EXHIBIT 10.3
FORM OF
POOLING AND SERVICING AGREEMENT
BY AND AMONG
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
as Trust Depositor
HARLEY-DAVIDSON CREDIT CORP.
as Servicer
AND
[_______________]
not in its individual capacity but solely as Trustee of
HARLEY-DAVIDSON MOTORCYCLE TRUST [___]
Dated as of [________]
CERTIFICATES FOR HARLEY-DAVIDSON MOTORCYCLE CONTRACTS
[_____] GRANTOR TRUST
[___]% CLASS A CERTIFICATES
[___]% CLASS B CERTIFICATES
TABLE OF CONTENTS
TABLE OF CONTENTS.................................................................................................2
ARTICLE I.........................................................................................................6
Section 1.01. General.......................................................................................6
Section 1.02. Specific Terms................................................................................6
ARTICLE II.......................................................................................................24
Section 2.01. Closing......................................................................................24
Section 2.02. Conditions to the Closing....................................................................25
Section 2.03. Acceptance by Trustee........................................................................26
Section 2.04. Conveyance of Subsequent Contracts...........................................................26
Section 2.05. Tax Treatment................................................................................29
ARTICLE III......................................................................................................29
REPRESENTATIONS AND WARRANTIES...................................................................................29
Section 3.01. Representations and Warranties Regarding the Trust Depositor.................................29
Section 3.02. Representations and Warranties Regarding the Servicer........................................31
ARTICLE IV.......................................................................................................32
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS;.....................................................32
Section 4.01. Custody of Contracts.........................................................................32
Section 4.02. Filing.......................................................................................34
Section 4.03. Name Change or Relocation....................................................................34
Section 4.04. Chief Executive Office.......................................................................35
Section 4.05. Costs and Expenses...........................................................................35
ARTICLE V........................................................................................................35
SERVICING OF CONTRACTS...........................................................................................35
Section 5.01. Responsibility for Contract Administration...................................................35
Section 5.02. Standard of Care.............................................................................35
Section 5.03. Records......................................................................................35
Section 5.04. Inspection...................................................................................35
Section 5.05. Trust Accounts...............................................................................36
Section 5.06. Enforcement..................................................................................38
Section 5.07. Trustee to Cooperate.........................................................................39
Section 5.08. Costs and Expenses...........................................................................40
Section 5.09. Maintenance of Security Interests in Motorcycles.............................................40
ARTICLE VI.......................................................................................................40
REPORTS..........................................................................................................40
Section 6.01. Monthly Reports..............................................................................40
Section 6.02. Officer's Certificate........................................................................41
Section 6.03. Other Data...................................................................................41
Section 6.04. Annual Report of Accountants.................................................................41
Section 6.05. Annual Statement of Compliance from Servicer.................................................42
Section 6.06. Statements to Certificateholders:............................................................42
ARTICLE VII......................................................................................................44
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SERVICER DEFAULTS; SERVICE TRANSFER..............................................................................44
Section 7.01. Servicer Defaults............................................................................44
Section 7.02. Service Transfer.............................................................................45
Section 7.03. [Reserved]...................................................................................46
Section 7.04. Notification to Certificateholders...........................................................46
Section 7.05. Effect of Transfer...........................................................................47
Section 7.06. Database File................................................................................47
Section 7.07. Successor Servicer Indemnification...........................................................47
ARTICLE VIII.....................................................................................................50
PAYMENTS AND RESERVE FUND........................................................................................50
Section 8.01. Monthly Payments.............................................................................50
Section 8.02. Fees.........................................................................................50
Section 8.03. Advances; Realization of Carrying Charge.....................................................50
Section 8.04. Payments.....................................................................................51
Section 8.05. Withdrawal from Reserve Fund to Cover a Shortfall............................................52
Section 8.06. Repurchases of Contracts for Breach of Representations and Warranties........................52
Section 8.07. Reassignment of Repurchased Contracts........................................................53
ARTICLE IX.......................................................................................................54
THE CERTIFICATES.................................................................................................54
Section 9.01 The Certificates.............................................................................54
Section 9.02 Authentication of Certificates...............................................................54
Section 9.03 Registration of Transfer and Exchange........................................................54
Section 9.04 Certain Transfer Restrictions. [RESERVED]....................................................55
Section 9.05 Mutilated, Destroyed, Lost or Stolen Certificates............................................55
Section 9.06 Persons Deemed Owners........................................................................56
Section 9.07 Access to List of Certificateholders' Names and Addresses....................................56
Section 9.08 Book-Entry Certificates......................................................................56
Section 9.09 Notices to Clearing Agency...................................................................57
ARTICLE X........................................................................................................57
INDEMNITIES......................................................................................................57
Section 10.01. Servicer Indemnification......................................................................57
Section 10.02. Liabilities to Obligors.......................................................................58
Section 10.03. Tax Indemnification...........................................................................58
Section 10.04. Servicer's Indemnities........................................................................58
Section 10.05. Operation of Indemnities......................................................................58
ARTICLE XI.......................................................................................................58
THE TRUSTEE......................................................................................................59
Section 11.01. Duties of Trustee.............................................................................59
Section 11.02. Certain Matters Affecting the Trustee.........................................................60
Section 11.03. Trustee Not Liable for Certificates or Contracts..............................................62
Section 11.04. Trustee May Own Certificates..................................................................62
Section 11.05. Rights to Direct Trustee and to Waive Servicer Defaults.......................................62
Section 11.06. The Servicer to Pay Trustee's Expenses........................................................62
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Section 11.07. Eligibility Requirements for Trustee..........................................................63
Section 11.08. Resignation or Removal of Trustee.............................................................63
Section 11.09. Successor Trustee.............................................................................64
Section 11.10. Merger or Consolidation of Trustee............................................................65
Section 11.11. Tax Returns...................................................................................65
Section 11.12. Obligor Claims................................................................................65
Section 11.13 Appointment of Co-Trustee or Separate Trustee.................................................66
Section 11.14 Representations and Warranties of Trustee.....................................................67
ARTICLE XII......................................................................................................68
MISCELLANEOUS....................................................................................................68
Section 12.01. Servicer Not to Resign........................................................................68
Section 12.02. Prohibited Transactions with Respect to the Trust.............................................68
Section 12.03. Maintenance of Office or Agency...............................................................69
Section 12.04. Termination...................................................................................69
Section 12.05. Acts of Certificateholders....................................................................69
Section 12.06. Calculations..................................................................................70
Section 12.07. Assignment or Delegation by Trust Depositor...................................................70
Section 12.08. Amendment.....................................................................................70
Section 12.09. Notices.......................................................................................71
Section 12.10. Merger and Integration........................................................................72
Section 12.11. Headings......................................................................................72
Section 12.12. Governing Law.................................................................................72
Section 12.13. No Insolvency Petition........................................................................72
Section 12.14. Third Party Beneficiary.......................................................................73
Section 12.15. No Additional Securities......................................................................73
Section 12.16. No Additional Indebtedness by the Trust Depositor.............................................73
Exhibit A-1......................................................................................................75
Certificate for Harley-Davidson Motorcycle Contracts.............................................................75
Certificate for Harley-Davidson Motorcycle Contracts.............................................................83
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This Agreement, dated as of [_____], is made by and among
Harley-DavidsonCustomer Funding Corp., a Nevada corporation (the "TRUST
DEPOSITOR"), Harley-Davidson Credit Corp., a Nevada corporation, as Servicer (in
such capacity, the "SERVICER") and [_____________], a ________________ not in
its individual capacity but solely as Trustee (in such capacity, the "TRUSTEE")
of Harley-Davidson Motorcycle Trust [_____] (the "TRUST").
In consideration of the premises and the mutual agreements hereinafter
set forth, the Trust Depositor, the Servicer and the Trustee agree as provided
herein:
ARTICLE I
DEFINITIONS
SECTION 1.01. GENERAL. For the purpose of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, the terms
defined in this Article include the plural as well as the singular, the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular article, section or other
subdivision, and Section references refer to Sections of this Agreement.
SECTION 1.02 SPECIFIC TERMS.
"ACT" HAS THE MEANING ASSIGNED IN SECTION 9.02 (B).
"ADDITION NOTICE" means, with respect to any transfer of Subsequent
Contracts to the Trust pursuant to Section 2.04 and the Deposit Agreement 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 Subsequent Contracts to be transferred
and the aggregate Principal Balance of such Subsequent Contracts.
"ADVANCE" means, with respect to any Payment Date, the amounts, if any,
deposited by the Servicer in the Collection Account for such Payment Date
pursuant to Section 8.03.
"AFFILIATE" of any specified Person means any other Person controlling
or controlled by, or under common control with, such specified Person. For the
purposes of this definition, "CONTROL" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "CONTROLLING" or "CONTROLLED" have meanings
correlative to the foregoing.
"AGREEMENT" means this Pooling and Servicing Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"APPLICANTS" has the meaning assigned in Section 9.06.
"AUTHENTICATING AGENT" means any authenticating agent appointed
pursuant to Section 9.07.
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"AVAILABLE FUNDS" means, with respect to any Payment Date, the sum of
the Available Interest and the Available Principal for such Payment Date.
"AVAILABLE INTEREST" means, with respect to any Payment 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 (as well as Late Payment Penalty Fees
and Extension Fees), (ii) the interest component of all Net Liquidation
Proceeds, (iii) the interest component of the aggregate of the Repurchase Prices
for Contracts repurchased by the Seller pursuant to Section 8.06, (iv) all
Advances made by the Servicer pursuant to Section 8.03, (v) the interest
component of all amounts paid by the Seller in connection with an optional
repurchase of the Contracts pursuant to Section 8.08, (vi) all amounts received
in respect of Carrying Charges transferred from the Interest Reserve Account
pursuant to Section 8.03, 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 the last sentence of Section 5.05(d).
"AVAILABLE PRINCIPAL" means, with respect to any Payment 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 Repurchase Prices for Contracts repurchased by the Seller pursuant to
Section 8.06, and (iv) the principal component of all amounts paid by the Seller
in connection with an optional repurchase of the Contracts pursuant to Section
8.08.
"AVERAGE DEFAULT RATIO" means, for any Payment Date, the arithmetic
average of the Default Ratios for such Payment Dates and the two immediately
preceding Payment Dates.
"AVERAGE DELINQUENCY RATIO" means, the arithmetic average of the
Delinquency Ratios for that Payment Date and the two immediately preceding
Payment Dates.
"AVERAGE LOSS RATIO" means, for a Payment Date is equal to the
arithmetic average of the Loss Ratios for such Payment Date and the two
immediately preceding Payment Dates.
"BOOK-ENTRY CERTIFICATES" means beneficial interests in Class A
Certificates or Class B Certificates, ownership and transfers of which shall be
registered through book entries by a Clearing Agency as described in Section
9.08.
"BUELL" means Buell Motorcycle Company.
"BUSINESS DAY" means any day other than (a) a Saturday or a Sunday, or
(b) another day on which banking institutions in the city of Chicago, Illinois
are authorized or obligated by law, executive order, or governmental decree to
be closed.
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"CARRYING CHARGES" means the sum of (i) the product of (A) one-twelfth
of the sum of (x) the Class A Pass-Through Rate and (y) [___]% times (B) the
Class A Percentage of the Pre-Funded Amount as of the beginning of the related
Due Period plus (ii) the product of (A) one-twelfth of the sum of (x) the Class
B Pass-Through Rate and (y) [___]% times (B) the Class B Percentage of the
Pre-Funded Amount as of the beginning of the related Due Period.
"CERTIFICATEHOLDER" or "HOLDER" means the person in whose name either a
Class A Certificate or a Class B Certificate is registered on the Certificate
Register, except that, solely for the purposes of giving any consent, waiver,
request or demand pursuant to this Agreement, any Certificate registered in the
name of the Trust Depositor or any Affiliate of the Trust Depositor shall be
deemed not to be outstanding and the Fractional Interest evidenced thereby shall
not be taken into account in determining whether the requisite Fractional
Interest necessary to effect any such consent, request, waiver or demand has
been obtained; PROVIDED, HOWEVER, that in determining whether the Trustee shall
be protected in relying upon any such consent, waiver, request or demand only
Certificates which the Trustee knows to be so owned shall be so disregarded.
"CERTIFICATE OWNER" means, with respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency or on the books of a Person
maintaining an account with the Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of the Clearing Agency).
"CERTIFICATE REGISTER" means the register maintained pursuant to
Section 9.02(a).
"CERTIFICATE REGISTRAR" or "REGISTRAR" means the registrar appointed
pursuant to Section 9.02.
"CERTIFICATES" means the Class A Certificates and the Class B
Certificates.
"CLASS" means all Certificates whose form is identical except for
variation in denomination, principal amount or Holder.
"CLASS A CERTIFICATE" means a Certificate for Harley-Davidson
Motorcycle Contracts evidencing a Fractional Interest executed and delivered by
the Trustee substantially in the form of EXHIBIT A-1.
"CLASS A CERTIFICATE BALANCE" shall initially equal the Class A Initial
Certificate Balance and, on any date thereafter, shall equal the Class A
Certificate Balance, reduced by all amounts previously distributed to Class A
Certificateholders and allocable to principal.
"CLASS A CERTIFICATE FACTOR" means, at any time, the percentage
(carried out to seven decimal places) derived from a fraction, the numerator of
which is the Class A Certificate Balance at such time and the denominator of
which is the Class A Initial Certificate Balance.
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"CLASS A DISTRIBUTABLE AMOUNT" means, with respect to any Payment Date,
the sum of the Class A Principal Distributable Amount and the Class A Interest
Distributable Amount.
"CLASS A INITIAL CERTIFICATE BALANCE" means $[_____], which is equal to
the aggregate Principal Balance of the Initial Contracts as of the Initial
Cutoff Date plus the Pre-Funded Amount as of the Closing Date multiplied by the
Class A Percentage, and with respect to a particular Certificate means the
amount set forth on the face thereof.
"CLASS A INTEREST CARRYOVER SHORTFALL" means, with respect to any
Payment Date, (i) the excess of the Class A Interest Distributable Amount for
the preceding Payment Date over the amount of interest that was actually
distributed to Class A Certificateholders on such preceding Payment Date, plus
(ii) 30 days of interest on the amount specified in clause (i), to the extent
permitted by law, at the Class A Pass-Through Rate.
"CLASS A INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date (other than the first Payment Date), the sum of (i) the product of
(A) one-twelfth (or, with respect to the first Payment Date, a fraction, the
numerator of which equals the number of days from and including the Closing Date
to but excluding the first Payment Date and the denominator of which equals 360)
of the Class A Pass-Through Rate and (B) the Class A Certificate Balance as of
the immediately preceding Payment Date (after giving effect to distributions of
principal made on such immediately preceding Payment Date) or, in the case of
the first Payment Date, the Class A Initial Certificate Balance plus (ii) the
Class A Interest Carryover Shortfall for such Payment Date.
"CLASS A PASS-THROUGH RATE" means [___]% per annum computed on the
basis of a 360-day year consisting of twelve 30-day months.
"CLASS A PERCENTAGE" means [___]%.
"CLASS A POOL FACTOR" means, at any time, the percentage (carried out
to seven decimal places) derived from a fraction, the numerator of which is the
Class A Certificate Balance at such time and the denominator of which is the
Class A Initial Certificate Balance.
"CLASS A PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any
Payment Date, (i) the excess of the Class A Principal Distributable Amount over
(ii) the amount of principal that was actually distributed to Class A
Certificateholders on such preceding Payment Date.
"CLASS A PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date, the sum of (i) the product of (a) the Class A Percentage and (b)
the Monthly Principal with respect to such Payment Date plus (ii) the Class A
Principal Carryover Shortfall with respect to such Payment Date; PROVIDED,
HOWEVER, that the Class A Principal Distributable Amount on the Final Scheduled
Payment Date shall not be less than the amount that is necessary (after giving
effect to other amounts to be deposited in the Collection Account on such
Payment Date and allowable to principal) to reduce the outstanding principal
amount of the Class A Certificates to zero.
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"CLASS B CERTIFICATE" means a Certificate for Harley-Davidson
Motorcycle Contracts evidencing a Fractional Interest executed and delivered by
the Trustee substantially in the form of EXHIBIT A-2.
"CLASS B CERTIFICATE BALANCE" shall initially equal the Class B Initial
Certificate Balance and, on any Payment Date (after giving effect to all
payments made to Certificateholders on such date) shall equal the amount by
which the sum of (i) the Pool Balance as of the last day of the related Due
Period and (ii) the Pre-Funded Amount as of such day exceeds the Class A
Certificate Balance on such Payment Date (after giving effect to all payments
made to the Class A Certificateholders on such date).
"CLASS B CERTIFICATE FACTOR" means, at any time, the percentage
(carried out to seven decimal places) derived from a fraction, the numerator of
which is the Class B Certificate Balance at such time and the denominator of
which is the Class B Initial Certificate Balance.
"CLASS B DISTRIBUTABLE AMOUNT" means, with respect to any Payment Date,
the sum of the Class B Principal Distributable Amount and the Class B Interest
Distributable Amount.
"CLASS B INITIAL CERTIFICATE BALANCE" means $[____], which is equal to
the aggregate Principal Balance of the Initial Contracts as of the Initial
Cutoff Date plus the Pre-Funded Amount as of the Closing Date multiplied by the
Class B Percentage, and with respect to a particular Certificate means the
amount set forth on the face thereof.
"CLASS B INTEREST CARRYOVER SHORTFALL" means, with respect to any
Payment Date, (i) the excess of the Class B Interest Distributable Amount for
the preceding Payment Date over the amount of interest that was actually
distributed to Class B Certificateholders on such preceding Payment Date, plus
(ii) 30 days of interest on the amount specified in clause (i), to the extent
permitted by law, at the Class B Pass-Through Rate.
"CLASS B INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date (other than the first Payment Date), the sum of (i) the product of
(A) one-twelfth (or, with respect to the first Payment Date, a fraction the
numerator of which equals the number of days from and including the Closing Date
to but excluding the first Payment Date and the denominator of which equals 360)
of the Class B Pass-Through Rate and (B) the Class B Certificate Balance as of
the immediately preceding Payment Date (after giving effect to distributions of
principal made on such immediately preceding Payment Date) or, in the case of
the first Payment Date, the Class B Initial Certificate Balance plus (ii) the
Class B Interest Carryover Shortfall for such Payment Date.
"CLASS B PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any
Payment Date, (i) the excess of the Class B Principal Distributable Amount over
(ii) the amount of principal that was actually distributed to Class B
Certificateholders on such preceding Payment Date.
"CLASS B PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date, the sum of (i) the product of (A) the Class B Percentage and (B)
the Monthly Principal for such
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Payment Date plus (ii) the Class B Principal Carryover Shortfall for such
Payment Date; PROVIDED, HOWEVER, that the Class B Principal Distributable Amount
on the Final Scheduled Payment Date shall not be less than the amount that is
necessary (after giving effect to other amounts to be deposited in the
Collection Account on such Payment Date and allocable to principal) to reduce
the outstanding principal amount of the Class B Certificates to zero.
"CLASS B PASS-THROUGH RATE" means [___]% per annum computed on the
basis of a 360-day year consisting of twelve 30-day months. The Class B
Pass-Through Rate includes (i) at any time during the Funding Period, the sum of
(a) the Class A Pass-Through Rate multiplied by the Class B Percentage
multiplied by the Pool Balance, (b) 1.75 basis points on the Pool Balance and
(c) a portion of the amount deposited to the Collection Account from the
Interest Reserve Account during the Funding Period equal to the difference
between the Class B Pass-Through Rate multiplied by the Class B Certificate
Balance and the sum of items (a) and (b) above and (ii) at any time after the
Funding Period, the sum of (a) the Class A Pass-Through Rate multiplied by the
Class B Certificate Balance and (b) 1.75 basis points on the Pool Balance. In no
event will the Class B Pass-Through Rate exceed 7.00% per annum.
"CLASS B PERCENTAGE" means [___]%
"CLASS B POOL FACTOR" means, at any time, the percentage (carried out
to seven decimal places) derived from a fraction, the numerator of which is the
Class B Certificate Balance at such time and the denominator of which is the
Class B Initial Certificate Balance.
"CLEARING AGENCY" means an organization registered as a "CLEARING
AGENCY" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"CLOSING DATE" means [_______].
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL AGENT" means the Collateral Agent named in the Security
Agreement and any successor thereto pursuant to the terms of the Security
Agreement.
"COLLECTION ACCOUNT" means a trust account as described in Section 5.05
maintained in the name of the Trust which shall be an Eligible Account.
"COMPUTER DISK" means the computer disk 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) by the Trust
Depositor in selecting the Contracts sold to the Trust pursuant
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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 2.04,
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 other
evidence of the obligation of the Obligor, (b) the original title certificate to
the Motorcycle and, where applicable, the certificate of lien recordation, or,
if such title certificate has not yet been issued, an application for such title
certificate, or other appropriate evidence of a security interest in the covered
Motorcycle; (c) the assignments of the Contract; (d) the original copy of any
agreement(s) modifying the Contract including, without limitation, any extension
agreement(s) and (e) documents evidencing the existence of physical damage
insurance covering such Motorcycle.
"CONTRACT RATE" means, as to any Contract, the annual rate of interest
specified in the Contract.
"CONTRACTS" means the motorcycle conditional sales contracts 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 on
or 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 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 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 12.09.
"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 Payment Date, the fraction
(expressed as a percentage) computed by the Servicer by dividing (i) the
aggregate Net Liquidation Losses for all Contracts since the Cutoff Date through
the end of the related Due Period by (ii) the sum of (A) the Principal Balance
of the Contracts as of the Cutoff Date plus (B) the Principal Balance of any
Subsequent Contracts as of the related Subsequent Cutoff Date.
"CUTOFF DATE" means either or both (as the context may require) the
Initial Cutoff Date and any Subsequent Cutoff Date.
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"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.
"DEFAULT RATIO" means, as of any Payment Date, the fraction (expressed
as a percentage) derived by dividing (x) the Principal Balance for all Contracts
that become Defaulted 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 related Due Period.
"DELINQUENCY AMOUNT" means, as of any Payment Date means 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 inventory).
"DELINQUENT INTEREST" means, for each Contract and each Determination
Date as to which the full payment due in the related Due Period has not been
paid (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 Payment Date, the fraction
(expressed as a percentage) computed by dividing (a) the Delinquency Amount
during the immediately preceding Due Period multiplied by twelve by (b) the
Principal Balance of the Contracts as of the beginning of the related Due
Period.
"DEPOSIT AGREEMENT" means the Agreement to Deposit Contracts, dated as
of [___], from the Trust Depositor in favor of the Trustee for the benefit of
the Trust, which comprises part of the Trust Corpus.
"DETERMINATION DATE" means the fourth Business Day following the
conclusion of a Due Period during the term of this Agreement.
"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 Payment Date shall be the
calendar month immediately preceding such date; PROVIDED, however, that with
respect to the Initial Determination Date or Initial Payment Date, the Due
Period shall be the period from the Initial Cutoff Date to and including
[_____].
"ELIGIBLE ACCOUNT" means a segregated direct deposit account maintained
with 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,
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short-term deposit or commercial paper rating of at least A-1+ by Standard &
Poor's and P-1 by Moody's.
"ELIGIBLE INVESTMENTS" means any one or more of the following types of
investments:
(a) (i) direct interest-bearing obligations of, and
interest-bearing obligations guaranteed as to timely payment of
principal and interest by, the United States or any agency or
instrumentality of the United States the obligations of which are
backed by the full faith and credit of the United States; and (ii)
direct interest-bearing obligations of, and interest-bearing
obligations guaranteed as to timely payment of principal and interest
by, the Federal National Mortgage Association or the Federal Home Loan
Mortgage Corporation, but only if, at the time of investment, such
obligations are assigned the highest credit rating by each Rating
Agency;
(b) demand or time deposits in, certificates of deposit of, or
bankers' acceptances issued by any depositary institution or trust
company organized under the laws of the United States or any State and
subject to supervision and examination by federal and/or State banking
authorities (including, if applicable, the Trustee or any agent of the
Trustee acting in their respective commercial capacities); PROVIDED
that the short-term unsecured debt obligations of such depositary
institution or trust company at the time of such investment, or
contractual commitment providing for such investment, are assigned the
highest credit rating by each Rating Agency;
(c) repurchase obligations pursuant to a written agreement (i)
with respect to any obligation described in clause (a) above, where the
Trustee has taken actual or constructive delivery of such obligation in
accordance with Section 5.05, and (ii) entered into with a depositary
institution or trust company organized under the laws of the United
States or any State thereof, the deposits of which are insured by the
Federal Deposit Insurance Corporation and the short-term unsecured debt
obligations of which are rated "A-1+" by Standard & Poor's and "P-1" by
Moody's (including, if applicable, the Trustee or any agent of the
Trustee acting in their respective commercial capacities);
(d) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States or
any State whose long-term unsecured debt obligations are assigned the
highest credit rating by each Rating Agency at the time of such
investment or contractual commitment providing for such investment;
PROVIDED, HOWEVER, that securities issued by any particular corporation
will not be Eligible Investments to the extent that an investment
therein will cause the then outstanding principal amount of securities
issued by such corporation and held as part of the Trust to exceed 10%
of the Eligible Investments held in the Trust (with Eligible
Investments valued at par);
(e) commercial paper that (i) is payable in United States
dollars and (ii) is rated in the highest credit rating category by each
Rating Agency;
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(f) money market mutual funds registered under the Investment
Company Act of 1940, as amended, having a rating, at the time of such
investment, from each of the Rating Agencies in the highest investment
category granted thereby; and
(g) any other demand or time deposit, obligation, security or
investment as may be acceptable to each Rating Agency and as may from
time to time be confirmed in writing to the Trustee by each Rating
Agency;
PROVIDED, HOWEVER, that securities issued by any entity (except as provided in
paragraph (a)) will not be Eligible Investments to the extent that an investment
therein will cause the then outstanding principal amount of securities issued by
such entity and held in the Pre-Funding Account to exceed $10 million (with
Eligible Investments held in the Pre-Funding Account valued at par).
"EXTENSION FEE" means any extension fee paid by the Obligor on a
Contract.
"FINAL SCHEDULED PAYMENT DATE" means [____].
"FRACTIONAL INTEREST" means an undivided interest in the Trust and, as
to a particular Certificateholder, means the undivided interest in the Trust
owned by that Certificateholder equal to the percentage obtained by dividing (a)
the Certificate Balance of all Certificates held by such Certificateholder at
the time of determination by (b) the aggregate of the Certificate Balance of all
of the Certificates held by all Certificateholders at such time.
"FUNDING PERIOD" means the period beginning on the Closing Date and
ending on the first to occur of (a) the Payment 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 Payment Date) is less than $100,000, (b) the date on which a Servicer
Default occurs, (c) the date on which an Insolvency Event occurs with respect to
the Seller and (d) the close of business on the date which is 90 days from and
including the Closing Date.
"HOLDER" means a Person in whose name a Certificate is registered in
the Certificate Register.
"INITIAL CONTRACTS" means those Contracts conveyed to the Trust on the
Closing Date.
"INITIAL CUTOFF DATE" means [_____].
"INSOLVENCY EVENT" means with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or 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,
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and such decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable Federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by such Person to the entry of an
order for relief in an involuntary case under any such law, or the consent by
such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general 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 action by such Person in furtherance of any of the foregoing.
"INTEREST RESERVE ACCOUNT" means the account designated as the
Interest Reserve Account in, and which is established and maintained pursuant
to, Section 3.01 of the Security Agreement.
"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 $[___].
"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.
"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) such Contract is a Defaulted
Contract with respect to which the Servicer has determined in good faith that
all amounts expected to be recovered have been received, or (iii) all or any
portion of any payment is delinquent 150 days or more.
"LIQUIDATED DAMAGES" means the amounts payable by the Trust Depositor
to the Trust upon the end of the Funding Period under Section 2.02 of the
Deposit Agreement, to be derived from any remaining Pre-Funded Amount at the end
of the Funding Period, and described as "Liquidated Damages" in Section 2.02 of
the Deposit Agreement.
"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 I.
"LOCKBOX" means the Lockbox maintained by the Lockbox Bank identified
on EXHIBIT L hereto.
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"LOCKBOX ACCOUNT" means the account maintained with the Lockbox Bank
and identified on EXHIBIT L hereto.
"LOCKBOX AGREEMENT" means the Third Amended and Restated Lockbox
Administration Agreement dated as of March 1, 1996 by and among the Servicer,
the Trust Depositor, Eaglemark Customer Funding Corporation-II, NBD Bank, N.A.,
Bank of America National Trust and Savings Association ("BOFA"), Norwest Bank
Minnesota, National Association (the "PREDECESSOR TRUSTEE"), the Trustee,
Financial Security Assurance Inc. ("FSA," with respect to certain prior trusts,
the "PRIOR TRUSTS"), 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 and FSA, or if an Insurer Default (as defined in
FSA's documentation relating to such Prior Trusts) shall have occurred and be
continuing or FSA is owed no obligation with respect to such Prior Trusts, the
majority of the Certificateholders with respect to such Prior Trusts), the
Servicer, the Trustee and the Lockbox Bank.
"LOCKBOX BANK" means the financial institution maintaining the Lockbox
Account and identified on EXHIBIT L hereto or any successor thereto acceptable
to a majority of the Certificateholders.
"LOSS RATIO" means, for any Payment 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.
"MONTHLY PRINCIPAL" means, as to any Payment Date, the following amount
calculated as of the related Determination Date: the difference between (i) the
sum of (A) the Principal Balance of the Contracts as of the first day of the Due
Period preceding the Due Period in which such Payment Date occurs (or, in the
case of the first Payment Date, the Principal Balance of the Contracts as of the
Initial Cutoff Date), plus (B) the Pre-Funded Amount on such date (or, in the
case of the first Payment Date, the Pre-Funded Amount on the Closing Date) and
(ii) the sum of (A) the Principal Balance of the Contracts as of the first day
of the Due Period in which such Payment Date occurs, plus (B) the Pre-Funded
Amount on such day, plus (C) the amount of any Special Distribution occurring
from the day referred to in clause (i)(A) above to the day referred to in clause
(ii)(A) above; provided, that on the Final Scheduled Payment Date, Monthly
Principal shall equal the aggregate of the Class A Certificate Balance and the
Class B Certificate Balance. For purposes of determining the amount in clause
(ii)(C) above as to any particular Payment Date and with respect to the Due
Period preceding such Payment Date, if the Funding Period ends during such Due
Period and Liquidated Damages (as defined in the Security Agreement) are
consequently paid from the Pre-Funding Account during such Due Period but will
not be distributed as a Special Distribution until the Payment Date occurring in
the following Due Period (i.e., the particular Payment Date referred to above),
then the amount calculated in clause (ii)(C) for such preceding Due Period shall
be deemed to include such Special Distribution, in such amount (although paid as
a Special Distribution) on the Payment
- 17 -
Date occurring during the following Due Period) will not be included in the next
calculation of clause (ii)(C) to be made with respect to the following Due
Period.
"MONTHLY REPORT" has the meaning assigned in Section 6.01.
"MONTHLY SERVICING FEE" means, as to any Payment Date, one-twelfth of
the product of 1% and the Principal Balance of the Contracts as of the beginning
of the related Due Period.
"MOODY'S" means Moody's Investors Service, Inc. or any successor
thereto.
"MOTORCYCLE" means a motorcycle manufactured by Harley-Davidson, Inc.
(or in certain limited instances Buell) securing a Contract.
"NET LIQUIDATION LOSSES" means, as of any Payment Date, with respect to
a Liquidated Contract, the amount, if any, by which (a) the outstanding
Principal Balance of such Liquidated Contract plus accrued and unpaid interest
thereon at the Contract Rate to the date on which such Liquidated Contract
became a Liquidated Contract exceeds (b) the Net Liquidation Proceeds for such
Liquidated Contract.
"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 received by the Servicer.
"OBLIGOR" means a Motorcycle buyer or other person who owes payments
under a Contract.
"OFFICER'S CERTIFICATE" means a certificate signed by the Chairman of
the Board, President, or any Vice President of the Seller, the Trust Depositor
or the Servicer and delivered to the Trustee.
"PAYING AGENT" has the meaning assigned in Section 8.01(b).
"PAYMENT 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 Payment Date hereunder being
[_____].
"PERSON" means any individual, corporation, 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 aggregate 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 3.01 of
the Security Agreement.
"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
opening 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
repurchased by the Seller pursuant to Section 5.01 of the Transfer and Sale
Agreement and Section 8.06 hereof because of a breach of representation or
warranty, or if (y) the Seller gives notice of its intent to purchase the
Contracts in connection with an optional termination of the Trust pursuant to
Section 5.02 of the Transfer and Sale Agreement and Section 8.08 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, (ii) from and after the third Due
Period succeeding the final Due Period in which the Obligor is required to make
the final scheduled payment on a Contract, the Principal Balance, if any, of
such Contract shall be deemed to be zero, and (iii) 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.
"RATING AGENCY" means each of Moody's and Standard & Poor's, so long as
such Persons maintain a rating on the Certificates; and if either Moody's or
Standard & Poor's no longer maintains a rating on the Certificates, such other
nationally recognized statistical rating organization selected by the Trust
Depositor.
"RECORD DATE" means, with respect to any Payment Date, the last
Business Day of the preceding calendar month.
"REIMBURSEMENT AMOUNT" has the meaning assigned in Section 8.03 hereof.
"REPURCHASE PRICE" means, with respect to a Contract to be repurchased
hereunder, an amount equal to (a) the remaining principal balance of such
Contract, plus (b) accrued and unpaid interest at the Contract Rate on such
Contract through the end of the immediately preceding Due Period.
"REQUISITE INTEREST RESERVE AMOUNT" means, as of the Closing Date,
$[_____] and as of any Payment Date thereafter during the Funding Period an
amount equal to the product of (i) a fraction, the numerator of which equals the
difference between (x) the sum of the weighted average of the Class A
Pass-Through Rate and the Class B Pass-Through Rate and ___% and (y) ___%, and
the denominator of which equals 360, times (ii) the Pre-Funded Amount on such
date
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times (iii) the number of days remaining in the Funding Period. The Requisite
Interest Reserve Amount for any Subsequent Transfer Date shall be calculated
after taking into account the transfer of Subsequent Contracts to the Trust on
such Payment Date.
"RESERVE AGENT" means the Reserve Agent named in the Reserve Fund
Agreement, and any successor thereto pursuant to the terms of the Reserve Fund
Agreement.
"RESERVE FUND" means with respect to the Trust, the Reserve Fund
established and maintained pursuant to the Reserve Fund Agreement. The Reserve
Fund shall in no event be deemed part of the Trust Corpus.
"RESERVE FUND ADDITIONAL DEPOSITS" means, with respect to any transfer
of Subsequent Contracts to the Trust, the amount (if any) required to be
deposited in the Reserve Fund on or prior to such transfer in satisfaction of
the condition set forth in Section 2.04(b)(vi) hereof.
"RESERVE FUND AGREEMENT" means the Reserve Fund Agreement, dated as of
[____] among the Trust Depositor, the Reserve Agent and the Trustee (as amended,
supplemented or otherwise modified from time to time).
"RESERVE FUND DEPOSITS" shall have the meaning provided in the Reserve
Fund Agreement.
"RESERVE FUND INITIAL DEPOSIT" means $[____].
"RESERVE FUND TRIGGER EVENT" means as of any particular Payment Date
(i) the Average Delinquency Ratio is equal to or greater than ___%; (ii) the
Average Loss Ratio is equal to or greater than ___%, (iii) the Cumulative Loss
Ratio is equal to or greater than (a) ___% with respect to any Payment Date
which occurs within the period from the Closing Date to, and inclusive of, the
first anniversary of the Closing Date, (b) ___% with respect to any Payment 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) ___% for any Payment Date following the second anniversary of the Closing
Date or (iv) the Average Default Ratio is equal to or greater than ___%.
"RESERVE FUND REQUISITE AMOUNT" means, with respect to any Payment
Date, an amount equal to ___% of the Principal Balance of the Contracts in the
Trust as of the first day of the immediately preceding Due Period or, upon the
occurrence of a Reserve Fund Trigger Event which has not terminated for three
consecutive Payment Dates (inclusive of the respective Payment Date), an amount
equal to ___% of the Principal Balance of the Contracts in the Trust as of the
first day of the immediately preceding Due Period; provided, however, in no
event, after the Funding Period, shall the Reserve Fund Requisite Amount be less
than ___% of the aggregate of the Initial Class A Certificate Balance and
Initial Class B Certificate Balance.
"RESPONSIBLE OFFICER" means, with respect to the Trustee, the chairman
and any vice chairman of the board of directors, the president, the chairman and
vice chairman of any
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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 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.
"SECURITY AGREEMENT" means the Security Agreement, dated as of [____]
among the Trust Depositor, the Collateral Agent and the Trustee, securing the
Trust Depositor's obligations to the Trust under the Deposit Agreement.
"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
[____] appointed pursuant to Article VII below with respect to the duties and
obligations required of the Servicer under this Agreement.
"SERVICER DEFAULT" has the meaning assigned to such term in SECTION
8.01.
"SERVICE TRANSFER" has the meaning assigned in Section 7.02(a).
"SERVICING FEE" means, on any Determination Date, the sum of (a) the
Monthly Servicing Fee payable on the related Payment 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 Trustee by the Servicer, as the same may be amended from time
to time.
"SHORTFALL" means, with respect to a Payment Date as determined in
accordance with Section 8.04(b), the amounts described in clauses (v) through
(viii) thereof over Available Funds (after the payment of amounts described in
clauses (i) through (iv) of Section 8.04(b) on such Payment Date) in the
Collection Account with respect to the related Due Period.
"SPECIAL DISTRIBUTION" means a distribution on a Payment Date of
amounts deposited in the Special Distribution Subaccount derived from the
payment of Liquidated Damages under the Deposit Agreement, which shall be deemed
a distribution of principal with respect to the Certificates.
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"SPECIAL DISTRIBUTION SUBACCOUNT" means the account described in
Section 5.05(a) established for the purpose of Special Distributions.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
division of The McGraw Hill Company or any successor thereto.
"SUBSEQUENT CONTRACTS" means all Contracts sold and transferred to the
Trust pursuant to Section 2.04 hereof and Section 2.01 of the Deposit Agreement.
"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 transferred the Subsequent Contracts to the Trust Depositor,
the form of which is attached to the Transfer and Sale Agreement as EXHIBIT C.
"SUBSEQUENT TRANSFER AGREEMENT" means the agreement described in
Section 2.04 hereof and Section 2.01 of the Deposit Agreement.
"SUBSEQUENT TRANSFER DATE" means any date during the Funding Period on
which Subsequent Contracts are transferred to the Trust.
"TRANSACTION DOCUMENTS" means this Agreement, the Transfer and Sale
Agreement, the Reserve Fund Agreement, the Deposit Agreement, the Security
Agreement, the Lockbox Agreement, any Subsequent Transfer Agreement and any
Subsequent Purchase Agreement.
"TRANSFER AND SALE AGREEMENT" means the Transfer and Sale Agreement
dated as of [____] by and between the Trust Depositor and the Seller, as
amended, supplemented or otherwise modified from time to time.
"TRUST" means the trust created by this Agreement, comprised of the
Trust Corpus.
"TRUST ACCOUNTS" means, collectively, the Collection Account and the
Special Distribution Subaccount therein, or any of them.
"TRUST CORPUS" has the meaning given to such term in Section 2.01(b)
hereof (and in Section 2.04(a) hereof in respect of Subsequent Contracts and
related assets transferred to the Trust pursuant to Subsequent Transfer
Agreements). Although the Trust Depositor has pledged the Reserve Fund to the
Trustee pursuant to the Reserve Fund Agreement, the Reserve Fund
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shall not under any circumstances be deemed to be a part of or otherwise
includable in the Trust or the Trust Corpus.
"TRUST DEPOSITOR" has the meaning assigned such term in the preamble
hereunder or any successor thereto.
"TRUSTEE'S FEE" means, with respect to any Payment Date, one-twelfth of
the product of ___% and the sum of (i) the Principal Balance of the Contracts as
of the beginning of the related Due Period and (ii) the Pre-Funded Amount as of
the beginning of such period; provided, however, in no event shall such fee be
less than $200.00 per month.
"UCC" means the Uniform Commercial Code as enacted in Illinois or
Nevada, as applicable.
"UNCOLLECTIBLE ADVANCE" means with respect to any Determination Date
and any Contract, the amount, if any, advanced by the Servicer pursuant to
Section 8.03 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 shall be evidenced by an
Officer's Certificate delivered to the Trustee.
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ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
Section 2.01. Closing. (a) There is hereby created by the Trust
Depositor, as settlor, a separate trust which shall be known as the
Harley-Davidson Motorcycle Trust [_____]. The Trust shall be administered
pursuant to the provisions of this Agreement for the benefit of the
Certificateholders. The Trustee is hereby specifically empowered to conduct
business dealings on behalf of the Trust in accordance with the terms hereof.
(b) On the Closing Date, the Trust Depositor shall sell, transfer,
assign, set over and otherwise convey to the Trust by execution of an assignment
substantially in the form of EXHIBIT B 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 on or after the Initial Cutoff Date, including any liquidation
proceeds therefrom, but excluding any rights to receive payments which were
collected pursuant thereto 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) 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 such Contracts) and the Seller, (vi) all rights of the Trust
Depositor in the Lockbox, the Lockbox Account and related Lockbox Agreement to
the extent they relate to such 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), and (ix) all proceeds and products of the
foregoing (the property in clauses (i)-(ix) above, along with the Deposit
Agreement (which has been executed directly in favor of the Trustee for the
benefit of the Trust), being the "TRUST CORPUS"). Although the Trust Depositor
and the Trustee agree that such transfer is intended to be a sale 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 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.
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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 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 B
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 C
hereto.
(c) Opinions of counsel for the Seller and the Trust Depositor
substantially in the form of EXHIBITS D-1, D-2 and D-3 hereto (and
including as an addressee thereof each Rating Agency).
(d) A letter from Arthur Andersen LLP, or another nationally
recognized accounting firm, addressed to the Trustee and stating that
such firm has reviewed a sample of the Initial Contracts and performed
specific procedures for such sample with respect to certain contract
terms and which identifies those Initial Contracts which do not
conform.
(e) Copies of resolutions of the Board of Directors of each of
the Seller/Servicer and the Trust Depositor or of the Executive
Committee of the Board of Directors of each of the Seller/Servicer and
the Trust Depositor approving the execution, delivery and performance
of this Agreement and the other Transaction Documents to which any of
them is a party, as applicable, and the transactions contemplated
hereunder and thereunder, certified in each case by the Secretary or an
Assistant Secretary of the Seller/Servicer and the Trust Depositor.
(f) Officially certified recent evidence of due incorporation
and good standing of each of the Seller and the Trust Depositor under
the laws of Nevada.
(g) Evidence of proper filing with the appropriate offices in
Nevada and Illinois of UCC financing statements executed by the Seller,
as debtor, naming the Trust Depositor as secured party (and the Trustee
as assignee) and identifying the Contract Assets as collateral; and
evidence of proper filing with the appropriate offices in Nevada and
Illinois of UCC financing statements executed by the Trust Depositor,
as debtor, (i) naming the Trustee as secured party and identifying the
Trust Corpus as collateral, and (ii) naming the Trustee as secured
party and identifying the Reserve Fund Deposits therein as collateral,
and (iii) naming the Trustee as secured party and identifying the
Collateral (as defined in the Security Agreement) 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 on or after the Initial
Cutoff Date to the Closing Date,
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together with an Officer's Certificate from the Seller to the effect
that such amount is correct.
(j) The Officer's Certificate of the Seller specified in
Section 2.02(i) of the Transfer and Sale Agreement.
(k) A fully executed copy of the Reserve Fund Agreement,
together with evidence of deposit in the Reserve Fund of the Reserve
Fund Initial Deposit by the Depositor in accordance with the Reserve
Fund Agreement.
(l) Evidence of deposit in the Interest Reserve Account of
$[_____].
(m) A fully executed Deposit Agreement.
(n) A fully executed Security Agreement.
(o) A fully executed Transfer and Sale Agreement.
Section 2.03. Acceptance by Trustee. On the Closing Date, if the
conditions set forth in Section 2.02 have been satisfied, the Trustee shall
issue on behalf of the Trust to, or upon the order of, the Trust Depositor the
Class A Certificates and Class B Certificates representing ownership of a
beneficial interest in 100% of the Trust.
Section 2.04. Conveyance of Subsequent Contracts. (a) Subject to
the conditions set forth in paragraph (b) below, the Trust Depositor, pursuant
to the mutually agreed upon terms contained in the Deposit Agreement and
pursuant to one or more Subsequent Transfer Agreements, shall sell, 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 (including, without
limitation, all security interests and all rights to receive payments which are
collected pursuant thereto on or after the related Subsequent Cutoff Date,
including any liquidation proceeds therefrom, but excluding any rights to
receive payments which were collected pursuant thereto prior to such Subsequent
Cutoff Date), (ii) all rights of the Trust Depositor under any physical damage
or other individual insurance policy (or a "forced placed" policy, if any)
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 such Contracts) and the
Seller, (vi) all rights of the Trust Depositor in the Lockbox, the Lockbox
Account and related Lockbox Agreement to the extent they relate to such
Contracts, (vii) all rights (but not the obligations) of the Trust Depositor
under the Transfer and Sale Agreement related to such Contracts (to the extent
not already conveyed under Section 2.01(b)), 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 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
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time related to such Contracts (to the extent not already conveyed under Section
2.01(b)) (and any investments of such amounts), and (ix) all proceeds and
products of the foregoing (the property in clauses (i)-(ix) above, upon such
transfer, becoming part of the "TRUST CORPUS"). Although the Trust Depositor and
the Trustee agree that such transfer is intended to be a sale 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 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 Seller shall have provided the Trustee, the Placement
Agent 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 Trustee
a duly executed written assignment (including an acceptance by the
Trustee) in substantially the form of EXHIBIT N hereto (the "SUBSEQUENT
TRANSFER AGREEMENT"), which shall include a Subsequent List of
Contracts listing the Subsequent Contracts;
(iv) the Trust Depositor shall have deposited or caused to be
deposited in the Collection Account all collections received with
respect to the Subsequent Contracts on or 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 Reserve Fund Additional Deposit for such
Subsequent Transfer Date (if any is required) shall have been made;
(vii) each Rating Agency shall have notified the Trust
Depositor and the Trustee in writing that following such transfer the
Class A Certificates will be rated in the highest rating category by
such Rating Agency and the Class B Certificates will be rated at least
"BBB" by Standard & Poor's and Baa2 by Moody's;
(viii) such addition will not result in a material adverse tax
consequence to the Trust or the Certificateholders as evidenced by an
Opinion of Counsel to be delivered by the Seller to the Trustee, the
Rating Agency and the Placement Agent;
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(ix) the Trust Depositor shall have delivered to the Trustee
an Officers' Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b);
(x) the Trust Depositor shall have delivered to the Rating
Agencies and the Placement Agent one or more opinions of counsel 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) the Trust Depositor shall have taken any action necessary
to maintain the first perfected ownership interest of the Trust in the
Trust Corpus and the first perfected security interest of the Reserve
Agent in the Reserve Fund Deposits;
(xii) no selection procedures believed by the Trust Depositor
to be adverse to the interests of the Certificateholders shall have
been utilized in selecting the Subsequent Contracts;
(xiii) the Trust Depositor shall have delivered to the Rating
Agencies evidence that (A) the weighted average annual percentage rate
of the Contracts collectively, following the transfer of the Subsequent
Contracts, is not less than ___%, and (B) that the weighted average
calculated remaining term to maturity of the Contracts collectively,
following the transfer of the Subsequent Contracts, does not exceed 66
months ; and
(xiv) the Trust Depositor shall have delivered to the Rating
Agencies, a report with respect tocertain agreed-upon procedures
relating to the Subsequent Contracts being transferred, confirming that
procedures were performed substantially similar to such procedures as
were performed in connection with the transfer of the Initial
Contracts.
(c) As provided in the Deposit Agreement, the Trust Depositor covenants
to transfer (at or prior to the end of the Funding Period) to the Trust pursuant
thereto Subsequent Contracts with an aggregate Principal Balance equal to
$[_____]; PROVIDED, HOWEVER, that in complying with such covenant the Trust
Depositor agrees to make no more than one separate transfer of Subsequent
Contracts per monthly period (as measured by the corresponding Payment Dates),
and PROVIDED FURTHER, HOWEVER, that the sole remedy of the Trust or the
Certificateholders with respect to a failure to comply with such covenant shall
be to enforce the provisions of Section 2.02 of the Deposit Agreement by
demanding the payment of Liquidated Damages thereunder.
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SECTION 2.05. TAX TREATMENT. It is the intention of the Trust
Depositor that, for federal income tax purposes, the Trust will be classified as
a grantor trust and not as an association taxable as a corporation. The Trust
Depositor and the Servicer by entering into this Agreement, and each
Certificateholder by the purchase of a Certificate, agree to report such
transactions for federal income tax purposes in a manner consistent with such
characterization.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Seller under the Transfer and Sale Agreement has made, and upon execution of
each Subsequent Purchase Agreement is deemed to remake, each of the
representations and warranties set forth in EXHIBIT K hereto and has consented
to the assignment by the Trust Depositor to the Trustee 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 sale, transfer and assignment of the
Contracts to the Trust. Pursuant to Section 2.01 of this Agreement, the Trust
Depositor has sold, assigned, transferred and conveyed to the Trustee 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 K attached hereto, together with all rights of the Trust
Depositor with respect to any breach thereof including any right to require the
Seller to repurchase any Contract in accordance with the Transfer and Sale
Agreement. It is understood and agreed that the representations and warranties
set forth or referred to in this Section shall survive delivery of the Contract
Files to the Trustee or any custodian.
The Trust Depositor hereby represents and warrants to the 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 K 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 Trustee all rights of the Trust Depositor to cause the
Seller under the Transfer and Sale Agreement to repurchase Contracts in the
event of a breach of such representations and warranties.
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING THE TRUST
DEPOSITOR. By its execution of this Agreement and each Subsequent Transfer
Agreement, the Trust Depositor represents and warrants to the Trustee and the
Certificateholders that:
(a) ASSUMPTION OF SELLER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in EXHIBIT K 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
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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 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 sale,
transfer and assignment of the Trust Corpus, enforceable against the
Trust Depositor and creditors of and purchasers from the Trust
Depositor. This Agreement and the other Transaction Documents to which
the Trust Depositor is a party constitute the legal, valid and binding
obligation of the Trust Depositor enforceable in accordance with their
terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies.
(d) NO CONSENT REQUIRED. The Trust Depositor is not required
to obtain the consent of any other party or any consent, license,
approval or authorization from, or registration or declaration with,
any governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement or the other Transaction Documents to which it is a party.
(e) NO VIOLATIONS. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which it is a
party by the Trust Depositor, and the consummation of the transactions
contemplated hereby and thereby, will not violate any provision of any
existing law or regulation or any order or decree of any court or of
any Federal or state regulatory body or administrative agency having
jurisdiction over the Trust Depositor or any of its properties or the
Articles of Incorporation or Bylaws of the Trust Depositor, or
constitute a material breach of any mortgage, indenture, contract or
other agreement to which the Trust Depositor is a party or by which the
Trust Depositor or any of the Trust Depositor's properties may be
bound, or result in the creation or imposition of any security
interest, lien, charge, pledge, preference, equity or encumbrance of
any kind upon any of its properties pursuant to the terms of any such
mortgage, indenture, contract or other agreement, other than as
contemplated by the Transaction Documents.
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(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 Certificates (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
Certificates.
(g) PLACE OF BUSINESS; NO CHANGES. The Trust Depositor's sole
place of business (within the meaning of Article 9 of the UCC) is as
set forth in Section 12.09 below. 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.
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 sale, transfer and assignment of the Contracts to the Trust.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER.
The Servicer represents and warrants to the Trustee and the Certificateholders
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.
(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
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enforceable in accordance with their terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies.
(c) NO CONSENT REQUIRED. The Servicer is not required to
obtain the consent of any other party or any consent, license, approval
or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement and the other Transaction Documents to which the Servicer is
a party.
(d) NO VIOLATIONS. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which the
Servicer is a party by the Servicer will not violate any provisions of
any existing law or regulation or any order or decree of any court or
of any Federal or state regulatory body or administrative agency having
jurisdiction over the Servicer or any of its properties or the Articles
of Incorporation or Bylaws of the Servicer, or constitute a material
breach of any mortgage, 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 or the
Certificates 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 IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS;
Section 4.01. Custody of Contracts. (a) Subject to the terms and
conditions of this Section 4.01, the contents of each Contract File shall be
held in the custody of the Servicer for the benefit of, and as agent for, the
Certificateholders and the Trustee as the owner thereof.
(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
Trustee 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
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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 Trustee shall be deemed to
have possession of the Contract Files for purposes of Section 9-305 of the
Uniform Commercial Code of the State in which the Contract Files are located.
(c) As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Contract Files on behalf of the
Certificateholders and the Trustee, 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,
conduct annual physical inspections of Contract Files held by it under
this Agreement and certify to the Trustee annually that it continues to
maintain possession of such Contract Files;
(ii) implement policies and procedures in writing and signed
by a Servicing Officer with respect to persons authorized to have
access to the Contract Files on the Servicer's premises and the
receipting for Contract Files taken from their storage area by an
employee of the Servicer for purposes of servicing or any other
purposes;
(iii) attend to all details in connection with maintaining
custody of the Contract Files on behalf of the Certificateholders and
the Trustee;
(iv) at all times maintain the original of the fully executed
Contract and store such original Contract in a fireproof vault;
(v) stamp each Contract on both the first and the signature
page (if different) as of the Closing Date (or Subsequent Transfer
Date, as the case may be) in the form attached hereto as EXHIBIT M;
(vi) within 30 days of the Closing Date (or Subsequent
Transfer Date, as the case may be) deliver an Officer's Certificate to
the 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; and
(vii) within 185 days of the Closing Date (or Subsequent
Transfer Date, as the case may be) deliver an Officer's Certificate to
the Trustee listing each Contract with respect to which there did not
exist as of 180 days of the Closing Date (or Subsequent Transfer Date,
as the case may be) an original title certificate to the motorcycle and
the certificate of lien recordation relating thereto.
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(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. The Servicer shall promptly report to the Trustee
any failure by it 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
Certificateholders, the 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 Certificateholders, or the
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 Certificateholder, or the
Trustee. The Trustee shall have no duty to monitor or otherwise oversee the
Servicer's performance as custodian hereunder.
Section 4.02. Filing. On or prior to the Closing Date, the Servicer
shall cause the UCC financing statement(s) referred to in Section 2.02(g) hereof
to be filed and from time to time the Servicer shall take and cause to be taken
such actions and execute such documents as are necessary or desirable or as the
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.
Section 4.03. Name Change or Relocation. (a) During the term of
this Agreement, neither the Seller nor the Trust Depositor shall change its
name, identity or structure or relocate its chief executive office without first
giving at least 30 days' prior written notice to the 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 place of business (within the
meaning of Article 9 of the UCC) from the location specified in Section 12.09
below 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 Trustee
an opinion of counsel reasonably acceptable to the Trustee stating that, in the
opinion of such counsel, all financing statements or amendments necessary to
preserve and protect the interests of the Trustee in the Trust Corpus have been
filed, and reciting the details of such filing.
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Section 4.04. Chief Executive Office. During the term of this
Agreement, the Trust Depositor will maintain its chief executive office in one
of the States of the United States, except Louisiana, Tennessee, Colorado,
Kansas, New Mexico, Oklahoma, Utah or Wyoming.
Section 4.05. Costs and Expenses. The Servicer agrees to pay all
reasonable costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the Trust's right,
title and interest in and to the Contracts (including, without limitation, the
security interest in the Motorcycles granted thereby).
ARTICLE V
SERVICING OF CONTRACTS
Section 5.01. Responsibility for Contract Administration. The
Servicer will have the sole obligation to manage, administer, service and make
collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The 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 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 VII.
Section 5.02. Standard of Care. In managing, administering,
servicing and making collections on the Contracts pursuant to this Agreement,
the Servicer will exercise that degree of skill and care consistent with the
skill and care that the Servicer exercises with respect to similar contracts
serviced by the Servicer, and, in any event no less degree of skill and care
than would be exercised by a prudent servicer of motorcycle conditional sales
contracts; PROVIDED, HOWEVER, that notwithstanding the foregoing, the Servicer
shall not release or waive the right to collect the unpaid balance on any
Contract.
Section 5.03. Records. The Servicer shall, during the period it is
servicer hereunder, maintain such books of account and other records as will
enable the 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 Trustee and its 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 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 Trustee may, using generally
accepted audit procedures, verify the status of each Contract and review the
Computer Disk and records relating thereto for conformity to Monthly Reports
prepared pursuant to Article VI and compliance with the standards represented to
exist as to each Contract in this Agreement.
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(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 Certificateholders.
Section 5.05. Trust Accounts. (a) On or before the Closing Date,
the Trust Depositor shall establish the Collection Account and the Special
Distribution Subaccount therein, each in the name of the Trustee for the benefit
of the Certificateholders. The Trustee is hereby required to ensure that each of
the Trust Accounts is established and maintained as an Eligible Account.
(b) The Trustee shall deposit (or the Servicer shall deposit, with
respect to payments by or on behalf of the Obligors and Net Liquidation Proceeds
received directly by the Servicer), without deposit into any intervening
account, into the Collection Account as promptly as practical (but in any case
not later than the second Business Day following the receipt thereof):
(i) With respect to principal and interest on the Contracts
(as well as Late Payment Penalty Fees and Extension Fees) received on
or 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 Trustee or
Servicer;
(ii) All Net Liquidation Proceeds related to the Contracts;
(iii) The aggregate of the Repurchase Prices for Contracts
repurchased by the Depositor as described in Section 9.06 which amounts
shall come from the Seller pursuant to Section 5.01 of the Transfer and
Sale Agreement;
(iv) All Advances made by the Servicer pursuant to Section
8.03(a);
(v) All amounts paid by the Seller in connection with an
optional repurchase of the Contracts described in Section 8.08;
(vi) All amounts realized in respect of Carrying Charges
transferred from the Interest Reserve Account as contemplated in
Section 8.03(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) as contemplated in the last sentence
of Section 5.05(d) hereof.
(c) The Trustee shall, if amounts remain on deposit in the Pre-Funding
Account at the expiration of the Funding Period, make demand, immediately upon
expiration of the Funding Period, upon the Trust Depositor and the Collateral
Agent for the payment of Liquidated Damages as contemplated in Section 2.02 of
the Deposit Agreement and Section 3.03 of the Security Agreement. The Trustee
shall deposit the amounts received from the Deposit Collateral Agent in respect
of such Liquidated Damages into the Special Distribution Subaccount in the
Collection Account to be distributed on the next upcoming Payment Date as
contemplated in Section 8.04(b) hereof.
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(d) If the Servicer so directs, in writing, the Trustee shall in its
capacity as Trustee hereunder, invest the amounts in the Trust Accounts in
Eligible Investments that mature not later than one Business Day prior to the
next succeeding Payment Date. Once such funds are invested, the 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 Trustee may purchase an Eligible Investment from
itself or an Affiliate. Any investment of funds in the Trust Accounts shall be
made in Eligible Investments (a) held in the possession of the Trustee or
maintained with another institution as an Eligible Account with respect to which
such institution has noted the Trustee's interest therein on its books and
records and a confirmation of the Trustee's interest has been sent to the
Trustee by such institution, and (b) with respect to Eligible Investments
comprised of securities, the Trustee has purchased such securities for value in
good faith without notice of any adverse claim thereto, and which securities (A)
if certificated and in bearer form, have been delivered to the Trustee, or in
registered form, have been issued or endorsed to the Trustee or in blank, (B) if
uncertificated, the transfer of which is registered on the books of the issuer
thereof, or (C) have been transferred (x) through acquisition or possession by a
financial intermediary of a certificated security specially endorsed to or
issued in the name of the Trustee, or (y) through confirmation by a financial
intermediary (not a clearing corporation) of the Trustee's purchase of a
certificated security and appropriate identification of its interest in the
records of such intermediary, or (z) through the making of appropriate entries
to the Trustee's (or its designee's) account on the books of a clearing
corporation in accordance with Section 8-320 of the applicable Uniform
Commercial Code. Subject to the other provisions hereof, the 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 Trustee or its agent, together with each document of
transfer, if any, necessary to transfer title to such investment to the Trustee
in a manner which complies with this Section 5.05(d). All interest, dividends,
gains upon sale and other income from, or earnings on, investments of funds in
the Trust Accounts shall be deposited in the Collection Account pursuant to
Section 5.05(b)(ii) and distributed on the next Payment Date pursuant to Section
8.04(b).
(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 ____
a.m., Central time, on the Business Day prior to the next succeeding Payment
Date, but only for so long as (a)(i) the short-term certificate of deposit
ratings of the Servicer are at least P-1 by Moody's and "A-1" by Standard &
Poor's or (ii) the Rating Agency shall have notified the Servicer and the
Trustee, in writing, that monthly remittances of collections will not result in
reduction or withdrawal of any then outstanding rating of any outstanding Note
or Certificate and (b) the Servicer is Harley-Davidson Credit Corp.
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(f) As of the Business Day immediately preceding the related Payment
Date, all collections for the related Collection Period with respect to each
Contract shall be applied by the Servicer as follows:
(i) First, to reimburse any outstanding Advances made by the
Servicer with respect to such Contract;
(ii) Second, first to interest accrued on such Contract as of
such date and then to principal until the Principal Balance of such
Contract is brought current; and
(iii) Third, to reduce the unpaid late charges or extension
fees (if any) as provided in such Contract.
(g) Any collections on a Contract remaining after application in
accordance with the provisions of Section 5.05(f) shall constitute an excess
payment (an "EXCESS PAYMENT"). Excess Payments shall be applied as a prepayment
of the Principal Balance of such Contract.
(h) The Servicer will, from time to time as provided herein, be
permitted to withdraw from the Collection Account any amount deposited therein
that, based on the Servicer's good-faith determination, was deposited in error
or required to be repaid to the related Obligor.
Section 5.06. Enforcement. (a) The Servicer will, consistent with
Section 5.02, act with respect to the Contracts in such manner as will maximize
the receipt of all payments called for under the terms of the Contracts. The
Servicer will act in a commercially reasonable manner with respect to the
repossession and disposition of a Motorcycle following a default under the
related Contract with a view to realizing proceeds at least equal to the
Motorcycle's fair market value. If the Servicer determines that eventual payment
in full of a Contract is unlikely, the Servicer will follow its normal practices
and procedures to recover all amounts due upon that Contract, including
repossessing and disposing of the related Motorcycle at a public or private sale
or taking other action permitted by applicable law. The Servicer will be
entitled to recover all reasonable out-of-pocket expenses incurred by it in
liquidating a Contract and disposing of the related Motorcycle.
(b) The Servicer may sue to enforce or collect upon Contracts, in its
own name, if possible, or as agent for the Trustee. If the Servicer elects to
commence a legal proceeding to enforce a Contract, the act of commencement shall
be deemed to be an automatic assignment of the Contract to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the Trustee on behalf of the Trust shall, at the Servicer's expense,
take such steps as the Servicer deems reasonably necessary to enforce the
Contract, including bringing suit in its name or the names of the
Certificateholders.
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(c) The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Contract in accordance with the
Servicer's usual practice. In exercising recourse rights, the Servicer is
authorized on the Trustee's behalf to reassign the defaulted Contract or the
related Motorcycle to the person against whom recourse exists at the price set
forth in the document creating the recourse; PROVIDED, HOWEVER, the Servicer in
exercising recourse against any third persons as described in the immediately
preceding sentence shall do so in such manner as to maximize the aggregate
recovery with respect to the Contract; and PROVIDED FURTHER, HOWEVER, that
notwithstanding the foregoing the Servicer in its capacity as such may exercise
such recourse only if such Contract was not required to be repurchased by the
Seller pursuant to the Transfer and Sale Agreement or was required to be
repurchased by the Seller and the Seller has defaulted on such repurchase
obligation.
(d) The Servicer will not permit any rescission or cancellation of any
Contract due to the acts or omissions of the Servicer.
(e) The Servicer may grant to the Obligor on any Contract an extension
of payments due under such Contract, PROVIDED that (i) the extension period is
limited to 45 days, (ii) the Obligor has been in good standing for the previous
twelve-month period, (iii) such extension is consistent with the Servicer's
customary servicing procedures and is consistent with Section 5.02, (iv) such
extension does not extend the maturity date of the Contract beyond the latest
maturity date of any of the Contracts as of the Initial Cutoff Date (or, if a
transfer of Subsequent Contracts to the Trust occurs, beyond the latest maturity
date of such Subsequent Contracts) and (v) the aggregate Principal Balances of
Contracts which have had extensions granted does not exceed more than 3.00% of
the aggregate of the Class A Initial Certificate Balance and the Class B Initial
Certificate Balance.
(f) The Servicer will not add to the outstanding Principal Balance of
any Contract the premium of any physical damage or other individual insurance on
a Motorcycle securing such Contract it obtains on behalf of the Obligor under
the terms of such Contract, but may create a separate Obligor obligation with
respect to such premium if and as provided by the Contract.
(g) If the Servicer shall have repossessed a Motorcycle on behalf of
the Trust, the Servicer shall either (i) maintain at its expense physical damage
insurance with respect to such Motorcycle, or (ii) indemnify the Trust against
any damage to such Motorcycle prior to resale or other disposition. The Servicer
shall not allow such repossessed Motorcycles to be used in an active trade or
business, but rather shall dispose of the Motorcycle in a reasonable time in
accordance with the Servicer's normal business practices.
Section 5.07. Trustee to Cooperate. Upon payment in full on any
Contract, the Servicer will notify the Trustee and the Trust Depositor on the
next succeeding Payment Date by certification of a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such payments which are required to be deposited in the
Collection Account pursuant to Section 5.05 have been so deposited) and shall
(if the Servicer is not then in possession of the Contracts and Contract Files)
request delivery of the Contract and
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Contract File to the Servicer. Upon receipt of such delivery and request, the
Trustee shall promptly release or cause to be released such Contract and
Contract File to the Servicer. Upon receipt of such Contract and Contract File,
each of the Trust Depositor and the Servicer is authorized to execute an
instrument in satisfaction of such Contract and to do such other acts and
execute such other documents as the Servicer deems necessary to discharge the
Obligor thereunder and eliminate the security interest in the Motorcycle related
thereto. The Servicer shall determine when a Contract has been paid in full; to
the extent that insufficient payments are received on a Contract credited by the
Servicer as prepaid or paid in full and satisfied, the shortfall shall be paid
by the Servicer out of its own funds. From time to time as appropriate for
servicing and repossession in connection with any Contract, if the Servicer is
not then in possession of the Contracts and Contract Files, the Trustee shall,
upon written request of a Servicing Officer and delivery to the Trustee of a
receipt signed by such Servicing Officer, cause the original Contract and the
related Contract File to be released to the Servicer and shall execute such
documents as the Servicer shall deem reasonably necessary to the prosecution of
any such proceedings. Such receipt shall obligate the Servicer to return the
original Contract and the related Contract File to the Trustee when the need by
the Servicer has ceased unless the Contract shall be repurchased as described in
Section 8.09. Upon request of a Servicing Officer, the Trustee shall perform
such other acts as reasonably requested by the Servicer and otherwise cooperate
with the Servicer in the enforcement of the Certificateholders' rights and
remedies with respect to Contracts.
Section 5.08. Costs and Expenses. All costs and expenses incurred
by the Servicer in carrying out its duties hereunder, fees and expenses of
accountants and payments of all fees and expenses incurred in connection with
the enforcement of Contracts (including enforcement of defaulted Contracts and
repossessions of Motorcycles securing such Contracts when such Contracts are not
repurchased pursuant to Section 8.06) and all other fees and expenses not
expressly stated hereunder to be for the account of the Trust shall be paid by
the Servicer and the Servicer shall not be entitled to reimbursement hereunder.
Section 5.09. Maintenance of Security Interests in Motorcycles. The
Servicer shall take such steps as are necessary to maintain continuous
perfection and the first priority of the security interest created by each
Contract in the related Motorcycle. The Trustee hereby authorizes the Servicer
to take such steps as are necessary to perfect such security interest and to
maintain the first priority thereof in the event of a relocation of a Motorcycle
or for any other reason.
ARTICLE VI
REPORTS
Section 6.01. Monthly Reports. No later than 10:00 a.m. Chicago,
Illinois time two Business Days following each Determination Date, the Servicer
shall cause the Trustee and each Rating Agency to receive a "Monthly Report"
substantially in the form of EXHIBIT J hereto.
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Section 6.02. Officer's Certificate. Each Monthly Report delivered
pursuant to Section 6.01 shall be accompanied by a certificate of a Servicing
Officer substantially in the form of EXHIBIT F, certifying the accuracy of the
Monthly Report and that no Servicer Default or event that with notice or lapse
of time or both would become a Servicer Default has occurred, or if such event
has occurred and is continuing, specifying the event and its status.
Section 6.03. Other Data. In addition, the Trust Depositor and the
Servicer shall, on request of the Trustee, Moody's or Standard & Poor's, furnish
the Trustee, Moody's or Standard & Poor's, as the case may be, such underlying
data as may be reasonably requested.
Section 6.04. Annual Report of Accountants.
(a) The Servicer shall cause a firm of nationally recognized
independent certified public accountants (the "INDEPENDENT ACCOUNTANTS"), who
may also render other services to the Servicer or to the Trust Depositor, to
deliver to the Trustee, the Placement Agent and each Rating Agency, on or before
March 31 (or 90 days after the end of the Servicer's fiscal year, if other than
December 31) of each year, beginning on March 31, 1997, with respect to the
twelve months ended the immediately preceding December 31 (or other applicable
date), a statement (the "ACCOUNTANT'S REPORT") addressed to the Board of
Directors of the Servicer to the Trustee to the effect that such firm has
audited the financial statements of the Servicer and issued its report thereon
and that such audit
(1) was made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting
records and such other auditing procedures as such firm considered
necessary in the circumstances;
(2) included an examination of documents and records relating
to the servicing of motorcycle conditional sales contracts under
pooling and servicing agreements substantially similar to one another
(such statement to have attached thereto a schedule setting forth the
pooling and servicing agreements covered thereby, including this
Agreement);
(3) included an examination of the delinquency and loss
statistics relating to the Servicer's portfolio of motorcycle
conditional sales contracts; and
(4) except as described in the statement, disclosed no
exceptions or errors in the records relating to motorcycle loans
serviced for others that, in the firm's opinion, generally accepted
auditing standards requires such firm to report.
The Accountant's Report shall further state that
(1) a review in accordance with agreed upon procedures was
made of one randomly selected Monthly Report and
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(2) except as disclosed in the Report, no exceptions or errors
in the Monthly Report so examined were found.
(b) The Accountant's Report shall also indicate that the firm is
independent of the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants.
Section 6.05. Annual Statement of Compliance from Servicer. The
Servicer will deliver to the Trustee and each of the Rating Agencies, on or
before January 31 of each year commencing January 31, 19__, an Officer's
Certificate stating that (a) a review of the activities of the Servicer during
the prior calendar year and of its performance under this Agreement was made
under the supervision of the officer signing such certificate and (b) to such
officer's knowledge, based on such review, the Servicer has fully performed all
its obligations under this Agreement, or, if there has been a default in the
performance of any such obligation, specifying each such default known to such
officer and the nature and status thereof. A copy of such certificate may be
obtained by any Certificateholder by a request in writing to the Trustee.
Section 6.06. Statements to Certificateholders. (a) On or before
two Business Days prior to each Payment Date, the Servicer shall prepare and,
concurrently with each distribution to Certificateholders pursuant to Article
VIII, the Trustee, in its capacity as Certificate Registrar and Paying Agent,
shall cause to be delivered and mailed to each Holder of a Class A Certificate
and each Holder of a Class B Certificate at the address appearing on the
Certificate Register a statement as of the related Payment Date setting forth:
(i) the amount distributed on such date and allocable to
principal of the Class A Certificates and the Class B Certificates;
(ii) the amount distributed on such date and allocable to
interest on the Class A Certificates and the Class B Certificates;
(iii) the amount of the Class A and Class B Principal and
Interest Carryover Shortfalls, if any, for such Payment Date and the change in
the Class A and Class B Principal and Interest Carryover Shortfalls from the
immediately preceding Payment Date;
(iv) the amount otherwise distributable to the Class B
Certificateholders that will be distributed to the Class A Certificateholders on
such Payment Date;
(v) the amount of the distributions described in (i) or (ii)
above payable pursuant to a claim on the Reserve Fund or from any other
source not constituting Available Funds and the amount remaining in the
Reserve Fund after giving effect to all deposits and withdrawals from
the Reserve Fund on such date;
(vi) the amount of any Special Distribution to be made on such
Payment Date;
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(vii) for each Payment Date during the Funding Period, the
remaining Pre-Funded Amount;
(viii) for each Payment Date to and including the Payment Date
immediately following the end of the Funding Period, the Principal
Balance and number of Subsequent Contracts conveyed to the Trust during
the related Due Period;
(ix) the remaining Class A Certificate Balance and Class B
Certificate Balance after giving effect to the distribution of
principal (and Special Distribution, if any) to be made on such Payment
Date;
(x) the Pool Balance as of the close of business on the last
day of the related Due Period;
(xi) the Class A Pool Factor and the Class B Pool Factor
immediately before and immediately after such Payment Date;
(xii) the amount of fees payable out of the Trust, separately
identifying the Monthly Servicing Fee and the Trustee Fee;
(xiii) the number and aggregate Principal Balance of Contracts
delinquent 31-59 days, 60-89 days and 90 or more days, computed as of
the end of the related Due Period;
(xiv) the number and aggregate Principal Balance of Contracts
that became Liquidated Contracts during the immediately preceding Due
Period, the amount of liquidation proceeds for such Due Period, the
amount of liquidation expenses being deducted from liquidation proceeds
for such Due Period, and the Net Liquidation Proceeds for such Due
Period;
(xv) the Loss Ratio, Average Loss Ratio, Cumulative Loss
Ratio, Default Ratio, Average Default Ratio, Delinquency Ratio and
Average Delinquency Ratio each as of such Payment Date;
(xvi) the number of Contracts and the aggregate Principal
Balance of such Contracts, as of the first day of the Due Period
relating to such Payment Date and as of the end of such Payment Date
(after giving effect to payments received during such Due Period and to
any transfers of Subsequent Contracts to the Trust occurring on or
prior to such Payment Date);
(xvii) the aggregate Principal Balance and number of Contracts
that were repurchased by the Seller pursuant to Section 8.06 with
respect to the related Due Period, identifying such Contracts and the
Repurchase Price for such Contracts; and
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(xix) such other customary factual information as is available
to the Servicer as the Servicer deems necessary and can reasonably
obtain from its existing data base to enable Certificateholders to
prepare their tax returns.
(b) Within 75 days after the end of each calendar year, the Servicer
shall prepare and the Certificate Registrar shall mail to each Certificateholder
of record at any time during such year a report as to the aggregate amounts
reported pursuant to subsections (a)(i), (ii) and (xii) of this Section 6.06,
attributable to such Certificateholder.
ARTICLE VII
SERVICER DEFAULTS; SERVICE TRANSFER
SECTION 7.01. SERVICER DEFAULTS. "SERVICER DEFAULT" means the
occurrence of any of the following:
(a) Any failure by the Servicer (i) to make any payment or
deposit required to be made hereunder or (ii) to direct the Trustee to
make any payment or distribution required to be made hereunder and the
continuance of such failure for a period of five (5) Business Days
after receipt of written notice from the Trustee or discovery by the
Servicer thereof;
(b) Failure on the Servicer's part to observe or perform in
any material respect any covenant or agreement set forth herein (other
than a covenant or agreement, the breach of which is specifically
addressed elsewhere in this Agreement) which (i) materially and
adversely affects the rights of the Certificateholders and (ii)
continues unremedied for thirty (30) days after receipt of written
notice from the Trustee or by Certificateholders with aggregate
Fractional Interests representing 25% or more of the Trust;;
(c) Any assignment by the Servicer of its duties or rights
hereunder or under the Transfer and Sale Agreement (or under any
Subsequent Purchase Agreement or Subsequent Transfer Agreement), except
as specifically permitted hereunder or thereunder, or any attempt to
make such an assignment;
(d) An involuntary case under any applicable bankruptcy,
insolvency or other similar law shall have been commenced in respect of
the Servicer and shall not have been dismissed within 90 days, or a
court having jurisdiction in the premises shall have entered a decree
or order for relief in respect of either the Servicer in an involuntary
case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of the
Servicer, or for any substantial liquidation or winding up of its
affairs;
(e) The Servicer shall have commenced a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall have
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consented to the entry of an order for relief in an involuntary case
under any such law, or shall have consented to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee,
custodian or sequestrator (or other similar official) of the Servicer
or for any substantial part of its property, or shall have made any
general assignment for the benefit of its creditors, or shall have
failed to, or admitted in writing its inability to, pay its debts as
they become due, or shall have taken any corporate action in
furtherance of the foregoing;
(f) Any failure by the Servicer to deliver to the Trustee the
Monthly Report pursuant to the terms of this Agreement which remains
uncured for five Business Days after the date which such failure
commences;
(g) Any representation, warranty or statement of the Servicer
made in this Agreement, in any Subsequent Transfer Agreement or any
certificate, report or other writing delivered pursuant hereto shall
prove to be incorrect in any material respect as of the time when the
same shall have been made and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Trust and,
within 30 days after written notice thereof shall have been given to
the Servicer by either the Trustee or by the Certificateholders with
aggregate Fractional Interests representing 25% or more of the Trust,
the circumstances or condition in respect of which such representation,
warranty or statement was incorrect shall not have been eliminated or
otherwise cured.
Section 7.02. WAIVER OF SERVICER DEFAULT. Certificateholders with
aggregate Fractional Interests representing more than 50% or more of the Trust,
may, by written notice delivered to the parties hereto, waive any Servicer
Default other than a Servicer Default described in SECTION 8.01(a).
Section 7.03. Service Transfer. (a) If a Servicer Default has
occurred and is continuing, (x) Certificateholders with aggregate Fractional
Interests representing more than 50% or more of the Trust or (y) the Trustee
may, by written notice delivered to the parties hereto, terminate all (but
not less than all) of the Servicer's management, administrative, servicing,
custodial and collection functions (such termination being herein called a
"SERVICE TRANSFER").
(b) Upon receipt of the notice required by Section 7.03(a) (or, if
later, on a date designated therein), all rights, benefits, fees,
indemnities, authority and power of the Servicer under this Agreement,
whether with respect to the Contracts, the Contract Files or otherwise, shall
pass to and be vested in the [ ] (the "SUCCESSOR SERVICER") pursuant to and
under this Section 7.03; and, without limitation, the Successor Servicer is
authorized and empowered to execute and deliver on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments,
and to do any and all acts or things necessary or appropriate to effect the
purposes of such notice of termination. The Servicer agrees to cooperate with
the Successor Servicer in effecting the termination of the responsibilities
and rights of the Servicer hereunder, including, without limitation, the
transfer to the Successor Servicer for administration
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by it of all cash amounts which shall at the time be held by the Servicer for
deposit, or have been deposited by the Servicer, in the Collection Account, or
for its own account in connection with its services hereafter or thereafter
received with respect to the Contracts. The Servicer shall transfer to the
Successor Servicer all records held by the Servicer relating to the Contracts in
such electronic form as the Successor Servicer may reasonably request and (ii)
any Contract Files in the Servicer's possession. In addition, the Servicer shall
permit access to its premises (including all computer records and programs) to
the Successor Servicer or its designee, and shall pay the reasonable transition
expenses of the Successor Servicer. Upon a Service Transfer, the Successor
Servicer shall also be entitled to receive the Servicing Fee for performing the
obligations of the Servicer.
SECTION 7.04. SUCCESSOR SERVICER TO ACT; APPOINTMENT OF SUCCESSOR
SERVICER. On and after a Service Transfer pursuant to SECTION 8.03, the
Successor Servicer shall be the successor in all respects to the Servicer in
its capacity as servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Servicer by the terms
and provisions hereof, and the terminated Servicer shall be relieved of such
responsibilities, duties and liabilities arising after such Service Transfer;
PROVIDED, HOWEVER, that [(i) the Successor Servicer will not assume any
obligations of the Servicer described in SECTION 8.03 and (ii)] the Successor
Servicer shall not be liable for any acts or omissions of the Servicer
occurring prior to such Service Transfer or for any breach by the Servicer of
any of its representations and warranties contained herein or in any related
document or agreement. Notwithstanding the above, if the Successor Servicer
is legally unable or unwilling to act as Servicer, it may appoint or petition
a court of competent jurisdiction to appoint an established financial
institution (x) having a net worth of not less than $100,00,000 as of the
last day of the most recent fiscal quarter for such institution and (y) whose
regular business shall include the servicing of automobile receivables, act
as Servicer. As compensation therefor, the Successor Servicer shall be
entitled to receive reasonable compensation equal to the Monthly Servicing
Fee. The Trustee and such Successor Servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. To the extent the terminated Servicer has made Advances, it shall
be entitled to reimbursement of the same notwithstanding its termination
hereunder, to the same extent as if it had continued to service the Contracts
hereunder.
Section 7.05. Notification to Certificateholders. (a) Promptly
following the occurrence of any Servicer Default, the Servicer shall give
written notice thereof to the Trustee, the Trust Depositor, the Back-up Servicer
and each Rating Agency at the addresses described in Section 12.09 hereof and to
the Certificateholders at their respective addresses appearing on the
Certificate Register.
(b) Within 10 days following any termination or appointment of a
Back-up Servicer pursuant to this Article VII, the Trustee shall give written
notice thereof to each Rating Agency and the Trust Depositor at the addresses
described in Section 12.09 hereof, and to the Certificateholders at their
respective addresses appearing on the Certificate Register.
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Section 7.06. Effect of Transfer. (a) After a Service Transfer, the
terminated Servicer shall have no further obligations with respect to the
management, administration, servicing, custody or collection of the Contracts
and the Successor Servicer appointed pursuant to Section [___] shall have all of
such obligations, except that the terminated Servicer will transmit or cause to
be transmitted directly to the Successor Servicer for its own account, promptly
on receipt and in the same form in which received, any amounts (properly
endorsed where required for the Successor Servicer to collect them) received as
payments upon or otherwise in connection with the Contracts.
(b) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Seller pursuant to Article X and Section 11.06), other than those
relating to the management, administration, servicing, custody or collection of
the Contracts.
Section 7.07. Database File. The Servicer will provide the
Successor Servicer with a magnetic tape containing the database file for each
Contract (i) as of the Cutoff Date, (ii) the Subsequent Cutoff Date, (iii)
thereafter, as of the last day of the preceding Due Period on each Determination
Date prior to a Servicer Default and (iv) on and as of the Business Day before
the actual commencement of servicing functions by the Successor Servicer
following the occurrence of a Servicer Default.
Section 7.08. Successor Servicer Indemnification. The Servicer
shall defend, indemnify and hold the Successor Servicer and any officers,
directors, employees or agents of the Successor Servicer harmless against any
and all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments and any other costs, fees, and expenses that the Successor
Servicer may sustain in connection with the claims asserted at any time by third
parties against the Successor Servicer which result from (i) any willful or
grossly negligent act taken or omission by the Servicer or (ii) a breach of any
representations of the Servicer in Section 3.02 hereof. The indemnification
provided by this Section 7.07 shall survive the termination of this Agreement.
Section 7.09. RESPONSIBILITIES OF THE SUCCESSOR SERVICER. The
Successor Servicer will not be responsible for delays attributable to the
Servicer's failure to deliver information, defects in the information supplied
by the Servicer or other circumstances beyond the control of the Successor
Servicer.
The Successor Servicer will make arrangements with the Servicer for the
prompt and safe transfer of, and the Servicer shall provide to the Successor
Servicer, all necessary servicing files and records, including (as deemed
necessary by the Successor Servicer at such time): (i) microfiche loan
documentation, (ii) servicing system tapes, (iii) Contract payment history, (iv)
collections history and (v) the trial balances, as of the close of business on
the day immediately preceding conversion to the Successor Servicer, reflecting
all applicable loan information.
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The Successor Servicer shall have no responsibility and shall not be in
default hereunder nor incur any liability for any failure, error, malfunction or
any delay in carrying out any of its duties under this Agreement if any such
failure or delay results from the Successor Servicer acting in accordance with
information prepared or supplied by a Person other than the Successor Servicer
or the failure of any such Person to prepare or provide such information. The
Successor Servicer shall have no responsibility, shall not be in default and
shall incur no liability (i) for any act or failure to act by any third party,
including the Servicer, the Depositor or the Trustee or for any inaccuracy or
omission in a notice or communication received by the Successor Servicer from
any third party or (ii) which is due to or results from the invalidity,
unenforceability of any Contract with applicable law or the breach or the
inaccuracy of any representation or warranty made with respect to any Contract.
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Section 7.10. LIMITATION OF LIABILITY OF SERVICER.
(a) Neither the Servicer nor any of the directors, officers, employees
or agents of the Servicer shall be under any liability to the Issuer, the
Trustee or the Certificateholders, except as provided under this Agreement, for
any action taken or for refraining from the taking of any action pursuant to
this Agreement or for errors in judgment; PROVIDED, HOWEVER, that this provision
shall not protect the Servicer or any such person against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer and any director,
officer, employee or agent of the Servicer may rely in good faith on the advice
of counsel or on any document of any kind, prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Contracts in accordance
with this Agreement, and that in its opinion may cause it to incur any expense
or liability; PROVIDED, HOWEVER, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of the Transaction
Documents and the rights and duties of the parties to the Transaction Documents
and the interests of the Certificateholders. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Servicer and the Servicer will not be
entitled to be reimbursed therefor.
Section 7.11. MERGER OR CONSOLIDATION OF SERVICER. Any Person into
which the Servicer may be merged or consolidated, or any corporation, or other
entity resulting from any merger conversion or consolidation to which the
Servicer shall be a party, or any Person succeeding to the business of the
Servicer (which Person assumes the obligations of the Servicer), shall be the
successor of the Servicer hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. The Servicer shall give prior written
notice of any such merger or consolidation to which it is a party to the Issuer,
the Indenture Trustee and the Rating Agencies.
Section 7.12. SERVICER NOT TO RESIGN. Subject to the provisions of
SECTION 8.03, Servicer shall not resign from the obligations and duties hereby
imposed on it as Servicer under this Agreement except upon determination that
the performance of its duties under this Agreement shall no longer be
permissible under applicable law. Notice of any such determination permitting
the resignation of Servicer shall be communicated to the Trustee at the earliest
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustee concurrently with or promptly after such notice. No
such resignation shall become effective until a Successor Servicer shall have
assumed the responsibilities and rights of the predecessor Servicer in
accordance with SECTION 8.04.
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Section 7.13. APPOINTMENT OF SUBSERVICER. So long as
Harley-Davidson Credit Corp. acts as the Servicer, the Servicer may at any time
without notice or consent subcontract substantially all its duties under this
Agreement to any corporation more than 50% of the voting stock of which is
owned, directly or indirectly, by Aon Corporation. The Servicer may at any time
perform specific duties as servicer under this Agreement through other
subcontractors; PROVIDED, HOWEVER, that no such delegation or subcontracting
shall relieve the Servicer of its responsibilities with respect to such duties
as to which the Servicer shall remain primarily responsible with respect
thereto.
ARTICLE VIII
PAYMENTS AND RESERVE FUND
SECTION 8.01. MONTHLY PAYMENTS. (a) Each Certificateholder as of
the related Record Date shall be paid on the next succeeding Payment Date by
check mailed to such Certificateholder at the address for such Certificateholder
appearing on the Certificate Register or by wire transfer if such
Certificateholder provides written instructions to the Trustee at least ten days
prior to such Payment Date.
(b) The Trustee shall serve as the paying agent hereunder (the "PAYING
AGENT") and shall make the payments to the Certificateholders required
hereunder. The Trustee hereby agrees that all amounts held by it for payment
hereunder will be held in trust for the benefit of the Certificateholders.
SECTION 8.02. FEES. The Trustee shall be paid the Trustee's Fee and
the Servicer shall be paid the Monthly Servicing Fee, each of which shall be
paid solely from the monies and in accordance with the priorities described in
Section 8.04(b). No recourse may be had to the Seller, Trust Depositor, Trustee,
Servicer, or any of their respective Affiliates in the event that amounts
available under Section 8.04(b) are insufficient for payment of the Trustee Fee
and the Monthly Servicing Fee.
Section 8.03. Advances; Realization of Carrying Charge. (a) On each
Determination Date, the Servicer shall compute the amount of Delinquent
Interest, if any, on the Contracts for the immediately preceding Due Period. Not
later than each Determination Date, the Servicer shall advance (each, an
"ADVANCE") such Delinquent Interest by depositing the aggregate amount of such
Delinquent Interest in the Collection Account, PROVIDED, HOWEVER, that the
Servicer shall be obligated to advance Delinquent Interest only to the extent
that the Servicer, in its sole discretion, expects that such Advance will not
become an Uncollectible Advance. The Servicer shall indicate on each Monthly
Report (i) the amount of Delinquent Interest, if any, on the Contracts for the
related Due Period and (ii) the amount of the Advance, if any, made by the
Servicer in respect of such Delinquent Interest pursuant to this Section 8.03.
If the amount of such Advance is less than the amount of the Delinquent
Interest, the relevant Monthly Report shall be accompanied by a certificate of a
Servicing Officer setting forth in reasonable detail the basis for the
determination by the Servicer that the portion of the Delinquent Interest not
advanced would become an Uncollectible Advance. By each Determination Date, the
Servicer
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shall determine the amount of prior unreimbursed Advances for which it desires
to be reimbursed pursuant to the provisions of Section 8.03 (such amount, the
"REIMBURSEMENT AMOUNT"). The Servicer shall be entitled to be reimbursed for any
outstanding Advance with respect to a Contract by means of a first priority
withdrawal from the Collection Account of such Reimbursement Amount as provided
in Section 8.04(b)(i).
(b) The Servicer shall determine no later than 12:00 noon, New York
City time, on the second Business Day prior to a Payment Date the Carrying
Charges in respect of the upcoming Payment Date. To the extent of such amount,
the Trustee shall, pursuant to the Deposit Agreement, make demand upon the Trust
Depositor for payment of the Carrying Charges, to be satisfied from (and solely
to the extent of) the amount then on deposit in the Interest Reserve Account.
Such demand shall be effected by giving the notice to the Collateral Agent
described in Section 3.03 of the Security Agreement. Amounts realized from such
demand shall be deposited immediately into the Collection Account as
contemplated in Section 5.05(b)(vi) hereof.
Section 8.04. Payments. (a) On each Determination Date, the
Servicer shall determine the amount of the Available Funds for the related
Payment Date and shall calculate the Available Interest, the Available
Principal, the Class A Distributable Amount, the Class B Distributable Amount,
and all other distributions to be made on the related Payment Date.
(b) On each Payment Date, the Trustee will, based on the information in
the Monthly Report, distribute as a Special Distribution from the Special
Distribution Subaccount (a) to the Holders of the Class A Certificateholders,
pro rata, in an amount equal to the Class A Percentage multiplied by the amount
in the Special Distribution Subaccount and (b) to the Class B
Certificateholders, pro rata, in an amount equal to the Class B Percentage
multiplied by the amount in the Special Distribution Subaccount, and shall also
distribute the following amounts in the following order of priority:
(i) from Available Funds, the Reimbursement Amount to the
Servicer;
(ii) from Available Interest, the Servicing Fee for the
related Due Period to the Servicer;
(iii) from Available Interest, the Trustee's Fee for the
related Due Period to the Trustee;
(iv) to the Class A Certificateholders of record, from
Available Interest, an amount equal to the Class A Interest
Distributable Amount for such Payment Date and, if such Available
Interest is insufficient, the Class A Certificateholders will receive
such shortfall first, from the Class B Percentage of Available
Principal and second, if such amounts are still insufficient, from
monies on deposit in the Reserve Fund;
(v) to the Class B Certificateholders of record, from
Available Interest, an amount equal to the Class B Interest
Distributable Amount for such Payment Date and, if
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such Available Interest is insufficient, the Class B Certificateholders
will receive such shortfall from monies on deposit in the Reserve Fund;
(vi) to the Class A Certificateholders of record, from
Available Principal, an amount equal to the Class A Principal
Distributable Amount for such Payment Date and, if such Available
Principal is insufficient, the Class A Certificateholders will receive
such shortfall first, from Available Interest, and second, if such
amounts are still insufficient, from monies on deposit in the Reserve
Fund;
(vii) to the Class B Certificateholders of record, from
Available Principal, an amount equal to the Class B Principal
Distributable Amount for such Payment Date and, if such Available
Principal is insufficient, the Class B Certificateholders will receive
such shortfall first, from Available Interest, and second, if such
amounts are still insufficient, from monies on deposit in the Reserve
Fund; and
(viii) any remaining Available Funds after the payments
described in clauses (i) through (vii) above shall be paid to the
Reserve Agent for deposit in the Reserve Fund.
Any monies intended for the payment of Class A Distributable Amounts or
Class B Distributable Amounts but which remain unclaimed by Certificateholders
for a period of two years after the Final Scheduled Payment Date shall, upon the
written request of the Trust Depositor, be paid to the Trust Depositor, and such
Certificateholders shall thereafter look only to the Trust Depositor for
payment, and then only to the extent of the amounts so received without interest
thereon; PROVIDED, HOWEVER, that within thirty days prior to the expiration of
the two-year period mentioned above, the Trustee, before being required to make
any such repayment, may, at the expense of the Trust Depositor, cause to be
published in a financial journal a notice that after a date named therein said
monies will be returned to the Trust Depositor.
Section 8.05. Withdrawal from Reserve Fund to Cover a Shortfall.
The Trustee shall determine no later than 10:00 a.m., Chicago, Illinois time, on
the Payment Date (but after making, and taking into account, the determination,
demand and transfer of funds contemplated in Section 8.03(b) above) whether
there exists a Shortfall with respect to the upcoming Payment Date. In the event
that the Trustee determines that there exists a Shortfall, the Trustee shall
furnish to the Reserve Agent no later than 12:00 noon, Chicago, Illinois time,
on such Payment Date a written notice specifying the Shortfall for such Payment
Date and directing the Reserve Agent to remit monies in respect of such
Shortfall (to the extent of funds available to be so distributed pursuant to the
Reserve Fund Agreement) to the Trustee for deposit in the Collection Account.
Upon receipt of any such funds the Trustee shall deposit such amounts into the
Collection Account.
Section 8.06. Repurchases of Contracts for Breach of
Representations and Warranties. Upon a discovery by the Servicer, the Trust
Depositor or the Trustee of a breach of a representation or warranty of the
Seller as set forth in EXHIBIT K hereto or as made in any
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Subsequent Purchase Agreement relating to Subsequent Contracts that materially
adversely affects the Trust's interest in such Contract (without regard to the
benefits of the Reserve Fund), the party discovering the breach shall give
prompt written notice to the other parties PROVIDED, that the Trustee shall have
no duty or obligation to inquire or to investigate the breach by the Seller of
any of such representations or warranties. The Seller, as provided in the
Transfer and Sale Agreement and in accordance with this Section 8.06, shall
repurchase a Contract at its Repurchase Price, two Business Days prior to the
first Determination Date after the Seller becomes aware, or should have become
aware, or receives written notice from the Trustee, the Servicer or the Trust
Depositor of any breach of a representation or warranty of the Seller set forth
in Article III of the Transfer and Sale Agreement that materially adversely
affects such Contract or the Trust's interest in such Contract and which breach
has not been cured; PROVIDED, HOWEVER, that with respect to any Contract
incorrectly described on the List of Contracts with respect to unpaid Principal
Balance which the Seller would otherwise be required to repurchase under the
Transfer and Sale Agreement, the Seller may, in lieu of repurchasing such
Contract, deposit in the Collection Account not later than one Business Day
after such Determination Date cash in an amount sufficient to cure such
deficiency or discrepancy, and PROVIDED FURTHER that with respect to a breach of
representation or warranty relating to the Contracts in the aggregate and not to
any particular Contract the Seller may select Contracts (without adverse
selection) to repurchase such that had such Contracts not been included as part
of the Trust Corpus there would have been no breach of such representation or
warranty; PROVIDED FURTHER that (a) the failure of a Contract File to be
complete or of the original certificate of title and evidence of recordation of
such certificate to be included in the Contract File as of 180 days after the
Closing Date (or Subsequent Transfer Date, in the case of Subsequent Contracts)
or (b) the failure to maintain perfection of the security interest in the
Motorcycle securing a Contract in accordance with Section 5.09, shall be deemed
to be a breach materially and adversely affecting the Trust's interest in the
Contract or in the related Contracts. Notwithstanding any other provision of
this Agreement, the obligation of the Seller under the Transfer and Sale
Agreement and described in this Section 8.06 shall not terminate or be deemed
released by any party hereto upon a Service Transfer pursuant to Article VII.
The repurchase obligation described in this Section 8.06 is in no way to be
satisfied with monies in the Reserve Fund.
Section 8.07. Reassignment of Repurchased Contracts. Upon receipt
by the Trustee for deposit in the Collection Account of the Repurchase Price as
described in Section 8.06 or Section 8.08, and upon receipt of a certificate of
a Servicing Officer in the form attached hereto as EXHIBIT G, the Trustee shall
assign to the Seller all of the Trust's right, title and interest in the
repurchased Contract without recourse, representation or warranty, except as to
the absence of liens, charges or encumbrances created by or arising as a result
of actions of the Trustee.
Section 8.08. Seller's Repurchase Option. As provided in the
Transfer and Sale Agreement, on written notice to the Trustee at least 20 days
prior to a Payment Date, and provided that aggregate of the Class A Certificate
Balance and Class B Certificate Balance is then less than 10% of the Class A
Initial Certificate Balance and Class B Initial Certificate Balance, and
provided a valuation letter is delivered as required in Section 5.02 of the
Transfer and Sale Agreement, the Seller may (but is not required to) repurchase
on that Payment Date all
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outstanding Contracts at a price equal to the aggregate of the Class A and Class
B Certificate Balance on the previous Payment Date plus the aggregate of the
Class A Interest Distributable Amount and the Class B Interest Distributable
Amount for the current Payment Date thereon, the Reimbursement Amount (if any)
as well as accrued and unpaid Monthly Servicing Fees and Trustee Fees to the
date of such repurchase. Such price is to be deposited in the Collection Account
one Business Day before such Payment Date, against the Trustee's release of the
Contracts and the Contract Files to the Seller in the manner described in
Section 8.07 above.
ARTICLE IX
THE CERTIFICATES
Section 9.01. The Certificates. The Class A Certificates and the
Class B Certificates shall be substantially in the form of Exhibit A-1 and
Exhibit A-2, respectively. The Certificates shall be issued in fully registered
form in minimum denominations of $[ ] and integral multiples of $[ ] in excess
thereof, except that one Class A Certificate and one Class B Certificate may be
issued in a denomination representing the remainder of the Class A Certificate
Balance or Class B Certificate Balance, as applicable. The Certificates shall be
executed on behalf of the Trust by manual or facsimile signature of an
authorized officer of the Trustee. Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures were
affixed, authorized to sign on behalf of the Trustee shall be validly issued and
entitled to the benefit of this Agreement, notwithstanding the fact that such
individuals or any of them have ceased to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of authentication and delivery of such Certificates.
Section 9.02. Authentication of Certificates. Concurrently with the
conveyance of the Contracts to the Trust, the Trustee shall cause the
Certificates to be executed on behalf of the Trust by an authorized Trust
officer, and authenticated and delivered to or upon the written order of the
Trust Depositor, without further corporate action by the Trust Depositor, in
authorized denominations. No Certificate shall entitle its Holder to any benefit
under this Agreement or be valid for any purpose unless there shall appear on
such Certificate a certificate of authentication, executed by the Trustee by
manual signature. Such authentication shall constitute conclusive evidence that
such Certificate shall have been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
Section 9.03. Registration of Transfer and Exchange. (a) The
Trustee shall cause to be kept a register (the "CERTIFICATE REGISTER") in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and the registration of transfers
of Certificates. The Trustee shall be the initial "CERTIFICATE REGISTRAR" for
the purpose of registering Certificates and transfers of Certificates as herein
provided. Upon the resignation of any Certificate Registrar, the Trustee shall
promptly appoint a successor or, if it elects not to make such an appointment,
assume the duties of Certificate Registrar.
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If a Person other than the Trustee is appointed as Certificate
Registrar, the Trustee shall give prompt written notice of the appointment of
such Certificate Registrar and of the location, and any change in the location,
of the Certificate Register, and the Trustee shall have the right to inspect the
Certificate Register at all reasonable times, to obtain copies thereof and to
rely conclusively upon a certificate executed on behalf of the Certificate
Registrar by an authorized officer thereof as to the names and addresses of the
Certificateholders and the principal amounts and number of the Certificates.
Upon surrender for registration of transfer of any Certificate at the
office or agency of the Trustee to be maintained as provided in Section 6.08,
the Trustee shall execute, authenticate and deliver to the designated transferee
or transferees, one or more new Certificates in any authorized denominations of
a like aggregate principal amount.
At the option of the Certificateholder, Certificates may be exchanged
for other Certificates in any authorized denominations of a like aggregate
principal amount. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute, authenticate and deliver to the Certificateholder the
Certificates that the Certificateholder making the exchange is entitled to
receive.
All Certificates issued upon any registration of transfer or exchange
of Certificates shall be the valid obligations of the Trust, evidencing the same
interest in the Trust and entitled to the same benefits under this Agreement as
the Certificates surrendered upon such registration of transfer or exchange.
(b) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by, the
holder thereof or such holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located or having a
correspondent located in [________] or the city in which the Corporate Trust
Office is located or by a member firm of a national securities exchange, and
such other documents as the Trustee may require.
(c) No service charge shall be made to a Certificateholder for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates.
SECTION 9.04. CERTAIN TRANSFER RESTRICTIONS. [RESERVED]
Section 9.05. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate shall be surrendered to the Certificate Registrar
or if the Certificate Registrar shall receive evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (b) there shall be
delivered to the Certificate Registrar and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then in the
absence of notice that such
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Certificate has been acquired by a bona fide purchaser, the Trustee on behalf of
the Trust shall execute, and the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and denomination. In connection
with the issuance of any new Certificate under this Section, the Trustee and the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of ownership of a beneficial interest in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 9.06. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate is registered in
the Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 8.04 and for all other purposes
whatsoever, and neither the Trustee nor the Certificate Registrar shall be bound
by any notice to the contrary.
Section 9.07. Access to List of Certificateholders' Names and
Addresses. The Certificate Registrar will furnish to the Trustee, the Trust
Depositor and the Servicer, within five days after receipt by the Certificate
Registrar of a request therefor from the Trustee or the Certificateholder in
writing, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Certificateholders as of the most recent Record Date.
If Class A Certificateholders or Class B Certificateholders with aggregate
Fractional Interests representing 25% or more of the Class A Certificate Balance
or Class B Certificate Balance, respectively, (hereinafter referred to as
"APPLICANTS") apply in writing to the Trustee, and such application states that
the Applicants desire to communicate with other Certificateholders with respect
to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants access during normal business hours to
the most recent list of Certificateholders held by the Trustee. If such list is
as of a date more than 90 days prior to the date of receipt of such Applicants'
request, the Trustee shall promptly request from the Certificate Registrar a
current list as provided above, and shall afford such Applicants access to such
list promptly upon receipt. Every Certificateholder, by receiving and holding a
Certificate, agrees with the Certificate Registrar and the Trustee that none of
the Trust Depositor, the Certificate Registrar or the Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Certificateholders
Section 9.08. Book-Entry Certificates. Unless the Holder thereof
requests that Class A Certificates be delivered in definitive, fully registered
form ("DEFINITIVE CERTIFICATES"), the Class A Certificates, upon original
issuance, will be issued in the form of one or more typewritten Certificates
representing Book-Entry Certificates, to be delivered to the Depository Trust
Company, the initial Clearing Agency, by or on behalf of the Trust. The
Book-Entry Certificates
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shall be registered initially on the Certificate Register in the name of Cede &
Co., the nominee of the initial Clearing Agency. With respect to the Book-Entry
Certificates:
(1) the provisions of this Section shall be in full force and
effect;
(2) the Depositor, the Servicer, the Certificate Registrar and the
Trustee may deal with the Clearing Agency for all purposes
(including the making of distributions on the Book-Entry
Certificates) as the sole Holder of such Book-Entry
Certificates and shall have no obligation to the related
Certificate Owner;
(3) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of
this Section shall control;
(4) the rights of such Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those
established by law and agreements between such Certificate
Owners and the Clearing Agency and/or the Clearing Agency
Participants pursuant to the Depository Agreement. The initial
Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit
distributions of principal and interest on the Book-Entry
Certificates to such Clearing Agency Participants; and
(5) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of
Certificateholders evidencing a specified percentage of the
Certificate Balance, the Clearing Agency shall be deemed to
represent such percentage only to the extent that it has
received instructions to such effect from Certificate Owners
and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial
interest in the Book-Entry Certificates and has delivered such
instructions in writing to the Trustee.
Neither the Trustee nor the Certificate Registrar shall have any responsibility
to monitor or restrict the transfer of beneficial ownership in any Certificate
an interest in which is transferable through the facilities of the Depository.
Section 9.09. Notices to Clearing Agency. Whenever a notice or
other communication to Holders of the Book-Entry Certificates is required under
this Agreement, the Trustee and the Servicer shall give all such notices and
communications specified herein to be given to Holders of Certificates to the
Clearing Agency.
ARTICLE X
INDEMNITIES
Section 10.01. Servicer Indemnification. The Servicer agrees to defend
and indemnify the Trust, the Trustee the Paying Agent, the Certificateholders
and any agents of the Trustee,
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and the Certificateholders against any and all costs, expenses, losses, damages,
claims and liabilities, and shall also assume the obligations of the Trust
Depositor to pay expenses and costs incurred pursuant to the terms of the
Security Agreement (which expenses and costs shall not be borne by the
Collateral as defined therein), including reasonable fees and expenses of
counsel and expenses of litigation arising out of or resulting from this
Agreement or any of the related Transaction Documents, or the use, ownership or
operation of any Motorcycle by the Servicer or any Affiliate of the Servicer.
Notwithstanding any other provision of this Agreement, the obligation of the
Servicer described in this Section 10.01 shall not terminate or be deemed
released upon a Service Transfer pursuant to Article VII and shall survive any
termination of this Agreement.
Section 10.02. Liabilities to Obligors. No obligation or liability to
any Obligor under any of the Contracts is intended to be assumed by the Trust or
the Certificateholders under or as a result of this Agreement and the
transactions contemplated hereby and, to the maximum extent permitted and valid
under mandatory provisions of law, the Trust and the Certificateholders
expressly disclaim any such assumption.
Section 10.03. Tax Indemnification. As provided in the Transfer and
Sale Agreement, the Seller has agreed to pay, and to indemnify, defend and hold
harmless the Trust, the Trustee and the Certificateholders from, any taxes which
may at any time be asserted with respect to, and as of the date of, the transfer
of the Contracts to the Trust, including, without limitation, any sales, gross
receipts, general corporation, personal property, privilege or license taxes
(but not including any federal, state or other taxes arising out of the creation
of the Trust and the issuance of the Certificates) and costs, expenses and
reasonable counsel fees in defending against the same, whether arising by reason
of the acts to be performed by the Trust Depositor, the Seller or the original
Servicer under this Agreement or imposed against the Trust, a Certificateholder
or otherwise. Notwithstanding any other provision of this Agreement, the
obligation of the Seller described in this Section 10.03 shall not terminate or
be deemed released upon a Service Transfer pursuant to Article VII and shall
survive any termination of this Agreement.
Section 10.04. Servicer's Indemnities. The Servicer shall defend and
indemnify the Trust, the Trustee and the Certificateholders against any and all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel and expenses of litigation, in respect of any
action taken by such Servicer with respect to any Contract. This indemnity shall
survive any Service Transfer (but the original Servicer's obligations under this
Section 10.04 shall not relate to any actions of any subsequent Servicer after a
Service Transfer) and any payment of the amount owing under, or any repurchase
by the Seller of, any such Contract and shall survive any termination of this
Agreement.
Section 10.05. Operation of Indemnities. Indemnification under this
Article X shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If the Servicer has made any indemnity
payments to the Trustee pursuant to this Article X and the Trustee thereafter
collects any of such amounts from others, the Trust will repay such amounts
collected to the Servicer, without interest.
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ARTICLE XI
THE TRUSTEE
Section 11.01. Duties of Trustee. The Trustee, prior to the occurrence
of a Servicer Default and after the curing of all Servicer Defaults which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If a Servicer Default has occurred
(which has not been cured), the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform as to form to the requirements of this Agreement and shall promptly
notify the Servicer and each Certificateholder of any failure of any of the
foregoing to so conform.
Subject to Section 11.03, no provision of this Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act (including actions or omissions within its
control resulting in the failure of Certificateholders to receive timely payment
of either the Class A Distributable Amount or the Class B Distributable Amount)
or its own misconduct; PROVIDED, HOWEVER, that:
(a) Prior to the occurrence of a Servicer Default, and after
the curing of all such Servicer Defaults which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(b) The Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(c) The Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of Certificateholders with aggregate
Fractional Interests representing 25% or more of the Trust relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement; and
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(d) The Trustee shall not be charged with knowledge of any
event referred to in Section 7.01 unless a Responsible Officer of the
Trustee at the Corporate Trust Office obtains actual knowledge of such
event or the Trustee receives written notice of such event from the
Seller, the Trust Depositor, the Servicer or the Certificateholders
with aggregate Fractional Interests representing 25% or more of the
Trust.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it,
PROVIDED, HOWEVER, that nothing contained herein shall relieve the Trustee of
the obligations, upon the occurrence of a Servicer Default (which has not been
cured), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
None of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Seller, the Trust Depositor or the Servicer
under this Agreement.
Without limiting the generality of this Section 11.01, the Trustee
shall have no duty (i) to see to any recording, filing or depositing of this
Agreement or any agreement referred to herein or any financing statement
evidencing a security interest in the Motorcycles or to see to the maintenance
of any such recording or filing or depositing or to any re-recording, refiling
or redepositing of any thereof, (ii) to see to any insurance of the Motorcycles
or Obligors or to effect or maintain any such insurance, (iii) to see to the
payment or discharge of any tax, assessment or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against any part of the Trust, (iv) to confirm or verify the contents of any
reports or certificates delivered to the Trustee pursuant to this Agreement
believed by the Trustee to be genuine and to have been signed or presented by
the proper party or parties, or (v) to inspect the Motorcycles at any time or
ascertain or inquire as to the performance or observance of any of the Seller's
or the Servicer's representations, warranties or covenants or the Servicer's
duties and obligations as Servicer and as custodian of the Contract Files under
this Agreement.
SECTION 11.02. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
otherwise provided in Section 11.01 and provided the Paying Agent shall also
benefit from the provisions of this Section 11.02:
(a) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, certificate of a
Servicing Officer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
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(b) The Trustee may consult with counsel and any opinion of any counsel
for the Seller, the Trust Depositor or the Servicer shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by the Trustee hereunder in good faith and in accordance with such
opinion of counsel;
(c) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation hereunder or in relation hereto, at the request, order or
direction of any of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; PROVIDED, HOWEVER, that nothing
contained herein shall relieve the Trustee of the obligations, upon the
occurrence of a Servicer Default (which has not been cured), to exercise such of
the rights and powers vested in it by this Agreement, and to use the same degree
of care and skill in their exercise as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs;
(d) Prior to the occurrence of a Servicer Default and after the curing
of all Servicer Defaults which may have occurred, the Trustee shall not be bound
to make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in writing so
to do by Certificateholders with aggregate Fractional Interests representing 25%
or more of the Trust; PROVIDED, HOWEVER, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to so proceeding. The reasonable expense of
every such examination shall be paid by the Servicer or, if paid by the Trustee,
shall be reimbursed by the Servicer upon demand; and
(e) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or co-trustees or a custodian and shall not be liable for any acts or
omissions of such agents, attorneys or co-trustees or custodians if appointed by
it with due care hereunder; PROVIDED, HOWEVER, if the Servicer is acting as
custodian, the Servicer is deemed by all parties to have been appointed with due
care.
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Section 11.03. Trustee Not Liable for Certificates or Contracts. The
Trustee assumes no responsibility for the correctness of the recitals contained
herein or in the Certificates (other than the Trustee's execution thereof). The
Trustee makes no representations as to the validity or sufficiency of this
Agreement, the Trust or of the Certificates (other than its execution thereof)
or of any Contract, Contract File or related document. The Trustee shall not be
accountable for the use or application by the Servicer or the Trust Depositor of
funds paid to the Trust Depositor in consideration of conveyance of the
Contracts to the Trust by the Trust Depositor or deposited in or withdrawn from
the Collection Account by the Servicer.
Section 11.04. Trustee May Own Certificates. The Trustee in its
individual or other capacity may become the owner or pledgee of Certificates
representing less than all the beneficial interest in the Trust with the same
rights as it would have if it were not Trustee.
Section 11.05. RIGHTS TO DIRECT TRUSTEE AND TO WAIVE SERVICER DEFAULTS.
Certificateholders with aggregate Fractional Interests representing 25% or more
of the Trust shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee under this
Agreement or any Transaction Document assigned to the Trustee, or exercising any
trust or power conferred on the Trustee under this Agreement or any Transaction
Document assigned to the Trustee; PROVIDED, HOWEVER, that, subject to Section
11.01, the Trustee shall have the right to decline to follow any such direction
if the Trustee being advised by counsel determines that the action so directed
may not lawfully be taken, or if the Trustee in good faith shall, by a
Responsible Officer or Responsible Officers of the Trustee, determine that the
proceedings so directed would be illegal or involve the Trustee in personal
liability or (in the case of directions by the Certificateholders) be unduly
prejudicial to the rights of Certificateholders not parties to such direction;
and PROVIDED FURTHER that nothing in this Agreement shall impair the right of
the Trustee to take any action deemed proper by the Trustee and which is not
inconsistent with such direction by the Certificateholders. Certificateholders
with aggregate Fractional Interests representing 51% or more of the Trust may
waive any past Servicer Default hereunder and its consequences, and upon any
such waiver, such Servicer Default shall cease to exist and shall be deemed to
have been cured for every purpose of this Agreement; but no such waiver shall
extend to any subsequent or other Servicer Default or impair any right
consequent thereon. The Trustee shall have no liability for acting upon the
direction of the Certificateholders.
Section 11.06. The Servicer to Pay Trustee's Expenses. The Servicer
agrees to indemnify the Trustee for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on the Trustee's
part, arising out of or in connection with the acceptance or administration of
this trust and its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder.
This Section 11.06 shall be for the benefit of the Trustee in its
capacities as Trustee, Paying Agent, and Certificate Registrar hereunder, and
shall not terminate or be deemed released
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upon a Service Transfer pursuant to Article VII and shall survive the
termination of this Agreement.
Section 11.07. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a financial institution organized and doing
business under the laws of the United States of America or any state, authorized
under such laws to exercise corporate trust powers, whose long term Unsecured
debt is rated at least Baa3 by Moody's and shall have a combined capital and
surplus of at least $50,000,000 or shall be a member of a bank holding system
the aggregate combined capital and surplus of which is $50,000,000 and subject
to supervision or examination by Federal or state authority, PROVIDED that the
Trustee's separate capital and surplus shall at all times be at least the amount
required by Section 310(a)(2) of the Trust Indenture Act of 1939, as amended. If
such Person publishes reports of condition at least annually, pursuant to law or
to the requirements of a supervising or examining authority, then for the
purposes of this Section 11.07, the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section 11.07,
the Trustee shall resign immediately in the manner and with the effect specified
in Section 11.08.
Section 11.08. Resignation or Removal of Trustee. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer with a copy to the Trust Depositor, the
Seller, and the Certificateholders. Upon receiving such notice of resignation,
the Servicer shall promptly appoint a successor Trustee by written instrument,
in duplicate, one copy of which instrument shall be delivered to each of the
Trust Depositor, the Seller, and the Certificateholders and one copy to the
successor Trustee. If no successor Trustee shall have been so appointed and
shall have accepted such appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 11.07 and shall fail to resign after written
request therefor by the Servicer, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Servicer may
remove the Trustee. If the Servicer shall have removed the Trustee under the
authority of the immediately preceding sentence, the Servicer shall promptly
appoint a successor Trustee by written instrument one copy of which instrument
shall be delivered to the Trustee so removed, the Trust Depositor and the Seller
and one copy to the successor trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 11.08 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 11.09.
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Any resigning or removed Trustee shall be entitled to payment of all
Trustee's Fees earned and reimbursement for all expenses incurred by it up to
the date of resignation. All indemnification obligations of the Servicer and the
Seller shall survive such resignation or removal.
Section 11.09. Successor Trustee. Any successor Trustee appointed as
provided in Section 11.08 shall execute, acknowledge and deliver to the
Servicer, the Trust Depositor and to its predecessor Trustee, with a copy to the
Certificateholders, an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The predecessor Trustee shall deliver or cause to be delivered
to the successor Trustee the Contracts and the Contract Files (if any such
Contracts and Contract Files are in the Trustee's possession) and any related
documents and statements held by it hereunder; and, if the Contracts are then
held by a custodian pursuant to a custodial agreement, the predecessor Trustee
and the custodian shall amend such custodial agreement to make the successor
Trustee the successor to the predecessor Trustee thereunder; and the Servicer,
the Trust Depositor and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Trustee all such rights,
powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section 11.09 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 11.07.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 11.09, the Servicer shall cause notice of the succession of such
Trustee hereunder to be mailed to each Rating Agency and to each
Certificateholder at their addresses as shown in the Certificate Register. If
the Servicer fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Servicer.
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Section 11.10. Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such Person shall be eligible under the provisions
of Section 11.07, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. Upon such occasion, the Servicer shall cause notice thereof to
be mailed to each Rating Agency and each Certificateholder. If the Servicer
fails to mail such notice within ten days after such succession, the successor
Trustee shall cause such notice to be mailed at the expense of the Servicer with
a copy to each Certificateholder.
Section 11.11. Tax Returns.
(a) The Servicer, on behalf of the Trust, shall request that the
Trustee furnish the Servicer with all such information in the Trustee's
possession as may be reasonably required in connection with the preparation of
all tax returns of the Trust and the Trustee shall, upon such request, furnish
such information and execute such returns; and
(b) As directed by the Servicer in writing, the Trustee shall take all
action specified in such writing relating to (i) certain withholding
requirements applicable to non-U.S. persons; (ii) backup withholding
requirements; and (iii) certain taxpayer certification requirements relating to
clauses (i) and (ii) above.
Section 11.12. Obligor Claims. In connection with any offset defenses,
or affirmative claims for recovery, asserted in legal actions brought by
Obligors under one or more Contracts based upon provisions therein complying
with, or upon other rights or remedies arising from, any legal requirements
applicable to the Contracts, including, without limitation, the Federal Trade
Commission's Trade Regulation Rule Concerning Preservation of Consumers' Claims
and Defenses (16 C.F.R. Section 433) as amended from time to time:
(a) The Trustee is not, and shall not be deemed to be, either
in any individual capacity, as trustee hereunder or otherwise, a
creditor, or a joint venturer with or an Affiliate of, or acting in
concert or cooperation with, any seller of Motorcycles, in the
arrangement, origination or making of Contracts. The Trustee is the
holder of the Contracts only as trustee on behalf of the
Certificateholders, and not as a principal or in any individual or
personal capacity;
(b) The Trustee shall not be personally liable for or
obligated to pay Obligors any affirmative claims asserted thereby, or
responsible to Certificateholders for any offset defense amounts
applied against Contract payments pursuant to such legal actions;
(c) The Trustee will pay, solely from available Trust monies,
affirmative claims for recovery by Obligors only pursuant to final
judicial orders or judgments, or judicially approved settlement
agreements, resulting from such legal actions; and
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(d) The Servicer has agreed to indemnify, hold harmless and
defend the Trustee and Certificateholders from and against any and all
liability, loss, costs and expenses of the Trustee and
Certificateholders resulting from any affirmative claims for recovery
asserted or collected by Obligors under the Contracts. Notwithstanding
any other provision of this Agreement, the obligation of the Servicer
described in this Section 11.12(d) shall not terminate or be deemed
released upon a Service Transfer pursuant to Article VII and shall
survive termination of this Agreement.
Section 11.13. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction having authority over the
Trust, the Contracts or the Obligors, the Servicer and Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section 11.13, such powers, duties, obligations, rights and
trusts as the Servicer and the Trustee may consider necessary or desirable. If
the Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, or in case a Servicer Default shall have
occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 11.07
hereunder and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 11.09
hereof; PROVIDED, HOWEVER, that notice of appointment of any co-trustee or
separate trustee shall be provided to Moody's, and any co-trustee or separate
trustee shall have a long-term debt rating from Moody's of Baa3 or higher.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 11.13, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such co-trustee or separate trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such co-trustee or separate trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then co-trustees and separate trustees,
as effectively as if given to each of them. Every instrument appointing any
co-trustee or separate trustee shall refer to this Agreement and the conditions
of this Article XI. Each co-trustee and separate trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of
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this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed with
the Trustee.
Any co-trustee or separate trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any co-trustee or separate trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 11.14. Representations and Warranties of Trustee. The Trustee,
solely in its capacity as Trustee, makes the following representations and
warranties:
(a) The Trustee is duly organized and validly existing as a
_________________ in good standing under the laws of the [State of
__________], with trust powers and with power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted.
(b) The Trustee has the power and authority to execute and
deliver this Agreement and to carry out its terms; and the execution,
delivery, and performance of this Agreement has been duly authorized by
the Trustee by all necessary corporate action.
(c) This Agreement constitutes a legal, valid, and binding
obligation of the Trustee, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights in general and by general principles of equity,
regardless of whether such enforceability shall be considered in a
proceeding in equity or at law.
(d) The consummation of the transactions contemplated by this
Agreement, and the fulfillment of the terms hereof, do not conflict
with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under,
the charter or by-laws of the Trustee or any indenture, agreement, or
other instrument to which the Trustee is a party or by which it is
bound; nor result in the creation or imposition of any lien upon any of
its properties pursuant to terms of any such indenture, agreement, or
other instrument; nor violate any law or any order, rule, or regulation
applicable to the Trustee of any court or of any Federal or state
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Trustee or its properties.
(e) There are no proceedings or investigations pending or, to
the best knowledge of the Trustee, threatened before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Trustee or its properties
(i) asserting the invalidity of this Agreement, or (ii) seeking to
prevent the
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consummation of any of the transactions contemplated by this Agreement,
or (iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Trustee of its obligations
under, or the validity or enforceability of, this Agreement.
(f) In no event shall the Trustee be required to perform, or
be responsible for the manner of performance of, any of the obligations
of the Servicer, or any other party, under this Agreement.
(g) The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Agreement, the
Trust Corpus or the Certificates, it shall not be accountable for the
Trust Depositor's use of the proceeds from the Certificates, and it
shall not be responsible for any statement of the Trust Depositor in
the Agreement or in any document issued in connection with the sale of
the Certificates or in the Certificates other than the Trustee's
certificate of authentication.
ARTICLE XII
MISCELLANEOUS
Section 12.01. Servicer Not to Resign. The Servicer shall not resign
from the obligations and duties hereby imposed on it except upon a determination
that the performance of its duties hereunder is no longer permissible under
applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced by an opinion of counsel for the Servicer to such
effect delivered to the Trustee. No such resignation shall become effective
until a Successor Servicer shall have assumed the responsibilities and
obligations of the Servicer in accordance with Section 7.03.
Section 12.02. Prohibited Transactions with Respect to the Trust.
Neither the Servicer nor the Trust Depositor shall:
(a) Provide credit to any Certificateholder for the purpose of
enabling such Certificateholder to purchase Certificates;
(b) Purchase any Certificates in an agency or trustee
capacity; or
(c) Except as provided herein, lend any money to the Trust.
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Section 12.03. Maintenance of Office or Agency. The Trustee shall
maintain an office or agency in Chicago, Illinois where Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Trustee in respect of the Certificates and this Agreement
may be served. On the date hereof the Trustee's office for such purposes is
located at the address set forth in Section 12.09. The Trustee will give prompt
written notice to Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
Section 12.04. Termination. This Agreement shall terminate (after
distribution of all Class A Distributable Amounts and Class B Distributable
Amounts due to Certificateholders pursuant to Sections 8.01 and 8.04) on the
Payment Date on which the Class A Certificate Balance and Class B Certificate
Balance is reduced to zero; PROVIDED, that in no event shall the trust created
hereby continue beyond the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late Ambassador of the
United States to the Court of St. James, living on the date hereof, and
PROVIDED, FURTHER, that the Servicer's and the Trust Depositor's representations
and warranties and the indemnities by the Seller and Servicer shall survive
termination. Upon such termination, the Trustee shall provide each Rating Agency
written notice of such termination. Additionally, upon such termination any
amounts remaining in the Collection Account after distribution of all amounts
payable to the Certificateholders in respect of Class A Distributable Amounts
and Class B Distributable Amounts and payment of all other amounts owed to the
Certificateholders shall be paid to the Seller.
Section 12.05. Acts of Certificateholders. (a) Except as otherwise
specifically provided herein, whenever Certificateholder approval,
authorization, direction, notice, consent, waiver or other action is required
hereunder, such approval, authorization, direction, notice, consent, waiver or
other action shall be deemed to have been given or taken on behalf of, and shall
be binding upon, all Certificateholders if agreed to by Certificateholders with
aggregate Fractional Interests representing 51% or more of the Trust.
(b) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
an agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where required, to the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and (subject to Section 11.01)
conclusive in favor of the Trustee, the Servicer, the Trust Depositor and the
Seller if made in the manner provided in this Section 12.05.
(c) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
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(d) The ownership of Certificates shall be proved by the Certificate
Register, absent manifest error.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind every holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done
by the Trustee, the Servicer or the Trust Depositor in reliance thereon, whether
or not notation of such action is made upon such security.
(f) The Trustee may require such additional proof of any matter
referred to in this Section 12.05 as it shall deem necessary.
Section 12.06. Calculations. Except as otherwise provided in this
Agreement, all interest rate and basis point calculations under this Agreement
will be made on the basis of a 360-day year comprised of twelve 30-day months
and will be carried out to at least three decimal places.
Section 12.07. Assignment or Delegation by Trust Depositor. Except as
specifically authorized hereunder, the Trust Depositor may not convey and assign
or delegate any of its rights or obligations hereunder absent the prior written
consent of 100% of the Class A Certificateholders and the Class B
Certificateholders, and any attempt to do so without such consent shall be void.
Section 12.08. Amendment. (a) This Agreement may be amended from time
to time by the Servicer, the Trust Depositor and the Trustee, without the
consent of any of the Certificateholders, to correct manifest error, to cure any
ambiguity, to correct or supplement any provisions herein or therein which may
be inconsistent with any other provisions herein or therein, as the case may be,
or to add any other provisions with respect to matters or questions arising
under this Agreement which shall not be inconsistent with the provisions of this
Agreement; PROVIDED, HOWEVER, that such action shall not, as evidenced by an
opinion of Counsel for the Trust Depositor, adversely affect the interests of
any Certificateholder.
(b) This Agreement may also be amended from time to time by the
Servicer, the Trust Depositor and the Trustee, with the consent of
Certificateholders with aggregate Fractional Interests representing 66-2/3% or
more of each Class voting as a separate Class, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the
Certificateholders; and any Servicer Default may be waived by the
Certificateholders with aggregate Fractional Interests representing 51% of the
Trust; PROVIDED, HOWEVER, that no such amendment or waiver described above shall
(a) reduce in any manner the amount of, or delay the timing of, collections of
payments on the Contracts or distributions which are required to be made on any
Certificate or (b) reduce the aforesaid percentage required to consent to any
such amendment, without the consent of the holders of all Certificates then
outstanding. Notwithstanding anything to the contrary contained herein, the
Depositor may, from time to time after the date of this Agreement, request each
Rating Agency to approve a formula for determining the Reserve Fund Requisite
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Amount that is different from that on the Closing Date and would result in a
decrease in the Reserve Fund Requisite Amount or the manner by which the Reserve
Fund is funded. In the event each Rating Agency delivers a letter to the Trustee
to the effect that the use of any such new formulation will not result in a
qualification, reduction or withdrawal of its then-current rating of the Class A
Certificates and the Class B Certificates, then either the Reserve Fund
Requisite Amount will be determined in accordance with such new formula or the
manner by which the Reserve Fund is funded will be modified.
(c) Promptly after the execution of any amendment or consent pursuant
to this Section 12.08, the Trustee shall furnish written notification of the
substance of such amendment and a copy of such amendment to each
Certificateholder, and to each Rating Agency.
(d) It shall not be necessary for the consent of Certificateholders
under this Section 12.08 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
(e) The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
(f) In connection with any amendment pursuant to this Section 12.08,
the Trustee shall be entitled to receive an opinion of counsel to the Servicer
and acceptable to the Trustee to the effect that such amendment is authorized or
permitted by this Agreement.
(g) Upon the execution of any amendment or consent pursuant to this
Section 12.08, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every holder of Certificates theretofore or thereafter issued hereunder
shall be bound thereby.
Section 12.09. Notices. All communications and notices pursuant hereto
to the Servicer, the Trust Depositor, the Servicer, the Trustee, the Seller,
Standard & Poor's, Moody's and the Placement Agent shall be in writing and
delivered or mailed to it at the appropriate following address:
If to the Servicer: Harley-Davidson Credit Corp.
150 South Wacker Drive
Chicago, Illinois 60606
Attention: [ ]
If to the Trust Depositor: Harley-Davidson Customer Funding Corp.
4150 Technology Way
Carson City, Nevada 89706
Attention: President
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If to the Trustee: __________________
__________________
__________________
If to the Seller: Harley-Davidson Credit Corp.
4150 Technology Way
Carson City, Nevada 89706
Attention: [ ]
If to Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Department
If to Standard & Poor's: Standard & Poor's Ratings Services, a
division of The McGraw Hill Company,
25 Broadway
New York, New York 10004
Attention: Asset Backed Securities Surveillance
If to the Placement Agent [ ]
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Certificateholder
shall be in writing and delivered or mailed at the address shown in the
Certificate Register.
Section 12.10. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
Section 12.11. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 12.12. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Illinois.
Section 12.13. No Insolvency Petition. The Trustee and the Servicer
hereby covenant and agree that, prior to the date which is one year and one day
after the payment in full of the Certificates, they will not institute against,
or join with any other Person in instituting against the Trust Depositor or the
Trust any involuntary insolvency proceedings under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or requesting the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar
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official), or for the substantial liquidation of their respective affairs. This
Section 12.13 shall survive the termination of this Agreement.
Section 12.14. Third Party Beneficiary. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as otherwise provided in this Article
XII, no other Person shall have any right or obligation hereunder.
Section 12.15. No Additional Securities. Notwithstanding anything to
the contrary contained herein, the Trust shall not issue any additional
Certificates or issue any other form of securities. Moreover, except as provided
for herein during the Funding Period or in Section 5.05(d), the Trust will not
purchase, or otherwise obtain any assets after the Closing Date or reinvest
amounts received with respect to the assets in the Trust.
Section 12.16. No Additional Indebtedness by the Trust Depositor. The
Trust Depositor hereby covenants that it shall not incur any indebtedness other
than indebtedness necessary to meet its obligations under the Transaction
Documents or any other similar documentation relating to any future grantor
trusts in which the Trust Depositor participates.
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In WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
HARLEY-DAVIDSON CUSTOMER FUNDING
CORP., as Trust Depositor
By___________________________________
Name:
Title:
HARLEY-DAVIDSON CREDIT CORP.,
as Servicer
By___________________________________
Name:
Title:
[TRUSTEE]
By___________________________________
Name:
Title:
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EXHIBIT A-1
CERTIFICATE FOR HARLEY-DAVIDSON MOTORCYCLE CONTRACTS
Harley-Davidson Motorcycle Trust ___
___.% Certificate, Class A
This Class A Certificate does not represent an obligation of or an
interest in Harley-Davidson Customer Funding Corp., Harley-Davidson Credit Corp.
or any affiliate thereof, except to the extent set forth in the Agreement. This
Class A Certificate has not been registered under the Securities Act of 1933 or
any state securities laws and may not be sold, transferred or pledged in the
absence of an effective Registration Statement under such Act and laws or unless
the conditions set forth in Section 9.02 of the Agreement have been complied
with.
The principal represented by this Class A Certificate is payable in
installments, as described herein and in the Agreement. Accordingly, the unpaid
Class A Certificate Balance of this Class A Certificate may be less than that
set forth below. Anyone acquiring this Class A Certificate may ascertain the
current unpaid Class A Certificate Balance represented by this certificate by
inquiry of the Trustee.
No. Class A Initial Certificate Principal Balance:$_________
Fractional Interest: ______%
This certifies that ____________________________ is the registered owner of the
undivided Fractional Interest represented by the Class A Initial Certificate
Principal Balance set forth above in Harley-Davidson Motorcycle Trust _____ (the
"TRUST"), which includes among its assets a pool of fixed-rate, simple interest
Harley-Davidson motorcycle conditional sales contracts (including, without
limitation, all security interests and any and all rights to receive payments
which are collected pursuant thereto on or after the Initial Cutoff Date or the
related Subsequent Cutoff Date in respect of Subsequent Contracts as described
below) (the "CONTRACTS") and rights under the Deposit Agreement described
herein. The Trust has been created pursuant to a Pooling and Servicing Agreement
(the "AGREEMENT"), dated as of _______________, by and among Harley-Davidson
Customer Funding Corp., as trust depositor (the "TRUST DEPOSITOR"),
Harley-Davidson Credit Corp., as servicer (in such capacity, the "SERVICER"),
and [______________], as Trustee of the Trust (in such capacity, the "TRUSTEE").
This Class A Certificate is one of the Class A Certificates described in the
Agreement and is issued, together with the Class B Certificates, pursuant and
subject to the Agreement. By acceptance of this Class A Certificate the holder
assents to and becomes bound by the Agreement. The Agreement provides that the
holder of a Class A Certificate agrees to report the income on the Class A
Certificate in a manner consistent with the intended characterization of the
Trust as a grantor trust. To the extent not defined herein, all capitalized
terms have the meanings assigned to such terms in the Agreement and all Section
references, unless otherwise specified, are to Sections of the Agreement.
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It is contemplated by the Transaction Documents that the proceeds from
the issuance of the Certificates will be used in their entirety to purchase
Contracts, including the Subsequent Contracts. To the extent that proceeds from
the Certificates are intended to purchase Subsequent Contracts, those proceeds
shall be deposited at Closing in the Pre-Funding Account and will be withdrawn
therefrom from time to time during the Funding Period only to purchase
Subsequent Contracts. Any funds remaining in the Pre-Funding Account at the end
of the Funding Period shall be distributed as a Special Distribution of
principal to the Class A Certificateholders in an amount equal to the Class A
Percentage multiplied by the amount on deposit in the Special Distribution
Account. The Pre-Funding Account and the funds therein are not a part of the
Trust but will be held by the Collateral Agent for the benefit of the Trustee
pursuant to the Security Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (each, a "PAYMENT DATE") of each calendar month commencing
_________, so long as the Agreement has not been terminated, by check from funds
drawn from the Collection Account (or in certain instances the Special
Distribution Account) to the registered Class A Certificateholder at the address
appearing on the Certificate Register (or by wire transfer if the Class A
Certificateholder delivers written instructions to the Trustee at least ten days
prior to such Payment Date) as of the last Business Day of the immediately
preceding calendar month (each such month during the term of the Agreement
constituting a "DUE PERIOD"), an amount equal to the Class A Certificateholder's
Fractional Interest of the Class A Principal Distributable Amount and the Class
A Interest Distributable Amount (as well as, in certain instances, the
Fractional Interest of Special Distributions). The final scheduled Payment Date
of this Certificate is_________________, which relates to the month following
the latest maturity date of the Contracts (including any Subsequent Contracts).
This Class A Certificate does not represent an obligation of or an
interest in the Trust Depositor, the Servicer, the Back-up Servicer or the
Trustee and the Trustee in its individual capacity is not personally liable to
the Class A Certificateholder for any amounts payable under this Class A
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Class A Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class A Certificateholder
free of charge upon a written request to the Trustee, at its Corporate Trust
Department, 311 West Monroe Street, 12th Floor, Chicago, Illinois 60606.
"CLASS A INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date (other than the first Payment Date), the sum of (i) the product of
(A) one-twelfth (or, with respect to the first Payment Date, a fraction, the
numerator of which equals the number of days from and including the Closing Date
to but excluding the first Payment Date and the denominator of which
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equals 360) of the Class A Pass-Through Rate and (B) the Class A Certificate
Balance as of the immediately preceding Payment Date (after giving effect to
distributions of principal made on such immediately preceding Payment Date) or,
in the case of the first Payment Date, the Class A Initial Certificate Balance
plus (ii) the Class A Interest Carryover Shortfall for such Payment Date. "CLASS
A PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Payment Date, the
sum of (i) the product of (a) the Class A Percentage and the (b) Monthly
Principal for such Payment Date plus (ii) the Class A Principal Carryover
Shortfall for such Payment Date. "AVAILABLE INTEREST" means, with respect to any
Payment 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 (as well as
Late Payment Penalty Fees and Extension Fees), (ii) the interest component of
all Net Liquidation Proceeds, (iii) the interest component of the aggregate of
the Repurchase Prices for Contracts repurchased by the Seller pursuant to
Section 8.06, (iv) all Advances made by the Servicer pursuant to Section 8.03,
(v) the interest component of all amounts paid by the Seller in connection with
an optional repurchase of the Contracts pursuant to Section 8.08, (vi) all
amounts received in respect of Carrying Charges transferred from the Interest
Reserve Account pursuant to Section 8.03, 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 the last sentence of Section
5.05(d). "AVAILABLE PRINCIPAL" means, with respect to any Payment 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 Repurchase Prices for Contracts repurchased by the Seller pursuant to
Section 8.06, and (iv) the principal component of all amounts paid by the Seller
in connection with an optional repurchase of the Contracts pursuant to Section
8.08. "CLASS A INTEREST CARRYOVER SHORTFALL" means, with respect to any Payment
Date, (i) the excess of the Class A Interest Distributable Amount for the
preceding Payment Date over the amount of interest that was actually distributed
to Class A Certificateholders on such preceding Payment Date, plus (ii) 30 days
of interest on the amount specified in clause (i), to the extent permitted by
law, at the Class A Pass-Through Rate. "CLASS A PRINCIPAL CARRYOVER SHORTFALL"
means, with respect to any Payment Date, (i) the excess of the Class A Principal
Distributable Amount over (ii) the amount of principal that was actually
distributed to Class A Certificateholders on such preceding Payment Date.
"PRINCIPAL BALANCE" means (a) with respect to any Contract as of any date, an
amount equal to the unpaid principal balance of such Contract as of the opening
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 repurchased by
the Seller pursuant to Section 5.01 of the Transfer and Sale Agreement and
Section 8.06 because of a breach of representation or warranty or if (y) the
Seller gives notice of its intent to purchase the Contracts in connection with
an optional termination of the Trust pursuant to Section 5.02 of the Transfer
and Sale Agreement and Section 8.08, 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
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thereafter, (ii) from and after the third Due Period succeeding the final Due
Period in which the Obligor is required to make the final scheduled payment on a
Contract, the Principal Balance, if any, of such Contract shall be deemed to be
zero, and (iii) 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. "MONTHLY PRINCIPAL"
means, as to any Payment Date, the following amount calculated as of the related
Determination Date: the difference between (i) the sum of (A) the Principal
Balance of the Contracts as of the first day of the Due Period preceding the Due
Period in which such Payment Date occurs (or, in the case of the first Payment
Date, the Principal Balance of the Contracts as of the Initial Cutoff Date),
plus (B) the Pre-Funded Amount on such date (or, in the case of the first
Payment Date, the Pre-Funded Amount on the Closing Date) and (ii) the sum of (A)
the Principal Balance of the Contracts as of the first day of the Due Period in
which such Payment Date occurs, plus (B) the Pre-Funded Amount on such day, plus
(C) the amount of any Special Distribution occurring from the day referred to in
clause (i)(A) above to the day referred to in clause (ii)(A) above; provided,
that on the Final Scheduled Payment Date, Monthly Principal shall equal the
aggregate of the Class A Certificate Balance and the Class B Certificate
Balance. For purposes of determining the amount in clause (ii)(C) above as to
any particular Payment Date and with respect to the Due Period preceding such
Payment Date, if the Funding Period ends during such Due Period and Liquidated
Damages (as defined in the Security Agreement) are consequently paid from the
Pre-Funding Account during such Due Period but will not be distributed as a
Special Distribution until the Payment Date occurring in the following Due
Period (i.e., the particular Payment Date referred to above), then the amount
calculated in clause (ii)(C) for such preceding Due Period shall be deemed to
include such Special Distribution in such amount (although paid as a Special
Distribution on the Payment Date occurring during the following Due Period) will
not be included in the next calculation of clause (ii)(C) to be made with
respect to the following Due Period.
On each Payment Date, the Trustee will cause to be distributed from
Available Funds, Available Interest and Available Principal for such Payment
Date in the Collection Account to the Certificateholders the following amounts
(after the payment of the Reimbursement Amount, the Servicing Fee, the Trustee's
Fee and the Back-up Servicer Fee) in the following priorities (which includes
the benefit of (a) the subordination (as described below) of the Class B
Percentage of Available Interest and Available Principal and (b) the Reserve
Fund) (l) to the Class A Certificateholders of record, from Available Interest,
an amount equal to the Class A Interest Distributable Amount for such Payment
Date and, if such Available Interest is insufficient, the Class A
Certificateholders will receive such shortfall first, from the Class B
Percentage of Available Principal and second, if such amounts are still
insufficient, from monies on deposit in the Reserve Fund; (2) to the Class B
Certificateholders of record, from Available Interest, an amount equal to the
Class B Interest Distributable Amount for such Payment Date and, if such
Available Interest is insufficient, the Class B Certificateholders will receive
such shortfall from monies on deposit in the Reserve Fund; (3) to the Class A
Certificateholders of record, from Available Principal, an amount equal to the
Class A Principal Distributable Amount for such Payment Date and, if such
Available Principal is insufficient, the Class A
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Certificateholders will receive such shortfall first, from Available Interest,
and second, if such amounts are still insufficient, from monies on deposit in
the Reserve Fund; and (4) to the Class B Certificateholders of record, from
Available Principal, an amount equal to the Class B Principal Distributable
Amount for such Payment Date and, if such Available Principal is insufficient,
the Class B Certificateholders will receive such shortfall first, from Available
Interest, and second, if such amounts are still insufficient, from monies on
deposit in the Reserve Fund. Any Available Funds remaining in the Collection
Account after such distributions will be paid to the Trust Depositor subject to
the conditions of the Reserve Fund Agreement.
The Seller will repurchase a Contract by depositing the Repurchase
Price for such Contract into the Collection Account no later than two Business
Days prior to the Determination Date which is more than ninety days after the
Trust Depositor becomes aware, or should have become aware or receives written
notice from the Trustee, of breach of a warranty of the Seller set forth in
Article III of the Transfer and Sale Agreement that materially adversely affects
the Trust's interest in such Contract, which breach has not been cured (the
Seller's obligation to repurchase such Contract constituting the
Certificateholders' sole remedy with respect to such a breach of a
representation and warranty set forth in the Transfer and Sale Agreement).
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights of the Certificateholders
under the Agreement at any time by the Servicer, the Back-up Servicer, the Trust
Depositor, and the Trustee with the consent of the holders of Class A
Certificates evidencing Fractional Interests representing 66-2/3% or more of
such Class voting as a separate Class and holders of Class B Certificates
evidencing Fractional Interests representing 66-2/3% or more of the Class B
Certificates voting as a separate Class. Any such consent by the holder of this
Class A Certificate shall be conclusive and binding on such holder and upon all
future holders of this Class A Certificate and of any Class A Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Class A Certificate. The Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of any of the Certificateholders.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class A Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this Class A
Certificate for registration of transfer at the office or agency maintained by
the Trustee in Chicago, Illinois as previously described, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder thereof or his or her attorney
duly authorized in writing, and upon receipt by the Trustee of either (i)
evidence of the effectiveness or continued effectiveness of a registration
statement under the Securities Act of 1933, as amended, with respect to this
Class A Certificate, and registration under the applicable state laws, or (ii) a
certificate in writing of the transferee satisfactory to the Trust Depositor
regarding the facts surrounding such disposition; PROVIDED, HOWEVER, at the
election of the Trust Depositor, the Trust Depositor may, in addition, if such
certification is not substantially in the form of Exhibit H-2 to the Agreement,
require the delivery of an opinion of counsel satisfactory to the Trustee (which
shall not be at the expense of the Trust Depositor or the Trustee) that no such
registration is required, and thereupon one or
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more new Class A Certificates evidencing the same aggregate Fractional Interest
will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain limitations therein
set forth, Class A Certificates are exchangeable for new Class A Certificates of
authorized denominations evidencing the same aggregate Fractional Interest as
requested by the holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Certificate Registrar
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Trust Depositor, the Servicer, the Back-up Servicer, the Trustee,
the Paying Agent and the Certificate Registrar and any agent of the Trust
Depositor, the Servicer, the Back-up Servicer, the Trustee, the Paying Agent or
the Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trust
Depositor, the Servicer, the Back-up Servicer, the Trustee, the Paying Agent,
the Certificate Registrar nor any such agent shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate (after distribution of all Class A
Distributable Amounts and Class B Distributable Amounts) on the Payment Date on
which the Class A Certificate Balance and Class B Certificate Balance is reduced
to zero; PROVIDED, that in no event shall the trust created thereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
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IN WITNESS WHEREOF, Harley-Davidson Motorcycle Trust _____ has caused this Class
A Certificate to be duly executed by the manual signature of a duly authorized
officer of the Trustee or of a duly appointed Authenticating Agent.
HARLEY-DAVIDSON MOTORCYCLE TRUST ______
DATED: __________
[_________________], NOT IN ITS INDIVIDUAL
CAPACITY BUT SOLELY AS TRUSTEE
BY________________________________
AUTHORIZED OFFICER
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FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_____________________________________________ the within ___% Certificate, Class
A for Harley-Davidson Motorcycle Contracts, Harley-Davidson Motorcycle Trust
_____, and does hereby irrevocably constitute and appoint
_____________________________________ Attorney to transfer the said certificate
on the Certificate Register maintained by the Trustee, with full power of
substitution in the premises.
--------------------------------
Signature
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EXHIBIT A-2
CERTIFICATE FOR HARLEY-DAVIDSON MOTORCYCLE CONTRACTS
Harley-Davidson Motorcycle Trust ____
_____% Certificate, Class B
This Class B Certificate does not represent an obligation of or an
interest in Harley-Davidson Customer Funding Corp., Harley-Davidson Credit Corp.
or any affiliate thereof, except to the extent set forth in the Agreement. This
Class B Certificate has not been registered under the Securities Act of 1933 or
any state securities laws and may not be sold, transferred or pledged in the
absence of an effective Registration Statement under such Act and laws or unless
the conditions set forth in Section 9.02 of the Agreement have been complied
with. Distributions on this Class B Certificate are subordinate to distributions
on the Class A Certificates as described in the Agreement.
The principal represented by this Class B Certificate is payable in
installments, as described herein and in the Agreement. Accordingly, the unpaid
Class B Certificate Balance of this Class B Certificate may be less than that
set forth below. Anyone acquiring this Class B Certificate may ascertain the
current unpaid Class B Certificate Balance represented by this certificate by
inquiry of the Trustee.
No. Class B Initial Certificate Principal Balance:$________
Fractional Interest: _______%
This certifies that ______________________________ is the registered owner of
the undivided Fractional Interest represented by the Class B Initial Certificate
Principal Balance set forth above in Harley-Davidson Motorcycle Trust _____ (the
"TRUST"), which includes among its assets a pool of fixed-rate, simple interest
Harley-Davidson motorcycle conditional sales contracts (including, without
limitation, all security interests and any and all rights to receive payments
which are collected pursuant thereto on or after the Initial Cutoff Date or the
related Subsequent Cutoff Date in respect of Subsequent Contracts as described
below) (the "CONTRACTS") and rights under the Deposit Agreement described
herein. The Trust has been created pursuant to a Pooling and Servicing Agreement
(the "AGREEMENT"), dated as of ________, by and among Harley-Davidson Customer
Funding Corp., as trust depositor (the "TRUST DEPOSITOR"), Harley-Davidson
Credit Corp., as servicer (in such capacity, the "SERVICER"), and
[_______________], as Trustee of the Trust (the "TRUSTEE"). This Class B
Certificate is one of the Class B Certificates described in the Agreement and is
issued, together with the Class A Certificates, pursuant and subject to the
Agreement. By acceptance of this Class B Certificate the holder assents to and
becomes bound by the Agreement. The Agreement provides that the holder of a
Class B Certificate agrees to report the income on the Class B Certificate in a
manner consistent with the intended characterization of the Trust as a grantor
trust. To the extent not defined herein, all
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capitalized terms have the meanings assigned to such terms in the Agreement and
all Section references, unless otherwise specified, are to Sections of the
Agreement.
It is contemplated by the Transaction Documents that the proceeds from
the issuance of the Certificates will be used in their entirety to purchase
Contracts, including the Subsequent Contracts. To the extent that proceeds from
the Certificates are intended to purchase Subsequent Contracts, those proceeds
shall be deposited at Closing in the Pre-Funding Account and will be withdrawn
therefrom from time to time during the Funding Period only to purchase
Subsequent Contracts. Any funds remaining in the Pre-Funding Account at the end
of the Funding Period shall be distributed as a Special Distribution of the
Class B percentage of principal to the Class B Certificateholders in an amount
equal to the Class B Percentage multiplied by the amount on deposit in the
Special Distribution Account. The Pre-Funding Account and the funds therein are
not a part of the Trust but will be held by the Collateral Agent for the benefit
of the Trustee pursuant to the Security Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (each, a "PAYMENT DATE") of each calendar month commencing
__________, so long as the Agreement has not been terminated, by check from
funds drawn from the Collection Account (or in certain instances the Special
Distribution Account) to the registered Class B Certificateholder at the address
appearing on the Certificate Register (or by wire transfer, if the Class B
Certificateholder delivers written instructions to the Trustee at least ten days
prior to such Payment Date) as of the last Business Day of the immediately
preceding calendar month (each such month during the term of the Agreement
constituting a "DUE PERIOD"), an amount equal to the Class B Certificateholder's
Fractional Interest of the Class B Principal Distributable Amount and the Class
B Interest Distributable Amount (as well as, in certain instances, the
Fractional Interest of Special Distributions). The final scheduled Payment Date
of this Certificate is ____________, which relates to the month following the
latest maturity date of the Contracts (including any Subsequent Contracts).
This Class B Certificate does not represent an obligation of or an
interest in the Trust Depositor, the Servicer, the Back-up Servicer or the
Trustee and the Trustee in its individual capacity is not personally liable to
the Class B Certificateholder for any amounts payable under this Class B
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Class B Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class B Certificateholder
free of charge upon a written request to the Trustee, at its Corporate Trust
Department, 311 West Monroe Street, 12th Floor, Chicago, Illinois 60606.
"CLASS B INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date (other than the first Payment Date), the sum of (i) the product of
(A) one-twelfth (or, with respect to the first Payment Date, a fraction, the
numerator of which equals the number of days from and
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including the Closing Date to but excluding the first Payment Date and the
denominator of which equals 360) of the Class B Pass-Through Rate and (B) the
Class B Certificate Balance as of the immediately preceding Payment Date (after
giving effect to distributions of principal made on such immediately preceding
Payment Date) or, in the case of the first Payment Date, the Class B Initial
Certificate Balance plus (ii) the Class B Interest Carryover Shortfall for such
Payment Date. "CLASS B PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Payment Date, the sum of (i) the product of (a) the Class B Percentage and
(b) the Monthly Principal for such Payment Date plus (ii) the Class B Principal
Carryover Shortfall for such Payment Date. "AVAILABLE INTEREST" means, with
respect to any Payment 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 (as well as Late Payment Penalty Fees and Extension Fees), (ii) the
interest component of all Net Liquidation Proceeds, (iii) the interest component
of the aggregate of the Repurchase Prices for Contracts repurchased by the
Seller pursuant to Section 8.06, (iv) all Advances made by the Servicer pursuant
to Section 8.03, (v) the interest component of all amounts paid by the Seller in
connection with an optional repurchase of the Contracts pursuant to Section
8.08, (vi) all amounts received in respect of Carrying Charges transferred from
the Interest Reserve Account pursuant to Section 8.03, 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 the last sentence
of Section 5.05(d). "AVAILABLE PRINCIPAL" means, with respect to any Payment
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 Repurchase Prices for Contracts repurchased by
the Seller pursuant to Section 8.06, and (iv) the principal component of all
amounts paid by the Seller in connection with an optional repurchase of the
Contracts pursuant to Section 8.08. "CLASS B INTEREST CARRYOVER SHORTFALL"
means, with respect to any Payment Date, (i) the excess of the Class B Interest
Distributable Amount for the preceding Payment Date over the amount of interest
that was actually distributed to Class B Certificateholders on such preceding
Payment Date, plus (ii) 30 days of interest on the amount specified in clause
(i), to the extent permitted by law, at the Class B Pass-Through Rate. "CLASS B
PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any Payment Date, (i) the
excess of the Class B Principal Distributable Amount over (ii) the amount of
principal that was actually distributed to Class B Certificateholders on such
preceding Payment Date. "PRINCIPAL BALANCE" means (a) with respect to any
Contract as of any date, an amount equal to the unpaid principal balance of such
Contract as of the opening 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 repurchased by the Seller pursuant to Section 5.01 of the Transfer
and Sale Agreement and Section 8.06 because of a breach of representation or
warranty or if (y) the Seller gives notice of its intent to purchase the
Contracts in connection with an optional termination of the Trust pursuant to
Section 5.02 of the Transfer and Sale Agreement and Section 8.08, in each case
the Principal Balance of such Contract or Contracts shall be deemed as of the
related Determination
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Date to be zero for the Due Period in which such event occurs and for each Due
Period thereafter, (ii) from and after the third Due Period succeeding the final
Due Period in which the Obligor is required to make the final scheduled payment
on a Contract, the Principal Balance, if any, of such Contract shall be deemed
to be zero, and (iii) 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. "MONTHLY PRINCIPAL"
means, as to any Payment Date, the following amount calculated as of the related
Determination Date: the difference between (i) the sum of (A) the Principal
Balance of the Contracts as of the first day of the Due Period preceding the Due
Period in which such Payment Date occurs (or, in the case of the first Payment
Date, the Principal Balance of the Contracts as of the Initial Cutoff Date),
plus (B) the Pre-Funded Amount on such date (or, in the case of the first
Payment Date, the Pre-Funded Amount on the Closing Date) and (ii) the sum of (A)
the Principal Balance of the Contracts as of the first day of the Due Period in
which such Payment Date occurs, plus (B) the Pre-Funded Amount on such day, plus
(C) the amount of any Special Distribution occurring from the day referred to in
clause (i)(A) above to the day referred to in clause (ii)(A) above; provided,
that on the Final Scheduled Payment Date, Monthly Principal shall equal the
aggregate of the Class A Certificate Balance and the Class B Certificate
Balance. For purposes of determining the amount in clause (ii)(C) above as to
any particular Payment Date and with respect to the Due Period preceding such
Payment Date, if the Funding Period ends during such Due Period and Liquidated
Damages (as defined in the Security Agreement) are consequently paid from the
Pre-Funding Account during such Due Period but will not be distributed as a
Special Distribution until the Payment Date occurring in the following Due
Period (i.e., the particular Payment Date referred to above), then the amount
calculated in clause (ii)(C) for such preceding Due Period shall be deemed to
include such Special Distribution in such amount (although paid as a Special
Distribution on the Payment Date occurring during the following Due Period) will
not be included in the next calculation of clause (ii)(C) to be made with
respect to the following Due Period
On each Payment Date, the Trustee will cause to be distributed from
Available Funds, Available Interest and Available Principal for such Payment
Date in the Collection Account to the Certificateholders the following
amounts (after the payment of the Reimbursement Amount, the Servicing Fee,
the Trustee's Fee and the Back-up Servicer Fee) in the following priorities
(subject to the subordination of the Class B Certificates as described below
but including the benefit of the Reserve Fund) (l) to the Class A
Certificateholders of record, from Available Interest, an amount equal to the
Class A Interest Distributable Amount for such Payment Date and, if such
Available Interest is insufficient, the Class A Certificateholders will
receive such shortfall first, from the Class B Percentage of Available
Principal and second, if such amounts are still insufficient, from monies on
deposit in the Reserve Fund; (2) to the Class B Certificateholders of record,
from Available Interest, an amount equal to the Class B Interest
Distributable Amount for such Payment Date and, if such Available Interest is
insufficient, the Class B Certificateholders will receive such shortfall from
monies on deposit in the Reserve Fund; (3) to the Class A Certificateholders
of record, from Available Principal, an amount equal to the Class A Principal
Distributable Amount for such Payment Date and, if such Available
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Principal is insufficient, the Class A Certificateholders will receive such
shortfall first, from Available Interest, and second, if such amounts are
still insufficient, from monies on deposit in the Reserve Fund; and (4) to
the Class B Certificateholders of record, from Available Principal, an amount
equal to the Class B Principal Distributable Amount for such Payment Date
and, if such Available Principal is insufficient, the Class B
Certificateholders will receive such shortfall first, from Available
Interest, and second, if such amounts are still insufficient, from monies on
deposit in the Reserve Fund. Any Available Funds remaining in the Collection
Account after such distributions will be paid to the Trust Depositor subject
to the conditions of the Reserve Fund Agreement.
The Seller will repurchase a Contract by depositing the Repurchase
Price for such Contract into the Collection Account no later than two Business
Days prior to the Determination Date which is more than ninety days after the
Trust Depositor becomes aware, or should have become aware or receives written
notice from the Trustee, of breach of a warranty of the Seller set forth in
Article III of the Transfer and Sale Agreement that materially adversely affects
the Trust's interest in such Contract, which breach has not been cured (the
Seller's obligation to repurchase such Contract constituting the
Certificateholders' sole remedy with respect to such a breach of a
representation and warranty set forth in the Transfer and Sale Agreement).
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights of the Certificateholders
under the Agreement at any time by the Servicer, the Back-up Servicer, the Trust
Depositor and the Trustee with the consent of the holders of Class B
Certificates evidencing Fractional Interests representing 66-2/3% or more of
such Class voting as a separate Class and holders of Class A Certificates
evidencing Fractional Interests representing 66-2/3% or more of the Class A
Certificates voting as a separate Class. Any such consent by the holder of this
Class B Certificate shall be conclusive and binding on such holder and upon all
future holders of this Class B Certificate and of any Class B Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Class B Certificate. The Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of any of the Certificateholders.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class B Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this Class B
Certificate for registration of transfer at the office or agency maintained by
the Trustee in Chicago, Illinois as previously described, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder thereof or his or her attorney
duly authorized in writing, and upon receipt by the Trustee of either (i)
evidence of the effectiveness or continued effectiveness of a registration
statement under the Securities Act of 1933, as amended, with respect to this
Class B Certificate, and registration under the applicable state laws, or (ii) a
certificate in writing of the transferee satisfactory to the Trust Depositor
regarding the facts surrounding such disposition; PROVIDED, HOWEVER, at the
election of the Trust Depositor, the Trust Depositor may, in addition, if such
certification is not substantially in the form of Exhibit H-2 to the Agreement,
require the delivery of an opinion of counsel satisfactory to the Trustee (which
shall not be at the expense of
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the Trust Depositor or the Trustee) that no such registration is required, and
thereupon one or more new Class B Certificates evidencing the same aggregate
Fractional Interest will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain limitations therein
set forth, Class B Certificates are exchangeable for new Class B Certificates of
authorized denominations evidencing the same aggregate Fractional Interest as
requested by the holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Certificate Registrar
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Trust Depositor, the Servicer, the Back-up Servicer, the Trustee,
the Paying Agent and the Certificate Registrar and any agent of the Trust
Depositor, the Servicer, the Back-up Servicer, the Trustee, the Paying Agent or
the Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trust
Depositor, the Servicer, the Back-up Servicer, the Trustee, the Paying Agent,
the Certificate Registrar nor any such agent shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate (after distribution of all Class A
Distributable Amounts and Class B Distributable Amounts on the Payment Date on
which the Class A Certificate Balance and Class B Certificate Balance is reduced
to zero; PROVIDED, that in no event shall the trust created thereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
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IN WITNESS WHEREOF, Harley-Davidson Motorcycle Trust _____ has caused this Class
B Certificate to be duly executed by the manual signature of a duly authorized
officer of the Trustee or of a duly appointed Authenticating Agent.
HARLEY-DAVIDSON MOTORCYCLE TRUST _________
DATED:__________
[__________________], NOT IN ITS INDIVIDUAL
CAPACITY BUT SOLELY AS TRUSTEE
BY________________________________
AUTHORIZED OFFICER
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FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_____________________________________________ the within ___% Certificate, Class
B for Harley-Davidson Motorcycle Contracts, Harley-Davidson Motorcycle Trust
_____, and does hereby irrevocably constitute and appoint
_____________________________________ Attorney to transfer the said certificate
on the Certificate Register maintained by the Trustee, with full power of
substitution in the premises.
--------------------------------
Signature
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