EXHIBIT 10.11
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SALE AND SERVICING AGREEMENT
among
HARLEY-DAVIDSON MOTORCYCLE TRUST 2001-3,
as Issuer,
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,
as Trust Depositor,
HARLEY-DAVIDSON CREDIT CORP.,
as Servicer
and
BNY MIDWEST TRUST COMPANY,
as Indenture Trustee
Dated as of December 1, 2001
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TABLE OF CONTENTS
ARTICLE ONE DEFINITIONS...............................................................................1
SECTION 1.01. DEFINITIONS...............................................................................1
SECTION 1.02. USAGE OF TERMS...........................................................................21
SECTION 1.03. SECTION REFERENCES.......................................................................21
SECTION 1.04. CALCULATIONS.............................................................................21
SECTION 1.05. ACCOUNTING TERMS.........................................................................21
ARTICLE TWO ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS............................................21
SECTION 2.01. CLOSING..................................................................................21
SECTION 2.02. CONDITIONS TO THE CLOSING................................................................22
SECTION 2.03. CONVEYANCE OF SUBSEQUENT CONTRACTS.......................................................23
ARTICLE THREE REPRESENTATIONS AND WARRANTIES...........................................................26
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING THE TRUST DEPOSITOR.............................27
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER....................................29
ARTICLE FOUR PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS..............................30
SECTION 4.01. CUSTODY OF CONTRACTS.....................................................................30
SECTION 4.02. FILING...................................................................................32
SECTION 4.03. NAME CHANGE OR RELOCATION................................................................32
SECTION 4.04. COSTS AND EXPENSES.......................................................................32
ARTICLE FIVE SERVICING OF CONTRACTS...................................................................32
SECTION 5.01. RESPONSIBILITY FOR CONTRACT ADMINISTRATION...............................................32
SECTION 5.02. STANDARD OF CARE.........................................................................33
SECTION 5.03. RECORDS..................................................................................33
SECTION 5.04. INSPECTION...............................................................................33
SECTION 5.05. TRUST ACCOUNTS...........................................................................33
SECTION 5.06. ENFORCEMENT..............................................................................35
SECTION 5.07. TRUSTEES TO COOPERATE....................................................................37
SECTION 5.08. COSTS AND EXPENSES.......................................................................37
SECTION 5.09. MAINTENANCE OF SECURITY INTERESTS IN MOTORCYCLES.........................................38
SECTION 5.10. SUCCESSOR SERVICER/LOCKBOX AGREEMENTS....................................................38
SECTION 5.11. SEPARATE ENTITY EXISTENCE................................................................38
ARTICLE SIX THE TRUST DEPOSITOR......................................................................38
SECTION 6.01. COVENANTS OF THE TRUST DEPOSITOR.........................................................38
SECTION 6.02. LIABILITY OF TRUST DEPOSITOR; INDEMNITIES................................................41
SECTION 6.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, TRUST DEPOSITOR;
CERTAIN LIMITATIONS......................................................................42
SECTION 6.04. LIMITATION ON LIABILITY OF TRUST DEPOSITOR AND OTHERS....................................43
SECTION 6.05. TRUST DEPOSITOR NOT TO RESIGN............................................................43
ARTICLE SEVEN DISTRIBUTIONS; RESERVE FUND..............................................................44
SECTION 7.01. MONTHLY DISTRIBUTIONS....................................................................44
SECTION 7.02. FEES.....................................................................................44
SECTION 7.03. ADVANCES; REALIZATION OF CARRYING CHARGE.................................................44
SECTION 7.04. INTEREST RESERVE ACCOUNT.................................................................45
SECTION 7.05. DISTRIBUTIONS; PRIORITIES................................................................45
SECTION 7.06. RESERVE FUND.............................................................................48
SECTION 7.07. ESTABLISHMENT OF PRE-FUNDING ACCOUNT.....................................................49
SECTION 7.08. REACQUISITION OF CONTRACTS FOR BREACH OF REPRESENTATIONS AND WARRANTIES..................50
SECTION 7.09. REASSIGNMENT OF REACQUIRED CONTRACTS.....................................................51
SECTION 7.10. SELLER'S REACQUISITION OPTION............................................................51
ARTICLE EIGHT EVENTS OF TERMINATION; SERVICE TRANSFER..................................................51
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SECTION 8.01. EVENTS OF TERMINATION....................................................................51
SECTION 8.02. WAIVER OF SERVICER DEFAULT...............................................................52
SECTION 8.03. SERVICE TRANSFER.........................................................................52
SECTION 8.04. SUCCESSOR SERVICER TO ACT; APPOINTMENT OF SUCCESSOR SERVICER.............................53
SECTION 8.05. NOTIFICATION TO SECURITYHOLDERS..........................................................54
SECTION 8.06. EFFECT OF TRANSFER.......................................................................54
SECTION 8.07. DATABASE FILE............................................................................54
SECTION 8.08. SUCCESSOR SERVICER INDEMNIFICATION.......................................................54
SECTION 8.09. RESPONSIBILITIES OF THE SUCCESSOR SERVICER...............................................54
SECTION 8.10. LIMITATION OF LIABILITY OF SERVICER......................................................55
SECTION 8.11. MERGER OR CONSOLIDATION OF SERVICER......................................................56
SECTION 8.12. SERVICER NOT TO RESIGN...................................................................56
SECTION 8.13. APPOINTMENT OF SUBSERVICER...............................................................56
ARTICLE NINE REPORTS..................................................................................56
SECTION 9.01. MONTHLY REPORTS..........................................................................56
SECTION 9.02. OFFICER'S CERTIFICATE....................................................................56
SECTION 9.03. OTHER DATA...............................................................................57
SECTION 9.04. ANNUAL REPORT OF ACCOUNTANTS.............................................................57
SECTION 9.05. ANNUAL STATEMENT OF COMPLIANCE FROM SERVICER.............................................58
SECTION 9.06. MONTHLY REPORTS TO NOTEHOLDERS...........................................................58
ARTICLE TEN TERMINATION..............................................................................60
SECTION 10.01. SALE OF TRUST ASSETS.....................................................................60
ARTICLE ELEVEN MISCELLANEOUS............................................................................61
SECTION 11.01. AMENDMENT................................................................................61
SECTION 11.02. PROTECTION OF TITLE TO TRUST.............................................................62
SECTION 11.03. GOVERNING LAW............................................................................64
SECTION 11.04. NOTICES..................................................................................64
SECTION 11.05. SEVERABILITY OF PROVISIONS...............................................................66
SECTION 11.06. ASSIGNMENT...............................................................................66
SECTION 11.07. THIRD PARTY BENEFICIARIES................................................................66
SECTION 11.08. COUNTERPARTS.............................................................................66
SECTION 11.09. HEADINGS.................................................................................66
SECTION 11.10. NO BANKRUPTCY PETITION; DISCLAIMER AND SUBORDINATION.....................................66
SECTION 11.11. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE TRUSTEE...........................67
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EXHIBITS
Exhibit A Form of Assignment A-1
Exhibit B Form of Closing Certificate of Trust Depositor B-1
Exhibit C Form of Closing Certificate of Seller/Servicer C-1
Exhibit D Form of Opinion of Counsel for Trust Depositor regarding
general corporate matters (including perfection opinion) D-1
Exhibit E Form of Opinion of Counsel for Trust Depositor regarding
the "TRUE SALE" nature of the transaction E-1
Exhibit F Form of Opinion of Counsel for Trust Depositor regarding
non-consolidation F-1
Exhibit G Form of Certificate Regarding Reacquired Contracts G-1
Exhibit H List of Contracts H-1
Exhibit I Form of Monthly Report to Noteholders and the Certificateholder I-1
Exhibit J Seller's Representations and Warranties J-1
Exhibit K Lockbox Bank and Lockbox Account K-1
Exhibit L Form of Contract Stamp L-1
Exhibit M Form of Subsequent Transfer Agreement M-1
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SALE AND SERVICING AGREEMENT, dated as of December 1, 2001, among
Harley-Davidson Motorcycle Trust 2001-3 (together with its successors and
assigns, the "ISSUER" or the "TRUST"), Harley-Davidson Customer Funding Corp.
(together with its successor and assigns, the "TRUST DEPOSITOR"), BNY Midwest
Trust Company (solely in its capacity as Indenture Trustee together with its
successors and assigns, the "INDENTURE TRUSTEE") and Harley-Davidson Credit
Corp. (solely in its capacity as Servicer together with its successor and
assigns, "HARLEY-DAVIDSON CREDIT" or the "SERVICER").
WHEREAS the Issuer desires to acquire from the Trust Depositor an initial
and subsequent pool of fixed-rate, simple interest motorcycle conditional sales
contracts relating to Harley-Davidson and Buell motorcycles and motorcycles not
manufactured by Harley-Davidson or Buell (collectively, the "CONTRACTS")
originated by Harley-Davidson Credit and subsequently sold by Harley-Davidson
Credit to the Trust Depositor;
WHEREAS the Trust Depositor is willing to transfer and assign the
Contracts to the Issuer pursuant to the terms hereof; and
WHEREAS the Servicer is willing to service the Contracts pursuant to
the terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"ADDITION NOTICE" means, with respect to any transfer of Subsequent
Contracts to the Issuer pursuant to Section 2.04 and the Trust Depositor's
corresponding prior purchase of such Contracts from the Seller, a notice, which
shall be given at least 10 days prior to the related Subsequent Transfer Date,
identifying the aggregate Principal Balance of the Subsequent Contracts to be
transferred.
"ADVANCE" means, with respect to any Distribution Date, the amounts, if
any, deposited by the Servicer in the Collection Account for such Distribution
Date pursuant to Section 7.03.
"AFFILIATE" of any specified Person means any other Person controlling or
controlled by, or under common control with, such specified Person. For the
purposes of this definition, "CONTROL" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership
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of voting securities, by contract or otherwise; and the terms "CONTROLLING" or
"CONTROLLED" have meanings correlative to the foregoing.
"AGGREGATE PRINCIPAL BALANCE" will equal the sum of the Principal Balances
of each outstanding Contract and the Pre-Funded Amount, if any. At the time of
initial issuance of the Securities, the initial aggregate principal amount of
the Securities will equal the initial Pool Balance plus the initial Pre-Funded
Amount.
"AGGREGATE PRINCIPAL BALANCE DECLINE" means, with respect to any
Distribution Date, the amount by which the Aggregate Principal Balance as of the
Distribution Date immediately preceding such Distribution Date (or as of the
Cutoff Date in the case of the first Distribution Date) exceeds the Aggregate
Principal Balance as of such Distribution Date.
"AGREEMENT" means this
Sale and Servicing Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"AVAILABLE MONIES" means, with respect to any Distribution Date, the sum
of the Available Interest and the Available Principal for such Distribution
Date.
"AVAILABLE INTEREST" means, with respect to any Distribution Date, the
total (without duplication) of the following amounts received by the Servicer on
or in respect of the Contracts during the related Due Period: (i) all amounts
received in respect of interest on the Contracts, (ii) the interest component of
all Net Liquidation Proceeds, (iii) the interest component of the aggregate of
the Reacquisition Prices for Contracts reacquired by the Trust Depositor
pursuant to Section 7.08, (iv) all Advances made by the Servicer pursuant to
Section 7.03, (v) the interest component of all amounts paid by the Trust
Depositor in connection with an optional reacquisition of the Contracts pursuant
to Section 7.10, (vi) all amounts received in respect of Carrying Charges
transferred from the Interest Reserve Account pursuant to Section 7.03, and
(vii) all amounts received in respect of interest, dividends, gains, income and
earnings on investment of funds in the Trust Accounts as contemplated in Section
5.05(d).
"AVAILABLE PRINCIPAL" means, with respect to any Distribution Date, the
total (without duplication) of the following amounts received by the Servicer on
or in respect of the Contracts during the related Due Period: (i) all amounts
received in respect of principal on the Contracts, (ii) the principal component
of all Net Liquidation Proceeds, (iii) the principal component of the aggregate
of the Reacquisition Prices for Contracts reacquired by the Trust Depositor
pursuant to Section 7.08, and (iv) the principal component of all amounts paid
by the Trust Depositor in connection with an optional reacquisition of the
Contracts pursuant to Section 7.10.
"AVERAGE DELINQUENCY RATIO" means, for any Distribution Date, the
arithmetic average of the Delinquency Ratios for such Distribution Date and the
two immediately preceding Distribution Dates.
"AVERAGE LOSS RATIO" means, for any Distribution Date, the arithmetic
average of the Loss Ratios for such Distribution Date and the two immediately
preceding Distribution Dates.
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"BASE PROSPECTUS" means the Prospectus dated November 15, 2000 relating to
the Harley-Davidson Motorcycle Trusts.
"BUELL" means Buell Motorcycle Company.
"BUSINESS DAY" means any day other than a Saturday or a Sunday, or another
day on which banking institutions in the city of Chicago, Illinois, Wilmington,
Delaware or New York, New York are authorized or obligated by law, executive
order, or governmental decree to be closed.
"CALCULATION DAY" means the last day of each calendar month.
"CARRYING CHARGES" means the sum of (i) the product of (x) the weighted
average of the Class A-1 Rate, the Class A-2 Rate and the Class B Rate and (y)
the undisbursed funds (excluding investment earnings) in the Pre-Funding Account
(as of the last day of the related Due Period) and (ii) the Indenture Trustee
Fee for the related Distribution Date, minus (iii) the amount of any investment
earnings on funds in the Pre-Funding Account which was transferred to the
Interest Reserve Account, as well as interest earnings on amounts in the
Interest Reserve Account.
"CERTIFICATE" means the Trust Certificate (as such term is defined in the
Trust Agreement), representing 100% of the beneficial equity interest in the
Trust and issued pursuant to the Trust Agreement.
"CERTIFICATE REGISTER" shall have the meaning specified in the Trust
Agreement.
"CERTIFICATEHOLDER" shall have the meaning specified in the Trust
Agreement.
"CLASS" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"CLASS A NOTE MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect
to any Distribution Date, the Class A Note Percentage of the Principal
Distributable Amount for such Distribution Date.
"CLASS A NOTE PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of any
Distribution Date, the excess of the Class A Note Principal Distributable Amount
with respect to the immediately preceding Distribution Date over the amount in
respect of principal for the Class A Notes that is actually deposited in the
Note Distribution Account on such preceding Distribution Date.
"CLASS A NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Class A Note Monthly Principal Distributable
Amount with respect to such Distribution Date and the Class A Note Principal
Carryover Shortfall as of the close of the immediately preceding Distribution
Date; PROVIDED, HOWEVER, that the Class A Note Principal
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Distributable Amount shall not exceed the outstanding principal amount of the
Class A Notes; and PROVIDED, FURTHER, that the Class A Note Principal
Distributable Amount (i) on the Class A-1 Final Distribution Date shall not be
less than the amount that is necessary (after giving effect to other amounts
to be deposited in the Note Distribution Account for payment on the Class A-1
Notes on such Distribution Date and allocable to principal) to reduce the
outstanding principal amount of the Class A-1 Notes to zero, and (ii) on the
Class A-2 Final Distribution Date shall not be less than the amount that is
necessary (after giving effect to other amounts to be deposited in the Note
Distribution Account for payment on the Class A-2 Notes on such Distribution
Date and allocable to principal) to reduce the outstanding principal amount of
the Class A-2 Notes to zero.
"CLASS A NOTES" means, collectively, the Class A-1 Notes and the Class A-2
Notes.
"CLASS A-1 FINAL DISTRIBUTION DATE" means the February 2006 Distribution
Date.
"CLASS A-1 NOTEHOLDER" means the Person in whose name a Class A-1 Note is
registered in the Note Register, as such term is defined in the Indenture.
"CLASS A-1 RATE" means 2.57% per annum (computed on the basis of a 360-day
year of twelve 30-day months).
"CLASS A NOTE PERCENTAGE" means, (i) for each Distribution Date to but
excluding the Distribution Date on which the principal amount of the Class A-2
Notes is reduced to zero, 95.00%; (ii) for the Distribution Date on which the
principal amount of the Class A-2 Notes is reduced to zero, such percentage
which represents the fraction of the Principal Distributable Amount necessary to
reduce the principal amount of the Class A-2 Notes to zero; and (iii) for each
Distribution Date thereafter, 0%.
"CLASS A-2 FINAL DISTRIBUTION DATE" means the October 2009 Distribution
Date.
"CLASS A-2 NOTEHOLDER" means the Person in whose name a Class A-2 Note is
registered in the Note Register.
"CLASS A-2 RATE" means 4.04% per annum (computed on the basis of a 360-day
year of twelve 30-day months).
"CLASS B FINAL DISTRIBUTION DATE" means the October 2009 Distribution
Date.
"CLASS B NOTEHOLDER" means the Person in whose name a Class B Note is
registered in the Note Register, as such term is defined in the Indenture.
"CLASS B NOTE MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect
to any Distribution Date, the Class B Note Percentage of the Principal
Distributable Amount for such Distribution Date.
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"CLASS B NOTE PERCENTAGE" means, (i) for each Distribution Date to but
excluding the Distribution Date on which the principal amount of the Class A-2
Notes is reduced to zero, 5.00%; and (ii) for the Distribution Date on which the
principal amount of the Class A-2 Notes is reduced to zero, that percentage that
equals 100% minus the Class A Note Percentage for such Distribution Date; and
(iii) 100% thereafter.
"CLASS B NOTE PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of any
Distribution Date, the excess of the Class B Note Principal Distributable Amount
with respect to the immediately preceding Distribution Date over the amount in
respect of principal for the Class B Notes that is actually deposited in the
Note Distribution Account on such preceding Distribution Date.
"CLASS B NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Class B Note Monthly Principal Distributable
Amount with respect to such Distribution Date and the Class B Note Principal
Carryover Shortfall as of the close of the immediately preceding Distribution
Date; PROVIDED, HOWEVER, that the Class B Note Principal Distributable Amount
shall not exceed the outstanding principal amount of the Class B Notes; and
PROVIDED, FURTHER, that the Class B Note Principal Distributable Amount on the
Class B Final Distribution Date shall not be less than the amount that is
necessary (after giving effect to other amounts to be deposited in the Note
Distribution Account for payment on the Class B Notes on such Distribution Date
and allocable to principal) to reduce the outstanding principal amount of the
Class B Notes to zero.
"CLASS B RATE" means 3.72% per annum (computed on the basis of a 360-day
year of twelve 30-day months).
"CLEARING AGENCY" shall have the meaning specified in the Indenture.
"CLOSING DATE" means December 12, 2001.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall have the meaning specified in the "granting clause" of
the Indenture.
"COLLECTION ACCOUNT" means a trust account as described in Section 5.05
maintained in the name of the Indenture Trustee and which shall be an Eligible
Account.
"COMPUTER 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 transferred to the Trust pursuant to this
Agreement (and any Subsequent Transfer Agreement), and includes the master file
and the history file as well as servicing information with respect to the
Contracts.
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"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 Indenture Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date of the execution of this Agreement is
located at the address set forth in Section 11.04.
"CRAM DOWN LOSS" means, with respect to a Contract, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Principal Balance of such Contract the amount of such reduction
(with a "CRAM DOWN LOSS" being deemed to have occurred on the date of issuance
of such order).
"CUMULATIVE LOSS RATIO" means, as of any Distribution Date, the fraction
(expressed as a percentage) computed by the Servicer by dividing (i) the
aggregate Net Liquidation Losses for all Contracts since the related Cutoff Date
through the end of the related Due Period by (ii) the sum of (A) the Principal
Balance of the Contracts as of the 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.
"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
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securing a Contract or (iii) the Servicer has determined in good faith that an
Obligor is not likely to resume payment under a Contract.
"DELINQUENCY AMOUNT" means, as of any Distribution Date, the Principal
Balance of all Contracts that were delinquent 60 days or more as of the end of
the related Due Period (including Contracts in respect of which the related
Motorcycles have been repossessed and are still inventory).
"DELINQUENT INTEREST" means, for each Contract and each Determination Date
as to which the full payment due in the related Due Period has not been paid
before the 30th day after the scheduled payment dated therefor (any such payment
being "DELINQUENT" for purposes of this definition), all interest accrued on
such Contract from the Due Date in the Due Period one month prior to the Due
Period in which the payment is delinquent.
"DELINQUENCY RATIO" means, for any Distribution Date, the fraction
(expressed as a percentage) computed by dividing (a) the Delinquency Amount
during the immediately preceding Due Period by (b) the Principal Balance of the
Contracts as of the beginning of the related Due Period.
"DELTA LOAN" means a loan made by the Seller pursuant to the program
designated as the Delta Program.
"DETERMINATION DATE" means the fourth Business Day following the
conclusion of a Due Period during the term of this Agreement.
"DISTRIBUTION DATE" means the fifteenth day of each calendar month during
the term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, with the first such Distribution Date hereunder being
January 15, 2002.
"DUE DATE" means, with respect to any Contract, the day of the month on
which each scheduled payment of principal and interest is due on such Contract,
exclusive of days of grace.
"DUE PERIOD" means a calendar month during the term of this Agreement, and
the Due Period related to a Determination Date or Distribution Date shall be the
calendar month immediately preceding such date; PROVIDED, HOWEVER, that with
respect to the Initial Determination Date or Initial Distribution Date, the Due
Period shall be the period from the Initial Cutoff Date to and including
December 31, 2001.
"ELIGIBLE ACCOUNT" means a segregated direct deposit account maintained
with the Indenture Trustee, acting in its fiduciary capacity, or a depository
institution or trust company organized under the laws of the United States of
America, or any of the States thereof, or the District of Columbia, having a
certificate of deposit, short-term deposit or commercial paper rating of at
least A-1+ by Standard & Poor's and P-1 by Moody's.
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"ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form which
evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any State (or any domestic branch of a foreign
bank) and subject to supervision and examination by Federal or State
banking or depository institution authorities; PROVIDED, HOWEVER, that at
the time of the investment or contractual commitment to invest therein,
the commercial paper or other short-term senior unsecured debt obligations
(other than such obligations the rating of which is based on the credit of
a Person other than such depository institution or trust company) thereof
shall have a credit rating from the Rating Agency in the highest
investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from the Rating Agency
in the highest investment category granted thereby;
(d) investments in money market funds having a rating from the
Rating Agency in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner Trustee or
any of their respective Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution
or trust company referred to in CLAUSE (b); and
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed as to timely payment by, the
United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with a depository
institution or trust company (acting as principal) described in CLAUSE
(b).
"EVENT OF TERMINATION" means an event specified in Section 8.01.
"EXCESS AMOUNTS" shall mean Available Monies after distributions made in
accordance with Section 7.05.
"FINAL DISTRIBUTION DATE" means the Class A-1 Final Distribution Date, the
Class A-2 Final Distribution Date or the Class B Final Distribution Date, as the
case may be.
"FUNDING PERIOD" means the period beginning on the Closing Date and ending
on the first to occur of (a) the Distribution Date on which the amount on
deposit in the Pre-Funding Account (after giving effect to any transfers
therefrom in connection with the transfer of
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Subsequent Contracts to the Trust on such Distribution Date) is less than
$150,000, (b) the date on which an Event of Termination occurs, (c) the date
on which an Insolvency Event occurs with respect to the Trust Depositor and
(d) the close of business on the date which is 90 days from and including the
Closing Date.
"HARLEY-DAVIDSON FINANCIAL" has the meaning assigned in Section 5.10
hereof.
"HOLDER" means, with respect to a (i) Certificate, the Person in whose
name such Certificate is registered in the Certificate Register and (ii) Note,
the Person in whose name such Note is registered in the Note Register.
"INDENTURE" means the Indenture, dated as of the date hereof, between the
Issuer and the Indenture Trustee.
"INDENTURE TRUSTEE" means the Person acting as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"INDENTURE TRUSTEE FEE" means, with respect to any Distribution Date,
one-twelfth of the product of .003% and the sum of (i) the Principal Balance of
the Contracts as of the beginning of the related Due Period and (ii) the
Pre-Funded Amount as of the beginning of such period; PROVIDED, HOWEVER, in no
event shall such fee be less than $200.00 per month.
"INDEPENDENT" when used with respect to any specified Person, means such a
Person who (i) is in fact independent of the Issuer, the Trust Depositor or the
Servicer, (ii) is not a director, officer or employee of any Affiliate of the
Issuer, the Trust Depositor or the Servicer, (iii) is not a person related to
any officer or director of the Issuer, the Trust Depositor or the Servicer or
any of their respective Affiliates, (iv) is not a holder (directly or
indirectly) of more than 10% of any voting securities of Issuer, the Trust
Depositor or the Servicer or any of their respective Affiliates, and (v) is not
connected with the Issuer, the Trust Depositor or the Servicer as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
"INITIAL CLASS A-1 NOTE BALANCE" means $188,000,000.
"INITIAL CLASS A-2 NOTE BALANCE" means $111,250,000.
"INITIAL CLASS B NOTE BALANCE" means $15,750,000.
"INITIAL CONTRACTS" means those Contracts conveyed to the Trust on the
Closing Date.
"INITIAL CUTOFF DATE" means November 27, 2001.
"INSOLVENCY EVENT" means, with respect to a specified Person, (i) the
entry of a decree or order for relief by a court or regulatory authority having
jurisdiction in respect of such Person in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other
9
present or future, federal or state, bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or other similar official for such Person or for any substantial part of its
property, or ordering the winding-up or liquidation of such Person's affairs,
and the continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days; (ii) the commencement of an involuntary case
under the federal bankruptcy laws, as now or hereinafter in effect, or another
present or future federal or state bankruptcy, insolvency or similar law and
such case is not dismissed within 60 days; or (iii) the commencement by such
Person of a voluntary case under the federal bankruptcy laws, as now or
hereinafter in effect, or any other present or future federal or state,
bankruptcy, insolvency or similar law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or other similar official for such Person or
for any substantial part of its property, or the making by such Person of an
assignment for the benefit of creditors or the failure by such Person
generally to pay its debts as such debts become due or the taking of corporate
action by such Person in furtherance of any the foregoing.
"INTEREST PERIOD" means, with respect to any Distribution Date, the period
from and including the fifteenth day of the month of the Distribution Date
immediately preceding such Distribution Date (or, in the case of the first
Distribution Date, the Closing Date) to but excluding the fifteenth day of the
month of such Distribution Date.
"INTEREST RATE" means the Class A-1 Rate, the Class A-2 Rate or the Class
B Rate, as applicable.
"INTEREST RESERVE ACCOUNT" means the account designated as the Interest
Reserve Account in, and which is established and maintained pursuant to, Section
7.04 hereof.
"INTEREST RESERVE AMOUNT" means, as of any date of determination, the
amount on deposit in the Interest Reserve Account on such date, and as of the
Closing Date shall be $151,573.22.
"INVESTMENT EARNINGS" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts, other than the Pre-Funding Account, to be
deposited into the Collection Account on such Distribution Date pursuant to
Section 5.05(b).
"ISSUER" means the Harley-Davidson Motorcycle Trust 2001-3.
"LATE PAYMENT PENALTY FEES" means any late payment fees paid by Obligors
on Contracts after all sums received have been allocated first to regular
installments due or overdue and all such installments are then paid in full.
"LIEN" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Contract by operation of law.
10
"LIQUIDATED CONTRACT" means a Contract with respect to which there has
occurred one or more of the following: (i) 90 days have elapsed following the
date of repossession (and expiration of any redemption period) with respect to
the Motorcycle securing such Contract, (ii) the receipt of proceeds by the
Servicer from the sale of a repossessed Motorcycle securing a Contract, (iii)
the Servicer has determined in good faith that all amounts expected to be
recovered have been received with respect to such Contract, or (iv) all or any
portion of any payment is delinquent 150 days or more.
"LIST OF CONTRACTS" means the list identifying each Contract constituting
part of the Trust Corpus, which list shall consist of the initial List of
Contracts reflecting the Initial Contracts transferred to the Trust on the
Closing Date, together with any Subsequent List of Contracts reflecting the
Subsequent Contracts transferred to the Trust on the related Subsequent Transfer
Date, and which list (a) identifies each Contract and (b) sets forth as to each
Contract (i) the Principal Balance as of the applicable Cutoff Date, (ii) the
amount of monthly payments due from the Obligor, (iii) the Contract Rate and
(iv) the maturity date, and which list (as in effect on the Closing Date) is
attached to this Agreement as EXHIBIT H.
"LOCKBOX" means the Lockbox maintained by the Lockbox Bank identified on
EXHIBIT K hereto.
"LOCKBOX ACCOUNT" means the account maintained with the Lockbox Bank and
identified on EXHIBIT K hereto.
"LOCKBOX AGREEMENT" means the Fifth Amended and Restated Lockbox
Administration Agreement dated as of November 1, 2000 by and among the Lockbox
Bank, Servicer, the Trust Depositor, Harley-Davidson Customer Funding Corp., The
Bank of New York (successor-in-interest to the corporate trust business of
▇▇▇▇▇▇ Trust and Savings Bank), BNY Midwest Trust Company and Bank One, National
Association, with respect to the Lockbox Account, unless such agreement shall be
terminated in accordance with its terms, in which event "LOCKBOX AGREEMENT"
shall mean such other agreement, in form and substance acceptable to the
above-described parties.
"LOCKBOX BANK" means the financial institution maintaining the Lockbox
Account and identified on EXHIBIT K hereto or any successor thereto.
"LOSS RATIO" means, for any Distribution Date, the fraction (expressed as
a percentage) derived by dividing (x) Net Liquidation Losses for all Contracts
that became Liquidated Contracts during the immediately preceding Due Period
multiplied by twelve by (y) the outstanding Principal Balances of all Contracts
as of the beginning of the Due Period.
"MANDATORY REDEMPTION" means the prepayment, in part, made to the
Noteholders without premium made on the Distribution Date on or immediately
following the last day of the Funding Period in the event that any amount
remains on deposit in the Pre-Funding Account after giving effect to the
acquisition of all Subsequent Contracts, including any such acquisition on such
date.
11
"MANDATORY REDEMPTION SUBACCOUNT" means the subaccount of the Note
Distribution Account into which deposits from the Pre-Funding Account for any
Mandatory Redemption are made.
"MODIFIED REQUIRED HOLDERS" means (i) prior to the payment in full of the
Class A Notes outstanding, Class A-1 Noteholders and/or Class A-2 Noteholders
evidencing at least 66 2/3% of the aggregate outstanding principal balance of
the Class A Notes and (ii) from and after the payment in full of the Class A
Notes outstanding, Class B Noteholders evidencing at least 66 2/3% of the
aggregate outstanding principal balance of the Class B Notes.
"MONTHLY REPORT" shall have the meaning specified in Section 9.06.
"MONTHLY SERVICING FEE" means, as to any Distribution Date, one-twelfth of
the product of 1% and the Principal Balance of the Contracts as of the beginning
of the related Due Period.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc. or any successor
thereto.
"MOTORCYCLE" means a motorcycle manufactured by Harley-Davidson, Inc. (or
in certain limited instances Buell or certain other manufacturers) securing a
Contract.
"NET LIQUIDATION LOSSES" means, as of any Distribution Date, with respect
to all Liquidated Contracts on an aggregate basis, the amount, if any, by which
(a) the outstanding Principal Balance of all Liquidated Contracts plus accrued
and unpaid interest thereon at the Contract Rate to the date on which such
Liquidated Contracts became Liquidated Contracts exceeds (b) the Net Liquidation
Proceeds for such Liquidated Contracts.
"NET LIQUIDATION PROCEEDS" means, as to any Liquidated Contract, the
proceeds realized on the sale or other disposition of the related Motorcycle,
including proceeds realized on the repurchase of such Motorcycle by the
originating dealer for breach of warranties, and the proceeds of any insurance
relating to such Motorcycle, after payment of all reasonable expenses incurred
thereby, together, in all instances, with the expected or actual proceeds of any
recourse rights relating to such Contract as well as any post-disposition
proceeds or other amounts in respect of a Liquidated Contract received by the
Servicer.
"NOTE DEPOSITORY AGREEMENT" shall have the meaning specified in the
Indenture.
"NOTE DISTRIBUTABLE AMOUNT" means, with respect to any Distribution Date,
the sum of the Note Principal Distributable Amount and the Note Interest
Distributable Amount for such Distribution Date.
"NOTE DISTRIBUTION ACCOUNT" means the account established and maintained
as such pursuant to Section 5.05.
"NOTE INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date and a Class of Notes, the excess, if any, of the sum of the
Note Interest Distributable Amount for such
12
Class for the immediately preceding Distribution Date plus any outstanding
Note Interest Carryover Shortfall for such Class on such preceding
Distribution Date, over the amount in respect of interest that is actually
deposited in the Note Distribution Account with respect to such Class on such
preceding Distribution Date, plus, interest on such excess to the extent
permitted by applicable law, at the related Interest Rate for the related
Interest Period.
"NOTE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date and a Class of Notes, the sum of the Note Monthly Interest
Distributable Amount and the Note Interest Carryover Shortfall for such Class of
Notes with respect to such Distribution Date.
"NOTE MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date for any Class of Notes, interest accrued from and including
the fifteenth day of the month of the preceding calendar month to, but
excluding, the fifteenth day of the calendar month in which such Distribution
Date occurs (or in the case of the first Distribution Date, interest accrued
from and including the Closing Date to but excluding such Distribution Date) at
the related Interest Rate for such Class of Notes on the outstanding principal
amount of the Notes of such Class on the immediately preceding Distribution
Date, after giving effect to all payments of principal to Noteholders of such
Class on or prior to such preceding Distribution Date (or, in the case of the
first Distribution Date, on the original principal amount of such Class of
Notes).
"NOTE POOL FACTOR" means with the respect to any Class of Notes as of the
close of business on any Distribution Date, a seven-digit decimal figure equal
to the outstanding principal amount of such Class of Notes (after giving effect
to any reductions thereof to be made on such Distribution Date) divided by the
original outstanding principal amount of such Class of Notes.
"NOTE PRINCIPAL CARRYOVER SHORTFALL" means the Class A Note Principal
Carryover Shortfall and the Class B Note Principal Carryover Shortfall.
"NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means the Class A Note Principal
Distributable Amount and the Class B Note Principal Distributable Amount.
"NOTE REGISTER" shall have the meaning specified in the Indenture.
"NOTES" means the Class A-1 Notes, the Class A-2 Notes and the Class B
Notes, in each case as executed and authenticated in accordance with the
Indenture.
"OBLIGEE" means the Person to whom an Obligor is indebted under a
Contract.
"OBLIGOR" means a Motorcycle buyer or other person who owes payments under
a Contract.
"OFFICER'S CERTIFICATE" means a certificate signed by the Chairman, the
President, a Vice President, the Treasurer, an Assistant Treasurer, the
Controller, an Assistant Controller, the Secretary or an Assistant Secretary of
any Person delivering such certificate and delivered to the Person to whom such
certificate is required to be delivered, including any certificate delivered
13
under any of the Transaction Documents required to be executed by a Servicing
Officer. In the case of an Officer's Certificate of the Servicer, at least one
of the signing officers must be a Servicing Officer. Unless otherwise specified,
any reference herein to an Officer's Certificate shall be to an Officers'
Certificate of the Servicer.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be
counsel to the Trust Depositor or the Servicer) acceptable to the Indenture
Trustee or the Owner Trustee, as the case may be.
"OWNER TRUSTEE" means the Person acting, not in its individual capacity,
but solely as Owner Trustee under the Trust Agreement, its successors in
interest and any successor owner trustee under the Trust Agreement.
"PAYING AGENT" means as described in Section 6.11 of the Indenture and
Section 3.10 of the Trust Agreement.
"PERSON" means any individual, corporation, estate, limited liability
company, partnership, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"POOL BALANCE" means as of any date, the Principal Balance of Contracts as
of the close of business on such date.
"PRE-FUNDED AMOUNT" means as of any date, the amount on deposit in the
Pre-Funding Account at the close of business on such date.
"PRE-FUNDING ACCOUNT" means the account designated as the Pre-Funding
Account in, and which is established and maintained pursuant to Section 7.07.
"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
reacquired by the Seller pursuant to Section 5.01 of the Transfer and Sale
Agreement and Section 7.08 hereof because of a breach of representation or
warranty, or if (y) the Trust Depositor gives notice of its intent to reacquire
the Contracts in connection with an optional termination of the Trust pursuant
to Section 5.02 of the Transfer and Sale Agreement and Section 7.10 hereof, in
each case the Principal Balance of such Contract or Contracts shall be deemed as
of the related Determination Date to be zero for the Due Period in which such
event occurs and for each Due Period thereafter, (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
14
deemed to be zero; and (b) where the context requires, the aggregate of the
Principal Balances described in clause (a) for all such Contracts.
"PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Distribution
Date, the Aggregate Principal Balance Decline for such Distribution Date.
"PROSPECTUS" means the Base Prospectus together with the Supplement.
"QUALIFIED ELIGIBLE INVESTMENTS" means Eligible Investments acquired by
the Indenture Trustee in its name and in its capacity as Indenture Trustee,
which are held by the Indenture Trustee in the Pre-Funding Account, the Interest
Reserve Account or the Reserve Fund and with respect to which (a) the Indenture
Trustee has noted its interest therein on its books and records, and (b) the
Indenture Trustee has purchased such investments for value without notice of any
adverse claim thereto (and, if such investments are securities or other
financial assets or interests therein, within the meaning of Section 8-102 of
the UCC as enacted in Illinois, without acting in collusion with a securities
intermediary in violating such securities intermediary's obligations to
entitlement holders in such assets, under Section 8-504 of such UCC, to maintain
a sufficient quantity of such assets in favor of such entitlement holders), and
(c) either (i) such investments are in the possession, or are under the control,
of the Indenture Trustee, or (ii) such investments, (A) if certificated
securities and in bearer form, have been delivered to the Indenture Trustee, or
in registered form, have been delivered to the Indenture Trustee and either
registered by the issuer thereof in the name of the Indenture Trustee or
endorsed by effective endorsement to the Indenture Trustee or in blank; (B) if
uncertificated securities, the ownership of which has been registered to the
Indenture Trustee on the books of the issuer thereof (or another person, other
than a securities intermediary, either becomes the registered owner of the
uncertified security on behalf of the Indenture Trustee or, having previously
become the registered owner, acknowledges that it holds for the Indenture
Trustee); or (C) if securities entitlements (within the meaning of Section 8-102
of the UCC as enacted in Illinois) representing interests in securities or other
financial assets (or interests therein) held by a securities intermediary
(within the meaning of said Section 8-102), a securities intermediary indicates
by book entry that a security or other financial asset has been credited to the
Indenture Trustee's securities account with such securities intermediary. Any
such Qualified Eligible Investment may be purchased by or through the Indenture
Trustee or any of its affiliates.
"RATING AGENCY" means each of Moody's and Standard & Poor's, so long as
such Persons maintain a rating on the Notes; and if either Moody's or Standard &
Poor's no longer maintains a rating on the Notes, such other nationally
recognized statistical rating organization selected by the Trust Depositor.
"REACQUISITION PRICE" means, with respect to a Contract to be reacquired
hereunder as of the last day of any Due Period an amount equal to (a) the
Principal Balance of such Contract as of such day, plus (b) accrued and unpaid
interest at the Contract Rate on such Contract through the end of such Due
Period.
15
"RECORD DATE" means, with respect to any Distribution Date, the close of
business on the day immediately preceding such date.
"REIMBURSEMENT AMOUNT" has the meaning assigned in Section 7.03 hereof.
"REQUIRED HOLDERS" means (i) prior to the payment in full of the Class A
Notes outstanding, Class A-1 Noteholders and Class A-2 Noteholders evidencing
more than 50% of the aggregate outstanding principal balance of the Class A
Notes and (ii) from and after the payment in full of the Class A Notes
outstanding, Class B Noteholders evidencing more than 50% of the aggregate
outstanding principal balance of the Class B Notes.
"RESERVE FUND" means the Reserve Fund established and maintained pursuant
to Section 7.06 hereof.
"RESERVE FUND INITIAL DEPOSIT" means $2,216,763.12.
"RESERVE FUND DEPOSITS" means all moneys deposited in the Reserve Fund
from time to time including, but not limited to, the Reserve Fund Initial
Deposit as well as any monies deposited therein pursuant to Section 7.05(b), all
investments and reinvestments thereof, earnings thereon, and proceeds of the
foregoing, whether now or hereafter existing.
"RESERVE FUND TRIGGER EVENT" means the occurrence with respect to any
Distribution Date (i) the Average Delinquency Ratio for such Distribution Date
is equal to or greater than (a) 2.50% with respect to any Distribution Date
which occurs within the period from the Closing Date to, and inclusive of, the
first anniversary of the Closing Date, (b) 3.00% with respect to any
Distribution Date which occurs within the period from the day after the first
anniversary of the Closing Date to, and inclusive of, the second anniversary of
the Closing Date, or (c) 3.50% with respect to any Distribution Date which
occurs within the period from the day after the second anniversary of the
Closing Date to, and inclusive of, the third anniversary of the Closing Date or
(d) 4.00% with respect to any Distribution Date occurring after the third
anniversary of the Closing Date; (ii) the Average Loss Ratio for such
Distribution Date is equal to or greater than (a) 3.00% with respect to any
Distribution Date which occurs within the period from the Closing Date to, and
inclusive of, the second anniversary of the Closing Date or (b) 2.75% with
respect to any Distribution Date which occurs following the second anniversary
of the Closing Date; or (iii) the Cumulative Loss Ratio for such Distribution
Date is equal to or greater than (a) 1.25% with respect to any Distribution Date
which occurs within the period from the Closing Date to, and inclusive of, the
first anniversary of the Closing Date, (b) 1.75% with respect to any
Distribution Date which occurs within the period from the day after the first
anniversary of the Closing Date to, and inclusive of, the second anniversary of
the Closing Date, (c) 2.25% with respect to any Distribution Date which occurs
within the period from the day after the second anniversary of the Closing Date
to, and inclusive of, the third anniversary of the Closing Date, or (d) 2.50%
with respect to any Distribution Date occurring after the third anniversary of
the Closing Date.
16
A Reserve Fund Trigger Event shall be deemed to have terminated with
respect to a Distribution Date if no Reserve Fund Trigger Event shall exist with
respect to three consecutive Distribution Dates (inclusive of the respective
Distribution Date).
"RESPONSIBLE OFFICER" means, with respect to the Owner Trustee, any
officer in its Corporate Trust Administration Department (or any similar group
of a successor Owner Trustee) and with respect to the Indenture Trustee, the
chairman and any vice chairman of the board of directors, the president, the
chairman and vice chairman of any executive committee of the board of directors,
every vice president, assistant vice president, the secretary, every assistant
secretary, cashier or any assistant cashier, controller or assistant controller,
the treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other authorized officer or assistant officer of the Trustee
customarily performing functions similar to those performed by persons who at
the time shall be such officers, respectively, or to whom a corporate trust
matter is referred because of knowledge of, familiarity with, and authority to
act with respect to a particular matter.
"SECURITIES" means the Notes, or any of them.
"SECURITYHOLDERS" means the Holders of the Notes.
"SELLER" means Harley-Davidson Credit Corp., a Nevada corporation, or
its successor, in its capacity as Seller of Contract Assets under the
Transfer and Sale Agreement and any Subsequent Purchase Agreement.
"SERVICER" means Harley-Davidson Credit Corp., a Nevada corporation, or
its successor, until any Service Transfer hereunder and thereafter means the
Successor Servicer appointed pursuant to Article VIII below with respect to the
duties and obligations required of the Servicer under this Agreement.
"SERVICE TRANSFER" has the meaning assigned in Section 8.02(a).
"SERVICING FEE" means, on any Determination Date, the sum of (a) the
Monthly Servicing Fee payable on the related Distribution Date, (b) Late Payment
Penalty Fees received by the Servicer during the related Due Period, and (c)
extension fees received by the Servicer during the related Due Period.
"SERVICING OFFICER" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Indenture Trustee by the Servicer, as the same may be amended
from time to time.
"SHORTFALL" means, with respect to a Distribution Date, the excess (if
any), of the sum of the amounts payable pursuant to clauses (v) through (viii)
of Section 7.05 over Available Monies for such Distribution Date minus the
amounts payable pursuant to clauses (i) through (iv) of Section 7.05 on such
Distribution Date.
17
"SOLVENT" means, as to any Person at any time, that (a) the fair value of
the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code; (b) the present fair saleable value of the
property of such Person in an orderly liquidation of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person is able
to realize upon its property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the normal
course of business; (d) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature; and (e) such Person is not engaged in
business or a transaction, and is not about to engage in a business or a
transaction, for which such Person's property would constitute unreasonably
small capital.
"SPECIFIED RESERVE FUND BALANCE" means with respect to any Distribution
Date will be an amount equal to the greater of:
(a) 2.00% of the Principal Balance of the Contracts in the Trust as
of the last day of the immediately preceding Due Period; PROVIDED,
HOWEVER, in the event a Reserve Fund Trigger Event occurs and is
continuing for three consecutive Distribution Dates (inclusive of the
respective Distribution Date), the Specified Reserve Fund Balance shall be
equal to 6.00% of the Principal Balance of the Contracts in the Trust as
of the last day of the immediately preceding Due Period; and
(b) 1.00% of the aggregate of the Initial Class A-1 Note Balance,
Initial Class A-2 Note Balance and Initial Class B Note Balance;
PROVIDED, HOWEVER, in no event shall the Specified Reserve Fund Balance be
greater than the aggregate outstanding principal balance of the Securities. As
of any Distribution Date, the amount of funds actually on deposit in the Reserve
Fund may, in certain circumstances, be less than the Specified Reserve Fund
Balance
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division
of The McGraw Hill Companies, or any successor thereto.
"SUBSEQUENT CONTRACTS" means all Contracts transferred to the Trust
pursuant to Section 2.04.
"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.
18
"SUBSEQUENT PURCHASE AGREEMENT" means, with respect to any Subsequent
Contracts, the agreement between the Seller and the Trust Depositor pursuant to
which the Seller will transfer the Subsequent Contracts to the Trust Depositor,
the form of which is attached to the Transfer and Sale Agreement as EXHIBIT C.
"SUBSEQUENT RESERVE FUND AMOUNT" means the amount on each Subsequent
Transfer Date equal to 1.00% of the aggregate balance of the Subsequent
Contracts conveyed to the Trust.
"SUBSEQUENT TRANSFER AGREEMENT" means the agreement described in Section
2.04(b) hereof.
"SUBSEQUENT TRANSFER DATE" means any date during the Funding Period on
which Subsequent Contracts are transferred to the Trust.
"SUCCESSOR SERVICER" means a servicer described in Section 8.02(b).
"SUPPLEMENT" means the Prospectus Supplement dated December 4, 2001.
"TRANSACTION DOCUMENTS" means this Agreement, the Transfer and Sale
Agreement, the Lockbox Agreement, the Indenture, the Trust Agreement, the
Administration Agreement, the Note Depository Agreement, any Subsequent Transfer
Agreement and any Subsequent Purchase Agreement.
"TRANSFER AND SALE AGREEMENT" means the Transfer and Sale Agreement dated
as of the date hereof by and between the Seller and the Trust Depositor, as
amended, supplemented or otherwise modified from time to time.
"TRUST" means the trust created by the Trust Agreement, comprised of the
Trust Corpus.
"TRUST ACCOUNTS" means, collectively, the Collection Account, the
Pre-Funding Account, the Note Distribution Account and the Reserve Fund, or any
of them.
"TRUST ACCOUNT PROPERTY" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Fund Initial Deposit, and all
proceeds of the foregoing.
"TRUST AGREEMENT" means the Trust Agreement, dated as of the date hereof,
between the Trust Depositor and the Owner Trustee.
"TRUST CORPUS" has the meaning given to such term in Section 2.01(a)
hereof (and in Section 2.04(a) hereof in respect of Subsequent Contracts and
related assets transferred to the Trust pursuant to Subsequent Transfer
Agreements).
19
"TRUST DEPOSITOR" has the meaning assigned such term in the preamble
hereunder or any successor thereto.
"TRUST ESTATE" shall have the meaning specified in the Trust Agreement.
"TRUSTEES" means the Owner Trustee and the Indenture Trustee.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
AND from time to time in the State of Illinois, PROVIDED that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection or priority of the security interests in any collateral or the
availability of any remedy hereunder is governed by the Uniform Commercial Code
as in effect on or after the date hereof in any other jurisdiction, "UCC" means
the Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such perfection or effect of perfection or
non-perfection or priority or availability of such remedy.
"UNCOLLECTIBLE ADVANCE" means with respect to any Determination Date and
any Contract, the amount, if any, advanced by the Servicer pursuant to Section
7.03 which the Servicer has as of such Determination Date determined in good
faith will not be ultimately recoverable by the Servicer from insurance policies
on the related Motorcycle, the related Obligor or out of Net Liquidation
Proceeds with respect to such Contract. The determination by the Servicer that
it has made an Uncollectible Advance, or, that any Advance proposed to be made
would be an Uncollectible Advance, shall be evidenced by an Officer's
Certificate delivered to the Trustees.
"UNDERWRITERS" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and First Union
Securities, Inc.
"UNITED STATES" means the United States of America.
"VICE PRESIDENT" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "VICE
PRESIDENT" who is a duly elected officer of such Person.
"WTC" means Wilmington Trust Company, in its individual capacity.
20
SECTION 1.02. USAGE OF TERMS. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein
entered into in accordance with their respective terms and not prohibited by
this Agreement; references to Persons include their permitted successors and
assigns; and the term "including" means "including without limitation."
SECTION 1.03. SECTION REFERENCES. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
SECTION 1.04. CALCULATIONS. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder will be made on the basis
of a 360-day year and twelve 30-day months and will be carried out to at least
three decimal places.
SECTION 1.05. ACCOUNTING TERMS. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
ARTICLE TWO
TRANSFER OF CONTRACTS
SECTION 2.01. CLOSING. (a) On the Closing Date, the Trust Depositor
shall transfer, assign, set over and otherwise convey to the Trust by execution
of an assignment substantially in the form of EXHIBIT A hereto, without
recourse other than as expressly provided herein, (i) all the right, title and
interest of the Trust Depositor in and to the Initial Contracts listed on the
initial List of Contracts delivered on the Closing Date (including, without
limitation, all security interests and all rights to receive payments which are
collected pursuant thereto 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 Trust Depositor, (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
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(ix) all proceeds and products of the foregoing (the property in clauses
(i)-(ix) above, being the "TRUST CORPUS"). Although the Trust Depositor and the
Owner Trustee agree that such transfer is intended to be a transfer of
ownership of the Trust Corpus, rather than the granting of a security interest
to secure a borrowing, and that the Trust Corpus shall not be property of the
Trust Depositor, in the event such transfer is deemed to be of a mere security
interest to secure a borrowing, the Trust Depositor shall be deemed to have
granted the Trust a perfected first priority security interest in such Trust
Corpus and this Agreement shall constitute a security agreement under
applicable law.
SECTION 2.02. CONDITIONS TO THE CLOSING. On or before the Closing
Date, the Trust Depositor shall deliver or cause to be delivered the following
documents to the Owner Trustee and the Indenture Trustee:
(a) The initial List of Contracts, certified by the Chairman of the
Board, President or any Vice President of the Trust Depositor, together
with an assignment substantially in the form of EXHIBIT A hereto.
(b) A certificate of an officer of the Seller substantially in the
form of EXHIBIT B to the Transfer and Sale Agreement and of an officer of
the Trust Depositor substantially in the form of EXHIBIT B hereto.
(c) Opinions of counsel for the Seller and the Trust Depositor
substantially in the form of EXHIBITS D, E and F hereto (and including as
an addressee thereof each Rating Agency).
(d) A letter or letters from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, or another
nationally recognized accounting firm, addressed to the Seller and the
Underwriters and stating that such firm has reviewed a sample of the
Initial Contracts and performed specific procedures for such sample with
respect to certain contract terms and which identifies those Initial
Contracts which do not conform.
(e) Copies of resolutions of the Board of Directors of each of the
Seller/Servicer and the Trust Depositor or of the Executive Committee of
the Board of Directors of each of the Seller/Servicer and the Trust
Depositor approving the execution, delivery and performance of this
Agreement and the other Transaction Documents to which any of them is a
party, as applicable, and the transactions contemplated hereunder and
thereunder, certified in each case by the Secretary or an Assistant
Secretary of the Seller/Servicer and the Trust Depositor.
(f) Officially certified, recent evidence of due incorporation and
good standing of each of the Seller and the Trust Depositor under the laws
of Nevada.
(g) Evidence of proper filing with the appropriate office in Nevada
of a UCC financing statement naming the Seller, as debtor, naming the
Trust Depositor as secured party (and the Trust as assignee) and
identifying the Contract Assets as collateral; and evidence of proper
filing with the appropriate office in Nevada of a UCC financing statement
naming the Trust Depositor, as debtor, naming the Trust as secured party
and identifying the Trust Corpus as collateral; and
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evidence of proper filing with appropriate office in
Delaware of a UCC
financing statement naming the Trust, as debtor, and naming the Indenture
Trustee, as secured party and identifying the Collateral as collateral.
(h) An Officer's Certificate listing the Servicer's Servicing
Officers.
(i) Evidence of deposit in the Collection Account of all funds
received with respect to the Initial Contracts on or after the Initial
Cutoff Date to the Closing Date, together with an Officer's Certificate
from the Trust Depositor to the effect that such amount is correct.
(j) The Officer's Certificate of the Seller specified in Section
2.02(h) of the Transfer and Sale Agreement.
(k) Evidence of deposit in the Reserve Fund of the Reserve Fund
Initial Deposit by the Owner Trustee.
(l) A fully executed Transfer and Sale Agreement.
(m) A fully executed Trust Agreement.
(n) A fully executed Administration Agreement.
(o) A fully executed Indenture.
SECTION 2.03. CONVEYANCE OF SUBSEQUENT CONTRACTS. (a) Subject to the
conditions set forth in paragraph (b) below, the Trust Depositor, shall
transfer, assign, set over and otherwise convey to the Trust, without recourse
other than as expressly provided herein and therein, (i) all the right, title
and interest of the Trust Depositor in and to the Subsequent Contracts listed
on the Subsequent List of Contracts (including, without limitation, all
security interests and all rights to receive payments which are collected
pursuant thereto 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 Trust Depositor, (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(a)), including
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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 time related to such
Contracts (to the extent not already conveyed under Section 2.01(a)) (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 Owner Trustee
agree that such transfer is intended to be a transfer of ownership, rather than
the granting of a security interest to secure a borrowing, and that the Trust
Corpus following such transfer shall not be property of the Trust Depositor, in
the event such transfer is deemed to be of a mere security interest to secure a
borrowing, the Trust Depositor shall be deemed to have granted the Owner
Trustee for the benefit of the Trust a perfected first priority security
interest in such Trust Corpus and this Agreement shall constitute a security
agreement under applicable law.
(b) The Trust Depositor shall transfer to the Trust the Subsequent
Contracts and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) The Trust Depositor shall have provided the Owner Trustee, the
Indenture Trustee, the Underwriters and the Rating Agencies with a timely
Addition Notice and shall have provided any information reasonably
requested by any of the foregoing with respect to the Subsequent
Contracts;
(ii) the Funding Period shall not have terminated;
(iii) the Trust Depositor shall have delivered to the Owner Trustee
a duly executed written assignment (including an acceptance by the Owner
Trustee) in substantially the form of EXHIBIT M 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 Subsequent Reserve Fund Amount for such
Subsequent Transfer Date shall have been deposited by the Indenture
Trustee from the Pre-Funding Account to the Reserve Fund;
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(vii) each Rating Agency shall have notified the Trust Depositor,
the Owner Trustee and the Indenture Trustee in writing that following such
transfer the Class A-1 Notes and Class A-2 Notes will be rated in the
highest rating category by such Rating Agency and the Class B Notes will
be rated at least its rating as of the Closing Date by Standard & Poor's
and Moody's;
(viii) such addition will not result in a material adverse tax
consequence to the Trust or the Certificateholder as evidenced by an
Opinion of Counsel to be delivered by the Trust Depositor to the Owner
Trustee, Indenture Trustee, the Rating Agencies and the Underwriters;
(ix) the Trust Depositor shall have delivered to the Owner Trustee
and the Indenture 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 Underwriters 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) no selection procedures believed by the Trust Depositor to be
adverse to the interests of the Noteholders shall have been utilized in
selecting the Subsequent Contracts;
(xii) the Trust Depositor shall have delivered to the Rating
Agencies evidence that (A) the weighted average annual percentage rate of
the Contracts collectively, following the transfer of the Subsequent
Contracts, is not less than 10.80% 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 74
months;
(xiii) the Trust Depositor shall have delivered to the Rating
Agencies, a report with respect to certain 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;
(xiv) each of the representations and warranties made by the Seller
pursuant to Section 3.01 of the Transfer and Sale Agreement with respect
to the Subsequent Receivables shall be true and correct as of the related
Subsequent Transfer Date, and the Seller shall have performed all
obligations to be performed by it hereunder on or prior to such Subsequent
Transfer Date;
(xv) the Seller shall, at its own expense, on or prior to the
Subsequent Transfer Date indicate in its Computer Disk that the Subsequent
Receivables identified on the Subsequent List of Contracts in the
Subsequent Transfer Agreement have been
25
transferred to the Issuer pursuant to this Agreement and the Transfer and
Sale Agreement; and
(xvi) the Seller shall have taken any action required to maintain
the first perfected ownership interest of the Issuer in the Trust Estate
and the first perfected security interest of the Indenture Trustee in the
Collateral.
(c) The Trust Depositor covenants to transfer (at or prior to the end of
the Funding Period) to the Trust pursuant thereto Subsequent Contracts with an
aggregate Principal Balance equal to $93,323,687.96; PROVIDED, HOWEVER, that in
complying with such covenant, the Trust Depositor agrees to make no more than
one separate transfer of Subsequent Contracts per monthly period (as measured by
the corresponding Distribution Dates). In the event that the Trust Depositor
shall fail to deliver and transfer to the Trust any or all of such Subsequent
Receivables by the date on which the Funding Period ends and the Pre-Funded
Amount is greater than $150,000 on such date, the Trust Depositor shall cause to
be deposited into the Collection Account the amount then on deposit in the
Pre-Funding Account; PROVIDED, HOWEVER, that the foregoing shall be the sole
remedy of the Trust, the Owner Trustee, the Indenture Trustee or the
Securityholders with respect to a failure of the Trust Depositor to comply with
such covenant.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
The Seller under the Transfer and Sale Agreement has made, and upon
execution of each Subsequent Purchase Agreement is deemed to remake, each of the
representations and warranties set forth in EXHIBIT J hereto and has consented
to the assignment by the Trust Depositor to the Issuer of the Trust Depositor's
rights with respect thereto. Such representations speak as of the execution and
delivery of this Agreement and as of the Closing Date in the case of the Initial
Contracts, and as of the applicable Subsequent Transfer Date in the case of the
Subsequent Contracts, but shall survive the transfer and assignment of the
Contracts to the Trust. Pursuant to Section 2.01 of this Agreement, the Trust
Depositor has assigned, transferred and conveyed to the Issuer as part of the
Trust Corpus its rights under the Transfer and Sale Agreement, including without
limitation, the representations and warranties of the Seller therein as set
forth in EXHIBIT J attached hereto, together with all rights of the Trust
Depositor with respect to any breach thereof including any right to require the
Seller to reacquire any Contract in accordance with the Transfer and Sale
Agreement. It is understood and agreed that the representations and warranties
set forth or referred to in this Section shall survive delivery of the Contract
Files to the Owner Trustee or any custodian.
The Trust Depositor hereby represents and warrants to the Trust and the
Indenture Trustee that it has entered into the Transfer and Sale Agreement with
the Seller, that the Seller has made the representations and warranties in the
Transfer and Sale Agreement as set forth in EXHIBIT J hereto, that such
representations and warranties run to and are for the benefit of the
26
Trust Depositor, and that pursuant to Section 2.01 of this Agreement the Trust
Depositor has transferred and assigned to the Trust all rights of the Trust
Depositor to cause the Seller under the Transfer and Sale Agreement to
reacquire Contracts in the event of a breach of such representations and
warranties.
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING THE TRUST
DEPOSITOR. By its execution of this Agreement and each Subsequent Transfer
Agreement, the Trust Depositor represents and warrants to the Trust, the
Indenture Trustee and the Noteholders that:
(a) ASSUMPTION OF SELLER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in EXHIBIT J are true and
correct.
(b) ORGANIZATION AND GOOD STANDING. The Trust Depositor is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has the corporate
power to own its assets and to transact the business in which it is
currently engaged. The Trust Depositor is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction in
which the character of the business transacted by it or properties owned
or leased by it requires such qualification and in which the failure so to
qualify would have a material adverse effect on the business, properties,
assets, or condition (financial or other) of the Trust Depositor or the
Trust.
(c) AUTHORIZATION; VALID SALE; BINDING OBLIGATIONS. The Trust
Depositor has the power and authority to make, execute, deliver and
perform its obligations under this Agreement and the other Transaction
Documents to which it is a party and all of the transactions contemplated
under this Agreement and the other Transaction Documents to which it is a
party, and to create the Trust and cause it to make, execute, deliver and
perform its obligations under this Agreement and the other Transaction
Documents to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and
to cause the Trust to be created. This Agreement and the related
Subsequent Transfer Agreement, if any, shall effect a valid transfer and
assignment of the Trust Corpus, enforceable against the Trust Depositor
and creditors of and purchasers from the Trust Depositor. This Agreement
and the other Transaction Documents to which the Trust Depositor is a
party constitute the legal, valid and binding obligation of the Trust
Depositor enforceable in accordance with their terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and
by the availability of equitable remedies.
(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.
27
(e) NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party by
the Trust Depositor, and the consummation of the transactions contemplated
hereby and thereby, will not violate any provision of any existing law or
regulation or any order or decree of any court or of any Federal or state
regulatory body or administrative agency having jurisdiction over the
Trust Depositor or any of its properties or the Articles of Incorporation
or Bylaws of the Trust Depositor, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Trust
Depositor is a party or by which the Trust Depositor or any of the Trust
Depositor's properties may be bound, or result in the creation or
imposition of any security interest, lien, charge, pledge, preference,
equity or encumbrance of any kind upon any of its properties pursuant to
the terms of any such mortgage, indenture, contract or other agreement,
other than as contemplated by the Transaction Documents.
(f) LITIGATION. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or
to the knowledge of the Trust Depositor threatened, against the Trust
Depositor or any of its properties or with respect to this Agreement, the
other Transaction Documents to which it is a party or the Notes (1) which,
if adversely determined, would in the opinion of the Trust Depositor have
a material adverse effect on the business, properties, assets or condition
(financial or otherwise) of the Trust Depositor or the Trust or the
transactions contemplated by this Agreement or the other Transaction
Documents to which the Trust Depositor is a party or (2) seeking to
adversely affect the federal income tax or other federal, state or local
tax attributes of the Certificate or Notes.
(g) STATE OF INCORPORATION; NAME; NO CHANGES. The Trust
Depositor's state of incorporation is the State of Nevada. The Trust
Depositor's exact legal name is as set forth in the first paragraph of
this Agreement. The Trust Depositor has not changed its name, whether by
amendment of its Articles of Incorporation, by reorganization or
otherwise, and has not changed the location of its place of business,
within the four months preceding the Closing Date.
(h) SOLVENCY. The Trust Depositor, after giving effect to the
conveyances made by it hereunder, is Solvent.
Such representations speak as of the execution and delivery of this Agreement
and as of the Closing Date in the case of the Initial Contracts, and as of the
applicable Subsequent Transfer Date in the case of the Subsequent Contracts, but
shall survive the transfer and assignment of the Contracts to the Trust.
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SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER.
The Servicer represents and warrants to the Trust, the Indenture Trustee and
the Noteholders that:
(a) ORGANIZATION AND GOOD STANDING. The Servicer is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization and has the corporate power to own
its assets and to transact the business in which it is currently engaged.
The Servicer is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires
such qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets, or condition
(financial or otherwise) of the Servicer or the Trust. The Servicer is
properly licensed in each jurisdiction to the extent required by the laws
of such jurisdiction to service the Contracts in accordance with the terms
hereof other than such licenses the failure to obtain would not have a
material adverse effect on the business, properties, assets, or condition
(financial or otherwise) of the Servicer or on the ability of the Servicer
to perform its obligations hereunder.
(b) AUTHORIZATION; BINDING OBLIGATIONS. The Servicer has the power
and authority to make, execute, deliver and perform this Agreement and the
other Transaction Documents to which the Servicer is a party and all of
the transactions contemplated under this Agreement and the other
Transaction Documents to which the Servicer is a party, and has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Agreement and the other Transaction Documents to which
the Servicer is a party. This Agreement and the other Transaction
Documents to which the Servicer is a party constitute the legal, valid and
binding obligation of the Servicer enforceable in accordance with their
terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies.
(c) NO CONSENT REQUIRED. The Servicer is not required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement and the other
Transaction Documents to which the Servicer is a party.
(d) NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Servicer is a
party by the Servicer will not violate any provisions of any existing law
or regulation or any order or decree of any court or of any Federal or
state regulatory body or administrative agency having jurisdiction over
the Servicer or any of its properties or the Articles of Incorporation or
Bylaws of the Servicer, or constitute a material breach of any mortgage,
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
29
kind upon any of its properties pursuant to the terms of any such
mortgage, indenture, contract or other agreement, other than this
Agreement.
(e) LITIGATION. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or
to the knowledge of the Servicer threatened, against the Servicer or any
of its properties or with respect to this Agreement, any other Transaction
Document to which the Servicer is a party which, if adversely determined,
would in the opinion of the Servicer have a material adverse effect on the
business, properties, assets or condition (financial or otherwise) of the
Servicer or the Trust or the transactions contemplated by this Agreement
or any other Transaction Document to which the Servicer is a party.
ARTICLE FOUR
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
SECTION 4.01. CUSTODY OF CONTRACTS. (a) Subject to the terms and
conditions of this Section 4.01, the contents of each Contract File shall be
held in the custody of the Servicer for the benefit of, and as agent for, the
Trust 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
Trustees by written notice. The Servicer may temporarily move individual
Contract Files or any portion thereof without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures; PROVIDED, HOWEVER, that the Servicer will take all
action necessary to maintain the perfection of the Trust's interest in the
Contracts and the proceeds thereof. It is intended that by the Servicer's
agreement pursuant to Section 4.01(a) above and this Section 4.01(b) the
Trustees shall be deemed to have possession of the Contract Files for purposes
of Section 9-313 of the Uniform Commercial Code of the State in which the
Contract Files are located.
(c) As custodian, the Servicer shall have the following powers and
perform the following duties:
(i) hold the Contract Files on behalf of the Trust, maintain
accurate records pertaining to each Contract to enable it to comply with
the terms and conditions of this Agreement, maintain a current inventory
thereof, conduct annual physical inspections of Contract Files held by it
under this Agreement and certify to the Owner Trustee and the Indenture
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
30
Servicer's premises and the receipting for Contract Files taken from
their storage area by an employee of the Servicer for purposes of
servicing or any other purposes;
(iii) attend to all details in connection with maintaining
custody of the Contract Files on behalf of the Trust;
(iv) at all times maintain 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 L;
(vi) as promptly as practicable after the Closing Date (or
Subsequent Transfer Date, as the case may be), and in any event within 60
days thereof, deliver an Officer's Certificate to the Owner Trustee and
the Indenture Trustee certifying that as of a date no earlier than the
Closing Date (or Subsequent Transfer Date, as the case may be) it has
conducted an inventory of the Contract Files (which in the case of
Subsequent Contracts, need be only of the Contract Files related to such
Subsequent Contracts) and that there exists a Contract File for each
Contract and stating all exceptions to such statement, if any; 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 Owner
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.
(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 Owner Trustee and the Indenture 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 Noteholders, the Certificateholder,
the Owner Trustee and the Indenture Trustee for any and all liabilities,
obligations, losses, damages, payments, costs, or expenses of any kind
whatsoever which may be imposed on, incurred by or asserted against the
Noteholders, the Certificateholder, the Owner Trustee and the Indenture Trustee
as the result of any act or omission by the Servicer relating to the
maintenance and custody of the Contract Files; PROVIDED, HOWEVER, that the
Servicer will not be liable for any portion of any such amount resulting from
the gross negligence or willful misconduct of any Noteholder,
Certificateholder, the Owner
31
Trustee or the Indenture Trustee. The Trustees shall have no duty to monitor or
otherwise oversee the Servicer's performance as custodian hereunder.
SECTION 4.02. FILING. On or prior to the Closing Date, the Servicer
shall cause the UCC financing statement(s) referred to in Section 2.02(g)
hereof to be filed and from time to time the Servicer shall take and cause to
be taken such actions and execute such documents as are necessary or desirable
or as the Owner Trustee or Indenture Trustee may reasonably request to perfect
and protect the Trust's first priority perfected interest in the Trust Corpus
against all other persons, including, without limitation, the filing of
financing statements, amendments thereto and continuation statements, the
execution of transfer instruments and the making of notations on or taking
possession of all records or documents of title.
SECTION 4.03. NAME CHANGE OR RELOCATION. (a) During the term of this
Agreement, neither the Seller nor the Trust Depositor shall change its name,
identity or structure or change its state of incorporation without first giving
at least 30 days' prior written notice to the Owner Trustee and the Indenture
Trustee.
(b) If any change in either the Seller's or the Trust Depositor's name,
identity or structure or other action would make any financing or continuation
statement or notice of lien filed under this Agreement seriously misleading
within the meaning of applicable provisions of the UCC or any title statute,
the Servicer, no later than five days after the effective date of such change,
shall file such amendments as may be required to preserve and protect the
Trust's interests in the Trust Corpus and the proceeds thereof. In addition,
neither the Seller nor the Trust Depositor shall change its state of
incorporation unless it has first taken such action as is advisable or
necessary to preserve and protect the Trust's interest in the Trust Corpus.
Promptly after taking any of the foregoing actions, the Servicer shall deliver
to the Owner Trustee and the Indenture Trustee an opinion of counsel reasonably
acceptable to the Owner Trustee and the Indenture Trustee stating that, in the
opinion of such counsel, all financing statements or amendments necessary to
preserve and protect the interests of the Trust in the Trust Corpus and the
Indenture Trustee in the Collateral have been filed, and reciting the details
of such filing.
SECTION 4.04. COSTS AND EXPENSES. The Servicer agrees to pay all
reasonable costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the Trust's right,
title and interest in and to the Contracts (including, without limitation, the
security interest in the Motorcycles granted thereby).
ARTICLE FIVE
SERVICING OF CONTRACTS
SECTION 5.01. RESPONSIBILITY FOR CONTRACT ADMINISTRATION. The Servicer
will have the sole obligation to manage, administer, service and make
collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Owner Trustee, at the written request of a Servicing Officer,
shall
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furnish the Servicer with any powers of attorney or other documents necessary
or appropriate in the opinion of the Owner Trustee to enable the Servicer to
carry out its servicing and administrative duties hereunder. The Servicer is
hereby appointed the servicer hereunder until such time as any Service Transfer
may be effected under Article VIII.
SECTION 5.02. STANDARD OF CARE. In managing, administering, servicing
and making collections on the Contracts pursuant to this Agreement, the
Servicer will exercise that degree of skill and care consistent with the skill
and care that the Servicer exercises with respect to similar contracts serviced
by the Servicer, and, in any event no less degree of skill and care than would
be exercised by a prudent servicer of motorcycle conditional sales contracts;
PROVIDED, HOWEVER, that notwithstanding the foregoing, the Servicer shall not
release or waive the right to collect the unpaid balance of any Contract except
that with respect to a Contract that has become a Defaulted Contract, the
Servicer, consistent with its collection policies, may release or waive the
right to collect the unpaid balance of such Defaulted Contract in an effort to
maximize collections thereon.
SECTION 5.03. RECORDS. The Servicer shall, during the period it is
servicer hereunder, maintain such books of account and other records as will
enable the Owner Trustee and the Indenture Trustee to determine the status of
each Contract.
SECTION 5.04. INSPECTION. (a) At all times during the term hereof, the
Servicer shall afford the Owner Trustee and the Indenture Trustee and their
respective authorized agents reasonable access during normal business hours to
the Servicer's records relating to the Contracts and will cause its personnel
to assist in any examination of such records by the Owner Trustee or the
Indenture Trustee, or such authorized agents and allow copies of the same to be
made. The examination referred to in this Section will be conducted in a manner
which does not unreasonably interfere with the Servicer's normal operations or
customer or employee relations. Without otherwise limiting the scope of the
examination the Owner Trustee or the Indenture Trustee may, using generally
accepted audit procedures, verify the status of each Contract and review the
Computer Disk and records relating thereto for conformity to Monthly Reports
prepared pursuant to Article IX and compliance with the standards represented
to exist as to each Contract in this Agreement.
(b) At all times during the term hereof, the Servicer shall keep
available a copy of the List of Contracts at its principal executive office for
inspection by the Trustees.
SECTION 5.05. TRUST ACCOUNTS. (a) On or before the Closing Date, the
Trust Depositor shall establish the Collection Account, Note Distribution
Account, Pre-Funding Account and Reserve Fund, each with and in the name of the
Indenture Trustee for the benefit of the Noteholders. The Indenture Trustee is
hereby required to ensure that each of the Trust Accounts is established and
maintained as an Eligible Account.
(b) The Indenture Trustee shall deposit (or the Servicer shall deposit,
with respect to payments by or on behalf of the Obligors received directly by
the Servicer), without deposit into
33
any intervening account, into the Collection Account as promptly as practical
(but in any case not later than the second Business Day following the receipt
thereof):
(i) With respect to principal and interest on the Contracts
received 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 Owner
Trustee or Servicer;
(ii) All Net Liquidation Proceeds related to the Contracts;
(iii) The aggregate of the Reacquisition Prices for Contracts
reacquired by the Trust Depositor as described in Section 7.08;
(iv) All Advances made by the Servicer pursuant to Section
7.03(a);
(v) All amounts paid by the Trust Depositor in connection with
an optional reacquisition of the Contracts described in Section 7.10;
(vi) All amounts realized in respect of Carrying Charges
transferred from the Interest Reserve Account as contemplated in Section
7.03(b); and
(vii) All amounts received in respect of interest, dividends,
gains, income and earnings on investments of funds in the Trust Accounts
(except the Reserve Fund and the Pre-Funding Account) as contemplated
herein.
(c) The Indenture Trustee shall, if amounts remain on deposit in the
Pre-Funding Account at the expiration of the Funding Period, make a demand,
immediately upon expiration of the Funding Period, upon the Trust Depositor to
cause to be deposited into the Collection Account the amount then in deposit in
the Pre-Funding Account.
(d) If the Servicer so directs, in writing, the Indenture Trustee shall
invest the amounts in the Trust Accounts in Qualified Eligible Investments that
are payable on demand or that mature not later than one Business Day prior to
the next succeeding Distribution Date. Once such funds are invested, the
Indenture Trustee shall not change the investment of such funds. Any loss on
such investments shall be deposited in the applicable Trust Account by the
Servicer out of its own funds immediately as realized. Funds in the Trust
Accounts not so invested must be insured to the extent permitted by law by the
Bank Insurance Fund or the Savings Association Insurance Fund of the Federal
Deposit Insurance Corporation. Subject to the restrictions herein, the
Indenture Trustee may purchase a Qualified Eligible Investment from itself or
an Affiliate. Subject to the other provisions hereof, the Indenture Trustee
shall have sole control over each such investment and the income thereon, and
any certificate or other instrument evidencing any such investment, if any,
shall be delivered directly to the Indenture Trustee or its agent, together
with each document of transfer, if any, necessary to transfer title to such
investment to the Indenture Trustee in a manner which complies with this
Section 5.05(d). All interest, dividends,
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gains upon sale and other income from, or earnings on, investments of funds in
the Trust Accounts (other than the Reserve Fund and the Pre-Funding Account)
shall be deposited in the Collection Account pursuant to Section 5.05(b) and
distributed on the next Distribution Date pursuant to Section 7.05. The Trust
Depositor and the Trust agree and acknowledge that the Indenture Trustee is to
have "CONTROL" (within the meaning of Section 9-106 of the UCC) of collateral
comprised of "INVESTMENT PROPERTY" (within the meaning of Section 9-102 of the
UCC) for all purposes of this Agreement.
(e) Notwithstanding anything to the contrary herein, the Servicer may
remit payments on the Contracts and Net Liquidation Proceeds to the Collection
Account in next-day funds or immediately available funds no later than 10:00
a.m., Central time, on the Business Day prior to the next succeeding
Distribution Date, but only for so long as (i) the short-term debt security
rating of the Servicer is at least "P-1" by Moody's and "A-1+" by Standard &
Poor's or (ii) the long-term debt security rating of the Servicer is at least
"A2" by Moody's and "A" by Standard & Poor's.
(f) The Servicer shall apply collections received in respect of a
Contract as follows:
(i) First, to accrued interest with respect to such Contract;
(ii) Second, to pay any expenses and unpaid late charges or
extension fees (if any) due and owing under such Contract; and
(iii) Third, to principal to the extent due and owing under such
Contract.
(g) Any collections on a Contract remaining after application by the
Servicer in accordance with the provisions of Section 5.05(e) shall constitute
an excess payment (an "EXCESS PAYMENT"). Excess Payments constituting
prepayments of principal shall be applied as a prepayment of the Principal
Balance of such Contract. All other Excess Payments shall be permitted to be
retained by the Servicer.
(h) The Servicer will, from time to time as provided herein, be
permitted to withdraw or request the withdrawal from the Collection Account any
amount deposited therein that, based on the Servicer's good-faith
determination, was deposited in error.
SECTION 5.06. ENFORCEMENT. (a) The Servicer will, consistent with
Section 5.02, act with respect to the Contracts in such manner as will maximize
the receipt of all payments called for under the terms of the Contracts. The
Servicer shall use its best efforts to cause Obligors to make all payments on
the Contracts directly to the Lockbox Account. The Servicer will act in a
commercially reasonable manner with respect to the repossession and disposition
of a Motorcycle following a default under the related Contract with a view to
realizing proceeds at least equal to the Motorcycle's fair market value. If the
Servicer determines that eventual payment in full of a Contract is unlikely,
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
35
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 ▇▇▇ to enforce or collect upon Contracts, in its
own name, if possible, or as agent for the Trustees. If the Servicer elects to
commence a legal proceeding to enforce a Contract, the act of commencement
shall be deemed to be an automatic assignment of the Contract to the Servicer
for purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the
ground that it is not a real party in interest or a holder entitled to enforce
the Contract, the Owner Trustee (or the Indenture Trustee) on behalf of the
Trust shall, at the Servicer's expense, take such steps as the Servicer deems
reasonably necessary to enforce the Contract, including bringing suit in its
name or the names of the Noteholders under the Indenture and the
Certificateholder as owner of the Trust.
(c) The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Contract in accordance with the
Servicer's usual practice. In exercising recourse rights, the Servicer is
authorized on the Trust's behalf to reassign the Defaulted Contract or the
related Motorcycle to the Person against whom recourse exists at the price set
forth in the document creating the recourse; PROVIDED, HOWEVER, the Servicer in
exercising recourse against any third persons as described in the immediately
preceding sentence shall do so in such manner as to maximize the aggregate
recovery with respect to the Contract; and PROVIDED FURTHER, HOWEVER, that
notwithstanding the foregoing the Servicer in its capacity as such may exercise
such recourse only if such Contract (i) was not required to be reacquired by
the Seller pursuant to the Transfer and Sale Agreement or (ii) was required to
be reacquired by the Seller and the Seller has defaulted on such reacquisition
obligation.
(d) The Servicer will not permit any rescission or cancellation of any
Contract due to the acts or omissions of the Trust Depositor.
(e) 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 not received an extension during the
previous twelve-month period, (iii) the evidence supports the Obligor's
willingness and capability to resume monthly payments, (iv) such extension is
consistent with the Servicer's customary servicing procedures and is consistent
with Section 5.02, (v) 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 (vi)
the aggregate Principal Balances of Contracts which have had extensions granted
does not exceed more than 3.00% of the aggregate of the Initial Class A-1 Note
Balance, the Initial Class A-2 Note Balance and the Initial Class B Note
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
36
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. TRUSTEES TO COOPERATE. Upon payment in full on any
Contract, the Servicer will notify the Trustees and the Trust Depositor on the
next succeeding Distribution 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 Contract File to the Servicer. Upon
receipt of such delivery and request, the Trustees 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 Indenture Trustee shall,
upon written request of a Servicing Officer and delivery to the Indenture
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 Indenture
Trustee when the need by the Servicer has ceased unless the Contract shall be
reacquired as described in Section 7.10. Upon request of a Servicing Officer,
the Indenture Trustee shall perform such other acts as reasonably requested by
the Servicer and otherwise cooperate with the Servicer in the enforcement of
the Certificateholder's 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 reacquired pursuant to Section 7.08) 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.
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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 Owner Trustee and the Indenture Trustee
hereby authorize 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.
SECTION 5.10. SUCCESSOR SERVICER/LOCKBOX AGREEMENTS. The Servicer
shall use its best efforts to cause Obligors to make all payments on the
Contracts directly to one or more Lockbox Banks, acting as agent for the Trust
pursuant to a Lockbox Agreement. In the event the Servicer shall for any reason
no longer be acting as such, the Successor Servicer shall thereupon assume all
of the rights and obligations of the outgoing servicer under the Lockbox
Agreement; PROVIDED, HOWEVER, that the Successor Servicer shall not be liable
for any acts or obligations of the Servicer prior to such succession. In such
event, the Successor Servicer shall be deemed to have assumed all of the
outgoing Servicer's interest therein and to have replaced the outgoing Servicer
as a party to each such Lockbox Agreement to the same extent as if such Lockbox
Agreement had been assigned to the Successor Servicer, except that the outgoing
Servicer shall not thereby be relieved of any liability or obligations on the
part of the outgoing Servicer to the Lockbox Bank under such Lockbox Agreement.
The outgoing Servicer shall, upon the request of the Owner Trustee, but at the
expense of the outgoing Servicer, deliver to the Successor Servicer all
documents and records relating to each such Lockbox Agreement and an accounting
of amounts collected and held by the Lockbox Bank and otherwise use its best
efforts to effect the orderly and efficient transfer of any Lockbox Agreement
to the Successor Servicer.
SECTION 5.11. SEPARATE ENTITY EXISTENCE. The Servicer agrees to take
or refrain from taking or engaging in with respect to the Trust Depositor, as
applicable, each of the actions or activities specified in the "substantive
consolidation" opinion of Winston & ▇▇▇▇▇▇ (or in any related Certificate of
the Servicer) delivered on the Closing Date, upon which the conclusions
expressed therein are based.
ARTICLE SIX
THE TRUST DEPOSITOR
SECTION 6.01. COVENANTS OF THE TRUST DEPOSITOR.
(a) During the term of this Agreement, the Trust Depositor will
keep in full force and effect its existence, rights and franchises as a
corporation under the laws of the jurisdiction of its incorporation and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the other Transaction Documents and each
other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby.
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(b) ARM'S LENGTH TRANSACTIONS. During the term of this
Agreement, all transactions and dealings between the Trust Depositor and its
Affiliates will be conducted on an arm's-length basis.
(c) NO OTHER BUSINESS. The Trust Depositor shall not engage in
any business other than financing, purchasing, owning, selling and managing the
Contracts in the manner contemplated by this Agreement and the other
Transaction Documents and activities incidental thereto; PROVIDED, HOWEVER,
that the Trust Depositor may purchase and transfer (or grant Liens in respect
of) contracts and/or other related assets similar to the Contracts to other
Persons in securitization or other non-recourse financing transactions
involving the Seller or any of its Affiliates (or with respect to the Contract
Assets themselves, following a release and reconveyance thereof from the
Trust), on terms and conditions (with respect to the liabilities imposed upon
the Trust Depositor by virtue of such transactions, as well as in respect of
agreements or restrictions concerning activities of the Trust Depositor and its
relations or interactions with the Seller or the Servicer or other applicable
Affiliate relevant to "bankruptcy remoteness" or "substantive consolidation"
analysis), in each case substantially similar to such terms and conditions
applicable to the Trust Depositor hereunder and under the other Transaction
Documents.
(d) NO BORROWING. The Trust Depositor shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for (i)
any Indebtedness except for any Indebtedness permitted by or arising under the
Transaction Documents or (ii) obligations in connection with transactions
described in the proviso of Section 6.01(c), as limited thereby. The proceeds
of the Notes shall be used exclusively to fund the Trust Depositor's purchase
of the Contracts and the other assets specified in this Agreement and to pay
the transactional expenses of the Trust Depositor.
(e) GUARANTEES, LOANS ADVANCES AND OTHER LIABILITIES. Except as
otherwise contemplated by the Transaction Documents or in connection with
transactions described in Section 6.01(c), as limited thereby, the Trust
Depositor shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of assuming
another's payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, any other interest in, or make any
capital contribution to, any other Person.
(f) CAPITAL EXPENDITURES. The Trust Depositor shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
(g) RESTRICTED PAYMENTS. Except as permitted or contemplated by
the Transaction Documents, the Trust Depositor shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property,
39
securities or a combination thereof, to any owner of an equity interest in the
Trust Depositor, (ii) redeem, purchase, retire or otherwise acquire for value
any such equity interest or (iii) set aside or otherwise segregate any amounts
for any such purpose; it being understood that the Trust Depositor shall at all
times have the right to distribute funds received pursuant to the Transaction
Documents to its equity owner.
(h) SEPARATE ENTITY EXISTENCE. The Trust Depositor shall:
(i) Maintain its own deposit account or accounts, separate
from those of any Affiliate, with commercial banking institutions. The
funds of the Trust Depositor will not be diverted to any other Person or
for other than authorized uses of the Trust Depositor.
(ii) Ensure that, to the extent that it shares the same
officers or other employees as any of its members or Affiliates, the
salaries of and the expenses related to providing benefits to such
officers and other employees shall be fairly allocated among such
entities, and each such entity shall bear its fair share of the salary and
benefit costs associated with all such common officers and employees.
(iii) Ensure that, to the extent that it jointly contracts
with any of its members or Affiliates to do business with vendors or
service providers or to share overhead expenses, the costs incurred in so
doing shall be allocated fairly among such entities, and each such entity
shall bear its fair share of such costs. To the extent that the Trust
Depositor contracts or does business with vendors or service providers
when the goods and services provided are partially for the benefit of any
other Person, the costs incurred in so doing shall be fairly allocated to
or among such entities for whose benefit the goods and services are
provided, and each such entity shall bear its fair share of such costs.
All material transactions between Trust Depositor and any of its
Affiliates shall be only on an arm's length basis.
(iv) To the extent that the Trust Depositor and any of its
members or Affiliates have offices in the same location, there shall be a
fair and appropriate allocation of overhead costs among them, and each
such entity shall bear its fair share of such expenses.
(v) Conduct its affairs strictly in accordance with its
By-laws and Articles of Incorporation, and observe all necessary,
appropriate and customary limited liability company formalities,
including, but not limited to, holding all regular and special members'
and directors' meetings appropriate to authorize all entity action,
keeping separate and accurate records of such meetings and its actions,
passing all resolutions or consents necessary to authorize actions taken
or to be taken, and maintaining accurate and separate books, records and
accounts, including, but not limited to, payroll and intercompany
transaction accounts.
40
(vi) Take or refrain from taking or engaging in, as
applicable, each of the actions or activities specified in the "true sale"
and "substantive consolidation" opinions of Winston & ▇▇▇▇▇▇ delivered on
the Closing Date (or in any related certificate delivered in connection
therewith), upon which the conclusions expressed therein are based.
SECTION 6.02. LIABILITY OF TRUST DEPOSITOR; INDEMNITIES. The Trust
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Trust Depositor under this Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, WTC, the Indenture Trustee and the Servicer from and against
any taxes that may at any time be asserted against any such Person with respect
to the transactions contemplated herein and in the other Transaction Documents,
including any sales, gross receipts, general corporation, tangible personal
property, Illinois personal property replacement privilege or license taxes
(but, in the case of the Issuer, not including any taxes asserted with respect
to, and as of the date of, the transfer of the Contracts to the Issuer or the
issuance and original sale of the Securities, or asserted with respect to
ownership of the Contracts, or federal or other income taxes arising out of
distributions on the Certificate or the Notes) and costs and expenses in
defending against the same.
The Trust Depositor shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, WTC, the Indenture Trustee and the Securityholders from and
against any loss, liability or expense incurred by reason of the Trust
Depositor's willful misfeasance, bad faith or negligence (other than errors in
judgment) in the performance of its duties under this Agreement, or by reason of
reckless disregard of its obligations and duties under this Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, WTC and the Indenture Trustee from and against all costs,
expenses, losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties herein
and, in the case of the Owner Trustee, in the Trust Agreement and, in the case
of the Indenture Trustee, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability in the case of (i) the Owner Trustee
or WTC, as the case may be, shall be due to the willful misfeasance, bad faith
or negligence of the Owner Trustee or WTC, as the case may be, or shall arise
from the breach by the Owner Trustee or WTC, as the case may be, of any of its
representations or warranties set forth in Section 7.03 of the Trust Agreement,
or (ii) the Indenture Trustee, shall be due to the willful misfeasance, bad
faith or negligence of the Indenture Trustee.
The Trust Depositor shall be liable directly to and will indemnify any
injured party or any other creditor of the Trust for all losses, claims,
damages, liabilities and expenses of the Trust to the extent that Trust
Depositor would be liable if the Trust were a partnership under the
Delaware
Revised Uniform Limited Partnership Act in which Trust Depositor were a general
partner; PROVIDED, HOWEVER, that Trust Depositor shall not be liable for any
losses incurred by a
41
Certificateholder in the capacity of an investor in the Trust Certificate or a
Noteholder in the capacity of an investor in the Notes. In addition, any third
party creditors of the Trust (other than in connection with the obligations
described in the immediately preceding sentence for which Trust Depositor shall
not be liable) shall be deemed third party beneficiaries of this paragraph. The
obligations of Trust Depositor under this paragraph shall be evidenced by the
Trust Certificate described in the Trust Agreement.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation and shall
survive the termination of the Trust and the resignation or removal of the
Trustees. If the Trust Depositor shall have made any indemnity payments pursuant
to this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Trust Depositor, without interest.
Notwithstanding anything to the contrary herein, the obligations of the
Trust Depositor under this Section are solely the corporate obligations of the
Trust Depositor and shall be payable by it solely as provided in this Section.
The Trust Depositor shall only be required to make such contributions required
under this Section, (y) from funds available to it pursuant to, and in
accordance with the payment priorities set forth in Section 7.05 and (z) only to
the extent that it receives additional funds designated for such purposes or to
the extent that it has additional funds available (other than funds described in
the preceding clause (y)) that would be in excess of amounts that would be
necessary to pay the debt and other obligations of such entity incurred in
accordance with its certificate of incorporation and all financing documents to
which it is a party as they come due. In addition , no amount owing by the Trust
Depositor hereunder in excess of the liabilities that it is required to pay in
accordance with the preceding sentence shall constitute a "claim" (as defined in
Section 101(5) of the Bankruptcy Code) against it. No recourse shall be had for
the payment of any amount owing hereunder or any other obligation of, or claim
against the Trust Depositor arising out of or based up on this Section against
any stockholder, employee, officer, agent, director or authorized person of the
Trust Depositor or Affiliate thereof; provided, however, that the foregoing
shall not relieve any such person or entity of any liability they might
otherwise have as a result of fraudulent actions or omissions taken by them.
SECTION 6.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, TRUST DEPOSITOR; CERTAIN LIMITATIONS. Notwithstanding any
other provision in this Section and any provision of law, the Trust Depositor
shall not do any of the following:
(a) engage in any business or activity other than as set forth
in its Articles of Incorporation;
(b) without the affirmative vote of a majority of the members of
the Board of Directors of the Trust Depositor (which must include the
affirmative vote of at least two duly appointed Independent directors) (i)
dissolve or liquidate, in whole or in part, or institute proceedings to be
adjudicated bankrupt or insolvent, (ii) consent to the
42
institution of bankruptcy or insolvency proceedings against it, (iii)
file a petition seeking or consent to reorganization or relief under any
applicable federal or state law relating to bankruptcy, (iv) consent to
the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the corporation or a
substantial part of its property, (v) make a general assignment for the
benefit of creditors, (vi) admit in writing its inability to pay its
debts generally as they become due, or (vii) take any corporate action in
furtherance of the actions set forth in clauses (i) through (vi) above;
PROVIDED, HOWEVER, that no director may be required by any shareholder of
the Trust Depositor to consent to the institution of bankruptcy or
insolvency proceedings against the Trust Depositor so long as it is
solvent; or
(c) merge or consolidate with any other corporation, company or
entity or sell all or substantially all of its assets or acquire all or
substantially all of the assets or capital stock or other ownership
interest of any other corporation, company or entity unless the Person
formed by such consolidation or into which the Trust Depositor has merged
or the Person which acquires by conveyance, transfer or lease
substantially all the assets of the Trust Depositor as an entirety, can
lawfully perform the obligations of the Trust Depositor hereunder and
executes and delivers to the Owner Trustee and the Indenture Trustee an
agreement in form and substance reasonably satisfactory to the Owner
Trustee and the Indenture Trustee which contains an assumption by such
successor entity of the due and punctual performance and observance of
each covenant and condition to be performed or observed by the Trust
Depositor under this Agreement; PROVIDED that the Trust Depositor shall
provide notice of any merger, consolidation or succession pursuant to this
Section to each Rating Agency and shall receive from each Rating Agency a
letter to the effect that such merger, consolidation or succession will
not result in a qualification, downgrading or withdrawal of the
then-current ratings of each Class of Notes.
SECTION 6.04. LIMITATION ON LIABILITY OF TRUST DEPOSITOR AND OTHERS.
The Trust Depositor and any director or officer or employee or agent of the
Trust Depositor may rely in good faith on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Trust Depositor and any director or officer or employee or agent
of the Trust Depositor shall be reimbursed by the Owner Trustee or the
Indenture Trustee, as the case may be, for any contractual damages, liability
or expense incurred by reason of the Owner Trustee's or the Indenture Trustee's
willful misfeasance, bad faith or negligence (except errors in judgment) in the
performance of their respective duties hereunder, or by reason of reckless
disregard of their respective obligations and duties hereunder. The Trust
Depositor shall not be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to its obligations under this
Agreement, and that in its opinion may involve it in any expense or liability.
SECTION 6.05. TRUST DEPOSITOR NOT TO RESIGN. Subject to the provisions
of Section 6.03, the Trust Depositor shall not resign from the obligations and
duties hereby imposed on it as Trust Depositor hereunder.
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ARTICLE SEVEN
DISTRIBUTIONS; RESERVE FUND
SECTION 7.01. MONTHLY DISTRIBUTIONS. (a) Each Noteholder and
Certificateholder as of the related Record Date shall be paid on the next
succeeding Distribution Date by check mailed to such Noteholder or
Certificateholder at the address for such Noteholder or Certificateholder
appearing on the Note Register or Certificate Register or by wire transfer if
such Noteholder or Certificateholder provides written instructions to the
Indenture Trustee or the Owner Trustee, respectively, at least ten days prior
to such Distribution Date.
(b) The Indenture Trustee shall serve as the paying agent hereunder
(the "PAYING AGENT") and shall make the payments to or on behalf of the
Noteholders and the Certificateholder required hereunder. The Indenture Trustee
hereby agrees that all amounts held by it for payment hereunder will be held in
trust for the benefit of the Noteholders and the Certificateholder.
SECTION 7.02. FEES. The Indenture Trustee shall be paid the Indenture
Trustee 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 7.05(a). No recourse may be had to the Seller,
Trust Depositor, Trustees, Servicer, or any of their respective Affiliates in
the event that amounts available under Section 7.05(a) are insufficient for
payment of the Indenture Trustee's Fee and the Monthly Servicing Fee.
SECTION 7.03. 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") an amount equal to the Delinquent Interest for such Determination
Date by depositing such amount 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 the Delinquent Interest pursuant to this Section
7.03. 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 shall determine the amount of prior unreimbursed Advances for which it
shall be entitled to be reimbursed pursuant to the provisions of this Section
(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 7.05(a)(ii).
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(b) The Servicer shall determine no later than 12:00 noon, New York
City time, on the second Business Day prior to a Distribution Date the Carrying
Charges in respect of the upcoming Distribution Date. To the extent of such
amount, the Indenture Trustee shall transfer an amount equal to the Carrying
Charges from the Interest Reserve Account (solely to the extent of the amount
then on deposit) into the Collection Account as contemplated in Section
5.05(b)(vi) hereof.
SECTION 7.04. INTEREST RESERVE ACCOUNT.
(a) On or prior to the Closing Date, the Trust Depositor shall
establish with and in the name of the Indenture Trustee on behalf of the
Securityholders, an Eligible Account designated "HARLEY-DAVIDSON CUSTOMER
FUNDING CORP. INTEREST RESERVE ACCOUNT - HARLEY DAVIDSON MOTORCYCLE TRUST
2001-3 - BNY MIDWEST TRUST COMPANY, AS INDENTURE TRUSTEE" (such account being
the "Interest Reserve Account").
(b) No withdrawals may be made of funds in the Interest Reserve Account
except as provided in (c) below. Except as specifically provided, funds in the
Interest Reserve Account shall not be commingled with funds in any other
account established with respect to the Notes, the Certificate or with any
other monies.
(c) All investment earnings realized in respect of amounts in the
Pre-Funding Account shall be deposited when and as received in the Interest
Reserve Account, such that the Pre-Funded Amount shall never exceed the amount
initially deposited into the Pre-Funding Account on the Closing Date. With
respect to amounts on deposit in the Interest Reserve Account, the Indenture
Trustee shall disburse from such funds the amount specified in respect of
Carrying Charges in accordance with Section 7.03 herein. In the event that (i)
the Funding Period has terminated, (ii) all amounts on deposit in the
Pre-Funding Account have been disbursed, (iii) a Distribution Date has elapsed
following the occurrence of both (i) and (ii), and (iv) all amounts referred to
in clause (ii) have been applied, then any amounts remaining in the Interest
Reserve Account shall be allocated and distributed to the Trust Depositor.
SECTION 7.05. DISTRIBUTIONS; PRIORITIES.
(a) Except as provided in Section 7.05(b) or (c), on each Distribution
Date, the Indenture Trustee, at the Servicer's direction, will make the
following allocations and distributions of Available Monies in the following
order of priority:
(i) to the Mandatory Redemption Subaccount in the Note
Distribution Account to the Noteholders, the amount of any Mandatory
Redemption, PRO RATA (based on the outstanding principal amount of each
Class of Notes), calculated on the then current principal balance of the
Notes with the amounts derived from draws on the Pre-Funding Account
(which amounts are available for payment of such Mandatory Redemptions
and not for any other purpose); PROVIDED, HOWEVER, in the event the
amount in the Mandatory Redemption subaccount is less than $150,000 such
amount shall be distributed solely to the Class A-1 Noteholders;
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(ii) to the Servicer, the Reimbursement Amount to the Servicer
for Advances previously made;
(iii) to the Servicer, the Servicing Fee, including any unpaid
Servicing Fee with respect to one or more prior Due Periods;
(iv) to the Indenture Trustee, any accrued and unpaid Indenture
Trustee Fee with respect to one or more prior Due Periods;
(v) to the Note Distribution Account, together with any amounts
deposited therein pursuant to Section 7.06, the Note Interest
Distributable Amount with respect to such Distribution Date for each Class
of Notes allocated in the following order of priority:
(1) to the Class A-1 Noteholders and to the Class A-2
Noteholders, the Note Interest Distributable Amount for each such
Class of Notes; PROVIDED, HOWEVER, that if there are insufficient
funds on deposit in the Note Distribution Account to pay the entire
amount of the Note Interest Distributable Amount for each such Class
of Notes, then the amount in the Note Distribution Account shall be
applied to the Class A-1 Notes and the Class A-2 Notes PRO RATA on
the basis of the Note Interest Distributable Amount for each such
Class of Notes; and
(2) to the Class B Noteholders, the Note Interest
Distributable Amount for such Class of Notes;
(vi) to the Note Distribution Account, together with any amounts
deposited therein pursuant to Section 7.06, the Class A Note Principal
Distributable Amount with respect to such Distribution Date, first, to the
Class A-1 Notes until the Class A-1 Notes have been paid in full, and
second, to the Class A-2 Notes until the Class A-2 Notes have been paid in
full;
(vii) to the Note Distribution Account, together with any amounts
deposited therein pursuant to Section 7.06, the Class B Note Principal
Distributable Amount to the Class B Notes until the Class B Notes have
been paid in full;
(viii) any Excess Amounts to the Reserve Fund up to the
Specified Reserve Fund Balance; and
(ix) to the Holder of the Certificate.
(b) If the Notes have been declared immediately due and payable as
provided in Section 5.02 of the Indenture following the occurrence of an Event
of Default under Section 5.01(iii) of the Indenture, then, until such time as
the Notes have been paid in full, Available Monies shall be allocated and
distributed in the following order of priority after payment of the amounts set
forth in Section 7.05(a)(i), (ii), (iii) and (iv):
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(i) to the Note Distribution Account, together with any amounts
deposited therein pursuant to Section 7.06, the Note Interest
Distributable Amount with respect to such Distribution Date for each Class
of Notes allocated in the following order of priority:
(1) to the Class A-1 Noteholders and to the Class A-2
Noteholders, the Note Interest Distributable Amount for each such
Class of Notes; PROVIDED, HOWEVER, that if there are insufficient
funds on deposit in the Note Distribution Account to pay the entire
amount of the Note Interest Distributable Amount for each such Class
of Notes, then the amount in the Note Distribution Account shall be
applied to the Class A-1 Notes and the Class A-2 Notes PRO RATA on
the basis of the Note Interest Distributable Amount for each such
Class; and
(2) to the Class B Noteholders, the Note Interest
Distributable Amount for such Class of Notes;
(ii) to the Note Distribution Account, together with any amounts
deposited therein pursuant to Section 7.06, all amounts remaining after
distribution of interest to each Class of Notes shall be allocated in the
following order of priority:
(1) to the Class A Notes, PRO RATA (based on outstanding
principal amount), until the outstanding principal balance of each
Class of the Class A Notes has been reduced to zero; and
(2) to the Class B Notes, until the outstanding principal
balance of the Class B Notes has been reduced to zero; and
(iii) to the Holder of the Certificate.
(c) If the Notes have been declared immediately due and payable as
provided in Section 5.02 of the Indenture following the occurrence of an Event
of Default under Section 5.01(i), (ii), (iv) or (v) of the Indenture, then,
until such time as the Notes have been paid in full, Available Monies shall be
allocated and distributed in the following order of priority after payment of
amounts set forth in Section 7.05(a)(i), (ii), (iii) and (iv):
(i) to the Note Distribution Account, together with any amounts
deposited therein pursuant to Section 7.06, the Note Interest
Distributable Amount with respect to such Distribution Date for
distribution to the Class A-1 Noteholders and to the Class A-2
Noteholders, as applicable; PROVIDED, HOWEVER, that if there are
insufficient funds on deposit in the Note Distribution Account to pay the
entire amount of the Note Interest Distributable Amount for each such
Class of Notes, then the amount in the Note Distribution Account shall be
applied to the Class A-1 Notes and the Class A-2 Notes PRO RATA (on the
basis of the Note Interest Distributable Amount for each such Class);
47
(ii) to the Note Distribution Account, together with any amounts
deposited therein pursuant to Section 7.06, the Class A Note Principal
Distributable Amount for distribution to the Class A-1 Noteholders and the
Class A-2 Noteholders in reduction of the outstanding principal amount of
the Class A-1 Notes and Class A-2 Notes, as applicable, until the
outstanding principal balance of the Class A-1 Notes and the Class A-2
Notes has been reduced to zero; provided, however, that if there are
insufficient funds on deposit in the Note Distribution Account to reduce
the outstanding principal balance of the Class A-1 Notes and the Class A-2
Notes to zero, the amount in the Note Distribution Account shall be
applied to the payment of principal on the Class A-1 Notes and the Class
A-2 Notes PRO RATA (based on outstanding principal amount);
(iii) to the Note Distribution Account, together with any amounts
deposited therein pursuant to Section 7.06, the Note Interest
Distributable Amount with respect to such Distribution Date for
distribution to the Class B Noteholders;
(iv) to the Note Distribution Account, together with any amounts
deposited therein pursuant to Section 7.06, the Class B Note Principal
Distributable Amount with respect to such Distribution Date for
distribution to the Class B Noteholders in reduction of the outstanding
principal amount of the Class B Notes until the outstanding principal
balance of the Class B Notes has been reduced to zero; and
(v) to the Holder of the Certificate.
SECTION 7.06. RESERVE FUND.
(a) On or prior to the Closing Date, the Indenture Trustee, on behalf
of the Trust Depositor shall deposit the Reserve Fund Initial Deposit into the
Reserve Fund from the net proceeds of the Securities.
(b) The Indenture Trustee shall determine no later than 10:00 a.m.,
Chicago, Illinois time, on the Distribution Date (but after making, and taking
into account, the determination, demand and transfer of funds contemplated in
Section 7.05 above) whether there exists a Shortfall with respect to the
upcoming Distribution Date. In the event that the Indenture Trustee determines
that there exists a Shortfall, the Indenture Trustee shall no later than 12:00
noon, Chicago, Illinois time, on such Distribution Date remit monies from the
Reserve Fund in the following order of priority: first, to the Note
Distribution Account; the amount of such Shortfall relating to the Note
Interest Distributable Amount and second, to the Note Distribution Account, the
amount of such Shortfall relating to the Note Principal Distributable Amount.
(c) The Indenture Trustee shall at the written direction of the
Servicer invest the funds in the Reserve Fund in Qualified Eligible
Investments. Funds in the Reserve Fund shall be invested in investments that
are payable on demand or mature on or before the Business Day prior to each
Distribution Date. Once such funds are invested, the Indenture Trustee shall
not change the investment of such funds prior to maturity. Upon any such
investment, the Indenture Trustee shall, consistent with the definition of
Qualified Eligible Investment herein, make an
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appropriate notation of the security interest in such Qualified Eligible
Investment on the Indenture Trustee's records, by book entry or otherwise. All
income and gain realized from any such investments as well as any interest
earned on Reserve Fund Deposits shall be deposited and retained in the Reserve
Fund (subject to Section 7.06(e)). Losses, if any, realized on amounts in the
Reserve Fund invested pursuant to this paragraph shall first be credited
against undistributed investment earnings on amounts in the Reserve Fund
invested pursuant to this paragraph, and shall thereafter be deemed to reduce
the amount on deposit in the Reserve Fund. Neither the Trust Depositor nor the
Indenture Trustee shall be liable for the amount of any loss incurred in
respect of any investment, or lack of investment, of funds held in the Reserve
Fund. All income or loss on funds held in the Reserve Fund shall be taxable to
the Trust Depositor.
(d) Any Excess Amounts will be applied to the Specified Reserve Fund
Balance.
(e) On each Distribution Date on which the amount on deposit in the
Reserve Fund (after giving effect to all deposits thereto and withdrawals
therefrom on such Distribution Date) is greater than the Specified Reserve Fund
Balance, the Indenture Trustee shall release its lien on any remaining amounts
to the Trust Depositor.
SECTION 7.07. ESTABLISHMENT OF PRE-FUNDING ACCOUNT.
(a) On or prior to the Closing Date, the Trust Depositor shall establish
with and in the name of the Indenture Trustee on behalf of the Securityholders,
an Eligible Account designated "HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
PRE-FUNDING ACCOUNT - HARLEY DAVIDSON MOTORCYCLE TRUST 2001-3 - BNY MIDWEST
TRUST COMPANY, AS INDENTURE TRUSTEE" (such account being the "Pre-Funding
Account").
(b) During the Funding Period, following receipt from the Trust
Depositor of an Addition Notice, and upon further receipt of a written demand
from the Trust Depositor for a disbursement of funds from the Pre-Funding
Account to be made on or before the date on which the Funding Period terminates
(which written demand must be delivered not later than one Business Day prior
to the requested date of funding and must be accompanied by the written consent
of the Indenture Trustee), the Indenture Trustee will disburse the amount
demanded from the Pre-Funding Account to Harley-Davidson Credit upon the order
of the Trust Depositor for the purpose of purchasing Subsequent Contracts from
Harley-Davidson Credit pursuant to a Subsequent Purchase Agreement. With
respect to amounts still remaining on deposit in the Pre-Funding Account on the
date upon which the Funding Period ends (and provided a timely written demand
for funding as described above has not been received requesting funding on such
date) the Indenture Trustee shall immediately transfer all funds remaining in
the Pre-Funding Account to the Note Distribution Account.
(c) If (x) the Pre-Funded Amount has not been reduced to zero on the
Distribution Date on which the Funding Period ends (or, if the Funding Period
does not end on a Distribution Date, on the first Distribution Date following
the end of the Funding Period) or (y) the Pre-Funded Amount has been reduced to
$150,000 or less on any Determination Date, in either case
49
after giving effect to any reductions in the Pre-Funded Amount on such
Distribution Date or Determination Date pursuant to paragraph (a) above, the
Trust Depositor shall instruct the Indenture Trustee to withdraw from the
Pre-Funding Account the Pre-Funded Amount and, in the case of (x), on such
Distribution Date or, in the Determination Date (i) if the Pre-Funded Amount is
less than $150,000, deposit the Pre-Funded Amount in the Note Distribution
Account for payment as principal of the Class A-1 Notes up to the Outstanding
Amount thereof and then for payment of principal of the Class A-2 Notes and
Class B Notes and (ii) if the Pre-Funded Amount is equal to or greater than
$150,000, deposit the Pre-Funded Amount in the Note Distribution Account for
payment as principal of the Notes, pro rata, calculated on the then current
principal balance of each Class of Notes.
SECTION 7.08. REACQUISITION OF CONTRACTS FOR BREACH OF REPRESENTATIONS
AND WARRANTIES.
Upon a discovery by the Servicer, the Trust Depositor or the Trustees of
a breach of a representation or warranty of the Seller as set forth in EXHIBIT
J hereto or as made in any 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 Trustees 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 7.08, shall reacquire a Contract at its
Reacquisition 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 and 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 reacquire under the Transfer
and Sale Agreement, the Seller may, in lieu of reacquiring 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 reacquire 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 7.08 shall not terminate or be deemed
released by any party hereto upon a Service
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Transfer pursuant to Article VIII. The reacquisition obligation described in
this Section 7.08 is in no way to be satisfied with monies in the Reserve Fund.
SECTION 7.09. REASSIGNMENT OF REACQUIRED CONTRACTS. Upon receipt by
the Indenture Trustee for deposit in the Collection Account of the
Reacquisition Price as described in Section 7.08 or Section 7.10, and upon
receipt of a certificate of a Servicing Officer in the form attached hereto as
EXHIBIT G, the Indenture Trustee shall release its lien on and the Trust shall
assign to the Seller all of the Trust's right, title and interest in the
reacquired 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 Trustees.
SECTION 7.10. SELLER'S REACQUISITION OPTION. As provided in the
Transfer and Sale Agreement, on written notice to the Indenture Trustee at
least 20 days prior to a Distribution Date, and provided that the Pool Balance
is then less than 10% of the Aggregate Principal Balance as of the Closing
Date, and provided a valuation letter is delivered as required in Section 5.02
of the Transfer and Sale Agreement, the Seller, through the Trust Depositor,
may (but is not required to) reacquire on that Distribution Date all
outstanding Contracts at a price equal to the aggregate unpaid principal
balance of the Notes on the previous Distribution Date plus the aggregate of
the Note Interest Distributable Amount for the current Distribution Date, the
Reimbursement Amount (if any) as well as accrued and unpaid Monthly Servicing
Fees and the Indenture Trustee Fee to the date of such reacquisition. Such
price shall be deposited in the Collection Account not later than one (1)
Business Day before such Distribution Date, against the Owner Trustee's and
Indenture Trustee's release of the Contracts and the Contract Files to the
Seller.
ARTICLE EIGHT
EVENTS OF TERMINATION; SERVICE TRANSFER
SECTION 8.01. EVENTS OF TERMINATION. "Event of Termination" means the
occurrence of any of the following:
(a) Any failure by the Servicer or the Seller to make any payment or
deposit required to be made hereunder or in the Transfer and Sale Agreement (or
in any Subsequent Purchase Agreement or Subsequent Transfer Agreement) and the
continuance of such failure for a period of four Business Days after the date
on which such payment or deposit was due;
(b) Failure on the Servicer's or the Seller's part to observe or
perform in any material respect any covenant or agreement in this Agreement or
in the Transfer and Sale Agreement (or in any Subsequent Purchase Agreement or
Subsequent Transfer Agreement) (other than a covenant or agreement, the breach
of which is specifically addressed elsewhere in this Section) which continues
unremedied for 30 days after the date on which such failure commences;
51
(c) Any assignment by the Servicer or the Seller 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 or Trust
Depositor 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 or Trust Depositor 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 either the Servicer or Trust Depositor,
or for any substantial liquidation or winding up of their respective affairs;
(e) The Servicer or Trust Depositor shall have commenced a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall have 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 Trust Depositor, as the case may be, or for any substantial part of their
respective property, or shall have made any general assignment for the benefit
of their respective 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 Trustees 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 or the Trust Depositor by the Indenture
Trustee, the circumstances or condition in respect of which such
representation, warranty or statement was incorrect shall not have been
eliminated or otherwise cured.
SECTION 8.02. WAIVER OF SERVICER DEFAULT. The Required Noteholders
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 8.03. SERVICE TRANSFER. (a) If an Event of Termination has
occurred and is continuing and has not been waived pursuant to Section 8.02,
(x) the Required Holders or (y) the Indenture Trustee may, by written notice
delivered to the parties hereto, terminate all (but not
52
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 8.03(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 Indenture Trustee (the "SUCCESSOR SERVICER") pursuant to and under this
Section 8.03; 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 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 Monthly Servicing Fee for performing the obligations of
the Servicer.
SECTION 8.04. SUCCESSOR SERVICER TO ACT; APPOINTMENT OF SUCCESSOR
SERVICER. On or 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 8.08 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, the Required Holders may
appoint a successor servicer (other than the original Servicer or an Affiliate
of the original Servicer) to act as Servicer. As compensation therefor, the
successor servicer shall be entitled to receive reasonable compensation equal
to the Monthly Servicing Fee. The Owner Trustee, Noteholders and the Indenture
Trustee and such successor 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.
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SECTION 8.05. NOTIFICATION TO SECURITYHOLDERS. (a) Promptly following
the occurrence of any Event of Termination, the Servicer shall give written
notice thereof to the Trustees, the Trust Depositor and each Rating Agency at
the addresses described in Section 11.04 hereof and to the Noteholders at their
respective addresses appearing on the Note Register.
(b) Within 10 days following any termination or appointment of a
Successor Servicer pursuant to this Article VIII, the Indenture Trustee shall
give written notice thereof to each Rating Agency and the Trust Depositor at
the addresses described in Section 11.04 hereof, and to the Noteholders at
their addresses appearing on the Note Register.
SECTION 8.06. 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 8.03 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) other than those relating to the management, administration,
servicing, custody or collection of the Contracts.
SECTION 8.07. DATABASE FILE. The Servicer will provide the Successor
Servicer with a magnetic tape (in a format reasonably acceptable to the
Indenture Trustee and the Servicer) 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 Termination Event 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 Termination Event.
SECTION 8.08. 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 8.07 shall survive the termination of this Agreement.
SECTION 8.09. RESPONSIBILITIES OF THE SUCCESSOR SERVICER. The
Successor Servicer will not be responsible for delays attributable to the
Servicer's failure to deliver information, defects
54
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.
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 Trust Depositor or the Trustees 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.
SECTION 8.10. 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 Trust, the Owner Trustee, the
Indenture Trustee or the Noteholders, 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 Noteholders under the Indenture. 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.
55
SECTION 8.11. 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 all or substantially all
of 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 Owner Trustee, the Indenture Trustee and the
Rating Agencies.
SECTION 8.12. 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 Owner Trustee and the
Indenture 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 Owner Trustee and the Indenture Trustee
concurrently with or promptly after such notice. No such resignation shall
become effective until the Indenture Trustee shall have assumed the
responsibilities and rights of the predecessor Servicer in accordance with
Section 8.04.
SECTION 8.13. APPOINTMENT OF SUBSERVICER. So long as Harley-Davidson
Credit Corp. acts as the Servicer, the Servicer may at any time without notice
or consent perform specific duties as servicer under this Agreement through
other subcontractors; PROVIDED, HOWEVER, that, in each case, 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 NINE
REPORTS
SECTION 9.01. MONTHLY REPORTS. No later than 10:00 a.m. Chicago,
Illinois time two Business Days prior to each Distribution Date, the Servicer
shall cause the Trustees and each Rating Agency to receive a Monthly Report.
SECTION 9.02. OFFICER'S CERTIFICATE. Each Monthly Report delivered
pursuant to Section 9.01 shall be accompanied by a certificate of a Servicing
Officer substantially in the form of EXHIBIT C, certifying the accuracy of the
Monthly Report and that no Event of Termination or event that with notice or
lapse of time or both would become an Event of Termination has occurred, or if
such event has occurred and is continuing, specifying the event and its status.
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SECTION 9.03. OTHER DATA. In addition, the Trust Depositor and the
Servicer shall, upon the request of the Trustees, Moody's or Standard & Poor's,
furnish the Trustees, Moody's or Standard & Poor's, as the case may be, such
underlying data as may be reasonably requested.
SECTION 9.04. 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, Harley-Davidson Financial or to
the Trust Depositor, to deliver to the Trustees, the Underwriters 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, 2002, 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 and
to the Trustees to the effect that such firm has audited the financial
statements of Harley-Davidson Financial 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 Harley-Davidson Financial'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
(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 Harley-Davidson Financial within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
57
(c) In the event the Independent Accountants require the Indenture
Trustee to agree to the procedures performed by such firm, the Servicer shall
direct the Indenture Trustee in writing to so agree; it being understood and
agreed that the Indenture Trustee will deliver such letter of agreement in
conclusive reliance upon the direction of the Servicer, and the Indenture
Trustee shall not make any independent inquiry or investigation as to, and
shall have no obligation or liability in respect of, the sufficiency, validity
or correctness of such procedures.
SECTION 9.05. ANNUAL STATEMENT OF COMPLIANCE FROM SERVICER. The
Servicer will deliver to the Trustees, the Underwriters and each of the Rating
Agencies, on or before January 31 of each year commencing January 31, 2002, 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 (i) by any Noteholder by a request in
writing to the Indenture Trustee and (ii) by any Certificateholder by a request
in writing to the Owner Trustee.
SECTION 9.06. MONTHLY REPORTS TO NOTEHOLDERS. (a) On or before two
Business Days prior to each Distribution Date, the Servicer shall prepare and,
concurrently with each distribution to Noteholders pursuant to Article VII,
deliver to the Indenture Trustee, in its capacity as Note Registrar and Paying
Agent, shall cause to be delivered and mailed to each Noteholder at the
addresses appearing on the Note Register a statement as of the related
Distribution Date substantially in the form of EXHIBIT I hereto (the "MONTHLY
REPORT") setting forth:
(i) the amount of Noteholder's principal distribution;
(ii) the amount of Noteholder's interest distribution;
(iii) the amount of fees payable out of the Trust, separately
identifying the Monthly Servicing Fee and the Indenture Trustee Fee;
(iv) the amount of any Note Interest Carryover Shortfall and Note
Principal Carryover Shortfall on such Distribution Date and the change in
such amounts from those with respect to the immediately preceding
Distribution Date;
(v) the Note Pool Factor for each Class of Notes, in each case
of such Distribution Date;
(vi) 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 Monies and the amount remaining in the
Reserve Fund after giving effect to all deposits and withdrawals from the
Reserve Fund on such date;
58
(vii) the amount of any Mandatory Redemption to be made on such
Distribution Date;
(viii) for each Distribution Date during the Funding Period, the
remaining Pre-Funded Amount;
(ix) for each Distribution Date during the Funding Period to and
including the Distribution 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;
(x) the remaining Principal Balance after giving effect to the
distribution of principal (and Mandatory Redemption, if any) to each class
of Notes to be made on such Distribution Date;
(xi) 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;
(xii) 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, the Net Liquidation Proceeds and the Net Liquidation Losses for
such Due Period;
(xiii) the Loss Ratio, Average Loss Ratio, Cumulative Loss Ratio,
the Delinquency Ratio and the Average Delinquency Ratio as of such
Distribution Date;
(xiv) the number of Contracts and the aggregate Principal Balance
of such Contracts, as of the first day of the Due Period relating to such
Distribution 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 Distribution Date);
(xv) the aggregate Principal Balance and number of Contracts that
were reacquired by the Seller pursuant to the Agreement with respect to
the related Due Period, identifying such Contracts and the Reacquisition
Price for such Contracts;
(xvi) the amount otherwise distributable on the Class B Notes that
has instead been distributed to one or more senior Classes of Notes on
such Distribution Date;
(xvii) the amount of Advances made by the Servicer in respect of
the related Contracts and the related Due Period and the amount of
unreimbursed Advances in respect of the related Contracts determined by
the Servicer to be Defaulted Contracts; and
59
(xviii) 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 the Noteholders and the
Certificateholder to prepare their tax returns.
(b) Within the prescribed period of time for tax reporting purposes
after the end of each calendar year, the Servicer shall prepare and the Note
Registrar shall mail to each Noteholder of record at any time during such year
a report as to the aggregate amounts reported pursuant to subsections (i),
(ii), (iii) and (iv) of this Section, attributable to such Noteholder.
(c) The Indenture Trustee shall send via first class mail a paper copy
of the Monthly Report to (i) the initial Clearing Agency under the Note
Depository Agreement or any qualified successor appointed pursuant to Section
2.11 of the Indenture and (ii) each Securityholder or party to this Agreement.
ARTICLE TEN
TERMINATION
SECTION 10.01. SALE OF TRUST ASSETS.
(a) Upon any sale of the assets of the Trust pursuant to Section 9.02
of the Trust Agreement, the Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "INSOLVENCY PROCEEDS") in the Collection Account. On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the
Servicer shall instruct the Indenture Trustee to make the following deposits
(after the application on such Distribution Date of Available Monies and funds
on deposit in the Reserve Fund pursuant to Section 7.06) from the Insolvency
Proceeds as if (and in the same order of priority as) the Insolvency Proceeds
were Available Monies being allocated and distributed on such date pursuant to
Section 7.06(b).
(b) As described in Article Nine of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee
and the Indenture Trustee as soon as practicable after the Servicer has
received notice thereof.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholder will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.
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ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. AMENDMENT.
(a) This Agreement may be amended by the Trust Depositor, the Servicer,
the Indenture Trustee and the Owner Trustee on behalf of the Issuer,
collectively, without the consent of any Securityholders, (i) to cure any
ambiguity, to correct or supplement any provisions in this Agreement which are
inconsistent with the provisions herein, or to add any other provisions with
respect to matters or questions arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement, (ii) to add or provide any
credit enhancement for any Class of Notes and (iii) to change any provision
applicable for determining the Specified Reserve Fund Balance or the manner in
which the Reserve Fund is funded; PROVIDED, HOWEVER that any such action shall
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Securityholder and provided, further, that in
connection with any amendment pursuant to clause (iii) above, the Servicer
shall deliver to the Owner Trustee and the Indenture Trustee a letter from
Standard & Poor's (so long as Standard & Poor's is a Rating Agency) and Moody's
(so long as ▇▇▇▇▇'▇ is a Rating Agency) to the effect that such amendment will
not cause its then-current rating on any Class of Notes to be qualified,
reduced or withdrawn.
(b) This Agreement may also be amended from time to time by the Trust
Depositor, the Servicer, the Indenture Trustee and the Owner Trustee on behalf
of the Issuer, with the consent of the Required Holders, 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
Noteholders or the Certificateholder; PROVIDED, HOWEVER, that no such amendment
shall increase or reduce in any manner the amount of, or accelerate or delay
the timing of (i)(a) collections of payments on the Contracts or distributions
that shall be required to be made on any Note or any Interest Rate, (b) except
as otherwise provided in Section 10.01(a), the Specified Reserve Fund Balance
or the manner in which the Reserve Fund is funded or (ii) reduce the aforesaid
percentage of the Outstanding Amount of the Notes, the Holders of which are
required to consent to any such amendment, without the consent of the Holders
of all Notes of the relevant Class then outstanding and the Certificate.
(c) Prior to the execution of any such amendment or consent, the
Indenture Trustee shall furnish written notification of the substance of such
amendment or consent, together with a copy thereof, to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee and the Indenture Trustee, as the case may be, shall furnish
written notification of the substance of such amendment or consent to each
Noteholder. It shall not be necessary for the consent of Noteholders pursuant
to Section 11.01(b) to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the
61
substance thereof. The manner of obtaining such consents and of evidencing the
authorization by Noteholders of the execution thereof shall be subject to such
reasonable requirements as the Owner Trustee or the Indenture Trustee may
prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Owner Trustee and the Indenture Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee and the Indenture
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's or the Indenture Trustee's own rights, duties or
immunities under this Agreement or otherwise.
(f) Notwithstanding anything to the contrary in this Section 11.01, the
Trust Depositor or the Servicer, acting on behalf of the Trust Depositor, may
request each Rating Agency to approve a formula for determining the Specified
Reserve Fund Balance that is different from the formula or result determined
from the current definition thereof contained herein so as to result in a
decrease in the amount of the Specified Reserve Fund Balance or the manner by
which such Reserve Fund is funded. If each Rating Agency delivers to the
Indenture Trustee and Owner Trustee a written notice or letter stating that
such action will not result in a reduction or withdrawal of the rating of any
outstanding Class with respect to which a Rating Agency has previously issued a
rating as a result or such action, then the Specified Reserve Fund Balance will
be theretofore determined in accordance with such changed formula or manner of
funding, and an amendment to this Agreement effecting such change may be
executed without the consent of any Securityholder.
SECTION 11.02. PROTECTION OF TITLE TO TRUST.
(a) The Servicer shall file such financing statements and cause to be
filed such continuation statements, all in such manner and in such places as
may be required by law fully to preserve, maintain and protect the interest of
the Issuer, the Securityholders and the Indenture Trustee in the Contracts and
in the proceeds thereof. The Servicer shall deliver (or cause to be delivered)
to the Owner Trustee and the Indenture Trustee file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as available
following such filing. The Trust Depositor authorizes the Trust to file
financing statements describing the Trust Corpus as collateral.
(b) Neither the Seller, the Trust Depositor nor the Servicer shall
change its name, identity or corporate structure in any manner that would,
could or might make any financing statement or continuation statement filed in
accordance with Section 4.02(a) seriously misleading within the meaning of
Section 9-507 of the UCC, unless it shall have given the Issuer, the Owner
Trustee and the Indenture Trustee at least 30 days' prior written notice
thereof and shall have promptly filed appropriate amendments to all previously
filed financing statements or continuation statements.
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(c) The Seller and the Trust Depositor shall give the Issuer, the Owner
Trustee and the Indenture Trustee at least 30 days' prior written notice of any
change in its state of incorporation. The Servicer shall at all times maintain
each office from which it shall service Contracts, and its principal executive
office, within the United States.
(d) The Servicer shall maintain or cause to be maintained accounts and
records as to each Contract accurately and in sufficient detail to permit (i)
the reader thereof to know at any time the status of such Contract, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to) each
Contract and the amounts from time to time deposited in or credited to the
Collection Account in respect of each Contract.
(e) The Servicer shall maintain or cause to be maintained its computer
systems so that, from and after the time of transfer under this Agreement of
the Contracts, the Servicer's master computer records (including any backup
archives) that shall refer to a Contract indicate clearly the interest of the
Issuer and the Indenture Trustee in such Contract and that such Contract is
owned by the Issuer and has been pledged to the Indenture Trustee. Indication
of the Issuer's ownership of and the Indenture Trustee's interest in a Contract
shall be deleted from or modified on the Servicer's computer systems when, and
only when, the related Contract shall have been paid in full or reacquired or
shall have become a Liquidated Contract.
(f) If at any time the Trust Depositor or the Servicer shall propose to
sell, grant a security interest in, or otherwise transfer any interest in
automotive retail installment sales contracts to any prospective purchaser,
lender or other transferee, the Servicer shall give or cause to be given to
such prospective purchaser, lender or other transferee computer tapes, records
or print-outs (including any restored from back-up archives) that, if they
shall refer in any manner whatsoever to any Contract, shall indicate clearly
that such Contract has been transferred and is owned by the Issuer and has been
pledged to the Indenture Trustee.
(g) The Servicer shall permit the Owner Trustee and its agents, at any
time during normal business hours, to inspect, audit and make copies of and
abstracts from the Servicer's records regarding any Contract.
(h) Upon request, the Servicer shall furnish to the Owner Trustee and
the Indenture Trustee, within five Business Days, a list of all Contracts then
held as part of the Trust Estate, together with a reconciliation of such list
to the List of Contracts and to each of the Monthly Reports furnished before
such request indicating removal of Contracts from the Trust.
(i) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and each Rating Agency promptly after the execution and delivery of
this Agreement and of each amendment hereto, an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are necessary fully
to preserve and protect the interest of the Owner Trustee and the Indenture
Trustee and reciting the details of each filings or referring to prior Opinions
of Counsel in which
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such details are given, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interest.
SECTION 11.03. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Illinois and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws, except that the duties of the Owner Trustee shall be
governed by the laws of the State of
Delaware.
SECTION 11.04. NOTICES. All notices, demands, certificates, requests
and communications hereunder ("notices") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt to
be effective the date of delivery indicated on the return receipt, or (b) one
Business Day after delivery to an overnight courier, or (c) on the date
personally delivered to an Authorized Officer of the party to which sent, or
(d) on the date transmitted by legible telecopier transmission with a
confirmation of receipt, in all cases addressed to the recipient as follows:
(i) If to the Servicer or Seller:
Harley-Davidson Credit Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to the Trust Depositor:
Harley-Davidson Customer Funding Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) If to the Indenture Trustee:
BNY Midwest Trust Company
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(iv) If to the Owner Trustee:
64
Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(v) If to Moody's:
▇▇▇▇▇'▇ Investors Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ABS Monitoring Department
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(vi) If to Standard & Poor's:
Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(vii) If to the Underwriters:
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
First Union Securities, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Asset-Securitization Division
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
65
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
SECTION 11.05. SEVERABILITY OF PROVISIONS. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the Notes or
the Certificate or the rights of the Holders thereof.
SECTION 11.06. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, as provided in Sections 6.03 and 8.02, this Agreement may not
be assigned by the Trust Depositor or the Servicer without the prior written
consent of Holders of Notes aggregating not less than 66-2/3% of each Class.
SECTION 11.07. THIRD PARTY BENEFICIARIES. Except as otherwise
specifically provided herein, the parties hereto hereby manifest their intent
that no third party shall be deemed a third party beneficiary of this
Agreement, and specifically that the Obligors are not third party beneficiaries
of this Agreement.
SECTION 11.08. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
together constitute but one and the same instrument.
SECTION 11.09. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.10. NO BANKRUPTCY PETITION; DISCLAIMER AND SUBORDINATION.
(a) Each of the Seller, the Indenture Trustee, the Servicer, the Owner Trustee
and each Holder (by acceptance of the applicable Securities) covenants and
agrees that, prior to the date that is one year and one day after the payment
in full of all amounts owing in respect of all outstanding Securities, it will
not institute against the Trust Depositor, or the Trust, or join any other
Person in instituting against the Trust Depositor or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States. This Section 11.10 will survive the termination of this
Agreement.
(b) The Trust acknowledges and agrees that the Certificate represents a
beneficial interest in the Trust and Trust Corpus only and the Securities do
not represent an interest in any assets (other than the Trust Corpus) of the
Trust Depositor (including by virtue of any deficiency claim in respect of
obligations not paid or otherwise satisfied from the Trust Assets and proceeds
thereof). In furtherance of and not in derogation of the foregoing, to the
extent that the Trust Depositor enters into other securitization transactions,
the Trust acknowledges and agrees that it shall have no right, title or
interest in or to any assets (or interests therein) other than the Trust
66
Assets conveyed or purported to be conveyed (whether by way of a sale, capital
contribution or by the granting of a Lien) by the Trust Depositor to any Person
other than the Trust (the "OTHER ASSETS").
To the extent that notwithstanding the agreements contained in this
Section, the Trust or any Securityholder, either (i) asserts an interest in or
claim to, or benefit from any Other Assets, whether asserted against or through
the Trust Depositor or any other Person owned by the Trust Depositor, or (ii) is
deemed to have any interest, claim or benefit in or from any Other Assets,
whether by operation of law, legal process, pursuant to applicable provisions of
Insolvency Laws or otherwise (including without limitation pursuant to Section
1111(b) of the federal Bankruptcy Code, as amended) and whether deemed asserted
against or through the Trust Depositor or any other Person owned by the Trust
Depositor, then the Trust and each Securityholder by accepting a Note or
Certificate further acknowledges and agrees that any such interest, claim or
benefit in or from the Other Assets is and shall be expressly subordinated to
the indefeasible payment in full of all obligations and liabilities of the Trust
Depositor which, under the terms of the documents relating to the securitization
of the Other Assets, are entitled to be paid from, entitled to the benefits of,
or otherwise secured by such Other Assets (whether or not any such entitlement
or security interest is legally perfected or otherwise entitled to a priority of
distribution under applicable law, including Insolvency Laws, and whether
asserted against the Trust Depositor or any other Person owned by the Trust
Depositor) including, without limitation, the payment of post-petition interest
on such other obligations and liabilities. This subordination agreement shall be
deemed a subordination agreement within the meaning of Section 510(a) of the
Bankruptcy Code. Each Securityholder is deemed to have acknowledged and agreed
that no adequate remedy at law exists for a breach of this Section 11.10 and
that the terms and provisions of this Section 11.10 may be enforced by an action
for specific performance.
(c) The provisions of this Section 11.10 shall be for the third party
benefit of those entitled to rely thereon and shall survive the termination of
this Agreement.
SECTION 11.11. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been executed by Wilmington Trust Company, not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer, and in no
event shall Wilmington Trust Company in its individual capacity or any
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder,
as to all of which recourse shall be had solely to the assets of the Issuer.
For all purposes of this Agreement, in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of Articles Six, Seven
and Eight of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been executed by BNY Midwest Trust Company, not in its individual
capacity but solely as Indenture Trustee, and in no event shall BNY Midwest
Trust Company have any liability for the
67
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.
68
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
HARLEY-DAVIDSON MOTORCYCLE TRUST 2001-3
By: Wilmington Trust Company, not in
its individual capacity but solely
as Owner Trustee on behalf of the
Trust
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Printed Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Financial Services Officer
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,
as Trust Depositor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Treasurer
HARLEY-DAVIDSON CREDIT CORP., as Servicer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Treasurer
BNY MIDWEST TRUST COMPANY, not in its individual
capacity but solely as Indenture Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
Printed Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Assistant Vice President
Signature Page to
Sale and Servicing Agreement
EXHIBIT A
[Form of Assignment]
In accordance with the
Sale and Servicing Agreement (the "
SALE AND
SERVICING AGREEMENT") dated as of December 1, 2001 made by and between the
undersigned, as Trust Depositor ("TRUST DEPOSITOR"), Harley-Davidson Credit
Corp., as Servicer, BNY Midwest Trust Company, as Indenture Trustee and
Harley-Davidson Motorcycle Trust 2001-3 (the "TRUST"), as assignee thereunder,
the undersigned does hereby sell, transfer, convey and assign, set over and
otherwise convey to the Trust (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 Trust Depositor, (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 (other than the
Reserve Fund) from time to time (and any investments of such amounts), and (ix)
all proceeds and products of the foregoing
This Assignment is made pursuant to and in reliance upon the
representation and warranties on the part of the undersigned contained in
Article III of the Agreement and no others.
Capitalized terms used herein but not otherwise defined shall have the
meanings assigned to such terms in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this _____ day of December, 2001.
HARLEY-DAVIDSON CUSTOMER FUNDING
CORP.
By:
--------------------------------------
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Treasurer
A-1
EXHIBIT B
[Form of Closing Certificate of Trust Depositor]
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
PRESIDENT'S CERTIFICATE
The undersigned certifies that she is President of Harley-Davidson
Customer Funding Corp., a Nevada corporation (the "TRUST DEPOSITOR"), and that
as such is duly authorized to execute and deliver this certificate on behalf of
the Trust Depositor in connection with the
Sale and Servicing Agreement (the
"AGREEMENT") dated as of December 1, 2001 (the "EFFECTIVE DATE") by and among
the Trust Depositor, BNY Midwest Trust Company (the "INDENTURE TRUSTEE"), as
Indenture Trustee, Harley-Davidson Credit Corp. ("HARLEY-DAVIDSON CREDIT"), as
Servicer, and Harley-Davidson Motorcycle Trust 2001-3 ("ISSUER") (all
capitalized terms used herein without definition have the respective meanings
set forth in the Agreement), and further certifies as follows:
(1) Attached hereto as EXHIBIT I is a true and correct copy of the
Articles of Incorporation of the Trust Depositor, together with all
amendments thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Articles of Incorporation of the Trust Depositor since May
12, 2000, and no such amendment has been authorized by the Board of
Directors or shareholders of the Trust Depositor.
(3) Attached hereto as EXHIBIT II is a Certificate of the Secretary
of State of the State of Nevada dated December ____, 2001 stating that the
Trust Depositor is duly incorporated under the laws of the State of Nevada
and is in good standing.
(4) Attached hereto as EXHIBIT III is a true and correct copy of the
By-laws of the Trust Depositor, which are in full force and effect on the
date hereof.
(5) Attached hereto as EXHIBIT IV is a true and correct copy of
resolutions adopted pursuant to the unanimous written consent of the Board
of Directors of the Trust Depositor relating to the execution, delivery
and performance of the Agreement; the Transfer and Sale Agreement dated as
of the Effective Date between the Trust Depositor and Harley-Davidson
Credit; the Trust Agreement dated as of the Effective Date between the
Trust Depositor and the Wilmington Trust Company (the "Owner Trustee"), as
Owner Trustee; the Administrative Agreement dated as of the Effective Date
between the Trust Depositor, the Issuer, the Indenture Trustee,
Harley-Davidson Credit, as Administrator; the Underwriting Agreement dated
December 4, 2001 among the Trust
B-1
Depositor, Harley-Davidson Credit and the Underwriters (collectively, the
"PROGRAM AGREEMENTS"). Said resolutions have not been amended, modified,
annulled or revoked, and are on the date hereof in full force and effect
and are the only resolutions relating to these matters which have been
adopted by the Board of Directors.
(6) No event with respect to the Trust Depositor has occurred and is
continuing which would constitute an Event of Termination or an event
that, with notice or the passage of time or both, would become an Event of
Termination under the Agreement. To the best of my knowledge after
reasonable investigation, there has been no material adverse change in the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Trust Depositor, whether or not arising in the
ordinary course of business since the respective dates as of which
information is given in the Prospectus and except as set forth therein.
(7) All federal, state and local taxes of the Trust Depositor due
and owing as of the date hereof have been paid.
(8) All representations and warranties of the Trust Depositor
contained in the Program Agreements or any other related documents, or in
any document, certificate or financial or other statement delivered in
connection therewith are true and correct as of the date hereof.
(9) There is no action, investigation or proceeding pending or, to
our knowledge, threatened against the Trust Depositor before any court,
administrative agency or other tribunal (a) asserting the invalidity of
the Program Agreements; (b) seeking to prevent the consummation of any of
the transactions contemplated by the Program Agreements; or (c) which is
likely materially and adversely to affect the Trust Depositor's
performance of its obligations under, or the validity or enforceability
of, the Program Agreements.
(10) No consent, approval, authorization or order of, and no notice
to or filing with, any governmental agency or body or state or federal
court is required to be obtained by the Trust Depositor for the Trust
Depositor's consummation of the transactions contemplated by the Program
Agreements, except such as have been obtained or made and such as may be
required under the blue sky laws of any jurisdiction in connection with
the issuance and sale of the Certificate.
(11) The Trust Depositor is not a party to any agreements or
instruments evidencing or governing indebtedness for money borrowed or by
which the Trust Depositor or its property is bound (other than the Program
Agreements). Neither Harley-Davidson Credit's transfer and assignment of
the Contract Assets to the Trust Depositor, the Trust Depositor's
concurrent transfer and assignment of the Trust Corpus to the Trust, nor
the concurrent pledge of the Collateral by the Trust to the Indenture
Trustee nor the issuance and sale of the Certificate and the Notes, nor
the execution and delivery of the
B-2
Program Agreements, nor the consummation of any other of the transactions
contemplated therein, will violate or conflict with any agreement or
instrument to which the Trust Depositor is a party or by which it is
otherwise bound.
(12) In connection with the transfer of Contracts and related
collateral contemplated in the Agreement, (a) the Trust Depositor has not
made such transfer with actual intent to hinder, delay or defraud any
creditor of the Trust Depositor, and (b) the Trust Depositor has not
received less than a reasonably equivalent value in exchange for such
transfer, is not on the date thereof insolvent (nor will become insolvent
as a result thereof), is not engaged (or about to engage) in a business or
transaction for which it has unreasonably small capital, and does not
intend to incur or believe it will incur debts beyond its ability to pay
when matured.
(13) Each of the agreements and conditions of the Trust Depositor to
be performed on or before the Closing Date pursuant to the Program
Agreements have been performed in all material respects.
* * * *
B-3
IN WITNESS WHEREOF, I have affixed my signature hereto this ___ day of
December, 2001.
By:
----------------------------
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
EXHIBIT C
[Form of Closing Certificate of Servicer/Seller]
HARLEY-DAVIDSON CREDIT CORP.
PRESIDENT'S CERTIFICATE
The undersigned certifies that she is President of Harley-Davidson Credit
Corp. ("HARLEY-DAVIDSON CREDIT"), and that as such is duly authorized to execute
and deliver this certificate on behalf of Harley-Davidson Credit, as Servicer,
in connection with the
Sale and Servicing Agreement (the "
SALE AND SERVICING
AGREEMENT") dated as of December 1, 2001 (the "EFFECTIVE DATE") by and among
Harley-Davidson Credit, as Servicer, Harley-Davidson Customer Funding Corp.
("CFC"), BNY Midwest Trust Company, as Indenture Trustee and Harley-Davidson
Motorcycle Trust 2001-3 ("ISSUER"), in connection with the Transfer and Sale
Agreement dated as of the Effective Date (the "TRANSFER AND SALE AGREEMENT") by
and between Harley-Davidson Credit and CFC (all capitalized terms used herein
without definition having the respective meanings set forth in the
Sale and
Servicing Agreement), and further certifies as follows:
(1) Attached hereto as EXHIBIT I is a true and correct copy of the
Articles of Incorporation of Harley-Davidson Credit, together with all
amendments thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Articles of Incorporation of Harley-Davidson Credit since
July 6, 1995, and no such amendment has been authorized by the Board of
Directors or shareholders of Harley-Davidson Credit.
(3) Attached hereto as EXHIBIT II is a Certificate of the Secretary
of State of the State of Nevada dated December __, 2001 stating that
Harley-Davidson Credit is duly incorporated under the laws of the State of
Nevada and is in good standing.
(4) Attached hereto as EXHIBIT III is a true and correct copy of the
By-laws of Harley-Davidson Credit which were in full force and effect on
November 5, 1992 and at all times subsequent thereto.
(5) Attached hereto as EXHIBIT IV is a true and correct copy of
resolutions adopted pursuant to a unanimous written consent of the Board
of Directors of Harley-Davidson Credit and relating to the authorization,
execution, delivery and performance of the Transfer and Sale Agreement;
the Sale and Servicing Agreement; the Underwriting Agreement dated
December 4, 2001 among Harley-Davidson Credit, CFC and the Underwriters
(the "UNDERWRITING AGREEMENT"); and the Administration Agreement dated
December 1, 2001 among Harley-Davidson Credit, CFC, the Issuer and BNY
Midwest
C-1
Trust Company, as Indenture Trustee (the "INDENTURE TRUSTEE") (the
"ADMINISTRATION AGREEMENT"). Said resolutions have not been amended,
modified, annulled or revoked, and are on the date hereof in full force
and effect and are the only resolutions relating to these matters which
have been adopted by the Board of Directors.
(6) No event with respect to Harley-Davidson Credit has occurred and
is continuing which would constitute an Event of Termination or an event
that, with notice or the passage of time, would constitute an Event of
Termination under the Sale and Servicing Agreement. To the best of my
knowledge after reasonable investigation, there has been no material
adverse change in the condition, financial or otherwise, or the earnings,
business affairs or business prospects of Harley-Davidson Credit, whether
or not arising in the ordinary course of business, since the respective
dates as of which information is given in the Prospectus and except as set
forth therein.
(7) All federal, state and local taxes of Harley-Davidson Credit due
and owing as of the date hereof have been paid.
(8) All representations and warranties of Harley-Davidson Credit
contained in the Transfer and Sale Agreement, the Sale and Servicing
Agreement, the Underwriting Agreement and the Administration Agreement
(collectively, the "PROGRAM AGREEMENTS") or in any document, certificate
or financial or other statement delivered in connection therewith are true
and correct as of the date hereof.
(9) There is no action, investigation or proceeding pending or, to
my knowledge, threatened against Harley-Davidson Credit before any court,
administrative agency or other tribunal (a) asserting the invalidity of
any Program Agreement to which Harley-Davidson Credit is a party; or (b)
which is likely materially and adversely to affect Harley-Davidson
Credit's performance of its obligations under, or the validity or
enforceability of, the Program Agreements.
(10) No consent, approval, authorization or order of, and no notice
to or filing with, any governmental agency or body or state or federal
court is required to be obtained by Harley-Davidson Credit for
Harley-Davidson Credit's consummation of the transactions contemplated by
the Program Agreements, except such as have been obtained or made and such
as may be required under the blue sky laws of any jurisdiction in
connection with the issuance and sale of the Notes or the Certificate.
(11) SCHEDULE A hereto contains a complete list of all material
agreements (other than the Transfer and Sale Agreement) or instruments
evidencing or governing indebtedness for money borrowed to which
Harley-Davidson Credit is a party or by which Harley-Davidson Credit or
its property is bound. Neither Harley-Davidson Credit's transfer and
assignment of the Contract Assets to CFC, CFC's concurrent transfer and
assignment of the Trust Corpus to the Trust, nor the concurrent pledge by
the Trust of the Collateral to the Indenture Trustee, nor the issuance and
sale of the Notes or
C-2
the Certificate or the entering into of the Program Agreements, nor the
consummation of any other of the transactions contemplated therein, will
violate or conflict with any agreement or instrument to which
Harley-Davidson Credit is a party or by which it is otherwise bound.
(12) In connection with the transfers of Contracts and related
assets contemplated in the Transfer and Sale Agreement, (a)
Harley-Davidson Credit has not made such transfer with actual intent to
hinder, delay or defraud any creditor of Harley-Davidson Credit, and (b)
Harley-Davidson Credit has not received less than a reasonably equivalent
value in exchange for such transfer, is not on the date hereof insolvent
(nor will Harley-Davidson Credit become insolvent as a result thereof), is
not engaged (or about to engage) in a business or transaction for which it
has unreasonably small capital, and does not intend to incur or believe it
will incur debts beyond its ability to pay when matured.
(13) The sole shareholder of Harley-Davidson Credit is
Harley-Davidson Financial Services, Inc., a
Delaware corporation, which
has its chief executive office and only office in Chicago, Illinois, and
has no other offices in any other state.
(14) Each of the agreements and conditions of Harley-Davidson Credit
to be performed or satisfied on or before the Closing Date under the
Program Agreements has been performed or satisfied in all material
respects.
(15) Each Contract being transferred pursuant to the Transfer and
Sale Agreement is evidenced by a written agreement providing for a
repayment obligation as well as a security interest in the related
Motorcycle securing such obligation, and conforms as to these matters in
all material respects with the form of written Contract provided as
EXHIBIT A hereto (with such minor variations as to specific terms as may
be required or deemed desirable in respect of the laws or requirements of
particular states).
(16) Harley-Davidson Credit has not executed for filing any UCC
financing statements listing the Contract Assets as collateral other than
financing statements relating to the transactions contemplated in the
Transfer and Sale Agreement and in the agreements listed on SCHEDULE A
hereto.
* * * * * *
C-3
IN WITNESS WHEREOF, I have affixed my signature hereto this ___ day of
December, 2001.
By:
----------------------------
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
EXHIBIT D
[Form of Opinion of Counsel for Trust Depositor
Regarding General Corporate Matters
(Including Perfection Opinion)]
D-1
EXHIBIT E
[Form of Opinion of Counsel for Trust
Depositor Regarding the "TRUE SALE" Nature
of the Transaction]
E-1
EXHIBIT F
[Form of Opinion of Counsel for Trust
Depositor Regarding Non-consolidation]
F-1
EXHIBIT G
[Form of Certificate Regarding Reacquired Contracts]
Harley-Davidson Credit Corp.
Certificate Regarding Reacquired Contracts
The undersigned certifies that he is the Treasurer of Harley-Davidson
Credit Corp., a Nevada corporation (the "SERVICER"), and that as such is duly
authorized to execute and deliver this certificate on behalf of the Servicer
pursuant to Section 7.08 of the Sale and Servicing Agreement (the "AGREEMENT")
dated as of December 1, 2001 by and among Harley-Davidson Customer Funding
Corp., as Trust Depositor, the Servicer, BNY Midwest Trust Company, as Indenture
Trustee, and Harley-Davidson Motorcycle Trust 2001-3 (all capitalized terms used
herein without definition having the respective meanings specified in the
Agreement), and further certifies that:
1. The Contracts on the attached schedule are to be reacquired by the
Seller on the date hereof pursuant to Section 7.08 of the Agreement
and Section 5.01 of the Transfer and Sale Agreement.
2. Upon deposit of the Reacquisition Price for such Contracts, such
Contracts may, pursuant to Section 7.08 of the Agreement, be
assigned by the Trustee to the Seller.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of _____________.
Harley-Davidson Credit Corp.
By:
---------------------------------------
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Treasurer
G-1
EXHIBIT H
[List of Contracts]
H-1
EXHIBIT I
[Form of Monthly Report to Noteholders and the Certificateholder]
Harley-Davidson Motorcycle Trust 2001-3
$________ ___% Harley-Davidson Motorcycle Contract Backed Notes, Class A-1
$________ ___% Harley-Davidson Motorcycle Contract Backed Notes, Class A-2
$________ ___% Harley-Davidson Motorcycle Contract Backed Notes, Class B
Monthly Report
For the [ ] Distribution Date
A. Calculation of Available Monies
1. Available Principal (as defined in Article
I of the Sale and Servicing Agreement) $____________
2. Available Interest (as defined in Article I
of the Sale and Servicing Agreement) $____________
3. Available Monies (1. plus 2.) $____________
B. Calculation of Principal Distributable Amount (as
defined in Article I of the Sale and Servicing $____________
Agreement)
C. Calculation of Available Interest (as defined in
Article I of the Sale and Servicing Agreement). $____________
D. Calculation of Note Monthly Principal $____________
Distributable Amount
1A. Class A Note Percentage for such
Distribution Date
(a) for each Distribution Date to but
excluding the Distribution Date on 95.0%
which the principal amount of the
Class A-1 Notes is reduced to zero
(b) on the Distribution Date on which
the principal amount of the Class A-1
Notes is reduced to zero, 95.0% until
the principal amount of the Class A-2 95.0%
Notes has been reduced to zero
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(c) on the Distribution Date on
which the principal amount of the
Class A-2 Notes is reduced to zero, ____%
____%
(d) after the principal amount of
the Class A-2 Notes have been
reduced to zero 0.00%
1B. Class B Note Percentage for such
Distribution Date
(a) for each Distribution Date to
but excluding the Distribution Date
on which the principal amount of the 5.0%
Class A-2 Notes is reduced to zero
(b) on the Distribution Date on
which the principal amount of the
Class A-2 Notes is reduced to zero, ____%
___%
(c) after the principal amount of
the Class A-2 Notes have been 100.00%
reduced to zero
2. Principal Distributable Amount (from B) $____________
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3. Note Monthly Principal Distributable
Amount for
(a) Class A-1 Notes (D.1(a) $____________
multiplied by D.2 until Principal
Balance of Class A-1 Notes Principal
Balance is zero) $____________
(b) Class A-2 Notes (D.1(b) $____________
multiplied by D.2 until Class A-2
Notes Principal Balance is zero)
(c) Class B Notes (D.1(c)
multiplied by D.2 until Class B Notes $____________
Principal Balance is zero)
(d) Note Principal Carryover $____________
Shortfall
(e) Mandatory Redemption Amounts
(from Pre-Funding Account as defined
in Article I of the Sale and
Servicing Agreement)
(f) Class A Note Monthly Principal
Distributable Amount (the sum of
items 3(a), 3(b), 3(d) and 3(e))
(g) Class B Note Monthly Principal
Distributable Amount (the sum of
items 3(c), 3(d) and 3(e))
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E. Calculation of Note Monthly Interest
Distributable Amount. ___%
1. Class A-1 Interest Rate ___%
2. Class A-2 Interest Rate
3. Class B Interest Rate ___%
4. One-twelfth of the Class A-1 Interest Rate
times the Class A-1 Note Balance from and
including the fifteenth day of the month
based on a 360-day year of 12 months of 30
days each (or from and including the
Closing Date with respect to the first
Distribution Date) to but excluding the
fifteenth day of the month of the current $_____________
Distribution Date
5. One-twelfth of the Class A-2 Note Interest
Rate times the Class A-2 Note Balance from
and including the fifteenth day of the
month based on a 360-day year of 12 months
of 30 days each (or from and including the
Closing Date with respect to the first
Distribution Date) to but excluding the
fifteenth day of the month of the current $_____________
Distribution Date
6. One-twelfth of the Class B Note Interest
Rate times the Class B Note Balance from
and including the fifteenth day of the
month based on a 360-day year of 12 months
of 30 days each (or from and including the
Closing Date with respect to the first
Distribution Date) to but excluding the
fifteenth day of the month of the current $_____________
Distribution Date
7. Interest Carryover Shortfall for such
Distribution Date $_____________
8. Note Monthly Interest Distributable Amount
(the sum of items 3, 4 and 5) $_____________
F. Calculation of Note Distributable Amount (sum of
D.3(e) plus E.6.) $_____________
J. Fees
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1. The Monthly Servicing Fee for such
Distribution Date (1/12 of the product $____________
of 1% and the Principal Balance of the
Contracts as of the beginning of the
related Due Period)
2. Late Payment Penalty Fees for such $____________
Distribution Date
3. Extension Fees for such Distribution Date $____________
4. Indenture Trustee Fee for such
Distribution Date excluding expense
component (1/12 of the product of .003%
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)
K. CALCULATION OF THE AVAILABLE MONIES FOR SUCH
DISTRIBUTION DATE
1. The amount of funds deposited into the
Collection Account pursuant to Section $____________
5.05(b) of the Sale and Servicing
Agreement with respect to the related
Due Period
a. All amounts received by the
Indenture Trustee or the Servicer
with respect to principal and
interest on the Contracts, as well $____________
as Late Payment Penalty Fees and
Extensions Fees for the related Due
Period
b. All Net Liquidation Proceeds $____________
c. The aggregate of the
Reacquisition Prices for Contracts $____________
required to be reacquired by the
Seller as described in Section 7.08
of the Sale and Servicing Agreement
d. All Advances made by Servicer
pursuant to Section 7.03(a) of the $____________
Sale and Servicing Agreement
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e. All amounts paid by the Seller
in connection with an optional $____________
reacquisition of the Contracts
described in Section 7.10 of the
Sale and Servicing Agreement
f. All amounts obtained from the
Indenture Trustee in respect of
Carrying Charges to be deposited
into the Collection Account for the
upcoming Distribution Date as $____________
contemplated in Section 7.03(b) of
the Sale and Servicing Agreement
g. All amounts received in respect
of interest, dividends, gains, income
and earnings on investments of funds
in the Trust Accounts as contemplated $____________
in Section 5.05(b)(viii) of the Sale
and Servicing Agreement
h. Total amount of funds deposited
into the Collection Account pursuant $____________
to Section 5.05(b) (the sum of a.
through g.)
2. The amount of funds permitted to be
withdrawn from the Collection Account
pursuant to clauses (ii) through (iv)
of Section 7.05(a) of the Sale and
Servicing Agreement with respect to the $____________
related Due Period
a. Amounts to be paid to the
Servicer as the Reimbursement Amount $____________
in accordance with Section 7.03(a)
of the Sale and Servicing Agreement
b. Amounts to be paid to the
Servicer in respect to the Servicing $_____________
Fee for the related Due Period
c. Amounts to be paid to the
Indenture Trustee in respect of the $_____________
Indenture Trustee's Fee for the
related Due Period
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d. Total amount of funds permitted
to be withdrawn from the Collection
Account pursuant to clauses (ii)
through (iv) Section 7.05(a) of the $_____________
Sale and Servicing Agreement with
respect to the related Due Period
(sum of a. through d.)
3. The Available Monies (not including
amounts from Reserve Fund Account) for
such Distribution Date available to pay
Note Distributable Amounts and $____________
Certificate Distributable Amounts (1(h)
minus 2(e))
4. The Available Monies otherwise
distributable to the Certificateholders $____________
that will be distributed to the
Noteholders on such Distribution Date
L. The shortfall of Available Monies for such
Distribution Date to pay either the Note
Distributable Amount or the Certificate
Distributable Amount (the Available Monies for $____________
such Distribution Date minus the sum of the Note
Distributable Amount as set forth in F. and the
Certificate Distributable Amount as set forth in
I.)
M. The amount to be withdrawn from the Reserve Fund
on such Distribution Date to cover the Note
Interest Distributable Amount $____________
N. The amount to be withdrawn from the Reserve Fund
on such Distribution Date to cover the $____________
Certificate Interest Distributable Amount
O. The amount to be withdrawn from the Reserve Fund
on such Distribution Date to cover the Note $____________
Principal Distributable Amount
P. The amount to be withdrawn from the Reserve Fund
on such Distribution Date to cover the $____________
Certificate Principal Distributable Amount
Q. Interest Earnings on the Reserve Fund. $____________
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R. The amount on deposit in the Reserve Fund after
giving effect to deposits and withdrawals therefrom $____________
on such Distribution Date
S. The Specified Reserve Fund Amount for such
Distribution Date will be an amount equal to the
greater of (a) 2.00% of the Principal Balance of
the Contracts in the Trust as of the last day of
the immediately preceding Due Period; provided,
however, in the event a Reserve Fund Trigger
Event occurs with respect to a Distribution Date
and has not terminated for three (3) consecutive
Distribution Dates (inclusive) such amount shall
be equal to 6.00% of the Principal Balance of the
Contracts in the Trust as of the last day of the
immediately preceding Due Period) and (b) 1.00%
of the aggregate of the Initial Class A-1 Note
Balance, Initial Class A-2 Note Balance and $____________
Initial Class B Note Balance; provided, however,
in no event shall the Specified Reserve Fund
Balance be greater than the aggregate outstanding
principal balance of the Securities.
T. The Pool Factor
1. The Class A-1 Note Pool Factor immediately
before such Distribution Date ____________
2. The Class A-2 Note Pool Factor immediately
after such Distribution Date ____________
3. The Class B Note Pool Factor immediately
after such Distribution Date ____________
4. The Class A-1 Note Pool Factor immediately
before such Distribution Date ____________
5. The Class A-2 Note Pool Factor immediately
after such Distribution Date ____________
6. The Class B Note Pool Factor immediately
after such Distribution Date ____________
U. Delinquent Contracts
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1. 31-59 Days #______ $____________
2. 60-89 Days #______ $____________
3. 90 or More Days #______ $____________
V. Liquidated Contracts
1. Total Liquidated Contracts #______ $____________
2. Identity (attach)
3. Liquidation proceeds for the Due Period $____________
4. Liquidation expenses for the Due Period $____________
5. Net Liquidation Proceeds for the Due Period $____________
6. Net Liquidation Losses for the Due Period $____________
W. Advances
1. Unreimbursed Advances prior to such $____________
Distribution Date
2. Amount paid to Servicer on such
Distribution Date to reimburse Servicer $____________
for such unreimbursed Advances
3. Amount of Delinquent Interest for such $____________
Distribution Date
4. Amount of new Advances on such
Distribution Date (if such amount is less
than the amount of Delinquent Interest,
attach the certificate required by Section $____________
7.03 of the Sale and Servicing Agreement)
5. Total of unreimbursed Advances after new
Advances on such Distribution Date $____________
X. Reacquired Contracts
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1. Number of Contracts to be reacquired by
the Seller pursuant to Section 7.08 of the $____________
Sale and Servicing Agreement
2. Principal Amount of such Contracts $____________
3. Related Reacquisition Price of such $____________
Contracts
Y. Contracts
1. Number of Contracts as of beginning of Due $____________
Period
2. Principal Balance of Contracts as of $____________
beginning of Due Period
3. The weighted average Contract Rate of the
Contracts as of the beginning of the Due $____________
Period
4. The weighted average remaining term to
maturity of the Contracts as of the $____________
beginning of the Due Period
5. Number of Contracts as of end of Due Period $____________
6. Principal Balance of Contracts as of end $____________
of Due Period
7. The weighted average Contract Rate of the
Contracts as of the end of the Due Period $____________
8. The weighted average remaining term to
maturity of the Contracts as of the end of $____________
the Due Period
9. Pre-Funded Amount as of beginning of Due $____________
Period
10. Pre-Funded Amount as of end of Due Period $____________
Z. Interest Reserve Account
1. Interest Reserve Amount as of previous $____________
Distribution Date
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2. Carrying Charges (if any) to be paid
on upcoming Distribution Date $____________
3. Interest Reserve Amount as of upcoming $____________
Distribution Date
AA. Ratios
1. Cumulative Loss Ratio
a. The aggregate Net Liquidation Losses
for all Contracts since the Cutoff $_____________
Date through the end of the related
Due Period
b. The sum of the Principal Balance of
the Contracts as of the Cutoff Date
plus the Principal Balance of any
Subsequent Contracts as of the $_____________
related Subsequent Cutoff Date
c. The Cumulative Loss Ratio for such
Distribution Date (the quotient of $_____________
a. divided by b., expressed as a
percentage)
2. Average Delinquency Ratio for such
Distribution Date
(a) The Delinquency Amount (the
Principal Balance of all Contracts
that were delinquent 60 days or more $_____________
as of the end of the Due Period)
(b) The Delinquency Ratio (the fraction
(expressed as a percentage) computed
by dividing (a) the Delinquency
Amount during the immediately
preceding Due Period by (b) the
Principal Balance of the Contracts _____%
as of the beginning of the related
Due Period) for such Distribution
Date
(c) The Delinquency Ratio for the prior _____%
Distribution Date
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(d) The Delinquency Ratio for the second
prior Distribution Date _____%
(e) The Average Delinquency Ratio (the
arithmetic average of a. through c.) _____%
3. Average Loss Ratio for such Distribution
Date
(a) Net Liquidation Losses $________
(b) The Loss Ratio for (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) such Distribution
Date
(c) The Loss Ratio for the prior _____%
Distribution Date
(d) The Loss Ratio for the second prior _____%
Distribution Date
(e) The Average Loss Ratio (the
arithmetic average of a. through c.) _____%
4. Computation of Specified Reserve Fund
Balance
Reserve Fund Trigger Events
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(1) Average Delinquency Ratio (if (a)
(i) Average Delinquency Ratio 2.50%
with respect to any Distribution
Date which occurs within the period
from the Closing Date to, and
inclusive of, the first anniversary
of the Closing Date, (ii) 3.00% with
respect to any Distribution Date
which occurs within the period from
the day after the first anniversary
of the Closing Date to, and
inclusive of, the second anniversary
of the Closing Date or (iii) 3.50%
for any Distribution Date which
occurs within the period from the
day after the second anniversary of
the Closing Date to, and inclusive
of, the third anniversary of the
Closing Date or (iv) 4.00% for any
Distribution Date following the
third anniversary of the Closing
Date, then a Reserve Fund Trigger
Event has occurred) _____%
(2) Average Loss Ratio (if Average Loss
Ratio is equal to or greater than
(i) 3.00% with respect to any
Distribution Date which occurs
within the period from the Closing
Date to, and inclusive of, the
second anniversary of the Closing
Date or (ii) 2.75% with respect to
any Distribution Date which occurs
following the second anniversary of
the Closing Date, then a Reserve
Fund Trigger Event has occurred) _____%
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(3) Cumulative Loss Ratio (if Cumulative
Loss Ratio is equal to or greater
than (i) 1.25% with respect to any
Distribution Date which occurs
within the period from the Closing
Date to, and inclusive of, the first
anniversary of the Closing Date,
(ii) 1.75% with respect to any
Distribution Date which occurs
within the period from the day after
the first anniversary of the Closing
Date to, and inclusive of, the
second anniversary of the Closing
Date, (iii) 2.25% for any
Distribution Date while occurs
within the period from the day after
the second anniversary of the
Closing Date to, and inclusive of
the third anniversary of the Closing
Date, or (iv) 2.50% following the
third anniversary of the Closing
Date, then a Reserve Fund Trigger
Event has occurred) _____%
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EXHIBIT J
[Seller's Representations and Warranties]
(1) REPRESENTATIONS AND WARRANTIES REGARDING SELLER. Seller represents
and warrants, 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 Subsequent Contracts, that:
(a) ORGANIZATION AND GOOD STANDING. Seller 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.
Seller 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 Seller or Trust Depositor. Seller 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 of the
Sale and Servicing Agreement.
(b) AUTHORIZATION; BINDING OBLIGATION. Seller has the power and
authority to make, execute, deliver and perform this Agreement and the
other Transaction Documents to which the Seller is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which the Seller 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 Seller is
a party. This Agreement and the other Transaction Documents to which the
Seller is a party constitute the legal, valid and binding obligation of
Seller 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. Seller 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 Seller is a party.
(d) NO VIOLATIONS. Seller's execution, delivery and performance of
this Agreement and the other Transaction Documents to which the Seller is
a party will not violate any provision of any existing law or regulation
or any order or decree of any court or the Articles of Incorporation or
Bylaws of Seller, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which Seller is a party or by
which Seller or any of Seller's properties may be bound.
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(e) LITIGATION. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or
to the knowledge of Seller threatened, against Seller or any of its
properties or with respect to this Agreement or any other Transaction
Document to which the Seller is a party which, if adversely determined,
would in the opinion of Seller have a material adverse effect on the
business, properties, assets or condition (financial or other) of Seller
or the transactions contemplated by this Agreement or any other
Transaction Document to which the Seller is a party.
(f) STATE OF INCORPORATION; NAME; NO CHANGES. Seller's state of
incorporation is the State of Nevada. Seller's exact legal name is as set
forth in the first paragraph of this Agreement. Seller has not changed
its name whether by amendment of its Articles of Incorporation, by
reorganization or otherwise, and has not changed its state of
incorporation within the four months preceding the Closing Date.
(g) Approximately 5.0% of the aggregate principal balance of
contracts financed from time to time by the Seller are secured by
motorcycles manufactured by Buell.
(h) SOLVENCY. The Seller, after giving effect to the
conveyances made by it hereunder, is Solvent.
(2) REPRESENTATIONS AND WARRANTIES REGARDING EACH CONTRACT. Seller
represents and warrants as to each Contract 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
Subsequent Contracts, that:
(a) LIST OF CONTRACTS. The information set forth in the List of
Contracts (or Subsequent List of Contracts, in the case of Subsequent
Contracts) is true, complete and correct in all material respects as of
the Initial Cutoff Date or applicable Subsequent Cutoff Date, as the case
may be.
(b) PAYMENTS. As of the Initial Cutoff Date or applicable
Subsequent Cutoff Date, as the case may be, the most recent scheduled
payment with respect to any Contract either had been made or was not
delinquent for more than 30 days. To the best of Seller's knowledge, all
payments made on each Contract were made by the respective Obligor.
(c) NO WAIVERS. As of the Closing Date (or the applicable
Subsequent Transfer Date, in the case of Subsequent Contracts), the
terms of the Contracts have not been waived, altered or modified in any
respect, except by instruments or documents included in the related
Contract File.
(d) BINDING OBLIGATION. Each Contract is a legal, valid and binding
payment obligation of the Obligor thereunder and is enforceable in
accordance with its terms,
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except as such enforceability may be limited by insolvency, bankruptcy,
moratorium, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally.
(e) NO DEFENSES. No Contract is subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and the
operation of any of the terms of such Contract or the exercise of any
right thereunder will not render the Contract unenforceable in whole or
in part or subject to any right of rescission, setoff, counterclaim or
defense, including the defense of usury, and no such right of rescission,
setoff, counterclaim or defense has been asserted with respect thereto.
(f) INSURANCE. As of the origination date of each Contract (or the
applicable Subsequent Transfer Date in the case of Subsequent Contracts),
the related Motorcycle securing each Contract is covered by physical
damage insurance (i) in an amount not less than the value of the
Motorcycle at the time of origination of the Contract, (ii) naming Seller
as a loss payee and (iii) insuring against loss and damage due to fire,
theft, transportation, collision and other risks covered by comprehensive
coverage, and all premiums due on such insurance have been paid in full
from the date of the Contract's origination.
(g) ORIGINATION. Each Contract was originated by a Harley-Davidson
motorcycle dealer in the regular course of its business which dealer had
all necessary licenses and permits to originate the Contracts in the
state where such dealer was located, was fully and properly executed by
the parties thereto, and has been purchased by Seller in the regular
course of its business. Each Contract was sold by such motorcycle dealer
to the Seller without any fraud or misrepresentation on the part of such
motorcycle dealer.
(h) LAWFUL ASSIGNMENT. No Contract was originated in or is subject
to the laws of any jurisdiction whose laws would make the transfer and
assignment of the Contract under this Agreement or under the Sale and
Servicing Agreement or the pledge of the Contract under the Indenture
unlawful, void or voidable.
(i) COMPLIANCE WITH LAW. None of the Contracts, the origination of
the Contracts by the dealers, the purchase of the Contracts by the
Seller, the sale of the Contracts by the Seller to the Trust Depositor or
the transfer of the Contracts by the Trust Depositor to the Trust, or any
combination of the foregoing, violated as of the Closing Date or as of
any Subsequent Transfer Date, as applicable, any requirement of any
federal, state or local law and regulations thereunder, including,
without limitation, usury, truth in lending, motor vehicle installment
loan and equal credit opportunity laws, applicable to the Contracts and
the sale of Motorcycles. Seller shall, for at least the period of this
Agreement, maintain in its possession, available for the Trust
Depositor's, and the Trustee's inspection, and shall deliver to Trust
Depositor or the Trustee upon demand, evidence of compliance with all
such requirements.
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(j) CONTRACT IN FORCE. As of the Closing Date (or the applicable
Subsequent Transfer Date in the case of Subsequent Contracts), no
Contract has been satisfied or subordinated in whole or in part or
rescinded, and the related Motorcycle securing any Contract has not been
released from the lien of the Contract in whole or in part.
(k) VALID SECURITY INTEREST. Each Contract creates a valid,
subsisting and enforceable first priority perfected security interest in
favor of Seller in the Motorcycle covered thereby, and such security
interest has been assigned by Seller to the Trust Depositor. The original
certificate of title, certificate of lien or other notification (the
"LIEN CERTIFICATE") issued by the body responsible for the registration
of, and the issuance of certificates of title relating to, motor vehicles
and liens thereon (the "REGISTRAR OF TITLES") of the applicable state to
a secured party which indicates the lien of the secured party on the
Motorcycle is recorded on the original certificate of title, and original
certificate of title for each Motorcycle, show, or if a new or
replacement Lien Certificate is being applied for with respect to such
Motorcycle the Lien Certificate will be received within 180 days of the
Closing Date (or the applicable Subsequent Transfer Date in the case of
Subsequent Contracts) and will show, the Seller as original secured party
under each Contract as the holder of a first priority security interest
in such Motorcycle. With respect to each Contract for which the Lien
Certificate has not yet been returned from the Registrar of Titles, the
Seller has received written evidence from the related dealer that such
Lien Certificate showing the Seller as lienholder has been applied for,
the Seller's security interest has been validly assigned by the Seller to
the Trust Depositor and by the Trust Depositor to the Issuer pursuant to
this Agreement. Immediately after the transfer, each Contract will be
secured by an enforceable and perfected first priority security interest
in the Motorcycle in favor of the Trust as secured party, which security
interest is prior to all other liens upon and security interests in such
Motorcycle which now exist or may hereafter arise or be created (except,
as to priority, for any lien for taxes, labor, materials or of any state
law enforcement agency affecting a Motorcycle).
(l) CAPACITY OF PARTIES. All parties to any Contract had capacity
to execute such Contract and all other documents related thereto and to
grant the security interest purported to be granted thereby.
(m) GOOD TITLE. Each Contract was purchased by Seller for value and
taken into possession prior to the Cutoff Date (or the applicable
Subsequent Cutoff Date in the case of Subsequent Contracts) in the
ordinary course of its business, without knowledge that the Contract was
subject to a security interest. No Contract has been sold, assigned or
pledged to any person other than Trust Depositor and the Trustee as the
transferee of Trust Depositor, and prior to the transfer of the Contract
to Trust Depositor, Seller had good and marketable title to each Contract
free and clear of any encumbrance, equity, loan, pledge, charge, claim or
security interest and was the sole owner thereof and had full right to
transfer the Contract to Trust Depositor and to permit Trust Depositor to
transfer the same to the Issuer, and, as of the Closing Date (or the
applicable Subsequent
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Transfer Date in the case of Subsequent Contracts), the Issuer will have
a first priority perfected security interest therein.
(n) NO DEFAULTS. As of the Initial Cutoff Date (or the applicable
Subsequent Cutoff Date in the case of Subsequent Contracts), no default,
breach, violation or event permitting acceleration existed with respect
to any Contract and no event had occurred which, with notice and the
expiration of any grace or cure period, would constitute such a default,
breach, violation or event permitting acceleration under such Contract.
Seller has not waived any such default, breach, violation or event
permitting acceleration, and Seller has not granted any extension of
payment terms on any Contract. As of the Initial Cutoff Date (or the
applicable Subsequent Cutoff Date in the case of Subsequent Contracts),
no Motorcycle had been repossessed.
(o) NO LIENS. As of the Closing Date (or the applicable Subsequent
Transfer Date in the case of Subsequent Contracts) there are, to the best
of Seller's knowledge, no liens or claims which have been filed for work,
labor or materials affecting the Motorcycle securing any Contract which
are or may be liens prior to, or equal with, the lien of such Contract.
(p) INSTALLMENTS. Each Contract has a fixed Contract Rate and
provides for monthly payments of principal and interest which, if timely
made, would fully amortize the loan on a simple-interest basis over its
term.
(q) ENFORCEABILITY. Each Contract contains customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the collateral of
the benefits of the security.
(r) ONE ORIGINAL. Each Contract is evidenced by only one
original executed Contract, which original is being held by the
Servicer as custodian.
(s) NO GOVERNMENT CONTRACTS. No Obligor is the United States
government or an agency, authority, instrumentality or other political
subdivision of the United States government.
(t) LOCKBOX BANK. The Lockbox Bank is the only institution holding
any Lockbox Account for receipt of payments from Obligors, and all
Obligors, and only such Obligors, have been instructed to make payments
to the Lockbox Account, and no person claiming through or under Seller
has any claim or interest in the Lockbox Account other than the Lockbox
Bank; provided, however, that other "Trusts" (as defined in the Lockbox
Agreement) shall have an interest in certain other collections therein
not related to the Contracts.
(u) OBLIGOR BANKRUPTCY. At the Cutoff Date (or the applicable
Subsequent Cutoff Date in the case of Subsequent Contracts), no Obligor
was subject to a bankruptcy proceeding within the one year preceding such
Cutoff Date.
J-5
(v) CHATTEL PAPER. The Contracts constitute tangible chattel
paper within the meaning of the UCC.
(w) NO IMPAIRMENT. Neither the Seller nor the Trust Depositor has
done anything to convey any right to any Person that would result in such
Person having a right to payments due under the Contract or otherwise to
impair the rights of the Trust in any Contract or the proceeds thereof.
(x) CONTRACT NOT ASSUMABLE. No Contract is assumable by another
Person in a manner which would release the Obligor thereof from such
Obligor's obligations to the Trust Depositor with respect to such
Contract.
(3) REPRESENTATIONS AND WARRANTIES REGARDING THE CONTRACTS IN THE
AGGREGATE. Seller represents and warrants, 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 Subsequent
Contracts, that:
(a) AMOUNTS. The sum of the aggregate Principal Balances payable by
Obligors under the Contracts as of the Initial Cutoff Date (or the
applicable Subsequent Cutoff Date in the case of Subsequent Contracts),
plus the Pre-Funded Amount as of such date, equals the sum of the
principal balance of the Class A-1 Notes, the Class A-2 Notes and the
Class B Notes on the Closing Date or the related Subsequent Transfer Date,
as applicable.
(b) CHARACTERISTICS. The Initial Contracts have the following
characteristics: (i) all the Contracts are secured by Motorcycles; (ii) no
Initial Contract has a remaining maturity of more than 84 months; and
(iii) the final scheduled payment on the Initial Contract with the latest
maturity is due not later than February 2009. Approximately 74.86% of the
Principal Balance of the Initial Contracts as of the Initial Cutoff Date
is attributable to loans for purchases of new Motorcycles and
approximately 25.14% is attributable to loans for purchases of used
Motorcycles. No Initial Contract was originated after the Initial Cutoff
Date. No Initial Contract has a Contract Rate less than 4.99%. The first
scheduled payment date of the Contracts (including any Subsequent
Contracts) is due no later than May 2002. Approximately 5.0% of the
Principal Balance of the Initial Contracts as of the Initial Cutoff Date
is attributable to loans for purchases of Motorcycles not manufactured by
Harley-Davidson or Buell.
(c) MARKING RECORDS. As of the Closing Date (or the applicable
Subsequent Transfer Date in the case of Subsequent Contracts), Seller has
caused the Computer Disk relating to the Contracts sold hereunder and
concurrently reconveyed by Trust Depositor to the Trust and pledged by the
Trust to the Indenture Trustee to be clearly and unambiguously marked to
indicate that such Contracts constitute part of the Trust Corpus, are
owned by the Trust and constitute security for the Notes.
J-6
(d) NO ADVERSE SELECTION. No selection procedures adverse to
Noteholders have been employed in selecting the Contracts.
(e) TRUE SALE. The transaction contemplated by this Agreement
constitutes a valid sale, transfer and assignment from Seller to Trust
Depositor and from Trust Depositor to the Trust of all of Seller's right,
title and interest in the Contract Assets as of the Closing Date and any
Subsequent Transfer Date, as applicable.
(f) ALL FILINGS MADE. All filings (including, without limitation,
UCC filings) required to be made by any Person and actions required to be
taken or performed by any Person in any jurisdiction to give the Trustee a
first priority perfected lien on, or ownership interest in, the Contracts
and the proceeds thereof and the rest of the Trust Corpus have been made,
taken or performed.
(g) DELTA LOANS. No more than 11.00% of the Principal Balance
of the Contracts as of the end of the Funding Period is attributable to
Delta Loans.
(4) REPRESENTATIONS AND WARRANTIES REGARDING THE CONTRACT FILES. Seller
represents and warrants 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 Subsequent Contracts, that:
(a) POSSESSION. Immediately prior to the Closing Date or any
Subsequent Transfer Date, the Servicer will have possession of each
original Contract and the related complete Contract File, and there are
and there will be no custodial agreements relating to the same in effect.
Each of such documents which is required to be signed by the Obligor has
been signed by the Obligor in the appropriate spaces. All blanks on any
form have been properly filled in and each form has otherwise been
correctly prepared. The complete Contract File for each Contract currently
is in the possession of the Servicer.
(b) BULK TRANSFER LAWS. The transfer, assignment and conveyance of
the Contracts and the Contract Files by Seller pursuant to the Transfer
and Sale Agreement or any Subsequent Purchase Agreement and by Trust
Depositor pursuant to the Sale and Servicing Agreement is not subject to
the bulk transfer or any similar statutory provisions in effect in any
applicable jurisdiction.
J-7
EXHIBIT K
[Lockbox Bank and Lockbox Account]
Lockbox
-------
Harley-Davidson Credit Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Lockbox Bank
------------
LaSalle Bank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
K-1
EXHIBIT L
[Form of Contract Stamp]
This Contract/Note is subject to a security interest granted to
Harley-Davidson Motorcycle Trust 2001-3. A UCC1 Financing Statement covering
this Contract/Note has been filed with the Secretary of State of the State of
Nevada. Such lien will be released only in connection with appropriate filings
in such offices. Consequently, potential purchasers of this Contract/Note must
refer to such filings to determine whether such lien has been released.
L-1
EXHIBIT M
[Form of Subsequent Transfer Agreement]
[see EXHIBIT C of the Transfer and Sale Agreement]
M-1