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EXHIBIT 10.2
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SALE AND SERVICING AGREEMENT
among
HARLEY-DAVIDSON MOTORCYCLE TRUST [_____],
as Issuer,
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,
as Trust Depositor,
HARLEY-DAVIDSON CREDIT CORP.,
as Servicer
and
[_____],
as Indenture Trustee
Dated as of [_____]
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TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS...........................................................................................1
SECTION
1.01.
DEFINITIONS................................................................................1
SECTION 1.02.
USAGE OF
TERMS............................................................................21
SECTION
1.03.
SECTION
REFERENCES........................................................................21
SECTION
1.04.
CALCULATIONS..............................................................................21
SECTION
1.05.
ACCOUNTING
TERMS..........................................................................21
ARTICLE TWO TRANSFER OF
CONTRACTS................................................................................21
SECTION
2.01.
CLOSING...................................................................................21
SECTION
2.02.
CONDITIONS TO THE
CLOSING.................................................................22
SECTION
2.03.
CONVEYANCE OF SUBSEQUENT
CONTRACTS........................................................23
ARTICLE THREE REPRESENTATIONS AND
WARRANTIES.....................................................................26
SECTION
3.01.
REPRESENTATIONS AND WARRANTIES REGARDING THE TRUST
DEPOSITOR..............................27
SECTION
3.02.
REPRESENTATIONS AND WARRANTIES REGARDING THE
SERVICER.....................................29
ARTICLE FOUR PERFECTION OF TRANSFER AND PROTECTION OF SECURITY
INTERESTS.........................................30
SECTION
4.01.
CUSTODY OF
CONTRACTS......................................................................30
SECTION
4.02.
FILING....................................................................................31
SECTION
4.03. NAME
CHANGE OR
RELOCATION.................................................................32
SECTION
4.04.
COSTS AND
EXPENSES........................................................................32
ARTICLE FIVE SERVICING OF
CONTRACTS..............................................................................32
SECTION
5.01.
RESPONSIBILITY FOR CONTRACT
ADMINISTRATION................................................32
SECTION
5.02.
STANDARD OF
CARE..........................................................................33
SECTION
5.03.
RECORDS...................................................................................33
SECTION
5.04.
INSPECTION................................................................................33
SECTION
5.05.
TRUST
ACCOUNTS............................................................................33
SECTION
5.06.
ENFORCEMENT...............................................................................35
SECTION
5.07.
TRUSTEES TO
COOPERATE.....................................................................37
SECTION
5.08.
COSTS AND
EXPENSES........................................................................37
SECTION
5.09.
MAINTENANCE OF SECURITY INTERESTS IN
MOTORCYCLES..........................................38
SECTION
5.10.
SUCCESSOR SERVICER/LOCKBOX
AGREEMENTS.....................................................38
SECTION
5.11.
SEPARATE ENTITY
EXISTENCE.................................................................38
ARTICLE SIX THE TRUST
DEPOSITOR..................................................................................38
SECTION
6.01.
COVENANTS OF THE TRUST
DEPOSITOR..........................................................38
SECTION
6.02.
LIABILITY OF TRUST DEPOSITOR;
INDEMNITIES.................................................41
SECTION
6.03.
MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF,
TRUST DEPOSITOR;
CERTAIN
LIMITATIONS.......................................................................42
SECTION
6.04.
LIMITATION ON LIABILITY OF TRUST DEPOSITOR AND
OTHERS.....................................43
SECTION
6.05.
TRUST DEPOSITOR NOT TO
RESIGN.............................................................43
ARTICLE SEVEN DISTRIBUTIONS; RESERVE
FUND........................................................................44
SECTION
7.01.
MONTHLY
DISTRIBUTIONS.....................................................................44
SECTION
7.02.
FEES......................................................................................44
SECTION
7.03.
ADVANCES; REALIZATION OF CARRYING
CHARGE..................................................44
SECTION
7.04.
INTEREST RESERVE
ACCOUNT..................................................................45
SECTION
7.05.
DISTRIBUTIONS;
PRIORITIES.................................................................45
SECTION
7.06.
RESERVE
FUND..............................................................................48
SECTION 7.07.
ESTABLISHMENT OF PRE-FUNDING
ACCOUNT......................................................49
SECTION
7.08.
REACQUISITION OF CONTRACTS FOR BREACH OF REPRESENTATIONS AND
WARRANTIES...................50
SECTION
7.09.
REASSIGNMENT OF REACQUIRED
CONTRACTS......................................................51
SECTION
7.10.
SELLER'S REACQUISITION
OPTION.............................................................51
ARTICLE EIGHT EVENTS OF TERMINATION; SERVICE
TRANSFER............................................................51
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SECTION
8.01.
EVENTS OF
TERMINATION.....................................................................51
SECTION
8.02.
WAIVER OF EVENT OF
TERMINATION............................................................52
SECTION
8.03.
SERVICE
TRANSFER..........................................................................52
SECTION
8.04.
SUCCESSOR SERVICER TO ACT; APPOINTMENT OF SUCCESSOR
SERVICER..............................53
SECTION
8.05.
NOTIFICATION TO
SECURITYHOLDERS...........................................................53
SECTION
8.06.
EFFECT OF
TRANSFER........................................................................54
SECTION
8.07.
DATABASE
FILE.............................................................................54
SECTION
8.08.
SUCCESSOR SERVICER
INDEMNIFICATION........................................................54
SECTION
8.09.
RESPONSIBILITIES OF THE SUCCESSOR
SERVICER................................................54
SECTION
8.10.
LIMITATION OF LIABILITY OF
SERVICER.......................................................55
SECTION
8.11.
MERGER OR CONSOLIDATION OF
SERVICER.......................................................55
SECTION
8.12.
SERVICER NOT TO
RESIGN....................................................................56
SECTION
8.13.
APPOINTMENT OF
SUBSERVICER................................................................56
ARTICLE NINE REPORTS
............................................................................................56
SECTION
9.01.
MONTHLY
REPORTS...........................................................................56
SECTION
9.02.
OFFICER'S
CERTIFICATE.....................................................................56
SECTION
9.03.
OTHER
DATA................................................................................56
SECTION
9.04.
ANNUAL REPORT OF
ACCOUNTANTS..............................................................56
SECTION
9.05.
ANNUAL STATEMENT OF COMPLIANCE FROM
SERVICER..............................................58
SECTION
9.06.
MONTHLY REPORTS TO
NOTEHOLDERS............................................................58
ARTICLE TEN
TERMINATION..........................................................................................60
SECTION
10.01. SALE OF
TRUST
ASSETS......................................................................60
ARTICLE ELEVEN
MISCELLANEOUS.....................................................................................60
SECTION
11.01.
AMENDMENT.................................................................................60
SECTION
11.02.
PROTECTION OF TITLE TO
TRUST..............................................................62
SECTION
11.03. GOVERNING
LAW.............................................................................63
SECTION
11.04.
NOTICES...................................................................................63
SECTION
11.05.
SEVERABILITY OF
PROVISIONS................................................................65
SECTION
11.06.
ASSIGNMENT................................................................................65
SECTION
11.07. THIRD
PARTY
BENEFICIARIES.................................................................65
SECTION
11.08.
COUNTERPARTS..............................................................................66
SECTION
11.09.
HEADINGS..................................................................................66
SECTION
11.10. NO
BANKRUPTCY PETITION; DISCLAIMER AND
SUBORDINATION......................................66
SECTION
11.11.
LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE............................67
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EXHIBITS
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Exhibit A
Form of Assignment
A-1
Exhibit B
Form of Closing Certificate of Trust Depositor
B-1
Exhibit C
Form of Closing Certificate of Seller/Servicer
C-1
Exhibit D
Form of Opinion of Counsel for Trust Depositor regarding
general corporate matters (including perfection opinion)
D-1
Exhibit E
Form of Opinion of Counsel for Trust Depositor regarding
the "TRUE SALE" nature of the transaction
E-1
Exhibit F
Form of Opinion of Counsel for Trust Depositor regarding
non-consolidation
F-1
Exhibit G
Form of Certificate Regarding Reacquired Contracts
G-1
Exhibit H
List of Contracts
H-1
Exhibit I
Form of Monthly Report to Noteholders and the Certificateholder
I-1
Exhibit J
Seller's Representations and Warranties
J-1
Exhibit K
Lockbox Bank and Lockbox Account
K-1
Exhibit L
Form of Subsequent Transfer Agreement
L-1
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SALE
AND SERVICING AGREEMENT, dated as of [_____], among
Harley-Davidson
Motorcycle Trust [_____] (together with its successors and assigns,
the "ISSUER"
or the "TRUST"), Harley-Davidson Customer Funding Corp. (together
with its
successor and assigns, the "TRUST DEPOSITOR"), [_____] (solely in
its capacity
as Indenture Trustee together with its successors and assigns, the
"INDENTURE
TRUSTEE") and Harley-Davidson Credit Corp. (solely in its capacity
as Servicer
together with its successor and assigns, "HARLEY-DAVIDSON CREDIT"
or the
"SERVICER").
WHEREAS the Issuer desires to acquire from the Trust Depositor an
initial
and one or more subsequent pools of fixed-rate, simple interest
motorcycle
conditional sales contracts and promissory note and security
agreements relating
to Harley-Davidson and Buell motorcycles and motorcycles not
manufactured by
Harley-Davidson or Buell (collectively, the "CONTRACTS") purchased
by
Harley-Davidson Credit and subsequently sold by Harley-Davidson
Credit to the
Trust Depositor;
WHEREAS the Trust Depositor is willing to transfer and assign the
Contracts
to the Issuer pursuant to the terms hereof; and
WHEREAS the Servicer is willing to service the Contracts pursuant
to the
terms hereof;
NOW,
THEREFORE, in consideration of the premises and the mutual
covenants
herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01.
DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires,
shall have
the following meanings:
"ADDITION NOTICE" means, with respect to any transfer of
Subsequent
Contracts to the Issuer pursuant to Section 2.03 and the Trust
Depositor's
corresponding prior purchase of such Contracts from the Seller, a
notice, which
shall be given at least 10 days prior to the related Subsequent
Transfer Date,
identifying the aggregate Principal Balance of the Subsequent
Contracts to be
transferred.
"ADVANCE" means, with respect to any Distribution Date, the
amounts, if
any, deposited by the Servicer in the Collection Account for such
Distribution
Date pursuant to Section 7.03.
"AFFILIATE" of any specified Person means any other Person
controlling or
controlled by, or under common control with, such specified Person.
For the
purposes of this definition, "CONTROL" when used with respect to
any specified
Person means the power to direct the management and policies of
such Person,
directly or indirectly, whether through the ownership
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of voting securities, by contract or otherwise; and the terms
"CONTROLLING" or
"CONTROLLED" have meanings correlative to the foregoing.
"AGGREGATE PRINCIPAL BALANCE" will equal the sum of the Principal
Balances
of each outstanding Contract and the Pre-Funded Amount, if any. At
the time of
initial issuance of the Securities, the initial aggregate principal
amount of
the Securities will equal the initial Pool Balance plus the initial
Pre-Funded
Amount.
"AGGREGATE PRINCIPAL
BALANCE DECLINE" means, with respect to any
Distribution Date, the amount by which the Aggregate Principal
Balance as of the
close of business on the last day of the Due Period relating to the
Distribution
Date immediately preceding such Distribution Date (or as of the
Initial Cutoff
Date in the case of the first Distribution Date) exceeds the
Aggregate Principal
Balance as of the close of business on the last day of the Due
Period relating
to such Distribution Date.
"AGREEMENT" means this Sale and Servicing Agreement, as
amended,
supplemented or otherwise modified from time to time in accordance
with the
terms hereof.
"AVAILABLE MONIES" means, with respect to any Distribution Date,
the sum of
the Available Interest and the Available Principal for such
Distribution Date.
"AVAILABLE INTEREST" means, with respect to any Distribution Date,
the
total (without duplication) of the following amounts received by
the Servicer on
or in respect of the Contracts during the related Due Period: (i)
all amounts
received in respect of interest on the Contracts, (ii) the interest
component of
all Net Liquidation Proceeds, (iii) the interest component of the
aggregate of
the Reacquisition Prices for Contracts reacquired by the Trust
Depositor
pursuant to Section 7.08, (iv) all Advances made by the Servicer
pursuant to
Section 7.03, (v) the interest component of all amounts paid by the
Trust
Depositor in connection with an optional reacquisition of the
Contracts pursuant
to Section 7.10, (vi) all amounts received in respect of Carrying
Charges
transferred from the Interest Reserve Account pursuant to Section
7.03, and
(vii) all amounts received in respect of interest, dividends,
gains, income and
earnings on investment of funds in the Trust Accounts as
contemplated in Section
5.05(d).
"AVAILABLE PRINCIPAL" means, with respect to any Distribution Date,
the
total (without duplication) of the following amounts received by
the Servicer on
or in respect of the Contracts during the related Due Period: (i)
all amounts
received in respect of principal on the Contracts, (ii) the
principal component
of all Net Liquidation Proceeds, (iii) the principal component of
the aggregate
of the Reacquisition Prices for Contracts reacquired by the Trust
Depositor
pursuant to Section 7.08, and (iv) the principal component of all
amounts paid
by the Trust Depositor in connection with an optional reacquisition
of the
Contracts pursuant to Section 7.10.
"AVERAGE DELINQUENCY RATIO" means, for any Distribution Date,
the
arithmetic average of the Delinquency Ratios for such Distribution
Date and the
two immediately preceding Distribution Dates.
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"AVERAGE LOSS RATIO" means, for any Distribution Date, the
arithmetic
average of the Loss Ratios for such Distribution Date and the two
immediately
preceding Distribution Dates.
"BASE PROSPECTUS" means the Prospectus dated [_____] relating to
the
Harley-Davidson Motorcycle Trusts.
"BUELL" means Buell Motorcycle Company, LLC.
"BUSINESS DAY" means any day other than a Saturday or a Sunday, or
another
day on which banking institutions in the city of Chicago, Illinois,
Wilmington,
Delaware or New York, New York are authorized or obligated by law,
executive
order, or governmental decree to be closed.
"CALCULATION DAY" means the last day of each calendar month.
"CARRYING CHARGES" means, with respect to any Distribution Date,
the sum of
(i) the product of (x) the weighted average of the Class A-1 Rate,
the Class A-2
Rate and the Class B Rate for the related Interest Period and (y)
the
undisbursed funds (excluding investment earnings) in the
Pre-Funding Account (as
of the last day of the related Due Period) and (ii) the Indenture
Trustee Fee
for the related Distribution Date, minus (iii) the amount of any
investment
earnings on funds in the Pre-Funding Account which was transferred
to the
Interest Reserve Account, as well as interest earnings on amounts
in the
Interest Reserve Account with respect to such Distribution
Date.
"CERTIFICATE" means the Trust Certificate (as such term is defined
in the
Trust Agreement), representing 100% of the beneficial equity
interest in the
Trust and issued pursuant to the Trust Agreement.
"CERTIFICATE REGISTER" shall have the meaning specified in the
Trust
Agreement.
"CERTIFICATEHOLDER" shall have the meaning specified in the
Trust
Agreement.
"CLASS" means all Notes whose form is identical except for
variation in
denomination, principal amount or owner.
"CLASS A NOTE MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect
to any Distribution Date, the Class A Note Percentage of the
Principal
Distributable Amount for such Distribution Date.
"CLASS A NOTE PERCENTAGE" means, (i) for each Distribution Date to
but
excluding the Distribution Date on which the principal amount of
the Class A-2
Notes is reduced to zero, [_____]%; (ii) for the Distribution Date
on which the
principal amount of the Class A-2 Notes is reduced to zero, such
percentage
which represents the fraction of the Principal Distributable Amount
necessary to
reduce the principal amount of the Class A-2 Notes to zero; and
(iii) for each
Distribution Date thereafter, [_____]%.
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"CLASS A NOTE PRINCIPAL CARRYOVER SHORTFALL" means, as of the close
of any
Distribution Date, the excess of the Class A Note Principal
Distributable Amount
with respect to the immediately preceding Distribution Date over
the amount in
respect of principal for the Class A Notes that is actually
deposited in the
Note Distribution Account on such preceding Distribution Date.
"CLASS A NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect
to any
Distribution Date, the sum of the Class A Note Monthly Principal
Distributable
Amount with respect to such Distribution Date and the Class A Note
Principal
Carryover Shortfall as of the close of the immediately preceding
Distribution
Date; PROVIDED, HOWEVER, that the Class A Note Principal
Distributable Amount
shall not exceed the outstanding principal amount of the Class A
Notes; and
PROVIDED, FURTHER, that the Class A Note Principal Distributable
Amount (i) on
the Class A-1 Final Distribution Date shall not be less than the
amount that is
necessary (after giving effect to other amounts to be deposited in
the Note
Distribution Account for payment on the Class A-1 Notes on such
Distribution
Date and allocable to principal) to reduce the outstanding
principal amount of
the Class A-1 Notes to zero, and (ii) on the Class A-2 Final
Distribution Date
shall not be less than the amount that is necessary (after giving
effect to
other amounts to be deposited in the Note Distribution Account for
payment on
the Class A-2 Notes on such Distribution Date and allocable to
principal) to
reduce the outstanding principal amount of the Class A-2 Notes to
zero.
"CLASS A NOTES" means, collectively, the Class A-1 Notes and the
Class A-2
Notes.
"CLASS A-1 FINAL DISTRIBUTION DATE" means the [______] 20__
Distribution
Date.
"CLASS A-1 NOTEHOLDER" means the Person in whose name a Class A-1
Note is
registered in the Note Register, as such term is defined in the
Indenture.
"CLASS A-1 RATE" means [____]% per annum (computed on the basis of
a
360-day year of twelve 30-day months).
"CLASS A-2 FINAL DISTRIBUTION DATE" means the [______] 20__
Distribution
Date.
"CLASS A-2 NOTEHOLDER" means the Person in whose name a Class A-2
Note is
registered in the Note Register.
"CLASS A-2 RATE" means [____]% per annum (computed on the basis of
a
360-day year of twelve 30-day months).
"CLASS B FINAL DISTRIBUTION DATE" means the [______] 20__
Distribution
Date.
"CLASS B NOTEHOLDER" means the Person in whose name a Class B Note
is
registered in the Note Register, as such term is defined in the
Indenture.
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"CLASS B NOTE MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect
to any Distribution Date, the Class B Note Percentage of the
Principal
Distributable Amount for such Distribution Date.
"CLASS B NOTE PERCENTAGE" means, (i) for each Distribution Date to
but
excluding the Distribution Date on which the principal amount of
the Class A-2
Notes is reduced to zero, [_____]%; and (ii) for the Distribution
Date on which
the principal amount of the Class A-2 Notes is reduced to zero,
that percentage
that equals 100% minus the Class A Note Percentage for such
Distribution Date;
and (iii) [_____]% thereafter.
"CLASS B NOTE PRINCIPAL CARRYOVER SHORTFALL" means, as of the close
of any
Distribution Date, the excess of the Class B Note Principal
Distributable Amount
with respect to the immediately preceding Distribution Date over
the amount in
respect of principal for the Class B Notes that is actually
deposited in the
Note Distribution Account on such preceding Distribution Date.
"CLASS B NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect
to any
Distribution Date, the sum of the Class B Note Monthly Principal
Distributable
Amount with respect to such Distribution Date and the Class B Note
Principal
Carryover Shortfall as of the close of the immediately preceding
Distribution
Date; PROVIDED, HOWEVER, that the Class B Note Principal
Distributable Amount
shall not exceed the outstanding principal amount of the Class B
Notes; and
PROVIDED, FURTHER, that the Class B Note Principal Distributable
Amount on the
Class B Final Distribution Date shall not be less than the amount
that is
necessary (after giving effect to other amounts to be deposited in
the Note
Distribution Account for payment on the Class B Notes on such
Distribution Date
and allocable to principal) to reduce the outstanding principal
amount of the
Class B Notes to zero.
"CLASS B RATE" means [____]% per annum (computed on the basis of a
360-day
year of twelve 30-day months).
"CLEARING AGENCY" shall have the meaning specified in the
Indenture.
"CLOSING DATE" means [_____].
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall have the meaning specified in the "granting
clause" of
the Indenture.
"COLLECTION ACCOUNT" means a trust account as described in Section
5.05
maintained in the name of the Indenture Trustee and which shall be
an Eligible
Account.
"COMPUTER FILE" means the computer file generated by the Servicer
which
provides information relating to the Contracts and which was used
by the Seller
in selecting the Contracts sold to the Trust Depositor pursuant to
the Transfer
and Sale Agreement (and any Subsequent Purchase Agreement) and
transferred to
the Trust by the Trust Depositor pursuant to this
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Agreement (and any Subsequent Transfer Agreement), and includes the
master file
and the history file as well as servicing information with respect
to the
Contracts.
"CONTRACT ASSETS" has the meaning assigned in Section 2.01 (and
2.03, as
applicable in the case of Subsequent Contracts) of the Transfer and
Sale
Agreement.
"CONTRACT FILE" means, as to each Contract, (a) the original copy
of the
Contract, including the executed conditional sales contract or
promissory note
and security agreement or other evidence of the obligation of the
Obligor, (b)
the original title certificate to the Motorcycle and, where
applicable, the
certificate of lien recordation, or, if such title certificate has
not yet been
issued, an application for such title certificate, or other
appropriate evidence
of a security interest in the covered Motorcycle; (c) the
assignments of the
Contract; (d) the original copy of any agreement(s) modifying the
Contract
including, without limitation, any extension agreement(s) and (e)
documents
evidencing the existence of physical damage insurance covering such
Motorcycle.
"CONTRACT RATE" means, as to any Contract, the annual rate of
interest with
respect to such Contract.
"CONTRACTS" means the motorcycle conditional sales contracts or
promissory
note and security agreements described in the List of Contracts and
constituting
part of the Trust Corpus (as such list may be supplemented from
time to time to
reflect transfers of Subsequent Contracts), and includes, without
limitation,
all related security interests and any and all rights to receive
payments which
are collected pursuant thereto after the Initial Cutoff Date or,
with respect to
any Subsequent Contracts, any related Subsequent Cutoff Date, but
excluding any
rights to receive payments which are collected pursuant thereto on
or prior to
the Initial Cutoff Date, or with respect to any Subsequent
Contracts, any
related Subsequent Cutoff Date.
"CORPORATE TRUST OFFICE" means the office of the Indenture Trustee
at which
at any particular time its corporate trust business shall be
principally
administered, which office at the date of the execution of this
Agreement is
located at the address set forth in Section 11.04.
"CRAM DOWN LOSS" means, with respect to a Contract, if a court
of
appropriate jurisdiction in an insolvency proceeding shall have
issued an order
reducing the Principal Balance of such Contract, the amount of such
reduction
(with a "CRAM DOWN LOSS" being deemed to have occurred on the date
of issuance
of such order).
"CUMULATIVE LOSS RATIO" means, as of any Distribution Date, the
fraction
(expressed as a percentage) computed by the Servicer by dividing
(i) the
aggregate Net Liquidation Losses for all Contracts since the
related Cutoff Date
through the end of the related Due Period by (ii) the sum of (A)
the Principal
Balance of the Contracts as of the Initial Cutoff Date plus (B) the
Principal
Balance of any Subsequent Contracts as of the related Subsequent
Cutoff Date
plus (C) the Pre-Funded Amount.
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"CUTOFF DATE" means either or both (as the context may require) the
Initial
Cutoff Date and any Subsequent Cutoff Date.
"DEFAULTED CONTRACT" means a Contract with respect to which there
has
occurred one or more of the following: (i) all or some portion of
any payment
under the Contract is 120 days or more delinquent, (ii)
repossession (and
expiration of any redemption period) of a Motorcycle securing a
Contract or
(iii) the Servicer has determined in good faith that an Obligor is
not likely to
resume payment under a Contract.
"DELINQUENCY AMOUNT" means, as of any Distribution Date, the
Principal
Balance of all Contracts that were delinquent 60 days or more as of
the end of
the related Due Period (including Contracts in respect of which the
related
Motorcycles have been repossessed and are still in inventory).
"DELINQUENT INTEREST" means, for each Contract and each
Determination Date
as to which the full payment due in the related Due Period has not
been paid
before the 30th day after the scheduled payment dated therefor (any
such payment
being "DELINQUENT" for purposes of this definition), all interest
accrued on
such Contract from the Due Date in the Due Period one month prior
to the Due
Period in which the payment is delinquent.
"DELINQUENCY RATIO" means, for any Distribution Date, the
fraction
(expressed as a percentage) computed by dividing (a) the
Delinquency Amount
during the immediately preceding Due Period by (b) the Principal
Balance of the
Contracts as of the beginning of the related Due Period.
"DELTA LOAN" means a loan made by the Seller pursuant to the
program
designated as the Delta Program.
"DETERMINATION DATE" means the fourth Business Day following the
conclusion
of a Due Period during the term of this Agreement.
"DISTRIBUTION DATE" means the fifteenth day of each calendar month
during
the term of this Agreement, or if such day is not a Business Day,
the next
succeeding Business Day, with the first such Distribution Date
hereunder being
[_____].
"DUE
DATE" means, with respect to any Contract, the day of the month
on
which each scheduled payment of principal and interest is due on
such Contract,
exclusive of days of grace.
"DUE
PERIOD" means a calendar month during the term of this Agreement,
and
the Due Period related to a Determination Date or Distribution Date
shall be the
calendar month immediately preceding such date; PROVIDED, HOWEVER,
that with
respect to the Initial Determination Date or Initial Distribution
Date, the Due
Period shall be the period from the Initial Cutoff Date to and
including
[_____].
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"ELIGIBLE ACCOUNT" means a segregated direct deposit account
maintained
with the Indenture Trustee, acting in its fiduciary capacity, or a
depository
institution or trust company organized under the laws of the United
States of
America, or any of the States thereof, or the District of Columbia,
having a
certificate of deposit, short-term deposit or commercial paper
rating of at
least A-1+ by Standard & Poor's and P-1 by Moody's.
"ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable
instruments
or securities represented by instruments in bearer or registered
form which
evidence:
(a) direct
obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand
deposits, time deposits or certificates of deposit of
any
depository institution or trust company incorporated under the laws
of
the
United States of America or any State (or any domestic branch of
a
foreign bank) and subject to supervision and examination by Federal
or
State banking or depository institution authorities; PROVIDED,
HOWEVER,
that
at the time of the investment or contractual commitment to
invest
therein, the commercial paper or other short-term senior unsecured
debt
obligations (other than such obligations the rating of which is
based on
the
credit of a Person other than such depository institution or
trust
company) thereof shall have a credit rating from the Rating Agency
in the
highest investment category granted thereby;
(c)
commercial paper, master notes, promissory notes, demand notes
or
other short term debt obligations having, at the time of the
investment
or
contractual commitment to invest therein, a rating from the
Rating
Agency in the highest investment category granted thereby;
(d)
investments in money market funds having a rating from the
Rating Agency in the highest investment category granted thereby
(including
funds for which the Indenture Trustee or the Owner Trustee or any
of their
respective Affiliates is investment manager or advisor);
(e) notes
or bankers' acceptances issued by any depository
institution or trust company referred to in CLAUSE (b);
(f)
repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed as to timely payment by,
the
United States of America or any agency or instrumentality thereof
the
obligations of which are backed by the full faith and credit of the
United
States of America, in either case entered into with a
depository
institution or trust company (acting as principal) described in
CLAUSE (b);
and
(g) any
other investment with respect to which the Issuer or the
Servicer has received written notification from the Rating Agencies
that
the
acquisition of such investment as an Eligible Investment will
not
result in a withdrawal or downgrading of the ratings on the
Notes.
8
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"EVENT OF TERMINATION" means an event specified in Section
8.01.
"EXCESS AMOUNTS" shall mean Available Monies after distributions
made in
accordance with Section 7.05.
"FINAL DISTRIBUTION DATE" means the Class A-1 Final Distribution
Date, the
Class A-2 Final Distribution Date or the Class B Final Distribution
Date, as the
case may be.
"FUNDING PERIOD" means the period beginning on the Closing Date and
ending
on the first to occur of (a) the Distribution Date on which the
amount on
deposit in the Pre-Funding Account (after giving effect to any
transfers
therefrom in connection with the transfer of Subsequent Contracts
to the Trust
on such Distribution Date) is less than $150,000, (b) the date on
which an Event
of Termination occurs, (c) the date on which an Insolvency Event
occurs with
respect to the Trust Depositor and (d) the close of business on the
date which
is 90 days from and including the Closing Date.
"HARLEY-DAVIDSON FINANCIAL" means Harley-Davidson Financial
Services, Inc.,
a Delaware corporation.
"HOLDER" means, with respect to a (i) Certificate, the Person in
whose name
such Certificate is registered in the Certificate Register and (ii)
Note, the
Person in whose name such Note is registered in the Note
Register.
"INDENTURE" means the Indenture, dated as of the date hereof,
between the
Issuer and the Indenture Trustee.
"INDENTURE TRUSTEE" means the Person acting as Indenture Trustee
under the
Indenture, its successors in interest and any successor trustee
under the
Indenture.
"INDENTURE TRUSTEE FEE" means, with respect to any Distribution
Date,
one-twelfth of the product of [_____]% and the sum of (i) the
Principal Balance
of the Contracts as of the beginning of the related Due Period and
(ii) the
Pre-Funded Amount as of the beginning of such period; PROVIDED,
HOWEVER, in no
event shall such fee be less than $200.00 per month.
"INDEPENDENT" when used with respect to any specified Person, means
such a
Person who (i) is in fact independent of the Issuer, the Trust
Depositor or the
Servicer, (ii) is not a director, officer or employee of any
Affiliate of the
Issuer, the Trust Depositor or the Servicer, (iii) is not a person
related to
any officer or director of the Issuer, the Trust Depositor or the
Servicer or
any of their respective Affiliates, (iv) is not a holder (directly
or
indirectly) of more than 10% of any voting securities of Issuer,
the Trust
Depositor or the Servicer or any of their respective Affiliates,
and (v) is not
connected with the Issuer, the Trust Depositor or the Servicer as
an officer,
employee, promoter, underwriter, trustee, partner, director or
person performing
similar functions.
"INITIAL CLASS A-1 NOTE BALANCE" means $[_____].
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"INITIAL CLASS A-2 NOTE BALANCE" means $[_____].
"INITIAL CLASS B NOTE BALANCE" means $[_____].
"INITIAL CONTRACTS" means those Contracts conveyed to the Trust on
the
Closing Date.
"INITIAL CUTOFF DATE" means as of the close of business on
[_____].
"INSOLVENCY EVENT" means, with respect to a specified Person, (i)
the entry
of a decree or order for relief by a court or regulatory authority
having
jurisdiction in respect of such Person in an involuntary case under
the federal
bankruptcy laws, as now or hereafter in effect, or any other
present or future,
federal or state, bankruptcy, insolvency or similar law, or
appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
other
similar official for such Person or for any substantial part of its
property, or
ordering the winding-up or liquidation of such Person's affairs,
and the
continuance of any such decree or order unstayed and in effect for
a period of
60 consecutive days; (ii) the commencement of an involuntary case
under the
federal bankruptcy laws, as now or hereinafter in effect, or
another present or
future federal or state bankruptcy, insolvency or similar law and
such case is
not dismissed within 60 days; or (iii) the commencement by such
Person of a
voluntary case under the federal bankruptcy laws, as now or
hereinafter in
effect, or any other present or future federal or state,
bankruptcy, insolvency
or similar law, or the consent by such Person to the appointment of
or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator
or other similar official for such Person or for any substantial
part of its
property, or the making by such Person of an assignment for the
benefit of
creditors or the failure by such Person generally to pay its debts
as such debts
become due or the taking of corporate action by such Person in
furtherance of
any the foregoing.
"INTEREST PERIOD" means, with respect to any Distribution Date, the
period
from and including the fifteenth day of the month of the
Distribution Date
immediately preceding such Distribution Date (or, in the case of
the first
Distribution Date, from and including the Closing Date) to but
excluding the
fifteenth day of the month of such Distribution Date.
"INTEREST RATE" means the Class A-1 Rate, the Class A-2 Rate or the
Class B
Rate, as applicable.
"INTEREST RESERVE ACCOUNT" means the account designated as the
Interest
Reserve Account in, and which is established and maintained
pursuant to, Section
7.04 hereof.
"INTEREST RESERVE AMOUNT" means, as of any date of determination,
the
amount on deposit in the Interest Reserve Account on such date, and
as of the
Closing Date shall be $[_________].
"INVESTMENT EARNINGS" means, with respect to any Distribution Date,
the
investment earnings (net of losses and investment expenses) on
amounts on
deposit in the Trust Accounts, other than the Pre-Funding Account,
to be
deposited into the Collection Account on such Distribution Date
pursuant to
Section 5.05(b).
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"ISSUER" means the Harley-Davidson Motorcycle Trust [_____].
"LATE PAYMENT PENALTY FEES" means any late payment fees paid by
Obligors on
Contracts after all sums received have been allocated first to
regular
installments due or overdue and all such installments are then paid
in full.
"LIEN" means a security interest, lien, charge, pledge, equity
or
encumbrance of any kind, other than tax liens, mechanics' liens and
any liens
that attach to the respective Contract by operation of law.
"LIQUIDATED CONTRACT" means a Contract with respect to which there
has
occurred one or more of the following: (i) 90 days have elapsed
following the
date of repossession (and expiration of any redemption period) with
respect to
the Motorcycle securing such Contract, (ii) the receipt of proceeds
by the
Servicer from the sale of a repossessed Motorcycle securing a
Contract, (iii)
the Servicer has determined in good faith that all amounts expected
to be
recovered have been received with respect to such Contract, or (iv)
all or any
portion of any payment is delinquent 150 days or more.
"LIST OF CONTRACTS" means the list identifying each Contract
constituting
part of the Trust Corpus, which list shall consist of the initial
List of
Contracts reflecting the Initial Contracts transferred to the Trust
on the
Closing Date, together with any Subsequent List of Contracts
reflecting the
Subsequent Contracts transferred to the Trust on the related
Subsequent Transfer
Date, and which list (a) identifies each Contract and (b) sets
forth as to each
Contract (i) the Principal Balance as of the applicable Cutoff
Date, (ii) the
amount of monthly payments due from the Obligor, (iii) the Contract
Rate and
(iv) the maturity date, and which list (as in effect on the Closing
Date) is
attached to this Agreement as EXHIBIT H.
"LOCKBOX" means the Lockbox maintained by a Lockbox Bank identified
on
EXHIBIT K hereto.
"LOCKBOX ACCOUNT" means the account maintained with the Lockbox
Bank and
identified on EXHIBIT K hereto.
"LOCKBOX AGREEMENT" means the Fifth Amended and Restated
Lockbox
Administration Agreement dated as of November 1, 2000 by and among
the Lockbox
Bank, the Servicer, the Trust Depositor, Eaglemark Customer
Funding
Corporation-IV, The Bank of New York (successor-in-interest to the
corporate
trust business of Harris Trust and Savings Bank), BNY Midwest Trust
Company and
Bank One, National Association, with respect to the Lockbox
Account, unless such
agreement shall be terminated in accordance with its terms, in
which event
"LOCKBOX AGREEMENT" shall mean such other agreement, in form and
substance
acceptable to the above-described parties.
"LOCKBOX BANK" means the financial institution maintaining the
Lockbox
Account and identified on EXHIBIT K hereto or any successor
thereto.
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"LOSS RATIO" means, for any Distribution Date, the fraction
(expressed as a
percentage) derived by dividing (x) Net Liquidation Losses for all
Contracts
that became Liquidated Contracts during the immediately preceding
Due Period
multiplied by twelve by (y) the outstanding Principal Balances of
all Contracts
as of the beginning of the Due Period.
"MANDATORY REDEMPTION" means the prepayment, in part, made to
the
Noteholders without premium made on the Distribution Date on or
immediately
following the last day of the Funding Period in the event that any
amount
remains on deposit in the Pre-Funding Account after giving effect
to the
acquisition of all Subsequent Contracts, including any such
acquisition on such
date.
"MANDATORY REDEMPTION SUBACCOUNT" means the subaccount of the
Note
Distribution Account into which deposits from the Pre-Funding
Account for any
Mandatory Redemption are made.
"MODIFIED REQUIRED HOLDERS" means (i) prior to the payment in full
of the
Class A Notes outstanding, Class A-1 Noteholders and/or Class A-2
Noteholders
evidencing at least 66 2/3% of the aggregate outstanding principal
balance of
the Class A Notes and (ii) from and after the payment in full of
the Class A
Notes outstanding, Class B Noteholders evidencing at least 66 2/3%
of the
aggregate outstanding principal balance of the Class B Notes.
"MONTHLY REPORT" shall have the meaning specified in Section
9.06.
"MONTHLY SERVICING FEE" means, as to any Distribution Date,
one-twelfth of
the product of [_____]% and the Principal Balance of the Contracts
as of the
beginning of the related Due Period or, with respect to the first
Distribution
Date of [_____], as of the Initial Cutoff Date.
"MOODY'S" means Moody's Investors Service, Inc. or any successor
thereto.
"MOTORCYCLE" means a
motorcycle manufactured by a subsidiary of
Harley-Davidson, Inc. (or in certain limited instances Buell or
certain other
manufacturers) securing a Contract.
"NET
LIQUIDATION LOSSES" means, as of any Distribution Date, with
respect
to all Liquidated Contracts on an aggregate basis, the amount, if
any, by which
(a) the outstanding Principal Balance of all Liquidated Contracts
plus accrued
and unpaid interest thereon at the Contract Rate to the date on
which such
Liquidated Contracts became Liquidated Contracts exceeds (b) the
Net Liquidation
Proceeds for such Liquidated Contracts.
"NET
LIQUIDATION PROCEEDS" means, as to any Liquidated Contract, the
proceeds realized on the sale or other disposition of the related
Motorcycle,
including proceeds realized on the repurchase of such Motorcycle by
the
originating dealer for breach of warranties, and the proceeds of
any insurance
relating to such Motorcycle, after payment of all reasonable
expenses incurred
thereby, together, in all instances, with the expected or actual
proceeds of any
recourse rights relating to such Contract as well as any
post-disposition
proceeds or other amounts in respect of a Liquidated Contract
received by the
Servicer.
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"NOTEHOLDER" shall have the meaning specified in the Indenture.
"NOTE DEPOSITORY AGREEMENT" shall have the meaning specified in
the
Indenture.
"NOTE DISTRIBUTABLE AMOUNT" means, with respect to any Distribution
Date,
the sum of the Note Principal Distributable Amount and the Note
Interest
Distributable Amount for such Distribution Date.
"NOTE DISTRIBUTION ACCOUNT" means the account established and
maintained as
such pursuant to Section 5.05.
"NOTE INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution
Date and a Class of Notes, the excess, if any, of the sum of the
Note Interest
Distributable Amount for such Class for the immediately preceding
Distribution
Date plus any outstanding Note Interest Carryover Shortfall for
such Class on
such preceding Distribution Date, over the amount in respect of
interest that is
actually deposited in the Note Distribution Account with respect to
such Class
on such preceding Distribution Date, plus, interest on such excess
to the extent
permitted by applicable law, at the related Interest Rate for the
related
Interest Period.
"NOTE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date and a Class of Notes, the sum of the Note Monthly
Interest
Distributable Amount and the Note Interest Carryover Shortfall for
such Class of
Notes with respect to such Distribution Date.
"NOTE MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any
Distribution Date for any Class of Notes, interest accrued from and
including
the fifteenth day of the month of the preceding calendar month to,
but
excluding, the fifteenth day of the calendar month in which such
Distribution
Date occurs (or in the case of the first Distribution Date,
interest accrued
from and including the Closing Date to but excluding such
Distribution Date) at
the related Interest Rate for such Class of Notes on the
outstanding principal
amount of the Notes of such Class on the immediately preceding
Distribution
Date, after giving effect to all payments of principal to
Noteholders of such
Class on or prior to such preceding Distribution Date (or, in the
case of the
first Distribution Date, on the original principal amount of such
Class of
Notes).
"NOTE POOL FACTOR" means with respect to any Class of Notes as of
the close
of business on any Distribution Date, a seven-digit decimal figure
equal to the
outstanding principal amount of such Class of Notes (after giving
effect to any
reductions thereof to be made on such Distribution Date) divided by
the original
outstanding principal amount of such Class of Notes.
"NOTE PRINCIPAL CARRYOVER SHORTFALL" means the Class A Note
Principal
Carryover Shortfall and the Class B Note Principal Carryover
Shortfall.
"NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means the Class A Note
Principal
Distributable Amount and the Class B Note Principal Distributable
Amount.
"NOTE REGISTER" shall have the meaning specified in the
Indenture.
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<Page>
"NOTES" means the Class A-1 Notes, the Class A-2 Notes and the
Class B
Notes, in each case as executed and authenticated in accordance
with the
Indenture.
"OBLIGEE" means the Person to whom an Obligor is indebted under a
Contract.
"OBLIGOR" means a Motorcycle buyer or other person who owes
payments under
a Contract.
"OFFICER'S CERTIFICATE" means a certificate signed by the Chairman,
the
President, a Vice President, the Treasurer, an Assistant Treasurer,
the
Controller, an Assistant Controller, the Secretary or an Assistant
Secretary of
any Person delivering such certificate and delivered to the Person
to whom such
certificate is required to be delivered, including any certificate
delivered
under any of the Transaction Documents required to be executed by a
Servicing
Officer. In the case of an Officer's Certificate of the Servicer,
at least one
of the signing officers must be a Servicing Officer. Unless
otherwise specified,
any reference herein to an Officer's Certificate shall be to an
Officers'
Certificate of the Servicer.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be
counsel
to the Trust Depositor or the Servicer) acceptable to the Indenture
Trustee or
the Owner Trustee, as the case may be.
"OUTSTANDING AMOUNT" shall have the meaning specified in the
Indenture.
"OWNER TRUSTEE" means the Person acting, not in its individual
capacity,
but solely as Owner Trustee under the Trust Agreement, its
successors in
interest and any successor owner trustee under the Trust
Agreement.
"PAYING AGENT" means as described in Section 1.01 of the Indenture
and
Section 3.10 of the Trust Agreement.
"PERSON" means any individual, corporation, estate, limited
liability
company, partnership, joint venture, association, joint stock
company, trust
(including any beneficiary thereof), unincorporated organization or
government
or any agency or political subdivision thereof.
"POOL BALANCE" means as of any date, the Principal Balance of
Contracts as
of the close of business on such date.
"PRE-FUNDED AMOUNT" means as of any date, the amount on deposit in
the
Pre-Funding Account at the close of business on such date.
"PRE-FUNDING ACCOUNT" means the account designated as the
Pre-Funding
Account in, and which is established and maintained pursuant to
Section 7.07.
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<Page>
"PRINCIPAL BALANCE" means (a) with respect to any Contract as of
any date,
an amount equal to the unpaid principal balance of such Contract as
of the close
of business on the Initial Cutoff Date or related Subsequent Cutoff
Date, as
applicable, reduced by the sum of (x) all payments received by the
Servicer as
of such date allocable to principal and (y) any Cram Down Loss in
respect of
such Contract; PROVIDED, HOWEVER, that (i) if (x) a Contract is
reacquired by
the Seller pursuant to Section 5.01 of the Transfer and Sale
Agreement and
Section 7.08 hereof because of a breach of representation or
warranty, or if (y)
the Seller gives notice of its intent to reacquire the Contracts in
connection
with an optional termination of the Trust pursuant to Section 5.02
of the
Transfer and Sale Agreement and Section 7.10 hereof, in each case
the Principal
Balance of such Contract or Contracts shall be deemed as of the
related
Determination Date to be zero for the Due Period in which such
event occurs and
for each Due Period thereafter and (ii) from and after the Due
Period in which a
Contract becomes a Liquidated Contract, the Principal Balance of
such Contract
shall be deemed to be zero; and (b) where the context requires, the
aggregate of
the Principal Balances described in clause (a) for all such
Contracts.
"PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution
Date, the Aggregate Principal Balance Decline for such Distribution
Date.
"PROSPECTUS" means the Base Prospectus together with the
Supplement.
"QUALIFIED ELIGIBLE INVESTMENTS" means Eligible Investments
acquired by the
Indenture Trustee in its name and in its capacity as Indenture
Trustee, which
are held by the Indenture Trustee in any Trust Account and with
respect to which
(a) the Indenture Trustee has noted its interest therein on its
books and
records, and (b) the Indenture Trustee has purchased such
investments for value
without notice of any adverse claim thereto (and, if such
investments are
securities or other financial assets or interests therein, within
the meaning of
Section 8-102 of the UCC as enacted in Illinois, without acting in
collusion
with a securities intermediary in violating such securities
intermediary's
obligations to entitlement holders in such assets, under Section
8-504 of such
UCC, to maintain a sufficient quantity of such assets in favor of
such
entitlement holders), and (c) either (i) such investments are in
the possession,
or are under the control, of the Indenture Trustee, or (ii) such
investments,
(A) if certificated securities and in bearer form, have been
delivered to the
Indenture Trustee, or in registered form, have been delivered to
the Indenture
Trustee and either registered by the issuer thereof in the name of
the Indenture
Trustee or endorsed by effective endorsement to the Indenture
Trustee or in
blank; (B) if uncertificated securities, the ownership of which has
been
registered to the Indenture Trustee on the books of the issuer
thereof (or
another person, other than a securities intermediary, either
becomes the
registered owner of the uncertified security on behalf of the
Indenture Trustee
or, having previously become the registered owner, acknowledges
that it holds
for the Indenture Trustee); or (C) if securities entitlements
(within the
meaning of Section 8-102 of the UCC as enacted in Illinois)
representing
interests in securities or other financial assets (or interests
therein) held by
a securities intermediary (within the meaning of said Section
8-102), a
securities intermediary indicates by book entry that a security or
other
financial asset has been credited to the Indenture Trustee's
securities account
with such securities intermediary. Any such Qualified Eligible
Investment may be
purchased by or through the Indenture Trustee or any of its
affiliates.
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<Page>
"RATING AGENCY" means each of Moody's and Standard & Poor's, so
long as
such Persons maintain a rating on the Notes; and if either Moody's
or Standard &
Poor's no longer maintains a rating on the Notes, such other
nationally
recognized statistical rating organization selected by the Trust
Depositor.
"REACQUISITION PRICE" means, with respect to a Contract to be
reacquired
hereunder as of the last day of any Due Period an amount equal to
(a) the
Principal Balance of such Contract as of such day, plus (b) accrued
and unpaid
interest at the Contract Rate on such Contract through the end of
such Due
Period.
"RECORD DATE" means, with respect to any Distribution Date, the
close of
business on the day immediately preceding such date.
"REIMBURSEMENT AMOUNT" has the meaning assigned in Section 7.03
hereof.
"REQUIRED HOLDERS" means (i) prior to the payment in full of the
Class A
Notes outstanding, Class A-1 Noteholders and Class A-2 Noteholders
evidencing
more than 50% of the aggregate outstanding principal balance of the
Class A
Notes and (ii) from and after the payment in full of the Class A
Notes
outstanding, Class B Noteholders evidencing more than 50% of the
aggregate
outstanding principal balance of the Class B Notes.
"RESERVE FUND" means the Reserve Fund established and maintained
pursuant
to Section 7.06 hereof.
"RESERVE FUND INITIAL DEPOSIT" means $[_________].
"RESERVE FUND DEPOSITS" means all moneys deposited in the Reserve
Fund from
time to time including, but not limited to, the Reserve Fund
Initial Deposit as
well as any monies deposited therein pursuant to Section 7.05(a),
all
investments and reinvestments thereof, earnings thereon, and
proceeds of the
foregoing, whether now or hereafter existing.
"RESERVE FUND TRIGGER EVENT" means the occurrence with respect to
any
Distribution Date (i) the Average Delinquency Ratio for such
Distribution Date
is equal to or greater than (a) [_____]% with respect to any
Distribution Date
which occurs within the period from the Closing Date to, and
inclusive of, the
first anniversary of the Closing Date, (b) [_____]% with respect to
any
Distribution Date which occurs within the period from the day after
the first
anniversary of the Closing Date to, and inclusive of, the second
anniversary of
the Closing Date, or (c) [_____]% with respect to any Distribution
Date which
occurs within the period from the day after the second anniversary
of the
Closing Date to, and inclusive of, the third anniversary of the
Closing Date or
(d) [_____]% with respect to any Distribution Date occurring after
the third
anniversary of the Closing Date; (ii) the Average Loss Ratio for
such
Distribution Date is equal to or greater than (a) [_____]% with
respect to any
Distribution Date which occurs within the period from the Closing
Date to, and
inclusive of, the second anniversary of the Closing Date or (b)
[_____]% with
respect to any Distribution Date which occurs following the second
anniversary
of the Closing Date; or (iii) the Cumulative Loss Ratio for such
Distribution
Date is
16
<Page>
equal to or greater than (a) [_____]% with respect to any
Distribution
Date which occurs within the period from the Closing Date to, and
inclusive of,
the first anniversary of the Closing Date, (b) [_____]% with
respect to any
Distribution Date which occurs within the period from the day after
the first
anniversary of the Closing Date to, and inclusive of, the second
anniversary of
the Closing Date, (c) [_____]% with respect to any Distribution
Date which
occurs within the period from the day after the second anniversary
of the
Closing Date to, and inclusive of, the third anniversary of the
Closing Date, or
(d) [_____]% with respect to any Distribution Date occurring after
the third
anniversary of the Closing Date.
A
Reserve Fund Trigger Event shall be deemed to have terminated
with
respect to a Distribution Date if no Reserve Fund Trigger Event
shall exist with
respect to three consecutive Distribution Dates (inclusive of the
respective
Distribution Date).
"RESPONSIBLE OFFICER" means, with respect to the Owner Trustee, any
officer
in its Corporate Trust Administration Department (or any similar
group of a
successor Owner Trustee) and with respect to the Indenture Trustee,
the chairman
and any vice chairman of the board of directors, the president, the
chairman and
vice chairman of any executive committee of the board of directors,
every vice
president, assistant vice president, the secretary, every assistant
secretary,
cashier or any assistant cashier, controller or assistant
controller, the
treasurer, every assistant treasurer, every trust officer,
assistant trust
officer and every other authorized officer or assistant officer of
the Trustee
customarily performing functions similar to those performed by
persons who at
the time shall be such officers, respectively, or to whom a
corporate trust
matter is referred because of knowledge of, familiarity with, and
authority to
act with respect to a particular matter.
"SECURITIES" means the Notes, or any of them.
"SECURITYHOLDERS" means the Holders of the Notes.
"SELLER" means Harley-Davidson Credit Corp., a Nevada corporation,
or its
successor, in its capacity as Seller of Contract Assets under the
Transfer and
Sale Agreement and any Subsequent Purchase Agreement.
"SERVICER" means Harley-Davidson Credit Corp., a Nevada
corporation, or its
successor, until any Service Transfer hereunder and thereafter
means the
Successor Servicer appointed pursuant to Article VIII below with
respect to the
duties and obligations required of the Servicer under this
Agreement.
"SERVICE TRANSFER" has the meaning assigned in Section 8.03(a).
"SERVICING FEE" means, on any Determination Date, the sum of (a)
the
Monthly Servicing Fee payable on the related Distribution Date, (b)
Late Payment
Penalty Fees received by the Servicer during the related Due
Period, and (c)
extension fees received by the Servicer during the related Due
Period.
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"SERVICING OFFICER" means any officer of the Servicer involved in,
or
responsible for, the administration and servicing of Contracts
whose name
appears on a list of servicing officers appearing in an Officer's
Certificate
furnished to the Indenture Trustee by the Servicer, as the same may
be amended
from time to time.
"SHORTFALL" means, with respect to a Distribution Date, the excess
(if
any), of the sum of the amounts payable pursuant to clauses (v)
through (viii)
of Section 7.05(a) over Available Monies for such Distribution Date
minus the
amounts payable pursuant to clauses (i) through (iv) of Section
7.05(a) on such
Distribution Date.
"SOLVENT" means, as to any Person at any time, that (a) the fair
value of
the property of such Person is greater than the amount of such
Person's
liabilities (including disputed, contingent and unliquidated
liabilities) as
such value is established and liabilities evaluated for purposes of
Section
101(31) of the Bankruptcy Code; (b) the present fair saleable value
of the
property of such Person in an orderly liquidation of such Person is
not less
than the amount that will be required to pay the probable liability
of such
Person on its debts as they become absolute and matured; (c) such
Person is able
to realize upon its property and pay its debts and other
liabilities (including
disputed, contingent and unliquidated liabilities) as they mature
in the normal
course of business; (d) such Person does not intend to, and does
not believe
that it will, incur debts or liabilities beyond such Person's
ability to pay as
such debts and liabilities mature; and (e) such Person is not
engaged in
business or a transaction, and is not about to engage in a business
or a
transaction, for which such Person's property would constitute
unreasonably
small capital.
"SPECIFIED RESERVE FUND BALANCE" means, with respect to any
Distribution
Date, an amount equal to the greater of:
(a)
[_____]% of the Principal Balance of the Contracts in the Trust
as
of the last day of the related Due Period; PROVIDED, HOWEVER, in
the
event a Reserve Fund Trigger Event occurs and is continuing for
three
consecutive Distribution Dates (inclusive of the respective
Distribution
Date), the Specified Reserve Fund Balance shall be equal to
[_____]% of the
Principal Balance of the Contracts in the Trust as of the last day
of the
immediately preceding Due Period; and
(b)
[_____]% of the aggregate of the Initial Class A-1 Note
Balance, Initial Class A-2 Note Balance and Initial Class B Note
Balance;
PROVIDED, HOWEVER, in no event shall the Specified Reserve Fund
Balance be
greater than the aggregate outstanding principal balance of the
Securities. As
of any Distribution Date, the amount of funds actually on deposit
in the Reserve
Fund may, in certain circumstances, be less than the Specified
Reserve Fund
Balance.
"STANDARD & POOR'S" means Standard & Poor's Ratings
Services, a division of
The McGraw Hill Companies, or any successor thereto.
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"SUBSEQUENT CONTRACTS" means all Contracts transferred to the
Trust
pursuant to Section 2.03.
"SUBSEQUENT CUTOFF DATE" means the date specified as such for
Subsequent
Contracts in the related Subsequent Transfer Agreement.
"SUBSEQUENT LIST OF CONTRACTS" means a list, in the form of the
initial
List of Contracts delivered on the Closing Date, but listing each
Subsequent
Contract transferred to the Trust pursuant to the related
Subsequent Transfer
Agreement.
"SUBSEQUENT PURCHASE AGREEMENT" means, with respect to any
Subsequent
Contracts, the agreement between the Seller and the Trust Depositor
pursuant to
which the Seller will transfer the Subsequent Contracts to the
Trust Depositor,
the form of which is attached to the Transfer and Sale Agreement as
EXHIBIT C.
"SUBSEQUENT RESERVE FUND AMOUNT" means the amount on each
Subsequent
Transfer Date equal to [_____]% of the aggregate balance of the
Subsequent
Contracts conveyed to the Trust.
"SUBSEQUENT TRANSFER AGREEMENT" means the agreement described in
Section
2.03(b) hereof.
"SUBSEQUENT TRANSFER DATE" means any date during the Funding Period
on
which Subsequent Contracts are transferred to the Trust.
"SUCCESSOR SERVICER" means a servicer described in Section
8.03(b).
"SUPPLEMENT" means the Prospectus Supplement dated [_____].
"TRANSACTION DOCUMENTS" means this Agreement, the Transfer and
Sale
Agreement, the Lockbox Agreement, the Indenture, the Trust
Agreement, the
Administration Agreement, the Note Depository Agreement, any
Subsequent Transfer
Agreement and any Subsequent Purchase Agreement.
"TRANSFER AND SALE AGREEMENT" means the Transfer and Sale Agreement
dated
as of the date hereof by and between the Seller and the Trust
Depositor, as
amended, supplemented or otherwise modified from time to time.
"TRUST" means the trust created by the Trust Agreement, comprised
of the
Trust Corpus.
"TRUST ACCOUNTS" means, collectively, the Collection Account,
the
Pre-Funding Account, the Note Distribution Account, the Reserve
Fund and the
Interest Reserve Account, or any of them.
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"TRUST ACCOUNT PROPERTY" means the Trust Accounts, all amounts
and
investments held from time to time in any Trust Account (whether in
the form of
deposit accounts, physical property, book-entry securities,
uncertificated
securities or otherwise), including the Reserve Fund Initial
Deposit, and all
proceeds of the foregoing.
"TRUST AGREEMENT" means the Trust Agreement, dated as of
[_________],
between the Trust Depositor and the Owner Trustee.
"TRUST CORPUS" has the meaning given to such term in Section
2.01(a) hereof
(and in Section 2.03(a) hereof in respect of Subsequent Contracts
and related
assets transferred to the Trust pursuant to Subsequent Transfer
Agreements).
"TRUST DEPOSITOR" has the meaning assigned such term in the
preamble
hereunder or any successor thereto.
"TRUST ESTATE" shall have the meaning specified in the Trust
Agreement.
"TRUSTEES" means the Owner Trustee and the Indenture Trustee.
"UCC" means the Uniform Commercial Code as in effect on the date
hereof AND
from time to time in the State of Illinois, PROVIDED that if by
reason of
mandatory provisions of law, the perfection or the effect of
perfection or
non-perfection or priority of the security interests in any
collateral or the
availability of any remedy hereunder is governed by the Uniform
Commercial Code
as in effect on or after the date hereof in any other jurisdiction,
"UCC" means
the Uniform Commercial Code as in effect in such other jurisdiction
for purposes
of the provisions hereof relating to such perfection or effect of
perfection or
non-perfection or priority or availability of such remedy.
"UNCOLLECTIBLE ADVANCE" means with respect to any Determination
Date and
any Contract, the amount, if any, advanced by the Servicer pursuant
to Section
7.03 which the Servicer has as of such Determination Date
determined in good
faith will not be ultimately recoverable by the Servicer from
insurance policies
on the related Motorcycle, the related Obligor or out of Net
Liquidation
Proceeds with respect to such Contract. The determination by the
Servicer that
it has made an Uncollectible Advance, or, that any Advance proposed
to be made
would be an Uncollectible Advance, shall be evidenced by an
Officer's
Certificate delivered to the Trustees.
"UNDERWRITERS" means [_____], [_____] and [_____].
"UNITED STATES" means the United States of America.
"VICE PRESIDENT" of any Person means any vice president of such
Person,
whether or not designated by a number or words before or after the
title "VICE
PRESIDENT" who is a duly elected officer of such Person.
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"[_____]" means [_____], in its individual capacity.
SECTION 1.02. USAGE OF
TERMS. With respect to all terms in this
Agreement, the singular includes the plural and the plural the
singular; words
importing any gender include the other genders; references to
"writing" include
printing, typing, lithography and other means of reproducing words
in a visible
form; references to agreements and other contractual instruments
include all
amendments, modifications and supplements thereto or any changes
therein entered
into in accordance with their respective terms and not prohibited
by this
Agreement; references to Persons include their permitted successors
and assigns;
and the term "including" means "including without limitation."
SECTION 1.03. SECTION
REFERENCES. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
SECTION 1.04.
CALCULATIONS. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder will be made
on the basis
of a 360-day year and twelve 30-day months and will be carried out
to at least
three decimal places.
SECTION 1.05. ACCOUNTING
TERMS. All accounting terms used but not
specifically defined herein shall be construed in accordance with
generally
accepted accounting principles in the United States.
ARTICLE TWO
TRANSFER OF CONTRACTS
SECTION 2.01. CLOSING.
(a) On the Closing Date, the Trust Depositor
shall transfer, assign, set over and otherwise convey to the Trust
by execution
of an assignment substantially in the form of EXHIBIT A hereto,
without recourse
other than as expressly provided herein, (i) all the right, title
and interest
of the Trust Depositor in and to the Initial Contracts listed on
the initial
List of Contracts delivered on the Closing Date (including, without
limitation,
all security interests and all rights to receive payments which are
collected
pursuant thereto after the Initial Cutoff Date, including any
liquidation
proceeds therefrom, but excluding any rights to receive payments
which were
collected pursuant thereto on or prior to the Initial Cutoff Date),
(ii) all
rights of the Trust Depositor under any physical damage or other
individual
insurance policy (and rights under a "FORCED PLACED" policy, if
any), any debt
insurance policy or any debt cancellation agreement relating to any
such
Contract, an Obligor or a Motorcycle securing such Contract, (iii)
all security
interests in each such Motorcycle, (iv) all documents contained in
the related
Contract Files, (v) all rights (but not the obligations) of the
Trust Depositor
under any related motorcycle dealer agreements between dealers
(i.e., the
originators of certain Contracts) and the Seller, (vi) all rights
of the Trust
Depositor in the Lockbox, the Lockbox Account and the related
Lockbox Agreement
to the extent they relate to the Contracts, (vii) all rights (but
not the
obligations) of the Trust Depositor under the Transfer and Sale
Agreement,
including but not limited to the Trust Depositor's rights under
Article V
thereof, (viii) the remittances, deposits
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and payments made into the Trust Accounts from time to time and
amounts in the
Trust Accounts from time to time (and any investments of such
amounts), (ix) all
rights of the Trust Depositor to certain rebates of premiums and
other amounts
relating to insurance policies, debt cancellation agreements,
extended service
contracts or other repair agreements and other items financed under
such
Contracts and (x) all proceeds and products of the foregoing (the
property in
clauses (i)-(x) above, being the "TRUST CORPUS"). Although the
Trust Depositor
and the Owner Trustee agree that such transfer is intended to be a
transfer of
ownership of the Trust Corpus, rather than the granting of a
security interest
to secure a borrowing, and that the Trust Corpus shall not be
property of the
Trust Depositor, in the event such transfer is deemed to be of a
mere security
interest to secure a borrowing, the Trust Depositor shall be deemed
to have
granted the Trust a perfected first priority security interest in
such Trust
Corpus and this Agreement shall constitute a security agreement
under applicable
law.
SECTION 2.02. CONDITIONS
TO THE CLOSING. On or before the Closing
Date, the Trust Depositor shall deliver or cause to be delivered
the following
documents to the Owner Trustee and the Indenture Trustee:
(a) The
initial List of Contracts, certified by the Chairman of the
Board, President or any Vice President of the Trust Depositor,
together
with
an assignment substantially in the form of EXHIBIT A hereto.
(b) A
certificate of an officer of the Seller substantially in the
form
of EXHIBIT B to the Transfer and Sale Agreement and of an officer
of
the
Trust Depositor substantially in the form of EXHIBIT B hereto.
(c)
Opinions of counsel for the Seller and the Trust Depositor
substantially in the form of EXHIBITS D, E and F hereto (and
including as
an
addressee thereof each Rating Agency).
(d) A
letter or letters from [_____], or another nationally
recognized accounting firm, addressed to the Seller and the
Underwriters
and
stating that such firm has reviewed a sample of the Initial
Contracts
and
performed specific procedures for such sample with respect to
certain
contract terms and which identifies those Initial Contracts which
do not
conform.
(e) Copies
of resolutions of the Board of Directors of each of the
Seller/Servicer and the Trust Depositor or of the Executive
Committee of
the
Board of Directors of each of the Seller/Servicer and the Trust
Depositor approving the execution, delivery and performance of
this
Agreement and the other Transaction Documents to which any of them
is a
party, as applicable, and the transactions contemplated hereunder
and
thereunder, certified in each case by the Secretary or an
Assistant
Secretary of the Seller/Servicer and the Trust Depositor.
(f)
Officially certified, recent evidence of due incorporation and
good
standing of each of the Seller and the Trust Depositor under the
laws
of
Nevada.
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(g)
Evidence of proper filing with the appropriate office in Nevada
of a
UCC financing statement naming the Seller, as debtor, naming the
Trust
Depositor as assignor secured party (and the Trust as secured
party) and
identifying the Contract Assets as collateral; and evidence of
proper
filing with the appropriate office in Nevada of a UCC financing
statement
naming the Trust Depositor, as debtor, naming the Trust as assignor
secured
party (and the Indenture Trustee as secured party) and identifying
the
Trust Corpus as collateral; and evidence of proper filing with
the
appropriate office in Delaware of a UCC financing statement naming
the
Trust, as debtor, and naming the Indenture Trustee, as secured
party and
identifying the Collateral as collateral.
(h) An
Officer's Certificate listing the Servicer's Servicing
Officers.
(i)
Evidence of deposit in the Collection Account of all funds
received with respect to the Initial Contracts after the Initial
Cutoff
Date
to the Closing Date, together with an Officer's Certificate from
the
Trust Depositor to the effect that such amount is correct.
(j) The
Officer's Certificate of the Seller specified in Section
2.02(h) of the Transfer and Sale Agreement.
(k)
Evidence of deposit in the Reserve Fund of the Reserve Fund
Initial Deposit by the Owner Trustee.
(l) A
fully executed Transfer and Sale Agreement.
(m) A
fully executed Trust Agreement.
(n) A
fully executed Administration Agreement.
(o) A
fully executed Indenture.
SECTION 2.03. CONVEYANCE
OF SUBSEQUENT CONTRACTS. (a) Subject to the
conditions set forth in paragraph (b) below, the Trust Depositor,
shall
transfer, assign, set over and otherwise convey to the Trust,
without recourse
other than as expressly provided herein and therein, (i) all the
right, title
and interest of the Trust Depositor in and to the Subsequent
Contracts listed on
the Subsequent List of Contracts (including, without limitation,
all security
interests and all rights to receive payments which are collected
pursuant
thereto after the related Subsequent Cutoff Date, including any
liquidation
proceeds therefrom, but excluding any rights to receive payments
which were
collected pursuant thereto on or prior to such Subsequent Cutoff
Date), (ii) all
rights of the Trust Depositor under any physical damage or other
individual
insurance policy (including a "FORCED PLACED" policy, if any), any
debt
insurance policy or any debt cancellation agreement relating to any
such
Subsequent Contract, an Obligor or a Motorcycle securing such
Subsequent
Contract, (iii) all security interests in each such Motorcycle,
(iv) all
documents contained in the related Contract Files, (v) all rights
(but not the
obligations) of the Trust Depositor under any related motorcycle
dealer
agreements between dealers (i.e., the originators of certain
Subsequent
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Contracts) and the Seller, (vi) all rights of the Trust Depositor
in the
Lockbox, the Lockbox Account and the related Lockbox Agreement to
the extent
they relate to such Subsequent Contracts, (vii) all rights (but not
the
obligations) of the Trust Depositor under the Transfer and Sale
Agreement
related to such Subsequent Contracts (to the extent not already
conveyed under
Section 2.01(a)), including but not limited to the Trust
Depositor's related
rights under Article V thereof, as well as all rights, but not the
obligations,
of the Trust Depositor under the Subsequent Purchase Agreement
related to such
Subsequent Contracts, (viii) the remittances, deposits and payments
made into
the Trust Accounts from time to time and amounts in the Trust
Accounts from time
to time related to such Subsequent Contracts (to the extent not
already conveyed
under Section 2.01(a)) (and any investments of such amounts), (ix)
all rights of
the Trust Depositor to certain rebates of premiums and other
amounts relating to
insurance policies, debt cancellation agreements, extended service
contracts or
other repair agreements and other items financed under such
Subsequent Contracts
and (x) all proceeds and products of the foregoing (the property in
clauses
(i)-(x) above, upon such transfer, becoming part of the "TRUST
CORPUS").
Although the Trust Depositor and the Owner Trustee agree that such
transfer is
intended to be a transfer of ownership, rather than the granting of
a security
interest to secure a borrowing, and that the Trust Corpus following
such
transfer shall not be property of the Trust Depositor, in the event
such
transfer is deemed to be of a mere security interest to secure a
borrowing, the
Trust Depositor shall be deemed to have granted the Owner Trustee
for the
benefit of the Trust a perfected first priority security interest
in such Trust
Corpus and this Agreement shall constitute a security agreement
under applicable
law.
(b)
The Trust Depositor
shall transfer to the Trust the Subsequent
Contracts and the other property and rights related thereto
described in
paragraph (a) above only upon the satisfaction of each of the
following
conditions on or prior to the related Subsequent Transfer Date:
(i) The
Trust Depositor shall have provided the Owner Trustee, the
Indenture Trustee, the Underwriters and the Rating Agencies with a
timely
Addition Notice and shall have provided any information
reasonably
requested by any of the foregoing with respect to the Subsequent
Contracts;
(ii) the Funding
Period shall not have terminated;
(iii) the Trust
Depositor shall have delivered to the Owner Trustee a
duly
executed written assignment (including an acceptance by the
Owner
Trustee) in substantially the form of EXHIBIT L hereto (the
"SUBSEQUENT
TRANSFER AGREEMENT"), which shall include a Subsequent List of
Contracts
listing the Subsequent Contracts;
(iv) the Trust
Depositor shall have deposited or caused to be
deposited in the Collection Account all collections received with
respect
to
the Subsequent Contracts after the related Subsequent Cutoff
Date;
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(v) as of
each Subsequent Transfer Date, neither the Seller nor the
Trust Depositor was insolvent nor will either of them have been
made
insolvent by such transfer nor is either of them aware of any
pending
insolvency;
(vi) the
applicable Subsequent Reserve Fund Amount for such
Subsequent Transfer Date shall have been deposited by the Indenture
Trustee
from
the Pre-Funding Account to the Reserve Fund;
(vii) each Rating
Agency shall have notified the Trust Depositor, the
Owner Trustee and the Indenture Trustee that following such
transfer the
Class A-1 Notes and Class A-2 Notes will be rated in the highest
rating
category by such Rating Agency and the Class B Notes will be rated
at least
its
rating as of the Closing Date by Standard & Poor's and
Moody's;
(viii) such addition will not result in a material adverse tax
consequence to the Trust or the Certificateholder as evidenced by
an
Opinion of Counsel to be delivered by the Trust Depositor to the
Owner
Trustee, Indenture Trustee, the Rating Agencies and the
Underwriters;
(ix) the Trust
Depositor shall have confirmed the satisfaction of
each
condition precedent specified in this paragraph (b);
(x) the
Trust Depositor shall have delivered to the Rating Agencies
and
the Underwriters one or more opinions of counsel (or bring-downs
of
opinions of counsel delivered on the Closing Date) with respect to
the
transfer of the Subsequent Contracts substantially in the form of
the
opinions of counsel delivered to such Persons on the Closing
Date;
(xi) no
selection procedures believed by the Trust Depositor to be
adverse to the interests of the Noteholders shall have been
utilized in
selecting the Subsequent Contracts;
(xii) the Trust
Depositor shall have delivered to the Rating Agencies
evidence that (A) the weighted average contract rate of the
Contracts
collectively, following the transfer of the Subsequent Contracts,
is not
less
than [_____]% and (B) that the weighted average calculated
remaining
term
to maturity of the Contracts collectively, following the transfer
of
the
Subsequent Contracts, does not exceed [_____] months;
(xiii) each of the representations and warranties made by the
Seller
pursuant to Section 3.01 of the Transfer and Sale Agreement with
respect to
the
Subsequent Contracts shall be true and correct as of the
related
Subsequent Transfer Date, and the Seller shall have performed
all
obligations to be performed by it hereunder on or prior to such
Subsequent
Transfer Date;
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(xiv) the Seller or
the Servicer shall, at its own expense, on or
prior to the Subsequent Transfer Date indicate in its Computer File
that
the
Subsequent Contracts identified on the Subsequent List of Contracts
in
the
Subsequent Transfer Agreement have been transferred to the
Issuer
pursuant to this Agreement and the Transfer and Sale Agreement;
and
(xv) the Seller
shall have taken any action required to maintain the
first perfected ownership interest of the Issuer in the Trust
Estate and
the
first perfected security interest of the Indenture Trustee in
the
Collateral.
(c)
The Trust Depositor
covenants to transfer (at or prior to the end of
the Funding Period) to the Trust pursuant thereto Subsequent
Contracts with an
aggregate Principal Balance equal to $[_________]; PROVIDED,
HOWEVER, that in
complying with such covenant, the Trust Depositor agrees to make no
more than
one separate transfer of Subsequent Contracts per monthly period
(as measured by
the corresponding Distribution Dates). In the event that the Trust
Depositor
shall fail to deliver and transfer to the Trust any or all of such
Subsequent
Receivables by the date on which the Funding Period ends and the
Pre-Funded
Amount is greater than $150,000 on such date, the Trust Depositor
shall cause to
be deposited into the Collection Account the amount then on deposit
in the
Pre-Funding Account; PROVIDED, HOWEVER, that the foregoing shall be
the sole
remedy of the Trust, the Owner Trustee, the Indenture Trustee and
the
Securityholders with respect to a failure of the Trust Depositor to
comply with
such covenant.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
The
Seller under the Transfer and Sale Agreement has made, and upon
execution of each Subsequent Purchase Agreement is deemed to
remake, each of the
representations and warranties set forth in EXHIBIT J hereto and
has consented
to the assignment by the Trust Depositor to the Issuer of the Trust
Depositor's
rights with respect thereto. Such representations speak as of the
execution and
delivery of this Agreement and as of the Closing Date in the case
of the Initial
Contracts, and as of the applicable Subsequent Transfer Date in the
case of the
Subsequent Contracts, but shall survive the transfer and assignment
of the
Contracts to the Trust. Pursuant to Section 2.01 of this Agreement,
the Trust
Depositor has assigned, transferred and conveyed to the Issuer as
part of the
Trust Corpus its rights under the Transfer and Sale Agreement,
including without
limitation, the representations and warranties of the Seller
therein as set
forth in EXHIBIT J attached hereto, together with all rights of the
Trust
Depositor with respect to any breach thereof including any right to
require the
Seller to reacquire any Contract in accordance with the Transfer
and Sale
Agreement. It is understood and agreed that the representations and
warranties
set forth or referred to in this Section shall survive delivery of
the Contract
Files to the Owner Trustee or any custodian.
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The
Trust Depositor hereby represents and warrants to the Trust and
the
Indenture Trustee that it has entered into the Transfer and Sale
Agreement with
the Seller, that the Seller has made the representations and
warranties in the
Transfer and Sale Agreement as set forth in EXHIBIT J hereto, that
such
representations and warranties run to and are for the benefit of
the Trust
Depositor, and that pursuant to Section 2.01 of this Agreement the
Trust
Depositor has transferred and assigned to the Trust all rights of
the Trust
Depositor to cause the Seller under the Transfer and Sale Agreement
to reacquire
Contracts in the event of a breach of such representations and
warranties.
SECTION 3.01.
REPRESENTATIONS AND WARRANTIES REGARDING THE TRUST
DEPOSITOR. By its execution of this Agreement and each Subsequent
Transfer
Agreement, the Trust Depositor represents and warrants to the
Trust, the
Indenture Trustee and the Noteholders that:
(a) ASSUMPTION OF SELLER'S
REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in EXHIBIT J are true and
correct.
(b)
ORGANIZATION AND GOOD STANDING. The Trust Depositor is a
corporation duly organized, validly existing and in good standing
under the
laws
of the jurisdiction of its organization and has the corporate power
to
own
its assets and to transact the business in which it is
currently
engaged. The Trust Depositor is duly qualified to do business as a
foreign
corporation and is in good standing in each jurisdiction in which
the
character of the business transacted by it or properties owned or
leased by
it
requires such qualification and in which the failure so to qualify
would
have
a material adverse effect on the business, properties, assets,
or
condition (financial or other) of the Trust Depositor or the
Trust.
(c)
AUTHORIZATION; VALID SALE; BINDING OBLIGATIONS. The Trust
Depositor has the power and authority to make, execute, deliver and
perform
its
obligations under this Agreement and the other Transaction
Documents to
which it is a party and all of the transactions contemplated under
this
Agreement and the other Transaction Documents to which it is a
party, and
to
create the Trust and cause it to make, execute, deliver and perform
its
obligations under this Agreement and the other Transaction
Documents to
which it is a party and has taken all necessary corporate action
to
authorize the execution, delivery and performance of this Agreement
and the
other Transaction Documents to which it is a party and to cause the
Trust
to
be created. This Agreement and the related Subsequent Transfer
Agreement, if any, shall effect a valid transfer and assignment of
the
Trust Corpus, enforceable against the Trust Depositor and creditors
of and
purchasers from the Trust Depositor. This Agreement and the
other
Transaction Documents to which the Trust Depositor is a party
constitute
the
legal, valid and binding obligation of the Trust Depositor
enforceable
in
accordance with their terms, except as enforcement of such terms
may be
limited by bankruptcy, insolvency or similar laws affecting the
enforcement
of
creditors' rights generally and by the availability of
equitable
remedies.
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(d) NO
CONSENT REQUIRED. The Trust Depositor is not required to
obtain the consent of any other party or any consent, license,
approval or
authorization from, or registration or declaration with, any
governmental
authority, bureau or agency in connection with the execution,
delivery,
performance, validity or enforceability of this Agreement or the
other
Transaction Documents to which it is a party.
(e) NO
VIOLATIONS. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a
party by the
Trust Depositor, and the consummation of the transactions
contemplated
hereby and thereby, will not violate any provision of any existing
law or
regulation or any order or decree of any court or of any Federal or
state
regulatory body or administrative agency having jurisdiction over
the Trust
Depositor or any of its properties or the Articles of Incorporation
or
Bylaws of the Trust Depositor, or constitute a material breach of
any
mortgage, indenture, contract or other agreement to which the
Trust
Depositor is a party or by which the Trust Depositor or any of the
Trust
Depositor's properties may be bound, or result in the creation
or
imposition of any security interest, lien, charge, pledge,
preference,
equity or encumbrance of any kind upon any of its properties
pursuant to
the
terms of any such mortgage, indenture, contract or other
agreement,
other than as contemplated by the Transaction Documents.
(f)
LITIGATION. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently
pending, or to
the
knowledge of the Trust Depositor threatened, against the Trust
Depositor or any of its properties or with respect to this
Agreement, the
other Transaction Documents to which it is a party or the Notes (1)
which,
if
adversely determined, would in the opinion of the Trust Depositor
have a
material adverse effect on the business, properties, assets or
condition
(financial or otherwise) of the Trust Depositor or the Trust or
the
transactions contemplated by this Agreement or the other
Transaction
Documents to which the Trust Depositor is a party or (2) seeking
to
adversely affect the federal income tax or other federal, state or
local
tax
attributes of the Certificate or Notes.
(g) STATE
OF INCORPORATION; NAME; NO CHANGES. The Trust Depositor's
state of incorporation is the State of Nevada. The Trust
Depositor's exact
legal name is as set forth in the first paragraph of this
Agreement. The
Trust Depositor has not changed its name, whether by amendment of
its
Articles of Incorporation, by reorganization or otherwise, and has
not
changed the location of its place of business, within the four
months
preceding the Closing Date.
(h)
SOLVENCY. The Trust Depositor, after giving effect to the
conveyances made by it hereunder, is Solvent.
Such representations speak as of the execution and delivery of this
Agreement
and as of the Closing Date in the case of the Initial Contracts,
and as of the
applicable Subsequent Transfer
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Date in the case of the Subsequent Contracts, but shall survive the
transfer and
assignment of the Contracts to the Trust.
SECTION 3.02.
REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER.
The Servicer represents and warrants to the Trust, the Indenture
Trustee and the
Noteholders that:
(a)
ORGANIZATION AND GOOD STANDING. The Servicer is a corporation
duly
organized, validly existing and in good standing under the laws of
the
jurisdiction of its organization and has the corporate power to own
its
assets and to transact the business in which it is currently
engaged. The
Servicer is duly qualified to do business as a foreign corporation
and is
in
good standing in each jurisdiction in which the character of
the
business transacted by it or properties owned or leased by it
requires such
qualification and in which the failure so to qualify would have a
material
adverse effect on the business, properties, assets, or condition
(financial
or
otherwise) of the Servicer or the Trust. The Servicer is
properly
licensed in each jurisdiction to the extent required by the laws of
such
jurisdiction to service the Contracts in accordance with the terms
hereof
other than such licenses the failure to obtain would not have a
material
adverse effect on the business, properties, assets, or condition
(financial
or
otherwise) of the Servicer or on the ability of the Servicer to
perform
its
obligations hereunder.
(b)
AUTHORIZATION; BINDING OBLIGATIONS. The Servicer has the power
and
authority to make, execute, deliver and perform this Agreement and
the
other Transaction Documents to which the Servicer is a party and
all of the
transactions contemplated under this Agreement and the other
Transaction
Documents to which the Servicer is a party, and has taken all
necessary
corporate action to authorize the execution, delivery and
performance of
this
Agreement and the other Transaction Documents to which the Servicer
is
a
party. This Agreement and the other Transaction Documents to which
the
Servicer is a party constitute the legal, valid and binding
obligation of
the
Servicer enforceable in accordance with their terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency
or
similar laws affecting the enforcement of creditors' rights
generally and
by
the availability of equitable remedies.
(c) NO
CONSENT REQUIRED. The Servicer is not required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any
governmental
authority, bureau or agency in connection with the execution,
delivery,
performance, validity or enforceability of this Agreement and the
other
Transaction Documents to which the Servicer is a party.
(d) NO
VIOLATIONS. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Servicer
is a
party by the Servicer will not violate any provisions of any
existing law
or
regulation or any order or decree of any court or of any Federal
or
state regulatory body or administrative agency having jurisdiction
over the
Servicer or any of its properties or the Articles of Incorporation
or
Bylaws of the Servicer, or constitute a material breach of any
mortgage,
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indenture, contract or other agreement to which the Servicer is a
party or
by
which the Servicer or any of the Servicer's properties may be
bound, or
result in the creation of or imposition of any security interest,
lien,
pledge, preference, equity or encumbrance of any kind upon any of
its
properties pursuant to the terms of any such mortgage, indenture,
contract
or
other agreement, other than this Agreement.
(e)
LITIGATION. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently
pending, or to
the
knowledge of the Servicer threatened, against the Servicer or any
of
its
properties or with respect to this Agreement, any other
Transaction
Document to which the Servicer is a party which, if adversely
determined,
would in the opinion of the Servicer have a material adverse effect
on the
business, properties, assets or condition (financial or otherwise)
of the
Servicer or the Trust or the transactions contemplated by this
Agreement or
any
other Transaction Document to which the Servicer is a party.
ARTICLE FOUR
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
SECTION 4.01. CUSTODY OF
CONTRACTS. (a) Subject to the terms and
conditions of this Section 4.01, the contents of each Contract File
shall be
held by the Servicer, or its custodian, for the benefit of, and as
agent for,
the Trust as the owner thereof and the Indenture Trustee.
(b)
The Servicer agrees to
maintain the related Contract Files at its
offices where they are currently maintained, or at such other
offices of the
Servicer in the State of Nevada as shall from time to time be
identified to the
Trustees by written notice. The Servicer may temporarily move
individual
Contract Files or any portion thereof without notice as necessary
to conduct
collection and other servicing activities in accordance with its
customary
practices and procedures; PROVIDED, HOWEVER, that the Servicer will
take all
action necessary to maintain the perfection of the Trust's interest
in the
Contracts and the proceeds thereof. It is intended that, by the
Servicer's
agreement pursuant to Section 4.01(a) above and this Section
4.01(b), the
Trustees shall be deemed to have possession of the Contract Files
for purposes
of Section 9-313 of the Uniform Commercial Code of the State in
which the
Contract Files are located.
(c)
As custodian, the
Servicer shall have the following powers and perform
the following duties:
(i) hold,
or cause the Servicer's custodian to hold, the Contract
Files on behalf of the Trust, maintain accurate records pertaining
to each
Contract to enable it to comply with the terms and conditions of
this
Agreement, maintain a current inventory thereof and certify to the
Owner
Trustee and the Indenture Trustee annually that it, or its
custodian,
continues to maintain possession of such Contract Files;
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(ii) implement
policies and procedures in writing and signed by a
Servicing Officer with respect to persons authorized to have access
to the
Contract Files on the Servicer's premises and the receipting for
Contract
Files taken from their storage area by an employee of the Servicer
for
purposes of servicing or any other purposes;
(iii) attend to all
details in connection with maintaining custody of
the
Contract Files on behalf of the Trust;
(iv) at all
times maintain, or cause the Servicer's custodian to
maintain, the original of the fully executed Contract and store
such
original Contract in a fireproof vault except as may be necessary
to
conduct collection and servicing activities in accordance with
its
customary practices and procedures; and
(v) as
promptly as practicable after the Closing Date (or
Subsequent Transfer Date, as the case may be), and in any event
within 60
days
thereof, deliver an Officer's Certificate to the Owner Trustee and
the
Indenture Trustee certifying that as of a date no earlier than the
Closing
Date
(or Subsequent Transfer Date, as the case may be) it has conducted
an
inventory of the Contract Files (which in the case of Subsequent
Contracts,
need
be only of the Contract Files related to such Subsequent
Contracts)
and
that there exists a Contract File for each Contract and stating
all
exceptions to such statement, if any.
(d)
In performing its
duties under this Section 4.01, the Servicer agrees
to act with reasonable care, using that degree of skill and care
that it
exercises with respect to similar contracts for the installment
purchase of
consumer goods owned and/or serviced by it, and in any event with
no less degree
of skill and care than would be exercised by a prudent servicer of
motorcycle
conditional sales contracts and promissory notes and security
agreements. The
Servicer shall promptly report to the Owner Trustee and the
Indenture Trustee
any failure by it, or its custodian, to hold the Contract Files as
herein
provided and shall promptly take appropriate action to remedy any
such failure.
In acting as custodian of the Contract Files, the Servicer further
agrees not to
assert any legal or beneficial ownership interest in the Contracts
or the
Contract Files, except as provided in Section 5.06. The Servicer
agrees to
indemnify the Noteholders, the Certificateholder, the Owner Trustee
and the
Indenture Trustee for any and all liabilities, obligations, losses,
damages,
payments, costs, or expenses of any kind whatsoever which may be
imposed on,
incurred by or asserted against the Noteholders, the
Certificateholder, the
Owner Trustee and the Indenture Trustee as the result of any act or
omission by
the Servicer relating to the maintenance and custody of the
Contract Files;
PROVIDED, HOWEVER, that the Servicer will not be liable for any
portion of any
such amount resulting from the gross negligence or willful
misconduct of any
Noteholder, Certificateholder, the Owner Trustee or the Indenture
Trustee. The
Trustees shall have no duty to monitor or otherwise oversee the
Servicer's
performance as custodian hereunder.
SECTION 4.02. FILING. On
or prior to the Closing Date, the Servicer
shall cause the UCC financing statement(s) referred to in Section
2.02(g) hereof
to be filed and from time to
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time the Servicer shall take and cause to be taken such actions and
execute such
documents as are necessary or desirable or as the Owner Trustee or
Indenture
Trustee may reasonably request to perfect and protect the Trust's
first priority
perfected interest in the Trust Corpus against all other persons,
including,
without limitation, the filing of financing statements, amendments
thereto and
continuation statements, the execution of transfer instruments and
the making of
notations on or taking possession of all records or documents of
title. All
financing statements filed or to be filed against the Seller in
favor of the
Trust Depositor or the Trust in connection herewith describing the
Contract
Assets as collateral shall contain a statement to the following
effect: "A
purchase of or security interest in any collateral described in
this financing
statement, except as permitted in the Transfer and Sale Agreement
or Sale and
Servicing Agreement, will violate the rights of the Secured
Party."
SECTION 4.03. NAME
CHANGE OR RELOCATION. (a) During the term of this
Agreement, neither the Seller nor the Trust Depositor shall change
its name,
identity or structure or change its state of incorporation without
first giving
at least 30 days' prior written notice to the Owner Trustee and the
Indenture
Trustee.
(b)
If any change in
either the Seller's or the Trust Depositor's name,
identity or structure or other action would make any financing or
continuation
statement or notice of lien filed under this Agreement seriously
misleading
within the meaning of applicable provisions of the UCC or any title
statute, the
Servicer, no later than five days after the effective date of such
change, shall
file such amendments as may be required to preserve and protect the
Trust's
interests in the Trust Corpus and the proceeds thereof. In
addition, neither the
Seller nor the Trust Depositor shall change its state of
incorporation unless it
has first taken such action as is advisable or necessary to
preserve and protect
the Trust's interest in the Trust Corpus. Promptly after taking any
of the
foregoing actions, the Servicer shall deliver to the Owner Trustee
and the
Indenture Trustee an opinion of counsel reasonably acceptable to
the Owner
Trustee and the Indenture Trustee stating that, in the opinion of
such counsel,
all financing statements or amendments necessary to preserve and
protect the
interests of the Trust in the Trust Corpus and the Indenture
Trustee in the
Collateral have been filed, and reciting the details of such
filing.
SECTION 4.04. COSTS AND
EXPENSES. The Servicer agrees to pay all
reasonable costs and disbursements in connection with the
perfection and the
maintenance of perfection, as against all third parties, of the
Trust's right,
title and interest in and to the Contracts (including, without
limitation, the
security interest in the Motorcycles granted thereby).
ARTICLE FIVE
SERVICING OF CONTRACTS
SECTION 5.01.
RESPONSIBILITY FOR CONTRACT ADMINISTRATION. The Servicer
will have the sole obligation to manage, administer, service and
make
collections on the Contracts and perform or cause to be performed
all
contractual and customary undertakings of the holder of the
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Contracts to the Obligor. The Owner Trustee, at the written request
of a
Servicing Officer, shall furnish the Servicer with any powers of
attorney or
other documents necessary or appropriate in the opinion of the
Owner Trustee to
enable the Servicer to carry out its servicing and administrative
duties
hereunder. The Servicer is hereby appointed the servicer hereunder
until such
time as any Service Transfer may be effected under Article
VIII.
SECTION 5.02. STANDARD
OF CARE. In managing, administering, servicing
and making collections on the Contracts pursuant to this Agreement,
the Servicer
will exercise that degree of skill and care consistent with the
skill and care
that the Servicer exercises with respect to similar contracts
serviced by the
Servicer, and, in any event no less degree of skill and care than
would be
exercised by a prudent servicer of motorcycle conditional sales
contracts and
promissory note and security agreements; PROVIDED, HOWEVER, that
notwithstanding
the foregoing, the Servicer shall not release or waive the right to
collect the
unpaid balance of any Contract except that with respect to a
Contract that has
become a Defaulted Contract, the Servicer, consistent with its
collection
policies, may release or waive the right to collect the unpaid
balance of such
Defaulted Contract in an effort to maximize collections
thereon.
SECTION 5.03. RECORDS.
The Servicer shall, during the period it is
servicer hereunder, maintain such books of account and other
records as will
enable the Owner Trustee and the Indenture Trustee to determine the
status of
each Contract.
SECTION 5.04.
INSPECTION. (a) At all times during the term hereof, the
Servicer shall afford the Owner Trustee and the Indenture Trustee
and their
respective authorized agents reasonable access during normal
business hours to
the Servicer's records relating to the Contracts and will cause its
personnel to
assist in any examination of such records by the Owner Trustee or
the Indenture
Trustee, or such authorized agents and allow copies of the same to
be made. The
examination referred to in this Section will be conducted in a
manner which does
not unreasonably interfere with the Servicer's normal operations or
customer or
employee relations. Without otherwise limiting the scope of the
examination the
Owner Trustee or the Indenture Trustee may, using generally
accepted audit
procedures, verify the status of each Contract and review the
Computer File and
records relating thereto for conformity to Monthly Reports prepared
pursuant to
Article IX and compliance with the standards represented to exist
as to each
Contract in this Agreement.
(b)
At all times during
the term hereof, the Servicer shall keep available
a copy of the List of Contracts at its principal executive office
for inspection
by the Trustees.
SECTION 5.05. TRUST
ACCOUNTS. (a) On or before the Closing Date, the
Trust Depositor shall establish the Trust Accounts, ea
