer shall 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 the Issuer under the Pooling Agreement in the
Receivables, the Series 2003-A Portfolio Interest and the Series 2003-A
Portfolio Certificate and the Indenture Trustee's security interest in the
Receivables, the Series 2003-A Portfolio Interest and the Portfolio Certificate
under the Indenture. The Servicer shall deliver (or cause to be delivered) to
the Indenture Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
ARTICLE IV
THE CUSTODIAN
SECTION 4.01 Custody of Receivable Files. To assure uniform quality
in servicing the Receivables and to reduce administrative costs, the Owner of
each Receivable hereby appoints the Servicer, and the Servicer hereby accepts
such appointment, to act as agent of the Owner of each Receivable as custodian
to maintain custody of the following documents or instruments with respect to
such Receivable (as to each Receivable, the "Receivable File"), which will be
hereby constructively delivered to the Owner of the related Receivable and the
Indenture Trustee:
(a) the fully executed original of the Retail Note or Retail
Lease, as the case may be;
(b) documents evidencing or related to any related Insurance
Policy;
(c) if such Receivable is a Retail Note, where permitted by law,
the original Certificate of Title (when received) and otherwise such documents,
if any, that NFC keeps on file in accordance with its customary procedures
indicating that the Financed Vehicle is owned by the Obligor and subject to the
interest of NFC as first lienholder or secured party;
(d) if such Receivable is a Retail Lease, the original Certificate
of Title and such other documents that NFC is required to maintain pursuant to
Section 3.6 of the Titling Trust Servicing Agreement; and
(e) any and all other documents that NFC keeps on file in
accordance with its customary procedures relating to the individual Receivable,
Obligor or Financed Vehicle.
SECTION 4.02 Duties of Servicer as Custodian.
(a) The Servicer shall hold each Receivable File for the benefit
of the Owner of the related Receivable and maintain such accurate and complete
accounts, records and computer systems pertaining to each Receivable File as
shall enable NFRRC, the Issuer and the Indenture Trustee to comply with their
respective obligations under the Purchase Agreement and
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the Further Transfer and Servicing Agreements. Each Receivable shall be
identified as such on the books and records of the Servicer to the extent the
Servicer reasonably determines to be necessary to comply with the terms and
conditions of the Purchase Agreement and, if applicable, the Further Transfer
and Servicing Agreements. In performing its duties as custodian the Servicer
shall act with reasonable care, using that degree of skill and attention that
the Servicer exercises with respect to the receivable files relating to
comparable truck, truck chassis, bus and trailer receivables that the Servicer
services and holds for itself or others. The Servicer shall conduct, or cause to
be conducted, periodic physical inspections of the Receivable Files held by it
under this Agreement, and of the related accounts, records and computer systems,
in such manner as shall enable the Owner Trustee and the Indenture Trustee to
verify the accuracy of the Servicer's inventory and record keeping. The Servicer
shall promptly report to each Owner any failure on its part to hold the
Receivable Files and maintain its accounts, records and computer systems as
herein provided and promptly take appropriate action to remedy any such failure.
(b) The Servicer shall maintain each Receivable File at its
principal office at 0000 Xxxx Xxxx Xxxx, Xxxxxxx Xxxxxxx, Xxxxxxxx 00000, or at
such other office of the Servicer as shall from time to time be identified to
the Owners and the Indenture Trustee upon 60 days' prior written notice. Subject
only to the Custodian's security requirements applicable to its own employees
having access to similar records held by the Servicer and the limitations set
forth in Section 3.03 hereof and otherwise in the Basic Documents, the Servicer
shall permit the Owners, the Indenture Trustee or their duly authorized
representatives, attorneys or auditors to inspect the Receivable Files and the
related accounts, records and computer systems maintained by the Servicer
pursuant hereto at such times as such party may reasonably request.
(c) In general, the Servicer shall attend to all nondiscretionary
details in connection with maintaining custody of the Receivable Files. In
addition, the Servicer shall assist the Owner Trustee generally in the
preparation of routine reports to Securityholders, if any, or to regulatory
bodies to the extent necessitated by the Servicer's custody of the Receivable
Files.
SECTION 4.03 Custodian's Indemnification. The Servicer as custodian
shall indemnify the Issuer, the Indenture Trustee, the Collateral Agent, and the
Noteholders and each of their officers, directors and agents for any and all
liabilities, obligations, losses, compensatory damages, payments, costs or
expenses of any kind whatsoever that may be imposed on, incurred by or asserted
against the Issuer or the Indenture Trustee, any Noteholder or any of their
officers, directors and agents as the result of any improper act or omission in
any way relating to the maintenance and custody by the Servicer as custodian of
the Receivable Files; provided, however, that the Servicer shall not be liable
to the Issuer or the Indenture Trustee for any portion of any such amount
resulting from the willful misfeasance, bad faith or negligence of such Person.
SECTION 4.04 Effective Period and Termination. The Servicer's
appointment as custodian with respect to a Receivable File hereunder shall
become effective as of the related Purchase Date and shall continue in full
force and effect until terminated pursuant to this Section 4.04. If the Servicer
shall resign as Servicer in accordance with the provisions of this Agreement or
if all of the rights and obligations of any Servicer shall have been terminated
under Article VII the appointment of such Servicer as custodian shall be
terminated. Upon (i) the repurchase of a
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Warranty Receivable by NFC pursuant to the Purchase Agreement, (ii) purchase of
a Warranty Receivable by NFRRC pursuant to the Pooling Agreement or (iii)
purchase of an Administrative Receivable by the Servicer pursuant to Section
2.08(a) of this Agreement, the Servicer shall deliver the related Receivable
File to or at the direction of the purchaser. Upon delivery of such Receivable
File, the Servicer's obligations with respect to such Receivable File shall
terminate.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE SERVICER
SECTION 5.01 Representations and Warranties of the Servicer. The
Servicer hereby represents and warrants to NFRRC and the Issuer that as of each
Purchase Date:
(a) Organization and Good Standing. The Servicer has been duly
organized and is validly existing as a corporation, and 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 service the Receivables as provided in
this Agreement and the Titling Trust Servicing Agreement.
(b) Due Qualification. The Servicer 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 (including the servicing of the
Receivables as required by this Agreement and the Titling Trust Servicing
Agreement) requires such qualification.
(c) Power and Authority. The Servicer has the power and authority
to execute and deliver this Agreement, the Titling Trust Servicing Agreement and
to perform its obligations hereunder and thereunder and the execution, delivery
and performance by the Servicer of this Agreement and the Titling Trust
Servicing Agreement have been duly authorized by all necessary corporate action
on the part of the Servicer. Except as expressly contemplated in the Basic
Documents, no consent or authorization of, filing with, or other act by or in
respect of, any Governmental Authority or other Person is required in connection
with the execution, delivery, performance, validity or enforceability against
the Servicer of this Agreement and the Titling Trust Servicing Agreement.
(d) Binding Obligation. This Agreement and the Titling Trust
Servicing Agreement each constitutes a legal, valid and binding obligation of
the Servicer enforceable against the Servicer 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.
(e) No Violation. The execution and delivery of this Agreement and
the Titling Trust Servicing Agreement by the Servicer and its performance of its
obligations hereunder and thereunder will not violate any Requirement of Law or
Contractual Obligation of the Servicer and will not result in, or require, the
creation or imposition of any Lien on any of its
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property or assets pursuant to any such Requirement of Law or Contractual
Obligation other than as contemplated by the Basic Documents.
(f) No Proceedings. There are no actions, proceedings or, to the
Servicer's knowledge, investigations pending or, to the Servicer's knowledge,
threatened before any Governmental Authority (i) asserting the invalidity of
this Agreement or the Titling Trust Servicing Agreement, (ii) seeking to prevent
the consummation of any of the transactions contemplated by this Agreement or
the Titling Trust Servicing Agreement or the issuance of the Securities, or
(iii) seeking any determination or ruling that would reasonably be expected to
have a Material Adverse Effect with respect to the Servicer.
(g) No Consent. Except as expressly contemplated by the Basic
Documents, no consent or authorization of, filing with, or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the execution, delivery, performance, validity or enforceability
by or against the Servicer of this Agreement or the Titling Trust Servicing
Agreement.
ARTICLE VI
THE SERVICER
SECTION 6.01 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. Any Person (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 or other
interest of which is owned directly or indirectly by NIC and which is otherwise
servicing NFC's receivables, which Person in any of the foregoing cases 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 6.01 to the Rating Agencies, the Owner
Trustee and the Indenture Trustee.
SECTION 6.02 Limitation on Liability of Servicer and Others.
(a) Neither the Servicer nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the Issuer
or any Noteholder, except as specifically provided in this Agreement, for any
action taken or for refraining from the taking of any action pursuant to this
Agreement or any other Further Transfer and Servicing Agreement or for errors in
judgment; provided, however, that this provision shall not protect the Servicer
or any such Person against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence (except errors in
judgment) in the performance of the Servicer's duties or by reason of reckless
disregard of obligations and duties under the Further Transfer and Servicing
Agreements. The Servicer and any director, officer or employee or agent of the
Servicer may rely in good faith on the advice of counsel or on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement.
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(b) 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 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
Securityholders under this Agreement and the Noteholders and (to the extent
expressly provided therein) the Certificateholders under the Indenture and the
interests of the Certificateholders under the Trust Agreement. In such event,
the legal expenses and costs for such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Issuer and the
Servicer shall be entitled to be reimbursed therefor.
SECTION 6.03 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 Person more than 50% of the voting stock or other
interest of which is owned, directly or indirectly, by NIC. The Servicer may at
any time perform specific duties as Servicer through subservicers who are in the
business of servicing medium and heavy duty truck, truck chassis, bus and
trailer receivables; provided, however, that no such delegation shall relieve
the Servicer of its responsibility with respect to such duties.
SECTION 6.04 Servicer Not to Resign. Subject to the provisions of
Section 7.02, the Servicer shall not resign from the obligations and duties
imposed on it by this Agreement or the Titling Trust Servicing Agreement as
Servicer except upon determination that the performance of its duties under this
Agreement or the Titling Trust Servicing 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 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
7.02.
SECTION 6.05 Servicer Indemnification of the Indenture Trustee and
the Owner Trustee.
(a) The Servicer (other than the Indenture Trustee in its capacity
as successor Servicer pursuant to Section 7.03 hereof) shall be liable in
accordance with this Agreement only to the extent of the obligations in this
Agreement specifically undertaken by the Servicer. Such obligations shall
include the following:
(i) The Servicer (other than any successor Servicer who is
not an affiliate of the initial Servicer, including the Indenture Trustee in its
capacity as successor Servicer pursuant to Section 7.03 hereof it being
understood that the removed Servicer shall retain such liability) shall defend,
indemnify and hold harmless the Indenture Trustee, the Owner Trustee, the
Issuer, the Collateral Agent and the Interested Parties from and against any and
all costs, expenses, losses, damages, claims and liabilities arising out of or
resulting from the use, ownership or operation by the Servicer or any Affiliate
thereof of any Financed Vehicle;
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(ii) The Servicer (other than any successor Servicer who is
not an affiliate of the initial Servicer, including the Indenture Trustee in its
capacity as successor Servicer pursuant to Section 7.03 hereof it being
understood that the removed Servicer shall retain such liability) shall
indemnify, defend and hold harmless the Issuer, the Owner Trustee and the
Indenture Trustee 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 and the Pooling Agreement, including any sales, gross receipts,
general corporation, Illinois corporate income, tangible personal property,
privilege or license taxes (but not including any taxes asserted with respect
to, and as of the date of, the sale of the Receivables to the Owner Trustee or
the issuance and original sale of the Securities, or asserted with respect to
ownership of the Receivables, or federal or other income taxes arising out of
distributions on the Securities, or any fees or other compensation payable to
any such Person) and costs and expenses in defending against the same;
(iii) The Servicer shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee, the Collateral Agent and
the Interested Parties from and against any and all costs, expenses, losses,
claims, damages, and liabilities to the extent that such cost, expense, loss,
claim, damage, or liability arose out of, or was imposed upon such Person
through the negligence, willful misfeasance or bad faith of the Servicer in the
performance of its duties under this Agreement and any other Transfer and
Servicing Agreements or by reason of reckless disregard of its obligations and
duties under any of the Transfer and Servicing Agreements;
(iv) The Servicer (other than any successor Servicer who is
not an affiliate of the initial Servicer, including the Indenture Trustee in its
capacity as successor Servicer pursuant to Section 7.03 hereof it being
understood that the removed Servicer shall retain such liability) shall
indemnify, defend and hold harmless each Trustee and their respective agents,
officers, directors and servants, from and against all costs, expenses, losses,
claims, damages and liabilities arising out of or incurred in connection with
(x) in the case of the Owner Trustee, the Indenture Trustee's performance of its
duties under the Basic Documents, (y) in the case of the Indenture Trustee, the
Owner Trustee's performance of its duties under the Basic Documents or (z) the
acceptance, administration or performance by, or action or inaction of, the
applicable Trustee of the trusts and duties contained in this Agreement, the
Basic Documents, the Indenture (in the case of the Indenture Trustee), including
the administration of the Collateral, and the Trust Agreement (in the case of
the Owner Trustee), including the administration of the Owner Trust Estate,
except in each case to the extent that such cost, expense, loss, claim, damage
or liability: (A) is due to the willful 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 or (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; and
(v) The Servicer (other than any successor Servicer who is
not an affiliate of the initial Servicer, including the Indenture Trustee in its
capacity as successor Servicer pursuant to Section 7.03 hereof it being
understood that the removed Servicer shall retain such liability) will indemnify
the Owner Trustee in accordance with the provisions specified in Section 6.9 of
the Trust Agreement.
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(b) Indemnification under this Section 6.05 shall survive the
resignation or removal of the Owner Trustee or the Indenture Trustee or the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Servicer has made any indemnity
payments pursuant to this Section 6.05 and the recipient thereafter collects any
of such amounts from others, the recipient shall promptly repay such amounts
collected to the Servicer, without interest.
SECTION 6.06 Backup Servicer. (a) Within 120 days after the Closing
Date, NFC, as Servicer, will identify and retain a third-party backup Servicer
who meets the criteria specified for a successor Servicer as set forth in
Section 7.03 and who agrees to become a successor servicer if appointed by the
Indenture Trustee pursuant to Section 7.03 (the "Backup Servicer"). Unless and
until a Servicer Default occurs and the Backup Servicer is appointed as the
successor Servicer, the sole obligation of the Backup Servicer will be to
perform systems data mapping of NFC's servicing computer systems. Prior to a
Servicer Default, up to $100,000 of the costs and expenses associated with the
Backup Servicer performing such system data mapping shall be paid for with funds
on deposit in the Backup Servicer Account as defined below, provided that any
costs and expenses in excess of $100,000 shall be paid for by the Servicer.
(b) On the Closing Date, the Servicer shall deposit cash or
Eligible Investments in the amount of $250,000 into an Eligible Deposit Account
(the "Backup Servicer Account"), which shall initially be established and
maintained with the Indenture Trustee so long as (A) the short-term unsecured
debt obligations of the Indenture Trustee have the Required Deposit Rating or
(B) the Backup Servicer Account is maintained in the corporate trust department
of the Indenture Trustee. Funds deposited in the Backup Servicer Account shall,
to the extent permitted by applicable laws, rules and regulations, be invested
at the written direction of the Servicer in Eligible Investments. Except as
otherwise provided in Section 2.02(b)(i), the Servicer shall be entitled to
receive all investment earnings on the Backup Servicer Account when and as paid
without any obligation to (a) either Trustee or (b) the Noteholders, in respect
thereof. The Servicer will not have any obligation to deposit any such amount in
any account established hereunder. Such amount will be withdrawn from the Backup
Servicer Account and delivered to the Servicer upon presentation of a
certificate signed by a Responsible Officer of the Servicer setting forth, in
reasonable detail, the amount of such investment earnings. Should the short-term
unsecured debt obligations of the Indenture Trustee (or any other bank or trust
company with which the Backup Servicer Account is maintained) no longer have the
Required Deposit Rating, then the Servicer shall within 10 Business Days (or
such longer period, not to exceed 30 calendar days, upon satisfaction of the
Rating Agency Condition with respect thereto), with the Indenture Trustee's
assistance as necessary, cause the Backup Servicer Account (A) to be moved to a
bank or trust company, the short-term unsecured debt obligations of which shall
have the Required Deposit Rating, or (B) to be moved to the corporate trust
department of the Indenture Trustee.
(c) In the event that NFC is removed as Servicer as described in
Section 7.02, the funds on deposit in the Backup Servicer Account will be made
available to the Backup Servicer or the Indenture Trustee to pay the fees and
expenses associated with the transition of the servicing functions to the Backup
Servicer or the Indenture Trustee, as applicable. Any amount remaining in the
Backup Servicer Account after the transition of the servicing functions
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has been completed will be withdrawn and distributed to NFC. If the amount on
deposit in the Backup Servicer Account is insufficient to cover all of the fees
and expenses associated with the transition of the servicing functions, no
Person will be obligated to deposit any additional funds into the Backup
Servicer Account; provided, however, that NFC will be obligated to pay the fees
and expenses of the transition not covered by the funds on deposit in the Backup
Servicer Account. If the amount on deposit in the Backup Servicer Account on any
Distribution Date, after giving effect to all deposits or withdrawals therefrom
on that date, is greater than $250,000 or such lower amount, subject to
satisfaction of the Rating Agency Condition, the excess will be withdrawn and
distributed to NFC. In addition, the Backup Servicer Account may be eliminated
entirely subject to satisfaction of the Rating Agency Condition.
ARTICLE VII
DEFAULT
SECTION 7.01 Servicer Defaults. Each of the following shall
constitute a "Servicer Default":
(a) any failure by the Servicer to deliver to the Indenture
Trustee for deposit in any of the Designated Accounts or to the Owner Trustee
for deposit in the Certificate Distribution Account any required payment or to
direct the Indenture Trustee to make any required distributions therefrom, in
each case which failure continues unremedied for five Business Days after the
earlier of (i) written notice is received by the Servicer from the applicable
Trustee or (ii) after discovery of such failure by an officer of the Servicer;
(b) any failure by the Servicer duly to observe or perform in any
material respect any other covenant or agreement of the Servicer set forth in
this Agreement, the Titling Trust Servicing Agreement or any other Basic
Documents which failure materially and adversely affects the rights of the
Securityholders and which continues unremedied for 60 days after the giving of
written notice of such failure (A) to the Servicer by either Trustee or (B) to
the Servicer and to either Trustee by the holders of not less than 25% of the
Outstanding Amount of the Controlling Class;
(c) any representation, warranty or certification made by the
Servicer pursuant to this Agreement, the Titling Trust Servicing Agreement or
any other Basic Documents shall prove to have been incorrect in any material
respect when made, and if the consequences of such representation, warranty or
certification being incorrect shall be susceptible of remedy in all material
respects, such consequences shall not be remedied in all material respects
within 30 days after the Servicer first becomes aware or is advised that such
representation, warranty or certification was incorrect in a material respect;
and
(d) the occurrence of an Insolvency Event with respect to the
Servicer.
SECTION 7.02 Consequences of a Servicer Default. If a Servicer
Default shall occur and be continuing, the Indenture Trustee or holders of
Securities evidencing not less than a majority of the Outstanding Amount of the
Controlling Class 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 the rights and obligations of the Servicer hereunder, under the
Titling
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Trust Servicing Agreement, and under all sub-servicing agreements whereupon the
Indenture Trustee will succeed to all the responsibilities, duties and
liabilities of the Servicer under this Agreement and the Titling Trust Servicing
Agreement and will be entitled to similar compensation arrangements. On or after
the receipt by the Servicer of such written notice, all authority and power of
the Servicer under this Agreement and the Titling Trust Servicing Agreement,
whether with respect to the Receivables or otherwise, shall pass to and be
vested in the Indenture Trustee pursuant to and under this Section 7.02. Upon
the receipt of such notice, the Servicer's appointment as custodian shall be
terminated and, upon instruction from the Indenture Trustee, the Servicer shall
release any Receivable File to the Indenture Trustee, or its respective agent or
assignee, as the case may be, at such place or places as the Indenture Trustee
may designate, as soon as practicable. The Servicer shall be deemed to have
received proper instructions with respect to the Receivable Files upon its
receipt of written instructions signed by an officer of the Indenture Trustee.
The Indenture Trustee is hereby authorized and empowered to execute and deliver,
on behalf of the 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 either Trustee or the successor Servicer in effecting the
termination of the responsibilities and rights of the Servicer under this
Agreement and the Titling Trust Servicing Agreement, including the transfer to
either Trustee for administration by it of all cash amounts that shall at the
time be held by the Servicer for deposit, or that shall have been deposited by
the Servicer in the Collection Account, the Negative Carry Account, the
Pre-Funding Account, the Reserve Account, the Note Distribution Account or the
Certificate Distribution Account or thereafter received that shall at any time
be held with respect to the Receivables by the Servicer.
SECTION 7.03 Indenture Trustee to Act; Appointment of Successor. On
and after the time the Servicer receives a notice of termination pursuant to
Section 7.02, the Indenture Trustee shall be the successor in all respects to
the Servicer in its capacity as servicer under this Agreement and the Titling
Trust Servicing Agreement and the transactions set forth or provided for in this
Agreement and the Titling Trust Servicing Agreement, and shall be subject to all
the responsibilities, restrictions, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions of this Agreement and the
Titling Trust Servicing Agreement; provided, however, that if the Backup
Servicer satisfies the criteria for a successor servicer specified below, the
Indenture Trustee shall promptly appoint the Backup Servicer as the successor
Servicer; provided, further, 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 Indenture Trustee or the
Backup Servicer shall be entitled to such compensation (whether payable out of
the Collection Account or otherwise) as the 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 and
shall be entitled to Investment Earnings as set forth in Section 2.02(b) hereof.
Notwithstanding the above, if the Indenture Trustee does not appoint the Backup
Servicer as the successor servicer then the Indenture Trustee may, if it shall
be unwilling to so act, or shall, if it
- 25 -
is legally unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, a successor (i) having a net worth of not less than
$100,000,000 and (ii) whose regular business includes the servicing of
receivables of the type included in the Collateral, as the successor to the
Servicer under this Agreement and the Titling Trust Servicing Agreement in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer under this Agreement and the Titling Trust Servicing Agreement. In
connection with such appointment and assumption, the Indenture Trustee may make
such arrangements for the compensation of such successor out of payments on
Receivables as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted the Servicer under this
Agreement and the Titling Trust Servicing Agreement. The Indenture Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession.
SECTION 7.04 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.
SECTION 7.05 Repayment of Advances. If a successor Servicer shall be
appointed, the predecessor Servicer shall be entitled to receive, to the extent
of available funds, reimbursement for Outstanding Monthly Advances pursuant to
Section 2.14 in the manner specified in Section 8.2 of the Indenture with
respect to all Monthly Advances made by such predecessor Servicer. The successor
Servicer shall not be entitled to reimbursement for Monthly Advances made by the
predecessor Servicer.
SECTION 7.06 Waiver of Past Defaults. The Indenture Trustee, at the
direction of the holders of not less than a majority of the Outstanding Amount
of the Controlling Class, may waive any default by the Servicer in the
performance of its obligations hereunder and its consequences, except a default
in making any required deposits to or payments from any of the Designated
Accounts in accordance with this Agreement. Upon any such waiver of a past
default, such default shall cease to exist, and any Servicer Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon. The Servicer shall give written notice of
each such waiver to the Rating Agencies.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 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 the parties hereto; provided, however, that this Agreement may not
be amended unless such amendment is in accordance with the provisions of Section
5.01 of the Pooling Agreement as if such Section 5.01 were contained herein and
were applicable to this Agreement. Prior to the execution of any such amendment,
the Servicer shall furnish written notification of the substance of such
amendment to each of the Rating Agencies.
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SECTION 8.02 Termination. The respective obligations and
responsibilities of the parties hereto pursuant to this Agreement shall
terminate upon the earlier of:
(a) the maturity or other liquidation of the last Receivable and
the disposition of any amounts received upon liquidation of any such remaining
Receivables or
(b) the termination of the Pooling Agreement pursuant to Section
4.02 thereof.
SECTION 8.03 Notices. All notices, requests and demands to NFRRC,
the Servicer, either Trustee or Rating Agencies under this Agreement shall be
delivered as specified in Appendix B to the Pooling Agreement.
SECTION 8.04 Governing Law. All questions concerning the
construction, validity and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Illinois, without giving effect to any choice of law or conflict provision or
rule (whether of the State of Illinois or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Illinois.
SECTION 8.05 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 8.06 Assignment. Except to the extent permitted by Article
VI or as required by Article VII, the Servicer may not assign its rights or
delegate its obligations hereunder or under the Titling Trust Servicing
Agreement. The Servicer acknowledges that the Issuer shall assign all of its
rights, title and interest in this Agreement to the Indenture Trustee on behalf
of the Noteholders pursuant to the Indenture. The Servicer agrees that the
Indenture Trustee, to the extent provided in the Indenture, shall be entitled to
enforce the terms of this Agreement and the rights (including, without
limitation, the right to grant or withhold any consent or waiver) of Issuer
directly against the Servicer. Until the satisfaction and discharge of all
obligations of the Issuer, the Servicer further agrees that, in respect of its
obligations hereunder, it will act at the direction of and in accordance with
all requests and instructions from the Indenture Trustee given in accordance
with the Indenture. The Indenture Trustee shall have the rights of a third-party
beneficiary under this Agreement. The Servicer shall deliver copies of all
statements, reports, Opinions of Counsel, notices, requests, demands and other
documents to be delivered by the Servicer to Issuer pursuant to the terms hereof
to the Indenture Trustee.
SECTION 8.07 Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the parties hereto, and their respective
successors and permitted assigns. Except as otherwise provided in Section 6.03
or in this Article VIII, no other Person shall have any right or obligation
hereunder.
SECTION 8.08 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
- 27 -
SECTION 8.09 Headings and Cross-References. The various headings in
this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement.
SECTION 8.10 No Petition Covenants. Notwithstanding any prior
termination of this Agreement, the Servicer shall not, prior to the date which
is one year and one day after payment in full of all obligations and the final
distribution with respect to the Securities to the Note Distribution Account or
the Certificate Distribution Account, as applicable, acquiesce, petition or
otherwise invoke or cause the Issuer or NFRRC to invoke or join any other Person
in instituting the process of any court or government authority for the purpose
of commencing or sustaining a case against the Issuer or NFRRC any bankruptcy,
reorganization, arrangement, insolvency, liquidation proceeding, or similar law
of the United States or any state of the United States.
SECTION 8.11 Limitation of Liability of the Trustees.
(a) Notwithstanding anything contained herein to the contrary,
this Agreement has been acknowledged and accepted by The Bank of New York not in
its individual capacity but solely as Indenture Trustee and in no event shall
The Bank of New York have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
(b) 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 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 Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer. 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 Issuer
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.
[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this
Servicing Agreement to be duly executed by their respective officers duly
authorized as of the day and year first above written.
NAVISTAR FINANCIAL CORPORATION,
as Servicer
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President and Treasurer
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President and Treasurer
HARCO LEASING COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President and Treasurer
THE BANK OF NEW YORK
not in its individual capacity, but solely
as Collateral Agent
By: /s/ Xxxx Xxxxxxx
----------------------------------------------
Name: Xxxx Xxxxxxx
Title: Agent
BANK ONE, NATIONAL ASSOCIATION
not in its individual capacity, but solely as
Portfolio Trustee
By: /s/ Xxxxxx Xxx Xxxxxxx
----------------------------------------------
Name: Xxxxxx Xxx Xxxxxxx
Title: Vice President
NAVISTAR FINANCIAL 2003-A OWNER TRUST
By: Chase Manhattan Bank USA, National
Association, not in its individual capacity, but
solely as Owner Trustee
By: /s/ Xxxx X. Xxxxxx
----------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
THE BANK OF NEW YORK,
not in its individual capacity, but solely as
Indenture Trustee
By: /s/ Xxxxx Xxxxxxx
----------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Assistant Vice President
The Indenture Trustee, in its role as Securities
Intermediary, hereby acknowledges its undertaking
as set forth in Section 2.02
By: /s/ Xxxxx Xxxxxxx
----------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Assistant Vice President
NAVISTAR LEASING COMPANY
By: Bank One, National Association, as General
Interest Trustee
By: /s/ Xxxxxx Xxx Xxxxxxx
----------------------------------------------
Name: Xxxxxx Xxx Xxxxxxx
Title: Vice President
Servicing Agreement
