Exhibit 10.2
SALE AND SERVICING AGREEMENT
among
HARLEY-DAVIDSON MOTORCYCLE TRUST 2005-2,
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 May 1, 2005
Table of Contents
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EXHIBITS
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SALE AND SERVICING AGREEMENT, dated
as of May 1, 2005, among Harley-Davidson Motorcycle Trust
2005-2 (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 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:
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 May 23, 2005 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
Notes” means,
collectively, the Class A-1 Notes and the Class A-2
Notes.
“Class A-1 Final
Distribution Date” means the January 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 3.79%
per annum (computed on the basis of a 360-day year of twelve 30-day
months).
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“Class A-2 Final
Distribution Date” means the February 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 4.07%
per annum (computed on the basis of a 360-day year of twelve 30-day
months).
“Class B Final
Distribution Date” means the February 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 4.27%
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
May 31, 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 any Subsequent Purchase Agreement)
and transferred to the Trust by the Trust Depositor pursuant to
this 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
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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.
“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).
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“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 June 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.
“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 May 31,
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
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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.
“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
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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
.00185% 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
$487,000,000.
“Initial Class A-2
Note Balance” means
$251,180,000.
“Initial Class B Note
Balance” means
$36,820,000.
“Initial
Contracts” means
those Contracts conveyed to the Trust on the Closing
Date.
“Initial Cutoff
Date” means as of
the close of business on May 18, 2005.
“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,
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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
$1,546,161.85.
“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).
“Issuer”
means the Harley-Davidson Motorcycle
Trust 2005-2.
“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 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, 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.
“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.
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“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 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 June 15, 2005, 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.
“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.
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“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,
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
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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.
“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.
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“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.
“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);
14
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.
“ 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
$5,396,598.75.
“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
15
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.
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.
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“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, 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)
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
17
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.
“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 1.00% 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
May 23, 2005.
“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.
18
“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.
“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 April 29, 2005, 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 J.P. Morgan Securities Inc.,
ABN AMRO Incorporated, BNP Paribas Securities Corp., Citigroup
Global Markets Inc. and Wachovia Capital Markets, LLC.
“United
States” means the
United States of America.
19
“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.
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)
20
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 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
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 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
21
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
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
22
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
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;
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(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;
(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 10.83% 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 76
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
24
Seller shall have performed all
obligations to be performed by it hereunder on or prior to such
Subsequent Transfer Date;
(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 $235,340,125.11; 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.
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
25
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 3.0
1.
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
26
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 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.
27
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.
Section 3.0
2.
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
28
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 4.0
1.
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;
29
(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 4.0
2.
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
30
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 4.0
3.
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 4.0
4.
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).
Section 5.0
1.
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
31
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 5.0
2.
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 5.0
3.
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 5.0
5.
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
32
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 Initial Cutoff Date or
Subsequent Cutoff Date, as applicable (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 Reacquisition
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 Trust
Depositor in connection with an optional reacquisition of the
Contracts described in Section 7.10;
(vi)
All amounts realized in respect of
Carrying Charges transferred from the Interest Reserve Account as
contemplated in Section 7.03(b); 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 and the
Pre-Funding Account) as contemplated herein.
(c)
The Indenture Trustee shall, if
amounts remain on deposit in the Pre-Funding Account at the
expiration of the Funding Period, cause to be deposited into the
Note Distribution Account the amount then in deposit in the
Pre-Funding Account.
(d)
If the Servicer so directs, in
writing, 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 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
33
Accounts (other than the Reserve Fund and the
Pre-Funding Account) 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
secur
