Exhibit 10.2
SALE AND SERVICING AGREEMENT
among
HARLEY-DAVIDSON MOTORCYCLE TRUST
2005-4,
as Issuer,
HARLEY-DAVIDSON CUSTOMER FUNDING
CORP.,
as Trust Depositor,
HARLEY-DAVIDSON CREDIT CORP.,
as Servicer
and
THE BANK OF NEW YORK TRUST COMPANY,
N.A.,
as Indenture Trustee
Dated as of November 1, 2005
Table of Contents
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EXHIBITS
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SALE AND SERVICING AGREEMENT, dated
as of November 1, 2005, among Harley-Davidson Motorcycle Trust
2005-4 (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” ), The Bank
of New York Trust Company, N.A. (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 a pool 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:
“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 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. At the time of initial issuance of the Securities,
the initial aggregate principal amount of the Securities will equal
the initial Pool Balance.
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“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 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 Purchase 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
Servicer in connection with an optional purchase of the Contracts
pursuant to Section 7.10, (vi) the interest component of the
aggregate of the Purchase Prices for Contracts purchased by the
Servicer pursuant to Section 7.11, 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 Purchase Prices for
Contracts reacquired by the Trust Depositor pursuant to Section
7.08, (iv) the principal component of all amounts paid by the
Servicer in connection with an optional purchase of the Contracts
pursuant to Section 7.10, and (v) the principal component of the
aggregate of the Purchase Prices for Contracts purchased by the
Servicer pursuant to Section 7.11.
“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.
“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 November 8, 2005 relating to the
Harley-Davidson Motorcycle Trusts.
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“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.
“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
Notes” means,
collectively, the Class A-1 Notes and the Class A-2
Notes.
“Class A-1 Final
Distribution Date” means the November 2010 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 4.78%
per annum (computed on the basis of a 360-day year of twelve 30-day
months).
“Class A-2 Final
Distribution Date” means the June 2012 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 4.85%
per annum (computed on the basis of a 360-day year of twelve 30-day
months).
“Class B Final Distribution
Date” means the
June 2013 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.
“Class B
Rate” means 5.06%
per annum (computed on the basis of a 360-day year of twelve 30-day
months).
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“Clearing
Agency” shall have
the meaning specified in the Indenture.
“Closing
Date” means
November 16, 2005.
“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 transferred to the Trust by the
Trust Depositor pursuant to this 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 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,
and includes, without limitation, all related security interests
and any and all rights to receive payments which are collected
pursuant thereto after the Cutoff Date, but excluding any rights to
receive payments which are collected pursuant thereto on or prior
to the 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
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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 Cutoff Date through
the end of the related Due Period by (ii) the Principal Balance of
the Contracts as of the Cutoff Date.
“Cutoff
Date” means as of
the close of business on November 2, 2005.
“ 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 Business
Day, with the first such Distribution Date hereunder being December
15, 2005.
“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.
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“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 Cutoff Date to and including November 30, 2005.
“Eligible
Account” means a
segregated 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
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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.
“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.
“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
.0035% and the Principal Balance of the Contracts as of the
beginning of the related Due 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
$234,000,000.
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“Initial Class A-2 Note
Balance” means
$73,937,000.
“Initial Class B Note
Balance” means
$17,063,000.
“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.
“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 to be deposited into the Collection Account on such
Distribution Date pursuant to Section 5.05(b).
“Issuer”
means the Harley-Davidson Motorcycle
Trust 2005-4.
“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.
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“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 List of Contracts
reflecting the Contracts transferred to the Trust on the Closing
Date and which list (a) identifies each Contract and (b) sets forth
as to each Contract (i) the Principal Balance as of the 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, Bank One, National Association and The Bank
of New York Trust Company, 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.
“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.
“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.
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“Monthly Servicing
Fee” means, as to
any Distribution Date, one-twelfth of the product of 1.00% 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 December 15, 2005, as of the 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 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.
“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.
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“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,
as of the close of any Distribution Date, the excess of the Note
Principal Distributable Amount with respect to such Distribution
Date over the amount in respect of principal that is actually
deposited in the Note Distribution Account on such Distribution
Date.
“Note Principal
Distributable Amount” means, with respect to any Distribution Date,
the sum of the Principal Distributable Amount with respect to such
Distribution Date and the Note Principal Carryover Shortfall as of
the close of the immediately preceding Distribution Date;
provided, however , that the Note Principal Distributable
Amount shall not exceed the outstanding principal amount of the
Notes; and provided, further , that the 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, (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, and
(iii) on the Class B Final Distribution Date shall not be less than
the amount that is necessary (after giving effect to the 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
on the Class B notes to zero.
“Note
Register” shall
have the meaning specified in the Indenture.
“ 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.
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“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.
“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 Cutoff Date, 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 is purchased by the Servicer pursuant to Section 7.11
hereof, or if (y) the Servicer gives notice of its intent to
purchase the Contracts in connection with an optional termination
of the Trust pursuant to 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
12
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.
“ Purchase Price”
means, with respect to a Contract to be reacquired or purchased
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.
“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.
“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.
13
“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
$2,437,500.00.
“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) 2.50% 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) 3.00% 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) 3.50% 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)
4.00% 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) 3.00%
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) 2.75% 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 equal to or greater than (a) 1.25% 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) 2.00% 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) 2.50% 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) 2.75% with
respect to any Distribution Date occurring after the third
anniversary of the Closing Date.
14
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.
“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.
“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, an
amount equal to the excess (if any) of (a) the sum of the amounts
payable pursuant to (1) clauses (v) and (vi) of Section 7.05(a),
(2) clauses (i) and (ii) of Section 7.05(b) or (3) clauses (i)
through (iv) of Section 7.05(c), as applicable, over (b) 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.
15
“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)
2.00% 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 6.00% of the
Principal Balance of the Contracts in the Trust as of the last day
of the immediately preceding Due Period; and
(b)
1.00% 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, Inc., or any successor thereto.
“Successor
Servicer” means a
servicer described in Section 8.03(b).
“Supplement” means the Prospectus Supplement dated November
8, 2005.
“Transaction
Documents” means
this Agreement, the Transfer and Sale Agreement, the Lockbox
Agreement, the Indenture, the Trust Agreement, the Administration
Agreement and the Note Depository 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.
16
“Trust”
means the trust created by the
Trust Agreement, comprised of the Trust Corpus.
“Trust
Accounts” means,
collectively, the Collection Account, the Note Distribution Account
and the Reserve Fund, or any of them.
“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 November 1, 2005, between the
Trust Depositor and the Owner Trustee.
“Trust
Corpus” has the
meaning given to such term in Section 2.01(a) hereof.
“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 Wachovia Capital Markets, LLC,
BNP Paribas Securities Corp., and J.P. Morgan Securities
Inc.
“United
States” means the
United States of America.
17
“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.
“WTC”
means Wilmington Trust Company, 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
Contracts listed on the 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 Cutoff Date, including any liquidation proceeds
therefrom, but excluding any rights to receive payments which were
collected pursuant thereto on or prior to the 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)
18
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
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 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 Ernst &
Young LLP, or another nationally recognized accounting firm,
addressed to the Seller and the Underwriters and stating that such
firm has reviewed a sample of the Contracts and performed specific
procedures for such sample with respect to certain contract terms
and which identifies those 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
19
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.
(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
Contracts after the 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.
[Intentionally
Omitted] .
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
The Seller under the Transfer and
Sale Agreement has made each of the representations and warranties
set forth in Exhibit J hereto and has consented to the
assignment by the Trust
20
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, 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.
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, 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
21
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 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.
(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
22
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, 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
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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,
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.
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(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;
(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 in accordance with its customary practices and
procedures, 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 , 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 it has conducted an inventory of the Contract Files 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
25
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 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).
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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
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.
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Section 5.05.
Trust
Accounts . (a) On or before the
Closing Date, the Trust Depositor shall establish the Trust
Accounts, each with and in the name of the Indenture Trustee for
the benefit of the Noteholders. The Indenture Trustee is
hereby required to ensure that each of the Trust Accounts is
established and maintained as an Eligible Account.
(b)
The Indenture Trustee shall deposit
(or the Servicer shall deposit, with respect to payments by or on
behalf of the Obligors received directly by the Servicer), without
deposit into any intervening account, into the Collection Account
as promptly as practical (but in any case not later than the second
Business Day following the receipt thereof):
(i)
With respect to principal and
interest on the Contracts received after the Cutoff Date (which for
the purpose of this paragraph (b)(i) shall include those monies in
the Lockbox Account allocable to principal and interest on the
Contracts), all such amounts received by the Owner Trustee or
Servicer;
(ii)
All Net Liquidation Proceeds related
to the Contracts;
(iii)
The aggregate of the Purchase Prices
for Contracts reacquired by the Trust Depositor as described in
Section 7.08;
(iv)
All Advances made by the Servicer
pursuant to Section 7.03(a);
(v)
All amounts paid by the Servicer in
connection with an optional purchase of the Contracts described in
Section 7.10;
(vi)
The aggregate of the Purchase Prices
for Contracts purchased by the Servicer as described in Section
7.11; and
(vii)
All amounts received in respect of
interest, dividends, gains, income and earnings on investments of
funds in the Trust Accounts (except the Reserve Fund) as
contemplated herein.
(c)
[Intentionally Omitted].
(d)
The Servicer shall direct in
writing, and the Indenture Trustee shall invest the amounts in the
Trust Accounts in Qualified Eligible Investments that are payable
on demand or that mature not later than one Business Day prior to
the next succeeding Distribution Date. Once such funds are
invested, the Indenture Trustee shall not change the investment of
such funds. Any loss on such investments shall be deposited
in the applicable Trust Account by the Servicer out of its own
funds immediately as realized. Funds in the Trust Accounts
not so invested must be insured to the extent permitted by law by
the Bank Insurance Fund or the Savings Association Insurance Fund
of the Federal Deposit Insurance Corporation. Subject to the
restrictions herein, the Indenture Trustee may purchase a Qualified
Eligible Investment from itself or an Affiliate.
Subject to the other provisions hereof, the Indenture Trustee shall
have sole control over each such investment and the income thereon,
and any certificate or other instrument evidencing any
28
such investment, if any, shall be delivered
directly to the Indenture Trustee or its agent, together with each
document of transfer, if any, necessary to transfer title to such
investment to the Indenture Trustee in a manner which complies with
this Section 5.05(d). All interest, dividends, gains upon
sale and other income from, or earnings on, investments of funds in
the Trust Accounts (other than the Reserve Fund) shall be deposited
in the Collection Account pursuant to Section 5.05(b) and
distributed on the next Distribution Date pursuant to Section
7.05. The Trust Depositor and the Trust agree and acknowledge
that the Indenture Trustee is to have “control”
(within the meaning of Section 9-106 of the UCC) of collateral
comprised of “Investment Property” (within the
meaning of Section 9-102 of the UCC) for all purposes of this
Agreement.
(e)
Notwithstanding anything to the
contrary herein, the Servicer may remit payments on the Contracts
and Net Liquidation Proceeds to the Collection Account in next-day
funds or immediately available funds no later than 10:00 a.m.,
Central time, on the Business Day prior to the next succeeding
Distribution Date, but only for so long as the short-term debt
security rating of the Servicer is at least “P-1” by
Moody’s and “A-1” by Standard &
Poor’s.
(f)
The Servicer shall apply collections
received in respect of a Contract as follows:
(i)
First, to accrued interest with
respect to such Contract;
(ii)
Second, to pay any expenses and
unpaid late charges or extension fees (if any) due and owing under
such Contract; and
(iii)
Third, to principal to the extent
due and owing under such Contract.
(g)
Any collections on a Contract
remaining after application by the Servicer in accordance with the
provisions of Section 5.05(f) shall constitute an excess payment
(an “ Excess Payment ”). Excess Payments
constituting prepayments of principal shall be applied as a
prepayment of the Principal Balance of such Contract. All
other Excess Payments shall be permitted to be retained by the
Servicer.
(h)
The Servicer will, from time to time
as provided herein, be permitted to withdraw or request the
withdrawal from the Collection Account any amount deposited therein
that, based on the Servicer’s good-faith determination, was
deposited in error.
Section 5.06.
Enforcement
. (a) The
Servicer will, consistent with Section 5.02, act with respect to
the Contracts in such manner as will maximize the receipt of all
payments called for under the terms of the Contracts. The
Servicer shall use its best efforts to cause Obligors to make all
payments on the Contracts to the Lockbox Account (either directly
by remitting payments to the Lockbox, or indirectly by making
payments through direct debit, the telephone or the internet to an
account of the Servicer which payments will be subsequently
transferred from such account to the Lockbox Account). The
Servicer will act in a commercially reasonable manner with respect
to the repossession and disposition of a Motorcycle following a
default under the related Contract with a view to realizing
proceeds at least equal to the Motorcycle’s fair market
value. If the Servicer determines that eventual payment in
full of a Contract is unlikely,
29
the Servicer will follow its normal practices
and procedures to recover all amounts due upon that Contract,
including repossessing and disposing of the related Motorcycle at a
public or private sale or taking other action permitted by
applicable law. The Servicer will be entitled to recover all
reasonable out-of-pocket expenses incurred by it in liquidating a
Contract and disposing of the related Motorcycle.
(b)
The Servicer may sue to enforce or
collect upon Contracts, in its own name, if possible, or as agent
for the Trustees. If the Servicer elects to commence a legal
proceeding to enforce a Contract, the act of commencement shall be
deemed to be an automatic assignment of the Contract to the
Servicer for purposes of collection only. If, however, in any
enforcement suit or legal proceeding it is held that the Servicer
may not enforce a Contract on the ground that it is not a real
party in interest or a holder entitled to enforce the Contract, the
Owner Trustee (or the Indenture Trustee) on behalf of the Trust
shall, at the Servicer’s expense, take such steps as the
Servicer deems reasonably necessary to enforce the Contract,
including bringing suit in its name or the names of the Noteholders
under the Indenture and the Certificateholder as owner of the
Trust.
(c)
The Servicer shall exercise any
rights of recourse against third persons that exist with respect to
any Contract in accordance with the Servicer’s usual
practice. In exercising recourse rights, the Servicer is
authorized on the Trust’s behalf to reassign the Defaulted
Contract or the related Motorcycle to the Person against whom
recourse exists at the price set forth in the document creating the
recourse; provided, however, the Servicer in exercising
recourse against any third persons as described in the immediately
preceding sentence shall do so in such manner as to maximize the
aggregate recovery with respect to the Contract; and provided
further, however, that notwithstanding the foregoing the
Servicer in its capacity as such may exercise such recourse only if
such Contract (i) was not required to be reacquired by the Seller
pursuant to the Transfer and Sale Agreement or (ii) was required to
be reacquired by the Seller and the Seller has defaulted on such
reacquisition obligation.
(d)
The Servicer will not permit any
rescission or cancellation of any Contract due to the acts or
omissions of the Trust Depositor.
(e)
Subject to Section 5.02, the
Servicer may grant extensions, rebates or adjustments on a
Contract; provided, however, that if the Servicer extends the date
for final payment by the Obligor of any Contract beyond the Class B
Final Distribution Date, it shall promptly purchase such Contract
pursuant to Section 7.11.
(f)
The Servicer will not add to the
outstanding Principal Balance of any Contract the premium of any
physical damage or other individual insurance on a Motorcycle
securing such Con
