<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 2000
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HARLEY-DAVIDSON MOTORCYCLE TRUSTS
(Issuer with respect to the Securities)
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
(Sponsor of the Trusts described herein)
(Exact name of Registrant as specified in its charter)
NEVADA APPLIED FOR
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4150 TECHNOLOGY WAY
CARSON CITY, NEVADA 89706
(775) 886-3200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DONNA F. ZARCONE
PRESIDENT AND CHIEF OPERATING OFFICER
HARLEY-DAVIDSON CREDIT CORP.
150 SOUTH WACKER DRIVE
SUITE 3100
CHICAGO, ILLINOIS 60606
(775) 886-3200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES OF ALL COMMUNICATIONS TO:
M. DAVID GALAINENA
WINSTON & STRAWN
35 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60601
(312) 558-5600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================== ================== ======================== ====================== ========================
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) PER UNIT(2) PRICE REGISTRATION FEE
- ---------------------------------- ------------------ ------------------------ ---------------------- ------------------------
- ---------------------------------- ------------------ ------------------------ ---------------------- ------------------------
<S> <C> <C> <C> <C>
Harley-Davidson Motorcycle
Contract Backed Notes and
Certificates $10,000,000 100% $10,000,000 $2,640.00
================================== ================== ======================== ====================== ========================
</TABLE>
(1) The amount of Securities being registered represents the maximum aggregate
principal amount of Securities currently expected to be offered for sale.
$190,000,000 aggregate principal amount of the Securities registered by the
Registrant under Registration Statement No. 333-62849 referred to below and
not previously sold are consolidated in this Registration Statement
pursuant to Rule 429. All registration fees in the amount of $354,000 in
connection with such unsold amount of Securities have previously been paid
under Registration Statement No. 333-62849. The total amount registered
under this Registration Statement as so consolidated as of the date of this
filing is $200,000,000.
(2) Estimated solely for purposes of calculating the registration fee.
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus and
prospectus supplement filed as part of this Registration Statement also relate
to $190,000,000 principal amount of Securities previously registered by the
Registrant under its Registration Statement on Form S-3 (File No. 333-62849).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
INTRODUCTORY NOTE
This registration statement contains (i) a prospectus relating to the
offering of one or more series of Harley-Davidson Motorcycle Contract Backed
Notes and/or Harley-Davidson Motorcycle Contract Backed Certificates by various
Harley-Davidson Motorcycle Trusts created from time to time by Harley-Davidson
Credit Corp. and (ii) two forms of prospectus supplement relating to the
offering by a Harley-Davidson Motorcycle Trust of Harley-Davidson Motorcycle
Contract Backed Notes and/or Harley-Davidson Motorcycle Contract Backed
Certificates described in the forms of prospectus supplement. The forms of
prospectus supplement relate only to the securities described therein and are
forms that may be used by the Harley-Davidson Motorcycle Trusts to offer
Harley-Davidson Motorcycle Contract Backed Notes and/or Harley-Davidson
Motorcycle Contract Backed Certificates under this registration statement.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 22, 2000
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED [______________]
THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY
BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
SUPPLEMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
HARLEY-DAVIDSON MOTORCYCLE TRUST [_____]
ISSUER
$[ ] [ ]% 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
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
DEPOSITOR
HARLEY-DAVIDSON CREDIT CORP.
SELLER AND SERVICER
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-10 IN THIS PROSPECTUS
SUPPLEMENT AND ON PAGE 9 OF THE PROSPECTUS.
The notes will represent obligations of the Harley-Davidson Motorcycle
Trust [ ] only, and will not represent obligations of or interests in
Harley-Davidson Financial Services, Inc., Harley-Davidson Credit Corp.,
Harley-Davidson Customer Funding Corp., Harley-Davidson, Inc. or any of their
respective affiliates. This prospectus supplement may be used to offer and sell
the notes only if accompanied by the prospectus.
The notes are contract backed notes issued by the trust. The assets
underlying the notes are fixed-rate, simple interest, conditional sales
contracts relating to the purchase of new or used motorcycles.
-------------------------
THE TRUST WILL ISSUE THE FOLLOWING CLASSES OF NOTES:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
FINAL UNDERWRITING
PRINCIPAL INTEREST FIRST PAYMENT SCHEDULED PRICE TO DISCOUNT PER PROCEEDS TO
CLASS AMOUNT RATE DATE PAYMENT DATE PUBLIC NOTE ISSUER
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 $__________ ___% ___________ _____________ ______ ______ ______
- ------------------------------------------------------------------------------------------------------------
A-2 $__________ ___% ___________ _____________ ______ ______ ______
- ------------------------------------------------------------------------------------------------------------
B $__________ ___% ___________ _____________ ______ ______ ______
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The total price to the public is $
-------------------------------------
The total underwriting discount is $
-----------------------------------
The total proceeds to the depositor are $
------------------------------
Credit Enhancement:
- Reserve fund with an initial deposit of $_________.
- Subordination of the Class A-2 notes to the Class A-1 notes as
described in this prospectus supplement.
- Subordination of the Class B notes to the Class A notes as
described in this prospectus supplement.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[UNDERWRITERS]
Prospectus Supplement dated [______________]
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Supplement Summary.....................................................................................S-1
Risk Factors......................................................................................................S-10
The Trust.........................................................................................................S-13
The Seller And The Servicer.......................................................................................S-15
Use Of Proceeds...................................................................................................S-15
The Contracts.....................................................................................................S-15
Yield And Prepayment Considerations...............................................................................S-25
The Depositor.....................................................................................................S-25
Description Of The Notes..........................................................................................S-25
General....................................................................................................S-26
Optional Redemption........................................................................................S-27
Mandatory Redemption Following the Funding Period..........................................................S-27
Certain Information Regarding The Notes...........................................................................S-28
The Accounts...............................................................................................S-28
Determination of Outstanding Principal Balances............................................................S-31
Payments and Distributions on the Notes....................................................................S-32
Material Federal Income Tax Consequences..........................................................................S-34
ERISA Considerations..............................................................................................S-35
Legal Proceedings.................................................................................................S-36
Underwriting......................................................................................................S-36
Ratings Of The Securities.........................................................................................S-38
Legal Matters.....................................................................................................S-38
Experts...........................................................................................................S-38
Reports To Noteholders............................................................................................S-38
Global Clearance, Settlement And Tax Documentation Procedures.....................................................S-40
Glossary Of Terms.................................................................................................S-45
</TABLE>
i
<PAGE>
READING THE PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the notes in two separate documents
that offer varying levels of detail:
* prospectus -- provides general information, some of which may not
apply to the notes; and
* prospectus supplement -- provides specific information relating to
the terms of the notes.
To the extent that any statements in this prospectus supplement differ
from or modify statements in the prospectus, you should rely on the information
in this prospectus supplement. References to "we", "our" and "us" refer to
Harley-Davidson Customer Funding Corp.
We include cross-references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions. The Table of Contents of this prospectus supplement
provides pages on which these captions are located.
You can find a glossary of the principal capitalized terms used in this
prospectus supplement beginning on page S-45 of this prospectus supplement.
If you have received a copy of this prospectus supplement and the
accompanying prospectus in an electronic format, and if the legal prospectus
delivery period has not expired, you may obtain a paper copy of this prospectus
supplement and the accompanying prospectus from Harley-Davidson Credit Corp. or
any of the underwriters by asking any of them for it.
ii
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights selected information from this prospectus
supplement and does not contain all the information that you need to consider in
making an investment decision. To understand all of the terms of the offering of
the notes, you should read this entire prospectus supplement and the
accompanying prospectus before making an investment decision. In addition, you
may wish to read the documents governing the transfers and servicing of the
contracts, the formation of the trusts and the issuance of the securities. Those
documents have been filed as exhibits to the registration statement.
There are material risks associated with an investment in the
securities. See "RISK FACTORS" in this prospectus supplement and in the
accompanying prospectus for a discussion of factors you should consider before
investing in the securities.
The Issuer or the Trust......... Harley-Davidson Motorcycle Trust [ ].
Seller and Servicer............. Harley-Davidson Credit Corp., a 100% owned
subsidiary of Harley-Davidson Financial
Services, Inc.
Depositor....................... Harley-Davidson Customer Funding Corp.,
a 100% owned subsidiary of
Harley-Davidson Credit Corp.
Trustee......................... [ ], will be the trustee for the
Trust.
Indenture Trustee............... [ ]. The indenture trustee will
also act as paying agent under the
indenture and the trust agreement.
Closing Date.................... On or about [ ].
TERMS OF THE NOTES:
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL
CLASS AMOUNT INTEREST RATES
<S> <C> <C> <C>
Class A-1 notes %
Class A-2 notes %
Class B notes %
</TABLE>
The notes represent indebtedness of the
trust secured by the assets of the trust.
Payment Dates................... The trust will pay interest and principal on
the notes on the [ ] day of each
month or if that day is not a business day,
the next business day. The first payment
date is [ ].
Record Dates.................... The day immediately preceding the payment
date.
Interest........................ INTEREST PERIODS:
S-1
<PAGE>
Interest on the notes will accrue in the
following manner:
<TABLE>
<CAPTION>
DAY COUNT
FROM (INCLUDING) TO (EXCLUDING) CONVENTION
---------------- -------------- ----------
<S> <C> <C>
[ ] day of prior [ ] day of current 30/360
month month
</TABLE>
The first interest period will begin on and
include the closing date and end on and
include [ ].
PAYMENT OF INTEREST:
On each payment date the trust will pay
interest on the notes which will be made
from available collections and other
amounts.
Interest payments on the Class A-1 notes and
Class A-2 notes will have the same priority.
The trust will make interest payments on the
Class B notes after paying interest on the
Class A-1 notes and Class A-2 notes.
See "CERTAIN INFORMATION REGARDING THE
NOTES-- DISTRIBUTIONS ON THE NOTEs" and
"DESCRIPTION OF THE NOTES--PAYMENTS OF
INTEREST" for a discussion of the
determination of the amounts available to
pay interest.
Principal....................... On each payment date, the trust will pay
principal on the notes which will be made
from available collections and other
amounts.
Generally, the trust will pay the principal
of the Class A-1 notes until paid in full,
and then on the Class A-2 notes until paid
in full and then on the Class B notes until
paid in full.
See "CERTAIN INFORMATION REGARDING THE
NOTES-- DISTRIBUTIONS ON THE NOTEs" and
"DESCRIPTION OF THE NOTES--PAYMENTS OF
PRINCIPAL" for a discussion of the
determination of amounts available to pay
principal.
Final Scheduled
Payment Dates................... The final scheduled payment dates of the
notes are set forth on the cover of this
prospectus supplement.
If the notes have not already been paid in
full, we will be obligated to pay the
outstanding principal amount of the notes in
full on their respective final scheduled
payment dates. Certain circumstances could
cause principal to be paid earlier or later,
or in reduced amounts. See "DESCRIPTION OF
THE NOTES--OPTIONAL REDEMPTION,"
S-2
<PAGE>
"DESCRIPTION OF THE NOTES--MANDATORY
REDEMPTION FOLLOWING THE FUNDING PERIOD" in
this prospectus supplement and "DESCRIPTION
OF THE NOTES AND THE INDENTURE--THE
INDENTURE--EVENTS OF DEFAULT; RIGHTS UPON
EVENT OF DEFAULT" in the prospectus.
Optional Redemption............. The seller may cause the depositor to redeem
the notes in full if the aggregate
outstanding principal balance of the
contracts owned by the trust declines to
less than 10% of the sum of:
- the aggregate outstanding
principal balance of the
contracts owned by the trust as
of the closing date; and
- the initial amount on deposit
in the pre-funding account.
The redemption price will be equal to the
unpaid principal amount of the notes plus
accrued interest thereon. See "DESCRIPTION
OF THE NOTES--OPTIONAL REDEMPTION."
Mandatory Special
Redemption...................... The notes will be prepaid in part, without
premium, on the payment 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. The aggregate principal amount of
notes to be prepaid will be an amount equal
to the amount then on deposit in the
pre-funding account allocated pro rata.
The Contracts and Other
Assets of the Trust............. The property of the trust will be a pool of
fixed-rate, simple interest conditional
sales contracts relating to motorcycles
manufactured by Harley-Davidson, Inc. and
Buell Motorcycle Company, a wholly-owned
subsidiary of Harley-Davidson, Inc. The
contracts were originated by the seller
indirectly through Harley-Davidson
motorcycle dealers. Included in the trust's
assets are security interests in the
Harley-Davidson and Buell motorcycles
securing the contracts and proceeds, if any,
from certain insurance policies with respect
to such motorcycles.
The Contracts................... Our main source of funds for making payments
on the notes will be collections on the
contracts. The contracts sold to the trust
will be selected from contracts in the
depositor's portfolio based on the criteria
specified in the transfer and sale
agreement. The contracts arise and will
arise from loans to obligors located in the
50 states of the United States, Canada, the
District of Columbia and the U.S.
Territories.
S-3
<PAGE>
On the closing date, pursuant to the sale
and servicing agreement, the depositor will
be obligated, subject only to the
availability thereof, to sell, and the trust
will be obligated to purchase, subject to
the satisfaction of certain conditions set
forth therein, subsequent contracts.
Following the transfer of subsequent
contracts to the trust, the aggregate
characteristics of the entire pool of
contracts may vary from those of the initial
contracts as to the criteria identified and
described above and in "THE CONTRACTS"
herein.
The last scheduled payment on the initial
contract with the latest maturity will occur
in [ ].
No contract (including any subsequent
contract sold to the trust after the closing
date) will have a scheduled maturity later
than [ ]. However, an obligor can generally
prepay its contract at any time without
penalty.
COMPOSITION OF THE INITIAL CONTRACTS
(AS OF THE INITIAL CUTOFF DATE)
<TABLE>
<S><C>
Aggregate Principal Balance...................................$_______________
Number of Contracts.....................................................______
Average Principal Balance...........................................$_________
Weighted Average Annual Percentage Rate................................._____%
(Range)......................................................___% to ___%
Weighted Average Original Term (in months)............................._______
(Range)........................................................___ to ___
Weighted Average Calculated Remaining Term (in months)..................._____
(Range)........................................................___ to ___
</TABLE>
GEOGRAPHIC CONCENTRATION
<TABLE>
<CAPTION>
PRINCIPAL BALANCE
STATE CONCENTRATION
----- -------------
<S> <C>
[ ] ................ %
[ ] ................ %
[ ] ................ %
[ ] ................ %
[ ] ................ %
</TABLE>
No other state represented more than 5% of
the aggregate principal balance of the
contracts as of the initial cutoff date.
S-4
<PAGE>
Reserve Fund.................... On the closing date, the depositor will
establish a trust account in the name of the
indenture trustee which we refer to as the
"RESERVE FUND." The reserve fund provides
you with limited protection in the event
collections from obligors on the contracts
are insufficient to make payment on the
notes. We cannot assure you, however, that
this protection will be adequate to prevent
shortfalls in amounts available to make
payments on the notes.
The initial balance of the reserve fund will
be $________. We will be required to
maintain on deposit in the reserve fund on
each payment date a specified amount as set
forth under the caption "CERTAIN INFORMATION
REGARDING THE NOTES--CALCULATION OF RESERVE
FUND REQUIRED AMOUNT".
If the amount on deposit in the reserve fund
on any payment date is less than the
required amount, the trust will use the
funds available to it after payment of the
base servicing fee, reimbursement of
servicer advances and payment of interest
and principal on the securities to make a
deposit into the reserve fund. Amounts on
deposit in the reserve fund on any payment
date in excess of the required amount will
be paid to the depositor.
If on any payment date the funds available
to the trust to pay principal and interest
on the securities are insufficient to make
payments on the notes, the trust will use
funds in the reserve fund to cover any
shortfalls.
If on the final scheduled payment date of
any class of notes, the principal balance of
that class has not been paid in full, the
trust will use funds in the reserve fund to
pay those notes in full.
Pre-Funding
Account......................... On the closing date, we will fund an account
called the pre-funding account by depositing
$[ ] which will secure our obligations to
purchase subsequent contracts from the
seller and sell those contracts to the
trust. The amount in the pre-funding account
will be reduced by the amount used to
purchase subsequent contracts from the
seller. We expect that the pre-funded amount
will be reduced to less than $150,000 by the
payment date occurring in [ ]. Any
pre-funded amount remaining at the end of
this funding period will be paid to the
noteholders as described above in "SUMMARY
OF TERMS--MANDATORY SPECIAL REDEMPTION."
S-5
<PAGE>
Interest Reserve
Account......................... On the closing date, we will fund an account
called the interest reserve account by
depositing $[ ] which will provide
additional funds to account for the fact
that the monthly investment earnings on
amounts in the pre-funding account (until
such amounts have been used to purchase
subsequent contracts) are expected to be
less than the weighted average of the
interest payments on the notes, as well as
the amount necessary to pay trustees' fees.
In addition to the initial deposit, all
investment earnings with respect to the
pre-funding account will be deposited into
the interest reserve account.
The interest reserve account is not designed
to provide any protection against losses on
the contracts in the trust. After the
funding period, money remaining in the
interest reserve account will be paid to us.
Ratings......................... On the closing date, the notes must have
received ratings from Standard & Poor's
Ratings Services, A Division of The
McGraw-Hill Companies, and/or Moody's
Investors Service, Inc. as set forth below:
<TABLE>
<CAPTION>
STANDARD & POOR'S MOODY'S
----------------- -------
<S> <C> <C>
Class A-1
Class A-2
Class B
</TABLE>
See "RATINGS OF THE NOTES."
Advances........................ The servicer is obligated to advance each
month an amount equal to accrued and unpaid
interest on the contracts which was
delinquent with respect to the related due
period, but only to the extent that the
servicer believes that the amount of such
advance will be recoverable from collections
on the contracts. The servicer will be
entitled to reimbursement of its outstanding
advances on any payment date by means of a
first priority withdrawal of certain funds
then held in the collection account. See
"CERTAIN INFORMATION REGARDING THE
NOTES--ADVANCES."
Mandatory Repurchase by
the Depositor................... Under the sale and servicing agreement, we
have agreed, in the event of a breach of
certain representations and warranties made
by us which materially and adversely affects
the trust's interest in any contract and
which has not been cured, to repurchase such
contract
S-6
<PAGE>
within two business days prior to
the first determination date after the
servicer, the trustee, the indenture trustee
or we become aware of such breach. See
"DESCRIPTION OF TRANSFER AND SERVICING
AGREEMENTS--REPRESENTATIONS AND WARRANTIES
MADE BY THE SELLER AND THE DEPOSITOR" in the
prospectus.
Servicing Fees.................. The servicer will be entitled to receive a
monthly servicing fee equal to 1/12th of 1%
of the principal balance of the contracts.
The servicer will also be entitled to
receive any extension fees or late payment
penalty fees paid by obligors. The servicing
fees will be paid to the servicer prior to
any payments to the noteholders. See
"CERTAIN INFORMATION REGARDING THE
NOTES--SERVICING COMPENSATION AND
REIMBURSEMENT OF SERVICER ADVANCES."
Priority of Payments............ PRIOR TO ACCELERATION OF THE NOTES
On each payment date prior to the
acceleration of the notes, the trust will
apply collections on the contracts received
during the prior calendar month, servicer
advances and funds transferred from the
reserve fund to make the following payments
in the following order of priority:
- to the noteholders, the amount of any
mandatory special redemption;
- reimbursement of servicer advances;
- servicing fee;
- trustees' fees;
- interest on the Class A notes;
- interest on the Class B notes;
- principal on the Class A-1 notes until
paid in full;
- principal on the Class A-2 notes until
paid in full;
- principal on the Class B notes until
paid in full;
S-7
<PAGE>
- to the reserve fund, the amount, if any,
needed to fund the reserve fund to the
required amount;
- any remaining amounts to the depositor as
certificateholder under the trust agreement.
AFTER ACCELERATION OF THE NOTES:
On each payment date following an event of
default under the indenture, all available
amounts will be paid sequentially to retire
each class of notes in full before principal
is paid on the next class beginning with
Class A-1.
Credit Enhancement.............. The credit enhancement for the securities is
as follows:
<TABLE>
<S><C>
Class A-1 notes: - subordination of the Class A-2 notes and
Class B notes
- reserve fund
Class A-2 notes: - subordination of the Class B notes
- reserve fund
Class B notes: - reserve fund
</TABLE>
Material Federal Income
Tax Consequences................ Winston & Strawn, as federal tax counsel to
the trust, has delivered its opinion that
the notes will be characterized as debt for
federal income tax purposes, and the trust
will not be characterized as an association
(or publicly traded partnership) taxable as
a corporation. The purpose of obtaining the
opinion of tax counsel is to provide
investors with greater assurance regarding
the character of the notes for federal
income tax purposes and that the issuer of
the notes will not be subject to federal
income tax at the entity level. However, an
opinon of tax counsel is not binding on the
Internal Revenue Service and there is no
assurance that the Internal Revenue Service
will not disagree with the opinion of tax
counsel. By purchasing a note, you will
agree to treat your note as debt for
federal, state and local income tax
purposes. As a result, payments received by
you will generally be treated as either
interest or principal and you will not be
considered an owner of an equity interest in
the trust.
The foregoing is a very general summary of
material federal income tax matters. These
general statements are subject to the
qualifications, clarifications, assumptions
and expanded discussion set forth in the
accompanying prospectus and in this
prospectus
S-8
<PAGE>
supplement under the heading "MATERIAL
FEDERAL INCOME TAX CONSEQUENCES".
ERISA Considerations............ The Class A notes are generally eligible for
purchase by employee benefit plans and
individual retirement accounts and similar
arrangements, and by persons investing on
behalf of or with plan assets of such plans,
accounts and arrangements, subject to those
considerations and exceptions discussed
under "ERISA CONSIDERATIONS" in the
accompanying prospectus and this prospectus
supplement. The Class B notes are not
eligible for purchase by employee benefit
plans, individual retirement accounts or
similar arrangements, or by persons
investing on behalf of or with plan assets
of such plans, accounts and arrangements.
You should refer to "ERISA CONSIDERATIONS"
in the accompanying prospectus and this
prospectus supplement. If you are a benefit
plan fiduciary considering a purchase of the
notes you should, among other things,
consult with your counsel in determining
whether all required conditions have been
satisfied.
Marketing Address and
Telephone Numbers of
Principal Executive
Offices......................... The mailing address of the seller is 150
South Wacker Drive, Chicago, Illinois 60606,
telephone (312) 368-9501. The mailing
address of the depositor is 4150 Technology
Way, Carson City, Nevada 89706, telephone
(775) 886-3200. The principal office of the
trust is _____________, telephone
___________.
S-9
<PAGE>
RISK FACTORS
The following risk factors and the risk factors in the accompanying
prospectus describe the principal risk factors relating to an investment in the
notes.
You should carefully consider the following risks before you invest in
the securities. You should also carefully consider the risk factors beginning on
page 9 of the accompanying prospectus.
SOME CLASSES OF SECURITIES WILL BE ENTITLED TO INTEREST OR PRINCIPAL PAYMENTS
BEFORE OTHER CLASSES
The trust will pay interest, principal or both on some classes of notes
prior to paying interest, principal or both on other classes of notes. The
subordination of some classes to others means that the subordinated classes are
more likely to suffer the consequences of delinquent payments and defaults on
the contracts than the classes having prior payment rights. See "CERTAIN
INFORMATION REGARDING THE NOTES PAYMENTS AND DISTRIBUTIONS ON THE NOTES" in this
prospectus supplement.
Moreover, the more senior classes of notes could lose the credit
enhancement provided by the more subordinate classes and the reserve fund if
delinquencies and defaults on contracts increase and the collections on
contracts and amounts in the reserve fund are insufficient to pay the more
senior classes of notes.
ADVERSE EVENTS IN [__________] HIGH CONCENTRATION STATES MAY CAUSE INCREASED
DEFAULTS AND DELINQUENCIES
If adverse events or economic conditions were particularly severe in a
geographic region where there is a substantial concentration of obligors, the
amount of delinquent payments and defaults on the contracts may increase. As a
result, the overall timing and amount of collections on the contracts may differ
from what you expect, and you may experience delays or reductions in payments.
The following are the approximate percentages of the initial contract
pool principal balance whose obligors are located in the following states:
- - [_______%] in [_______],
- - [_______%] in [_______],
- - [_______%] in [_______],
- - [_______%] in [_______], and
- - [_______%] in [_______].
The remaining states accounted for [___]% of the initial aggregate principal
balance of the contracts, and none of these remaining states accounted for more
than 5% of the aggregate
S-10
<PAGE>
principal balance of the contracts. For a discussion of the breakdown of the
contracts by state, see "THE CONTRACTS" in this prospectus supplement.
Although we do not know of any matters likely to increase the rate of
delinquencies or defaults in these states, adverse events specific to a
geographic region would include natural disasters and regional economic
downturns. For example, a substantial downturn in the financial services
industry, which is highly concentrated in the states of New York and New Jersey,
or in the oil and gas industry, which is concentrated in the state of Texas
could reduce the income of obligors in those states and ultimately reduce the
related obligor's ability to make timely payments on their contracts. In
addition, the following economic conditions may affect payments:
- unemployment,
- interest rates,
- inflation rates, and
- consumer perceptions of the economy.
THE SECURITIES MAY NOT BE SUITABLE INVESTMENTS FOR ALL INVESTORS
The securities may not be a suitable investment for any investor that
requires a regular or predictable schedule of principal payments. We suggest
that only investors who, either alone or with their financial, tax and legal
advisors, have the expertise to analyze the prepayment, reinvestment and default
risks, the tax consequences of an investment and the interaction of these
factors consider purchasing the notes.
PREPAYMENTS, POTENTIAL LOSSES AND CHANGE IN ORDER OF PRIORITY OF PAYMENTS MAY
OCCUR FOLLOWING ACCELERATION OF THE NOTES
If the maturity dates of the notes are accelerated following an event
of default resulting from a payment default or the insolvency of the trust, the
trust will make no further distributions of interest in respect of the
subordinated classes of notes until the more senior classes of notes are paid in
full.
If the maturity dates of the notes are accelerated following an event
of default, the indenture trustee with the consent of the holders of all
outstanding notes may sell the trust assets. In such event, the trust may not
have sufficient funds to pay all of the securities in full.
In addition, if the maturity dates of the notes are accelerated
following an event of default and the indenture trustee determines that the
trust assets will not be sufficient on an ongoing basis to make all payments on
the notes as the payments would have become due if the maturity dates of the
notes had not been accelerated, the indenture trustee with the consent of the
holders of at least 66-2/3% of the Class A notes outstanding (or, if there are
no Class A notes outstanding, the Class B notes) may sell the trust assets for
an amount less than the aggregate outstanding principal amount of the notes. In
such event, the trust may not have sufficient funds to pay all of the notes in
full.
S-11
<PAGE>
If you receive your principal earlier than expected, you may not be
able to reinvest the prepaid amount at a rate of return that is equal to or
greater than the rate of return on your securities. If the trust is required to
sell its assets in the circumstances described above, the amount received from
the sale may not be sufficient to pay all amounts owed to you.
BECAUSE THE NOTES ARE IN BOOK-ENTRY FORM, YOUR RIGHTS CAN ONLY BE EXERCISED
INDIRECTLY
Because the notes will be issued in book-entry form, you will be
required to hold your interest in the notes through The Depository Trust Company
in the United States, or Clearstream, Luxembourg, or the Euroclear System in
Europe. Transfers of interests in the notes must therefore be made in accordance
with the usual rules and operating procedures of those systems. So long as the
notes are in book-entry form, you will not be entitled to receive a physical
note representing your interest. The notes will remain in book-entry form except
in the limited circumstances described under the caption "INFORMATION REGARDING
THE SECURITIES--BOOK-ENTRY REGISTRATION" in the accompanying prospectus. Unless
and until the notes in this prospectus supplement cease to be held in book-entry
form, the indenture trustee will not recognize you as a "noteholder," as such
term is used in the indenture. As a result, you will only be able to exercise
the rights of noteholders indirectly through DTC, if in the United States, and
its participating organizations, or Clearstream and Euroclear, in Europe, and
their participating organizations. Holding the notes in book-entry form could
also limit your ability to pledge your notes to persons or entities that do not
participate in DTC, Clearstream or Euroclear and to take other actions that
require a physical note representing the notes.
Interest and principal on the notes will be paid by the trust to DTC as
the holder of record of the notes while they are held in book-entry form. DTC
will credit payments received from the trust to the accounts of its participants
which, in turn, will credit those amounts to noteholders either directly or
indirectly through indirect participants. This process may delay your receipt of
principal and interest payments from the trust.
S-12
<PAGE>
THE TRUST
GENERAL
The trust is a business trust formed under the laws of the State of
Delaware pursuant to the trust agreement between the depositor and the trustee
for the transactions described herein. After its formation, the trust will
engage in only a limited set of activities. The trust's activities are limited
to:
- acquiring, holding and managing the contracts and the other assets
of the trust and proceeds therefrom;
- issuing the notes and a certificate;
- making payments on the notes and a certificate; and
- engaging in other activities that are necessary, suitable or
convenient to accomplish the foregoing purposes or that are
incidental to or connected with the foregoing purposes.
Under a transfer and sale agreement between the seller and the
depositor, the seller will sell all of the contracts and the related property to
the depositor.
Under a sale and servicing agreement among the trust, the depositor,
the servicer, the trustee and the indenture trustee, the depositor will transfer
all of the contracts and related property to the trust.
The property of the trust will consist of:
- the contracts and the right to receive all scheduled payments
and prepayments received on the contracts on or after the
cut-off date, but excluding any scheduled payments due on or
after, but received prior to, the cut-off date;
- security interests in the financed motorcycles securing the
contracts and any related property;
- rights with respect to any repossessed financed motorcycles;
- the rights to proceeds from claims on theft, physical damage,
credit life and disability insurance policies covering the
financed motorcycles or the obligors;
- certain rebates of premiums and other amounts relating to
insurance policies, extended service contracts or other repair
agreements and other items financed under the contracts;
- the depositor's rights against the seller under the transfer
and sale agreement pursuant to which the seller sold the pool
of contracts to the depositor;
S-13
<PAGE>
- the right to receive payments from the depositor for the
repurchase of contracts which do not meet specified
representations made by depositor in the sale and servicing
agreement;
- the trust's rights against the servicer under the sale and
servicing agreement;
- amounts held in the collection account, the note distribution
account and the reserve fund to be established and maintained
under the sale and servicing agreement; and
- all proceeds of the foregoing.
The trust will issue a certificate to the depositor representing the
entire beneficial ownership interest in the trust.
The trust's principal offices will be in [ ], in care of [ ], as
trustee, at the address listed below under "THE TRUSTEE AND THE INDENTURE
TRUSTEE."
CAPITALIZATION
The following table illustrates the capitalization of the trust as of
the cut-off date, as if the issuance and sale of the notes had taken place, on
such date:
<TABLE>
<S><C>
Class A-1 notes........................................................................$
Class A-2 notes........................................................................$
Class B notes..........................................................................$_________________
Total.............................................................................$
=======
</TABLE>
THE INDENTURE AND THE ADMINISTRATION AGREEMENT
Under an indenture between the trust and the indenture trustee, the
indenture trustee will pledge the trust assets to secure the payment of the
notes.
Under an administration agreement among the trust, the indenture
trustee and Harley-Davidson Credit Corp., as administrator, the administrator
will agree to perform certain of the trust's administrative functions under the
indenture.
THE TRUSTEE AND THE INDENTURE TRUSTEE
[ ] will be the trustee under the trust agreement. The trustee is a
[_________] banking association and its principal offices are located at
[_____________].
[ ] will be the indenture trustee under the indenture agreement. The
indenture trustee is a [_________] and its principal offices are located at
[_____________].
The servicer will pay the fees of the trustee and the indenture trustee
in connection with their duties under the trust agreement and the indenture.
Each of the trustee and the indenture
S-14
<PAGE>
trustee will also be entitled to indemnification by the servicer for, and will
be held harmless against, any loss, liability, fee, disbursement or expense
incurred by it not resulting from its own willful misfeasance, bad faith or
negligence. The servicer will also indemnify the trustee and the indenture
trustee for specified taxes that may be asserted in connection with the
transaction.
THE SELLER AND THE SERVICER
Harley-Davidson Credit Corp. will act as seller and servicer of the
contracts and will receive compensation and fees for such services. Information
regarding the seller and the servicer is set forth under the captions "THE
SELLER AND THE SERVICER" in the accompanying prospectus
USE OF PROCEEDS
The depositor will use the net proceeds received from the sale of the
notes (i) for the purchase of the initial contracts and related assets from the
seller and (ii) the remainder for the funding of the pre-funding account. The
seller will use the net proceeds from the depositor's purchase of the initial
contracts, as well as subsequent contracts, for the repayment of a substantial
portion of the outstanding principal of the warehouse lines through which it
finances its motorcycle conditional sales contracts. Following each such
repayment, it is expected that the warehouse lines will be used to fund a new
portfolio of motorcycle conditional sales contracts.
THE CONTRACTS
The contracts are (or will be, in the case of subsequent contracts)
fixed-rate simple interest conditional sales contracts relating to motorcycles
manufactured by Harley-Davidson, Inc. or Buell Motorcycle Company, a
wholly-owned subsidiary of Harley-Davidson, Inc. The contracts were originated
by the seller indirectly through Harley-Davidson motorcycle dealers and acquired
by the depositor in the ordinary course of the depositor's business. Each
contract has (or will have) a fixed annual percentage rate and provides for, if
timely made, payments of principal and interest which fully amortize the loan on
a simple interest basis over its term. The contracts have or will have the
following characteristics:
- the last scheduled payment of each initial contract is due no
later than [ ], and with respect to the contracts as a whole
(including any subsequent contracts conveyed to the trust after
the closing date), the last scheduled payment will be due no later
than [ ];
- the first scheduled payment date of contracts representing
approximately [ ]% of the aggregate principal balance of the
initial contracts as of the initial cutoff date is due no later
than [ ];
- the first scheduled payment date of contracts representing
approximately [ ]% of the aggregate principal balance of the
initial contracts as of the initial cutoff date is due no later
than [ ];
- the first scheduled payment date of contracts representing
approximately [ ]% of the aggregate principal balance of the
subsequent contracts as of the subsequent cutoff date will be due
no later than [ ];
S-15
<PAGE>
- the first scheduled payment date of contracts representing
approximately [ ]% of the aggregate principal balance of the
subsequent contracts as of the subsequent cutoff date will be due
no later than [ ];
- approximately [ ]% of the principal balance of the initial
contracts as of the initial cutoff date is attributable to loans
to purchase motorcycles which were new and approximately [ ]%
is attributable to loans to purchase motorcycles which were used
at the time the related contract was originated.
- all initial contracts have a contractual rate of interest of at
least [ ]% per annum and not more than [ ]% per annum
and the weighted average contractual rate of interest of the
initial contracts as of the initial cutoff date is approximately
[ ]% per annum (see Table 1 below).
- the initial contracts have remaining maturities as of the initial
cutoff date of at least [ ] months but not more than
[ ] months and original maturities of at least [ ]
months but not more than [ ] months.
- the initial contracts have a weighted average term to scheduled
maturity, as of origination, of approximately [ ] months,
and a weighted average term to scheduled maturity as of the
initial cutoff date of approximately [ ] months (see
Tables 2 and 3 below).
- the average principal balance per initial contract as of the
initial cutoff date was approximately $[ ] and the principal
balances on the initial contracts as of the initial cutoff date
ranged from $[ ] to $[ ] (see Table 4 below).
- the contracts arise (or will arise) from loans to obligors located
in 50 states, the District of Columbia, the U.S. Territories and
Canada and with respect to the initial contracts, constitute the
following approximate amounts expressed as a percentage of the
aggregate principal balance of the initial contracts as of the
initial cutoff date:[ ]% in [ ], [ ]% in [ ]
and [ ]% in [ ] (see Table 5 below). No other state
represented more than 5.00% by aggregate principal balance of the
initial contracts.
Subsequent contracts will not need to satisfy any criteria except for
the criteria described in the preceding paragraph. Therefore, following the
transfer of the subsequent contracts to the trust, the aggregate characteristics
of the entire pool of the contracts, including the composition of the contracts,
the distribution by weighted average annual percentage rate of the contracts,
the distribution by calculated remaining term of the contracts, the distribution
by original term to maturity of the contracts, the distribution by current
balance of the contracts, and the geographic distribution of the contracts,
described in the following tables, may vary from those of the initial contracts
as of the initial cutoff date.
S-16
<PAGE>
TABLE 1
DISTRIBUTION BY APR OF THE INITIAL CONTRACTS
(AS OF THE INITIAL CUTOFF DATE)
<TABLE>
<CAPTION>
PERCENT OF NUMBER TOTAL OUTSTANDING PERCENT OF POOL
RATE NUMBER OF CONTRACTS OF CONTRACTS(1) PRINCIPAL BALANCE BALANCE(1)
---- ------------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
8.500- 9.000%
9.001-10.000
10.001-11.000
11.001-12.000
12.001-13.000
13.001-14.000
14.001-15.000
15.001-16.000
16.001-17.000
17.001-18.000
18.001-19.000
19.001-20.000
20.001-21.000
21.001-22.000
22.001-23.000
23.001-23.990
Totals: 100.00% 100.00%
</TABLE>
(1) Percentages may not add to 100.00% because of rounding.
TABLE 2
DISTRIBUTION BY CALCULATED REMAINING TERM
OF THE INITIAL CONTRACTS
(AS OF THE INITIAL CUTOFF DATE)
<TABLE>
<CAPTION>
CALCULATED
REMAINING PERCENT OF NUMBER TOTAL OUTSTANDING PERCENT OF
TERM (MONTHS) NUMBER OF CONTRACTS OF CONTRACTS (1) PRINCIPAL BALANCE POOL BALANCE (1)
------------- ------------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
6 - 12
13 - 24
25 - 36
37 - 48
49 - 60
61 - 72
73 - 84
TOTALS: 100.00% 100.00%
</TABLE>
(1) Percentages may not add to 100.00% because of rounding.
S-17
<PAGE>
TABLE 3
DISTRIBUTION BY CALCULATED ORIGINAL
TERM TO MATURITY OF THE INITIAL CONTRACTS
(AS OF THE INITIAL CUTOFF DATE)
<TABLE>
<CAPTION>
ORIGINAL PERCENT OF NUMBER TOTAL OUTSTANDING PERCENT OF POOL
TERM (MONTHS) NUMBER OF CONTRACTS OF CONTRACTS (1) PRINCIPAL BALANCE BALANCE (1)
------------- ------------------- ----------------- ----------------- -----------
<S> <C> <C> <C> <C>
0 - 12
13 - 24
25 - 36
37 - 48
49 - 60
61 - 72
73 - 84
TOTALS: 100.00% 100.00%
</TABLE>
(1) Percentages may not add to 100.00% because of rounding.
S-18
<PAGE>
TABLE 4
DISTRIBUTION BY CURRENT BALANCE OF THE INITIAL CONTRACTS
(AS OF THE INITIAL CUTOFF DATE)
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF NUMBER TOTAL OUTSTANDING PERCENT OF POOL
CURRENT BALANCE CONTRACTS OF CONTRACTS (1) PRINCIPAL BALANCE BALANCE (1)
--------------- --------- ---------------- ----------------- -----------
<S> <C> <C> <C> <C>
$ 0 - 1,000.00
$ 1,000.01 - 2,000.00
$ 2,000.01 - 3,000.00
$ 3,000.01 - 4,000.00
$ 4,000.01 - 5,000.00
$ 5,000.01 - 6,000.00
$ 6,000.01 - 7,000.00
$ 7,000.01 - 8,000.00
$ 8,000.01 - 9,000.00
$ 9,000.01 - 10,000.00
$ 10,000.01 - 11,000.00
$ 11,000.01 - 12,000.00
$ 12,000.01 - 13,000.00
$ 13,000.01 - 14,000.00
$ 14,000.01 - 15,000.00
$ 15,000.01 - 16,000.00
$ 16,000.01 - 17,000.00
$ 17,000.01 - 18,000.00
$ 18,000.01 - 19,000.00
$ 19,000.01 - 20,000.00
$ 20,000.01 - 21,000.00
$ 21,000.01 - 22,000.00
$ 22,000.01 - 23,000.00
$ 23,000.01 - 24,000.00
$ 24,000.01 - 25,000.00
$ 25,000.01 - 26,000.00
$ 26,000.01 - 27,000.00
$ 27,000.01 - 28,000.00
$ 28,000.01 - 29,000.00
$ 29,000.01 - 30,000.00
$ 30,000.01 - 31,000.00
$ 31,000.01 - 32,000.00
$ 32,000.01 - 33,000.00
$ 33,000.01 - [
]
TOTALS: 100.00% 100.00%
</TABLE>
(1) Percentages may not add to 100.00% because of rounding.
S-19
<PAGE>
TABLE 5
GEOGRAPHIC DISTRIBUTION OF THE INITIAL CONTRACTS
(AS OF THE INITIAL CUTOFF DATE)
<TABLE>
<CAPTION>
PERCENT OF NUMBER TOTAL OUTSTANDING PERCENT OF POOL
STATE NUMBER OF CONTRACTS OF CONTRACTS (1) PRINCIPAL BALANCE BALANCE (1)
----- ------------------- ---------------- ------------------ -----------
<S> <C> <C> <C> <C>
ALABAMA
ALASKA
ARIZONA
ARKANSAS
CALIFORNIA
COLORADO
CONNECTICUT
DELAWARE
DISTRICT OF COLUMBIA
FLORIDA
GEORGIA
HAWAII
IDAHO
ILLINOIS
INDIANA
IOWA
KANSAS
KENTUCKY
LOUISANA
MAINE
MARYLAND
MASSACHUSETTS
MICHIGAN
MINNESOTA
MISSISSIPPI
MISSOURI
MONTANA
NEBRASKA
NEVADA
NEW HAMPSHIRE
NEW JERSEY
NEW MEXICO
NEW YORK
NORTH CAROLINA
NORTH DAKOTA
OHIO
OKLAHOMA
OREGON
PENNSYLVANIA
S-20
<PAGE>
TABLE 5
GEOGRAPHIC DISTRIBUTION OF THE INITIAL CONTRACTS
(CONTINUED)
<CAPTION>
PERCENT OF NUMBER TOTAL OUTSTANDING PERCENT OF POOL
STATE NUMBER OF CONTRACTS OF CONTRACTS (1) PRINCIPAL BALANCE BALANCE (1)
----- ------------------- ---------------- ------------------ -----------
<S> <C> <C> <C> <C>
RHODE ISLAND
SOUTH CAROLINA
SOUTH DAKOTA
TENNESSEE
TEXAS
UTAH
VERMONT
VIRGINIA
WASHINGTON
WEST VIRGINIA
WISCONSIN
WYOMING
CANADA
OTHER
TOTALS: 100.00% 100.00%
</TABLE>
(1) Percentages may not add to 100.00% because of rounding.
S-21
<PAGE>
DELINQUENCY, LOAN LOSS AND REPOSSESSION INFORMATION
The following tables set forth the delinquency experience and loan loss
and repossession experience of the seller's portfolio of conditional sales
contracts for motorcycles. These figures include data in respect of contracts
which the seller has previously sold with respect to prior securitizations and
for which the seller acts as servicer.
<TABLE>
<CAPTION>
DELINQUENCY EXPERIENCE(1)/
(DOLLARS IN THOUSANDS)
AT DECEMBER 31,
--------------------------------------------------------------------------------------------------------
1999 1998 1997
---- ---- ----
Number Number Number
of of of
contracts Amount contracts Amount contracts Amount
--------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Portfolio ................. 91,556 $ 914,545.5 67,137 $ 651,248.7 45,258 $ 434,890.7
Period of Delinquency(2)/
30-59 Days ...... 2,868 $ 28,307.9 1,970 $ 17,768.1 1,264 $ 11,454.6
60-89 Days ...... 983 9,424.3 745 6,153.9 559 5,112.1
90 Days or more . 371 3,569.9 304 2,591.0 269 2,196.5
----- ------------- ----- ------------- ----- -------------
Total Delinquencies ....... 4,222 $ 41,302.1 3,019 $ 26,513.0 2,092 $ 18,763.2
===== ============= ===== ============= ===== =============
Total Delinquencies as a
Percent of Total Portfolio 4.61% 4.52% 4.50% 4.07% 4.62% 4.31%
<CAPTION>
1996 1995
---- ----
Number Number
of of
contracts Amount contracts Amount
--------- ------ --------- -------
<S> <C> <C> <C> <C>
Portfolio ................. 32,574 $ 303,682.4 20,590 $ 184,054.0
Period of Delinquency(2)/
30-59 Days ...... 904 $ 8,002.9 477 $ 4,043.3
60-89 Days ...... 374 3,170.7 157 1,298.7
90 Days or more . 213 1,880.6 140 1,120.2
------ ------------- --- -------------
Total Delinquencies ....... 1,491 $ 13,054.2 774 $ 6,462,2
====== ============= === =============
Total Delinquencies as a
Percent of Total Portfolio. 4.58% 4.30% 3.76% 3.51%
</TABLE>
<TABLE>
<CAPTION>
At March 31,
--------------------------------------- ------------
2000 1999
---- ----
Number Number
of of
contracts Amount contracts Amount
--------- ------ --------- ------
<S> <C> <C> <C> <C>
Portfolio.................... 98,306 $981,709.4 72,411 $712,081.0
Period of Delinquency(2)/
30-59 Days............... 2,343 $22,973.6 1,814 $17,246.9
60-89 Days.............. 587 5,543.9 606 5,403.9
90 Days or more.......... 235 2,363.5 355 3,099.5
--- ------- --- -------
Total Delinquencies.......... 3,165 $30,881.0 2,775 $25,750.3
===== ========= ===== =========
Total Delinquencies as a
Percent of Total Portfolio... 3.22% 3.15% 3.83% 3.62%
</TABLE>
------------------
(1) Excludes contracts already in repossession, which
contracts the servicer does not consider outstanding.
(2) The period of delinquency is based on the number of
days payment are contractually past due (assuming
30-day months). Consequently, a contract due on the
first day of a month is not 30 days delinquent until
the first day of the next month.
S-22
<PAGE>
LOAN LOSS/REPOSSESSION EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended
December 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Principal Balance of All Contracts
Serviced(1)/.................... $918,481.6 $653,836.0 $436,771.0 $304,730.9 $184,548.7
Contract Liquidations(2)/........... 1.59% 1.54% 1.42% 0.74% 0.76%
Net Losses:
Dollars(3)/..................... $5,875.0 $5,245.3 $3,781.1 $1,639.5 $866.4
Percentage(4)/.................. 0.64% 0.80% 0.87% 0.54% 0.47%
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------------------------------
2000 1999
---- ----
<S> <C> <C>
Principal Balance of All Contracts $985,715.0 $714,465.2
Serviced(1)/..................
Contract Liquidations(2)/............ 1.95% 1.67%
Net Losses:
Dollars(3)/...................... $1,995.5 $1,493.8
Percentage(4)/................... 0.81% 0.84%
</TABLE>
------------------
(1) As of period end. Includes contracts already in repossession.
(2) As a percentage of the total number of contracts being
serviced as of period end, calculated on an annualized basis.
(3) The calculation of net loss includes actual charge-offs,
deficiency balances remaining after liquidation of repossessed
vehicles and expenses of repossession and liquidation, net of
recoveries.
(4) As a percentage of the principal amount of contracts being
serviced as of period end, calculated on an annualized basis.
THE DATA PRESENTED IN THE FOREGOING TABLES ARE FOR ILLUSTRATIVE PURPOSES ONLY
AND THERE IS NO ASSURANCE THAT THE DELINQUENCY, LOAN LOSS OR REPOSSESSION
EXPERIENCE OF THE CONTRACTS WILL BE SIMILAR TO THAT SET FORTH ABOVE.
TWELVE MONTHS ENDED DECEMBER 31, 1999 VERSUS TWELVE MONTHS ENDED DECEMBER 31,
1998.
The amounts classified as delinquent as a percentage of the portfolio
increased from 4.07% to 4.52%. The increase is attributable to a conversion to a
new servicing system in December 1999. The number of liquidations as a
percentage of the portfolio increased from 1.54% to 1.59%. Net losses as a
percentage of the outstanding principal amount of the contracts decreased from
0.80% to 0.64%. The decrease is attributable to more stringent collection
procedures implemented by the servicer. The number of contracts in the portfolio
increased from 67,137 to 91,556 due to an increase in Harley-Davidson motorcycle
production and HDFS's market share penetration of units financed.
TWELVE MONTHS ENDED DECEMBER 31, 1998 VERSUS TWELVE MONTHS ENDED DECEMBER 31,
1997.
The amounts classified as delinquent as a percentage of the portfolio
decreased from 4.31% to 4.07%. The decrease is attributable to the seasoning of
the portfolio. The number of liquidations as a percentage of the portfolio
increased from 1.42% to 1.54%. The increase is attributable to growth and
seasoning of the Delta loan program. Net losses as a percentage of the
outstanding principal amount of the contracts decreased from 0.87% to 0.80%. The
decrease is
S-23
<PAGE>
attributable to more stringent collection procedures implemented by the
servicer. The number of contracts in the portfolio increased from 45,258 to
67,137 due to an increase in Harley-Davidson motorcycle production and HDFS's
market share penetration of units financed.
TWELVE MONTHS ENDED DECEMBER 31, 1997 VERSUS TWELVE MONTHS ENDED DECEMBER 31,
1996.
The amounts classified as delinquent as a percentage of the portfolio
increased from 4.30% to 4.31%. The number of liquidations as a percentage of the
portfolio increased from .74% to 1.42%. The increase is attributable to growth
and seasoning of the Delta loan program. Net losses as a percentage of the
outstanding principal amount of the contracts increased from 0.54% to 0.87%. The
increase is attributable to a lower collectors to account ratio due to the
launch of HDFS's credit card operation. The number of contracts in the portfolio
increased from 32,574 to 45,258 due to an increase in Harley-Davidson motorcycle
production and HDFS's market share penetration of units financed.
TWELVE MONTHS ENDED DECEMBER 31, 1996 VERSUS TWELVE MONTHS ENDED DECEMBER 31,
1995.
The amounts classified as delinquent as a percentage of the portfolio
increased from 3.51% to 4.30%. The increase is attributable to overall portfolio
growth. The number of liquidations as a percentage of the portfolio decreased
from 0.76% to 0.74%. Net losses as a percentage of the outstanding principal
amount of the contracts increased from 0.47% to 0.54%. The increase is
attributable to overall portfolio growth. The number of contracts in the
portfolio increased from 20,590 to 32,574 due to an increase in Harley-Davidson
motorcycle production and HDFS's market share penetration of units financed.
THREE MONTHS ENDED MARCH 31, 2000 VERSUS THREE MONTHS ENDED MARCH 31, 1999.
The amounts classified as delinquent as a percentage of the portfolio
decreased from 3.62% to 3.15%. The decrease is attributable to increased
collections. The number of liquidations as a percentage of the portfolio
increased from 1.67% to 1.95%. The increase is attributable to the growth and
seasoning of the Delta loan program. Net losses as a percentage of the
outstanding principal amount of the contracts decreased from 0.84% to 0.81%. The
decrease is attributable to increased recoveries on defaulted contracts. The
number of contracts in the portfolio increased from 72,411 to 98,306 due an
increase in Harley-Davidson motorcycle production and HDFS's market share
penetration of units financed. We know of no trends that are likely to increase
the rate of delinquencies or losses on the contracts.
S-24
<PAGE>
YIELD AND PREPAYMENT CONSIDERATIONS
By their terms, the contracts may be prepaid, in whole or in part, at
any time. Each contract also contains a provision which permits the seller to
require full prepayment in the event of a sale of the related motorcycle
securing a contract. In addition, repurchases of the contracts from the trust by
the depositor, and concurrently from the depositor by the seller, could occur in
the event of a breach of certain representation and warranties with respect to
the contracts. Repurchases of contracts from the trust by the depositor, and
concurrently from the depositor by the seller, could also occur if the depositor
exercises its limited option to repurchase the contracts from the trust when the
aggregate outstanding principal balances of the contracts owned by the trust has
declined to less than 10% of the sum of:
- the aggregate outstanding principal balance of the
contracts owned by the trust as of the closing date; and
- the initial amount on deposit in the pre-funding account.
Any prepayments and repurchases of contracts will reduce the average
life of the notes and the interest received by the noteholders over the life of
the notes (for this purpose the term "PREPAYMENT" includes liquidations due to
default, as well as receipt of proceeds from credit life, credit disability and
casualty insurance policies). In addition, funds remaining in the pre-funding
account at the end of the funding period will be used to prepay outstanding
principal of the notes and as a result, the interest received by noteholders
over the life of the notes will be reduced.
THE DEPOSITOR
The depositor is a special purpose corporation formed in the State of
Nevada. All of the common stock of the depositor is owned by the seller. All of
the officers and directors of the depositor are employed by the seller, except
that at least two directors of the depositor are required to be independent of
the depositor. The depositor's business is limited to purchasing the contracts
and related assets (and other similar retail motorcycle installment conditional
sales contracts) from the seller, acting as the general partner of the trust and
other similar trusts and performing the obligations described in the sale and
servicing agreement and the transfer and sale agreement (as well as similar
agreements entered into in connection with the formation of similar trusts).
DESCRIPTION OF THE NOTES
This section supplements the information in the accompanying prospectus
under the caption "Description of the Notes and Indenture". However, as these
statements are only summaries, you should read the sale and servicing agreement
and indenture, forms of which have been filed as exhibits to the registration
statement of which the accompanying prospectus forms a part. A copy of the
indenture and the sale and servicing agreement are available to you upon request
to the depositor and will be filed with the Securities and Exchange Commission
following the issuance of the securities.
S-25
<PAGE>
GENERAL
The notes will be issued pursuant to the terms of the indenture between
the trust and the indenture trustee.
The trust will issue three classes of notes, consisting of two classes
of senior notes, designated as the
- - Class A-1 notes and
- - Class A-2 notes.
We refer to these notes as the "CLASS A NOTES." The trust will also
issue one class of subordinate notes, designated as the Class B notes.
The notes will be delivered in book-entry form only and be issued in
minimum denominations of $1,000.
INTEREST
Each class of notes will bear interest at the fixed rate per annum for
that class shown on the cover page of this prospectus supplement.
The trust will pay interest on the notes on each payment date with
Available Amounts and amounts withdrawn from the reserve fund as set forth under
"PAYMENTS AND DISTRIBUTIONS --DISTRIBUTIONS" below.
Interest will be payable to you monthly on the [_______] of each month
or, if that date is not a business day, on the next succeeding business day and
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months for the interest period from and including the __th day of the prior
month (or from and including the closing date, in the case of the initial
payment date) to but excluding the __th day of the next month.
After the acceleration of the notes following an event of default
resulting from a payment default, the trust will not make interest payments on
the Class B Notes until the Class A Notes have been paid in full.
Interest payments on the Class A Notes will have the same priority. If
on any payment date the trust has insufficient funds to make a full payment of
interest on the Class A Notes, the holders of the Class A Notes will receive
their pro rata share of the amount available for interest on the Class A Notes.
If on any payment date, the trust does not have sufficient funds, to
make a full payment of interest on any class of notes, the amount of the
shortfall will be carried forward, and together with interest on the shortfall
amount at the applicable interest rate for that class, added to the amount of
interest the affected class of noteholders will be entitled to receive on the
next payment date.
S-26
<PAGE>
PRINCIPAL
On each payment date, principal on the notes will be payable in an
amount equal to the amount by which (1) the sum of the aggregate principal
balances of the notes as of the close of business on the prior payment date
exceeds (2) the aggregate principal balance of the contracts as of the end of
the prior calendar month, excluding certain non-collectible or defaulted
contracts and contracts to be repurchased by the depositor or purchased by the
servicer due to certain breaches. The trust will pay principal on the notes on
each payment date with Available Amounts and amounts withdrawn from the reserve
fund as set forth under "PAYMENTS AND DISTRIBUTIONS--DISTRIBUTIONS" below.
Principal of each class of notes is due and payable on the scheduled
final payment date for that class shown on the cover page of this prospectus
supplement.
OPTIONAL REDEMPTION
The notes may be redeemed in full on any payment date if the aggregate
outstanding principal balance of the contracts owned by the trust declines to
less than 10% of the sum of:
- the aggregate outstanding principal balance of the contracts
owned by the trust as of the closing date; and
- the initial amount on deposit in the pre-funding account.
The redemption price will equal the unpaid principal amount of the notes plus
accrued interest thereon.
MANDATORY REDEMPTION FOLLOWING THE FUNDING PERIOD
Noteholders will be prepaid in part, without premium, on the payment
date on or immediately following the last day of the funding period if any
amount remains on deposit in the pre-funding account after subsequent contracts
are transferred to the trust. The aggregate principal amount of notes to be
prepaid will be an amount equal to the amount then on deposit in the pre-funding
account allocated pro rata. If the amount on deposit in the pre-funding account
is less than $150,000, only the Class A-1 noteholders will be prepaid.
VOTING RIGHTS
This prospectus supplement and the accompanying prospectus specify
certain circumstances under which the consent, approval, direction or request of
the holders of a specified percentage of the outstanding principal amount of the
notes must be obtained, given or made, or under which such holders are permitted
to take an action or give a notice. While the Class A notes are outstanding,
only the holders of the Class A notes will have those rights, not the holders of
all of the notes or the Class B notes.
S-27
<PAGE>
NOTICES
You will be notified in writing by the indenture trustee of any event
of default, servicer default or termination of, or appointment of a successor
to, the servicer promptly upon a responsible officer obtaining actual knowledge
of these events. If notes are issued other than in book-entry form, those
notices will be mailed to the addresses of noteholders as they appear in the
register maintained by the indenture trustee prior to mailing. Those notices
will be deemed to have been given on the date of that publication or mailing.
CERTAIN INFORMATION REGARDING THE NOTES
THE ACCOUNTS
THE COLLECTION ACCOUNT
The indenture trustee will establish an account referred to as the
collection account in accordance with the sale and servicing agreement. The
servicer will cause all collections made on or in respect of the contracts
during a due period to be deposited in or credited to the collection account.
The servicer is required to deposit, without deposit into any intervening
account, into the collection account as promptly as possible, but in any case
not later than the second business day following the receipt thereof, all
amounts received on or in respect of the contracts. The servicer is required to
use its best efforts to cause an obligor 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. Funds in the collection account will be invested in certain
eligible investments. All income or other gain from such investments will be
promptly deposited in, and any loss resulting from such investments shall be
charged to, the collection account.
THE PRE-FUNDING ACCOUNT
The indenture trustee will establish a trust account referred to as
the pre-funding account in accordance with the sale and servicing agreement.
During the funding period, the pre-funding account will be maintained by the
indenture trustee for your benefit to secure the depositor's obligations
under the sale and servicing agreement to purchase and transfer subsequent
contracts to the trust. On the closing date, the depositor will deposit
$[ ] into the pre-funding account. During the funding period, amounts on
deposit in the pre-funding account will be reduced by the amount thereof that
the depositor uses to purchase subsequent contracts from the seller and
contemporaneously transfer to the trust. The depositor expects that the
pre-funded amount will be reduced to less than $150,000 by the payment date
occurring in [ ]. Any pre-funded amount remaining at the end of the
funding period will be payable to the noteholders. See "DESCRIPTION OF THE
NOTES--MANDATORY SPECIAL REDEMPTION".
THE RESERVE FUND
The servicer will establish pursuant to the sale and servicing
agreement the reserve fund which will be a segregated account in the name of the
indenture trustee. The reserve fund will be created with an initial deposit by
the depositor on the closing date of an amount equal to
S-28
<PAGE>
$________, which is less than the amount that is required to be on deposit in
the reserve fund. The reserve fund will thereafter be funded as described below
under "--DISTRIBUTIONS".
Amounts held from time to time in the reserve fund will be held for the
benefit of noteholders and may be invested in investments acceptable to the
rating agencies rating the notes as being consistent with the ratings of the
notes at the direction of the servicer. Investment income on those investments
will be paid to the depositor, upon the direction of the servicer, to the extent
that funds on deposit in the reserve fund on any payment date exceed the amount
that is required to be on deposit in the reserve fund. If the amount on deposit
in the reserve fund on any payment date exceeds the amount that is required to
be on deposit in the reserve fund on that payment date, the indenture trustee
will withdraw that excess and pay it to the depositor. Upon any distribution to
the depositor of those excess amounts, the noteholders will not have any rights
in, or claims to, those amounts.
The servicer may, from time to time after the date of this prospectus
supplement, request each rating agency rating the notes to approve a formula for
determining the amount that is required to be on deposit in the reserve fund on
each payment date that is different from that described below. If each rating
agency delivers a letter to the indenture trustee and the trustee to the effect
that the use of any new formula will not result in a qualification, reduction or
withdrawal of its then-current rating of any class of the notes, then the amount
that is required to be on deposit in the reserve fund will be determined in
accordance with the new formula. The sale and servicing agreement will
accordingly be amended, without the consent of any noteholder, to reflect the
new calculation.
If Available Amounts for any payment date, after paying the base
servicing fee, reimbursing the servicer for servicer advances and paying the
trustees' fees, are insufficient to pay principal and interest on the notes, the
indenture trustee will withdraw funds from the reserve fund for distribution to
the noteholders to cover any shortfalls. If on the final scheduled payment date
of any class of notes, the principal amount of that class has not been paid in
full, the indenture trustee will withdraw funds from the reserve fund to pay
those notes in full.
None of the noteholders, the indenture trustee, the trustee or the
seller will be required to refund any amounts properly distributed or paid to
them, whether or not there are sufficient funds on any subsequent payment date
to make full distributions to the noteholders.
CALCULATION OF RESERVE FUND REQUIRED AMOUNT
On the closing date, the depositor will deposit a total of $[ ]
into the reserve fund initial deposit. With respect to any payment date, the
reserve fund required amount will equal the greater of (a) [ ]% of the
principal balance of the contracts in the trust as of the first day of the
immediately preceding due period; PROVIDED, HOWEVER, that if certain trigger
events occur, the reserve fund required amount will be equal to [ ]% of the
principal balance of the contracts in the trust as of the first day of the
immediately preceding due period and (b) [ ]% of the aggregate of the initial
note balances; PROVIDED, HOWEVER, in no event shall the reserve fund required
amount be greater than the aggregate outstanding principal balance of the
notes. As of
S-29
<PAGE>
any payment date, the amount of funds actually on deposit in the reserve fund
initial deposit may, in certain circumstances, be less than the reserve fund
required amount.
A "RESERVE FUND TRIGGER EVENT" will have been deemed to occur with
respect to any payment date if (i) the Average Delinquency Ratio for such
payment date is equal to or greater than (a) [ ]% with respect to any payment
date which occurs within the period from the closing date to, and inclusive of,
the first anniversary of the closing date, (b) [ ]% with respect to any payment
date which occurs within the period from the day after the first anniversary of
the closing date to, and inclusive of, the second anniversary of the closing
date, or (c) [ ]% for any payment date 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) [ ]% for any payment date following
the third anniversary of the closing date; (ii) the Average Loss Ratio for such
payment date is equal to or greater than (a) [ ]% with respect to any payment
date which occurs within the period from the closing date to, and inclusive of,
the eighteen months following the closing date or (b) [ ]% with respect to any
payment date which occurs following the eighteen month period following the
closing date; or (iii) the Cumulative Loss Ratio for such payment date is equal
to or greater than (a) [ ]% with respect to any payment date which occurs within
the period from the closing date to, and inclusive of, the first anniversary of
the closing date, (b) [ ]% with respect to any payment date which occurs within
the period from the day after the first anniversary of the closing date to, and
inclusive of, the second anniversary of the closing date, (c) [ ]% for any
payment 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) [ ]% following the third anniversary of the closing
date.
A reserve fund trigger event will be deemed to have terminated with
respect to a payment date if no reserve fund trigger event shall exist with
respect to [______] consecutive payment dates (inclusive of the respective
payment date).
INTEREST RESERVE ACCOUNT
The depositor will establish, and fund with an initial deposit on the
closing date, the interest reserve account, for the purpose of providing
additional funds for payment to the trust of carrying charges to pay certain
distributions on payment dates occurring during (and on the first payment date
following the end of) the funding period. In addition to the initial deposit,
all investment earnings with respect to the pre-funded account are to be
deposited into the interest reserve account and, pursuant to the sale and
servicing agreement, the depositor is obligated to pay to the trust, on each
payment date described above, amounts in respect of carrying charges from such
account.
The interest reserve account will be established to account for the
fact that a portion of the proceeds obtained from the sale of the notes will be
initially deposited in the pre-funding account rather than invested in
contracts, and the monthly investment earnings on amounts in the pre-funding
account (until such amounts have been used to purchase subsequent contracts) are
expected to be less than the weighted average of the interest rates of the
respective classes of notes with respect to the corresponding portion of the
principal balances of respective classes of notes, as well as the amount
necessary to pay the trustees' fees. The interest reserve account is
S-30
<PAGE>
not designed to provide any protection against losses on the contracts in the
trust. After the funding period, money in the interest reserve account will be
released to the depositor.
THE DISTRIBUTION ACCOUNT
The indenture trustee will establish and maintain with itself the
distribution account, in the name of the indenture trustee on behalf of the
noteholders, in which amounts released from the collection account for
distribution to noteholders will be deposited and from which all distributions
to noteholders will be made.
DETERMINATION OF OUTSTANDING PRINCIPAL BALANCES
Prior to each payment date, the servicer will calculate a seven-digit
decimal factor which represents:
- the unpaid principal amount of the Class A-1 notes, after giving
effect to payments to be made on such payment date, as a fraction
of the initial outstanding principal amount of the Class A-1
notes.
- the unpaid principal amount of the Class A-2 notes, after giving
effect to payments to be made on such payment date, as a fraction
of the initial outstanding principal amount of the Class A-2
notes.
- the unpaid principal amount of the Class B notes, after giving
effect to payments to be made on such payment date, as a fraction
of the initial outstanding principal amount of the Class B notes.
If the servicer were to perform such calculations on the closing date,
the resulting decimal factor for each of the notes would be 1.000000.
Thereafter, these decimal factors will decline in correspondence with reductions
in the outstanding principal amount of the notes. Your portion of the aggregate
outstanding principal amount of notes will be the product of:
- the original denomination of the class of notes you own; and
- the decimal factor relating to the class of notes at the time of
determination (calculated as described above).
You will receive reports on or about each payment date concerning
payments received on the contracts, the aggregate outstanding principal balance
of the contracts owned by the trust, the decimal factors described above and
various other items of information. In addition, noteholders of record during
any calendar year will be furnished information for tax reporting purposes not
later than the latest date permitted by law. See "DESCRIPTION OF THE TRANSFER
AND SERVICING AGREEMENTS--STATEMENTS TO SECURITYHOLDERS" in the accompanying
prospectus.
S-31
<PAGE>
PAYMENTS AND DISTRIBUTIONS ON THE NOTES
AVAILABLE AMOUNTS
The trust will pay principal and interest in respect of the notes on
each payment date from Available Amounts for the payment date, as well as
amounts permitted to be withdrawn from the reserve fund. See "CERTAIN
INFORMATION REGARDING THE NOTES--THE ACCOUNTS--RESERVE FUND". "Available
Amounts" for any payment date are generally the sum of:
- - the following amounts on deposit in the collection account which the trust
received during the prior calendar month;
(1) all amounts allocable to scheduled principal or interest
payments on the contracts;
(2) prepayments of contracts; and
(3) proceeds of repossessed financed motorcycles and other
proceeds of defaulted contracts;
- - the purchase price paid by the depositor in repurchasing contracts from the
trust on that payment date as a result of a breach of the representations
and warranties with respect to those contracts in the sale and servicing
agreement;
- - servicer advances made by the servicer on that payment date in respect of
delinquent interest payments for the prior calendar month; and
- - the amount paid by the depositor to purchase the contracts when the
aggregate outstanding principal balance of the contracts is reduced to less
than 10% of the sum of (i) aggregate principal balance of the contracts
owned by the trust as of the closing date and (ii) the initial mount on
deposit in the pre-funding account.
The precise calculation of the funds available to the trust on each
payment date to make payments on the securities is set forth in the definition
of "Available Amounts" and the definitions of the defined terms contained in
that definition set forth in the Glossary. We refer you to those definitions.
SERVICING COMPENSATION AND REIMBURSEMENT OF SERVICER ADVANCES
On each payment date, the servicer will be entitled to receive:
- the base servicing fee in an amount equal to the product of one
twelfth of one percent (1%) and the aggregate principal balance of the
contracts as of the last day of the second calendar month preceding the
month in which that payment date falls; and
- any investment income earned on amounts on deposit in the collection
account during the prior calendar month.
S-32
<PAGE>
The servicer will also be entitled to retain any late payment fees, prepayment
charges, if any, and other similar fees and charges received during the prior
calendar month.
The servicer will reimburse itself for servicer advances out of:
- amounts received by the servicer from the obligors on account of the
related delinquent contract payments;
- the proceeds, net of expenses incurred by the servicer, of the sale
of the repossessed financed vehicles securing the related delinquent
contracts; and
- payments on other contracts when the servicer has determined that an
advance will not be recoverable from payments by the related obligor.
DISTRIBUTIONS
On each payment date prior to the acceleration of the notes, the
servicer will direct the indenture trustee to apply the Available Amounts,
together with amounts withdrawn from the reserve fund, to the following payments
and distributions in the following order of priority:
(1) reimbursement of servicer advances;
(2) payment of the base servicing fee;
(3) payment of the trustee's and the indenture trustee's fees;
(4) all accrued and unpaid interest on the Class A Notes,
including any accrued and unpaid interest on the Class A Notes
payable on prior payment dates plus interest on that accrued
and unpaid interest;
(5) all accrued and unpaid interest on the Class B Notes,
including any accrued and unpaid interest on the Class B Notes
payable on prior payment dates plus interest on that accrued
and unpaid interest;
(6) principal on the notes in the amounts and priority described
below under "PRINCIPAL";
(7) to the reserve fund, any amount necessary to increase the
amount on deposit in the reserve fund to the required amount;
and
(8) any remaining amounts to the depositor as certificateholder
under the trust agreement.
On each payment date after the acceleration of the notes following an
event of default resulting from a payment default, the trust will apply
Available Amounts, together with amounts withdrawn from the reserve fund, in the
same order as described above except that the trust will not pay interest on the
Class B Notes until the Class A Notes are paid in full.
S-33
<PAGE>
The trust is to make payments first from the Available Amounts, and
second, but only as to amounts described in clauses (4), (5) and (6) above, from
amounts permitted to be withdrawn from the reserve fund as described under
"RESERVE FUND" above.
PRINCIPAL
PRINCIPAL DISTRIBUTIONS BEFORE ACCELERATION OF NOTES
This chart summarizes how the trust will pay principal on the notes
before the acceleration of the maturity dates of the notes. The precise
calculation of the amount of principal payable on the notes on each payment date
is set forth in the definition of "TOTAL PRINCIPAL PAYMENT AMOUNT" and the
definitions of the defined terms used in that definition set forth in the
Glossary.
<TABLE>
<CAPTION>
- ---------------------------- -----------------------------------------------------------------------------------------
CLASS PRINCIPAL PAYMENTS
- ---------------------------- -----------------------------------------------------------------------------------------
<S> <C>
Class A-1 Notes - Begins receiving principal on first payment date
- Receives 100% of Total Principal Payment Amount until paid in full
- ---------------------------- -----------------------------------------------------------------------------------------
Class A-2 Notes - Begins receiving principal on payment date on which Class A-1 Notes are
paid in full
- Receives 100% of Total Principal Payment Amount until paid in full
- ---------------------------- -----------------------------------------------------------------------------------------
Class B Notes - Begins receiving principal on the payment date on which Class A-2 Notes
are paid in full
- Receives 100% of Total Principal Payment Amount until paid in full
- ---------------------------- -----------------------------------------------------------------------------------------
</TABLE>
PRINCIPAL DISTRIBUTIONS AFTER ACCELERATION OF NOTES
After acceleration of the maturity dates of the notes, the trust will
pay principal on the notes as follows:
<TABLE>
<CAPTION>
- ---------------------------- -----------------------------------------------------------------------------------------
CLASS PRINCIPAL PAYMENTS
- ---------------------------- -----------------------------------------------------------------------------------------
<S> <C>
Class A-1 Notes, 100% of the Total Principal Payment Amount applied on
Class A-2 Notes a pro rata basis to each class until paid in full
- ---------------------------- -----------------------------------------------------------------------------------------
Class B Notes 100% of the Total Principal Payment Amount until paid in full
- ---------------------------- -----------------------------------------------------------------------------------------
</TABLE>
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
TREATMENT OF TRUST
S-34
<PAGE>
Winston & Strawn, as federal tax counsel to the trust, will deliver its
opinion that the trust will not be an association (or a publicly traded
partnership) taxable as a corporation for federal income tax purposes. This
opinion will be based on the assumptions and qualifications described in the
accompanying prospectus under the caption "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--OWNER TRUST". If certificates issued by the trust are at all times
required to be owned by a single person, such as the depositor, then, for
federal income tax purposes, the trust may be disregarded as a separate entity
from the owner of its certificates. On the other hand, if the trust issues
certificates to multiple owners, the trust would be characterized as a
partnership for federal income tax purposes.
TREATMENT OF INVESTORS IN NOTES
Each purchaser of the notes agrees to treat the notes as debt for
federal income tax purposes. An investor will be taxed on the amount of payments
of interest on a note as ordinary interest income at the time it accrues or is
received in accordance with the investor's regular method of accounting. An
investor who disposes of a note will recognize taxable gain or loss equal to the
difference between the amount realized and the investor's adjusted tax basis in
the note. Any gain or loss will be a capital gain or loss assuming the notes
constitute capital assets in the hands of the owner. Special rules apply to
investors who purchase notes at a discount or a premium. The foregoing general
description of the treatment of investors in notes is subject to the further
explanation, assumptions and qualifications set forth in the accompanying
prospectus.
ERISA CONSIDERATIONS
The Class A notes may be purchased by an employee benefit plan, an
individual retirement account or a similar arrangement (a "Plan") subject to
ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code"). A fiduciary of a Plan must determine that the purchase of a Class A
note is consistent with its fiduciary duties under ERISA and does not result in
a nonexempt prohibited transaction as defined in Section 406 of ERISA or Section
4975 of the Code. For additional information regarding treatment of the notes
under ERISA, see "ERISA CONSIDERATIONS" in the accompanying prospectus.
The Class A notes may not be purchased with the assets of a Plan if the
depositor, the servicer, the indenture trustee, the trustee or any of their
affiliates:
1. is a "fiduciary" as defined in Section 3(21) of ERISA or
Section 4975(e)(3) of the Code with respect to those Plan
assets; or
2. is an employer maintaining or contributing to the Plan.
Because it is not certain whether the Class B notes will be treated as
debt instruments without substantial equity features, the Class B notes may not
be purchased by any Plan, or by a person investing on behalf of or with plan
assets of a Plan. Each purchaser and transferee of a Class B note, by its
acceptance of the Class B note, will be deemed to represent that it is not a
Plan, and is not purchasing the note on behalf of or with plan assets of a Plan.
S-35
<PAGE>
LEGAL PROCEEDINGS
None of the depositor, the servicer, the seller, or the trust are
parties to any legal proceeding which could have a material adverse impact on
your interest in the securities or in the trust's assets.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement among the depositor, the seller and the underwriters, the depositor
has agreed to sell to each of the underwriters named below and each of those
underwriters has severally agreed to purchase the following respective initial
principal amounts of notes at the respective public offering prices less the
respective underwriting discounts shown on the cover page of this prospectus
supplement:
<TABLE>
<CAPTION>
INITIAL PRINCIPAL INITIAL PRINCIPAL INITIAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF
UNDERWRITER CLASS A-1 NOTES CLASS A-2 NOTES CLASS B NOTES
- ----------- --------------- --------------- -------------
<S> <C> <C> <C>
</TABLE>
In the underwriting agreement, the underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all of the notes being
offered, if any of the notes are purchased. The underwriters have advised the
depositor that they propose initially to offer the notes to the public at the
respective public offering prices shown on the cover page of this prospectus
supplement, and to certain dealers at that price, less a concession not in
excess of the amount noted in the table below. The underwriters may allow and
the dealers may reallow to other dealers a discount not in excess of the amount
noted in the table below.
<TABLE>
<CAPTION>
SELLING CONCESSION REALLOWANCE
CLASS NOT TO EXCEED NOT TO EXCEED
- ----- ------------- -------------
<S> <C> <C>
A-1
A-2
B
</TABLE>
After the initial public offering of the securities, the offering prices and
other selling terms may be varied by the underwriters.
In connection with the offering of the notes, [_______________], on
behalf of the underwriters, may engage in overallotment, stabilizing
transactions or syndicate covering transactions in accordance with Regulation M
under the Securities Exchange Act of 1934. Overallotment transactions involve
syndicate sales in excess of the offering size creating a short position.
Stabilizing transactions permit bids to purchase the securities so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of
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securities in the open market after the distribution has been completed in order
to cover short positions. Such over-allotment transactions, stabilizing and
syndicate covering transactions may cause the price of the securities to be
higher than they would otherwise be in the absence of those transactions. The
underwriters do not represent that the underwriters will engage in those
transactions nor that such transactions, once commenced, will not be
discontinued without notice.
Until the distribution of the notes is completed, rules of the SEC may
limit the ability of the underwriters and certain selling group members to bid
for and purchase the notes. As an exception to these rules, the underwriters are
permitted to engage in certain transactions that stabilize the price of the
notes. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the notes.
There is currently no secondary market for the notes and you should not
assume that one will develop. The underwriters currently expect, but are not
obligated to make a market in the notes. You should not assume that any such
market will develop, or if one does develop, that it will continue or provide
sufficient liquidity.
Neither the seller nor the underwriters make any representations or
prediction as to the direction or magnitude of any effect that the transactions
described above, if engaged in, may have on the prices of the notes. In
addition, neither the seller nor the underwriters make any representation that
the underwriters will engage in such transactions or that such transactions,
once commenced, will not be discontinued without notice.
The underwriters have represented and agreed that:
(i) they have not offered or sold and, prior to the expiration of the
period of six months from the closing date, will not offer or sell any notes to
persons in the United Kingdom, except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of notes
Regulation 1995;
(ii) they have complied and will comply with all applicable provisions
of the Financial Services Act 1986 with respect to anything done by it in
relation to the notes in, from or otherwise involving the United Kingdom; and
(iii) they have only issued or passed on and will only issue or pass on
in the United Kingdom any document received by it in connection with the issue
of the notes to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995,
or is a person to whom such document may otherwise lawfully be issued or passed
on.
The underwriting agreement provides that the seller and the depositor
will indemnify the underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, or contribute to
payments the underwriters may be required to make in respect thereof.
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In the ordinary course of their respective businesses, the underwriters
and their respective affiliates have engaged and may in the future engage in
investment banking or commercial banking transactions with Harley-Davidson,
Inc., Harley-Davidson Credit Corp., Harley-Davidson Financial Services, Inc. or
any of their respective affiliates.
RATINGS OF THE SECURITIES
It is a condition of issuance that each of the Class A-1 notes and
Class A-2 notes be rated "____" by Standard & Poor's Rating Services and "____"
by Moody's Investors Services, Inc. and the Class B notes be rated at least
"____" by Standard & Poor's Rating Services and "_____" by Moody's Investors
Services, Inc.
There is no assurance that any such rating will continue for any period
of time or that it will not be revised or withdrawn entirely by the assigning
rating agency if, in its judgment, circumstances so warrant. A revision or
withdrawal of such rating may have an adverse effect on the market price of the
notes. A security rating is not a recommendation to buy, sell or hold the notes.
LEGAL MATTERS
Certain legal matters with respect to the notes, including certain
federal income tax matters, will be passed upon for the seller, servicer,
depositor and the trust by Winston & Strawn, Chicago, Illinois. Certain legal
matters for the underwriters will be passed upon by [___________].
EXPERTS
Ernst & Young LLP, independent auditors, have audited the balance sheet
of Harley-Davidson Motorcycle Trust [____] at [__________] as set forth in their
report. The depositor included this balance sheet in this prospectus supplement
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
REPORTS TO NOTEHOLDERS
Unless and until the notes are issued in physical form, monthly and
annual unaudited reports containing information concerning the contracts will be
prepared by the servicer, and sent on behalf of the trust only to Cede & Co., as
nominee of DTC and registered holder of the notes. No financial reports will be
sent to you. See "CERTAIN INFORMATION REGARDING THE NOTES--BOOK-ENTRY
REGISTRATIOn" and "--STATEMENTS TO NOTEHOLDERS" in this prospectus supplement.
Such reports will not constitute financial statements prepared in accordance
with generally accepted accounting principles. The servicer will file with the
Securities and Exchange Commission such periodic reports with respect to the
trust as are required under the Securities Exchange Act of 1934, as amended and
the rules and regulations of the SEC thereunder.
We filed a registration statement relating to the notes with the SEC.
This prospectus is part of the registration statement, but the registration
statement includes additional information.
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The servicer will file with the SEC all required reports and other
information about the trust.
You may read and copy any reports, statements or other information we
file at the SEC's reference room in Washington, D.C. You can request copies of
these documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at (800) SEC-0330 for further information on the operation
of the public reference rooms. Our filings with the SEC are also available to
the public on the SEC Internet site (http://www.sec.gov).
The SEC allows us to "incorporate by reference" information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus supplement. Information that we file
later with the SEC will automatically update the information in this prospectus
supplement. In all cases, you should rely on the later information over
different information included in this prospectus supplement or the accompanying
prospectus. We incorporate by reference any future annual, monthly and special
SEC reports and proxy materials filed by or on behalf of the trust until we
terminate our offering of the notes.
As a recipient of this prospectus, you may request a copy of any
document we incorporate by reference, except exhibits to the documents (unless
the exhibits are specifically incorporated by reference), at no cost, by writing
or calling us at:
Harley-Davidson Financial Services, Inc.
150 South Wacker, Suite 3100
Chicago, Illinois 60606
Attention: Treasurer
(telephone (312) 368-9501;
facsimile (312) 368-4372).
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<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered
Securities (the "GLOBAL SECURITIES") will be available only in book-entry form.
Investors in the Global Securities may hold such Global Securities through DTC
and, in the case of the Notes, Euroclear or Clearstream. The Global Securities
will be tradeable as home market instruments in both the European and U.S.
domestic markets. Initial settlement and all secondary trades will settle in
same-day funds.
Secondary market trading between investors holding Global Securities
through Euroclear and Clearstream will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (I.E. seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Euroclear or Clearstream and DTC
participants holding Global Securities will be effected on a
delivery-against-payment basis through the respective depositaries of Euroclear
and Clearstream (in such capacity) and as DTC participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect participants in DTC. As a result, Euroclear and
Clearstream will hold positions on behalf of their participants through their
respective depositaries, which in turn will hold such positions in accounts as
DTC participants.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to similar issues on pass-through
certificates. Investors' securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Euroclear or
Clearstream accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "LOCK-UP" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payments in same-day
funds.
SECONDARY MARKET TRADING
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Since the purchaser determines the place of delivery, it is important
to establish the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
participants will be settled using the procedures applicable to similar issues
of pass-through certificates in same-day funds.
TRADING BETWEEN EUROCLEAR AND/OR CLEARSTREAM PARTICIPANTS. Secondary
market trading between Euroclear participants or Clearstream participants will
be settled using the procedures applicable to conventional eurobonds in same-day
funds.
TRADING BETWEEN DTC SELLER AND EUROCLEAR OR CLEARSTREAM PURCHASER. When
Global Securities are to be transferred from the account of a DTC participant to
the account of a Euroclear participant or a Clearstream participant, the
purchaser will send instructions to Euroclear or Clearstream through a Euroclear
participant or Clearstream participant at least one business day prior to
settlement. Euroclear or Clearstream will instruct the respective depositary, as
the case may be, to receive the Global Securities against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment date to and excluding the settlement date. Payment will then be
made by the respective depositary to the DTC participant's account against
delivery of the Global Securities. After settlement has been completed, the
Global Securities will be credited to the respective clearing system and by the
clearing system, in accordance with its usual procedures, to the Euroclear
participant's or Clearstream participant's account. The Global Securities credit
will appear the next day (European time) and the cash debit will be back-valued
to, and the interest on the Global Securities will accrue from, the value date;
(which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (I.E., the trade fails),
the Euroclear or Clearstream cash debit will be valued instead as of the actual
settlement date.
Euroclear participants and Clearstream participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-positions
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Euroclear or Clearstream. Under
this approach, they may take on credit exposure to Euroclear or Clearstream
until the Global Securities are credited to their accounts one day later.
As an alternative, if Euroclear or Clearstream has extended a line of
credit to them, Euroclear participants or Clearstream participants can elect to
pre-position funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Euroclear participants or Clearstream
participants purchasing Global Securities would incur overdraft charges for one
day, assuming they cleared the overdraft when the Global Securities were
credited to their accounts. However, interest on the Global Securities would
accrue from the value date. Therefore, in many cases the investment income on
the Global Securities earned during that one-day period may substantially reduce
or offset the amount of such overdraft charges, although this
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result will depend on each Euroclear participant's or Clearstream participant's
particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC participants can employ their usual procedures for sending Global Securities
to the respective Depositary for the benefit of Euroclear participants or
Clearstream participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the DTC participant a cross-market transaction
will settle no differently than a trade between two DTC participants.
TRADING BETWEEN EUROCLEAR OR CLEARSTREAM SELLER AND DTC PURCHASER. Due
to time zone differences in their favor, Euroclear participants and Clearstream
participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC participant. The seller will send
instructions to Euroclear or Clearstream through a Euroclear participant or
Clearstream participant at least one business day prior to settlement. In these
cases, Euroclear or Clearstream will instruct the respective Depositary, as
appropriate, to deliver the bonds to the DTC participant's account against
payment. Payment will include interest accrued on the Global Securities from and
including the last coupon payment date to and excluding the settlement date. The
payment will then be reflected in the account of the Euroclear participant or
Clearstream participant the following day, and receipt of the cash proceeds in
the Euroclear participant's or Clearstream participant's account, would be
back-valued to the value date (which would be the preceding day, when settlement
occurred in New York). Should the Euroclear participant or Clearstream
participant have a line of credit with its respective clearing system and elect
to be in debit in anticipation or receipt of the sale proceeds in its account,
the back-valuation will extinguish any overdraft charges incurred over that
one-day-period. If settlement is not completed on the intended value date (I.E.,
the trade fails), receipt of the cash proceeds in the Euroclear participant's or
Clearstream participant's account would instead be valued as of the actual
settlement date. Finally, day traders that use, Euroclear or Clearstream and
that purchase Global Securities from DTC participants for delivery to Euroclear
participants or Clearstream participants should note that these trades would
automatically fail on the sale side unless affirmative action were taken. At
least three techniques should be readily available to eliminate this potential
problem:
(a) borrowing through Euroclear or Clearstream for one
day (until the purchase side of the day trade is
reflected in their Euroclear or Clearstream accounts)
in accordance with the clearing system's customary
procedures;
(b) borrowing the Global Securities in the U.S. from a
DTC participant no later than one day prior to
settlement, which would give the Global Securities
sufficient time to be reflected in their Euroclear or
Clearstream account in order to settle the sale side
of the trade; or
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(c) staggering the value dates for the buy and sell sides
of the trade so that the value date for the purchase
from the DTC participant is at least one day prior to
the value date for the sale to the Euroclear
participant or Clearstream participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENT
A beneficial owner of Global Securities holding securities through
Euroclear or Clearstream (or through DTC if the holder has an address outside
the U.S.) will be subject to the 30% U.S. withholding tax that generally applies
to payments of interest (including original issued discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes one of the following steps to
obtain an exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8 OR FORM W-8BEN).
Beneficial owners of Securities that are non-U.S. Persons can obtain a
complete exemption from the withholding tax by filing a signed Form W-8
(Certificate of Foreign Status) or Form W-8BEN (Certificate of Foreign
Status of Beneficial Owner for United States Tax Withholding). If the
information shown on Form W-8 changes, a new Form W-8 or Form W-8BEN
must be filed within 30 days of such change. After December 31, 2000,
only Form W-8BEN will be acceptable
EXEMPTION FOR NON-U.S. PERSONS WILL EFFECTIVELY CONNECTED
INCOME (FORM 4224 OR FORM W-8ECI). A non-U.S. Person, including a
non-U.S. corporation or bank with a U.S. branch, for which the interest
income is effectively connected with its conduct of a trade or business
in the United States, can obtain an exemption from the withholding tax
by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the
United States) or Form W-8ECI (Certificate of Foreign Person's Claim
for Exemption from Withholding on Income Effectively Connected with the
Conduct of a Trade or Business in the United States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN
TREATY COUNTRIES (FORM 1001 OR FORM W-8BEN). Non-U.S. Persons that are
Securityholders residing in a country that has a tax treaty with the
United States can obtain an exemption or reduced tax rate (depending on
the treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced
Rate Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8 or Form W-8BEN (Certificate of Foreign
Status of Beneficial Owner for United States Tax Withholding). Form
1001 may be filed by the Securityholder or his agent. After December
31, 2000, only Form W-8BEN will be acceptable.
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EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain
a complete exemption from the withholding tax by filing Form W-9
(Payer's Request for Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURES. The holder of a
Global Security or in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through
whom it holds (the clearing agency, in the case of persons holding
directly on the books of the clearing agency). Form W-8, Form 1001 and
Form 4224 are effective until December 31, 2000. Form W-8BEN and Form
W-8ECI are effective until the third succeeding calendar year from the
date the form is signed.
The term "U.S. PERSON" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States, any state thereof or the District of Columbia, (iii) an estate
the income of which is includible in gross income for United States tax
purposes, regardless of its source or (iv) a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust. Notwithstanding the preceding sentence, to
the extent provided in Treasury regulations, certain trusts in existence on
August 20, 1996, and treated as United States persons under the United States
Internal Revenue Code of 1986, as amended (the "Code") and applicable Treasury
regulations thereunder prior to such date, that elect to continue to be treated
as United States persons under the Code or applicable Treasury regulations
thereunder also will be a U.S. Person. This summary does not deal with all
aspects of U.S. Federal income tax withholding that may be relevant to foreign
holders of the Global Securities. Investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of the
Global Securities.
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<PAGE>
GLOSSARY OF TERMS
AVAILABLE AMOUNTS means, with respect to any payment date, the sum of
the Available Interest and the Available Principal for such payment date.
AVAILABLE INTEREST means, with respect to any payment date, the total,
without duplication, of the following amounts received by the servicer on or in
respect of the contracts during the prior calendar month:
* all amounts allocable to scheduled interest payments on the contracts;
* the interest component of all prepayments of contracts;
* the interest component of all proceeds of repossessed financed
motorcycles and other proceeds of defaulted contracts;
* the interest component of the purchase price paid by the depositor in
repurchasing contracts from the trust on that payment date as a result
of a breach of the representations and warranties with respect to those
contracts in the sale and servicing agreement;
* all amounts received in respect of carrying charges transferred from
the interest reserve account;
* all amounts received in respect of interest, dividends, gains, income
and earnings on investment of funds in the trust accounts;
* servicer advances made by the servicer on that payment date in respect
of delinquent interest payments for the prior calendar month; and
* the interest component of the amount paid by the seller to purchase the
contracts when the aggregate principal balance of the contracts is
reduced to less than 10% of the sum of (i) the aggregate outstanding
principal balance of the contracts as of the closing date and (ii) the
initial mount on deposit in the pre-funding account.
AVAILABLE PRINCIPAL means, with respect to any payment date, the total,
without duplication, of the following amounts received by the servicer on or in
respect of the contracts during the prior calendar month:
* all amounts allocable to scheduled principal payments on the contracts;
* the principal component of all prepayments of contracts;
* the principal component of all proceeds of repossessed motorcycles and
other proceeds of defaulted contracts;
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* the principal component of the purchase price paid by the depositor in
repurchasing contracts from the trust on that payment date as a result
of a breach of the representations and warranties with respect to those
contracts in the sale and servicing agreement; and
* the principal component of the amount paid by the seller to purchase
the contracts when the aggregate principal balance of the contracts is
reduced to less than 10% of the sum of (i) the aggregate outstanding
principal balance of the contracts as of the closing date and (ii) the
initial amount on deposit in the pre-funding account.
AVERAGE DELINQUENCY RATIO with respect to any payment date, is equal to
the arithmetic average of the Delinquency Ratios for the payment date and the
two immediately preceding payment dates.
AVERAGE LOSS RATIO for any payment date is equal to the arithmetic
average of the Loss Ratios for such payment date and the two immediately
preceding payment dates. The "LOSS RATIO" for any payment date is equal to the
fraction (expressed as a percentage) derived by dividing (x) the Net Liquidation
Losses for all contracts that became Liquidated Contracts during the immediately
preceding month multiplied by 12 by (y) the outstanding Principal Balances of
all contracts as of the beginning of the related month.
CUMULATIVE LOSS RATIO for any payment date means the fraction
(expressed as a percentage) computed by the servicer by dividing (a) the
aggregate Net Liquidation Losses for all contracts since the cutoff date through
the end of the related month by (b) the sum of (i) 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.
DELINQUENCY AMOUNT as of any payment date means the principal balance
of all contracts that were delinquent 60 days or more as of the end of the
related month (including contracts in respect of which the related motorcycles
have been repossessed and are still inventory).
DELINQUENCY RATIO for any payment date is equal to the fraction
(expressed as a percentage) derived by dividing (a) the Delinquency Amount
during the immediately preceding month by (b) the Principal Balance of the
contracts as of the beginning of the related month.
A LIQUIDATED CONTRACT means any defaulted contract as to which the
servicer has determined that all amounts which it expects to recover from or on
account of such contract have been recovered; PROVIDED that any defaulted
contract in respect of which the related motorcycle has been realized upon and
disposed of and the proceeds of such disposition have been realized shall be
deemed to be a Liquidated Contract; and PROVIDED FURTHER, a contract which has
been repossessed and has not been sold by the servicer for a period in excess of
[___] days from such date of repossession or a contract which has been
delinquent more than [___] days shall be deemed to be a Liquidated Contract with
a zero balance.
NET LIQUIDATION LOSSES means, with respect to a Liquidated Contract,
the amount, if any, by which (a) the outstanding Principal Balance of such
Liquidated Contract plus accrued
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and unpaid interest thereon at the annual interest rate stated in such
Liquidated Contract to the date on which such Liquidated Contract became a
Liquidated Contract exceeds (b) the Net Liquidation Proceeds for such Liquidated
Contract.
NET LIQUIDATION PROCEEDS means, as to any Liquidated Contract, the
proceeds realized on the sale or other disposition of the related motorcycle,
including proceeds realized on the repurchase of such motorcycle by the
originating dealer for breach of warranties, and the proceeds of any insurance
relating to such motorcycle, after payment of all expenses incurred thereby,
together, in all instances, with the expected or actual proceeds of any recourse
rights relating to such contract as well as any post disposition proceeds
received by the servicer.
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 cut-off date, reduced by all payments and other
amounts received by the servicer as of such date allocable to principal;
provided, however, that (i) if (x) a contract is repurchased by the depositor
because of a breach of a representation or warranty, or if (y) the depositor
gives notice of its intent to purchase the contracts in connection with an
optional termination of the trust, in each case the Principal Balance of such
contract or contracts shall be deemed to be zero for the prior calendar month in
which such event occurs and for each calendar month thereafter and (ii) from and
after the prior calendar month in which a contract becomes a defaulted contract,
the Principal Balance of such contract shall be deemed to be zero; and (b) where
the context requires, the aggregate Principal Balances described in clause (a)
for all such contracts.
The TOTAL PRINCIPAL PAYMENT AMOUNT for any payment date is the excess
of (x) the sum of the aggregate principal balance of the notes as of the close
of business on the prior payment date over (y) the principal balance of the
contracts as of the last day of the calendar month immediately preceding the
payment date.
UNITED STATES PERSONS means:
* A citizen or resident of the United States;
* A corporation or partnership organized in or under the laws of
the United States, any state thereof or the District of
Columbia;
* An estate the income of which is includible in gross income
for United States federal income tax purposes, regardless of
its source; or
A trust, (a) with respect to which a court within the United States is able to
exercise primary supervision over its administration, and one or more United
States fiduciaries have the authority to control all of its substantial
decisions, or (b) otherwise, the income of which is subject to U.S. federal
income tax regardless of its source.
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HARLEY-DAVIDSON MOTORCYCLE TRUST [ ]
BALANCE SHEET AS OF [__________], [_____]
Assets -- Cash.................................................... $
Beneficial Equity................................................. $
Liabilities....................................................... $
NOTES TO THE BALANCE SHEET
Harley-Davidson Motorcycle Trust [ ] is a limited purpose business
trust established under the laws of the State of Delaware. It was formed on [ ]
under a trust agreement dated as of [ ] between the depositor and the trustee.
The activities of the trust are limited by the terms of the trust agreement to
acquiring, owning and managing loan contracts and related assets, issuing and
making payments on notes and certificates and other related activities. Prior to
and including [ ], the trust did not conduct any activities.
The depositor will pay all fees and expenses related to the
organization and operations of the trust, other than withholding taxes, imposed
by the United States or any other domestic taxing authority. The depositor has
also agreed to indemnify the indenture trustee and trustee and certain other
persons involved in the sale of notes.
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<PAGE>
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE SECURITIES OFFERED BY THIS PROSPECTUS SUPPLEMENT,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
$
HARLEY-DAVIDSON MOTORCYCLE TRUST [ ]
$[ ] [ ]% HARLEY-DAVIDSON MOTORCYCLE CONTRACT BACKED NOTES, CLASS A-1
$[ ] [ ]% HARLEY-DAVIDSON MOTORCYCLE CONTRACT BACKED NOTES, CLASS A-2
$[ ] [ ]% HARLEY DAVIDSON MOTORCYCLE CONTRACT BACKED, CLASS B
HARLEY-DAVIDSON CREDIT CORP.
SELLER AND SERVICER
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
DEPOSITOR
---------------------
PROSPECTUS SUPPLEMENT
---------------------
[UNDERWRITERS]
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 22, 2000
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED [______________]
THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY
BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
SUPPLEMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
HARLEY-DAVIDSON MOTORCYCLE TRUST
ISSUER
$[ ] [ ]% HARLEY-DAVIDSON MOTORCYCLE CONTRACT BACKED CERTIFICATES, CLASS A
$[ ] [ ]% HARLEY-DAVIDSON MOTORCYCLE CONTRACT BACKED CERTIFICATES, CLASS B
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
DEPOSITOR
HARLEY-DAVIDSON CREDIT CORP.
SELLER AND SERVICER
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-10 IN THIS
PROSPECTUS SUPPLEMENT AND ON PAGE 9 OF THE PROSPECTUS.
The certificates will represent obligations of the Harley-Davidson
Motorcycle Trust [ ] only, and will not represent obligations of or interests in
Harley-Davidson Financial Services, Inc., Harley-Davidson Credit Corp.,
Harley-Davidson Customer Funding Corp., Harley-Davidson, Inc. or any of their
respective affiliates. This prospectus supplement may be used to offer and sell
the certificates only if accompanied by the prospectus.
The certificates are contract backed securities issued by the trust. The
assets underlying the certificates are fixed-rate, simple interest, conditional
sales contracts relating to the purchase of new or used motorcycles.
THE GRANTOR TRUST WILL ISSUE THE FOLLOWING CLASSES OF CERTIFICATES--
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
PASS- FIRST FINAL
PRINCIPAL THROUGH PAYMENT SCHEDULED PRICE TO UNDERWRITING PROCEEDS TO
CLASS AMOUNT RATE DATE PAYMENT DATE PUBLIC DISCOUNT DEPOSITOR
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
A $__________ ___% ___________ _____________ ______ ______ ______
- ------------------------------------------------------------------------------------------------
B $__________ ___% ___________ _____________ ______ ______ ______
- ------------------------------------------------------------------------------------------------
</TABLE>
THE TOTAL PRICE TO THE PUBLIC IS $
--------------------
THE TOTAL UNDERWRITING DISCOUNT IS $
------------------
<PAGE>
THE TOTAL PROCEEDS TO THE DEPOSITOR ARE $
-------------
CREDIT ENHANCEMENT:
- RESERVE FUND WITH AN INITIAL DEPOSIT OF $_________.
- SUBORDINATION OF THE CLASS B CERTIFICATES TO THE CLASS A
CERTIFICATES AS DESCRIBED IN THIS PROSPECTUS SUPPLEMENT.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[UNDERWRITERS]
Prospectus Supplement dated [______________]
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
<S><C>
Important Notice About Information Presented in this Prospectus Supplement
and the Accompanying Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . . ii
Prospectus Supplement Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . .S-1
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-10
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-12
The Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-12
The Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-13
The Seller and the Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-14
The Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-14
Yield and Prepayment Considerations. . . . . . . . . . . . . . . . . . . . . . . . .S-22
Pool Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-23
Description of the Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . .S-23
Payments on the Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-28
Ratings of the Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-30
Material Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . .S-31
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-32
Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-35
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-35
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-37
Global Clearance, Settlement and Tax Documentation Procedures. . . . . . . . . . . .S-38
Glossary of Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S-43
</TABLE>
i
<PAGE>
READING THE PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the certificates in two separate
documents that offer varying levels of detail:
- prospectus provides general information, some of which may not apply
to the certificates; and
- prospectus supplement provides specific information relating to the
terms of the certificates.
To the extent that any statements in this prospectus supplement differ from
or modify statements in the prospectus, you should rely on the information in
this prospectus supplement. References to "we", "our" and "us" refer to
Harley-Davidson Customer Funding Corp.
We include cross-references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions. The Table of Contents of this prospectus supplement
provides pages on which these captions are located.
You can find a glossary of the principal capitalized terms used in this
prospectus supplement beginning on page S-42 of this prospectus supplement.
If you have received a copy of this prospectus supplement and the
accompanying prospectus in an electronic format, and if the legal prospectus
delivery period has not expired, you may obtain a paper copy of this prospectus
supplement and the accompanying prospectus from Harley-Davidson Credit Corp. or
any of the underwriters by asking any of them for it.
ii
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
The following is only a summary of selected information from this
prospectus supplement and provides a general overview of relevant terms of the
certificates. It does not contain all the information that may be important to
you. You should read carefully this entire prospectus supplement and the
accompanying prospectus to understand all of the terms of the offering. In
addition, you may wish to read the documents governing the transfers and
servicing of the contracts, the formation of the trust and the issuance of the
certificates. Those documents have been filed as exhibits to the registration
statement.
There are material risks associated with an investment in the
securities. See "Risk Factors" in this prospectus supplement and in the
accompanying prospectus for a discussion of factors you should consider before
investing in the certificates.
Trust............................. Harley-Davidson Motorcycle Trust [ ].
The depositor will establish the trust
pursuant to a pooling and servicing
agreement.
Depositor......................... Harley-Davidson Customer Funding Corp., a
100% owned subsidiary of Harley-Davidson
Financial Services, Inc.. See "THE
DEPOSITOR" in this prospectus supplement.
Trustee........................... The trustee will be [ ],
acting not in its individual capacity but
solely as trustee under the pooling and
servicing agreement. The trustee's
address and phone number is [ ].
See "THE TRUST" in this prospectus
supplement.
Cut-off Date...................... [ ].
Closing Date...................... On or about [ ].
Terms of the Certificates:
A. Payment Dates.................. The trust will distribute interest and
principal in respect of the certificates
on the [ ] day of each month or if
that day is not a business day, the next
business day. The first payment date is
[----].
B. Record Dates.................. The day immediately preceding the payment
date.
C. Interest...................... PASS-THROUGH RATE:
The trust will distribute interest in
respect of the certificates at the
pass-through rates shown on the cover of
this prospectus supplement.
S-1
<PAGE>
INTEREST PERIODS:
Interest on the certificates will accrue in
the following manner:
Interest Period
<TABLE>
<CAPTION>
From To (excluding) Day Count
---- -------------- ---------
(including) Convention
----------- -----------
<S> <C> <C>
___ of prior ___ of 30/360
month current month
</TABLE>
DISTRIBUTION OF INTEREST:
On each payment date after payment of the
base servicing fee and reimbursement of
servicer advances, the trust will
distribute interest in respect of the
certificates from the funds available to it
to pay interest and expenses on each
payment date.
The funds available to the trustee to
distribute interest in respect of the
certificates on each payment date will
generally consist of interest collections
on the contracts received by the servicer
during the prior calendar month, less the
base servicing fee payable to the servicer
and amounts applied to reimburse servicer
advances relating to delinquent interest
payments, and amounts withdrawn form the
reserve fund.
If the funds available to the trustee to
distribute interest in respect of the Class
A Certificates are insufficient on any
payment date, funds available to the
trustee on that payment date to distribute
principal in respect of the Class B
Certificates will be applied to distribute
interest in respect of the Class A
Certificates.
No distributions of interest in respect of
the Class B Certificates will be made on
any payment date until interest in respect
of the Class A Certificates has been
distributed.
See "DISTRIBUTIONS ON THE CERTIFICATES" in
this prospectus supplement.
S-2
<PAGE>
E. Principal..................... On each payment date, the trust will
distribute principal of the certificates.
The funds available to the trustee to
distribute principal in respect of the
certificates on each payment date will
generally consist of collections on the
contracts received by the servicer during
the prior calendar month, less the base
servicing fee payable to the servicer,
amounts applied to reimburse servicer
advances and amounts distributed in respect
of interest on the certificates, and
amounts withdrawn from the reserve fund.
The amount of principal distributable will
be based on the amount by which:
- the aggregate principal balance of the
contracts as of the first day of the
calendar month prior to the month in
which that payment date occurs,
exceeds
- the aggregate principal balance of the
contracts as of the first day of the
calendar month in which that payment
date occurs.
The holders of the Class A Certificates and
the Class B Certificates will be entitled
to receive a PRO RATA share of the amounts
to be distributed in respect of principal.
However, no distributions of principal in
respect of the Class B Certificates will be
made on any payment date until interest and
principal in respect of the Class A
Certificates has been distributed.
See "DESCRIPTION OF THE CERTIFICATES--
PRINCIPAL" and "DISTRIBUTIONS ON THE
CERTIFICATES--DISTRIBUTIONS" in this
prospectus supplement.
E. Final Scheduled Payment Date... The trust will reduce the outstanding
principal balance of the certificates to
zero no later than the date shown on the
cover of this prospectus supplement.
F. Mandatory Prepayment........... The seller, at its option, may repurchase
the contracts on any payment date on which
the aggregate of the Class A certificate
balance and the Class B certificate
balance is less than 10% of the
S-3
<PAGE>
initial aggregate Class A certificate
balance and the Class B certificate
balance. If the seller purchases the
contracts the trust will prepay the
certificates in full on the payment date.
See "DESCRIPTION OF THE
CERTIFICATES--MANDATORY PREPAYMENT" in this
prospectus supplement.
THE TRUST'S ASSETS
The Contracts..................... Our main source of funds for making
payments on the certificates will be
collections on the contracts. The
contracts sold to the trust will be
selected from contracts in the depositor's
portfolio based on the criteria specified
in the transfer and sale agreement. The
contracts arise and will arise from loans
to obligors located in the 50 states of
the United States, Canada, the District of
Columbia and the U.S. Territories.
Following the closing date, pursuant to the
sale and servicing agreement, the depositor
will be obligated, subject only to the
availability thereof, to sell, and the
trust will be obligated to purchase,
subject to the satisfaction of certain
conditions set forth therein, subsequent
contracts from time to time. Following the
transfer of subsequent contracts to the
trust, the aggregate characteristics of the
entire pool of contracts may vary from
those of the initial contracts as to the
criteria identified and described above and
in "The Contracts" herein.
The last scheduled payment on the initial
contract with the latest maturity will
occur in [ ].
No contract (including any subsequent
contract sole to the trust after the
closing date) will have a scheduled
maturity later than [ ]. However, an
obligor can generally prepay its contract
at any time without penalty.
COMPOSITION OF THE INITIAL CONTRACTS
(AS OF THE INITIAL CUTOFF DATE)
S-4
<PAGE>
Aggregate Principal Balance..$____________
Number of Contracts.................______
Average Principal Balance.......$_________
Weighted Average Annual Percentage Rate
("APR")............................._____%
(Range)..................___% to ___%
Weighted Average Original Term (in months)
-------
(Range)....................___ to ___
Weighted Average Calculated Remaining Term
(in months).........................._____
(Range)....................___ to ___
GEOGRAPHIC CONCENTRATION
State Principal Balance
Concentration
[ ] ........... %
[ ] ........... %
[ ] ........... %
[ ] ........... %
[ ] ........... %
No other state represented more than 5% of
the aggregate principal balance of the
contracts as of the initial cutoff date.
Reserve Fund...................... On the closing date, the depositor will
establish a reserve fund in the name of
__________, as collateral agent. The
reserve fund provides you with limited
protection in the event collections from
obligors on the contracts are insufficient
to make payment on the certificates. We
cannot assure you, however, that this
protection will be adequate to prevent
shortfalls in amounts available to make
distributions on the certificates.
The initial balance of the reserve fund
will be $________. We will be required to
maintain on deposit in the reserve fund on
each payment date a specified amount as set
forth under the caption "DESCRIPTION OF THE
CERTIFICATES--CALCULATION OF
S-5
<PAGE>
RESERVE FUND REQUIRED AMOUNT".
If the amount on deposit in the reserve
fund on any payment date is less than the
required amount, the trustee will use the
funds available on that payment date after
payment of the base servicing fee,
reimbursement of servicer advances and
distributions of interest and principal in
respect of the certificates to make a
deposit into the reserve fund. Amounts on
deposit in the reserve fund on any payment
date in excess of the required amount will
be paid to the depositor.
If on any payment date the funds available
to the trustee to distribute principal and
interest in respect of the certificates are
insufficient, the trust will use funds in
the reserve fund to make distributions to
the certificateholders to cover any
shortfalls.
If on the final scheduled payment date of
the certificates, the certificate balances
of the certificates has not been reduced to
zero, the trustee will use funds in the
reserve fund to reduce the certificates
balances to zero.
Pre-Funding Account............... On the closing date, we will fund an
account called the pre-funding account by
depositing $[ ] which will
secure our obligation to purchase and
transfer subsequent contracts to the
trust. The amount in the pre-funding
account will be reduced by the amount used
to purchase subsequent contracts from the
seller. We expect that the pre-funded
amount will be reduced to less than
$150,000 by the payment date occurring in
[ ]. Any pre-funded amount
remaining at the end of the funding period
will be paid to the certificateholders as
described below in "SUMMARY OF TERMS --
MANDATORY SPECIAL REDEMPTION."
Mandatory Special Redemption...... The certificates will be prepaid in part,
without premium, on the payment 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. The aggregate principal
amount of certificates to be prepaid will
generally be an amount equal to the amount
then on deposit
S-6
<PAGE>
in the pre-funding account allocated pro
rata.
Interest Reserve Account.......... On the closing date, we will fund an
account called the interest reserve
account by depositing $[ ]
which will provide additional funds to
account for the fact that the monthly
investment earnings on amounts in the pre-
funding account (until such amounts have
been used to purchase subsequent
contracts) are expected to be less than
the weighted average of the interest
payments on the notes, as well as the
amount necessary to pay trustees' fees.
In addition to the initial deposit, all
investment earnings with respect to the
pre-funding account will be deposited into
the interest reserve account.
The interest reserve account is not
designed to provide any protection against
losses on the contracts in the trust. After
the funding period, money remaining in the
interest reserve account will be released
to us.
Mandatory Repurchases by the
Seller............................ Under the transfer and sale agreement, the
seller has agreed, in the event of a
breach of certain representations and
warranties made by the seller and
contained therein which materially and
adversely affects the trust's interest in
any contract, to repurchase such contract
within two business days prior to the
first determination date after the
servicer, the trustee or we become aware
of such breach. See "DESCRIPTION OF
TRANSFER AND SALE
AGREEMENT--REPRESENTATIONS AND WARRANTIES
MADE BY THE SELLER AND THE DEPOSITOR" in
the prospectus.
Servicing; Servicing Fee.......... Harley-Davidson Credit Corp., as the
servicer, will be responsible for
servicing, managing and administering the
contracts and related interests, and
enforcing and making collections on the
contracts.
Advances:
The servicer will make advances for
delinquent interest payments on contracts
to the extent it determines that a contract
as to which it has made advances is a
defaulted contract.
Servicer advances will be reimbursed from
the
S-7
<PAGE>
delinquent payments when made by the
obligors and from collections on other
contracts when the servicer determines that
the servicer advances will not be
recoverable from payments by the obligors.
Servicing Fee:
The servicer's base monthly fee payable on
each payment date will equal the product
of:
- one twelfth (1/12th) of one percent
(1%) and
- the aggregate principal balance of the
contracts as of the last day of the
second calendar month preceding the
month in which that payment date
falls.
The trust will pay the base servicing fee
to the servicer with the funds available to
it to pay interest and expenses on each
payment date after the reimbursement of
servicer advances.
The servicer will also be entitled to
retain any late payment fees, prepayment
charges, if any, and other similar fees and
charges.
See "DESCRIPTION OF THE TRANSFER AND
SERVICING AGREEMENT-SERVICING" in the
accompanying prospectus.
Credit Enhancement................ Losses and other shortfalls of cash flow
will be covered by payments on other
contracts, withdrawals from the reserve
fund and allocations of available funds to
the Class A Certificates.
The credit enhancement for the certificates
is as follows:
Class A Certificates - subordination
of the Class B
Certificates
- reserve fund
Class B Certificates - reserve fund
Ratings........................... On the closing date, each class of
certificates will have the following
ratings by Standard & Poor's Rating
Services and Moody's Investors Service,
S-8
<PAGE>
Inc.:
Class S&P Moody's
----- --- -------
A
B
See "RATINGS OF THE CERTIFICATES" in this
prospectus supplement and "RATINGS OF THE
SECURITIES" in the accompanying prospectus.
Material Federal Income Tax
Consequences...................... Winston & Strawn, as federal tax counsel
to the trust, will deliver an opinion
that:
- the trust will be treated as a grantor
trust for federal income tax purposes
and not as an association (or publicly
traded partnership) taxable as a
corporation; and
- each certificateholder will be treated
as the owner of a pro rata undivided
interest in the income and assets of
the trust.
ERISA Considerations.............. Subject to the considerations and
conditions discussed under "ERISA
CONSIDERATIONS" in this prospectus
supplement, the Class A Certificates may
be purchased by an employee benefit plan
that is subject to ERISA or Section 4975
of the Code.
Employee benefit plans and other retirement
arrangements that are subject to ERISA or
Section 4975 of the Code are not permitted
to acquire or hold Class B Certificates
except through an "insurance company
general account" in the manner discussed
under "ERISA CONSIDERATIONS" in this
prospectus supplement and the accompanying
prospectus.
You should refer to "ERISA CONSIDERATIONS"
in the accompanying prospectus for more
detailed information regarding the ERISA
eligibility of any class of certificates.
Mailing Address and Telephone
Number of Principal Executive
Offices........................... The mailing address of the seller is 150
South Wacker Drive, Chicago, Illinois
60606, telephone (312) 368-9501. The
mailing address of the depositor is 4150
Technology Way, Carson City, Nevada 89706,
telephone (775) 886-3200.
S-9
<PAGE>
RISK FACTORS
The following risk factors and the risk factors in the accompanying
prospectus describe the principal risk factors relating to an investment in the
certificates.
You should carefully consider the following risk factors before you invest
in the certificates. You should also carefully consider the risk factors
beginning on page 9 of the accompanying prospectus.
THE CLASS A CERTIFICATES WILL BE ENTITLED TO INTEREST OR PRINCIPAL DISTRIBUTIONS
BEFORE THE CLASS B CERTIFICATES
The holders of the Class B Certificates will not receive any distribution
of interest until the full amount of interest is distributed to the holders of
the Class A Certificates on each payment date. The holders of the Class B
Certificates will not receive any distribution of principal until the full
amount of principal and interest is distributed to the holders of the Class A
Certificates on each payment date. The subordination of the Class B Certificates
to the Class A Certificates means that the Class B Certificates are more likely
to suffer the consequences of delinquent payments and defaults on the contracts
than the Class A Certificates having prior distribution rights. See
"DISTRIBUTIONS ON THE CERTIFICATES --DISTRIBUTIONS" in this prospectus
supplement.
Moreover, the Class A Certificates could lose the credit enhancement
provided by the Class B Certificates and the reserve fund if delinquencies and
defaults on contracts increase and the collections on contracts and amounts in
the reserve fund are insufficient to make distributions in respect of even the
Class A Certificates.
ADVERSE EVENTS IN [_____] HIGH CONCENTRATION STATES MAY CAUSE INCREASED DEFAULTS
AND DELINQUENCIES
If adverse events or economic conditions were particularly severe in a
geographic region where there is a substantial concentration of obligors, the
amount of delinquent payments and defaults on the contracts may increase. As a
result, the overall timing and amount of collections on the contracts may differ
from what you expect, and you may experience delays or reductions in
distributions.
The following are the approximate percentages of the initial contract pool
principal balance whose obligors are located in the following states:
- [_______%] in [_______],
- [_______%] in [_______],
- [_______%] in [_______],
- [_______%] in [_______], and
- [_______%] in [_______].
S-10
<PAGE>
The remaining states accounted for [___]% of the _______ aggregate
principal balance of the contracts, and none of these remaining states accounted
for more than 5% of the initial aggregate principal balance of the contracts.
For a discussion of the breakdown of the contracts by state, see "THE CONTRACTS"
in this prospectus supplement.
Although we do not know of any matters likely to increase the rate of
delinquencies or defaults in these states, an example of an adverse event
specific to a geographic region would include natural disasters and regional
economic downturns. For example, a substantial downturn in the financial
services industry, which is highly concentrated in the states of New York and
New Jersey, or in the oil and gas industry, which is concentrated in the state
of Texas could reduce the income of obligors in those states and ultimately
reduce the related obligor's ability to make timely payments on their contracts.
In addition, the following economic conditions may affect payments:
- unemployment,
- interest rates,
- inflation rates, and
- consumer perceptions of the economy.
THE CERTIFICATES MAY NOT BE SUITABLE INVESTMENTS FOR ALL INVESTORS
The certificates may not be a suitable investment for any investor that
requires a regular or predictable schedule of principal payments. We suggest
that only investors who, either alone or with their financial, tax and legal
advisors, have the expertise to analyze the prepayment, reinvestment and default
risks, the tax consequences of an investment and the interaction of these
factors consider purchasing the certificates.
BECAUSE THE CERTIFICATES ARE IN BOOK-ENTRY FORM, YOUR RIGHTS CAN ONLY BE
EXERCISED INDIRECTLY
Because the certificates will be issued in book-entry form, you will be
required to hold your interest in the certificates through The Depository Trust
Company in the United States, or Clearstream, Luxembourg, (formerly Cedelbank)
or the Euroclear System in Europe. Transfers of interests in the certificates
within DTC, Clearstream or Euroclear must be made in accordance with the usual
rules and operating procedures of those systems. So long as the certificates are
in book-entry form, you will not be entitled to receive a physical note
representing your interest. The certificates will remain in book-entry form
except in the limited circumstances described under the caption "INFORMATION
REGARDING THE CERTIFICATES--BOOK-ENTRY REGISTRATION" in the accompanying
prospectus. Unless and until the certificates in this prospectus supplement
cease to be held in book-entry form, the trustee will not recognize you as a
"certificateholder," as such term is used in the trust agreement. As a result,
you will only be able to exercise the rights of securityholders indirectly
through DTC, if in the United States, and its participating organizations, or
Clearstream and Euroclear, in Europe, and their participating organizations.
Holding the certificates in book-entry form could also limit your ability to
pledge your
S-11
<PAGE>
certificates to persons or entities that do not participate in DTC,
Clearstream or Euroclear and to take other actions that require a physical note
representing the certificates.
Interest and principal on the certificates will be paid by the trust to DTC
as the record holder of the certificates while they are held in book-entry form.
DTC will credit payments received from the trust to the accounts of its
participants which, in turn, will credit those amounts to securityholders either
directly or indirectly through indirect participants. This process may delay
your receipt of principal and interest payments from the trust.
HOLDERS OF CLASS B CERTIFICATES MAY HAVE TO PAY TAXES ON AMOUNTS NOT ACTUALLY
RECEIVED.
For federal income tax purposes, amounts otherwise payable to the holders
of the Class A Certificates will be deemed to have been received by the holders
of the Class B Certificates and then paid by them to the holders of the Class A
Certificates pursuant to a guaranty. Accordingly, the holders of the Class A
Certificates could be liable for taxes on amounts not actually received. See
"MATERIAL FEDERAL INCOME TAX CONSEQUENCES" in the accompanying prospectus.
USE OF PROCEEDS
The depositor will use the net proceeds received from the sale of the
certificates (i) for the purchase of the initial contracts and related assets
from the seller and (ii) the remainder for the funding of the pre-funding
account. The seller will use the net proceeds from the depositor's purchase of
the initial contracts, as well as subsequent contracts, for the repayment of a
substantial portion of the outstanding principal of the warehouse lines through
which it finances its motorcycle conditional sales contracts. Following each
such repayment, it is expected that the warehouse lines will be used to fund a
new portfolio of motorcycle conditional sales contracts.
THE TRUST
GENERAL
The depositor will create the trust pursuant to a pooling and servicing
agreement among the depositor, the servicer and the trustee.
Under a transfer and sale agreement, the seller and the depositor will sell
all of the contracts and the related property to the depositor.
Pursuant to the pooling and servicing agreement, the depositor will
transfer all of the contracts and related property to the trust in exchange for
the certificates.
The property of the trust will consist of:
- the contracts and the right to receive all scheduled payments and
prepayments received on the contracts on or after the cut-off date,
but excluding any scheduled payments due on or after, but received
prior to, the cut-off date;
- security interests in the financed vehicles securing the contracts and
any related property;
S-12
<PAGE>
- rights with respect to any repossessed financed vehicles;
- the rights to proceeds from claims on theft, physical damage, credit
life and disability insurance policies covering the financed vehicles
or the obligors;
- certain rebates of premiums and other amounts relating to insurance
policies, extended service contracts or other repair agreements and
other items financed under the contracts;
- the depositor's rights against the seller under the purchase agreement
pursuant to which the seller sold the pool of contracts to the
depositor and against the performance guarantor under the performance
guarantee pursuant to which the performance guarantor guaranteed the
seller's obligations under the purchase agreement;
- the right to receive payments from the depositor obligated to
repurchase contracts which do not meet specified representations made
by depositor in the pooling and servicing agreement;
- the trust's rights against the servicer under the pooling and
servicing agreements;
- amounts held in the collection account and the paid-ahead account to
be established and maintained under the pooling and servicing
agreement; and
- all proceeds of the foregoing.
The reserve fund, the pre-funding account and the interest reserve
account will be maintained in the name of ________, as collateral agent for the
benefit of the certificateholders, but will not be part of the trust.
The certificates represent fractional undivided interests in the trusts.
See "DESCRIPTION OF THE CERTIFICATES" in this prospectus supplement.
THE TRUSTEE
[ ] will be the trustee under the pooling and servicing agreement. The
trustee is a [_________] banking association and its principal offices are
located at [_____________]. The trustee may resign at any time, in which event
the servicer will be obligated to appoint a successor trustee. The servicer may
also remove the trustee if the trustee ceases to be eligible to continue as such
under the pooling and servicing agreement or if the trustee becomes insolvent.
In such circumstances, the servicer will also be obligated to appoint a
successor trustee. Any resignation or removal of the trustee and appointment of
a successor trustee will not become effective until acceptance of the
appointment by the successor trustee.
The servicer will pay the fees of the trustee in connection with its duties
under the pooling and servicing agreement. The trustee will also be entitled to
indemnification by the servicer for, and will be held harmless against, any
loss, liability, fee, disbursement or expense
S-13
<PAGE>
incurred by the trustee not resulting from its own willful misfeasance, bad
faith or negligence. The servicer will also indemnify the trustee for specified
taxes that may be asserted in connection with the transaction.
THE SELLER AND THE SERVICER
Harley-Davidson Credit Corp. will act as seller and servicer of the
contracts and will receive compensation and fees for such services. Information
regarding the seller and the servicer is set forth under the captions "THE
SELLER AND THE SERVICER" in the accompanying prospectus.
THE CONTRACTS
DESCRIPTION OF THE CONTRACTS
The contracts are (or will be, in the case of subsequent contracts)
fixed-rate simple interest conditional sales contracts relating to motorcycles
manufactured by Harley-Davidson, Inc. or Buell Motorcycle Company, a
wholly-owned subsidiary of Harley-Davidson, Inc. The contracts were originated
by the seller indirectly through Harley-Davidson motorcycle dealers and acquired
by the depositor in the ordinary course of the depositor's business. Each
contract has (or will have) a fixed annual percentage rate and provides for, if
timely made, payments of principal and interest which fully amortize the loan on
a simple interest basis over its term. The contracts have or will have the
following characteristics:
- the last scheduled payment of each initial contract is due no later
than [ ], and with respect to the contracts as a whole (including any
subsequent contracts conveyed to the trust after the closing date),
the last scheduled payment will be due no later than [];
- the first scheduled payment date of contracts representing
approximately [ ]% of the aggregate principal balance of the initial
contracts as of the initial cutoff date is due no later than
[];
- the first scheduled payment date of contracts representing
approximately [ ]% of the aggregate principal balance of the initial
contracts as of the initial cutoff date is due no later than
[];
- the first scheduled payment date of contracts representing
approximately [ ]% of the aggregate principal balance of the
subsequent contracts as of the subsequent cutoff date will be due no
later than [ ];
- the first scheduled payment date of contracts representing
approximately [ ]% of the aggregate principal balance of the
subsequent contracts as of the subsequent cutoff date will be due no
later than [ ];
- approximately [ ]% of the principal balance of the initial contracts
as of the initial cutoff date is attributable to loans to purchase
motorcycles which were new and approximately [ ]% is attributable to
loans to purchase motorcycles which were used at the time the related
contract was originated.
- all initial contracts have a contractual rate of interest of at least
[ ]% per annum and not more than [ ]% per annum and the weighted
average contractual rate of interest
S-14
<PAGE>
of the initial contracts as of the initial cutoff date is approximately
[ ]% per annum (see Table 1 below).
- the initial contracts have remaining maturities as of the initial
cutoff date of at least [ ] months but not more than [ ] months and
original maturities of at least [ ] months but not more than [ ]
months.
- the initial contracts have a weighted average term to scheduled
maturity, as of origination, of approximately [ ] months, and a
weighted average term to scheduled maturity as of the initial cutoff
date of approximately [ ] months (see Tables 2 and 3 below).
- the average principal balance per initial contract as of the initial
cutoff date was approximately $[ ] and the principal balances on the
initial contracts as of the initial cutoff date ranged from $[ ] to
$[] (see Table 4 below).
- the contracts arise (or will arise) from loans to obligors located in
50 states, the District of Columbia, the U.S. Territories and Canada
and with respect to the initial contracts, constitute the following
approximate amounts expressed as a percentage of the aggregate
principal balance of the initial contracts as of the initial cutoff
date:[ ]% in [ ], [ ]% in [ ] and []%
in [ ] (see Table 5 below). No other state represented
more than 5.00% by aggregate principal balance of the initial
contracts.
Subsequent contracts will not need to satisfy any criteria except for the
criteria described in the preceding paragraph. Therefore, following the transfer
of the subsequent contracts to the trust, the aggregate characteristics of the
entire pool of the contracts, including the composition of the contracts, the
distribution by weighted average annual percentage rate of the contracts, the
distribution by calculated remaining term of the contracts, the distribution by
original term to maturity of the contracts, the distribution by current balance
of the contracts, and the geographic distribution of the contracts, described in
the following tables, may vary from those of the initial contracts as of the
initial cutoff date.
TABLE 1
DISTRIBUTION BY APR OF THE INITIAL CONTRACTS
(AS OF THE INITIAL CUTOFF DATE)
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
NUMBER OF NUMBER OF TOTAL OUTSTANDING POOL
RATE CONTRACTS CONTRACTS(1) PRINCIPAL BALANCE BALANCE(1)
---- --------- ------------ ----------------- ----------
<S> <C> <C> <C> <C>
8.500- 9.000%
9.001-10.000
10.001-11.000
11.001-12.000
12.001-13.000
13.001-14.000
14.001-15.000
15.001-16.000
16.001-17.000
17.001-18.000
18.001-19.000
S-15
<PAGE>
19.001-20.000
20.001-21.000
21.001-22.000
22.001-23.000
23.001-23.990
TOTALS: 100.00% 100.00%
</TABLE>
(1) PERCENTAGES MAY NOT ADD TO 100.00% BECAUSE OF ROUNDING.
TABLE 2
DISTRIBUTION BY CALCULATED REMAINING TERM
OF THE INITIAL CONTRACTS
(AS OF THE INITIAL CUTOFF DATE)
<TABLE>
<CAPTION>
CALCULATED PERCENT OF
REMAINING NUMBER OF NUMBER OF TOTAL OUTSTANDING PERCENT OF
TERM (MONTHS) CONTRACTS CONTRACTS (1) PRINCIPAL BALANCE POOL BALANCE (1)
------------- --------- ------------- ----------------- ---------------
<S> <C> <C> <C> <C>
6 - 12
13 - 24
25 - 36
37 - 48
49 - 60
61 - 72
73 - 84
TOTALS: 100.00% 100.00%
</TABLE>
(1) Percentages may not add to 100.00% because of rounding.
TABLE 3
DISTRIBUTION BY CALCULATED ORIGINAL
TERM TO MATURITY OF THE INITIAL CONTRACTS
(AS OF THE INITIAL CUTOFF DATE)
<TABLE>
<CAPTION>
PERCENT OF
ORIGINAL NUMBER OF NUMBER OF TOTAL OUTSTANDING PERCENT OF POOL
TERM (MONTHS) CONTRACTS CONTRACTS (1) PRINCIPAL BALANCE BALANCE (1)
------------- --------- ------------- ----------------- -----------
<S> <C> <C> <C> <C>
0 - 12
13 - 24
25 - 36
37 - 48
49 - 60
61 - 72
73 - 84
TOTALS: 100.00% 100.00%
</TABLE>
(1) Percentages may not add to 100.00% because of rounding.
S-16
<PAGE>
TABLE 4
DISTRIBUTION BY CURRENT BALANCE OF THE INITIAL CONTRACTS
(AS OF THE INITIAL CUTOFF DATE)
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF NUMBER OF TOTAL OUTSTANDING PERCENT OF POOL
CURRENT BALANCE CONTRACTS CONTRACTS (1) PRINCIPAL BALANCE BALANCE (1)
--------------- --------- ------------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
$ 0 - 1,000.00
$ 1,000.01 - 2,000.00
$ 2,000.01 - 3,000.00
$ 3,000.01 - 4,000.00
$ 4,000.01 - 5,000.00
$ 5,000.01 - 6,000.00
$ 6,000.01 - 7,000.00
$ 7,000.01 - 8,000.00
$ 8,000.01 - 9,000.00
$ 9,000.01 - 10,000.00
$ 10,000.01 - 11,000.00
$ 11,000.01 - 12,000.00
$ 12,000.01 - 13,000.00
$ 13,000.01 - 14,000.00
$ 14,000.01 - 15,000.00
$ 15,000.01 - 16,000.00
$ 16,000.01 - 17,000.00
$ 17,000.01 - 18,000.00
$ 18,000.01 - 19,000.00
$ 19,000.01 - 20,000.00
$ 20,000.01 - 21,000.00
$ 21,000.01 - 22,000.00
$ 22,000.01 - 23,000.00
$ 23,000.01 - 24,000.00
$ 24,000.01 - 25,000.00
$ 25,000.01 - 26,000.00
$ 26,000.01 - 27,000.00
$ 27,000.01 - 28,000.00
$ 28,000.01 - 29,000.00
$ 29,000.01 - 30,000.00
$ 30,000.01 - 31,000.00
$ 31,000.01 - 32,000.00
$ 32,000.01 - 33,000.00
$ 33,000.01 - 33,764.16
TOTALS: 100.00% 100.00%
</TABLE>
(1) Percentages may not add to 100.00% because of rounding.
S-17
<PAGE>
TABLE 5
GEOGRAPHIC DISTRIBUTION OF THE INITIAL CONTRACTS
(AS OF THE INITIAL CUTOFF DATE)
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF NUMBER OF TOTAL OUTSTANDING PERCENT OF POOL
STATE CONTRACTS CONTRACTS (1) PRINCIPAL BALANCE BALANCE (1)
----- --------- ------------ ----------------- -----------
<S> <C> <C> <C> <C>
ALABAMA
ALASKA
ARIZONA
ARKANSAS
CALIFORNIA
COLORADO
CONNECTICUT
DELAWARE
DISTRICT OF COLUMBIA
FLORIDA
GEORGIA
HAWAII
IDAHO
ILLINOIS
INDIANA
IOWA
KANSAS
KENTUCKY
LOUISANA
MAINE
MARYLAND
MASSACHUSETTS
MICHIGAN
MINNESOTA
MISSISSIPPI
MISSOURI
MONTANA
NEBRASKA
NEVADA
NEW HAMPSHIRE
NEW JERSEY
NEW MEXICO
NEW YORK
NORTH CAROLINA
NORTH DAKOTA
OHIO
OKLAHOMA
OREGON
PENNSYLVANIA
S-18
<PAGE>
TABLE 5
GEOGRAPHIC DISTRIBUTION OF THE INITIAL CONTRACTS
(CONTINUED)
PERCENT OF
NUMBER OF NUMBER OF TOTAL OUTSTANDING PERCENT OF POOL
STATE CONTRACTS CONTRACTS (1) PRINCIPAL BALANCE BALANCE (1)
----- --------- ------------ ----------------- -----------
<S> <C> <C> <C> <C>
RHODE ISLAND
SOUTH CAROLINA
SOUTH DAKOTA
TENNESSEE
TEXAS
UTAH
VERMONT
VIRGINIA
WASHINGTON
WEST VIRGINIA
WISCONSIN
WYOMING
CANADA
OTHER
TOTALS: 100.00% 100.00%
</TABLE>
(1) Percentages may not add to 100.00% because of rounding.
S-19
<PAGE>
DELINQUENCY, LOAN LOSS AND REPOSSESSION INFORMATION
The following tables set forth the delinquency experience and loan loss and
repossession experience of the seller's portfolio of conditional sales contracts
for motorcycles. These figures include data in respect of contracts which the
seller has previously sold with respect to prior securitizations and for which
the seller acts as servicer.
DELINQUENCY EXPERIENCE(1)/
(DOLLARS IN THOUSANDS)
AT DECEMBER 31,
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Number Number Number Number Number
of of of of of
contracts Amount contracts Amount contracts Amount contracts Amount contracts Amount
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio..................... 91,556 $914,545.5 67,137 $651,248.7 45,258 $434,890.7 32,574 $303,682.4 20,590 $184,054.0
Period of Delinquency(2)/
30-59 Days.................... 2,868 $28,307.9 1,970 $17,768.1 1,264 $11,454.6 904 $8,002.9 477 $4,043.3
60-89 Days.................... 983 9,424.3 745 6,153.9 559 5,112.1 374 3,170.7 157 1,298.7
90 Days or more............... 371 3,569.9 304 2,591.0 269 2,196.5 213 1,880.6 140 1,120.2
--- ------- --- ------- --- ------- --- ------- --- -------
Total Delinquencies........... 4,222 $41,302.1 3,019 $26,513.0 2,092 $18,763.2 1,491 $13,054.2 774 $6,462,2
Total Delinquencies as a ===== ========= ===== ========= ===== ========= ===== ========= === ========
Percent of Total Portfolio.... 4.61% 4.52% 4.50% 4.07% 4.62% 4.31% 4.58% 4.30% 3.76% 3.51%
</TABLE>
<TABLE>
<CAPTION>
At March 31,
---------------------------------------------
2000 1999
---- ----
Number Number
of of
contracts Amount contracts Amount
---------------------------------------------
<S> <C> <C> <C> <C>
Portfolio..................... 98,306 $981,709.4 72,411 $712,081.0
Period of Delinquency(2)/
30-59 Days.................... 2,343 $22,973.6 1,814 $17,246.9
60-89 Days.................... 587 5,543.9 606 5,403.9
90 Days or more............... 235 2,363.5 355 3,099.5
--- ------- --- -------
Total Delinquencies........... 3,165 $30,881.0 2,775 $25,750.3
===== ========= ===== =========
Total Delinquencies as a
Percent of Total Portfolio.... 3.22% 3.15% 3.83% 3.62%
</TABLE>
------------------
(1) Excludes contracts already in repossession, which contracts the
servicer does not consider outstanding.
(2) The period of delinquency is based on the number of days payment
are contractually past due (assuming 30-day months).
Consequently, a contract due on the first day of a month is not
30 days delinquent until the first day of the next month.
S-20
<PAGE>
Loan Loss/Repossession Experience
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended
December 31,
------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Principal Balance of All Contracts
Serviced(1)/..................... $918,481.6 $653,836.0 $436,771.0 $304,730.9 $184,548.7
Contract Liquidations(2)/.......... 1.59% 1.54% 1.42% 0.74% 0.76%
Net Losses:
Dollars(3)/...................... $5,875.0 $5,245.3 $3,781.1 $1,639.5 $866.4
Percentage(4)/................... 0.64% 0.80% 0.87% 0.54% 0.47%
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------------------------
2000 1999
---- ----
<S> <C> <C>
Principal Balance of All Contracts
Serviced(1)/........................ $985,715.0 $714,465.2
Contract Liquidations(2)/........... 1.95% 1.68%
Net Losses:
Dollars(3)/...................... $1,995.5 $1,493.8
Percentage(4)/................... 0.81% 0.84%
</TABLE>
------------------
(1) As of period end. Includes contracts already in repossession.
(2) As a percentage of the total number of contracts being serviced as of
period end, calculated on an annualized basis.
(3) The calculation of net loss includes actual charge-offs, deficiency
balances remaining after liquidation of repossessed vehicles and
expenses of repossession and liquidation, net of recoveries.
(4) As a percentage of the principal amount of contracts being serviced as
of period end, calculated on an annualized basis.
The data presented in the foregoing tables are for illustrative purposes
only and there is no assurance that the delinquency, loan loss or repossession
experience of the contracts will be similar to that set forth above.
TWELVE MONTHS ENDED DECEMBER 31, 1999 VERSUS TWELVE MONTHS ENDED DECEMBER 31,
1998.
The amounts classified as delinquent as a percentage of the portfolio
increased from 4.07% to 4.52%. The increase is attributable to a conversion to a
new servicing system in December 1999. The number of liquidations as a
percentage of the portfolio increased from 1.54% to 1.59%. Net losses as a
percentage of the outstanding principal amount of the contracts decreased from
0.80% to 0.64%. The decrease is attributable to more stringent collection
procedures implemented by the servicer. The number of contracts in the portfolio
increased from 67,137 to 91,556 due to an increase in Harley-Davidson motorcycle
production and HOFS's market share penetration of units financed.
TWELVE MONTHS ENDED DECEMBER 31, 1998 VERSUS TWELVE MONTHS ENDED DECEMBER 31,
1997.
The amounts classified as delinquent as a percentage of the portfolio
decreased from 4.31% to 4.07%. The decrease is attributable to the seasoning of
the portfolio. The number of liquidations as a percentage of the portfolio
increased from 1.42% to 1.54%. The increase is attributable to growth and
seasoning of the Delta loan program. Net losses as a percentage of the
outstanding principal amount of the contracts decreased from 0.87% to 0.80%. The
decrease is attributable to more stringent collection procedures implemented by
the servicer. The number of
S-21
<PAGE>
contracts in the portfolio increased from 45,258 to 67,137 due to an increase in
Harley-Davidson motorcycle production and HDFS's market share penetration of
units financed.
TWELVE MONTHS ENDED DECEMBER 31, 1997 VERSUS TWELVE MONTHS ENDED DECEMBER 31,
1996.
The amounts classified as delinquent as a percentage of the portfolio
increased from 4.30% to 4.31%. The number of liquidations as a percentage of the
portfolio increased from 0.74% to 1.42%. The increase is attributable to growth
and seasoning of the Delta loan program. Net losses as a percentage of the
outstanding principal amount of the contracts increased from 0.54% to 0.87%. The
increase is attributable to a lower collectors to account ratio due to the
launch of HDFS's credit card operation. The number of contracts in the portfolio
increased from 32,574 to 45,258 due to an increase in Harley-Davidson motorcycle
production and HDFS's market share penetration of units financed.
TWELVE MONTHS ENDED DECEMBER 31, 1996 VERSUS TWELVE MONTHS ENDED DECEMBER 31,
1995.
The amounts classified as delinquent as a percentage of the portfolio
increased from 3.51% to 4.30%. The increase is attributable to overall portfolio
growth. The number of repossessions as a percentage of the portfolio decreased
from 0.76% to 0.74%. Net losses as a percentage of the outstanding principal
amount of the contracts increased from 0.47% to 0.54%. The increase is
attributable to overall portfolio growth. The number of contracts in the
portfolio increased from 20,590 to 32,574 due to an increase in Harley-Davidson
motorcycle production and HDFS's market share penetration of units financed.
THREE MONTHS ENDED MARCH 31, 2000 VERSUS THREE MONTHS ENDED MARCH 31, 1999.
The amounts classified as delinquent as a percentage of the portfolio decreased
from 3.62% to 3.15%. The decrease is attributable to increased collections. The
number of liquidations as a percentage of the portfolio increased from 1.67% to
1.95%. The increase is attributable to the growth and seasoning of the Delta
loan program. Net losses as a percentage of the outstanding principal amount of
the contracts decreased from 0.84% to 0.81%. The decrease is attributable to
increased recoveries on defaulted contracts. The number of contracts in the
portfolio increased from 72,411 to 98,306 due to an increase in Harley-Davidson
motorcycle production and HDFS's market share penetration of units financed. We
know of no trends that are likely to increase the rate of delinquencies or
losses on the contracts.
YIELD AND PREPAYMENT CONSIDERATIONS
By their terms, the contracts may be prepaid, in whole or in part, at any
time. Each contract also contains a provision which permits the seller to
require full prepayment in the event of a sale of the related motorcycle
securing a contract. In addition, repurchases of the contracts from the trust by
the depositor, and concurrently from the depositor by the seller, could occur in
the event of a breach of certain representation and warranties with respect to
the contracts. Repurchases of contracts from the trust by the depositor, and
concurrently from the depositor by the seller, could also occur if the depositor
exercises its limited option to repurchase the contracts from the trust when the
aggregate outstanding principal balances of the contracts owned by the trust has
declined to less than 10% of the sum of:
- the aggregate outstanding principal balance of the contracts owned by
the trust as of the closing date; and
S-22
<PAGE>
- the initial amount on deposit in the pre-funding account.
Any prepayments and repurchases of contracts will reduce the average life
of the certificates and the interest received by the certificateholders over the
life of the certificate (for this purpose the term "PREPAYMENT" includes
liquidations due to default, as well as receipt of proceeds from credit life,
credit disability and casualty insurance policies). In addition, funds remaining
in the pre-funding account at the end of the funding period will be used to
prepay outstanding principal of the certificates and as a result, the interest
received by certificateholders over the life of the certificates will be
reduced.
The last scheduled payment on the initial contract with the latest maturity
will occur in [ ]. The last scheduled payment on the contract with the latest
maturity among the contracts as a whole, including any subsequent contracts,
will not occur later than [ ].
POOL FACTORS
The "CLASS A CERTIFICATE POOL FACTOR" will be a seven-digit decimal
indicating the certificate balance of the Class A Certificates on the payment
date as a fraction of the aggregate certificate balances of the contracts as of
the closing date. The "CLASS B CERTIFICATE POOL FACTOR" will be a seven-digit
decimal indicating the certificate balance of the Class B Certificates on the
payment date as a fraction of the aggregate certificate balances of the
contracts as of the closing date. The servicer will compute the pool factors
each month. Initially, each factor will be 1.0000000 and thereafter will decline
to reflect reductions in the certificate balances. The portion of the
certificate balance for any class of certificates for a given month allocable to
a certificateholder can be determined by multiplying the original denomination
of the holder's certificate by the related pool factor, as the case may be, for
that month.
You will receive monthly reports concerning the distributions received on
the contracts, the aggregate principal balance for the contracts, the related
certificate factors and various other items of information pertaining to the
trust. Furthermore, the trustee will furnish you with information for tax
reporting purposes not later than the latest date permitted by law. See
"DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS--SERVICING--STATEMENTS TO
SECURITYHOLDERS" in the accompanying prospectus.
DESCRIPTION OF THE CERTIFICATES
This section supplements the information in the accompanying prospectus
under the caption "DESCRIPTION OF THE Certificates". However, as these
statements are only summaries, you should read the pooling and servicing
agreement, a form of which has been filed as an exhibit to the registration
statement of which the accompanying prospectus forms a part. A copy of the
pooling and servicing agreement is available to you upon request to the
depositor and will be filed with the Securities Exchange Commission following
the issuance of the certificates.
GENERAL
The certificates will be issued pursuant to the terms of the pooling and
servicing agreement among the trustee, the depositor and the servicer.
S-23
<PAGE>
Two classes of certificates evidencing undivided ownership interests in the
trust, designated as the:
- Class A Certificates, and
- Class B Certificates will be issued.
The Class A Certificates will evidence in the aggregate an undivided
ownership interest of approximately ___% of the trust and the Class B
Certificates will evidence in the aggregate an undivided ownership interest of
approximately ____% of the trust.
The certificates will be delivered in book-entry form only and be issued in
minimum denominations of $1,000.
INTEREST
Interest will be distributable in respect of the certificates at the fixed
pass-through rates for each class of certificates shown on the cover page of
this prospectus supplement.
The trust will distribute interest in respect of the certificates on each
payment date from Available Interest and amounts withdrawn from the reserve fund
as set forth under "DISTRIBUTIONS ON THE CERTIFICATES--DISTRIBUTIONS" below.
Interest will be distributable to you monthly on the [_______] of each
month or, if that date is not a business day, on the next succeeding business
day and will be calculated for the interest period from and including the ____th
day of the prior month(or from and including the closing date, in the case of
the initial payment date) to but excluding the ____th day of the next month on
the basis of a 360-day year consisting of twelve 30-day months.
If on any payment date, the trust does not have sufficient funds to make a
full distribution of interest on any class the certificates, the amount of the
shortfall will be carried forward, and together with interest on the shortfall
amount at the applicable pass-through rate for that class, added to the amount
of interest distributable in respect of that class of certificates on the next
payment date.
PRINCIPAL
On each payment date, principal in respect of the certificates will be
distributable in an amount equal to the monthly principal for that payment date.
The holders of the Class A Certificates and the Class B Certificates will be
entitled to receive a PRO RATA share of the amounts to be distributed in respect
of principal. However, no distributions of principal in respect of the Class B
Certificates will be made on any payment date until interest and principal in
respect of the Class A Certificates has been distributed. Principal in respect
of the certificates will be distributed as set forth under "DISTRIBUTIONS ON THE
CERTIFICATES--DISTRIBUTIONS" below.
OPTIONAL PREPAYMENT
S-24
<PAGE>
The seller, at its option, may repurchase all of the contracts owned by a
trust on any payment date following the date on which the aggregate principal
balance of the contracts is less than 10% of the aggregate principal balance of
the contracts as of the cut-off date. The purchase price to be paid in
connection with the purchase will be at least equal to the sum of:
- the unpaid certificate balance of the certificates as of that payment
date, together with all interest distributable in respect of the
certificates as of that payment date;
- unreimbursed servicer advances;
- accrued but unpaid servicer fees;
- any other amounts payable at the time from Available Amounts; minus
- amounts on deposit in the reserve fund.
If the seller does purchase the contracts, the certificates will be paid in
full on the payment date on which the purchase occurs.
VOTING RIGHTS
If a servicer default occurs, the trustee or holders of certificates
evidencing more than 50% of the aggregate principal balance of the contracts may
remove the servicer without the consent of any other holder of certificates. If
a servicer default occurs, holders of certificates evidencing more than 50% of
the aggregate principal balance of the contracts may waive any servicer default
other than a default in making any required deposits into the collection
account.
NOTICES
Certificateholders will be notified in writing by the trustee of any
servicer default or termination of, or appointment of a successor to, the
servicer promptly upon a responsible officer obtaining actual knowledge of these
events. Except for the monthly and annual reports to certificateholders
described this prospectus supplement, the trustee is not obligated under the
pooling and servicing agreement to forward any other notices to the
certificateholders. There are no provisions in the pooling and servicing
agreement for the regular or special meetings of certificateholders.
THE ACCOUNTS
THE COLLECTION ACCOUNT
The trustee will establish an account referred to as the collection
account. The servicer will cause all collections made on or in respect of the
contracts during a due period to be deposited in or credited to the collection
account. The servicer is required to deposit, without deposit into any
intervening account, into the collection account as promptly as possible, but in
any case not later than the second business day following the receipt thereof,
all amounts received on or in respect of the contracts. The servicer is required
to use its best efforts to cause an obligor to make all payments on the
contracts directly to one or more lockbox banks, acting as
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agent for the trust pursuant to a lockbox agreement. Funds in the collection
account will be invested in certain eligible investments. All income or other
gain from such investments will be promptly deposited in, and any loss resulting
from such investments shall be charged to, the collection account.
THE PRE-FUNDING ACCOUNT
The trustee will establish a trust account referred to as the pre-funding
account in accordance with the sale and servicing agreement. During the funding
period, the pre-funding account will be maintained by the trustee for your
benefit to secure the depositor's obligations under the pooling and servicing
agreement to purchase and transfer subsequent contracts to the trust. On the
closing date, the depositor will deposit $[ ] into the pre-funding account.
During the funding period, amounts on deposit in the pre-funding account will be
reduced by the amount thereof that the depositor uses to purchase subsequent
contracts from the seller and contemporaneously transfer to the trust. The
depositor expects that the pre-funded amount will be reduced to less than
$150,000 by the payment date occurring in [ ]. Any pre-funded amount remaining
at the end of the funding period will be payable to the certificateholders. See
"DESCRIPTION OF THE CERTIFICATES -- MANDATORY SPECIAL REDEMPTION".
THE RESERVE FUND
The reserve fund will be a segregated account in the name of
[____________], as collateral agent. The reserve fund will be created with an
initial deposit by the depositor on the closing date of an amount equal to
$________ which is less than the amount that is required to be on deposit in the
reserve fund. The reserve fund will thereafter be funded as described above
under "DISTRIBUTIONS ON THE CERTIFICATES--DISTRIBUTIONS".
Amounts held from time to time in the reserve fund will be held for the
benefit of certificateholders and may be invested in investments acceptable to
the rating agencies rating certificates as being consistent with the ratings of
the certificates at the direction of the servicer. Investment income on those
investments will be paid to the depositor, upon the direction of the servicer,
to the extent that funds on deposit in the reserve fund on any payment date
exceed the amount that is required to be on deposit in the reserve fund. If the
amount on deposit in the reserve fund on any payment date exceeds the amount
that is required to be on deposit in the reserve fund on that payment date, the
collateral agent will withdraw that excess and pay it to the depositor. Upon any
distribution to the depositor of those excess amounts, neither the holders of
the Class A Certificates nor the holders of the Class B Certificates will have
any rights in, or claims to, those amounts.
The amount that is required to be on deposit in the reserve fund on each
payment date will initially be $[ ]. However, on any payment date, the
amount that is required to be on deposit in the reserve fund will be an
amount equal to $[ ].
The servicer may, from time to time after the date of this prospectus
supplement, request each rating agency rating the certificates to approve a
formula for determining the amount that is required to be on deposit in the
reserve fund on each payment date that is different from that described above.
If each rating agency delivers a letter to the trustee to the effect that the
use of
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any new formula will not result in a qualification, reduction or withdrawal of
its then-current rating of any class of certificates, then the amount that is
required to be on deposit in the reserve fund on each payment date will be
determined in accordance with the new formula. The pooling and servicing
agreement will accordingly be amended, without the consent of any
certificateholder, to reflect the new calculation.
If the amounts of Available Interest and/or Available Principal available
to the trust for any payment date are insufficient to make distributions of
principal and interest on the certificates, the collateral agent will withdraw
funds from the reserve fund for distribution to the certificateholders to cover
any shortfalls. If on the final scheduled payment date, the certificate balance
of each class has not been reduced to zero, the collateral agent will withdraw
funds from the reserve fund to pay those certificates in full.
CALCULATION OF RESERVE FUND REQUIRED AMOUNT
On the closing date, the depositor will deposit a total of $[ ]
into the reserve fund initial deposit. With respect to any payment date, the
reserve fund required amount will equal the greater of (a) [ ]% of the
principal balance of the contracts in the trust as of the first day of the
immediately preceding due period; PROVIDED, HOWEVER, that if certain trigger
events occur, the reserve fund required amount will be equal to [ ]% of the
principal balance of the contracts in the trust as of the first day of the
immediately preceding due period and (b) [ ]% of the aggregate of the initial
certificate balances; PROVIDED, HOWEVER, in no event shall the reserve fund
required amount be greater than the aggregate outstanding principal balance
of the securities. As of any payment date, the amount of funds actually on
deposit in the reserve fund initial deposit may, in certain circumstances, be
less than the reserve fund required amount.
A "RESERVE FUND TRIGGER EVENT" will have been deemed to occur with
respect to any payment date if (i) the Average Delinquency Ratio for such
payment date is equal to or greater than (a) [ ]% with respect to any payment
date which occurs within the period from the closing date to, and inclusive
of, the first anniversary of the closing date, (b) [ ]% with respect to any
payment date which occurs within the period from the day after the first
anniversary of the closing date to, and inclusive of, the second anniversary
of the closing date, or (c) [ ]% for any payment date 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) [ ]% for any
payment date following the third anniversary of the closing date; (ii) the
Average Loss Ratio for such payment date is equal to or greater than (a) [ ]%
with respect to any payment date which occurs within the period from the
closing date to, and inclusive of, the eighteen months following the closing
date or (b) [ ]% with respect to any payment date which occurs following the
eighteen month period following the closing date; or (iii) the Cumulative
Loss Ratio for such payment date is equal to or greater than (a) [ ]% with
respect to any payment date which occurs within the period from the closing
date to, and inclusive of, the first anniversary of the closing date, (b) [ ]
% with respect to any payment date which occurs within the period from the
day after the first anniversary of the closing date to, and inclusive of, the
second anniversary of the closing date, (c) [ ]% for any payment 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) [ ]% following the third anniversary of the closing date.
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A reserve fund trigger event will be deemed to have terminated with
respect to a payment date if no reserve fund trigger event shall exist with
respect to [ ] consecutive payment dates (inclusive of the respective payment
date).
INTEREST RESERVE ACCOUNT
The depositor will establish, and fund with an initial deposit on the
closing date, the interest reserve account, for the purpose of providing
additional funds for payment to the trust of carrying charges to pay certain
distributions on payment dates occurring during (and on the first payment date
following the end of) the funding period. In addition to the initial deposit,
all investment earnings with respect to the pre-funded account are to be
deposited into the interest reserve account and, pursuant to the sale and
servicing agreement, the depositor is obligated to pay to the trust, on each
payment date described above, amounts in respect of carrying charges from such
account.
The interest reserve account will be established to account for the fact
that a portion of the proceeds obtained from the sale of the certificates will
be initially deposited in the pre-funding account rather than invested in
contracts, and the monthly investment earnings on amounts in the pre-funding
account (until such amounts have been used to purchase subsequent contracts) are
expected to be less than the weighted average of the interest rates of the
respective classes of certificates with respect to the corresponding portion of
the principal balances of respective classes of certificates, as well as the
amount necessary to pay the trustees' fees. The interest reserve account is not
designed to provide any protection against losses on the contracts in the trust.
After the funding period, money in the interest reserve account will be released
to the depositor.
THE DISTRIBUTION ACCOUNT
The depositor will establish and maintain with an eligible institution the
certificate distribution account, in the name of the trust on behalf of the
certificateholders, in which amounts released from the collection account for
distribution to certificateholders will be deposited and from which all
distributions to certificateholders will be made.
MANDATORY REDEMPTION FOLLOWING THE FUNDING PERIOD
Certificateholders will be prepaid in part, without premium, on the
payment date on or immediately following the last day of the funding period
if any amount remains on deposit in the pre-funding account after subsequent
contracts are transferred to the trust. The aggregate principal amount of
certificates to be prepaid will be an amount equal to the amount then on
deposit in the pre-funding account allocated pro rata. If the amount on
deposit in the pre-funding account is less than $150,000, only the Class A
certificateholders will be prepaid.
PAYMENTS ON THE CERTIFICATES
AVAILABLE AMOUNTS
The trust will pay principal and interest in respect of the certificates on
each payment date from Available Amounts for the payment date, as well as
amounts permitted to be
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withdrawn from the reserve fund. See "CERTAIN INFORMATION REGARDING THE
NOTES--THE ACCOUNTS--RESERVE FUND". "Available Amounts" for any payment date are
generally the sum of:
- - the following amounts on deposit in the collection account which the trust
received during the prior calendar month;
(1) all amounts allocable to scheduled principal or interest payments on
the contracts;
(2) prepayments of contracts; and
(3) proceeds of repossessed financed motorcycles and other proceeds of
defaulted contracts;
- - the purchase price paid by the depositor in repurchasing contracts from the
trust on that payment date as a result of a breach of the representations
and warranties with respect to those contracts in the sale and servicing
agreement;
- - servicer advances made by the servicer on that payment date in respect of
delinquent interest payments for the prior calendar month; and
- - the amount paid by the depositor to purchase the contracts when the
aggregate outstanding principal balance of the contracts is reduced to less
than 10% of the sum of (i) aggregate principal balance of the contracts
owned by the trust as of the closing date and (ii) the initial mount on
deposit in the pre-funding account.
The precise calculation of the funds available to the trust on each payment
date to make payments on the certificates is set forth in the definition of
"Available Amounts" and the definitions of the defined terms contained in that
definition set forth in the Glossary. We refer you to those definitions.
SERVICING COMPENSATION AND REIMBURSEMENT OF SERVICER ADVANCES
On each payment date, the servicer will be entitled to receive:
- the base servicing fee in an amount equal to the product of one
twelfth of one percent (1%) and the aggregate principal balance of the
contracts as of the last day of the second calendar month preceding
the month in which that payment date falls; and
- any investment income earned on amounts on deposit in the collection
account during the prior calendar month.
The servicer will also be entitled to retain any late payment fees,
prepayment charges, if any, and other similar fees and charges received during
the prior calendar month.
The servicer will reimburse itself for servicer advances out of:
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- amounts received by the servicer from the obligors on account of the
related delinquent contract payments;
- the proceeds, net of expenses incurred by the servicer, of the sale of
the repossessed financed vehicles securing the related delinquent
contracts; and
- payments on other contracts when the servicer has determined that an
advance will not be recoverable from payments by the related obligor.
DISTRIBUTIONS
On each payment date, the trustee will distribute the following amounts in
the following order and priority from the following funds:
(1) from the Available Amounts, to the servicer, reimbursement of servicer
advances;
(2) from Available Interest, to the servicer, payment of the base
servicing fee;
(3) from Available Interest, to the Class A certificateholders, an amount
equal to the accrued and unpaid interest on the Class A Certificates,
including any accrued and unpaid interest on the Class A Certificates
payable on prior payment dates plus interest on that accrued and
unpaid interest, and if the remaining Available Interest is
insufficient, the Class A certificateholders will be entitled to
receive interest first from funds withdrawn from the reserve fund and
second, if those amounts are insufficient, from the Class B Percentage
of Available Principal;
(4) from Available Interest, to the Class B certificateholders, an amount
equal to the accrued and unpaid interest on the Class B Certificates,
including any accrued and unpaid interest on the Class B Certificates
payable on prior payment dates plus interest on that accrued and
unpaid interest and if the remaining Available Interest is
insufficient, the Class B certificateholders will be entitled to
receive interest from funds withdrawn from the reserve fund;
(5) from Available Amounts, to the Class A certificateholders, an amount
equal to the Class A Principal Distributable Amount for such payment
date and if the remaining Available Amounts are insufficient, the
Class A certificateholders will be entitled to receive principal from
funds withdrawn from the reserve fund;
(6) from Available Amounts, to the Class B certificateholders, an amount
equal to the Class B Principal Distributable Amount for such payment
date and if the remaining Available Amounts are insufficient, the
Class B certificateholders will be entitled to receive principal from
funds withdrawn from the reserve fund;
(7) from Available Amounts, to the reserve fund, an amount necessary to
increase the amount on deposit in the reserve fund to the required
amount; and
(8) any remaining Available Amounts to the depositor.
RATINGS OF THE CERTIFICATES
It is a condition of issuance that each of Standard & Poor's Rating
Services and Moody's Investors Service, Inc.
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- rate the Class A Certificates in its [___________] rating category,
- rate the Class B Certificates at least [___________] respectively.
The ratings address the likelihood of the timely receipt of interest and
distribution of principal in respect of each class of certificates on or before
the scheduled final payment date. The ratings will be based primarily upon the
contracts and the related property, the reserve fund, the yield supplement
account and the subordination provided by the Class B Certificates, in the case
of the Class A Certificates.
We cannot assure you that any rating will not be lowered or withdrawn by
the assigning rating agency. In the event that ratings with respect to the
certificates are qualified, reduced or withdrawn, no person or entity will be
obligated to provide any additional credit enhancement with respect to the
certificates.
The ratings should be evaluated independently from similar ratings on other
types of certificates. A rating is not a recommendation to buy, sell or hold the
certificates, inasmuch as these ratings do not comment as to market price or
suitability for a particular investor. The ratings do not address the likelihood
of distributions of principal in respect of any class of certificates prior to
the scheduled final payment date or the possibility of the imposition of United
States withholding tax with respect to non-United States Persons.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
TREATMENT OF TRUST AS GRANTOR TRUST
Winston & Strawn, as federal tax counsel to the trust, will deliver its
opinion that the trust will be treated for federal income tax purposes as a
grantor trust and not as an association (or a publicly traded partnership)
taxable as a corporation. They will further opine that each certificateholder
will be treated for federal income tax purposes as the owner of a pro rata
undivided interest in the income and assets of the trust. These opinions are
subject to the further explanation, assumptions and qualifications described in
the accompanying prospectus under the heading "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--GRANTOR TRUST". For federal income tax purposes, the trust will be
deemed to have acquired the following assets: the principal and interest due
with respect to each contract (excluding the portion retained by the seller),
any rights to receive payments under a yield supplement agreement, and certain
other rights in favor of the trust with respect to payments due on the
contracts.
TAX TREATMENT OF INVESTORS
Each certificateholder will be required to report on its federal income tax
return its pro rata share of the entire income from the contracts in the trust,
including interest, original issue discount, prepayment fees, assumption fees,
any gains on disposition of contracts, and late payment charges. A
certificateholder will also be required to report any payments received under a
yield supplement agreement to the extent that these payments are treated as
income. Each certificateholder will be entitled to deduct its pro rata share of
servicing fees, prepayment fees, assumption fees, and any losses recognized upon
disposition of contracts. A
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certificateholder's recognition of income required to be reported on its return
and its ability to deduct expenses of the trust are subject to the further
explanation, assumptions and qualifications described in detail in the
accompanying prospectus.
ERISA CONSIDERATIONS
CLASS A CERTIFICATES
Subject to the considerations set forth below and under "ERISA
CONSIDERATIONS" in the accompanying prospectus, the Class A Certificates may be
purchased by an employee benefit plan, an individual retirement account or a
similar arrangement (a "Benefit Plan") subject to ERISA or Section 4975 of the
United States Internal Revenue Code of 1986, as amended (the "Code"). A
fiduciary of a Benefit Plan must determine that the purchase of a Class A
Certificate is consistent with its fiduciary duties under ERISA and does not
result in a nonexempt prohibited transaction as defined in Section 406 of ERISA
or Section 4975 of the Code.
The United States Department of Labor (the "DOL") has granted to [ ] and
[ ]administrative exemptions (Prohibited Transaction Exemptions [ ] and [ ], as
amended by Prohibited Transaction Exemption 97-34 (the "Exemptions")) from some
of the prohibited transaction rules of ERISA with respect to the initial
purchase, the holding and the subsequent resale by Benefit Plans of certificates
representing interests in asset-backed pass-through trusts that consist of
receivables, loans and other obligations that meet the conditions and
requirements of the Exemptions. The receivables covered by the Exemptions
include motor vehicle installment obligations such as the contracts. The
Exemptions also apply to transactions in connection with the servicing,
management and operation of the trust which might otherwise constitute
prohibited transactions.
Among the conditions that must be satisfied for either of the Exemptions to
apply to the acquisition by a Benefit Plan of the Class A Certificates are the
following:
1. The acquisition of the Class A Certificates by a Benefit Plan is on
terms (including the price for that Class A Certificates) that are at
least as favorable to the Benefit Plan as they would be in an
arm's-length transaction with an unrelated party.
2. The rights and interests evidenced by the Class A Certificates
acquired by the Benefit Plan are not subordinated to the rights and
interests evidenced by other certificates of the trust.
3. The Class A Certificates acquired by the Benefit Plan have received a
rating at the time of the acquisition that is in one of the three
highest generic rating categories from Standard & Poor's Rating
Services ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Duff &
Phelps Inc. ("D&P") or Fitch IBCA, Inc. ("Fitch" and together with
S&P, Moody's and D&P, the "Rating Services").
4. The trustee is not an affiliate of any member of the Restricted Group
(as defined below).
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5. The sum of all payments made to and retained by the underwriters in
connection with the purchase of the Class A Certificates represents
not more than reasonable compensation for underwriting the Class A
Certificates. The sum of all payments made to and retained by the
depositor pursuant to the transfer of the contracts to the trust
represents not more than the fair market value of those contracts. The
sum of all payments made to and retained by any servicer represents
not more than reasonable compensation for the servicer's services and
reimbursement of the servicer's reasonable expenses in connection
therewith.
6. The Benefit Plan investing in the Class A Certificates is an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D of
the Commission under the Securities Act of 1933, as amended.
The trust must also meet the following requirements:
1. The corpus of the trust must consist solely of assets of the type that
have been included in other investment pools.
2. Certificates in those other investment pools must have been rated in
one of the three highest generic rating categories of any of the
Rating Services for at least one year prior to the Benefit Plan's
acquisition of certificates.
3. Certificates evidencing interests in those other investment pools must
have been purchased by investors other than Benefit Plans for at least
one year prior to any Benefit Plan's acquisition of Class A
Certificates.
The Exemptions do not apply in all respects to Benefit Plans sponsored by
the seller, the underwriters, the trustee, the servicer, any obligor with
respect to the contracts included in the trust constituting more than 5% of the
aggregate unamortized principal balance of the assets in the trust or any
affiliate of those parties (the "Restricted Group"). As of the date hereof, no
obligor with respect to the contracts included in the trust constitutes more
than 5% of the aggregate unamortized principal balance of the trust (i.e., the
initial principal amount of the certificates). Moreover, each Exemption provides
relief from specified self-dealing/conflict of interest prohibited transactions
that may arise when a fiduciary causes a Benefit Plan to invest in a trust
holding receivables on which the fiduciary (or its affiliate) is obligor only
if, among other requirements,
1. in the case of the acquisition of Class A Certificates in connection
with the initial issuance, at least 50% of each class of certificates
in which Benefit Plans have invested is acquired by persons
independent of the Restricted Group and at least 50% of the aggregate
interest in the trust is acquired by persons independent of the
Restricted Group;
2. a Benefit Plan's investment in the Class A Certificates does not
exceed 25% of all of the Class A Certificates outstanding at the time
of the acquisition;
3. immediately after the acquisition, no more than 25% of the assets of a
Benefit Plan with respect to which a person has discretionary
authority or renders
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investment advice are invested in certificates representing interests
in trusts containing assets sold or serviced by the same entity;
4. the fiduciary (or its affiliate) is obligor with respect to 5 percent
or less of the fair market value of receivables held in the trust; and
5. the Benefit Plan is not sponsored by a member of the Restricted Group.
The seller believes that the Exemptions will apply to the acquisition,
holding and resale of the Class A Certificates by a Benefit Plan and that all
conditions of the Exemptions other than those within the control of investors
will be met. However, there can be no assurance that the DOL or the IRS will not
take a contrary position, nor that that position will be sustained. One or more
alternative exemptions may be available with respect to specified prohibited
transactions to which the Exemptions are not applicable, depending in part upon
the type of a Benefit Plan's fiduciary making the decision to acquire the Class
A Certificates and the circumstances under which that decision is made. See
"ERISA CONSIDERATIONS" in the accompanying Prospectus. Any Benefit Plan which
acquires a beneficial ownership interest in a Class A Certificates will be
deemed, by virtue of the acceptance and acquisition of that ownership interest,
to have represented to the depositor and the trustee that that Benefit Plan is
an "accredited investor" for purposes of Rule 501(a)(1) of Regulation D under
the Securities Act.
CLASS B CERTIFICATES
Class B Certificates may not be acquired by an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA or a plan (as defined in Section 4975(e)(1) of the Code) or any person
acting on behalf of such a plan or using the assets of such a plan to acquire
the Class B Certificates or any entity whose underlying assets include plan
assets by reason of a plan's investment in the entity, except as provided below
with respect to insurance company general accounts. By its acceptance of a Class
B Certificate, each holder thereof will be deemed to have represented and
warranted that it is not subject to the foregoing limitation.
In 1995, the DOL issued PTCE 95-60. Section III of PTCE 95-60 exempts from
the application of the prohibited transaction provisions of Sections 406(a),
406(b) and 407(a) of ERISA and Section 4975 of the Code transactions in
connection with the servicing, management and operation of a trust (such as the
trust) in which an insurance company general account has an interest as a result
of its acquisition of certificates issued by the trust, provided that certain
conditions are satisfied. If these conditions are met, insurance company general
accounts would be allowed to purchase classes of certificates (such as the Class
B Certificates) which do not meet the requirements of the Exemptions solely
because they (i) are subordinated to other classes of certificates in the trust
and/or (ii) have not received a rating at the time of the acquisition in one of
the three generic highest rating categories from any of the Rating Services. All
other conditions of the Exemptions would have to be satisfied in order for PTCE
95-60 to be available. Before purchasing Class B Certificates, an insurance
company general account seeking to rely on Section III of PTCE 95-60 should
itself confirm that all applicable conditions and other requirements have been
satisfied.
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ALL CERTIFICATES
A purchaser of the certificates should be aware, however, that even if the
conditions specified in one or more exemptions are met, the scope of the relief
provided by the applicable exemption or exemptions might not cover all acts that
might be construed as prohibited transactions.
Prospective Benefit Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code, the applicability of the Exemptions
or any other exemptions, and the potential consequences of any purchase in their
specific circumstances, prior to making an investment in a certificate.
A governmental plan as defined in Section 3(32) of ERISA is not subject to
ERISA or Code Section 4975. However, that governmental plan may be subject to
federal, state or local law which is to a material extent similar to the
provisions of ERISA or Code Section 4975 ("Similar Law"). A fiduciary of a
governmental plan should make its own determination as to the need for and
availability of any exemptive relief under such Similar Law.
LEGAL PROCEEDINGS
None of the depositor, the servicer, the seller or the trust are parties to
any legal proceeding which could have a material adverse impact on your interest
in the certificates or in the trust's assets.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
among the depositor, the seller and the underwriters, the depositor has agreed
to sell to each of the underwriters named below and each of those underwriters
has severally to purchase the following respective initial certificate balances
of the certificates at the respective public offering prices less the respective
underwriting discounts shown on the cover page of this prospectus supplement:
INITIAL CERTIFICATE
INITIAL CERTIFICATE BALANCE OF BALANCE OF
UNDERWRITER CLASS A CERTIFICATES CLASS B CERTIFICATES
----------- -------------------- --------------------
In the underwriting agreement, the underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the certificates
being offered, if any of the certificates are purchased. In the event of default
by the underwriters, the underwriting agreement provides that, in certain
circumstances, the underwriting agreement may be terminated.
Distribution of the certificates may be made by the underwriters from time
to time in one or more negotiated transactions, or otherwise, at varying prices
to be determined at the time of sale. The underwriters may effect such
transactions by selling the certificates to or through
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dealers, and such dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the underwriters. In connection with
the sale of the certificates, the underwriters may be deemed to have received
compensation from the seller in the form of underwriting compensation. The
underwriters and any dealers that participate with the underwriters in the
distribution of the certificates may be deemed to be an underwriter and any
commissions received by them and any profit on the resale of the certificates
positioned by them may be deemed to be underwriting discounts and commissions
under the Securities Act. The underwriters may allow and the dealers may reallow
to other dealers a discount not in excess of the amount noted in the table
below:
SELLING CONCESSION REALLOWANCE
CLASS NOT TO EXCEED NOT TO EXCEED
----- ------------- -------------
A
B
After the initial public offering of the certificates, the offering prices and
other selling terms may be varied by the underwriters.
In connection with the offering of the certificates, [____________], on
behalf of the underwriters, may engage in overallotment, stabilizing
transactions or syndicate covering transactions in accordance with Regulation M
under the Securities Exchange Act of 1934. Overallotment transactions involve
syndicate sales in excess of the offering size creating a syndicate short
position. Stabilizing transactions permit bids to purchase the certificates so
long as the stabilizing bids do not exceed a specified minimum. Syndicate
covering transactions involve purchases of certificates in the open market after
the distribution has been completed in order to cover syndicate short positions.
Such over-allotment transactions, stabilizing and syndicate covering
transactions may cause the price of the certificates to be higher than they
would otherwise be in the absence of those transactions. The underwriters do not
represent that the underwriters will engage in those transactions nor that such
transactions, once commenced, will not be discontinued without notice.
The depositor and some of its affiliates have agreed to indemnify the
underwriters against some liabilities in connection with the sale of
certificates, including liabilities under the Securities Act of 1933, as
amended.
The certificates have no established trading market. The underwriters have
advised us that the underwriters intend to make a market in the certificates but
are not obligated to do so and may discontinue market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the certificates.
Neither the seller nor the underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above, if engaged in, may have on the prices of the certificates. In
addition, neither the seller nor the underwriters make any representation that
the underwriter will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The underwriters have represented and agreed that:
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(i) they have not offered or sold and, prior to the expiration of the
period of six months from the closing date, will not offer or sell any
certificates to persons in the United Kingdom, except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted
and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulation 1995;
(ii) they have complied and will comply with all applicable provisions
of the Financial Services Act 1986 with respect to anything done by
them in relation to the certificates in, from or otherwise involving
the United Kingdom; and
(iii) they have only issued or passed on and will only issue or pass
on in the United Kingdom any document received by it in connection
with the issue of the certificates to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995, or is a person to
whom such document may otherwise lawfully be issued or passed on.
LEGAL MATTERS
Winston & Strawn, Chicago, Illinois, has provided a legal opinion relating
to the certificates in its capacity as special counsel to the depositor and the
servicer. Certain legal matters for the underwriters will be passed upon by
[___________]. The pooling and servicing agreement and the certificates will be
governed by the laws of the State of Illinois.
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<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Securities
(the "GLOBAL SECURITIES") will be available only in book-entry form. Investors
in the Global Securities may hold such Global Securities through DTC and, in the
case of the Notes, Euroclear or Clearstream. The Global Securities will be
tradeable as home market instruments in both the European and U.S. domestic
markets. Initial settlement and all secondary trades will settle in same-day
funds.
Secondary market trading between investors holding Global Securities
through Euroclear and Clearstream will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (I.E. seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Euroclear or Clearstream and DTC
participants holding Global Securities will be effected on a
delivery-against-payment basis through the respective depositaries of Euroclear
and Clearstream (in such capacity) and as DTC participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect participants in DTC. As a result, Euroclear and Clearstream will
hold positions on behalf of their participants through their respective
depositaries, which in turn will hold such positions in accounts as DTC
participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to similar issues on pass-through
certificates. Investors' securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Euroclear or
Clearstream accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "LOCK-UP" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payments in same-day
funds.
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<PAGE>
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish the time of the trade where both the purchaser's and seller's accounts
are located to ensure that settlement can be made on the desired value date.
TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
participants will be settled using the procedures applicable to similar issues
of pass-through certificates in same-day funds.
TRADING BETWEEN EUROCLEAR AND/OR CLEARSTREAM PARTICIPANTS. Secondary market
trading between Euroclear participants or Clearstream participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
TRADING BETWEEN DTC SELLER AND EUROCLEAR OR CLEARSTREAM PURCHASER. When
Global Securities are to be transferred from the account of a DTC participant to
the account of a Euroclear participant or a Clearstream participant, the
purchaser will send instructions to Euroclear or Clearstream through a Euroclear
participant or Clearstream participant at least one business day prior to
settlement. Euroclear or Clearstream will instruct the respective depositary, as
the case may be, to receive the Global Securities against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment date to and excluding the settlement date. Payment will then be
made by the respective depositary to the DTC participant's account against
delivery of the Global Securities. After settlement has been completed, the
Global Securities will be credited to the respective clearing system and by the
clearing system, in accordance with its usual procedures, to the Euroclear
participant's or Clearstream participant's account. The Global Securities credit
will appear the next day (European time) and the cash debit will be back-valued
to, and the interest on the Global Securities will accrue from, the value date;
(which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (I.E., the trade fails),
the Euroclear or Clearstream cash debit will be valued instead as of the actual
settlement date.
Euroclear participants and Clearstream participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-positions
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Euroclear or Clearstream. Under
this approach, they may take on credit exposure to Euroclear or Clearstream
until the Global Securities are credited to their accounts one day later.
As an alternative, if Euroclear or Clearstream has extended a line of
credit to them, Euroclear participants or Clearstream participants can elect to
pre-position funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Euroclear participants or Clearstream
participants purchasing Global Securities would incur overdraft charges for one
day, assuming they cleared the overdraft when the Global Securities were
credited to their accounts. However, interest on the Global Securities would
accrue from the value date. Therefore, in many cases the investment income on
the Global Securities earned during that one-day period may substantially reduce
or offset the amount of such overdraft charges, although this
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<PAGE>
result will depend on each Euroclear participant's or Clearstream participant's
particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of CEDEL Participants or Clearstream
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
TRADING BETWEEN EUROCLEAR OR CLEARSTREAM SELLER AND DTC PURCHASER. Due to
time zone differences in their favor, Euroclear participants and Clearstream
participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC participant. The seller will send
instructions to Euroclear or Clearstream through a Euroclear participant or
Clearstream participant at least one business day prior to settlement. In these
cases, Euroclear or Clearstream will instruct the respective Depositary, as
appropriate, to deliver the bonds to the DTC participant's account against
payment. Payment will include interest accrued on the Global Securities from and
including the last coupon payment date to and excluding the settlement date. The
payment will then be reflected in the account of the Euroclear participant or
Clearstream participant the following day, and receipt of the cash proceeds in
the Euroclear participant's or Clearstream participant's account, would be
back-valued to the value date (which would be the preceding day, when settlement
occurred in New York). Should the Euroclear participant or Clearstream
participant have a line of credit with its respective clearing system and elect
to be in debit in anticipation or receipt of the sale proceeds in its account,
the back-valuation will extinguish any overdraft charges incurred over that
one-day-period. If settlement is not completed on the intended value date (I.E.,
the trade fails), receipt of the cash proceeds in the Euroclear participant's or
Clearstream participant's account would instead be valued as of the actual
settlement date. Finally, day traders that use, Euroclear or Clearstream and
that purchase Global Securities from DTC participants for delivery to Euroclear
participants or Clearstream participants should note that these trades would
automatically fail on the sale side unless affirmative action were taken. At
least three techniques should be readily available to eliminate this potential
problem:
(a) borrowing through Euroclear or Clearstream for one day (until the
purchase side of the day trade is reflected in their Euroclear or
Clearstream accounts) in accordance with the clearing system's
customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
participant no later than one day prior to settlement, which
would give the Global Securities sufficient time to be reflected
in their Euroclear or Clearstream account in order to settle the
sale side of the trade; or
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<PAGE>
(c) staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC
participant is at least one day prior to the value date for the
sale to the Euroclear participant or Clearstream participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENT
A beneficial owner of Global Securities holding securities through CEDEL or
Clearstream (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issued discount) on registered debt issued by U.S.
Persons, unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSONS (FORM W-8 OR FORM W-8BEN). Beneficial
owners of Securities that are non-U.S. Persons can obtain a complete
exemption from the withholding tax by filing a signed Form W-8 (Certificate
of Foreign Status) or Form W-8BEN (Certificate of Foreign Status of
Beneficial Owner for United States Tax Withholding). If the information
shown on Form W-8 changes, a new Form W-8 or Form W-8BEN must be filed
within 30 days of such change. After December 31, 2000, only Form W-8BEN
will be acceptable
EXEMPTION FOR NON-U.S. PERSONS WILL EFFECTIVELY CONNECTED INCOME (FORM
4224 OR FORM W-8ECI). A non-U.S. Person, including a non-U.S. corporation
or bank with a U.S. branch, for which the interest income is effectively
connected with its conduct of a trade or business in the United States, can
obtain an exemption from the withholding tax by filing Form 4224 (Exemption
from Withholding of Tax on Income Effectively Connected with the Conduct of
a Trade or Business in the United States) or Form W-8ECI (Certificate of
Foreign Person's Claim for Exemption from Withholding on Income Effectively
Connected with the Conduct of a Trade or Business in the United States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY
COUNTRIES (FORM 1001 OR FORM W-8BEN). Non-U.S. Persons that are
Securityholders residing in a country that has a tax treaty with the United
States can obtain an exemption or reduced tax rate (depending on the treaty
terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate
Certificate). If the treaty provides only for a reduced rate, withholding
tax will be imposed at that rate unless the filer alternatively files Form
W-8 or Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for
United States Tax Withholding). Form 1001 may be filed by the
Securityholder or his agent. After December 31, 2000, only Form W-8BEN will
be acceptable.
EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's
Request for Taxpayer Identification Number and Certification).
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<PAGE>
U.S. FEDERAL INCOME TAX REPORTING PROCEDURES. The holder of a Global
Security or in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it
holds (the clearing agency, in the case of persons holding directly on the
books of the clearing agency). Form W-8, Form 1001 and Form 4224 are
effective until December 31, 2000. Form W-8BEN and Form W-8ECI are
effective until the third succeeding calendar year from the date the form
is signed.
The term "U.S. PERSON" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States, any state thereof or the District of Columbia, (iii) an estate
the income of which is includible in gross income for United States tax
purposes, regardless of its source or (iv) a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust. Notwithstanding the preceding sentence, to
the extent provided in Treasury regulations, certain trusts in existence on
August 20, 1996, and treated as United States persons under the United States
Internal Revenue Code of 1986, as amended (the "Code") and applicable Treasury
regulations thereunder prior to such date, that elect to continue to be treated
as United States persons under the Code or applicable Treasury regulations
thereunder also will be a U.S. Person. This summary does not deal with all
aspects of U.S. Federal income tax withholding that may be relevant to foreign
holders of the Global Securities. Investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of the
Global Securities.
S-42
<PAGE>
GLOSSARY OF TERMS
AVAILABLE AMOUNTS means, with respect to any payment date, the sum of the
Available Interest and the Available Principal for such payment date.
AVAILABLE INTEREST means, with respect to any payment date, the total,
without duplication, of the following amounts received by the servicer on or in
respect of the contracts during the prior calendar month:
- all amounts allocable to scheduled interest payments on the contracts;
- the interest component of all prepayments of contracts;
- the interest component of all proceeds of repossessed financed
motorcycles and other proceeds of defaulted contracts;
- the interest component of the purchase price paid by the depositor in
repurchasing contracts from the trust on that payment date as a result
of a breach of the representations and warranties with respect to
those contracts in the sale and servicing agreement;
- all amounts received in respect of carrying charges transferred from
the interest reserve account;
- all amounts received in respect of interest, dividends, gains, income
and earnings on investment of funds in the trust accounts;
- servicer advances made by the servicer on that payment date in respect
of delinquent interest payments for the prior calendar month; and
- the interest component of the amount paid by the seller to purchase
the contracts when the aggregate principal balance of the contracts is
reduced to less than 10% of the sum of (i) the aggregate outstanding
principal balance of the contracts as of the closing date and (ii) the
initial mount on deposit in the pre-funding account.
AVAILABLE PRINCIPAL means, with respect to any payment date, the total,
without duplication, of the following amounts received by the servicer on or in
respect of the contracts during the prior calendar month:
- all amounts allocable to scheduled principal payments on the
contracts;
- the principal component of all prepayments of contracts;
- the principal component of all proceeds of repossessed motorcycles and
other proceeds of defaulted contracts;
- the principal component of the purchase price paid by the depositor in
repurchasing contracts from the trust on that payment date as a result
of a breach of the representations and warranties with respect to
those contracts in the sale and servicing agreement; and
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- the principal component of the amount paid by the seller to purchase
the contracts when the aggregate principal balance of the contracts is
reduced to less than 10% of the sum of (i) the aggregate outstanding
principal balance of the contracts as of the closing date and (ii) the
initial amount on deposit in the pre-funding account.
AVERAGE DELINQUENCY RATIO with respect to any payment date, is equal to the
arithmetic average of the Delinquency Ratios for the payment date and the two
immediately preceding payment dates.
AVERAGE LOSS RATIO for any payment date is equal to the arithmetic average
of the Loss Ratios for such payment date and the two immediately preceding
payment dates. The "LOSS RATIO" for any payment date is equal to the fraction
(expressed as a percentage) derived by dividing (x) the Net Liquidation Losses
for all contracts that became Liquidated Contracts during the immediately
preceding month multiplied by 12 by (y) the outstanding Principal Balances of
all contracts as of the beginning of the related month.
CUMULATIVE LOSS RATIO for any payment date means the fraction (expressed as
a percentage) computed by the servicer by dividing (a) the aggregate Net
Liquidation Losses for all contracts since the cutoff date through the end of
the related month by (b) the sum of (i) 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.
DELINQUENCY AMOUNT as of any payment date means the principal balance of
all contracts that were delinquent 60 days or more as of the end of the related
month (including contracts in respect of which the related motorcycles have been
repossessed and are still inventory).
DELINQUENCY RATIO for any payment date is equal to the fraction (expressed
as a percentage) derived by dividing (a) the Delinquency Amount during the
immediately preceding month by (b) the Principal Balance of the contracts as of
the beginning of the related month.
A LIQUIDATED CONTRACT means any defaulted contract as to which the servicer
has determined that all amounts which it expects to recover from or on account
of such contract have been recovered; PROVIDED that any defaulted contract in
respect of which the related motorcycle has been realized upon and disposed of
and the proceeds of such disposition have been realized shall be deemed to be a
Liquidated Contract; and PROVIDED FURTHER, a contract which has been repossessed
and has not been sold by the servicer for a period in excess of [___] days from
such date of repossession or a contract which has been delinquent more than
[___] days shall be deemed to be a Liquidated Contract with a zero balance.
NET LIQUIDATION LOSSES means, with respect to a Liquidated Contract, the
amount, if any, by which (a) the outstanding Principal Balance of such
Liquidated Contract plus accrued and unpaid interest thereon at the annual
interest rate stated in such Liquidated Contract to the date on which such
Liquidated Contract became a Liquidated Contract exceeds (b) the Net Liquidation
Proceeds for such Liquidated Contract.
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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 expenses incurred thereby, together, in all
instances, with the expected or actual proceeds of any recourse rights relating
to such contract as well as any post disposition proceeds received by the
servicer.
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 cut-off date, reduced by all payments and other
amounts received by the servicer as of such date allocable to principal;
provided, however, that (i) if (x) a contract is repurchased by the depositor
because of a breach of a representation or warranty, or if (y) the depositor
gives notice of its intent to purchase the contracts in connection with an
optional termination of the trust, in each case the Principal Balance of such
contract or contracts shall be deemed to be zero for the prior calendar month in
which such event occurs and for each calendar month thereafter and (ii) from and
after the prior calendar month in which a contract becomes a defaulted contract,
the Principal Balance of such contract shall be deemed to be zero; and (b) where
the context requires, the aggregate Principal Balances described in clause (a)
for all such contracts.
UNITED STATES PERSONS means:
- A citizen or resident of the United States;
- A corporation or partnership organized in or under the laws of
the United States, any state thereof or the District of Columbia;
- An estate the income of which is includible in gross income for
United States federal income tax purposes, regardless of its
source; or
A trust, (a) with respect to which a court within the United States is able to
exercise primary supervision over its administration, and one or more United
States fiduciaries have the authority to control all of its substantial
decisions, or (b) otherwise, the income of which is subject to U.S. federal
income tax regardless of its source.
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<PAGE>
Harley-Davidson Motorcycle Trust [ ]
BALANCE SHEET AS OF [__________], [_____]
Assets -- Cash............................ $
Beneficial Equity......................... $
Liabilities............................... $
NOTES TO THE BALANCE SHEET
Harley-Davidson Motorcycle Trust [ ] is a limited purpose business trust
established under the laws of the State of Delaware. It was formed on [ ] under
a trust agreement dated as of [ ] between the depositor and the trustee. The
activities of the trust are limited by the terms of the trust agreement to
acquiring, owning and managing loan contracts and related assets, issuing and
making payments on certificates and other related activities. Prior to and
including [ ], the trust did not conduct any activities.
The depositor will pay all fees and expenses related to the organization
and operations of the trust, other than withholding taxes, imposed by the United
States or any other domestic taxing authority. The depositor has also agreed to
indemnify the trustee and certain other persons involved in the sale of
certificates.
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<PAGE>
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE SECURITIES OFFERED BY THIS PROSPECTUS SUPPLEMENT,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
$
HARLEY-DAVIDSON MOTORCYCLE TRUST [ ]
$[ ] [ ]% HARLEY-DAVIDSON MOTORCYCLE CONTRACT BACKED CERTIFICATES, CLASS A
$[ ] [ ]% HARLEY-DAVIDSON MOTORCYCLE CONTRACT BACKED CERTIFICATES, CLASS B
HARLEY-DAVIDSON CREDIT CORP.
SELLER AND SERVICER
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
DEPOSITOR
---------------------
PROSPECTUS SUPPLEMENT
---------------------
[UNDERWRITERS]
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 22, 2000
PROSPECTUS
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
HARLEY-DAVIDSON MOTORCYCLE TRUSTS
HARLEY-DAVIDSON MOTORCYCLE CONTRACT BACKED NOTES
HARLEY-DAVIDSON MOTORCYCLE CONTRACT BACKED CERTIFICATES
(ISSUABLE IN SERIES)
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
AS DEPOSITOR
HARLEY-DAVIDSON CREDIT CORP.,
AS SELLER AND SERVICER
THE TRUSTS:
The depositor will form a new trust to issue each series of securities.
The trust will offer the securities under this prospectus and a prospectus
supplement which will be prepared separately for each series. Each trust will
own a pool of motorcycle retail installment contracts.
THE OFFERED SECURITIES:
- will consist of motorcycle contract backed securities sold
periodically in one or more series which may include one or more
classes of notes and/or one or more classes of certificates;
- will be paid only from the assets of the related trust;
- will be rated in one of the four highest rating categories by at
least one nationally recognized statistical rating organization;
- may have one or more forms of credit enhancement; and
- will be issued as part of a designated series that may include one
or more classes with payment rights that are senior or subordinate
to the rights of one or more of the other classes of securities.
-----------------
<PAGE>
YOU SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" ON PAGE 9 OF THIS PROSPECTUS AND THE OTHER RISK FACTORS INCLUDED IN THE
ACCOMPANYING PROSPECTUS SUPPLEMENT.
-----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED THAT
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------------
The amounts, prices and terms of each offering of securities will be
determined at the time of sale and will be described in a prospectus supplement
that will be attached to this prospectus.
This prospectus may not be used to offer and sell any series of
securities unless accompanied by the prospectus supplement for that series.
Prospectus dated ___________, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Important Notice About Information Presented in this Prospectus and the Accompanying Prospectus Supplement.....1
Prospectus Summary.............................................................................................1
Risk Factors...................................................................................................9
Harley-Davidson Motorcycles...................................................................................18
Other Manufacturers...........................................................................................18
Harley-Davidson Financial Services, Inc.......................................................................18
The Seller and Servicer.......................................................................................19
The Depositor.................................................................................................21
The Trusts....................................................................................................21
Use of Proceeds...............................................................................................23
The Trustee...................................................................................................23
Weighted Average Lives of the Securities......................................................................24
Factors and Trading Information...............................................................................25
Description of the Notes and Indenture........................................................................25
Description of the Certificates...............................................................................33
Information Regarding the Securities..........................................................................36
Description of the Transfer and Servicing Agreements..........................................................47
Legal Aspects of the Contracts................................................................................63
Material Federal Income Tax Consequences......................................................................70
ERISA Considerations..........................................................................................91
Ratings of the Securities.....................................................................................95
Plan of Distribution..........................................................................................95
Legal Matters.................................................................................................95
Where You Can Find More Information...........................................................................96
</TABLE>
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the securities in two separate
documents that offer varying levels of detail:
- this prospectus - which provides general information, some of
which may not apply to a particular series of securities including
your series, and
- the accompanying prospectus supplement - which provides a summary
of the specific terms of your series of securities.
We have included cross-references in this prospectus and the
accompanying prospectus supplement to captions in these materials where you can
find further discussions. The table of contents included in this prospectus and
the accompanying prospectus supplement provide the pages on which these captions
are located. References to "we", "our" and "us" refer to Harley-Davidson
Customer Funding Corp.
Whenever we use words like "intends," "anticipates" or "expects" or
similar words in this prospectus, we are making a forward-looking statement, or
a projection of what we think will happen in the future. Forward-looking
statements are inherently subject to a variety of circumstances, many of which
are beyond our control and could cause actual results to differ materially from
what we anticipate. Any forward-looking statements in this prospectus speak only
as of the date of this prospectus. We do not assume any responsibility to update
or review any forward-looking statement contained in this prospectus to reflect
any change in our expectation about the subject of that forward-looking
statement or to reflect any change in events, conditions or circumstances on
which we have based any forward-looking statement.
You should rely only on the information contained in this document,
including the information described under the heading "WHERE YOU CAN FIND MORE
INFORMATION" in the prospectus. We have not authorized anyone to provide you
with any different information or make any representation not contained in this
prospectus. If anyone makes such a representation to you, you should not rely on
it.
<PAGE>
PROSPECTUS SUMMARY
The following is only a summary of selected information from the
prospectus and provides a general overview of relevant terms of the securities.
It does not contain all the information that may be important to you. You should
read carefully this entire prospectus and the accompanying prospectus supplement
to understand all of the terms of the offering. In addition, you may wish to
read the documents governing the transfers and servicing of the contracts, the
formation of the trusts and the issuance of the securities. Those documents have
been filed as exhibits to the registration statement of which this prospectus is
a part.
There are material risks associated with an investment in the
securities. See "RISK FACTORS" in this prospectus and in the accompanying
prospectus supplement for a discussion of factors you should consider before
investing in the securities.
<TABLE>
<S><C>
Trust............................... For each series of securities, the depositor will form either a grantor
trust or an owner trust. An "owner trust" will issue notes and
certificates and will be formed by a trust agreement between the
depositor and the trustee of the owner trust. A "grantor trust" will
issue only certificates and will be formed by a pooling and servicing
agreement among the depositor, the servicer and the trustee of the
grantor trust.
Depositor........................... Harley-Davidson Customer Funding Corp., a wholly-owned subsidiary of
Harley-Davidson Credit Corp. The depositor will deposit the contracts
into the trust.
Seller.............................. Harley-Davidson Credit Corp. will sell the contracts to the depositor for
deposit into the trust.
Originating Dealers................. Motorcycle dealers originate the contracts in accordance with the
underwriting standards set by Harley-Davidson Credit Corp. under dealer
agreements governing the assignment of the contracts to the seller. The
seller acquires the contracts from the originating dealers in the
ordinary course of its business pursuant to the dealer agreements.
Servicer............................ Harley-Davidson Credit Corp. will service the contracts unless otherwise
specified in your prospectus supplement.
Trustee............................. The trustee of the trust for your series of securities will be identified
in your prospectus supplement.
Indenture Trustee................... If the trust issues notes, the trustee for the indenture pursuant to
which the notes will be issued will be identified in your prospectus
supplement.
Administrator....................... Harley-Davidson Credit Corp. will provide notices and
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perform other administrative functions of each trust.
The Securities...................... A series of securities may include:
- one or more of classes of notes which will be issued
pursuant to an indenture; and/or
- one or more classes of certificates, whether or not a class
of notes is issued as part of the series.
Terms of the Securities............. Your prospectus supplement provides the particular terms of your class of
notes and/or certificates, including:
- the stated principal amount of each class of notes and the
stated certificate balance of each class of certificates; and
- the interest rate, which may be fixed, variable, adjustable or
some combination of these rates, or method of determining the
interest rate.
The terms of a class of notes may differ from those of other
classes of notes of the same series and the terms of a class of
certificates may differ from those of other classes of
certificates of the same series in one or more aspects, including:
- timing and priority of payments;
- seniority;
- allocations of losses;
- interest rate or formula for calculating the interest rate;
- amount of interest or principal payments;
- whether interest or principal will be payable to holders of
the class if specified events occur;
- the right to receive collections from designated portions of
the contracts owned by the trust;
- scheduled final payment date; and
- the ability of holders of a class of notes or certificates to
direct the indenture trustee or the
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trustee to take specified remedies.
Trust Assets........................ The property of each trust will primarily be a pool of contracts secured
by new and used motorcycles and amounts due or collected under the
contracts on or after a cut-off date specified in your prospectus
supplement and will include related assets including:
- security interests in the financed motorcycles;
- proceeds from claims on insurance policies covering the
financed motorcycles or the obligors;
- certain rebates of premiums and other amounts relating to
insurance policies and other items financed under the contracts;
- the rights of the depositor in the agreements identified in
your prospectus supplement;
- amounts deposited in bank accounts specified in your
prospectus supplement; and
- proceeds from liquidated assets, including repossessed
motorcycles.
The Contracts....................... All of the contracts will be retail installment contracts originated
directly by the seller or purchased by the seller from the originating
dealers or other entities that finance the retail purchase of new and
used motorcycles.
Your prospectus supplement provides information about:
- the initial aggregate principal balance of the contracts
transferred to the trust;
- the number of contracts;
- the average contract principal balance;
- the geographical distribution of the contracts;
- the distribution of the contracts by annual percentage rate;
- the remaining term of the contracts;
- the weighted average remaining term of the
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contracts; and
- the weighted average annual percentage rate on the contracts.
Mandatory Purchase or Replacement of a
Contract............................ The depositor will make representations and warranties regarding the
contracts when it transfers the contracts to the trust, and the seller
will make representations and warranties regarding the contracts when it
sells the contracts to the depositor. In the event of an uncured breach
of any of these representations that materially and adversely affects the
trust's or securityholders' interest in a contract or the collectibility
of a contract, the depositor will be obligated to repurchase that
contract from the trust and the seller will be obligated to repurchase
that contract from the depositor. See "DESCRIPTION OF THE TRANSFER AND
SERVICING AGREEMENTS-REPRESENTATIONS AND WARRANTIES MADE BY THE SELLER
AND THE DEPOSITOR" in this prospectus.
Credit And Cash Flow
Enhancement......................... The depositor may arrange for protection from losses to one or
more classes of the securities. Credit enhancement may include:
- a cash collateral account;
- a spread account;
- subordination of one or more other classes of securities;
- one or more reserve funds;
- over-collateralization;
- letters of credit or other credit or liquidity facilities;
- surety bonds;
- guaranteed investment contracts;
- repurchase obligations;
- yield supplement agreements;
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- cash deposits;
- swap or other interest rate protection agreements;
- third party payments or other support; or
- other arrangements which may become suitable in light of credit
enhancement practices or developments in the future.
In addition, the depositor may develop and include in the trusts
features designed to ensure the timely payment of amounts owed to
you. These cash flow enhancement features may include any one or
more of the following:
- yield supplement agreements;
- liquidity facilities;
- cash deposits;
- third party payments or other support; or
- other arrangements which may become suitable in
light of cash flow enhancement practices or
developments in the future.
Your prospectus supplement will describe the specific terms of any
credit or cash flow enhancement applicable to your securities.
Servicing; Servicing Fee............ The servicer will be responsible for servicing, managing and
administering the contracts and financed motorcycles, and maintaining
custody of, enforcing and making collections on the contracts.
The trust will pay the servicer a monthly fee equal to a
percentage of the principal balance of the contracts at the
beginning of each month. The fee will be payable out of amounts
received on the contracts.
The servicer will also receive additional servicing compensation
in the form of investment earnings on certain bank accounts of the
trust and late fees, prepayment fees and other administrative fees
and expenses or similar charges received in respect of the
contracts by the servicer during that month. See "DESCRIPTION OF
THE TRANSFER AND SERVICING AGREEMENTS-SERVICING-SERVICING
COMPENSATION AND
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PAYMENT OF EXPENSES" in this prospectus.
Advances............................ The servicer may be obligated to advance interest that is due but unpaid
by an obligor. The servicer will not be obligated to make an advance if
it determines that it will not be able to recover that advance from an
obligor. The trust will reimburse the servicer for the advances the
servicer has made from late collections on the contracts for which it has
made advances or from collections generally if the servicer determines
that an advance will not be recoverable from an obligor.
Your prospectus supplement will describe the nature of the
servicer's obligation to make advances to the trust and the
reimbursement of those advances.
You should refer to "DESCRIPTION OF THE TRANSFER AND SERVICING
AGREEMENTS-SERVICING-ADVANCES" in this prospectus for more
detailed information on advances and reimbursement of advances.
Optional Purchase of
Contracts........................... Once the aggregate outstanding principal balance of the contracts is less
than 10% of the sum of (i) the aggregate outstanding principal balance of
the contracts owned by the trust as of the closing date and (ii) the
initial amount on deposit in the prefunding account, if any, the seller,
at its option, may repurchase all of the contracts held by the trust.
Upon such a purchase, the securities of that trust will be prepaid in
full. See "DESCRIPTION OF THE NOTES AND INDENTURE-OPTIONAL PURCHASE OF
CONTRACTS AND REDEMPTION OF NOTES" and "DESCRIPTION OF THE
CERTIFICATES-OPTIONAL PURCHASE OF CONTRACTS AND REDEMPTION OF
CERTIFICATES" in this prospectus.
TAX STATUS:
If your prospectus supplement specifies that the related trust will be
Grantor Trusts...................... treated as a "grantor trust," Winston & Strawn, as counsel to the trust,
will deliver an opinion that:
- the trust will be treated as a grantor trust for federal income
tax purposes and not as an "ASSOCIATION" or "PUBLICLY-TRADED
PARTNERSHIP" taxable as a corporation; and
- each certificateholder will be treated as the owner of a pro rata
undivided interest in the income and assets
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of the trust.
Owner Trusts........................ If your prospectus supplement specifies that the related trust will be
treated as an "owner trust":
1. Winston & Strawn will deliver an opinion that:
- the notes will be characterized as debt for federal income tax
purposes; and
- the trust will not be characterized as an "ASSOCIATION" or
"PUBLICLY TRADED PARTNERSHIP" taxable as a corporation;
2. by purchasing a note, you will agree to treat your note as debt
for federal, state and local income tax purposes; and
3. by purchasing a certificate, you will agree to treat the trust as
a partnership in which you are a partner for federal, state and
local income tax purposes.
You should refer to "MATERIAL FEDERAL INCOME TAX CONSEQUENCES" in
this prospectus and your prospectus supplement for more detailed
information on the application of federal income tax laws and
consult your tax advisor about the federal income tax consequences
of purchasing, owning and disposing of notes and/or certificates,
and the tax consequences in any state or other taxing
jurisdiction.
FASITs.............................. If your prospectus supplement specifies that an election will be made for
the trust to be treated as a "financial asset securitization investment
trust," or FASIT, Winston & Strawn will deliver an opinion that, assuming
timely filing of a FASIT election and compliance with the terms of the
governing documents, the trust, or one or more segregated pools of trust
assets, will qualify as one or more FASITs.
ERISA Considerations................ Subject to the considerations described in "ERISA CONSIDERATIONS" in this
prospectus and your prospectus supplement, employee benefit plans that
are subject to the Employee Retirement Income Security Act of 1974, as
amended, may purchase:
- notes issued by an "owner trust"; and
- certificates of a class issued by a "grantor trust" that
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are not subordinated to any other class.
Unless your prospectus supplement specifies otherwise, employee
benefit plans and individual retirement accounts may not purchase:
- subordinated classes of certificates issued by a "grantor trust";
or
- certificates issued by an "owner trust".
You should refer to "ERISA CONSIDERATIONS" in this prospectus and
your prospectus supplement for more detailed information regarding
the ERISA eligibility of any class of securities.
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RISK FACTORS
The following risk factors and the risk factors in your prospectus
supplement describe the principal risk factors relating to an investment in the
securities. You should carefully consider the following risk factors and the
additional risk factors described in the section captioned "RISK FACTORS" in
your prospectus supplement before you invest in any class of securities.
YOU MUST RELY ON THE TRUST'S ASSETS FOR REPAYMENT WHICH MAY NOT BE SUFFICIENT TO
MAKE FULL PAYMENTS ON YOUR SECURITIES
The securities represent interests solely in the trust or indebtedness
of the trust and will not be insured or guaranteed by the originating dealers,
the seller, the servicer, the depositor, or any of their respective affiliates,
or the related trustee or any other person or entity. The only source of payment
for your securities is payments received on the contracts held by the trust and
credit enhancement, if any, for your securities. The amount of credit
enhancement available to cover shortfalls in distributions of interest on and
principal of your securities may be limited. If the credit enhancement is
exhausted, you will be paid solely from payments on the contracts.
YOU MAY EXPERIENCE REDUCED RETURNS ON YOUR INVESTMENT DUE TO PREPAYMENTS ON THE
CONTRACTS, REPURCHASES OF THE CONTRACTS, LIQUIDATIONS OF DEFAULTED CONTRACTS
AND EARLY TERMINATION OF THE TRUST
A higher than anticipated level of prepayments of the contracts or
liquidations of defaulted contracts may cause a trust to pay principal on your
securities sooner than you expected. Also, a trust may pay principal on your
securities sooner than you expected if the depositor or the servicer repurchases
contracts from the trust. You may not be able to reinvest the principal paid to
you at yields that are equivalent to the yields on your securities; therefore,
the ultimate return you receive on your investment in the securities may be less
than the return you expected on the securities.
The contracts included in the trust may be prepaid, in full or in part,
voluntarily or as a result of defaults, theft of or damage to the related
motorcycles or for other reasons. The depositor will be required to repurchase a
contract from the trust if a breach of its representations and warranties
relating to that contract materially and adversely affects the trust's or the
securityholders' interest in the contract or the collectibility of the contract.
In that event, the seller will be obligated to repurchase the contract from the
depositor. Certain motorcycle dealer agreements between each of the originating
dealers and the seller require the originating dealer to repurchase certain
motorcycles repossessed by the seller in the event of a default by the obligor
pursuant to contracts designated as full recourse. This recourse to the dealers
will be assigned by the seller to the depositor pursuant to the transfer and
sale agreement, assigned from the depositor to the trust pursuant to the
agreement and, if applicable, pledged by the trust to the indenture trustee
pursuant to the indenture. There can be no assurance that an originating dealer
will perform its obligations under such motorcycle dealer agreements if and when
required to do so. In addition, the servicer will be required to purchase
contracts from the trust if it breaches certain covenants with respect to those
contracts. The seller may direct the depositor to purchase all remaining
contracts from the trust when the aggregate outstanding principal balance of the
contracts is less than 10% of the sum of (i) the aggregate outstanding principal
balance of the contracts owned by the trust as of the closing date and (ii) the
initial amount on deposit in the pre-funding account, if any.
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The depositor cannot fully predict the extent to which prepayments on
the contracts by the related obligors will shorten the life of the securities.
The rate of prepayments on the contracts may be influenced by a variety of
economic, social and other factors including:
- changes in customer requirements;
- the level of interest rates;
- the level of casualty losses; and
- the overall economic environment.
The depositor cannot assure you that prepayments on the contracts held
by the trust will conform to any historical experience. The depositor cannot
predict the actual rates of prepayments which will be experienced on the
contracts. However, your prospectus supplement may present information as to the
principal balances of the securities remaining on each payment date under
several hypothetical prepayment rates. You will bear all reinvestment risk
resulting from prepayments on the contracts and the corresponding acceleration
of payments on the securities. See "WEIGHTED AVERAGE LIVES OF THE SECURITIES" in
this prospectus.
CERTAIN EVENTS OF DEFAULT UNDER THE INDENTURE MAY RESULT IN INSUFFICIENT FUNDS
TO MAKE PAYMENTS ON YOUR SECURITIES
If the trust fails to pay principal of any class of notes on its final
scheduled payment date, or fails to pay interest on any class of notes within
five days of its due date, the indenture trustee or the holders of more than 50%
of the notes or the class or the classes of notes described in your prospectus
supplement may declare the entire amount of the notes to be due immediately. If
this happens, the holders of more than 50% (or such higher percentage as
specified in your prospectus supplement) of the notes or the class or classes of
notes described in your prospectus supplement may direct the indenture trustee
to sell the contracts and prepay the notes. In such event, there may not be
sufficient funds to pay all of the classes of securities in full.
PAID-AHEAD SIMPLE INTEREST CONTRACTS MAY AFFECT THE WEIGHTED AVERAGE LIFE OF THE
SECURITIES
If an obligor on a simple interest contract makes a payment on the
contract ahead of schedule, the weighted average life of the securities could be
affected. This is because the additional scheduled payments will be treated as a
principal prepayment and applied to reduce the principal balance of the related
contract. Obligors are generally not required to make any scheduled payments
during the period for which the contract was paid-ahead. During this period,
interest will continue to accrue on the contract principal balance, but the
contract would not be considered delinquent. Furthermore, when an obligor
resumes the required payments, they may be insufficient to cover the interest
that has accrued since the last payment by that obligor.
Generally paid-ahead payments shorten the weighted average lives of the
securities when the paid-ahead amount is applied to the payment of principal on
the securities; however, in certain circumstances the weighted average lives of
the securities may be extended. In addition, liquidation proceeds will be
applied first to reimburse any advances made by the servicer. Therefore, to the
extent the servicer makes advances on a paid-ahead simple interest contract
which subsequently goes into
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default, the loss on this contract may be larger than would have been the case
had advances not been made.
The seller's portfolio of contracts has historically included simple
interest contracts which have been paid-ahead by one or more scheduled monthly
payments. We cannot predict the number of contracts which may become paid-ahead
simple interest contracts or the amount of scheduled payments which may be paid
ahead.
THE PRICE AT WHICH YOU CAN RESELL YOUR SECURITIES MAY DECREASE IF THE RATINGS OF
YOUR SECURITIES DECLINE
At the initial issuance of the offered securities, at least one
nationally recognized statistical rating organization will rate the offered
securities in one of the four highest rating categories. At any time, a rating
agency may lower its ratings of the offered securities or withdraw its ratings
entirely. If a rating assigned to any security is lowered or withdrawn for any
reason, you may not be able to resell your securities or you may be able to
resell them only at a substantial discount. For more detailed information
regarding the ratings assigned to the offered securities, see "RATINGS OF THE
SECURITIES" in this prospectus and in your prospectus supplement.
SUBORDINATION MAY CAUSE SOME CLASSES OF SECURITIES TO BEAR ADDITIONAL CREDIT
RISK AND DOES NOT ENSURE PAYMENT OF THE MORE SENIOR CLASSES OF SECURITIES
The trust may pay interest and principal on some classes of securities
prior to paying interest and principal on other classes of securities. The
subordination of some classes of securities to others means that the
subordinated classes of securities are more likely to suffer the consequences of
delinquent payments and defaults on the contracts than the more senior classes
of securities.
The senior classes of securities could lose the credit enhancement
provided by the subordinate classes if delinquencies and defaults on the
contracts increase and if the collections on the contracts and any credit
enhancement described in your prospectus supplement are insufficient to pay even
the senior classes of securities.
Your prospectus supplement will describe any subordination provisions
applicable to your securities.
FUTURE DELINQUENCY AND LOSS EXPERIENCE OF THE CONTRACTS MAY VARY SUBSTANTIALLY
FROM THE SERVICER'S HISTORICAL EXPERIENCE
In your prospectus supplement, we will present the historical
delinquency and loss experience of the portfolio of contracts originated
directly or purchased by the seller and serviced by the servicer. However, the
actual results for the contracts transferred to your trust could be
substantially worse. If so, you may not receive interest and principal payments
on your securities in the amounts and at the times you expect.
INTERESTS OF OTHER PERSONS IN THE CONTRACTS OR THE FINANCED MOTORCYCLES COULD
REDUCE THE FUNDS AVAILABLE TO MAKE PAYMENTS ON YOUR SECURITIES
A person could acquire an interest in a contract that is superior to
that of the trust because the servicer will retain possession of the contracts.
If a person purchases contracts, or takes a security interest therein, for value
in the ordinary course of its business and obtains possession of the contracts
without
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actual knowledge of the trust's interest, that person will acquire an interest
in the contracts superior to the interest of the trust and some or all of the
collections on the contracts may be not available to make payments on the
securities.
A person could also acquire an interest in a financed motorcycle that
is superior to that of the trust because of the failure to identify the trust as
the secured party on the related certificate of title. The seller will assign
its security interests in the financed motorcycles to the depositor, and the
depositor will assign its security interests in the financed motorcycles to the
trust. The seller's assignment to the depositor, and the depositor's subsequent
assignment to the trust, are subject to state vehicle registration laws. These
registration laws require that the secured party's name appear on the
certificate or similar registration of title in order for the secured party's
security interest to be perfected. To facilitate servicing and reduce
administrative costs, the servicer will continue to hold the certificates of
title or ownership for the motorcycles and will not endorse or otherwise amend
the certificates of title or ownership to identify the trust as the new secured
party. As a result, the trust may not have a perfected security interest in the
financed motorcycles in certain states because the certificates or similar
registrations of title will not be amended to reflect the assignment of the
security interests in the financed motorcycles to the trust. In addition,
because the trust will not be identified as the secured party on any certificate
of title or similar registration of title, the security interest of the trust in
the motorcycles may be defeated through fraud, forgery, negligence or error.
The holders of some types of liens, such as tax liens or mechanics
liens, may have priority over the trust's security interest in the financed
motorcycles. The trust may lose its security interest in a financed motorcycle
confiscated by the government.
In the event that the trust must rely upon repossession and sale of the
financed motorcycle securing a defaulted contract to recover amounts due on the
defaulted contract, the trust's ability to realize upon the financed motorcycle
would be limited by the failure to have a perfected security interest in the
related financed motorcycle or the existence of a senior security interest in
the financed motorcycle. In this event, you may be subject to delays in payment
and may incur losses on your investment in the securities as a result of
defaults or delinquencies by obligors. See "LEGAL ASPECTS OF THE
CONTRACTS-SECURITY INTERESTS" in this prospectus.
LIMITATIONS ON ENFORCEABILITY OF SECURITY INTERESTS IN THE FINANCED MOTORCYCLES
MAY HINDER THE TRUST'S ABILITY TO REALIZE THE VALUE OF THE FINANCED
MOTORCYCLES
State law limitations on the enforceability of security interests and
the manner in which a secured party may dispose of collateral may limit or delay
the trust's ability to obtain or sell the financed motorcycles. This could
reduce or delay the availability of funds to make payments on your securities.
Under these state law limitations:
- some jurisdictions require that the obligor be notified of the
default and be given a period of time within which it may cure the
default prior to or after repossession; and
- the obligor may have the right to redeem collateral for its
obligations prior to actual sale by paying the secured party the
unpaid balance of the obligation plus the secured party's expenses
for repossessing, holding and preparing the collateral for
disposition.
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CONTRACTS THAT FAIL TO COMPLY WITH CONSUMER PROTECTION LAWS MAY BE
UNENFORCEABLE, WHICH MAY RESULT IN LOSSES ON YOUR INVESTMENT
The contracts are consumer contracts subject to many federal and state
consumer protection laws. If any of the contracts do not comply with one or more
of these laws, the servicer may be prevented from or delayed in collecting
amounts due on the contracts. If that happens, payments on the securities could
be delayed or reduced. See "LEGAL ASPECTS OF THE CONTRACTS-CONSUMER PROTECTION
LAWS" in this prospectus.
Each of the depositor and seller will make representations and
warranties relating to the contracts' compliance with consumer protection laws
and the enforceability of the contracts. If those representations and warranties
are not true as to any contract and the breach materially and adversely affects
the trust's or the securityholders' interest in the contract or the
collectibility of the contract, the depositor will be obligated to repurchase
the contract from the trust and the seller will be required to repurchase the
contract from the depositor.
REPURCHASE OBLIGATION OF THE DEPOSITOR AND THE SELLER PROVIDES YOU ONLY LIMITED
PROTECTION AGAINST PRIOR LIENS ON THE CONTRACTS
Federal or state law may grant liens on contracts that have priority
over the trust's interest. If the creditor associated with any prior lien on a
contract exercises its remedies, the cash proceeds from the contract and related
financed motorcycle available to the trust will be reduced. In that event, there
may be a delay or reduction in distributions to you. An example of a lien
arising under federal or state law is a tax lien on property of the seller or
depositor arising prior to the time a contract is conveyed to the trust. Such a
tax lien would have priority over the interest of the trust in the contracts.
The seller will represent and warrant to the depositor, and the
depositor will represent and warrant to the trust, that there are no prior liens
on the contracts. In addition, the seller will represent and warrant to the
depositor, and the depositor will represent and warrant to the trust, that it
will not grant any lien on the contracts. If those representations and
warranties are not true as to any contract and the breach materially and
adversely affects the trust's or the securityholders' interest in the contract
or the collectibility of the contract, the depositor will be obligated to
repurchase the contract from the trust and the seller will be required to
repurchase the contract from the depositor. There can be no assurance that the
depositor or the seller will be able to repurchase a contract at the time when
it is asked to do so.
BANKRUPTCY OF THE OBLIGORS MAY REDUCE OR DELAY COLLECTIONS ON THE CONTRACTS, AND
THE SALE OF FINANCED MOTORCYCLES RELATING TO DEFAULTING OBLIGORS MAY BE
DELAYED OR MAY NOT RESULT IN COMPLETE RECOVERY OF AMOUNTS DUE
Bankruptcy and insolvency laws affect the risk of loss on the contracts
of obligors who become subject to bankruptcy proceedings. Those laws could
result in the write-off of contracts of bankrupt obligors or result in delay in
payments due on the contracts. For example, if the obligor becomes bankrupt or
insolvent, the trust may need the permission of a bankruptcy court to obtain and
sell its collateral. As a result, you may be subject to delays in receiving
payments, and you may also suffer losses if available credit enhancement for
losses is insufficient.
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IF A BANKRUPTCY COURT DETERMINES THAT THE TRANSFER OF CONTRACTS FROM THE
ORIGINATING DEALERS TO THE SELLER OR FROM THE SELLER TO THE DEPOSITOR WAS NOT
A TRUE SALE, THEN PAYMENTS ON THE CONTRACTS COULD BE DELAYED RESULTING IN
LOSSES OR DELAYS IN PAYMENTS ON YOUR SECURITIES
If an originating dealer or the seller became a debtor in a bankruptcy
case, creditors of that party, or that party acting as debtor-in-possession, may
assert that the transfer of the contracts was ineffective to remove the
contracts from that party's estate. In that case, the distribution of payments
on the contracts to the trust might be subject to the automatic stay provisions
of the United States bankruptcy code. This would delay the distribution of those
payments to you for an uncertain period of time. Furthermore, reductions in
payments under the contracts to the trust may result if the bankruptcy court
rules in favor of the creditors or the debtor-in-possession. In either case, you
may experience delays or reductions in distributions or payments to you. In
addition, a bankruptcy trustee would have the power to sell the contracts if the
proceeds of the sale could satisfy the amount of the debt deemed owed by the
originating dealer or the seller, as the case may be. The bankruptcy trustee
could also substitute other collateral in lieu of the contracts to secure the
debt. Additionally, the bankruptcy court could adjust the debt if the
originating dealer or the seller were to file for reorganization under Chapter
11 of the bankruptcy code. Any of these actions could result in losses or delays
in payments on your securities. The originating dealers and the seller will each
represent and warrant that its conveyance of the contracts is a valid sale and
transfer of the contracts. See "LEGAL ASPECTS OF THE CONTRACTS-BANKRUPTCY
CONSIDERATIONS."
IF A BANKRUPTCY COURT DECIDES TO CONSOLIDATE THE ASSETS AND LIABILITIES OF THE
DEPOSITOR AND THE SELLER, PAYMENTS ON THE CONTRACTS COULD BE DELAYED
RESULTING IN LOSSES OR DELAYS IN PAYMENTS ON THE SECURITIES
If the seller became a debtor in a bankruptcy case, the seller, a
creditor or party acting as debtor-in-possession could request a bankruptcy
court to order that the seller's assets and liabilities be substantially
consolidated with the depositor's assets and liabilities. If the bankruptcy
court consolidated the assets and liabilities of the seller and the depositor,
delays and possible reductions in the amounts of distributions on the securities
could occur. See "LEGAL ASPECTS OF THE CONTRACTS-BANKRUPTCY CONSIDERATIONS."
PROCEEDS OF THE SALE OF CONTRACTS MAY NOT BE SUFFICIENT TO PAY YOUR SECURITIES
IN FULL; FAILURE TO PAY PRINCIPAL ON YOUR SECURITIES WILL NOT CONSTITUTE AN
EVENT OF DEFAULT UNTIL MATURITY
If so directed by the holders of the requisite percentage of
outstanding notes following an acceleration of the notes upon an event of
default, the indenture trustee in certain circumstances will sell the contracts
owned by the trust. However, there is no assurance that the market value of
those contracts will at any time be equal to or greater than the aggregate
outstanding principal balance of the securities. Therefore, upon a sale of the
contracts, there can be no assurance that sufficient funds will be available to
repay your securities in full. In addition, the amount of principal required to
be paid to you on each payment date will generally be limited to amounts
available in the collection account and the reserve fund, if any. The failure to
pay principal of your securities generally will not result in the occurrence of
an event of default until the final scheduled payment date for your securities.
See "DESCRIPTION OF THE NOTES AND INDENTURE-THE INDENTURE-EVENTS OF DEFAULT;
RIGHTS UPON EVENT OF DEFAULT" in this prospectus.
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COMMINGLING OF COLLECTIONS COULD RESULT IN REDUCED PAYMENTS TO YOU
If permitted by the rating agencies, rating the securities the servicer
may hold collections it receives from the obligors on the contracts with its own
funds until the day prior to the next date on which distributions will be made
on the securities. If the servicer does not pay these amounts to the trust when
required to do so, the trust may be unable to make the payments owed on your
securities. In the event the servicer becomes a debtor in a bankruptcy case, the
trust may not have a perfected security interest in these collections. In either
case, you may suffer losses on your investment.
YOU MAY NOT BE ABLE TO RESELL YOUR SECURITIES
There is currently no secondary market for the securities. We cannot
assure you that a secondary market will develop and if it does develop how
liquid it will be. Thus, you may not be able to resell your securities at all,
or may be able to do so only at a substantial discount. The underwriters may
assist in resales of the securities but they are not obligated to do so.
IF THE TRUST ENTERS INTO A CURRENCY OR AN INTEREST RATE SWAP, PAYMENTS ON THE
SECURITIES WILL BE DEPENDENT ON PAYMENTS MADE UNDER THE SWAP AGREEMENT
If the trust enters into a swap agreement, its ability to protect
itself from shortfalls in cash flow caused by currency or interest rate changes
will depend to a large extent on the terms of the swap agreement and whether the
swap counterparty performs its obligations under the swap. If the trust does not
receive the payments it expects under the swap agreement, the trust may not have
adequate funds to make all payments owed on your securities when due.
THE RATING OF A SWAP COUNTERPARTY MAY AFFECT THE RATINGS OF THE SECURITIES
If a trust enters into a swap, the rating agencies that rate the
trust's securities will consider the provisions of the swap agreement and the
rating of the swap counterparty. If a rating agency downgrades the debt rating
of the swap counterparty, it may downgrade the rating of the securities. In such
an event, you may not be able to resell your securities or you may be able to
resell them only at a substantial discount.
YOU MAY EXPERIENCE REINVESTMENT RISK ASSOCIATED WITH PRE-FUNDING ACCOUNTS
If so provided in the prospectus supplement, on the closing date an
amount will be deposited into the pre-funding account. The amount on deposit in
the pre-funding account will be used to purchase subsequent contracts from the
depositor (which, concurrently will acquire such subsequent contracts from the
seller) from time to time during the funding period specified in the prospectus
supplement. If the principal amount of the eligible subsequent contracts
acquired by the seller from originating dealers during the funding period is
less than the amount on deposit in the pre-funding account, the seller may have
insufficient subsequent contracts to transfer to the depositor.
Any conveyance of subsequent contracts to a trust is also subject to
the satisfaction, on or before the related subsequent transfer date, of the
following conditions precedent, among others: (i) each such subsequent contract
must satisfy the eligibility criteria specified in the related transfer and sale
agreement, pooling and servicing agreement or sale and servicing agreement, as
applicable; (ii) the seller and the depositor shall not have selected such
subsequent contracts in a manner that is adverse to the interests of
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holders of the securities; and (iii) as of the cutoff dates for such subsequent
contracts, all of the contracts in the trust, including the subsequent contracts
to be conveyed to the trust as of such date, must satisfy the parameters
described in the prospectus supplement.
To the extent that the amount on deposit in the pre-funding account has
not been applied to the purchase of subsequent contracts by the end of the
funding period, any amounts remaining in the pre-funding account will be
distributed as a prepayment of principal to you, in the amounts and pursuant to
the priorities set forth in the prospectus supplement. To the extent you receive
such a prepayment of principal, there may not then exist a comparably favorable
reinvestment opportunity and you will bear all reinvestment risk resulting from
such prepayments.
THE TRUST HAS LIMITED RECOURSE AGAINST THE SELLER AND THE DEPOSITOR
None of the seller, the depositor or any of their affiliates is
generally obligated to make any payments in respect of any notes, the
certificates or the contracts of the trust. However, in connection with the sale
of contracts by the depositor to the trust, the depositor will make
representations and warranties with respect to the characteristics of such
contracts and, in certain circumstances, the depositor may be required to
repurchase contracts with respect to which such representations and warranties
have been breached. The seller will correspondingly be obligated to the
depositor under the transfer and sale agreement (which rights of the depositor
against the seller will be assigned to the trust) to repurchase the contracts
from the depositor contemporaneously with the depositor's repurchase of the
contracts from the trust. See "DESCRIPTION OF THE SALE AND SERVICING AGREEMENTS
AND POOLING AND SERVICING AGREEMENTS-SALE AND ASSIGNMENT OF CONTRACTS".
THE TRUST DOES NOT HAVE SIGNIFICANT ASSETS OR SOURCES OF FUNDS OTHER THAN THE
CONTRACTS
The trust does not have and will not be permitted or expected to have,
any significant assets or sources of funds other than the contracts and, to the
extent provided in your prospectus supplement, a pre-funding account, a reserve
fund and any other credit enhancement or trust property. The notes will
represent obligations solely of, and the certificates will represent interests
solely in, the trust, and neither the notes nor the certificates will be insured
or guaranteed by the depositor, the servicer, the trustee, the indenture trustee
or any other person or entity (except as may be described in your prospectus
supplement). Consequently, you must rely for repayment upon payments on the
contracts and, if and to the extent available, amounts on deposit in the
pre-funding account (if any), the reserve fund (if any) and any other credit
enhancement, all as specified in your prospectus supplement. Any such credit
enhancement will not cover all contingencies, and losses in excess of amounts
available pursuant to any credit enhancement will be borne directly by you.
SOCIAL, ECONOMIC AND OTHER FACTORS MAY AFFECT THE PERFORMANCE OF THE CONTRACTS
AND THE AVAILABILITY OF SUBSEQUENT CONTRACTS
Economic conditions in countries, states or U.S. Territories where
obligors reside may affect the delinquency, loan loss and repossession
experience of the trust with respect to the contracts. The performance by such
obligors, or the ability of the seller to acquire from originating dealers
sufficient subsequent contracts for purchase with the amount on deposit in the
pre-funding account (if any), may be affected by a variety of social and
economic factors including, but not limited to, interest rates, unemployment
levels, the rate of inflation, and consumer perception of economic conditions
generally. However, neither the seller nor the depositor is able to determine or
predict whether or to what extent
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economic or social factors will affect the performance by any obligors, or the
availability of subsequent contracts in cases where subsequent contracts are to
be transferred to the trust as specified in the prospectus supplement.
THE HOLDERS OF THE NOTES OR THE CLASS OR CLASSES OF NOTES DESCRIBED IN YOUR
PROSPECTUS SUPPLEMENT MAY REMOVE THE SERVICER WITHOUT THE CONSENT OF THE
HOLDERS OF THE CERTIFICATES OR THE OTHER CLASSES OF NOTES
To the extent specified in your prospectus supplement, if there is a
servicer default under the sale and servicing agreement, the indenture trustee
or the holders of either the notes or the class or classes of notes described in
your prospectus supplement may remove the servicer without the consent of the
indenture trustee or the holders of the certificates or the other classes of
notes. Neither the trustee nor the holders of the certificates will have the
ability, without the concurrence of the holders of the notes or certain classes
of notes, to remove the servicer if a servicer default occurs.
THE RATINGS ON YOUR SECURITIES MAY BE LOWERED OR WITHDRAWN
It is a condition to the issuance of the offered securities that they
be rated in one of the four highest rating categories by at least one nationally
recognized statistical rating organization. A rating is not a recommendation to
purchase, hold or sell securities inasmuch as such rating does not comment as to
market price or suitability for a particular investor. Ratings of securities
will address the likelihood of the payment of principal and interest thereon
pursuant to their terms. The ratings of securities will not address the
likelihood of an early return of invested principal. There can be no assurance
that a rating will remain for a given period of time or that a rating will not
be lowered or withdrawn entirely by a rating agency if in its judgment
circumstances in the future so warrant. For more detailed information regarding
the ratings assigned to any class of a particular series of securities, see
"RATINGS OF THE SECURITIES" in your prospectus supplement.
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HARLEY-DAVIDSON MOTORCYCLES
All of the motorcycles securing contracts were manufactured by
Harley-Davidson, Inc. ("HARLEY-DAVIDSON"), except that not more than 8.0% of the
contracts (including all subsequent contracts) may relate to, and be secured by,
motorcycles manufactured by Buell Motorcycle Company, a wholly-owned subsidiary
of Harley-Davidson ("BUELL"), and not more than 10.0% of the contracts
(including all subsequent contracts) may relate to, and be secured by,
motorcycles manufactured by other manufacturers as described below. Buell
produces "PERFORMANCE" motorcycles using engines and certain other parts
manufactured by Harley-Davidson.
Harley-Davidson produces and sells premium heavyweight motorcycles.
Within the heavyweight class, Harley-Davidson sells touring motorcycles
(equipped for long-distance touring), as well as custom motorcycles which
emphasize the distinctive styling associated with certain classic
Harley-Davidson motorcycles. Harley-Davidson motorcycles are based on variations
of five basic chassis designs and are powered by one of four air cooled, twin
cylinder engines of "V" configuration which have displacements of 883cc, 1200cc,
1340cc, 1450cc and 1550cc. Harley-Davidson manufactures its own engines and
frames and is the only major manufacturer of motorcycles in the United States.
Buell produces "SPORTS PERFORMANCE" and "SPORT TOURING" motorcycles
using Harley-Davidson engines that are further modified in the manufacturing
process, as well as certain other Harley-Davidson parts. The "SPORTS
PERFORMANCE" and "SPORT TOURING" aspect of the motorcycles refers to overall
handling characteristics of the motorcycle, including cornering, acceleration
and braking. Buell's overall share of the "SPORTS PERFORMANCE" and "SPORT
TOURING" market has grown to approximately 18% as of December 31, 1999.
OTHER MANUFACTURERS
Except as otherwise specified in your prospectus supplement, contracts
aggregating not more than 10.0% of the aggregate principal balances of all
contracts in a trust (including subsequent contracts) may relate to, and be
secured by, motorcycles manufactured by Honda, Yamaha, Suzuki, Kawasaki as well
as certain other manufacturers. Such motorcycles fall within two categories:
"touring cycles" (with displacements typically over 750cc) which are generally
intended for use in long distance travel, and "street legal cycles", which
include all other motorcycles which may be licensed for street use under
applicable state or local law and which are not generally viewed as falling with
the "touring cycle" category.
HARLEY-DAVIDSON FINANCIAL SERVICES, INC.
Harley-Davidson Financial Services, Inc. ("HDFS") (formerly known as
Eaglemark Financial Services, Inc.) is the financing division of
Harley-Davidson. HDFS was originally formed in June 1992 with a capital infusion
of $10,000,000 from Harley-Davidson and an additional $15,000,000 capital
contribution from a major institutional investor in January 1993. In November
1995, Harley-Davidson purchased the equity owned by the major institutional
investor and, as of December 31, 1999, HDFS is a wholly-owned subsidiary of
Harley-Davidson. The business of HDFS, through its 100% ownership of
Harley-Davidson Credit Corp., has been to provide financial services programs to
Harley-Davidson and Buell motorcycle dealers and customers in the United States
and Canada.
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In addition, HDFS markets the Harley-Davidson Chrome VISA card, through
licensing agreements, in the United States and Canada, and offers wholesale and
retail financing programs for Harley-Davidson's European motorcycle dealers
through joint ventures with other finance companies. HDFS also provides
financial services programs for personal aircraft products in the United States.
THE SELLER AND SERVICER
GENERAL
Harley-Davidson Credit Corp. ("HDCC") (formerly known as Eaglemark,
Inc.) is a Nevada corporation and is a wholly-owned subsidiary of HDFS. HDCC
began operations in January 1993 when it purchased the $85 million wholesale
financing portfolio of certain Harley-Davidson dealers from ITT Commercial
Finance; subsequently, HDCC entered the retail consumer finance business. HDCC
provides wholesale and retail financial services programs to Harley-Davidson and
Buell dealers and consumers in the United States and Canada.
Wholesale financial services include floorplan and open account
financing for motorcycles and motorcycle parts and accessories, real estate
loans, computer loans, showroom remodeling loans and, through Harley-Davidson
Insurance Services, Inc., a wholly-owned subsidiary of HDFS ("HDI"), the
brokerage of a range of commercial insurance products.
Retail financial services include installment lending for new and used
Harley-Davidson and Buell motorcycles and the brokerage of a range of motorcycle
insurance policies and extended service contracts through HDI. HDI acts as an
insurance agent and does not assume any underwriting risk with regard to
insurance policies and extended service agreements.
HDCC's financing, insurance and credit card programs are designed to
work together as a package that appeals to the needs of Harley-Davidson's
customers. The intent of such a package is to increase dealer and customer
loyalty to HDCC while improving revenue and profits over time. HDCC's principal
executive offices are located at 4150 Technology Way, Carson City, Nevada 89706
(telephone 775/886-3200). As of December 31, 1999, HDCC had total assets of
$814.1 million, and stockholder's equity of $131.9 million.
UNDERWRITING AND ORIGINATION
The contracts in each trust have been or will be purchased by the
seller from a network of Harley-Davidson dealers located throughout the United
States and, in certain instances, Canada. The seller's personnel contact dealers
and explain the seller's available financing plans, terms, prevailing rates and
credit and financing policies. If the dealer wishes to use the seller's
available customer financing, the dealer must make an application to the seller
for approval.
Contracts that the seller purchases are written on forms provided or
approved by the seller and are purchased on an individually approved basis in
accordance with the seller's guidelines. The dealer submits the customer's
credit application and purchase order to the seller's office where an analysis
of the creditworthiness of the proposed buyer is made. The analysis includes a
review of the proposed buyer's paying habits, collateral information, length and
likelihood of continued employment and certain other procedures. The seller's
current underwriting guidelines for contracts generally require that the monthly
payment on the contract, together with the obligor's other fixed monthly
obligations, not exceed 40% of the obligor's monthly gross income; provided,
however, that the seller may originate a contract in excess of 40% of
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an obligor's monthly gross income if the obligor makes a larger down payment or
has an exceptionally good credit rating or other offsetting factors exist. With
respect to contracts for new motorcycles, and for used motorcycles of model year
1991 or later, the seller generally finances up to 90% of the motorcycle's sales
price. The seller generally finances up to 85% of such amount for used
motorcycles of a model year earlier than 1991. The seller will also finance, as
part of the principal balance of the respective contract, certain dealer
installed accessories, sales tax and title fees as well as premiums for the term
of the contract on optional credit life and accident and health insurance,
premiums for extended warranty insurance, premiums for GAP insurance and
premiums for required physical damage insurance on the motorcycle. If the
application meets the seller's guidelines and the credit is approved, the seller
purchases the contract when the customer accepts delivery of the motorcycle.
INDIVIDUAL MOTORCYCLE INSURANCE
The terms of each contract require that for the life of the contract,
each motorcycle is to be covered by a collision and comprehensive insurance
policy which covers physical damage risks and names the seller as a loss payee.
The amount of insurance coverage is limited to the value of the motorcycle. In
the transfer and sale agreement, the seller will represent and warrant that each
motorcycle was covered by the required insurance at the time of the related
contract's origination. Pursuant to the contract terms, the servicer may "FORCE
PLACE" (i.e., purchase on its own, with a corresponding claim for reimbursement
against the obligor to the extent provided in the applicable contract) collision
and comprehensive insurance with respect to the related motorcycle in those
situations in which the obligor has not maintained the required insurance. If
the servicer does "FORCE PLACE" insurance, as conveyee and assignee of the
contracts, the trust will be entitled to the benefits of such insurance.
Following repossession of a motorcycle by the servicer, the servicer does not
maintain such insurance. In the event the servicer repossesses a motorcycle on
behalf of the trust, the servicer will act as self-insurer for any damage to
such motorcycle until it is resold.
COLLECTION PROCEDURES
The servicer will make reasonable efforts to collect all payments due
with respect to the contracts held by any trust and will, consistent with the
related sale and servicing agreement or pooling and servicing agreement, follow
such collection procedures as it follows with respect to comparable motor
vehicle retail installment sale contracts and installment loans it services for
itself or others.
The servicer's collection efforts include having personnel, using a
predictive dialer, call a delinquent obligor on a pre-determined basis every
third day in the event such obligor is eleven to twenty-nine days delinquent
(with the exception of first payment defaults and loans classified as "DELTA
ACCOUNTS" which are called beginning on the second day of delinquency). At
thirty days delinquent, the account is reassigned from the predictive dialer
team to a dedicated senior collection associate and is called every third day in
the event the obligor is thirty to less than ninety days delinquent and every
day in the event the obligor is greater than ninety days delinquent. The
servicer's general approach is to restructure a delinquent loan as opposed to
repossessing the related motorcycle; however, the servicer's approach with
respect to a specific obligor is affected by the obligor's responsiveness and
attitude. Consistent with this approach, the servicer may, in its discretion,
arrange with the obligor on a contract to extend or modify the payment schedule,
but no such arrangement will, for purposes of any sale and servicing agreement
or pooling and servicing agreement, modify the original due dates or the amount
of the scheduled payments or extend the final payment date of any contract
beyond the last day of the due
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period relating to the latest maturity date (as specified with respect to the
pool of contracts in the related prospectus supplement). The servicer may sell
the motorcycle securing the respective contract at public or private sale, or
take any other action permitted by applicable law. See "LEGAL ASPECTS OF THE
CONTRACTS" in this prospectus.
REPOSSESSION
Certain information concerning the experience of the seller pertaining
to delinquencies, repossessions and net losses with respect to new and used
motorcycle contracts will be set forth in the prospectus supplement. There can
be no assurance that the delinquency, repossession and net loss experience on
any particular pool of contracts will be comparable to prior experience or to
such information.
YEAR 2000
The seller and servicer initiated and completed a program designed to
resolve the potential impact of the year 2000 on the ability of its computerized
information systems to accurately process information that may be date
sensitive. The seller and servicer identified the critical data storage and
operating systems and developed plans to ensure the readiness of systems to
process dates beyond the year 2000. Furthermore, the seller and servicer
communicated with the originating dealers, financial institutions and suppliers
to determine the risk created by those parties' failure to remediate their own
year 2000 issues.
To date, neither the seller nor the servicer has experienced any
material problems relating to the year 2000 issue. In addition, neither the
seller nor the depositor expects to incur material costs in the future as a
result of the year 2000 issue. There is no assurance that neither the seller nor
servicer will experience problems in the future as a result of the year 2000
issue.
THE DEPOSITOR
The depositor will be Harley-Davidson Customer Funding Corp., a
special-purpose finance subsidiary of Harley-Davidson Credit Corp. All of the
common stock of the depositor will be owned by Harley-Davidson Credit Corp. All
of the officers and directors of the depositor will be employed by
Harley-Davidson Credit Corp. or Harley-Davidson Financial Services, Inc., except
that at least two directors of the depositor will at all times be independent of
Harley-Davidson Credit Corp., Harley Davidson Financial Services, Inc. and
Harley-Davidson, Inc.
THE TRUSTS
The depositor will establish each trust pursuant to a trust agreement
or a pooling and servicing agreement for the transactions described in this
prospectus. Each trust will be a common law trust or a statutory trust. Each
trust may issue one or more classes of securities, representing debt of or
beneficial ownership interests in the trust.
On or before the date of the initial issuance of any securities by a
trust, the seller will sell the pool of contracts and the related property to
the depositor pursuant to a transfer and sale agreement and the depositor will
transfer the pool of contracts and the related property to the trust in exchange
for the securities issued by the trust pursuant to a sale and servicing
agreement or a pooling and servicing agreement.
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To the extent provided in the prospectus supplement, the depositor may
convey additional contracts to the trust after the closing date as frequently as
daily during a funding period specified in the prospectus supplement. The trust
will purchase any contracts subsequently added to the trust with amounts
deposited in a pre-funding account on the closing date. Any subsequent contracts
will be required to conform to the requirements described in the prospectus
supplement. Any subsequent contracts will also be assets of the trust. Any funds
remaining on deposit in a pre-funding account at the end of the funding period
will be used to prepay principal on the securities as specified in your
prospectus supplement.
To the extent provided in the prospectus supplement, all or a portion
of the principal collected on the contracts may be applied by the trustee to the
acquisition of subsequent contracts during a period specified in the prospectus
supplement rather than used to make or distribute payments of principal to
securityholders during that period. These securities would then possess an
interest only period, also commonly referred to as a "REVOLVING PERIOD", which
will be followed by an "AMORTIZATION PERIOD", during which principal will be
paid. Any interest only or revolving period may terminate prior to the end of
the specified period and result in the earlier than expected principal repayment
of the securities.
The property of each trust, as further specified in your prospectus
supplement, will consist of:
- the contracts and the right to receive all scheduled payments
and prepayments received on the contracts on or after the
cut-off date, but excluding any scheduled payments due on or
after, but received prior to, the cut-off date;
- amounts that may be held in separate trust accounts maintained
by the trustee or the indenture trustee for the trust,
including any reserve fund or interest reserve account;
- security interests in the financed motorcycles securing the
contracts and any related property;
- rights with respect to any repossessed financed motorcycles;
- the rights to proceeds from claims on theft, physical damage,
credit life and disability insurance policies covering the
financed motorcycles or the obligors;
- certain rebates of premiums and other amounts relating to
insurance policies, extended service contracts or other repair
agreements and other items financed under the contracts;
- the depositor's rights against the seller under the transfer
and sale agreement pursuant to which the seller sold the pool
of contracts to the depositor;
- the right to receive payments from the depositor obligated to
repurchase contracts which do not meet specified
representations made by depositor in the sale and servicing
agreement or the pooling and servicing agreement;
- the trust's rights against the servicer under the sale and
servicing agreement or the pooling and servicing agreement;
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- credit or cash flow enhancement for the securities specified
in the prospectus supplement; and
- all proceeds of the foregoing.
The property of a trust may also include a derivative arrangement for
any series or any class of securities. A derivative arrangement may include a
guaranteed rate agreement, a maturity liquidity facility, a tax protection
agreement, an interest rate cap or floor agreement, an interest rate or currency
swap agreement or any other similar arrangement. If the property of the trust
includes any of these types of assets, additional information concerning them
will be provided to you in your prospectus supplement.
If the trust issues notes, the trust will pledge its assets to the
indenture trustee for the benefit of the noteholders to secure its obligations
under the notes.
No trust will engage in any business activity other than:
- issuing notes and/or ownership interests in the trust;
- purchasing contracts, security interests in the related
financed motorcycles and related property;
- holding and dealing with assets of the trust;
- making payments on the securities it issued;
- entering into and performing the duties, responsibilities and
functions required under the pooling and servicing agreement,
the sale and servicing agreement, the indenture and related
documents; and
- matters incidental to the foregoing.
The assets of a trust will be separate from the assets of all other
trusts created by the depositor. Accordingly, the assets of one trust will not
be available to make payments on the securities issued by any other trust.
USE OF PROCEEDS
Unless otherwise provided in the related prospectus supplement, the
trust will use the net proceeds received from the sale of the securities (i) to
purchase the initial contracts and related assets from the trust depositor, and
(ii) to make a deposit into the pre-funding account, if any. The seller will use
the net proceeds from the trust depositor's purchase of the initial contracts,
as well as subsequent contracts, for general corporate purposes.
THE TRUSTEE
The prospectus supplement will specify the trustee for each trust and,
if the trust is issuing notes, the indenture trustee under the indenture. The
trustee's or the indenture trustee's liability in connection with the issuance
and sale of the related securities is limited solely to the express obligations
set forth in the related trust agreement, pooling and servicing agreement, sale
and servicing agreement or indenture.
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A trustee may resign at any time, in which event, the depositor will be
obligated to appoint a successor. An indenture trustee may resign at any time,
in which event, the trust or the administrator, on the trust's behalf, will be
obligated to appoint a successor. A trustee that becomes insolvent or otherwise
ceases to be eligible to continue in that capacity under the related pooling and
servicing agreement or trust agreement may be removed by the depositor. An
indenture trustee that becomes insolvent or otherwise ceases to be eligible to
continue in its capacity under the indenture may be removed by the trust or the
administrator, on the trust's behalf. In those circumstances, the servicer or
the administrator, as the case may be, will be obligated to appoint a successor.
Any resignation or removal of a trustee will not become effective until
acceptance of the appointment of a successor trustee.
In addition, the holders of more than 50% of the aggregate principal
amount of the notes or the class or classes of the notes described in your
prospectus supplement may remove the indenture trustee without cause and may
appoint a successor indenture trustee. If a trust issues a class of notes that
is subordinated to one or more other classes of notes and an event of default
occurs under the indenture, the indenture trustee may be deemed to have a
conflict of interest under the Trust Indenture Act of 1939 and may be required
to resign as trustee for one or more of the classes of notes. In any such case,
the indenture will provide for a successor indenture trustee to be appointed for
those classes of notes.
Each of the trustee and the indenture trustee and any of its respective
affiliates may hold securities in its own name or as a pledgee. For the purpose
of meeting the legal requirements of some jurisdictions, the servicer and the
related trustee will have the power to appoint co-trustees or separate trustees
of all or any part of the trust.
You will find the addresses of the principal offices of the trust, the
trustee and, if applicable, the indenture trustee in your prospectus supplement.
WEIGHTED AVERAGE LIVES OF THE SECURITIES
The weighted average lives of the securities of any trust will be a
function of the weighted average lives of the contracts held by the trust. The
weighted average lives of the contracts will be influenced by the rate at which
the principal balances of the related contracts are paid. The term "WEIGHTED
AVERAGE LIFE" means the average amount of time during which each dollar of
principal of a contract is outstanding.
All of the contracts will be prepayable at any time without penalty to
the obligor. If full or partial prepayments are received on the contracts, the
actual weighted average lives of the contracts will be shorter than the
scheduled weighted average lives of the contracts set forth in your prospectus
supplement. Prepayments include optional prepayments by obligors, liquidations
due to default, partial prepayments from rebates of extended warranties and
insurance premiums, as well as receipts of proceeds from physical damage, credit
life and disability insurance policies. Prepayment rates are influenced by a
variety of economic, social and other factors, including the fact that an
obligor generally may not sell or transfer the financed motorcycle securing a
contract without obtaining the certificate of title from the servicer.
We cannot predict the rate of prepayment on the contracts in either
stable or changing interest rate environments. The servicer maintains limited
records of the historical prepayment experience of the contracts included in its
portfolio but is not aware of any publicly available industry statistics for the
entire industry that set forth prepayment experience for receivables similar to
the contracts. The servicer believes that its prepayment experience is
consistent with that generally found in the industry. However,
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neither the servicer nor the depositor can assure you that prepayments will
conform to historical experience. The weighted average lives of the securities
will also be impacted to the extent that the depositor or the seller is
obligated to repurchase contracts from a given trust as a result of breaches of
particular representations and warranties relating to the contracts. See
"DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS-SALE AND ASSIGNMENT OF
CONTRACTS BY SELLER" and "-TRANSFER OF CONTRACTS BY DEPOSITOR" in this
prospectus. The weighted average lives of the securities will also be impacted
to the extent the servicer is obligated to purchase contracts from a given trust
as a result of breaches of certain covenants relating to the contracts. See
"DESCRIPTION OF THE TRANSFER AND SERVICING Agreements-Servicing" in this
prospectus. In addition, early retirement of the securities may be effected by
the exercise of the option of the depositor, at the direction of the servicer,
to purchase all of the contracts remaining in the trust when the aggregate
outstanding principal balance of the contracts is less than 10% of the sum of
(i) the aggregate outstanding principal balance of the contracts owned by the
trust as of the closing date and (ii) the initial amount on deposit in the
pre-funding account, if any. You will bear all of the reinvestment risk
resulting from the rate of prepayments of the contracts.
Your prospectus supplement may set forth additional information
regarding the maturity and prepayment considerations applicable to your pool of
contracts and your securities.
FACTORS AND TRADING INFORMATION
The "NOTE FACTOR" or, if applicable, the "CERTIFICATE FACTOR" for any
class of securities issued by an "owner trust" will be a seven-digit decimal
indicating the principal amount of that class of securities on the payment date
as a fraction of the respective principal amount of that class as of the closing
date. The servicer will compute the note factor and, if applicable, the
certificate factor each month. Initially, each factor will be 1.0000000 and
thereafter will decline to reflect reductions in the principal amount of each
class of notes and, if applicable, the reductions in the certificate balance.
The servicer will compute the principal amount by allocating payments in respect
of the contracts to principal and interest using the simple interest method. The
portion of the principal amount of any class of notes and of the certificate
balance for any class of certificates for a given month allocable to a
securityholder can be determined by multiplying the original denomination of the
holder's security by the related note factor or certificate factor, as the case
may be, for that month.
The "POOL FACTOR" for any class of certificates issued by a "grantor
trust" will be a seven-digit decimal indicating the principal amount of that
class of certificates on the payment date as a fraction of the respective
principal amount thereof as of the closing date. The servicer will compute the
pool factor each month and will calculate the pool factor by dividing the
certificate balance for that class of certificates as of the close of business
on the last day of the preceding month by the aggregate certificate balance of
the certificates as of the closing date.
You will receive monthly reports concerning the payments received on
the contracts, the aggregate principal balance of the contracts, the related
note factors, certificate factors, pool factors and various other items of
information pertaining to the trust. Furthermore, the trustee or the indenture
trustee will furnish you with information for tax reporting purposes not later
than on the latest date permitted by law. See "DESCRIPTION OF THE TRANSFER AND
SERVICING AGREEMENTS-SERVICING-STATEMENTS TO SECURITYHOLDERS" in this
prospectus.
DESCRIPTION OF THE NOTES AND INDENTURE
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GENERAL
The issuance of each series of notes will be under an indenture, a form
of which was filed with the Securities and Exchange Commission as an exhibit to
the registration statement of which this prospectus is a part. In addition, a
copy of the indenture for a series of notes will be filed with the Securities
and Exchange Commission following the issuance of each series of securities.
This summary describes the material terms common to each indenture and the
notes. This summary is subject to, and qualified in its entirety by reference
to, all of the provisions of the indenture and the notes.
The notes will be issued in fully registered form only and will
represent the obligations of a separate trust. Notes will be available for
purchase by you in the denominations specified in your prospectus supplement.
Your prospectus supplement will provide additional information specific
to your notes.
PAYMENTS
Your prospectus supplement will describe as to your class of notes:
- the timing and priority of payments of principal and interest;
- the amount and method of determining payments of principal and
interest;
- the priority of the application of the trust's available funds
to its expenses and payments on its securities; and
- the interest rates or the formula for determining the interest
.
Your rights to receive payments may be senior or subordinate to the
rights of holders of other classes of notes. Furthermore, each class of notes
may have a different interest rate, which may be a fixed, variable or adjustable
interest rate or any combination of the foregoing. See "INFORMATION REGARDING
THE SECURITIES-INTEREST RATES" in this prospectus.
Payments of principal and interest on any class of notes will be made
on a pro rata basis among all noteholders of that class. If the amount of funds
available to make a payment on a class of notes is less than the required
payment, the noteholders will receive their pro rata share of the amount
available for that class.
PRO-RATA PAY/SUBORDINATE NOTES
One or more classes of notes may be payable on an interest only or
principal only basis. In addition, the notes may include two or more classes
that differ as to timing, sequential order, priority of payment, interest rate
or amount of payments of principal or interest or both. Payments of principal or
interest or both on any class may be made upon the occurrence of specified
events, in accordance with a schedule or formula, or on the basis of collections
from designated assets of the trust. A series may include one or more classes of
notes, as to which accrued interest will not be distributed but rather will be
added to the principal or notional balance of the notes on each payment date.
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VARIABLE FUNDING NOTE
A trust may issue one or more classes of notes having particular
maturity dates and at the same time the trust may issue variable funding notes
which relate to those particular maturity dates. These notes may have a balance
that may decrease based on the amortization of contracts or increase based on
principal collections used to purchase additional contracts.
OPTIONAL PURCHASE OF CONTRACTS AND REDEMPTION OF NOTES
At its option, the seller may purchase all of the contracts owned by a
trust on any payment date following the date on which the aggregate outstanding
principal balance of the contracts is less than 10% of the sum of (i) the
aggregate outstanding principal balance of the contracts owned by the trust as
of the closing date and (ii) the initial amount on deposit in the pre-funding
account, if any. Except as otherwise described in your prospectus supplement,
the purchase price to be paid in connection with the purchase shall be at least
equal to the sum of:
- the unpaid principal balance of the contracts as of that
payment date;
- accrued but unpaid interest on the securities to that payment
date;
- unreimbursed servicer advances; and
- accrued but unpaid servicer fees.
If the seller purchases the contracts, the related notes will be repaid in full
on the payment date on which the purchase occurs. In no event will you or the
trust be subject to any liability to the seller as a result of or arising out of
the seller's optional purchase of the contracts.
VOTING RIGHTS
Your prospectus supplement may specify certain circumstances under
which the consent, approval, direction or request of the holders of a specified
percentage of the outstanding principal amount of the notes or certain classes
of notes must be obtained, given or made, or under which such holders are
permitted to take an action or give a notice. Your prospectus supplement may
further specify that one class of notes will control the voting with respect to
all classes of notes.
THE INDENTURE
MODIFICATION OF INDENTURE WITHOUT NOTEHOLDER CONSENT
The trust and the indenture trustee may, without your consent, correct
or supplement any provision in the indenture that is ambiguous or inconsistent
with any other provision of the indenture. In addition, if the indenture trustee
receives an opinion of counsel that a modification will not have a material
adverse effect on the noteholders, the trust and the indenture trustee may,
without your consent, enter into one or more supplemental indentures to, among
other things, add, modify or eliminate any provisions of the indenture or modify
your rights as a noteholder.
MODIFICATION OF INDENTURE WITH NOTEHOLDER CONSENT
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With the consent of the holders of more than 50% (or such higher
percentage as specified in your prospectus supplement) of the outstanding
principal amount of the notes or the class or classes of notes described in your
prospectus supplement, the trust and the indenture trustee may modify the
indenture and your rights under it.
Without the consent of the holder of each outstanding note affected,
however, no modification may:
- reduce the principal amount or interest rate or change the due
date of any payment;
- impair your right to sue to enforce payment provisions of the
indenture;
- reduce the percentage of the aggregate principal amount of the
notes to amend certain sections of the indenture or certain
other related agreements;
- permit the creation of any lien on collateral under the
indenture ranking prior to or on a parity with the lien of the
indenture;
- adversely affect the manner of determining notes outstanding
for voting purposes;
- reduce the percentage of the aggregate principal amount of the
notes needed to sell or liquidate the assets of a trust if the
proceeds of sale will be insufficient to pay the notes in
full; or
- modify the provisions of the indenture relating to these types
of indenture modifications without the consent of all
noteholders.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT
Events of default under each indenture will consist of:
- a default for five days or more in the payment of interest due
on any note;
- failure to pay the unpaid principal amount of any class of
notes when due and payable;
- a default in the observance or performance of any covenant or
agreement of the trust (other than those specifically
addressed above), which default continues for 30 days after
written notice thereof is given to the trust by the indenture
trustee or by holders of at least 25% of the aggregate
principal amount of the notes or the class or classes of notes
described in your prospectus supplement;
- any representation or warranty made by the trust in the
indenture or in any certificate delivered pursuant thereto was
incorrect as of the time made, and continues to be incorrect
for a period of 30 days after notice thereof is given to the
trust by the indenture trustee or by holders of at least 25%
of the aggregate principal amount of the notes or the class or
classes of notes described in your prospectus supplement; or
- events of bankruptcy, insolvency, receivership or liquidation
of the trust.
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If an event of default should occur and be continuing with respect to
the notes of a series, other than an event of default caused by an event of
bankruptcy, insolvency, receivership or liquidation of the trust, the indenture
trustee or the holders of more than 66 2/3% (or a lesser percentage as specified
in your prospectus supplement, but in no case not less than 50%) of the
aggregate principal amount of the notes or the class or classes of notes
described in your prospectus supplement may declare the principal amount of the
notes to be immediately due and payable. If an event of default caused by an
event of bankruptcy, insolvency, receivership or liquidation of the trust should
occur and be continuing with respect to the notes of a series, the principal
amount of the notes will be immediately due and payable. This declaration may be
rescinded by the holders of more than 66 2/3% (or a lesser percentage as
specified in your prospectus, but in no case not less than 50%) of the aggregate
principal amount of the notes or the class or classes of notes described in your
prospectus supplement.
If the notes of a series have been declared to be due and payable
following an event of default, the indenture trustee may:
- institute proceedings to collect amounts due or foreclose on
the trust assets;
- exercise remedies as a secured party; or
- sell the trust assets, or elect to have the trust maintain
possession of the trust assets.
The indenture trustee, however, may not sell the trust assets following
an event of default other than a default in the payment of principal or a
default for five days or more in the payment of interest, unless:
- the holders of all the outstanding notes consent to the sale;
- the proceeds of the sale are sufficient to pay in full the
principal and accrued interest on all the outstanding notes at
the date of the sale; or
- there has been an event of default for failure to pay
principal or interest on the notes and the indenture trustee
determines that the trust assets would not be sufficient on an
ongoing basis to make all payments on the notes as the
payments would have become due if the obligations had not been
declared due and payable and the indenture trustee provides
written notice to the rating agencies and obtains the consent
of the holders of more than 66-2/3% (or a lesser percentage as
specified in your prospectus supplement, but in no case not
less than 50%) of the aggregate principal amount of the notes
or the class or classes of notes described in your prospectus
supplement.
Following a declaration upon an event of default that the notes are immediately
due and payable, the application of any proceeds of any sale of the trust assets
will be in the order of priority described in the prospectus supplement for your
class of notes.
If an event of default occurs and is continuing, the indenture trustee
will be under no obligation to exercise any of the rights or powers under the
indenture at the request or direction of any of the noteholders if the indenture
trustee reasonably believes it will not be adequately indemnified against the
costs, expenses and liabilities which it may incur in complying with that
request. Holders of more than 50% of the aggregate principal amount of the notes
or the class or classes of notes described in your
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prospectus supplement will have the right to direct the time, method and place
of conducting any proceeding or any remedy available to the indenture trustee.
Additionally, holders of more than 50% of the aggregate principal amount of the
notes or the class or classes of notes described in your prospectus supplement
may, in some cases, waive any default, except a default in the payment of
principal or interest or a default in respect of a covenant or provision of the
indenture that cannot be modified without the waiver or consent of all of the
holders of the outstanding notes.
No holder of a note will have the right to institute any proceeding
with respect to the indenture, unless:
- the holder previously has given to the indenture trustee
written notice of a continuing event of default;
- the holders of not less than 25% in principal amount of the
outstanding notes or the class or classes of notes described
in your prospectus supplement make written request of the
indenture trustee to institute the proceeding in its own name
as indenture trustee;
- the holder or holders offer the indenture trustee reasonable
indemnity;
- the indenture trustee has for 60 days failed to institute the
proceeding; and
- no direction inconsistent with that written request has been
given to the indenture trustee during the 60-day period by the
holders of more than 50% of the notes or the class or classes
of notes described in your prospectus supplement.
Notwithstanding the foregoing, noteholders will have the absolute and
unconditional right to receive payment of principal of and interest on a note
and to institute suit for the enforcement of such payment, which right will not
be impaired without the individual noteholder's consent.
In addition, the indenture trustee and noteholders, by accepting the
notes, will covenant that they will not at any time institute against the
depositor or the trust any bankruptcy, reorganization or other proceeding under
any federal or state bankruptcy or similar law.
Neither the trustee, the holder of any certificate, the seller, the
depositor, or any of their respective owners, beneficiaries, agents, officers,
directors, employees, affiliates, successors or assigns will be personally
liable for the payment of the notes or for any agreement or covenant of the
trust contained in the indenture.
COVENANTS
Each indenture will provide that the trust may not consolidate with or
merge into any other entity, unless:
- the entity formed by or surviving the consolidation or merger
is organized under the laws of the United States, any state or
the District of Columbia;
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- the entity expressly assumes the trust's obligation to make
due and punctual payments upon the notes and the performance
or observance of every agreement and covenant of the trust
under the indenture;
- no event of default shall have occurred and be continuing
immediately after the merger or consolidation;
- the rating agencies rating the notes (and, if so provided in
the indenture, the certificates) advise the indenture trustee
that the ratings then in effect would not be reduced or
withdrawn as a result of the merger or consolidation;
- the indenture trustee has received an opinion of counsel to
the effect that the consolidation or merger would have no
material adverse tax consequence to the trust or to any
noteholder or certificateholder; and
- any action as is necessary to maintain the lien and security
interest of the indenture trustee shall have been taken.
Each indenture will provide that the trust will not, among other
things:
- except as expressly permitted by the related indenture, trust
agreement, sale and servicing agreement or pooling and service
agreement, transfer any of the assets of the trust;
- claim any credit on or make any deduction from, the principal
and interest payable in respect of the related notes, other
than amounts withheld under the bankruptcy code or applicable
state law, or assert any claim against any present or former
holder of notes because of the payment of taxes levied or
assessed upon the trust;
- permit the validity or effectiveness of the indenture to be
impaired or permit the release of any person from any
covenants or obligations relating to the notes under the
indenture except as expressly permitted in the indenture; or
- except as expressly permitted in the indenture, permit any
lien or claim to burden any assets of the trust.
Each indenture will provide that each trust may engage in only those
activities specified above under "THE TRUSTS." Each trust will be prohibited
from incurring, assuming or guaranteeing any indebtedness other than
indebtedness incurred under the notes and the indenture or otherwise in
accordance with the related indenture, trust agreement and sale and servicing
agreement.
ANNUAL COMPLIANCE STATEMENT
Each trust will be required to file annually with the applicable
indenture trustee a written statement as to the fulfillment of its obligations
under the indenture.
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INDENTURE TRUSTEE'S ANNUAL REPORT
Each indenture trustee will be required to mail each year to all
noteholders of the related series a brief report relating to:
- its eligibility and qualification to continue as indenture
trustee under the related indenture;
- any amounts advanced by it under the indenture;
- the amount, interest rate and maturity date of certain
indebtedness owing by the trust to the indenture trustee in
its individual capacity;
- the property and funds physically held by the indenture
trustee; and
- any action taken by it that materially affects the notes and
that has not been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE
The discharge of an indenture will occur with respect to the assets
securing the notes of a series upon the delivery to the related indenture
trustee for cancellation of all the notes or, with certain limitations, upon
deposit with the indenture trustee of funds sufficient for the payment in full
of all of the notes and payment of all amounts and obligations, if any, which
the trust owes to the noteholders or indenture trustee on behalf of the
noteholders.
TRUST ACCOUNTS
Under each indenture, if the applicable indenture trustee has a rating
of A-1+/P-1 by Standard & Poor's Rating Services and Moody's Investors Service,
Inc., the indenture trustee will establish and maintain segregated bank accounts
for the trust. If the applicable indenture trustee has a rating lower than
A-1+/P-1, the indenture trustee will establish and maintain segregated trust
accounts or accounts in a qualified institution. These accounts will include,
among others, a "COLLECTION ACCOUNT" and a "DISTRIBUTION ACCOUNT." The trust
accounts may, as described in the prospectus supplement for your notes, also
include a cash collateral or reserve fund account as credit enhancement.
"QUALIFIED INSTITUTION" means the corporate trust department of the
indenture trustee or any other depositary institution:
- organized under the laws of the United States or any state or
any domestic branch of a foreign bank;
- the deposits of which are insured by the Federal Deposit
Insurance Corporation; and
- which has, or whose parent corporation has, short-term or
long-term debt ratings acceptable to Moody's Investors
Service, Inc. and Standard & Poor's Ratings Services.
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The indenture trustee will invest funds in the trust accounts at the
direction of the servicer. All investments will be generally limited to
investments acceptable to the rating agencies rating the notes as being
consistent with the ratings of those notes that will mature not later than the
business day preceding the applicable payment date or any later date approved by
the rating agencies. If the rating agencies permit the investment of funds on
deposit in a cash collateral or reserve fund account in investments that mature
beyond a payment date, the amount of cash available in the cash collateral or
reserve fund account may be less than the amount required to be withdrawn from
that trust account to cover shortfalls in collections on the contracts and a
temporary shortfall in the amounts paid to the noteholders may result.
Investment earnings on funds deposited in the trust accounts will be paid to the
person described in your prospectus supplement.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The issuance of each series of certificates will be under the terms of
a trust agreement or a pooling and servicing agreement, a form of each of which
has been filed with the Securities and Exchange Commission as an exhibit to the
registration statement of which this prospectus is a part. In addition, a copy
of the trust agreement or the pooling and servicing agreement for a series of
certificates will be filed with the Securities and Exchange Commission following
the issuance of the certificates. This summary describes the material terms
common to the certificates issued by each trust. This summary is subject to, and
qualified in its entirety by reference to, all the provisions of the
certificates, the trust agreement or pooling and servicing agreement, as
applicable.
The certificates of each series will be issued in fully registered form
only and will represent an ownership interest in the trust. Certificates will be
available for purchase by you in the denominations specified in your prospectus
supplement.
Your prospectus supplement will provide additional information specific
to your certificates.
DISTRIBUTIONS
Your prospectus supplement will describe as to your class of
certificates:
- the timing and priority of distributions on account of
principal and interest;
- the amount and method of determining distributions on account
of principal and interest;
- the priority of the application of the trust's available funds
to its expenses and distributions on its securities;
- allocation of losses on the contracts among the classes of
certificates; and
- the interest rates or the formula for determining the interest
rates.
Your rights to receive distributions may be senior or subordinate to
holders of other classes of certificates. Furthermore, each class of
certificates may have a different interest rate, which may be a fixed, variable
or adjustable interest rate or any combination of the foregoing. See
"INFORMATION REGARDING THE SECURITIES-INTEREST RATES" in this prospectus.
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Distributions of principal and interest with respect to any class of
certificates will be made on a pro rata basis among all certificateholders of
that class. If the amount of funds available to make a distribution with respect
to a class of certificates is less than the required payment, the
certificateholders will receive their pro rata share of the amount available for
that class.
PRO-RATA PAY/SUBORDINATE CERTIFICATES
One or more classes of certificates may be payable on an interest only
or principal only basis. In addition, the certificates may include two or more
classes that differ as to timing, sequential order, priority of payment,
interest rate or amount of distributions of principal or interest or both.
Distributions of principal or interest or both on any class may be made upon the
occurrence of specified events, in accordance with a schedule or formula, or on
the basis of collections from designated assets of the trust. A series may
include one or more classes of certificates, as to which accrued interest will
not be distributed but rather will be added to the principal or notional balance
of the certificates on each payment date.
OPTIONAL PURCHASE OF CONTRACTS AND PREPAYMENT OF CERTIFICATES
At its option, the seller may purchase all of the contracts owned by a
trust on any payment date following the date on which the aggregate outstanding
principal balance of the contracts is less than 10% of the sum of (i) the
aggregate outstanding principal balance of the contracts owned by the trust as
of the closing date and (ii) the initial amount on deposit in the pre-funding
account, if any. Except as otherwise described in your prospectus supplement,
the purchase price to be paid in connection with the purchase shall be at least
equal to the sum of:
- the unpaid principal balance of the contracts as of that
payment date;
- accrued but unpaid interest on the certificates to the payment
date;
- unreimbursed servicer advances; and
- accrued but unpaid servicer fees.
If the seller purchases the contracts, the related certificates will be paid in
full on the payment date on which the purchase occurs. In no event will you or
the trust be subject to any liability to the seller as a result of or arising
out of the seller's optional purchase of the contracts.
THE POOLING AND SERVICING AGREEMENT
MODIFICATION OF THE POOLING AND SERVICING AGREEMENT WITHOUT
CERTIFICATEHOLDER CONSENT
In the case of a "grantor trust", the depositor and the trustee may,
without your consent, correct or supplement any provision in the pooling and
servicing agreement that is ambiguous or inconsistent with any other provision
of the pooling and servicing agreement. In addition, if the trustee receives an
opinion of counsel that a modification will not have a material adverse effect
on the certificateholders, the depositor and the trustee may, without your
consent, enter into one or more supplements to the pooling and servicing
agreement to, among other things, add, modify or eliminate any provisions of the
pooling and servicing agreement or modify your rights as a certificateholder.
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MODIFICATION OF POOLING AND SERVICING AGREEMENT WITH CERTIFICATEHOLDER
CONSENT
With the consent of the holders of more than 50% of the outstanding
principal amount of the certificates or the class or classes of certificates
described in your prospectus supplement, the depositor and the trustee may
modify the pooling and servicing agreement and your rights under it.
Without the consent of the holder of each outstanding certificate
affected, however, no modification may:
- reduce the principal amount or pass-through rate or change the
due date of any distribution;
- modify the manner of application of collections in respect of
the contracts to distributions in respect of the certificates;
- impair your right to sue to enforce payment provisions of the
pooling and servicing agreement;
- reduce the percentage of the aggregate certificate balance of
the certificates needed for consents of certificateholders;
- permit the creation of any lien on collateral under the
pooling and servicing agreement ranking prior to or on a
parity with the lien of the pooling and servicing agreement;
- adversely affect the manner of determining certificates
outstanding for voting purposes; or
- modify the provisions of the pooling and servicing agreement
relating to these types of pooling and servicing agreement
modifications without the consent of all certificateholders.
TRUST ACCOUNTS
Under the pooling and servicing agreement or trust agreement, if the
applicable trustee has a rating of A-1+/P-1 by Standard & Poor's Rating Services
and Moody's Investors Service, Inc., the trustee will establish and maintain
segregated bank accounts for the trust. If the applicable trustee has a rating
lower than A-1+/P-1, the trustee will establish and maintain segregated trust
accounts or accounts in a qualified institution. These accounts will include,
among others, a "COLLECTION ACCOUNT".
"QUALIFIED INSTITUTION" means the corporate trust department of the
trustee or any other depositary institution:
- organized under the laws of the United States or any
state or any domestic branch of a foreign bank;
- the deposits of which are insured by the Federal
Deposit Insurance Corporation; and
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- which has, or whose parent corporation has,
short-term or long-term debt ratings acceptable to
Moody's Investors Service, Inc. and Standard & Poor's
Ratings Services.
The trustee will invest funds in the trust accounts at the direction of the
servicer. All investments will be generally limited to investments acceptable to
the rating agencies rating the certificates as being consistent with the ratings
of those certificates that will mature not later than the business day preceding
the applicable payment date or any later date approved by the rating agencies.
See "DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS" in this
prospectus for summaries of the material terms of the trust agreements, sale and
servicing agreements and pooling and servicing agreements pursuant to which
certificates will be issued.
INFORMATION REGARDING THE SECURITIES
INTEREST RATES
A class of securities may bear interest at a fixed, variable or
adjustable rate per annum, as more fully described below and in your prospectus
supplement.
FIXED RATE SECURITIES. Each class of fixed rate securities will bear
interest at the applicable per annum interest rate or pass through rate,
specified in the applicable prospectus supplement. Interest on each class of
fixed rate securities will be computed on the basis of a 360-day year consisting
of twelve 30-day months or on such other day count basis as is specified in your
prospectus supplement.
FLOATING RATE SECURITIES. Each class of floating rate securities will
bear interest during each applicable interest period at a rate per annum
determined by reference to a base rate, plus or minus a specified spread, if
any, or multiplied by the spread multiplier, if any, as specified in the
applicable prospectus supplement. The "SPREAD" is a number of basis points to be
added to or subtracted from the related base rate. The "SPREAD MULTIPLIER" is a
percentage of the related base rate by which that base rate will be multiplied
to determine the applicable interest rate. Your prospectus supplement will
designate one of the following base rates as applicable to a floating rate
security:
- London interbank offered rate;
- commercial paper rates;
- Treasury rate;
- federal funds rate;
- negotiable certificates of deposit rate; or
- any other base rate that is set forth in your
prospectus supplement.
Your prospectus supplement will specify whether the interest rate will
be reset daily, weekly, monthly, quarterly, semiannually, annually or some other
specified period and the dates on which that interest rate will be reset. If the
reset date does not fall on a business day, then the reset date will be
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postponed to the next succeeding business day; except that with respect to
securities having a base rate based on the London interbank offered rate, if the
reset date falls in the next succeeding calendar month, then the reset date will
be the immediately preceding business day.
Interest on each class of floating rate security will accrue on an
Actual/360 basis, an Actual/Actual basis, or a 30/360 basis. For floating rate
securities calculated on an Actual/360 basis and Actual/Actual basis, accrued
interest for each interest period will be calculated by multiplying:
1. the face amount of that floating rate security;
2. the applicable interest rate; and
3. the actual number of days in the related interest period, and
dividing the resulting product by 360 or the actual number of
days in the related year, as applicable.
For floating rate securities calculated on a 30/360 basis, accrued
interest for an interest period will be computed on the basis of a 360-day year
consisting of twelve 30-day months, irrespective of how many days are actually
in that interest period.
Floating rate securities may also have either or both of the following:
- a maximum limitation, or ceiling, on the rate at
which interest may accrue during any interest period;
and
- a minimum limitation, or floor, on the rate at which
interest may accrue during any interest period.
The applicable interest rate will in not exceed the maximum rate permitted by
applicable law.
Each trust issuing floating rate securities will appoint a calculation
agent to calculate interest rates on each class of floating rate securities.
Your prospectus supplement will set forth the identity of the calculation agent,
which may be the related trustee or indenture trustee with respect to that
series. All determinations of interest by the calculation agent shall, in the
absence of manifest error, be conclusive for all purposes and binding on the
holders of floating rate securities of a given class. All percentages resulting
from any calculation on floating rate securities will be rounded to the nearest
one hundred-thousandth of a percentage point, with five one millionths of a
percentage point rounded upwards, and all dollar amounts used in or resulting
from that calculation on floating rate securities will be rounded to the nearest
cent.
CD RATE SECURITIES. The base rate for any securities having a base rate
based on a CD rate for each reset date shall be either:
- the rate for negotiable certificates of deposit
having the index maturity designated in the
applicable prospectus supplement as published in
H.15(519) under the heading "CDs (Secondary Market)"
as of the second business day prior to the reset
date; or
- if that rate is not published prior to 3:00 p.m., New
York City time on that business day, the rate for
negotiable certificates of deposit having the index
maturity designated in the applicable prospectus
supplement as published in H.15 Daily Update under
the
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heading "CDs (Secondary Market)" or such other
recognized electronic source used for the purpose of
displaying such rate; or
- if by 3:00 p.m., New York City time on that business
day, that rate is not yet published in either
H.15(519) or H.15 Daily Update or such other
recognized electronic source used for the purpose of
displaying such rate, the arithmetic mean of the
secondary market offered rates as of 10:00 a.m., New
York City time on that business day, of three leading
nonbank dealers in negotiable U.S. dollar
certificates of deposit in the City of New York
selected by the calculation agent for negotiable
certificates of deposit of major United States money
market banks with a remaining maturity closest to the
index maturity designated in the applicable
prospectus supplement in an amount that is
representative for a single transaction in that
market at that time.
"H.15(519)" means the publication entitled "Federal Reserve Statistical
Release H.15(519), Selected interest rates," or any successor publication,
published by the Board of Governors of the Federal Reserve System.
"H.15 DAILY UPDATE" means the publication entitled "H.15 Daily Update,
Selected interest rates," or any successor publication, published by the Board
of Governors of the Federal Reserve System.
COMMERCIAL PAPER RATE SECURITIES. The base rate of any securities
having a base rate based on commercial paper rates for each reset date shall be
either:
- the money market yield on the reset date of the rate
for commercial paper having the index maturity
specified in your prospectus supplement, as published
in H.15(519) under the heading "Commercial
Paper-Nonfinancial" as of the second business day
prior to the reset date; or
- if that rate is not published prior to 3:00 p.m., New
York City time on that business day, the money market
yield on the second business day prior to the reset
date of the rate for commercial paper of the
specified index maturity as published in H.15 Daily
Update or such other recognized electronic source
used for the purpose of displaying such rate under
the heading "Commercial Paper-Nonfinancial"; or
- if by 3:00 p.m., New York City time on that business
day, that rate is not yet published in either
H.15(519) or H.15 Daily Update or such other
recognized electronic source used for the purpose of
displaying such rate, the money market yield of the
arithmetic mean of the offered rates, as of 11:00
a.m., New York City time, on that date of three
leading dealers of commercial paper in the City of
New York selected by the calculation agent for
commercial paper of the specified index maturity
placed for an industrial issuer whose bonds are rated
"AA" or the equivalent by a nationally recognized
rating agency.
"MONEY MARKET YIELD" means a yield calculated in accordance with the
following formula:
D x 360
-----
Money Market Yield = 360 - (D x M) x 100
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where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
FEDERAL FUNDS RATE SECURITIES. The base rate for any securities having
a base rate based on the federal funds rate for each reset date shall be either:
- the rate set forth in H.15(519) for that date
opposite the caption "Federal Funds (Effective)" as
such rate is displayed on Bridge Telerate, Inc. Page
120 (or any other page as may replace that page); or
- if that rate does not appear on Bridge Telerate, Inc.
Page 120 or is not published in H.15(519) prior to
3:00 p.m., New York City time, the rate set forth in
H.15 Daily Update or such other recognized electronic
source used for the purpose of displaying such rate
under the heading "Federal Funds/Effective Rate"; or
- if by 3:00 p.m., New York City time, that rate does
not appear on Bridge Telerate, Inc. Page 120 or is
not yet published in either H.15(519) or H.15 Daily
Update or such other recognized electronic source
used for the purpose of displaying such rate, the
arithmetic mean of the rates for the last transaction
in overnight United States dollar federal funds
arranged by three leading brokers of federal funds
transactions in the City of New York selected by the
calculation agent prior to 9:00 a.m., New York City
time.
LIBOR SECURITIES. The base rate for any securities having a base rate
based on LIBOR will be determined by the calculation agent as follows:
1. On the second London business day prior to the reset date, the
calculation agent will determine the offered rates for
deposits in U.S. dollars for the period of the index maturity
specified in the applicable prospectus supplement, as either
- if "LIBOR Bloomberg" is specified in the applicable
prospectus supplement, the arithmetic mean of the
offered rates for deposits in the index currency
having the index maturity designated in the
applicable prospectus supplement, commencing on the
reset date, that appear on the page specified in the
applicable prospectus supplement as of 11:00 a.m.
London time, on the second London business day prior
to the reset date, if at least two offered rates
appear (unless, described above, only a single rate
is required) on that page, or
- if "LIBOR Telerate" is specified in the applicable
prospectus supplement, the rate for deposits in the
index currency having the index maturity designated
in the applicable prospectus supplement, commencing
on reset date that appears on the page specified in
the applicable prospectus supplement as of 11:00 a.m.
London time, on the second London business day prior
to the reset date.
2. If "LIBOR Bloomberg" is specified and fewer than two offered
rates appear on the designated page or if LIBOR Telerate is
specified and no rate appears on the designated
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page, the calculation agent will request the principal London
offices of each of four major banks in the London interbank
market to provide the calculation agent with its offered
quotations for deposits in the index currency for the period
of the index maturity designated in the applicable prospectus
supplement, commencing on the reset date, to prime banks in
the London interbank market at approximately 11:00 a.m.,
London time, on the second London business day prior to the
reset date and in a principal amount that is representative
for a single transaction in that index currency in that market
at that time.
- If at least two of those quotations are provided,
LIBOR will be the arithmetic mean of those
quotations.
- If fewer than two quotations are provided, LIBOR will
be the arithmetic mean of the rates quoted at
approximately 11:00 a.m., in the applicable principal
financial center, on the second London business day
prior to the reset date by three major banks in that
principal financial center for loans in the index
currency to leading European banks, having the index
maturity designated in the applicable prospectus
supplement and in a principal amount that is
representative for a single transaction in that index
currency in that market at that time; provided,
however, that if the banks so selected by the
calculation agent are not quoting offered rates as
mentioned in this sentence, LIBOR will be LIBOR in
effect on the reset date.
"INDEX CURRENCY" means the currency specified in the applicable
prospectus supplement as the currency for which LIBOR shall be calculated. If no
currency is specified in the applicable prospectus supplement, the index
currency shall be U.S.
dollars.
"PRINCIPAL FINANCIAL CENTER" will generally be the capital city of the
country of the specified index currency, except that with respect to U.S.
dollars, Deutsche marks, Canadian dollars, Australian dollars, Italian lira,
Swiss francs, Dutch guilders and Euros, the principal financial center shall be
New York, Frankfurt, Toronto, Sydney, Milan, Zurich, Amsterdam and London,
respectively.
TREASURY RATE SECURITIES. The base rate for any securities
having a base rate based on the Treasury rate for each reset date shall be
either:
- the rate for the most recent auction of Treasury bills
having the index maturity specified in the applicable
prospectus supplement, as that rate shall be set forth
under the heading "Investment Rate" on the display on
Bridge Telerate, Inc. Page 56 or Bridge Telerate, Inc.
Page 57 (or such other page as may replace either of those
pages opposite the index maturity) or,
- if Treasury bills of the index maturity have been
auctioned but that rate for those Treasury bills does not
appear on either Bridge Telerate, Inc. Page 56 or Bridge
Telerate, Inc. Page 57 prior to 3:00 p.m., New York City
time, the auction average rate for those Treasury bills
announced by the United States Department of the Treasury,
or
- if the results of the auction of Treasury bills having the
specified index maturity are not announced as provided
above by 3:00 p.m., New York City time, or if that auction
is not held in a particular week, the rate published in
H.15(519) under the heading "U.S. Government
Securities-Treasury bills-Secondary market", or
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- if that rate does not appear on H.15(519) by 3:00 p.m.,
New York City time, the rate set forth in H.15 Daily
Update or such other recognized electronic source used for
the purpose of displaying that rate under the heading
"U.S. Government Securities-Treasury bills-Secondary
market," or
- if those results are not published in H.15 Daily Update or
another recognized electronic source used for the purpose
of displaying such rate, by 3:00 p.m. New York City time,
the arithmetic mean of the secondary market bid rates, as
of approximately 3:30 p.m., New York City time, on that
date, of three leading primary United States government
securities dealers selected by the calculation agent for
the issue of Treasury bills with a remaining maturity
closest to the specified index maturity.
INDEXED SECURITIES. Any class of securities may consist of securities
in which the amounts payable on the final scheduled payment date and/or the
interest payable on any payment date is determined by reference to a measure
which will be related to the exchange rates of one or more currencies or
composite currencies or the price of commodities or stocks, on dates as
specified in the applicable prospectus supplement. Holders of indexed securities
may receive a principal amount on the related final scheduled payment date that
is greater than or less than the face amount of the indexed securities depending
upon the relative value on the related final payment date of the specified
indexed item. The applicable prospectus supplement will contain information as
to the method for determining the principal amount payable on the related final
scheduled payment date, if any, and, where applicable, historical information
with respect to the specific indexed item or items and special tax
considerations associated with an investment in indexed securities. For purposes
of determining the rights of a holder of a security indexed as to principal in
respect of voting for or against amendments to the related trust agreement,
indenture, or other related agreements, as the case may be, and modifications
and the waiver of rights under those agreements, the principal amount of that
indexed security shall be deemed to be the face amount thereof upon issuance
less any payments allocated to principal of that indexed security.
If the principal amount of an indexed security is based on an index
calculated or announced by a third party and that third party either suspends
the calculation or announcement of that index or changes the basis upon which
that index is calculated, then that index shall be calculated by an independent
calculation agent named in the applicable prospectus supplement on the same
basis, and subject to the same conditions and controls, as applied to the
original third party. If for any reason that index cannot be calculated on the
same basis and subject to the same conditions and controls as applied to the
original third party, then the principal amount of that indexed security shall
be calculated in the manner set forth in the applicable prospectus supplement.
Any determination of that independent calculation agent shall, in the absence of
manifest error, be binding on all parties.
The applicable prospectus supplement will describe whether the
principal amount of the related indexed security, if any, that would be payable
upon repayment prior to the applicable final scheduled payment date will be the
face amount of that indexed security, the principal amount of that indexed
security at the time of repayment or another amount described in that prospectus
supplement.
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit and cash flow enhancement arrangements
and the applicable provider, if any, will be set forth in the applicable
prospectus supplement. This credit or cash flow enhancement may be in one or
more of the following forms:
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- subordination of one or more classes of securities;
- spread account;
- reserve fund;
- over-collateralization;
- letter of credit;
- credit or liquidity facility;
- financial guaranty insurance policy;
- surety bond;
- guaranteed investment contract or other interest rate
protection agreement;
- repurchase obligation;
- yield supplement agreement;
- swap or other interest rate protection agreement;
- other agreements with respect to third party payments or other
support; or
- cash deposit or other arrangement that may be described in
your prospectus supplement.
Credit and cash flow enhancement is intended to enhance the likelihood
that you will receive the full amount of principal and interest due on your
securities and to decrease the likelihood that that you will experience losses.
The enhancement for a class or series of securities will not provide protection
against all risks of loss and will not guarantee repayment of the entire
principal of and interest on those securities. If losses occur which exceed the
amount covered by any credit or cash flow enhancement or which are not covered
by any credit or cash flow enhancement, you will bear your allocable share of
deficiencies, as described in your prospectus supplement. In addition, if a form
of enhancement covers more than one class or series of securities, you will be
subject to the risk that the enhancement will be exhausted by the claims of
securityholders of other classes or series.
If so provided in the prospectus supplement, the depositor or the trust
may replace the credit or cash flow enhancement for any class of securities with
another form of credit or cash flow enhancement without the consent of the
securityholders, provided that the rating agencies rating that class of
securities confirm that that substitution will not result in the reduction or
withdrawal of the rating of that class of securities.
RESERVE FUND
The depositor or a third party may establish for a series or class of
securities an account or reserve fund, which will be maintained with a
collateral agent or the related trustee or indenture trustee. The
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reserve fund will be funded by an initial deposit by the depositor or a third
party on the closing date in the amount set forth in your prospectus supplement
and, if the related trust has a pre-funding account, will also be funded on each
date that the trust acquires subsequent contracts from the depositor to the
extent described in the applicable prospectus supplement. The amount on deposit
in the reserve fund will be increased on each payment date thereafter up to the
reserve fund required amount by the deposit in the reserve fund of the amount of
collections on the related contracts available therefor as described in the
prospectus supplement.
Your prospectus supplement will describe the circumstances and manner
under which payments may be made out of the reserve fund, either to make
payments or distributions to you or to the servicer or a third party. Monies on
deposit in the reserve fund may be invested in investments acceptable to the
rating agencies rating the securities as being consistent with the ratings of
those securities under the circumstances and in the manner described in the
related sale and servicing agreement, pooling and servicing agreement or
indenture. Earnings on investment of funds in the reserve fund in eligible
investments will be paid to the person described in your prospectus supplement
under the circumstances described in your prospectus supplement on each payment
date. Any monies remaining on deposit in the reserve fund upon termination of
the trust also will be released to the depositor or its assignee.
BOOK-ENTRY REGISTRATION
Each class of securities offered by this prospectus will be represented
by one or more certificates registered in the name of Cede & Co., as nominee of
The Depository Trust Company. Unless your prospectus supplement states
otherwise, you may hold your securities through DTC in the United States, or
Clearstream, Luxembourg or the Euroclear System in Europe, if you are a
participant of those systems, or indirectly through organizations that are
participants in those systems.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under to Section 17A of the Securities Exchange Act
of 1934. DTC was created to hold securities for its direct participants and to
facilitate the clearance and settlement of securities transactions between its
direct participants through electronic book-entries, thereby eliminating the
need for physical movement of certificates. DTC's direct participants include:
- the underwriters offering the securities to you;
- securities brokers and dealers;
- banks;
- trust companies; and
- clearing corporations, and may include other
organizations.
Indirect access to the DTC system is also available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a direct participant, either directly or indirectly.
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To facilitate subsequent transfers, DTC will register all deposited
securities in the name of DTC's nominee, Cede & Co. DTC has no knowledge of the
actual holders of the securities; DTC's records reflect only the identify of its
direct participants to whose accounts the securities are credited, which may or
may not be the securityholders. DTC's direct and indirect participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
You have no entitlement to receive a certificate representing your
interest in a class of securities. As long as the securities are registered in
the name of Cede & Co., any action to be taken by your or any other holders will
be taken by DTC upon instructions from DTC's participants. All distributions,
notices, reports and statements to you will be delivered to Cede & Co., as the
registered holder of the securities, for distribution to you in compliance with
DTC procedures.
You will receive all payments of principal and interest on the
securities through direct participants or indirect participants. DTC will
forward the payments to its direct participants which will forward them to the
indirect participants or securityholders. Under a book-entry format, you may
experience some delay in their receipt of payments, since payments will be
forwarded to Cede & Co. as nominee of DTC. The trustee or indenture trustee will
not recognize you as a holder of securities under the trust agreement, pooling
and servicing agreement or indenture. You may exercise the rights as a holders
of securities only indirectly through DTC and its direct participants and
indirect participants. Because DTC can act only on behalf of direct
participants, who in turn act on behalf of indirect participants, and on behalf
of banks, trust companies and other persons approved by it, there may be limits
on your ability to pledge the securities to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to securities,
due to the absence of physical securities for the securities.
Arrangements among the various parties govern conveyance of notices and
other communications by:
- DTC to direct participants;
- by direct participants to indirect participants; and
- by direct participants and indirect participant to
holders, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Standing instructions and customary practices govern payments by DTC
participants to you, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name" and will be the
responsibility of the DTC participant and not of DTC, the indenture trustee, the
trustee, the depositor or the seller, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment or distribution of
principal and interest to DTC is the responsibility of the indenture trustee or
trustee, disbursement of the payments or distributions to direct participants
shall be the responsibility of DTC and disbursement of payments to you shall be
the responsibility of the direct participants and the indirect participants.
Purchases of securities under the DTC system must be made by or through
direct participants, which will receive a credit for the securities on DTC's
records. The ownership interest of each actual holder is in turn to be recorded
on the direct participants' and indirect participants' records. You will not
receive written confirmation from DTC of your purchase, but you are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of your holdings, from
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the direct participant or indirect participant through which you entered into
the transaction. Entries made on the books of DTC's participants acting on
behalf of you evidence transfers of ownership interests in the securities.
DTC has advised the depositor that it will take any action permitted to
be taken by a holder of securities only at the direction of one or more direct
participants to whose accounts with DTC the securities are credited.
Additionally, DTC has advised the depositor that to the extent that the pooling
and servicing agreement, the trust agreement or the indenture, as applicable,
requires that any action may be taken only by holders representing a specified
percentage of the aggregate outstanding principal amount of the securities, DTC
will take the action only at the direction of and on behalf of direct
participants, whose holdings include undivided interests that satisfy the
specified percentage.
DTC may discontinue providing its services as securities depositary
with respect to any class of securities at any time by giving reasonable notice
to the trustee or the indenture trustee, as applicable. Under these
circumstances, in the event that a successor securities depositary is not
obtained, fully registered, certificated securities are required to be printed
and delivered. A trust may decide to discontinue use of the system of book-entry
transfers through DTC or a successor securities depositary. In that event, fully
registered, certificated securities will be delivered to you. See "-ISSUANCE OF
DEFINITIVE SECURITIES."
The information in this section concerning DTC and DTC's book-entry
system are from sources that the depositor believes to be reliable, but the
depositor does not take any responsibility for the accuracy of this information.
Clearstream and Euroclear will hold omnibus positions on behalf of the
participants in the Clearstream and Euroclear systems, respectively, through
customers' securities accounts in Clearstream's and Euroclear's names on the
books of their respective depositaries which in turn will hold these positions
in customers' securities accounts in the depositaries' names on the books of
DTC.
Clearstream is incorporated under the laws of Luxembourg as a
professional depositary. Clearstream holds securities for its participants and
facilitates the clearance and settlement of securities transactions between its
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates.
Indirect access to Clearstream is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Clearstream participant, either directly or
indirectly.
Euroclear was created in 1968 to hold securities for participants of
Euroclear and to clear and settle transactions between Euroclear's participants
through simultaneous electronic book entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. The Brussels, Belgium
office of Morgan Guaranty Trust Company of New York operates Euroclear, under
contract with Euroclear Clearance Systems S.C., a Belgian cooperative
corporation. Euroclear's operator conducts all operations and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with
Euroclear's operator. Euroclear Clearance Systems S.C. establishes policy for
Euroclear on behalf of Euroclear's participants, including banks, securities
brokers and dealers, and other professional financial intermediaries.
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Indirect access to Euroclear is also available to other firms that
clear through or maintain a custodial relationship with a Euroclear participant,
either directly or indirectly.
Morgan Guaranty Trust Company of New York is the Belgian branch of a
New York banking corporation which is a member bank of the Federal Reserve
System. As such, the Board of Governors of the Federal Reserve System and the
New York Banking Department, as well as the Belgian Banking Commission,
regulates and examines it.
Euroclear holds all securities on a fungible basis without attribution
of specific certificates to specific securities clearance accounts. The
Euroclear operator acts under the Euroclear terms and conditions only on behalf
of Euroclear's participants, and has no record of or relationship with persons
holding through Euroclear's participants.
Transfers between direct participants will comply with DTC rules.
Transfers between Clearstream's participants and Euroclear's participants will
comply with their rules and operating procedures.
DTC will effect, under DTC rules, cross-market transfers between
persons holding directly or indirectly through DTC in the United States, on the
one hand, and directly or indirectly through Clearstream or Euroclear, on the
other, through the relevant European international clearing system through its
depository; however, these cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in this system as required by its rules and procedures and within
its established deadlines, European time. The relevant European international
clearing system will, if the transaction meets its settlement requirement,
deliver instructions to its depositary to take action to effect final settlement
on its behalf by delivering or receiving securities in DTC, and making or
receiving payment using its normal procedures for same-day funds settlement
applicable to DTC. Clearstream participants and Euroclear participants may not
deliver instructions directly to the depositories.
Because of time-zone differences, credits of securities in Clearstream
or Euroclear as a result of a transaction with a DTC participant will be made
during the subsequent securities settlement processing day, dated the business
day following the DTC settlement date, and the credits or any transactions in
the securities settled during the processing day will be reported to the
relevant Clearstream participant or Euroclear participant on that business day.
Cash received in Clearstream or Euroclear as a result of sales of securities by
or through a Clearstream participant or a Euroclear participant to a DTC
participant will be received with value on the DTC settlement date but will be
available in the relevant Clearstream or Euroclear cash account only as of the
business day following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of securities among participants of
DTC, Clearstream and Euroclear, they are under no obligation to perform or
continue to perform these procedures and these procedures may be discontinued at
any time.
Except as required by law, none of the seller, the servicer, the
depositor, the trustee or the indenture trustee will have any liability for any
aspect of the records relating to, actions taken or implemented by, or payments
made on account of, beneficial ownership interests in the securities held
through DTC, or for maintaining, supervising or reviewing any records or actions
relating to beneficial ownership interests.
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ISSUANCE OF DEFINITIVE SECURITIES
The trust will issue the notes, if any, and certificates in fully
registered, definitive form to beneficial owners or their nominees rather than
to DTC or its nominee, only if:
(1) DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to the securities, and the
trustee or the indenture trustee is unable to locate a qualified
successor;
(2) The administrator of the trust or the trustee, as
applicable, at its option, elects to terminate the book-entry system
through DTC; or
(3) After the occurrence of an event of default under the
indenture or a servicer default under the sale and servicing agreement
or the pooling and servicing agreement, holders representing more than
50% of the notes or the certificates, as the case may be, of that
series, acting together as a single class, advise the applicable
indenture trustee or trustee through DTC in writing that the
continuation of a book-entry system through DTC with respect to those
notes or certificates is no longer in the best interests of the holders
of those securities.
Upon the occurrence of any of the three events described immediately
above, the applicable indenture trustee or trustee must notify all beneficial
owners for each class of securities held through DTC of the availability of
securities in fully registered, definitive form. Upon surrender by DTC of the
global note representing the securities and instructions for reregistration, the
indenture trustee or trustee will issue these fully registered, definitive
securities, and the indenture trustee or trustee will recognize the holders of
fully registered, definitive securities.
Additionally, upon the occurrence of any event described above, the
indenture trustee or trustee will distribute principal of and interest on the
securities directly to you as required by the indenture, trust agreement or
pooling and servicing agreement, as applicable. Distributions will be made by
check, mailed to your address as it appears on the register maintained by the
applicable trustee or indenture trustee. Upon at least five days' notice to
holders of a class of securities, however, the indenture trustee or trustee will
make the final payment on any security only upon presentation and surrender of
the security at the office or agency specified in the notice of final
distribution to the securityholders. The indenture trustee or trustee will make
the final payment in this manner whether the securities are in book-entry form
or definitive form.
You may transfer any fully registered, definitive security of any class
at the offices of the indenture trustee or trustee or its agent in New York, New
York, which the indenture trustee or trustee shall designate on or prior to the
issuance of any fully registered, definitive securities with respect to that
class. There is no service charge for any registration of transfer or exchange,
but the indenture trustee or trustee may require payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection with the
transfer or exchange.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
This section summarizes the material terms of the following agreements:
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- the transfer and sale agreement pursuant to which the seller
will sell and assign all right, title and interest in the pool
of contracts and the related property to the depositor;
- the sale and servicing agreement or pooling and servicing
agreement pursuant to which the depositor will deposit the
pool of contracts and the related property to the trust and
the servicer will agree to service those contracts;
- the trust agreement, or in the case of a grantor trust, the
pooling and servicing agreement, pursuant to which a trust
will be created and certificates will be issued; and
- the administration agreement pursuant to which Harley-Davidson
Credit Corp. will undertake specified administrative duties
with respect to a trust that issues notes.
Forms of these documents, which we collectively refer to as the
"TRANSFER AND SERVICING AGREEMENTS", have been filed as exhibits to the
registration statement of which this prospectus is a part. In addition, a copy
of the relevant transfer and servicing agreements relating to a series of
securities will be filed with the Securities and Exchange Commission following
the sale of those securities. This summary describes the material terms expected
to be common to each transfer and servicing agreement. This summary is subject
to, and qualified in its entirety by reference to, all the provisions of the
transfer and servicing agreements relating to a particular series. You should
read the forms of the transfer and servicing agreements filed as noted above.
SALE AND ASSIGNMENT OF CONTRACTS BY SELLER
Harley-Davidson Credit Corp. will be the seller of the contracts and
the related property to the depositor for deposit into the trust. The seller
will acquire the contracts originated by the originating dealers throughout the
United States and, in certain instances, Canada, pursuant to dealer agreements.
On or before the applicable closing date, the seller will sell to the
depositor under a transfer and sale agreement all of its interest in the
following:
- the contracts and the right to receive all scheduled payments
and prepayments received on the contracts on or after the
cut-off date, but excluding any scheduled payments due on or
after, but received prior to, the cut-off date;
- security interests in the financed motorcycles securing the
contracts and any related property;
- the rights to proceeds from claims on theft, physical damage,
credit life and disability insurance policies covering the
financed motorcycles or the obligors;
- certain rebates of premiums and other amounts relating to
insurance policies, extended service contracts or other repair
agreements and other items financed under the contracts; and
- all proceeds of the foregoing.
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TRANSFER OF CONTRACTS BY THE DEPOSITOR
Pursuant to a sale and servicing agreement or pooling and servicing
agreement, on the applicable closing date, the depositor will transfer to the
trust all of its interest in the following:
- all property acquired by the depositor from the seller under
the transfer and sale agreement;
- amounts that may be held in separate trust accounts maintained
by the trustee or indenture trustee for the trust, including
any reserve fund or interest reserve account;
- the depositor's rights against the seller under the transfer
and sale agreement pursuant to which the seller sold the pool
of contracts to the depositor; and
- all proceeds of the foregoing.
The depositor will designate the servicer as custodian to maintain
physical possession, as the trust's agent, of the retail installment contracts
and any other documents relating to the contracts. To facilitate servicing and
save administrative costs, the documents will not be physically segregated from
other similar documents that are in the servicer's possession. However, UCC
financing statements will be filed in the applicable jurisdictions reflecting:
- the sale and assignment of the contracts and the security
interests in the financed motorcycles by the originating
dealers to the seller;
- the sale and assignment of the contracts and the security
interests in the financed motorcycles and the related property
by the seller to the depositor;
- the transfer of the contracts, the security interests in the
financed motorcycles, the related property and the depositor's
rights against the seller under the transfer and sale
agreement; and
- if applicable, the pledge by the trust of the trust assets to
the indenture trustee.
The seller and servicer's accounting records and computer systems will
also reflect these assignments and, if applicable, the pledge. Because the
contracts will remain in the servicer's possession, if a subsequent purchaser
were able to take physical possession of the contracts without knowledge of the
assignment, the trust's interest in the contracts could be defeated. In
addition, in some cases, the trust's security interest in collections that have
been received by the servicer but not yet remitted to the related collection
account could be defeated. See "LEGAL ASPECTS OF THE CONTRACTS-SECURITY
INTERESTS" in this prospectus.
The depositor will cause the applicable trustee and the indenture
trustee, if any, concurrently with the depositor's transfer and assignment of
the contracts and related property to the trust, to execute and deliver the
related notes and/or certificates to the depositor. The depositor will apply the
net proceeds received from the sale of the certificates and the notes of a given
series to the purchase of the related contracts from the seller and, to the
extent specified in the applicable prospectus supplement, to make any required
initial deposit into the reserve fund and the interest reserve account, if any.
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CONVEYANCE OF CONTRACTS
On the closing date:
- the seller will sell, transfer, assign, set over and otherwise
convey the initial contracts and related assets to the
depositor;
- the depositor will sell, transfer, assign, set over and otherwise
convey to the trust all right, title and interest in the initial
contracts and related assets; and
- if applicable, the trust will pledge to the indenture trustee all
right, title and interest in the initial contracts and related
assets.
The initial contracts will be described on a list delivered to the
trustee and, if applicable, the indenture trustee, and certified by a duly
authorized officer of the depositor. Such list will include the amount of
monthly payments due on each initial contract as of the initial cutoff date, the
contractual rate of interest on each contract and the maturity date of each
contract. Such list will be available for inspection by any securityholder at
the principal office of the servicer. Shortly after the conveyance of the
initial contracts to the trust, the servicer's compliance officer will have
completed a review of all the documents that the seller has customarily kept on
file relating to the contracts, including the certificates of title to, or other
evidence of a perfected security interest in, the related motorcycles, and
confirmed the accuracy of the list of initial contracts delivered to the trustee
and, if applicable, the indenture trustee. The depositor will deliver to the
trustee, and, if applicable, the indenture trustee, a report of a nationally
recognized independent public accounting firm which states that such firm has
performed specific procedures for a sample of the initial contracts supplied by
the seller. Any contract discovered not to agree with such list in a manner that
is materially adverse to the interests of the noteholders and, if applicable,
certificateholders, will be required to be repurchased by the seller, or, if the
discrepancy relates to the unpaid principal balance of a contract, the seller
may deposit cash in the collection account in an amount sufficient to offset
such discrepancy.
In addition to the initial contracts, the trust's assets will include
the trust's rights under the sale and servicing agreement in respect of the
depositor's obligation to purchase from the seller, and concurrently convey to
the trust, subsequent contracts purchased as of the applicable subsequent cutoff
date. Any conveyance of subsequent contracts will be subject to the satisfaction
of certain conditions including:
- each such subsequent contract satisfies the eligibility criteria
specified in the transfer and sale agreement and the related
subsequent purchase agreement executed thereunder;
- the depositor shall have delivered certain opinions of counsel to
the trustee, the underwriters and the rating agencies with respect
to the validity and other aspects of the conveyance of all such
subsequent contracts; and
- the rating agencies shall have each notified the depositor and the
trustees in writing that the ratings on the notes and, if
applicable, certificates will not be lowered following the
addition of such subsequent contracts.
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REPRESENTATIONS AND WARRANTIES MADE BY THE SELLER AND THE DEPOSITOR
The seller will make certain representations and warranties in the
transfer and sale agreement with respect to each contract, including that
(references to the closing date below being deemed, in respect of subsequent
contracts, to refer to the date such subsequent contracts are transferred to the
depositor):
(a) as of the related cutoff date, the most recent scheduled
payment was made or was not delinquent more than 30 days and,
to the best of the seller's knowledge, all payments on the
contract were made by the obligor;
(b) as of the closing date, no provision of a contract has been
waived, altered or modified in any respect, except by
instruments or documents contained in the files customarily
maintained by the servicer for each contract;
(c) each contract is a genuine, legal, valid and binding
obligation of the obligor and is enforceable in accordance
with its terms (except as may be limited by laws affecting
creditors' rights generally);
(d) as of the closing date, no contract is subject to any right of
rescission, set-off, counterclaim or defense;
(e) as of the contract's origination date, each motorcycle
securing a contract is covered by certain insurance policies
described under "THE SELLER AND SERVICER-INDIVIDUAL MOTORCYCLE
INSURANCE";
(f) each contract was originated by a Harley-Davidson motorcycle
dealer in the ordinary course of such dealer's 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 was
sold by such dealer to the seller without any fraud or
misrepresentation on the part of such dealer;
(g) no contract was originated in or is subject to the laws of any
jurisdiction whose laws would make the transfer, sale and
assignment of the contract pursuant to the transfer and sale
agreement or the sale and servicing agreement unlawful, void
or voidable;
(h) each contract and each sale of the related motorcycle complies
with all requirements of any applicable federal, state,
provincial, or local law and regulations thereunder,
including, without limitation, usury, truth in lending, motor
vehicle installment loan and equal credit opportunity laws,
with such compliance not being affected by the depositor's
conveyance and assignment of the contracts to the trust, or,
if applicable, the trust's pledge of the contracts to the
indenture trustee, and the seller will maintain in its
possession, available for inspection by or delivery to the
depositor, the trustee, and, if applicable, the indenture
trustee, evidence of compliance with all such requirements;
(i) as of the closing date no contract has been satisfied,
subordinated in whole or in part or rescinded and the
motorcycle securing the contract has not been released from
the lien of the contract in whole or in part;
(j) each contract creates a valid, subsisting and enforceable
first priority security interest in favor of the seller in the
motorcycle securing such contract; such security interest has
been conveyed and assigned by the seller to the depositor;
(k) 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 such motorcycles is recorded on the original certificate
of title; and the original certificate
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of title for each such motorcycle shows, 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 and will show, the seller
as original secured party under each contract and as the
holder of a first priority security interest in such
motorcycle (and 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);
(l) the seller's security interest has been validly assigned by
the seller to the depositor pursuant to UCC financing
statements in order that immediately after the sale, each
contract will be secured by an enforceable and perfected first
priority security interest in the related 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 any state law enforcement agency affecting
a motorcycle and for the lien of the indenture, if
applicable);
(m) all parties to each contract had capacity to execute such
contract;
(n) no contract has been sold, conveyed and assigned or pledged to
any other person other than the depositor, as transferee of
the seller and the trust as transferee of the depositor and,
if applicable, the indenture trustee as pledgee of the trust
and prior to the transfer of the contract to the depositor,
the seller had good and marketable title to each contract free
and clear of any encumbrance, equity, loan, pledge, charge,
claim or security interest, and as of the closing date, the
trust and the owner trustee or, if applicable, the indenture
trustee, will have a first priority perfected security
interest therein;
(o) as of the related cutoff date, there was no default, breach,
violation or event permitting acceleration under any contract
(except for payment delinquencies permitted by clause (a)
above), no event which with notice and the expiration of any
grace or cure period would constitute a default, breach,
violation or event permitting acceleration under such
contract, and the seller has not waived any of the foregoing;
(p) as of the closing date, there are, to the best of the seller's
knowledge, no liens or claims which have been filed for work,
labor or materials affecting a motorcycle securing a contract,
which are or may be liens prior or equal to the lien of the
contract;
(q) each contract has a fixed rate of interest 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;
(r) each contract contains customary and enforceable provisions
such as to render the rights and remedies of the holder
thereof adequate for realization against the collateral of the
benefits of the security;
(s) the description of each contract set forth in the list
delivered to the trustee and, if applicable, the indenture
trustee is true and correct; and
(t) there is only one original of each contract.
The seller will also make certain representations and warranties with
respect to the contracts in the aggregate as set forth in your prospectus
supplement.
In the event of a breach of any representation or warranty with respect
to a contract that materially and adversely affects the trust's or any
noteholder's or certificateholder's interest in the contract or the
collectibility of the contract, the depositor will be obligated to repurchase
the contract from the trust and
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the seller will be obligated to repurchase the contract from the depositor.
Any purchase shall be made at least two business days prior to the first
determination date after the date on which the servicer, the trustee or the
indenture trustee becomes aware and gives notice to the depositor or the seller
of the breach or the depositor or the seller becomes aware of the breach at a
price equal to the required payoff amount of the contract. The related trustee
or the indenture trustee may enforce this purchase obligation on your behalf,
and will constitute your sole remedy available against the depositor or the
seller for any uncured breach of its representations and warranties in the sale
and servicing agreement or pooling and servicing agreement, as applicable, and
the transfer and sale agreement, except that the seller will indemnify the
trust, the trustee, and, if applicable, the indenture trustee against losses,
damages, liabilities and claims which may be asserted against any of them as a
result of third-party claims arising out of the facts giving rise to that
breach.
Upon the purchase by the seller of a contract, the indenture trustee,
if any, the trust and the depositor will release the contract and its interest
in the related financed motorcycles to the seller.
COLLECTION ACCOUNT
In the case of a trust issuing notes, the indenture trustee will
establish and maintain the collection account in the name of the indenture
trustee for the benefit of the noteholders under the indenture. In the case of a
trust issuing only certificates, the trustee will maintain the collection
account in the name of the trustee for the benefit of the certificateholders
under the pooling and servicing agreement.
The servicer will deposit the following amounts into the collection
account no later than the second business day after processing by the servicer:
- all payments made by the obligors under the contracts;
- all proceeds of the contracts and the financed motorcycles;
and
- all payments made by the seller under the related transfer and
sale agreement, or the depositor under the sale and servicing
agreement or pooling and servicing agreement to repurchase any
contract as a result of a breach of a representation or
warranty, as described under "-REPRESENTATIONS AND WARRANTIES
MADE BY THE SELLER AND THE DEPOSITOR" above.
However, if the conditions to making monthly deposits into the
collection account set forth in the sale and servicing agreement or pooling and
servicing agreement (including the satisfaction of the minimum ratings of the
servicer and the absence of a servicer default) are satisfied and if permitted
by the rating agencies rating the securities, the servicer may retain
collections received on the contracts during each month until the business day
immediately prior to the related payment date. Pending deposit into the
collection account, the servicer will not be obligated to segregate collections
from its own funds and may use collections for its own benefit. To the extent
set forth in the applicable prospectus supplement, the servicer may, in order to
satisfy the requirements set forth in the sale and servicing agreement or
pooling and servicing agreement obtain a letter of credit or other security for
the benefit of the related trust to secure timely remittances of collections on
the contracts.
The servicer may withdraw from the collection account any amounts
deposited in error or required to be repaid to an obligor, based on the
servicer's good-faith determination that the amount was deposited in error or
must be returned to the obligor.
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Collections on a contract made during a month will be applied in the
following order:
- first, to accrued interest;
- second, to pay any expenses and late or extension fees owing;
and
- third, to principal until the principal balance is brought
current.
Any collections on a contract remaining after those applications will
be considered an "EXCESS PAYMENT". Excess payments relating to contracts will be
applied as a prepayment of principal.
SERVICING
The servicer will be obligated under the sale and servicing agreement
or pooling and servicing agreement, as applicable, to service the contracts with
reasonable care, using that degree of skill and attention that the servicer
generally exercises with respect to all comparable motor vehicle retail
installment contracts it services for itself and others in accordance with its
credit and collections policies and applicable law. In performing these duties,
the servicer shall comply in all material respects with its credit and
collection policies and procedures described above under "THE SELLER AND
SERVICER-UNDERWRITING AND ORIGINATION", as modified from time to time. The
servicer may delegate servicing responsibilities to third parties or affiliates,
provided that the servicer will remain obligated to the related trust for the
proper performance of its servicing responsibilities.
The servicer is responsible for:
- reviewing the contract files in the normal course of business;
- monitoring and tracking any property and sales taxes to be
paid by obligors;
- billing, collecting and recording payments from obligors;
- communicating with and providing billing records to obligors;
- depositing funds into the collection account;
- receiving payments as the trust's agent on the insurance
policies maintained by the obligors and communicating with
insurers;
- issuing reports to the trustee and indenture trustee, if any,
specified in the relevant transfer and servicing agreements;
- repossessing and remarketing financed motorcycle following
obligor defaults; and
- paying the fees and ordinary expenses of the trusts, trustee
and the indenture trustee.
The servicer is obligated to act in a commercially reasonable manner
with respect to the repossession and disposition of financed motorcycles
following a contract default with a view to realizing proceeds at least equal to
the financed motorcycle's fair market value.
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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 financed motorcycle at a public or private sale, or taking any
other action permitted by applicable law. See "LEGAL ASPECTS OF THE CONTRACTS"
in this prospectus. 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 financed motorcycle.
The servicer may, consistent with its customary servicing procedures,
grant to the obligor on any contract an extension of payments due under such
contract if:
(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; and
(iv) such extension is consistent with the servicer's
customary servicing procedures and with the sale and servicing
agreement or pooling and servicing agreement.
Exceptions to this extension policy may be authorized by the servicer's
management on a case-by-case basis consistent with the servicer's prudent
business practices.
If so specified in your prospectus supplement, a "backup servicer" may
be appointed and assigned certain oversight servicing responsibilities with
respect to the contracts. The identity of any backup servicer, as well as a
description of its responsibilities, of any fees payable to such backup servicer
and the source of payment of such fees, will be included in your prospectus
supplement.
EVIDENCE AS TO COMPLIANCE
Annually, the servicer will be obligated to deliver to the trustee and
the indenture trustee if any, a report from a nationally recognized accounting
firm stating that the accounting firm has audited the financial statements of
the servicer and issued an opinion on those financial statements and that the
accounting firm has examined and provided a report as to the servicer's controls
over the servicing of the contracts.
Annually the servicer will be obligated to deliver to the trustee and
the indenture trustee, if any, a certificate signed by an officer stating that
the servicer has fulfilled its obligations under the sale and servicing
agreement or the pooling and servicing agreement, as applicable, during the
preceding twelve-month period in all material respects or, if there has been a
default in the fulfillment of any obligation, describing such default.
You may obtain copies of these reports and certificates by delivering a
request in writing to the trustee or the indenture trustee, as the case may be,
at the address set forth in your prospectus supplement.
SERVICER DEFAULT
A servicer default under a sale and servicing agreement or pooling and
servicing agreement will occur if:
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- the servicer fails to make any payment or deposit required under
the securities, the sale and servicing agreement, the pooling and
servicing agreement or the transfer and sale agreement and such
failure continues for four business days after the date on which
such payment or deposit was due;
- the servicer fails to observe or perform in any material respect
any covenant or agreement in the securities, the sale and
servicing agreement, the pooling and servicing agreement or the
transfer and sale agreement which continues unremedied for thirty
days after the date on which such failure commences;
- the servicer assigns its duties or rights under the sale and
servicing agreement, the pooling and servicing agreement or the
transfer and sale agreement, except as specifically permitted
under the sale and servicing agreement, the pooling and servicing
agreement or the transfer and sale agreement, or attempts to make
such an assignment;
- an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect shall have been
commenced against the servicer and shall not have been dismissed
within 90 days, or a court having jurisdiction in the premises
enters a decree or order for relief in respect of the servicer in
an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appoints a
receiver, liquidator, assignee, custodian, trustee or sequestrator
(or similar official) of the servicer, or for any substantial
liquidation of its affairs;
- the servicer commences a voluntary case under any applicable
bankruptcy, insolvency or similar law, or consents to the entry of
an order for relief in an involuntary case under any such law, or
consents to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian or sequestrator (or other
similar official) of the servicer or for any substantial part of
its property or shall have made any general assignment for the
benefit of creditors, or fails to, or admits in writing its
inability to, pay debts as they become due, or takes any corporate
action in furtherance of the foregoing;
- the failure of the servicer to deliver the monthly report pursuant
to the terms of the sale and servicing agreement or the pooling
and servicing agreement and such failure remains uncured for five
business days after the date on which such failure commences; or
- any representation, warranty or statement of the servicer made in
the sale and servicing agreement, the pooling and servicing
agreement or any certificate, report or other writing delivered
pursuant to the sale and servicing agreement or the pooling and
servicing agreement 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 has been given to the servicer or the trust
depositor by the trustee or, if applicable, the indenture trustee,
the circumstances or condition in respect of which such
representation, warranty or statement was incorrect have not been
eliminated or otherwise cured.
The servicer will be required under the sale and servicing agreement or the
pooling and servicing agreement to give the trustees and, if applicable, the
indenture trustee, the rating agencies, the noteholders and the
certificateholders notice of an event of termination promptly upon the
occurrence of such event.
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RIGHTS UPON SERVICER DEFAULT
If a servicer default remains unremedied, the indenture trustee or the
holders of more than 50% of the aggregate principal amount of the notes or the
class or classes of notes described in your prospectus supplement or, if the
trust has no notes outstanding, the trustee or the holders of more than 50% of
the aggregate certificate balance of the certificates or the class or classes of
certificates described in your prospectus supplement may terminate all of the
rights and obligations of the servicer under the sale and servicing agreement or
pooling and servicing agreement. When this happens, the indenture trustee, the
trustee or a successor servicer selected by the indenture trustee or the trustee
will succeed to all the responsibilities, duties and liabilities of the servicer
under the sale and servicing agreement or pooling and servicing agreement.
If the indenture trustee or the trustee is unwilling or unable to act
as the successor servicer, it may appoint, or petition a court to appoint, a
successor servicer. The indenture trustee or the trustee may arrange for
compensation to the successor servicer but that compensation may not exceed the
base servicing fee payable to the servicer. Any successor servicer will not be
liable for any acts or omissions of the prior servicer occurring prior to a
transfer of the servicer's servicing and related functions or for any breach by
the prior servicer of any of its obligations.
If a trust has notes outstanding, the holders of more than 50% of the
aggregate principal amount of the notes or the class or classes of notes
described in your prospectus supplement may waive any servicer default, other
than a default in making any required deposits into the collection account. If a
trust has no notes outstanding, the holders of more than 50% of the aggregate
certificate balance of the certificates or the class or classes of certificates
described in your prospectus supplement may waive any servicer default, other
than a default in making any required deposits into the collection account.
Following an event of termination, the indenture trustee will terminate
the lockbox agreement and direct all obligors under the contracts to make all
payments under the contracts to the indenture trustee, or to a lockbox
established by the indenture trustee.
CERTAIN MATTERS REGARDING THE SERVICER
The servicer may not resign from its obligations under the sale and
servicing agreement or pooling and servicing agreement except if its duties are
no longer permissible under applicable law. No resignation will become effective
until a successor servicer has assumed the servicer's obligations and duties
under the sale and servicing agreement or pooling and servicing agreement.
Removal of the servicer is permissible only upon the occurrence of a servicer
default as discussed above.
Each sale and servicing agreement and pooling and servicing agreement
will provide that neither the servicer nor any of its directors, officers,
employees or agents will be under any liability to the trust or you for taking
any action or for refraining from taking any action pursuant to that agreement
or for errors in judgment; except that neither the servicer nor any person will
be protected against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of the
servicer's duties under that agreement or by reason of reckless disregard of its
obligations and duties under that agreement.
In addition, the servicer will not be obligated to appear in, prosecute
or defend any legal action that is not incidental to the servicer's servicing
responsibilities under the related sale and servicing
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agreement or pooling and servicing agreement and that, in its opinion, may cause
it to incur any expense or liability. The servicer may, however, undertake any
reasonable action that it may deem necessary or desirable in respect of that
agreement, the rights and duties of the parties thereto and the interests of the
securityholders under that agreement. In that event, the legal expenses and
costs of that action and any liability resulting therefrom will be expenses,
costs and liabilities of the servicer, and the servicer will not be entitled to
be reimbursed therefor.
Under the circumstances specified in each sale and servicing agreement
or pooling and servicing agreement, any entity into which the servicer may be
merged or consolidated, or any entity resulting from any merger or consolidation
to which the servicer is a party, or any entity succeeding to all or
substantially all of the business of the servicer will be the successor of the
servicer under that agreement.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Compensation to the servicer will include a base monthly fee equal:
- to the product of the percentage per annum specified in your
prospectus supplement multiplied by the monthly principal
balance of the contracts at the beginning of the month,
plus any
- late fees;
- prepayment charges, if any;
- documentation fees;
- extension fees and other administrative charges; and
- if specified in the prospectus supplement, investment
earnings on funds deposited in the trust accounts.
The servicer will pay all expenses incurred by it in connection with its
activities under the transfer and servicing agreements and the annual fees and
expenses of the trustee and the indenture trustee, if any. The servicer will be
authorized to waive any administrative fees or extension fees that may be
collected in the ordinary course of servicing any contract.
STATEMENTS TO TRUSTEES AND THE TRUST
On or prior to each payment date the servicer will provide to the
applicable indenture trustee, if any, and the applicable trustee a statement
setting forth with respect to a series of securities substantially the same
information that is required to be provided in the periodic reports to be
provided to securityholders of that series described under "-STATEMENTS TO
SECURITYHOLDERS" below.
STATEMENTS TO SECURITYHOLDERS
With respect to each series of securities that includes notes, on or
prior to each payment date, the servicer will prepare and provide to the related
indenture trustee a statement to be delivered to you on that payment date. With
respect to each series of securities that includes certificates, on or prior to
each
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payment date, the servicer will prepare and provide to the related trustee a
statement to be delivered to you on the payment date. Each statement will
include the following information:
- the amount of the payment allocable to the principal
amount of each class of those notes and to the certificate
balance of each class of those certificates;
- the amount of the payment allocable to interest on each
class of securities of that series;
- the amount of the distribution allocable to the yield
supplement deposit, if any;
- the aggregate principal balance of the contracts as of the
close of business on the last day of the preceding month;
- the amount of base servicing fees paid to the servicer;
- the interest rate or pass-through rate for the interest
period relating to the next succeeding payment date for
any class of notes or certificates of that series with
variable or adjustable rates;
- the amount, if any, otherwise distributable to one or more
subordinated classes of notes or certificates that has
instead been distributed to more senior classes of notes
or certificates on that payment date;
- the outstanding principal amount and the note factor for
each class of those notes, and either the certificate
balance and the certificate factor for each class of those
certificates or the outstanding principal amount and the
pool factor for each class of those certificates, each
after giving effect to all payments allocable to the
principal of each class of notes and to the certificate
balance of the certificates on that date;
- the amount of advances made by the servicer in respect of
the related contracts and the preceding month and the
amount of unreimbursed advances in respect of contracts
determined by the servicer to be defaulted contracts
during that month;
- the balance of any related reserve fund, interest reserve
account or other credit or liquidity enhancement on that
date, after giving effect to changes thereto on that date
and the amount of those changes;
- the total amount of monthly prepayments determined by the
servicer to be due in one or more future months on deposit
in the related trust account or held by the servicer, if
permitted by the rating agencies rating the securities,
with respect to the related contracts and the change in
that amount from the immediately preceding payment date;
- the number and aggregate principal balance of contracts
delinquent computed as of the end of the related due
period;
- the number and aggregate principal balance of contracts
that became liquidated contracts during the immediately
preceding due period, the amount of liquidation
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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;
- average and cumulative loss and delinquency information as
of such payment date;
- the number of contracts and the aggregate principal
balance of such contracts, as of the first day of the due
period relating to such payment date (after giving effect
to payments received during such due period and to any
transfers of subsequent contracts to the trust occurring
on or prior to such payment date);
- the aggregate principal balance and number of contracts
that were repurchased by the depositor with respect to the
related due period, identifying such contracts and the
repurchase price for such contracts; and
- 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
securityholders to prepare their tax returns.
You may obtain copies of the statements by delivering a request in
writing addressed to the applicable trustee or indenture trustee at its address
set forth in your prospectus supplement.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of each trust, the applicable
trustee or indenture trustee will mail to each person who at any time during
that calendar year has been a securityholder with respect to that trust and
received any payment a statement containing information for the purposes of that
securityholder's preparation of federal income tax returns. See "MATERIAL
FEDERAL INCOME TAX CONSEQUENCES" in this prospectus.
COLLECTIONS
With respect to each trust, the servicer will deposit all payments on
the related contracts (from whatever source) and all proceeds of such contracts
collected during each collection period specified in your prospectus supplement
into the related collection account within two business days after receipt
thereof. The servicer is required to use its best efforts to cause an obligor to
make all payments on the contracts directly to one or more lockbox banks, acting
as agent for the trust pursuant to a lockbox administration agreement. In
addition, the servicer may in the future collect payments from obligors through
other methods, including direct debit programs and the internet.
ADVANCES
The servicer will be obligated to advance each month an amount equal to
accrued and unpaid interest on any contract which was delinquent with respect to
the related due period, but only to the extent that the servicer believes that
the amount of such advance will be recoverable from collections on the
contracts. The servicer will deposit any advances in the collection account no
later than the day preceding the related payment date. The servicer will be
entitled to recoup advances on a contract by means of a first priority
withdrawal from Available Amounts on any payment date. The servicer will not be
obligated to make an advance to the extent that it determines, in its sole
discretion, that the advance will not be recovered from subsequent collections
on or in respect of the related contract.
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All advances are reimbursable to the servicer, without interest, if and
when a payment relating to a contract with respect to which an advance has
previously been made is subsequently received. In addition, upon the
determination by the servicer that a contract is a defaulted contract, it will
be entitled to recover unreimbursed advances in respect of that contract from
collections on or in respect of other contracts. A defaulted contract means a
contract with respect to which there has occurred one or more of the following:
(i) all or some portion of any payment under the contract is 120 days or more
delinquent, (ii) repossession (and expiration of any redemption period) of a
motorcycle securing a contract or (iii) the servicer has determined in good
faith that an obligor is not likely to resume payment under a contract.
NET DEPOSITS
As an administrative convenience and as long as specified conditions
are satisfied, the servicer will be permitted to make the deposit of
collections, aggregate advances and payments for purchases of contracts from the
trust for or with respect to a month net of payments to be made to the servicer
with respect to that month. The servicer may cause to be made a single, net
transfer to the collection account. The servicer, however, will account to the
related trustee, and you with respect to each trust as if all deposits, payments
and transfers were made individually. With respect to any trust that issues both
certificates and notes, if the related payment dates are not the same for all
classes of securities, all distributions, deposits or other remittances made on
a payment date will be treated as having been distributed, deposited or remitted
on the same payment date for the applicable month for purposes of determining
other amounts required to be distributed, deposited or otherwise remitted on a
payment date.
LIST OF SECURITYHOLDERS
Three or more holders of the notes of any class in a series or one or
more holders of those notes of that class evidencing not less than 25% of the
aggregate principal amount of those notes then outstanding may, by written
request to the related indenture trustee, obtain access to the list of all
noteholders maintained by that indenture trustee for the purpose of
communicating with other noteholders with respect to their rights under the
related indenture or under those notes. An indenture trustee may elect not to
afford the requesting noteholders access to the list of noteholders if it agrees
to mail the desired communication or proxy, on behalf of and at the expense of
the requesting noteholders, to all noteholders of that series.
Three or more holders of the certificates of any class in a series or
one or more holders of those certificates of that class evidencing not less than
25% of the certificate balance of those certificates may, by written request to
the related trustee, obtain access to the list of all certificateholders
maintained by that trustee for the purpose of communicating with other
certificateholders with respect to their rights under the related trust
agreement or pooling and servicing agreement or under those certificates.
The related trustee will provide to the servicer within 15 days after
receipt of a written request from the servicer, a list of the names of all
noteholders or certificateholders of record as of the most recent applicable
record date.
No transfer and servicing agreement will provide for the holding of
annual or other meetings of securityholders.
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INSOLVENCY OF TRUST
Each trust agreement will provide that the related trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect to
the related trust without the unanimous prior approval of all certificateholders
of that trust and the delivery to that trustee by each certificateholder of a
certificate certifying that that certificateholder reasonably believes that that
trust is insolvent.
PAYMENT OF NOTES
Upon the payment in full of all outstanding notes issued by a trust and
the satisfaction and discharge of the related indenture, the trustee will
succeed to all the rights of the indenture trustee, and the certificateholders
of that series will succeed to all the rights of the noteholders of that series,
under the related sale and servicing agreement, except as otherwise provided in
the sale and servicing agreement.
ADMINISTRATION AGREEMENT
Harley-Davidson Credit Corp., in its capacity as administrator, will
enter into an administration agreement with each trust that issues notes and the
related indenture trustee pursuant to which the administrator will agree to
provide notices and perform other administrative obligations of the trust under
the related indenture. For its services under the administration agreement the
administrator may be entitled to receive a monthly administration fee, which
administration fee will be paid by the depositor. The amount of the
administration fee, if any, will be set forth in your prospectus supplement.
AMENDMENT
The parties may, without your consent, correct or supplement any
provision in the transfer and servicing agreements that is ambiguous or
inconsistent with any other provision in the transfer and servicing agreements.
In addition, the parties may amend any transfer and servicing agreement without
the consent of any securityholder to add any provisions to or change in any
manner or eliminate any of the provisions of a transfer and servicing agreement
if the indenture trustee or trustee receives an opinion of counsel that the
modification will not have a material adverse effect on the securityholders.
Any transfer and servicing agreement may also be amended in any respect
by the parties with the consent of the holders of more than 50% of the aggregate
principal amount of the notes or the class or classes of the notes described in
your prospectus supplement issued by the trust or, if the trust has no notes
outstanding, the holders of more than 50% of the aggregate certificate balance
of the certificates or the class or classes of the certificates described in
your prospectus supplement, except that no amendment:
- that reduces the amount or changes the timing of any
collections on any contracts or payments required to be
distributed on any security;
- that changes the interest rate on any security, that adversely
affects the priority of payment of principal or interest to
the securityholders; or
- that reduces the percentage of securityholders required to
consent to these amendments or any waiver under the transfer
and servicing agreement,
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may be effective without the consent of the holder of each security. Also, an
amendment under the foregoing sentence will not be effective unless each rating
agency rating the securities confirms that the amendment will not result in a
reduction, qualification or withdrawal of the ratings on the securities.
TERMINATION
The obligations of the servicer, the depositor, the trustee and
indenture trustee with respect to you pursuant to the trust agreement, the sale
and servicing agreement, pooling and servicing agreement or indenture will
terminate upon the earlier to occur of (i) the maturity or other liquidation of
the last contract and the disposition of any amounts received upon liquidation
of any property remaining in the trust, or (ii) the payment to all
securityholders of all amounts required to be paid to them pursuant to the
indenture and the trust agreement or pooling and servicing agreement; PROVIDED,
HOWEVER, in no event shall the trust continue beyond the expiration of 21 years
from the death of the last survivor of the descendants of Joseph P. Kennedy, the
late Ambassador of the United States to the Court of St. James, living on the
closing date (each a "TERMINATION EVENT"). The seller's representations,
warranties and indemnities will survive any termination of the sale and
servicing agreement or pooling and servicing agreement. Upon termination,
amounts in the collection account, if any, will be paid to the depositor.
The trustee and, if applicable, the indenture trustee will give written
notice of termination to each securityholder of record. The final distribution
to you will be made only upon surrender and cancellation of your notes or
certificates at the office or agency of the trustee or, if applicable, the
indenture trustee specified in the notice of termination. Any funds remaining in
the trust, after the trustee or, if applicable, the indenture trustee has taken
certain measures to locate you and such measures have failed, will be
distributed to the depositor.
LEGAL ASPECTS OF THE CONTRACTS
GENERAL
The transfer of the contracts to the applicable trust, the perfection
of the security interests in the contracts and the enforcement of rights to
realize on the motorcycles as collateral for the contracts are subject to a
number of federal and state laws. Uniform Commercial Code financing statements
will be filed in the applicable jurisdictions reflecting the transfer or pledge
of the contracts and the security interests in the motorcycles and the related
property by the seller to the depositor and by the depositor to the trust and,
if applicable, by the trust to the indenture trustee. A person could acquire an
interest in a contract that is superior to that of the trust or the indenture
trustee because the servicer will retain possession of the contracts. If a
person purchases contracts, or takes a security interest therein, for value in
the ordinary course of its business and obtains possession of the contracts
without actual knowledge of the trust's or indenture trustee's interest, that
person will acquire an interest in the contracts superior to the interest of the
trust or the indenture trustee.
SECURITY INTERESTS
GENERAL
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In states in which the contracts evidence the credit sale of new and
used motorcycles by originating dealers to obligors, the contracts also
constitute personal property security agreements and include grants of security
interests in the motorcycles under the applicable Uniform Commercial Code.
Perfection of security interests in financed motor motorcycles is generally
governed by the motor vehicle registration laws of the state in which the
vehicle is located. In most states, a security interest in a motor vehicle is
perfected by obtaining possession of the certificate of title to the motor
vehicle or notation of the secured party's lien on the motor vehicle's
certificate of title.
All contracts acquired by the seller from the originating dealers will
name the seller as obligee or assignee and as the secured party. The seller will
also take all actions necessary under the laws of the state in which the related
financed motorcycle is located to perfect its security interest in that financed
motorcycle, including, where applicable, having a notation of its lien recorded
on the related certificate of title and/or obtaining possession of that
certificate of title. Because Harley-Davidson Credit Corp. will continue to
service the contracts as servicer under the sale and servicing agreement or the
pooling and servicing agreement, as applicable, the obligors on the contracts
will not be notified of the sale from the seller to the depositor or the sale
from the depositor to the related trust or, if applicable, the pledge to the
related indenture trustee.
PERFECTION
The seller will sell and assign its security interest in the financed
motorcycles to the depositor and the depositor will assign its security interest
in the financed motorcycles to the trust and, if applicable, the trust will
assign its security interest in the financed motorcycles to the indenture
trustee. However, because of the administrative burden and expense, none of the
seller, the depositor or the related trust will amend any certificate of title
to identify the trust or indenture trustee as the new secured party on that
certificate of title relating to a financed motorcycle. However, UCC financing
statements with respect to the transfer to the depositor of the seller's
security interest in the financed motorcycles and the transfer to the trust of
the depositor's security interest in the financed motorcycles and, if
applicable, the transfer to the indenture trustee of the trust's security
interest in the financed motorcycles will be filed. In addition, the servicer
will continue to hold any certificates of title relating to the financed
motorcycles in its possession as custodian for that trust. See "DESCRIPTION OF
THE TRANSFER AND SERVICING AGREEMENTS" in this prospectus.
In most states, an assignment is an effective conveyance of a security
interest without amendment of any lien noted on a motor vehicle's certificate of
title. Although re-registration of the motor vehicle is not necessary to convey
a perfected security interest in the financed motorcycles to the trust or the
indenture trustee, because neither the trust nor the indenture trustee will be
listed as lienholder on the certificates of title, the security interest of that
trust or the indenture trustee in the motorcycle could be defeated through
fraud, forgery, negligence or error. In the absence of fraud or forgery by the
motorcycle owner or the servicer or administrative error by state or local
agencies, the notation of the seller's lien on the certificates of title will be
sufficient to protect the trust and the indenture trustee against the rights of
subsequent purchasers of a financed motorcycle or subsequent lenders who take a
security interest in a financed motorcycle. The seller and depositor will each
represent and warrant that the seller a perfected security interest in each
financed motorcycle. If there are any financed motorcycles as to which the
seller failed to obtain a perfected security interest, the security interest of
the trust and the indenture trustee would be subordinate to, among others,
subsequent purchasers of the financed motorcycles and holders of perfected
security interests in the financed motorcycles. To the extent that failure has a
material and adverse effect on the trust's, the indenture trustee's or any
securityholder's interest in the related contract
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or the collectibility of the contract, however, it would constitute a breach of
the warranties of the seller and the depositor. Accordingly, the depositor would
be required to repurchase the related contract from the trust and the seller
will be required to purchase that contract from the depositor, unless the breach
was cured. The depositor will assign to the related trust its rights to cause
the seller to repurchase that contract under the related transfer and sale
agreement and, if applicable, the related trust will pledge to the indenture
trustee its rights to cause the depositor to repurchase that contract under the
related sale and servicing agreement. See "DESCRIPTION OF THE TRANSFER AND
SERVICING AGREEMENTS" and "RISK FACTORS-INTERESTS OF OTHER PERSONS IN THE
CONTRACTS OR THE FINANCED MOTORCYCLES COULD REDUCE FUNDS AVAILABLE TO MAKE
PAYMENTS ON YOUR SECURITIES" in this prospectus.
CONTINUITY OF PERFECTION
Under the laws of most states, the perfected security interest in a
vehicle would continue for four months after the motor vehicle is moved to a
state that is different from the one in which it is initially registered and
thereafter until the owner re-registers the motor vehicle in the new state. A
majority of states generally require surrender of a certificate of title to
re-register a motor vehicle. In those states, such as California, that require a
secured party to hold possession of the certificate of title to maintain
perfection, the secured party would learn of the re-registration through the
request from the obligor under the related contract to surrender possession of
the certificate of title. In the case of motor motorcycles registered in states
providing for the notation of a lien on the certificate of title but not
possession by the secured party, such as Texas, the secured party would receive
notice of surrender from the state of re-registration if the security interest
is noted on the certificate of title. Thus, the secured party would have the
opportunity to re-perfect its security interest in the vehicle in the state of
relocation. However, these procedural safeguards will not protect the secured
party if through fraud, forgery or administrative error, the obligor somehow
procures a new certificate of title that does not list the secured party's lien.
Additionally, in states that do not require a certificate of title for
registration of a motor vehicle, re-registration could defeat perfection. In the
ordinary course of servicing the contracts, the servicer will take steps to
effect re-perfection upon receipt of notice of re-registration or information
from the obligor as to relocation. Similarly, when an obligor sells a financed
motorcycle, the servicer must surrender possession of the certificate of title
or will receive notice as a result of its lien noted on the certificate of title
and accordingly will have an opportunity to require satisfaction of the related
contract before release of the lien. The servicer will be obligated to take
appropriate steps, at the servicer's expense, to maintain perfection of security
interests in the financed motorcycles and will be obligated to purchase the
related contract if it fails to do so and that failure has a material and
adverse effect on the trust's or any securityholder's interest in the contract
or the collectibility of the contract.
PRIORITY OF LIENS ARISING BY OPERATION OF LAW
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for unpaid taxes take priority over even a perfected security
interest in a financed motorcycle. The Internal Revenue Code also grants
priority to specified federal tax liens over the lien of a secured party. The
laws of some states and federal law permit the confiscation of motor motorcycles
by governmental authorities under some circumstances if used in unlawful
activities, which may result in the loss of a secured party's perfected security
interest in the confiscated vehicle. The seller will represent and warrant to
the depositor and the depositor will represent and warrant to the trust that, to
its knowledge, as of the related closing date, each security interest in a
financed motorcycle is prior to all other present liens upon and security
interests in that financed motorcycle. However, liens for repairs or taxes could
arise, or the confiscation of a financed motorcycle could occur, at any time
during the term of a contract. No notice will be given to
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related trustee, indenture trustee or you in respect of a given trust if a
lien arises or confiscation occurs that would not give rise to the
depositor's or seller's repurchase obligation.
REPOSSESSION
In the event of default by an obligor, the holder of the related
contract has all the remedies of a secured party under the UCC, except where
specifically limited by other state laws. Among the UCC remedies, the secured
party has the right to perform repossession by self-help means, unless it would
constitute a breach of the peace or is otherwise limited by applicable state
law. Unless a motor vehicle financed by the seller is voluntarily surrendered,
self-help repossession is the method employed by the servicer in most states and
is accomplished simply by retaking possession of the financed motorcycle. In
cases where an obligor objects or raises a defense to repossession, or if
otherwise required by applicable state law, a court order must be obtained from
the appropriate state court, and that vehicle must then be recovered in
accordance with that order. In some jurisdictions, the secured party is required
to notify that obligor of the default and the intent to repossess the collateral
and to give that obligor a time period within which to cure the default prior to
repossession. In some states, an obligor has the right to reinstate its contract
and recover the collateral by paying the delinquent installments or other
amounts due.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the secured party to provide an
obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. In
most states, an obligor has the right to redeem the collateral prior to actual
sale by paying the secured party the unpaid principal balance of the obligation,
accrued interest on the obligation plus reasonable expenses for repossessing,
holding and preparing the collateral for disposition and arranging for its sale,
plus, in some jurisdictions, reasonable attorneys' fees. In some states, an
obligor has the right to redeem the collateral prior to actual sale by payment
of delinquent installments or the unpaid balance.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the motor vehicle generally will be applied
first to the expenses of resale and repossession and then to the satisfaction of
the indebtedness. While some states impose prohibitions or limitations on
deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment can be sought in those states
that do not prohibit or limit those judgments. In addition to the notice
requirement described above, the UCC requires that every aspect of the sale or
other disposition, including the method, manner, time, place and terms, be
"commercially reasonable." Generally, courts have held that when a sale is not
"commercially reasonable," the secured party loses its right to a deficiency
judgment. However, the deficiency judgment would be a personal judgment against
the obligor for the shortfall, and a defaulting obligor can be expected to have
very little capital or sources of income available following repossession.
Therefore, in many cases, it may not be useful to seek a deficiency judgment or,
if one is obtained, it may be settled at a significant discount or be
uncollectible. In addition, the UCC permits the obligor or other interested
party to recover for any loss caused by noncompliance with the provisions of the
UCC. Also, prior to a sale, the UCC permits the obligor or other interested
person to prohibit the secured party from disposing of the collateral if it is
established that the secured party is not proceeding in accordance with the
"default" provisions under the UCC.
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Occasionally, after resale of a repossessed vehicle and payment of all
expenses and indebtedness, there is a surplus of funds. In that case, the UCC
requires the creditor to remit the surplus to any holder of a subordinate lien
with respect to that vehicle or if no lienholder exists, the UCC requires the
creditor to remit the surplus to the obligor.
BANKRUPTCY CONSIDERATIONS
The depositor has taken steps that are intended to make it unlikely
that the voluntary or involuntary application for relief by the seller under the
United States Bankruptcy Code or similar applicable state laws will result in
consolidation of the assets and liabilities of the depositor with those of the
seller. These steps include the creation of the depositor as a wholly-owned,
limited purpose subsidiary pursuant to articles of incorporation and bylaws
containing restrictions on the nature of the depositor's business and on its
ability to commence a voluntary case or proceeding under any insolvency law
without the unanimous affirmative vote of all of its directors. In addition, to
the extent that the seller granted a security interest in the contracts to the
depositor, and that interest was validly perfected before the bankruptcy or
insolvency of the seller and was not taken or granted in contemplation of
insolvency or with the intent to hinder, delay or defraud the seller or its
creditors, that security interest should not be subject to avoidance, and
payments to the trust with respect to the contracts should not be subject to
recovery by a creditor or trustee in bankruptcy of the seller.
However, delays in payments on the securities and possible reductions
in the amount of those payments could occur if:
1. a court were to conclude that the assets and liabilities of
the depositor should be consolidated with those of the seller
in the event of the application of applicable insolvency laws
to the seller, as the case may be;
2. a filing were made under any insolvency law by or against the
depositor; or
3. an attempt were to be made to litigate any of the foregoing
issues.
On each closing date, Winston & Strawn will give an opinion to the
effect that, based on a reasoned analysis of analogous case law, although there
is no precedent based on directly similar facts, and, subject to facts,
assumptions and qualifications specified in the opinion and applying the
principles set forth in the opinion, in the event of a voluntary or involuntary
bankruptcy case in respect of the seller under Title 11 of the United States
Bankruptcy Code at a time when the seller was insolvent, the property of the
seller would not properly be substantively consolidated with the assets of the
depositor. Among other things, that opinion will assume that each of the
depositor and the seller will follow specified procedures in the conduct of its
affairs, including maintaining records and books of account separate from those
of the other, refraining from commingling its assets with those of the other,
and refraining from holding itself out as having agreed to pay, or being liable
for, the debts of the other. The depositor and the seller intend to follow these
and other procedures related to maintaining their separate identities. However,
there can be no assurance that a court would not conclude that the assets and
liabilities of the depositor should be consolidated with those of the seller.
The seller will represent and warrant that the sale of the related
contracts to the depositor is a valid sale. Notwithstanding the foregoing, if
the seller were to become a debtor in a bankruptcy case, a court could take the
position that the sale of contracts to the depositor should instead be treated
as a pledge of
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those contracts to secure a borrowing of the seller. If a court were to reach
such conclusions, or a filing were made under any insolvency law by or against
the depositor, or if an attempt were made to litigate any of the foregoing
issues, delays and possible reduction in payments on the securities could occur.
In addition, if the transfer of contracts to the depositor is treated as a
pledge instead of a sale, a tax or government lien on the property of the seller
arising before the transfer of a contract to the depositor may have priority
over the depositor's interest in that contract.
The seller and the depositor will treat the transactions described in
this prospectus as a sale of the contracts to the depositor, so that the
automatic stay provisions of the United States Bankruptcy Code should not apply
to the contracts if the seller were to become a debtor in a bankruptcy case.
Furthermore, if an originating dealer or the seller became a debtor in
a bankruptcy case, creditors of that party, or that party acting as
debtor-in-possession, may assert that the transfer of the contracts was
ineffective to remove the contracts from that party's estate. In that case, the
distribution of payments on the contracts to the trust might be subject to the
automatic stay provisions of the United States bankruptcy code. This would delay
the distribution of those payments to you for an uncertain period of time.
Furthermore, reductions in payments under the contracts to the trust may result
if the bankruptcy court rules in favor of the creditors or the
debtor-in-possession. In either case, you may experience delays or reductions in
distributions or payments to you. In addition, a bankruptcy trustee would have
the power to sell the contracts if the proceeds of the sale could satisfy the
amount of the debt deemed owed by the originating dealer or the seller, as the
case may be. The bankruptcy trustee could also substitute other collateral in
lieu of the contracts to secure the debt. Additionally, the bankruptcy court
could adjust the debt if the originating dealer or the seller were to file for
reorganization under Chapter 11 of the bankruptcy code. Any of these actions
could result in losses or delays in payments on your securities. Each of the
originating dealers and the seller will represent and warrant that the
conveyance of the contracts by it is in each case a valid sale and transfer of
the contracts.
Also, cash collections on the contracts may be commingled with general
funds of the servicer and, in the event of a bankruptcy of the servicer, a court
may conclude that the trust does not have a perfected security interest in those
collections.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers involved
in consumer finance. These laws include the Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices
Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B
and Z, the Soldiers' and Sailors' Civil Relief Act of 1940, the Texas Consumer
Credit Code, state adoptions of the National Consumer Act and of the Uniform
Consumer Credit Code and state motor vehicle retail installment sales acts and
other similar laws. Also, state laws impose finance charge ceilings and other
restrictions on consumer transactions and require contract disclosures in
addition to those required under federal law. These requirements impose specific
statutory liabilities upon creditors who fail to comply with their provisions.
In some cases, this liability could affect an assignee's ability to enforce
consumer finance contracts such as the contracts.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC RULE"), the provisions of which are generally duplicated by
the Uniform Consumer Credit Code, other statutes or the common law in some
states, has the effect of subjecting a seller (and specified creditors and their
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assignees) in a consumer credit transaction to all claims and defenses that the
obligor in the transaction could assert against the seller of the goods.
Liability under the FTC Rule is limited to the amounts paid by the obligor under
the contract, and the holder of the contract may also be unable to collect any
balance remaining due under that contract from the obligor.
Most of the contracts will be subject to the requirements of the FTC
Rule. Accordingly, each trust, as holder of the related contracts, will be
subject to any claims or defenses that the purchaser of the applicable financed
motorcycle may assert against the seller of the related financed motorcycle. As
to each obligor, these claims are limited to a maximum liability equal to the
amounts paid by the obligor on the related contract. Under most state motor
vehicle dealer licensing laws, sellers of motor motorcycles are required to be
licensed to sell motor motorcycles at retail sale. Furthermore, federal odometer
regulations promulgated under the Motor Vehicle Information and Cost Savings Act
require that all sellers of new and used motorcycles furnish a written statement
signed by the seller certifying the accuracy of the odometer reading. If the
originating dealer is not properly licensed or if a written odometer disclosure
statement was not provided to the purchaser of the related financed motorcycle,
an obligor may be able to assert a defense against the originating dealer. If an
obligor were successful in asserting any of those claims or defenses, that claim
or defense would constitute a breach of the depositor's representations and
warranties under the related sale and servicing agreement or pooling and
servicing agreement and a breach of the seller's warranties under the related
transfer and sale agreement and would, if the breach materially and adversely
affects the collectibility of the contract or the interests of the trust or the
securityholders in the contract, create an obligation of the depositor and the
seller, respectively, to repurchase the contract unless the breach is cured. See
"DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS" in this prospectus.
Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the United
States. Courts have generally upheld the notice provisions of the UCC and
related laws as reasonable or have found that the repossession and resale by the
creditor do not involve sufficient state action to afford constitutional
protection to borrowers.
The seller and the depositor will represent and warrant that each
contract complies with all requirements of law in all material respects.
Accordingly, if an obligor has a claim against a trust for violation of any law
and that claim materially and adversely affects that trust's or the
securityholder's interest in a contract or the collectibility of the contract,
that violation would constitute a breach of the representations and warranties
of the seller and the depositor would create an obligation of the seller and the
depositor to repurchase the contract unless the breach is cured. See
"DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS" in this prospectus.
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured party
to realize upon collateral or to enforce a deficiency judgment. For example, in
a Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from
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repossessing a vehicle and, as part of the rehabilitation plan, reduce the
amount of the secured indebtedness to the market value of the vehicle at the
time of bankruptcy, as determined by the court, leaving the creditor as a
general unsecured creditor for the remainder of the indebtedness. A bankruptcy
court may also reduce the monthly payments due under a contract or change the
rate of interest and time of repayment of the indebtedness.
Under the terms of the Soldiers' and Sailors' Relief Act of 1940 (the
"Relief Act"), an obligor who enters the military service after the origination
of that obligor's contract (including an obligor who is a member of the National
Guard or is in reserve status at the time of the origination of the obligor's
contract and is later called to active duty) may not be charged interest above
an annual rate of 6% during the period of that obligor's active duty status,
unless a court orders otherwise upon application of the lender. In addition,
some states, including California, allow members of its national guard to extend
payments on any contract obligation if called into active service by the
Governor for a period exceeding 7 days. It is possible that the foregoing could
have an effect on the ability of the servicer to collect the full amount of
interest owing on some of the contracts. In addition, both the Relief Act and
the laws of some states, including California, New York and New Jersey, impose
limitations that would impair the ability of the servicer to repossess the
released financed motorcycle during the obligor's period of active duty status.
Thus, if that contract goes into default, there may be delays and losses
occasioned by the inability to exercise the trust's rights with respect to the
contract and the related financed motorcycle in a timely fashion.
Any shortfall pursuant to either of the two preceding paragraphs, to
the extent not covered by amounts payable to the securityholders from amounts on
deposit in the related reserve fund or from coverage provided under any other
credit enhancement mechanism, could result in losses to the securityholders.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a discussion of the material United States federal
income tax consequences of the purchase, ownership and disposition of notes or
certificates issued by a trust as described in this prospectus. The discussion
that follows constitutes the opinion of Winston & Strawn, federal tax counsel to
the depositor. Winston & Strawn prepared or reviewed the statements in this
prospectus under the heading "MATERIAL FEDERAL INCOME TAX CONSEQUENCES" and is
of the opinion that those statements are correct in all material respects. The
conclusions of law contained in this discussion constitute the opinion of
Winston & Strawn, federal tax counsel, being rendered for the benefit of
investors in the notes or certificates. In addition to this opinion, Winston &
Strawn will separately provide to the depositor, each trust and certain other
parties to each of the transactions contemplated by this prospectus more limited
opinions regarding the classification of the trust and the characterization of
the notes and the certificates for federal income tax purposes. Those separate
opinions are fully described below with respect to each type of trust.
This discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "CODE"), existing and proposed Treasury
Regulations, current administrative rulings, judicial decisions and other
applicable authorities in effect as of the date of this prospectus, all of which
are subject to change, possibly with retroactive effect. There are no cases,
regulations, or Internal Revenue Service rulings on comparable transactions or
instruments to those described in this prospectus.
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As a result, there can be no assurance that the Internal Revenue Service will
not challenge the conclusions of federal tax counsel reached in this description
of Material Federal Income Tax Consequences, and no ruling from the Internal
Revenue Service has been or will be sought on any of the issues discussed below.
Furthermore, legislative, judicial or administrative changes may occur, perhaps
with retroactive effect, which could affect the accuracy of the statements set
forth below.
This discussion does not attempt to deal with all aspects of federal
income taxation that may be relevant to all holders of notes and certificates in
light of their personal investment or tax circumstances. Also, this discussion
does not describe tax consequences to certain types of holders who may be
subject to special treatment under the federal income tax laws including,
without limitation, financial institutions, dealers in securities or currencies,
insurance companies, and persons who hold the notes or certificates as part of a
straddle, hedging or conversion transaction.
Investors and preparers of tax returns (including returns filed by any
trust described in this prospectus) should be aware that under applicable
Treasury Regulations a provider of advice on specific issues of law is not
considered an income tax return preparer unless the advice (1) is given with
respect to events that have occurred at the time the advice is rendered and is
not given with respect to the consequences of contemplated actions, and (2) is
directly relevant to the determination of an entry on a tax return. Accordingly,
taxpayers should consult their own tax advisors and tax return preparers
regarding the preparation of any item on a tax return, even where the
anticipated tax treatment has been discussed in this prospectus. The depositor
suggests that you consult with your own tax advisors as to the federal, state,
local, foreign and any other tax consequences to you of the purchase, ownership
and disposition of the notes and the certificates.
As mentioned above, the depositor and each trust (as well as certain
other parties to each transaction) will be provided with an opinion of Winston &
Strawn, as federal tax counsel, as described in the related prospectus
supplement, regarding certain specific federal income tax matters as discussed
below regarding the character of each trust and the notes and certificates (if
any) it issues. An opinion of federal tax counsel, however, is not binding on
the Internal Revenue Service or the courts. The form of that opinion will be
filed, together with the final documentation for the respective trust
transaction, with the Securities Exchange Commission under Form 8-K. For
purposes of the following summary, references to the trust, the notes, the
certificates and related terms, parties and documents refer to each trust and
the notes, certificates and related terms, parties and documents applicable to
such trust.
The federal income tax consequences to certificateholders will vary
depending on whether the trust is an owner trust or a grantor trust. As an
alternative to those two types of trusts, a trust could elect to be treated as a
financial asset securitization investment trust, generally referred to as a
FASIT. A summary of the federal income tax consequences pertaining to each type
of trust is set forth below. The prospectus supplement for each series of notes
or certificates will specify the treatment of the trust for federal income tax
purposes. To the extent any given series of notes or certificates differs from
the assumptions or conditions set forth in the following discussion or changes
occur in the relevant tax laws, or in their application, any additional tax
considerations will be disclosed in the applicable prospectus supplement. The
discussion of those additional tax considerations, to the extent they are
conclusions of law, will also constitute the opinion of federal tax counsel
being rendered for the benefit of investors as of the date of the prospectus
supplement. Because it will be later in time than the prospectus, that opinion
of federal tax counsel may modify, clarify, change or otherwise supplement the
opinion represented by the legal conclusions contained in this discussion of
Material Federal Income Tax Consequences.
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OWNER TRUSTS
A trust structured as an owner trust will typically issue one or more
classes of notes, intended to be treated as debt for federal income tax
purposes, and certificates, representing equity interests in the trust. The
characterization of the trust for federal income tax purposes depends in part
upon whether the certificates are owned by a single holder, such as the
depositor, or by multiple holders. This summary of material federal income tax
consequences with respect to the issuance of notes or certificates by an owner
trust is divided into three parts. The first part describes characterization of
the trust as a pass-through entity rather than as a corporation or other entity
subject to tax at the entity level. The second part describes the taxation of an
investor in the notes. The third part describes taxation of an investor in the
certificates.
TAX CHARACTERIZATION OF OWNER TRUSTS
Winston & Strawn, as federal tax counsel to the depositor, will deliver
its opinion that a trust established as an owner trust will not be an
association (or a publicly traded partnership) taxable as a corporation for
federal income tax purposes. This opinion will be based on the assumptions that
the terms of the trust agreement and related documents will be complied with and
that the owner or owners of certificates issued by the trust will take all
action necessary, if any, or refrain from taking any inconsistent action so as
to ensure the trust is, for federal income tax purposes, either disregarded as a
separate entity from the depositor (or other sole certificateholder) or treated
as a partnership. Winston & Strawn's opinion is also based on its conclusions
that (1) the trust will constitute a business entity, (2) the nature of the
income of the trust will exempt it from the rule that certain publicly traded
partnerships are taxable as corporations, and (3) the trust, if a corporation,
would not constitute a regulated investment company under the federal income tax
laws.
If certificates issued by the trust are at all times required to be
owned by a single person, such as the depositor, then, for federal income tax
purposes, the trust may be disregarded as a separate entity from the owner of
its certificates. In this situation, although it is the opinion of Winston &
Strawn that the notes issued by the trust will be characterized as indebtedness
for federal income tax purposes (as discussed below), no assurance can be given
that this characterization of the notes will prevail. If the Internal Revenue
Service successfully asserted that one or more of the notes did not represent
debt for federal income tax purposes, the notes might be treated as equity
interests in the trust. As a result, the trust would be considered to have
multiple equity owners (rather than just the single owner of the trust
certificates). In that case, the trust would be characterized as a partnership
for federal income tax purposes and the tax consequences to holders of notes
which were recharacterized as equity would be similar to those discussed below
under "-TAX TREATMENT OF INVESTORS IN CERTIFICATES".
Rather than having a single owner of certificates issued by the trust,
it is possible that the trust may issue certificates to multiple owners. In that
situation, the certificate owners would be treated as equity owners of the trust
and the trust would be characterized as a partnership for federal income tax
purposes.
In any case where the trust is treated as a partnership for federal
income tax purposes, it is the opinion of Winston & Strawn that it will not
constitute a publicly traded partnership. That opinion will be based upon
Winston & Strawn's assumption that (1) the nature of the income of the trust
will exempt it from publicly traded partnership characterization and/or (2)
the trust will at all times have fewer than 100 owners of its equity
interests. If, contrary to the opinion of Winston & Strawn, the trust were
treated as a
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publicly traded partnership or were otherwise taxable as a corporation for
federal income tax purposes, it would be subject to corporate income tax on
its taxable income. The trust's taxable income would include all its income
on the receivables and other assets owned by the trust, which may be reduced
by the interest expense on the notes issued by the trust to the extent the
notes are properly characterized as debt. Any such corporate income tax could
materially reduce cash available to make payments on the notes and
distributions on the certificates. If the trust were classified as a
partnership, other than a publicly traded partnership taxable as a
corporation, the trust itself would not be subject to United States federal
income tax. Instead, holders of equity interests in the partnership would be
required to take into account their allocable share of the trust's income and
deductions as discussed below under "-TAX TREATMENT OF INVESTORS IN
CERTIFICATES."
TAX TREATMENT OF INVESTORS IN NOTES
TREATMENT OF THE NOTES AS INDEBTEDNESS. The depositor and the owners of
the notes, by their purchase of notes, will agree to treat the notes as debt for
federal income tax purposes. Winston & Strawn, as federal tax counsel, will,
except as otherwise provided in the related prospectus supplement, advise the
trust that the notes will be classified as debt for federal income tax purposes.
The discussion below assumes this characterization of the notes is correct.
INTEREST ON THE NOTES. An investor will be taxed on the amount of
payments of interest on a note as ordinary interest income at the time it
accrues or is received in accordance with the investor's regular method of
accounting for United States federal income tax purposes. This treatment assumes
that all payments on the notes are denominated in U.S. dollars. It also assumes
that the payment of interest on the notes constitutes "QUALIFIED STATED
INTEREST" under Treasury Regulations relating to original issue discount and
that an investor does not acquire its notes as "STRIPPED NOTES" or at an
original issue discount as discussed below. If these assumptions are incorrect
with respect to any notes issued by a trust, additional tax considerations with
respect to those notes will be disclosed in the related prospectus supplement.
A holder of a note that has a fixed maturity date of not more than one
year from the issue date of that note (which will be referred to in this
paragraph as a "short-term note") may be subject to special rules. An accrual
basis holder of a short-term note (and some cash method holders, including
regulated investment companies, as set forth in Section 1281 of the Code)
generally would be required to report interest income as interest accrues on a
straight-line basis or under a constant yield method over the term of each
interest period. Other cash basis holders of a short-term note would, in
general, be required to report interest income as interest is paid (or, if
earlier, upon the taxable disposition of the short-term note). However, a cash
basis holder of a short-term note reporting interest income as it is paid may be
required to defer a portion of any interest expense otherwise deductible on
indebtedness incurred to purchase or carry the short-term note until the taxable
disposition of the short-term note. A cash basis taxpayer may elect under
Section 1281 to accrue interest income on all nongovernment debt obligations
with a term of one year or less, in which case the taxpayer would not be subject
to the interest expense deferral rule referred to in the preceding sentence.
Special rules apply if a short-term note is purchased for more or less than its
principal amount.
SALE OR OTHER DISPOSITION OF A NOTE. An investor who disposes of a
note, whether by sale, exchange for other property, or payment by the trust,
will recognize taxable gain or loss equal to the difference between the amount
realized on the sale or other disposition, not including any amount attributable
to accrued but unpaid interest, and the investor's adjusted tax basis in the
note. In general, an
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investor's adjusted tax basis in a note will be equal to the investor's initial
purchase price increased by any accrued original issue discount or market
discount previously included in income by the investor and decreased by the
amount of any bond premium previously amortized and the amount of any payments,
other than payments of stated interest, previously received by the investor with
respect to the note. Any gain or loss recognized upon the sale or other
disposition of a note will be capital gain or loss so long as the note is a
"capital asset" in the hands of the investor. For non-corporate investors,
capital gain recognized on the sale or other disposition of a note held by the
investor for more than one year will be taxed at a maximum rate of 20%. Capital
gain for a note held for one year or less is taxed at the rates applicable to
ordinary income, i.e., up to 39.6%. Taxpayers must aggregate capital gains and
losses for each taxable year. In the event a taxpayer realizes a net capital
loss for any year there are limitations on the amount of these capital losses
which can be deducted.
PURCHASE AT A DISCOUNT. An investor who purchases a note as part of the
initial offering by the trust for an issue price that is less than its "STATED
REDEMPTION PRICE AT MATURITY" will generally be considered to have purchased the
note at an original issue discount for United States federal income tax
purposes. In general, the stated redemption price at maturity for a note is
equal to the principal amount. If a note is acquired with original issue
discount the investor will be required to include in income each year, taxable
as ordinary income in the same manner as cash interest payments, a portion of
the original issue discount. For cash basis investors, such as individuals, the
requirement that original issue discount be accrued as income each year means
the investor recognizes taxable income even though the investor does not receive
cash corresponding to that income. The amount of original issue discount accrued
as income each year is based upon a formula which looks at the constant yield on
the notes and the term to maturity so as to annually allocate a proportionate
share of original issue discount. Under these rules, investors generally will be
required to include in income increasingly greater amounts of original issue
discount in successive accrual periods. For purposes of calculating the daily
portion of original issue discount to be accrued as income, the method of
determining yield to maturity is not clear, and in particular it is not clear
whether prepayments on the underlying contracts should be taken into account in
determining such yield. In determining the weighted average maturity of the
notes for purposes of calculating original issue discount, the depositor expects
to use a reasonable assumption regarding prepayment of the contracts owned by
the trust. No representation is made as to the actual prepayments to be made on
the contracts. This method of calculating the accrual of original issue discount
will cause the accrual of original issue discount to either increase or decrease
(but never below zero) in any given accrual period to reflect the fact that
prepayments are occurring at a faster or slower rate than the prepayment
assumption used in respect of the contracts.
In determining whether a note has original issue discount, the issue
price of the note may not necessarily equal the investor's purchase price,
although they generally should be the same. The issue price of a note will equal
the initial offering price to the public, not including bond houses, brokers or
similar persons or organizations acting in the capacity of underwriters or
wholesalers, at which price a substantial amount of the notes is sold.
If an investor acquires a note in a secondary market transaction for a
purchase price which is less than the principal amount or other amount payable
at maturity of the note, the difference is referred to for tax purposes as
market discount. Similarly to original issue discount, an investor must accrue a
portion of the market discount each year. The amount of market discount which
accrues annually will be calculated on a straight-line basis over the remaining
term to maturity of the note unless the investor elects to accrue market
discount using the constant yield method, i.e., the original issue discount
method. Unlike original
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issue discount, however, an investor does not include accrued market discount in
ordinary income each year. Rather, the aggregate amount of accrued market
discount is included in income when an investor sells or otherwise disposes of
the note. At that time, the portion of the amount realized by the investor on
the sale or other disposition of the note equal to accrued market discount is
taxed as ordinary income, which has a maximum tax rate of 39.6%, rather than the
long term capital gain maximum tax rate of 20%.
If an investor would prefer to be taxed on the annual accrual of market
discount each year rather than being taxed on the aggregate amount of all
accrued market discount when the note is sold or otherwise disposed of, the
investor can file an election to do so. This election would apply to all of the
investor's debt investments acquired in or after the taxable year in which the
notes are acquired and not just to the notes issued by the trust.
Limitations imposed by the federal tax laws which are intended to match
deductions with the taxation of income may defer deductions for interest paid by
an investor on indebtedness incurred or continued, or short sale expenses
incurred, to purchase or carry a note with market discount. A noteholder who
elects to include market discount in gross income as it accrues is exempt from
this rule.
Whenever an investor accrues and includes in income an amount of
original issue discount or market discount, the investor's adjusted basis in the
corresponding note is increased by that same amount. As a result, the investor
would recognize a lower capital gain or greater capital loss on the sale or
other disposition of the note.
In general, if the amount of original issue discount or market discount
would be less than one-fourth of one percent (0.25%) of the note's principal or
other stated redemption price at maturity multiplied by the number of full years
included in determining the weighted average maturity of the notes, the investor
can disregard the original issue discount or market discount rules.
PURCHASE AT A PREMIUM. If an investor purchases a note for a price that
exceeds the principal amount or other amount payable at maturity, the investor
will be considered to have an amortizable bond premium. An investor can elect to
accrue a portion of the premium each year as a deduction to offset interest
income on the corresponding note. The amount of premium which can be amortized
and deducted each year is calculated using a constant yield method over the
remaining term to maturity of the note. The deduction is available only to
offset interest income on the corresponding note; it cannot be used as a
deduction to the extent it exceeds taxable note interest. The adjusted tax basis
which an investor has in a note must be reduced by the amount of premium for
which a deduction is claimed. Because the basis is reduced, the investor would
recognize a larger taxable capital gain, or a smaller capital loss, on the sale
or other disposition of the note. If an investor elects to amortize and deduct
premium, the election will apply to all of the investor's debt investments and
not just to the notes.
If an investor purchases in a secondary market transaction a note which
was originally issued with original issue discount for an amount which is less
than the sum of all amounts payable on the note after the purchase date other
than payments of qualified stated interest but in excess of its adjusted issue
price, I.E., the original issue price plus any accrued original issue discount
as those terms are described above, the excess is referred to for tax purposes
as "ACQUISITION PREMIUM." The investor would be permitted to reduce the daily
portions of original issue discount the investor would otherwise include in
income by an amount corresponding to the ratio of (1) the excess of the
investor's purchase price for the note over the adjusted issue price of the note
as of the purchase date to (2) the excess of all amounts payable on the
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note after the purchase date, other than payments of qualified stated interest,
over the note's adjusted issue price.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT. An investor
may elect to include in gross income all interest that accrues on a note using
the constant-yield method described above under the heading "PURCHASE AT A
DISCOUNT" with modifications described below. For purposes of this election,
interest includes qualified stated interest, original issue discount, de minimis
original issue discount, market discount, de minimis market discount, and
unstated interest, as adjusted by any amortizable bond premium or acquisition
premium.
In applying the constant-yield method to a note with respect to which
this election has been made, the issue price of the note will equal the electing
investor's adjusted basis in the note immediately after its acquisition. The
issue date of the note will be the date of its acquisition by the electing
investor, and no payments on the note will be treated as payments of qualified
stated interest. This election, if made, may not be revoked without the consent
of the Internal Revenue Service. Investors should consult with their own tax
advisors as to the effect in their circumstances of making this election.
INFORMATION REPORTING AND BACKUP WITHHOLDING. The trust or an agent
acting on its behalf will be required to report annually to the Internal Revenue
Service, and to each non-corporate noteholder, the amount of interest paid on
the notes for each calendar year. Each non-corporate noteholder, other than
noteholders who are not subject to the reporting requirements, will be required
to provide, under penalties of perjury, a certificate, Form W-9, containing the
noteholder's:
(1) name,
(2) address,
(3) correct federal taxpayer identification number, and
(4) a statement that the noteholder is not subject to
backup withholding.
Should a non-exempt noteholder fail to provide the required certification, the
trust will be required to withhold or cause to be withheld 31% of the interest
otherwise payable to the noteholder and remit the withheld amounts to the
Internal Revenue Service as a credit against the noteholder's federal income tax
liability.
FOREIGN NOTEHOLDERS. Special tax rules apply to the purchase of notes
by foreign persons. For U.S. tax purposes, foreign investors include any person
who is not
(1) a citizen or resident of the United States,
(2) a corporation, partnership or other entity organized in or
under the laws of the United States, any state thereof or the
District of Columbia,
(3) an estate the income of which is includible in gross
income for U.S. federal income tax purposes, regardless of its
source,
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(4) a trust if a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more United States persons have the authority
to control all substantial decisions of the trust, or
(5) a trust that has a valid election in effect under
applicable United States Treasury Regulations to be treated as
a United States person.
Interest paid or accrued to a foreign investor that is not effectively
connected with the conduct of a trade or business within the United States by
the investor will generally be considered "portfolio interest" and not be
subject to United States federal income tax or withholding tax as long as the
foreign investor is not actually or constructively a 10 percent shareholder of
the trust or a controlled foreign corporation related to the trust through stock
ownership. Additionally, the foreign investor must provide or have a financial
institution provide on its behalf to the trust or paying agent an appropriate
statement or Form W-8 (or successor form), that is signed under penalties of
perjury, certifying that the beneficial owner of the note is a foreign person
and providing that foreign person's name and address. If the information
provided in this statement changes, the foreign investor must provide a new Form
W-8 (or successor form) within 30 days. If the foreign investor fails to satisfy
these requirements so that interest on the investor's notes was not portfolio
interest, interest payments would be subject to United States federal income and
withholding tax at a rate of 30% unless reduced or eliminated under an
applicable income tax treaty. To qualify for any reduction as the result of an
income tax treaty, the foreign investor must provide the paying agent with Form
1001 (or successor form).
The realization of any capital gain on the sale or other taxable
disposition of a note by a foreign investor will be exempt from United States
federal income and withholding tax, provided that (1) the gain is not
effectively connected with the conduct of a trade or business in the United
States by the investor, and (2) in the case of an individual foreign investor,
the investor is not present in the United States for 183 days or more during the
taxable year. If an individual foreign investor is present in the U.S. for 183
days or more during the taxable year, the gain on the sale or other disposition
of the notes could be subject to a 30% withholding tax unless reduced by treaty.
If the interest, gain or income on a note held by a foreign investor is
effectively connected with the conduct of a trade or business in the United
States by the investor, the noteholder will be subject to United States federal
income tax on the interest, gain or income at regular federal income tax rates.
At the same time, the noteholder may be exempt from withholding tax if a Form
4224 (or successor form) is furnished to the paying agent. In addition, if the
foreign investor is a foreign corporation, it may be subject to a branch profits
tax equal to 30% of its "EFFECTIVELY CONNECTED EARNINGS AND PROFITS" for the
taxable year, as adjusted for certain items, unless it qualifies for a lower
rate under an applicable tax treaty.
Regardless of when a foreign investor acquired a note, recently adopted
Treasury Regulations will become effective for note payments made after December
31, 2000. The new regulations make certain changes to the withholding, backup
withholding and information reporting rules just described and attempt to unify
certification requirements and modify reliance standards. It is suggested that
prospective investors consult their own tax advisors regarding the new
regulations.
If a foreign investor fails to provide necessary documentation to the
trust or its paying agent regarding the investor's taxpayer identification
number or certification of exempt status, a 31% backup withholding tax may be
applied to note payments to that investor. Any amounts withheld under the
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backup withholding rules will be allowed as a refund or a credit against the
foreign investor's U.S. federal income tax liability provided the required
information is furnished to the Internal Revenue Service.
POSSIBLE ALTERNATIVE TREATMENTS OF THE NOTES. If, contrary to the
opinion of Winston & Strawn, the Internal Revenue Service successfully asserted
that one or more of the notes did not represent debt for federal income tax
purposes, the notes might be treated as equity interests in the trust. If so
treated, the trust might be a publicly traded partnership taxable as a
corporation with the adverse consequences described above (and the resulting
taxable corporation would not be able to reduce its taxable income by deductions
for interest expense on notes recharacterized as equity). See "-OWNER TRUSTS-TAX
CHARACTERIZATION OF OWNER TRUSTS" in this prospectus. Alternatively, it is
possible that the trust might be treated as a partnership that would not be
taxable as a corporation. However, treatment of the notes as equity interests in
a partnership could have adverse tax consequences to certain holders. For
example, income to certain tax-exempt entities (including pension funds) could
constitute "UNRELATED BUSINESS TAXABLE INCOME;" income to foreign holders
generally would be subject to U.S. tax and U.S. tax return filing and
withholding requirements; individual holders might be subject to certain
limitations on their ability to deduct their share of trust expenses; and income
from the trust's assets would be taxable to noteholders without regard to
whether cash distributions are actually made from the trust or any particular
noteholder's method of accounting.
TAX TREATMENT OF INVESTORS IN CERTIFICATES
TREATMENT OF TRUST AS A PARTNERSHIP. As mentioned above, in any case
where the trust issues certificates to multiple owners, the trust will be
treated by the depositor as a partnership for federal income tax purposes. The
depositor and the servicer will agree, and each certificateholder will agree by
its purchase of certificates, to treat the trust as a partnership for purposes
of federal and state income tax, franchise tax and any other tax measured in
whole or in part by income, with the assets of the partnership being the assets
held by the trust, the partners of the partnership being the certificateholders,
and the notes being debt of the partnership. The trust, the depositor, and the
certificateholders will take all necessary actions, if any, and refrain from
taking any inconsistent actions, so as to ensure that the trust will be treated
as a partnership under the final Treasury Regulations which allow an entity to
elect status as a partnership.
A variety of alternative characterizations are possible. For example,
because the certificates have certain features characteristic of debt, the
certificates might be considered debt of the depositor or the trust. Any such
characterization should not result in materially adverse tax consequences to
certificateholders as compared to the consequences from treatment of the
certificates as equity in a partnership, described below. The following
discussion assumes that the certificates represent equity interests in a
partnership and that all payments on the certificates are denominated in U.S.
dollars.
PARTNERSHIP TAXATION. As a partnership, the trust will not be subject
to federal income tax. Rather, each certificateholder will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the trust. The trust's income will consist
primarily of interest and finance charges earned on the contracts owned by the
trust (including appropriate adjustments for any market discount, original issue
discount and bond premium), any yield supplement deposits and any gain upon
collection or disposition of the contracts. The trust's deductions will consist
primarily of interest accruing with respect to the notes, servicing and other
fees, and losses or deductions upon collection or disposition of the contracts.
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The tax items of a partnership are allocable to the partners in
accordance with the applicable federal income tax laws and the partnership
agreement (I.E., the trust agreement and related documents). The trust agreement
will provide, in general, that the certificateholders will be allocated taxable
income of the trust for each month equal to the sum of (1) the interest that
accrues on the certificates in accordance with their terms for such month,
including interest accruing at the pass-through rate for such month and interest
on amounts previously due on the certificates but not yet distributed; (2) any
trust income attributable to discount on the contracts that corresponds to any
excess of the principal amount of the certificates over their initial issue
price; (3) monthly prepayment premium payable to the certificateholders; and (4)
any other amounts of income payable to the certificateholders for the month
including, for example, any yield supplement deposits. That allocation of income
will be reduced by any amortization by the trust of premium on contracts that
corresponds to any excess of the issue price of certificates over their
principal amount. All remaining taxable income of the trust will be allocated to
the trust depositor. Based on the economic arrangement of the parties, this
approach for allocating trust income should be permissible under the applicable
Treasury Regulations, although no assurance can be given that the Internal
Revenue Service would not require a greater amount of income to be allocated to
certificateholders.
Certificateholders may be allocated income equal to the entire
pass-through rate plus the other items described above, even though the trust
might not have sufficient cash to make current cash distributions equal to that
amount. In that situation, cash basis holders will in effect be required to
report income from the certificates on the accrual basis and certificateholders
may become liable for taxes on trust income even if they have not received cash
from the trust to pay such taxes. In addition, because tax allocations and tax
reporting will be done on a uniform basis for all certificateholders, but
certificateholders may be purchasing certificates at different times and at
different prices, certificateholders may be required to report on their tax
returns taxable income that is greater or less than the amount reported to them
by the trust. See the discussion below under "-ALLOCATIONS BETWEEN TRANSFERORS
AND TRANSFEREES."
Most or all of the taxable income allocated to a certificateholder that
is a tax-exempt entity (including an individual retirement account) will
constitute "UNRELATED BUSINESS TAXABLE INCOME" generally taxable to such a
holder for federal income tax purposes.
With respect to any certificateholder who is an individual, an
individual taxpayer's share of certain expenses of the trust (including fees to
the servicer, but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or in
part and might result in such holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to such holder over the life of
the trust.
The trust will make all tax calculations relating to income and
allocations to certificateholders on an aggregate basis with respect to the
entire pool of contracts owned by the trust. If the Internal Revenue Service
were to require that such calculations be made separately for each contract, the
trust might be required to incur additional expense but it is believed that
there would not be a material adverse effect on certificateholders.
DISCOUNT AND PREMIUM. It is believed that the contracts will not be
issued with original issue discount, and, therefore, the trust should not have
income due to the accrual of original issue discount. However, the purchase
price paid by the trust for contracts may be greater or less than the remaining
principal balance of the contracts at the time of purchase. If so, the contracts
will have been acquired at a
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premium or market discount as the case may be. As indicated above, the trust
will make this calculation on an aggregate basis with respect to the entire pool
of contracts owned by the trust, but might be required to recompute it on a
contract-by contract basis.
If the trust acquires the contracts at a market discount or premium, it
will elect to include any such discount in income currently as it accrues over
the life of such contracts or to offset any such premium against interest income
on such contracts. See "-TAX TREATMENT OF INVESTORS IN NOTES-PURCHASE AT A
DISCOUNT" and "-PURCHASE AT A PREMIUM" in this prospectus. As indicated above, a
portion of such market discount income or premium deduction may be allocated to
certificateholders.
DISTRIBUTIONS TO CERTIFICATEHOLDERS. Certificateholders generally will
not recognize gain or loss with respect to distributions from the trust. A
certificateholder will recognize gain, however, to the extent that any money
distributed exceeds the certificateholder's adjusted basis in the certificates
(as described below under "-DISPOSITION OF CERTIFICATES") immediately before the
distribution. If a certificateholder is required to recognize an aggregate
amount of income (not including income attributable to disallowed itemized
deductions described above) over the life of the certificates that exceeds the
aggregate cash distributions with respect thereto, the amount of that excess
will generally give rise to a capital loss upon the retirement of the
certificates. Any gain or loss will generally be long-term gain or loss if the
holding period of the certificate is more than one year.
SECTION 708 TERMINATION. Under Section 708 of the Code, if 50% or more
of the outstanding equity interests in the trust are sold or exchanged within
any 12-month period, the trust will be deemed to terminate and then be
reconstituted for federal income tax purposes. If such a termination occurs, the
assets of the terminated trust (the "old trust") are deemed to be constructively
contributed to a reconstituted trust (the "new trust") in exchange for interests
in the new trust. Such interests would be deemed distributed to the partners, or
certificateholders, of the old trust in liquidation thereof, which would not
constitute a sale or exchange. Accordingly, if the sale of the trust's interests
terminated the partnership under Section 708 of the Code, the
certificateholder's basis in its ownership interest would not change. The
trust's taxable year would also terminate as a result of a constructive
termination and, if the certificateholder was on a different taxable year than
the trust, the termination could result in the bunching of more than twelve
months of the trust's income or loss in the certificateholder's income tax
return for the year in which the trust was deemed to terminate.
DISPOSITION OF CERTIFICATES. Generally, capital gain or loss will be
recognized on the sale of certificates, so long as the certificate is a "capital
asset" in the hands of the investor, in an amount equal to the difference
between the amount realized and the holder's tax basis in the certificates sold.
A certificateholder's tax basis in a certificate will generally equal the
holder's cost increased by the holder's share of trust income (that was
includible in the certificateholder's income) and decreased by any distributions
received with respect to such certificate. In addition, both the tax basis in
the certificates and the amount realized on a sale of a certificate would
include the holder's share of the notes and other liabilities of the trust. A
holder acquiring certificates at different prices may be required to maintain a
single aggregate adjusted tax basis in all of the certificates, and, upon sale
or other disposition of some of the certificates, allocate a portion of that
aggregate tax basis to the certificates sold (rather than maintaining a separate
tax basis in each certificate for purposes of computing gain or loss on a sale
of that certificate).
Any gain on the sale of a certificate attributable to the holder's
share of unrecognized accrued market discount on the contracts owned by the
trust would generally be treated as ordinary income to the
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holder and would give rise to special tax reporting requirements. The trust does
not expect to have any other assets that would give rise to such special
reporting requirements. Thus, to avoid those special reporting requirements, the
trust will elect to include market discount in income as it accrues as
previously stated.
ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES. In general, the
trust's taxable income and losses will be determined monthly and the tax items
for a particular calendar month will be apportioned among the certificateholders
in proportion to the principal amount of certificates owned by them as of the
close of the last day of the month. As a result, a holder purchasing
certificates may be allocated tax items (which will affect its tax liability and
tax basis) attributable to periods before the actual transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the trust might be reallocated among the certificateholders. The depositor
will be authorized to revise the trust's method of allocation between
transferors and transferees to conform to a method permitted by future
regulations.
SECTION 754 ELECTION. In the event that a certificateholder sells its
certificates at a profit or loss, the purchasing certificateholder will have a
higher or lower basis in the certificates than the selling certificateholder
had. The tax basis of the trust's assets will not be adjusted to reflect that
higher or lower basis unless the trust were to file an election under Section
754 of the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the trust will not make such election. As a
result, certificateholders might be allocated a greater or lesser amount of
trust income than would be appropriate based on their own purchase price for
certificates.
ADMINISTRATIVE MATTERS. The trustee is required to keep or have kept
complete and accurate books of the trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year of
the trust will be the calendar year. The trustee will file a partnership
information return (Form 1065) with the Internal Revenue Service for each
taxable year of the trust and will report each certificateholder's allocable
share of items of trust income and expense to holders and the Internal Revenue
Service on Schedule K-l. The trustee will provide the Schedule K-1 information
to nominees that fail to provide the trust with the information statement
described below and such nominees will be required to forward such information
to the beneficial owners of the certificates. Generally, holders must file tax
returns that are consistent with the information return filed by the trust or be
subject to penalties unless the holder notifies the Internal Revenue Service of
all such inconsistencies.
Under Section 6031 of the Code, any person that holds certificates as a
nominee at any time during a calendar year is required to furnish the trust with
a statement containing certain information on the nominee, the beneficial owners
and the certificates so held. Such information includes (1) the name, address
and taxpayer identification number of the nominee and (2) as to each beneficial
owner (a) the name, address and identification number of such person, (b)
whether such person is a United States person, a tax-exempt entity, a foreign
government or an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (c) certain information on
certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold certificates
through a nominee are required to furnish directly to the trust information as
to themselves and their ownership of certificates (a registered clearing agency
is not required to furnish any such information statements to the trust). The
information referred to above for
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any calendar year must be furnished to the trust on or before the following
January 31. Nominees, brokers and financial institutions that fail to provide
the trust with the information described above may be subject to penalties.
The trust depositor will be designated as the tax matters partner for
the trust in the trust agreement and, as such, will be responsible for
representing the certificateholders in any dispute with the Internal Revenue
Service. The federal income tax laws provide for administrative examination of a
partnership as if the partnership were a separate and distinct taxpayer.
Generally, the statute of limitations for partnership items does not expire
before three years after the date on which the partnership information return is
filed. Any adverse determination following an audit of the return of the trust
by the appropriate taxing authorities could result in an adjustment of the
returns of the certificateholders, and, under certain circumstances, a
certificateholder may be precluded from separately litigating a proposed
adjustment to the items of the trust. An adjustment could also result in an
audit of a certificateholder's returns and adjustments of items not related to
the income and losses of the trust.
BACK-UP WITHHOLDING. Distributions made on the certificates and
proceeds from the sale of the certificates will be subject to a back-up
withholding tax of 31% if, in general, the certificateholder fails to comply
with certain identification procedures, unless the holder is an exempt recipient
under applicable tax law provisions. See "-TAX TREATMENT OF INVESTORS IN
NOTES-INFORMATION REPORTING AND BACKUP WITHHOLDING" in this prospectus.
FOREIGN CERTIFICATEHOLDERS. It is not clear whether the trust would be
considered to be engaged in a trade or business in the United States for
purposes of federal withholding taxes with respect to non-U.S. persons because
there is no clear authority dealing with that issue under facts substantially
similar to those described herein. Nevertheless, the trust will withhold as if
it were so engaged in order to protect the trust from possible adverse
consequences of a failure to withhold. The trust expects to withhold on the
portion of its taxable income that is allocable to foreign certificateholders,
as if such income were effectively connect to a U.S. trade or business, at a
rate of 35% for foreign holders that are taxable as corporations and 39.6% for
all other foreign holders. Subsequent adoption of Treasury Regulations or the
issuance of other administrative pronouncements may require the trust to change
its withholding procedures. In determining a holder's withholding status, the
trust may generally rely on Form W-8, Form W-9 (or successor forms) or the
holder's certification of nonforeign status signed under penalties of perjury.
Each foreign holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the branch
profits tax) on its share of the trust's income. Each foreign holder must obtain
a taxpayer identification number from the Internal Revenue Service and submit
that number to the trust on Form W-8 (or successor form) in order to assure
appropriate crediting of the taxes withheld. A foreign holder generally would be
entitled to file with the Internal Revenue Service a claim for refund with
respect to taxes withheld by the trust, taking the position that no taxes were
due because the trust was not engaged in a U.S. trade or business (although no
assurance can be given as to the prospects for success of the refund claim).
However, even if such a position is successful, interest payments made (or
accrued) to a certificateholder who is a foreign person may be considered to be
guaranteed payments, but only to the extent such payments are determined without
regard to the income of the trust. It is unclear whether the Internal Revenue
Service would agree with that characterization. If these interest payments are
properly characterized as guaranteed payments, then the interest will not
constitute "PORTFOLIO INTEREST." As a result, certificateholders will be subject
to 30% U.S. withholding tax, unless reduced or eliminated pursuant to an
applicable treaty. In such case, a foreign
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holder would only be entitled to claim a refund for that portion of the taxes in
excess of the taxes that should be withheld with respect to the guaranteed
payments.
GRANTOR TRUSTS
This summary of material federal income tax consequences with respect
to the issuance of certificates by a grantor trust is divided into two parts.
The first part describes characterization of the trust as a grantor trust. The
second part describes taxation of an investor in certificates issued by a
grantor trust.
TAX CHARACTERIZATION OF GRANTOR TRUSTS
Winston & Strawn, as federal tax counsel, will deliver its opinion that
a trust structured as a grantor trust will be classified for federal income tax
purposes as a grantor trust and not as an association (or a publicly traded
partnership) taxable as a corporation and that, subject to the discussion below
under "-STRIPPED BONDS AND STRIPPED COUPONS", each certificateholder will be
treated for federal income tax purposes as the owner of a pro rata undivided
interest in the income and assets of the trust. The opinion of Winston & Strawn
does not foreclose the possibility of a contrary determination by the Internal
Revenue Service or by a court or of a contrary position by the Internal Revenue
Service or the Treasury Department in regulations or rulings issued in the
future.
For federal income tax purposes, the trust will be deemed to have
acquired the following assets: (1) the principal of each contract, plus a
portion of the interest due on each contract (the "TRUST STRIPPED BONDS"); (2)
the portion of the interest due on each contract not allocable to the Trust
Stripped Bonds or retained by the depositor (the "TRUST STRIPPED COUPONS"); (3)
the right to receive any yield supplement deposits; (4) the proceeds of certain
insurance policies on the financed assets; (5) rights under the trust agreement
and (6) rights under the security agreement in favor of the trust securing the
depositor's obligation to purchase subsequent contracts and deliver them to the
trust. Although a grantor trust may have certain rights with respect to a
reserve fund, pre-funding account or interest reserve account, such accounts
would not be assets of the trust.
It is possible, for federal income tax purposes, that the grantor trust
may be viewed as owning a single debt obligation having a principal amount equal
to the total stated principal amount of the entire pool of contracts and an
interest rate equal to the pass-through rate. Accordingly, the owners of
certificates would be viewed as owning an undivided interest in that single debt
obligation. In that case, the tax consequences to the certificate owners would
be the same as owners of notes owned by a trust structured as an owner trust
described above under the heading "-OWNER TRUSTS - TAX TREATMENT OF INVESTORS IN
NOTES."
The remainder of the discussion in this prospectus assumes that a
grantor trust certificateholder will be treated as owning an interest in each
contract, a portion of the interest payable on each contract, any right to
receive yield supplement deposits, and any other assets of the trust. However,
for administrative convenience, the servicer will report information to
investors and to the Internal Revenue Service on an aggregate basis (as though
all of the contracts and the rights to payments under the yield supplement
agreement were a single obligation). The amount and, in some instances,
character, of the income reported to a grantor trust certificateholder may
differ under this method for a particular period from that which would be
reported if income were reported on a precise asset-by-asset basis.
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TAX TREATMENT OF INVESTORS
CHARACTERIZATION OF INVESTMENT. As mentioned above, each grantor trust
certificateholder will be treated as the owner of a pro rata undivided interest
in each of the contracts in the trust, any right to receive yield supplement
deposits, and any other trust property. Any amounts received by a grantor trust
certificateholder in lieu of amounts due with respect to any contract because of
a default or delinquency in payment will be treated for federal income tax
purposes as having the same character as the payments they replace.
In each case where the interest rate on a contract exceeds the sum of
the certificate pass-through rate plus the servicing fee rate, for federal
income tax purposes, the depositor will be treated as having retained a fixed
portion of the interest due on the contract equal to the difference between (1)
the interest rate on each contract and (2) the sum of the pass-through rate and
the servicing fee rate. The depositor's retained yield with respect to the
contracts will be treated as "stripped coupons" within the meaning of Section
1286 of the Code and the contracts will be treated as "stripped bonds." See
"-STRIPPED BONDS AND STRIPPED COUPONS" below.
Each grantor trust certificateholder will be required to report on its
federal income tax return in accordance with that certificateholder's method of
accounting its pro rata share of the entire income from the contracts in the
trust represented by certificates, including interest, original issue discount,
prepayment fees, assumption fees, any gain recognized upon an assumption, late
payment charges received by the servicer and any gain recognized upon collection
or disposition of the contracts (but not including any portion of the
depositor's retained yield). A grantor trust certificateholder will also be
required to report under its usual method of accounting any payments received
under any yield supplement agreement to the extent that these payments are
treated as income. Each grantor trust certificateholder will be entitled to
deduct its pro rata share of servicing fees, prepayment fees, assumption fees,
any loss recognized upon an assumption, and late payment charges retained by the
servicer, provided that those amounts are reasonable compensation for services
rendered to the trust. Certificateholders that are individuals, estates or
trusts will be entitled to deduct their share of expenses only to the extent
those expenses exceed two percent of its adjusted gross income. Grantor trust
certificateholders who are individuals may be subject to additional deduction
limitations based on adjusted gross income.
A grantor trust certificateholder using the cash method of accounting
must take into account its pro rata share of income and deductions as and when
collected by or paid to the servicer. A grantor trust certificateholder using an
accrual method of accounting must take into account its pro rata share of income
and deductions as they become due or are paid, whichever is earlier. Because (1)
interest accrues on the contracts over differing monthly periods and is paid in
arrears and (2) interest collected on a contract generally is paid to
certificateholders in the following month, the amount of interest accruing to a
grantor trust certificateholder during any calendar month will not equal the
interest distributed in that month.
PURCHASE PRICE ALLOCATION. A certificateholder must allocate the cost
of its certificates among its allocable share of each of the separate assets of
the trust, in accordance with the proportion of the relative fair market values
of the assets as of the date the holder acquired its certificate, in order to
determine its initial tax basis for its pro rata portion of each asset held by
the trust. For this purpose, a certificateholder may treat the trust's rights in
the security interests, the individual insurance contracts, and other rights the
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trust may have which provide credit enhancement as part of the contracts such
that no separate allocation of the certificate cost and determination of basis
must be made to these rights.
In addition to the contracts however, the purchase price for
certificates should be allocated to the grantor trust certificateholder's
undivided interest in accrued but unpaid interest, amounts collected at the time
of purchase but not distributed, and, perhaps, rights to receive yield
supplement deposits. As a result, the portion of the purchase price allocable to
the grantor trust certificateholder's undivided interest in the contracts may be
decreased. The allocation of purchase price among the assets is important for
purposes of determining the amount of gain or loss recognized by a
certificateholder when the trust disposes of a contract and for calculating
discount or premium with respect to the contracts, all as discussed below.
STRIPPED BONDS AND STRIPPED COUPONS. Although the tax treatment of
stripped bonds is not entirely clear, based on recent guidance from the Internal
Revenue Service, each purchaser of a grantor trust certificate will be treated
as the purchaser of a stripped bond and coupon, to the extent that the contracts
consist of contracts having an interest rate in excess of the sum of the
pass-through rate plus the servicing fee rate. The stripped bond generally
should be treated as a single debt instrument issued on the day it is purchased
for purposes of calculating any original issue discount. Generally, under
applicable Treasury Regulations, if the discount on a stripped bond is larger
than a de minimis amount (one-fourth of one percent, or 0.25%, of the bond's
principal amount or other stated redemption price at maturity multiplied by the
full number of years included in determining the weighted average maturity of
the bonds) that stripped bond will be considered to have been issued with
original issue discount. See "-OWNER TRUSTS-TAX TREATMENT OF INVESTORS IN
NOTES-ORIGINAL ISSUE DISCOUNT." Although the matter is not entirely clear, each
certificateholder's share of the interest income on the contracts at the sum of
the pass-through rate and the fee servicing rate will be treated as "QUALIFIED
STATED INTEREST." The trustee will treat each holder's share of the interest
income in this manner for tax information reporting purposes. As a result, the
amount of original issue discount for each certificateholder will equal the
amount, if any, by which the portion of the certificate purchase price allocable
to the contracts is less than the remaining principal balance of those
contracts.
Generally, a certificateholder that acquires an undivided interest in
contracts constituting stripped bonds that have original issue discount
(referred to in this discussion as "stripped contracts") must include in gross
income the sum of the "daily portions" of the original issue discount for each
day on which it owns a certificate, including the date of purchase but excluding
the date of disposition. In the case of an original grantor trust
certificateholder, the daily portions of original issue discount with respect to
the stripped contracts generally would be determined as follows. A calculation
will be made of the portion of original issue discount that accrues on those
contracts during each successive monthly accrual period (or shorter period in
respect of the date of original issue or the final payment date). This will be
done, in the case of each full monthly accrual period, by adding (1) the present
value of all remaining payments to be received on the stripped contracts under
the prepayment assumption used in respect of the contracts and (2) any payments
received during that accrual period, and subtracting from that total the
"ADJUSTED ISSUE PRICE" of the stripped contracts at the beginning of that
accrual period. The adjusted issue price of the stripped contracts at the
beginning of the first accrual period is the amount of the purchase price paid
by the certificateholder for the certificate that is allocable to those
contracts. The adjusted issue price of the stripped contracts at the beginning
of a subsequent accrual period is the adjusted issue price at the beginning of
the immediately preceding accrual period plus the amount of original issue
discount allocable to that accrual period and reduced by the amount of any
payment on the stripped contracts
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(other than qualified stated interest) made at the end of or during that accrual
period. The original issue discount accruing during that accrual period will
then be divided by the number of days in the period to determine the daily
portion of original issue discount for each day in the period. With respect to
an initial accrual period shorter than a full monthly accrual period, the daily
portions of original issue discount must be determined according to a reasonable
method, provided that the method is consistent with the method used to determine
the yield to maturity of the stripped contracts.
For purposes of calculating the daily portion of original issue
discount to be accrued as income, the method of determining yield to maturity is
not clear, and in particular it is not clear whether prepayments on the
underlying contracts should be taken into account in determining such yield. The
method of calculating the accrual of original issue discount as described above
will cause the accrual of original issue discount to either increase or decrease
(but never below zero) in any given accrual period to reflect the fact that
prepayments are occurring at a faster or slower rate than the prepayment
assumption used in respect of the stripped contracts. Subsequent purchasers that
purchase interests in stripped contracts at more than a de minimis discount
should consult their tax advisors with respect to the proper method to accrue
that original issue discount.
PREMIUM. A certificateholder that acquires an interest in contracts at
a premium over the stated redemption price at maturity of the contracts may
elect to amortize that premium under a constant interest method. A premium would
occur if the purchase price for a certificate exceeded the holder's
proportionate share of the remaining payments due on the contracts Amortizable
premium will be treated as an offset to interest income recognized by the holder
on its grantor trust certificate. However, the holder's tax basis for the
grantor trust certificate will be reduced to the extent that amortizable premium
is claimed as a deduction to offset interest payments. A certificateholder that
makes this election for a grantor trust certificate that is acquired at a
premium will be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that the
certificateholder holds during the year of the election or thereafter.
It is not clear whether a reasonable prepayment assumption should be
used in computing amortization of premium allowable as a deduction. If a premium
is not subject to amortization using a reasonable prepayment assumption, the
holder of a certificate acquired at a premium should recognize a loss if a
contract is prepaid in full, equal to the difference between the portion of the
prepaid principal amount of that contract that is allocable to the grantor trust
certificate and the portion of the adjusted basis of the certificate that is
allocable to that contract. On the other hand, if a reasonable prepayment
assumption is used in calculating the amount of amortizable premium, it appears
that a loss would be available, if at all, only if prepayments occur at a rate
faster than the reasonable assumed prepayment rate. It is not clear whether any
other adjustments would be required to reflect differences between an assumed
prepayment rate and the actual rate of prepayments.
MARKET DISCOUNT. Generally, all discount on an interest in stripped
contracts will be treated as original issue discount under the stripped bond
rules of the Code, and the rules relating to market discount on bonds will not
apply. However, if the difference between the interest rate on the contracts and
the pass-through rate on the certificates were determined to constitute
reasonable compensation for services rendered to the trust, then the stripped
bond rules described above should not apply. In that event, a certificateholder
will be subject to the market discount rules to the extent that its undivided
interest in a contract is considered to have been purchased at a "MARKET
DISCOUNT." Generally, the amount of market discount is equal to the excess of
the portion of the principal amount of a contract allocable to a holder over
that holder's tax basis (i.e., the portion of the certificate purchase price
allocable to that contract). At
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the present time there is no express authority for determining whether market
discount exists by reference to the entire pool of contracts rather than on a
contract-by-contract basis. Market discount with respect to a contract will be
considered to be zero if the amount allocable to the contract is less than
one-fourth of one percent (0.25%) of the stated redemption price at maturity of
the contracts multiplied by the weighted average maturity remaining after the
date of purchase.
Any principal payment (whether a scheduled payment or a prepayment) or
any gain on disposition of a market discount instrument is required to be
treated as ordinary income up to the amount of the accrued market discount at
that time. The amount of accrued market discount for purposes of determining the
tax treatment of subsequent principal payments or dispositions of the market
discount debt instrument is reduced by the amount so treated as ordinary income.
Market discount will generally be considered to accrue ratably, unless a
certificateholder elects to accrue on a constant interest method. In addition,
special rules may apply to the determination of the accrual of market discount
where the principal of an instrument is payable in more than one installment. A
holder's election to include market discount in income currently, once made,
applies to all market discount obligations acquired by the holder on or after
the first taxable year to which the election applies and may not be revoked
without the consent of the Internal Revenue Service.
A holder who acquired a grantor trust certificate at a market discount
may be required to defer a portion of its interest deductions for the taxable
year attributable to any indebtedness incurred or continued to purchase or carry
that certificate. For these purposes, the de minimis rule referred to above
applies. Any deferred interest expense would not exceed the market discount that
accrues during that taxable year and is, in general, allowed as a deduction not
later than the year in which the market discount is includible in income. If the
holder elects to include market discount in income currently as it accrues on
all market discount instruments acquired by the holder in that taxable year or
thereafter, the interest expense deferral rule will not apply.
Because Treasury Regulations implementing the market discount rules
have not yet been issued, it is suggested that investors consult their own tax
advisors regarding the application of these rules and the advisability of making
the election to accrue market discount.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT. The original
issue discount regulations permit a certificateholder to elect to accrue all
interest and discount (including de minimis discount), offset by any premium, in
income as interest based on a constant yield method. If that election were to be
made with respect to a grantor trust certificate with market discount, the
grantor trust certificateholder would be deemed to have made an election to
include in income currently market discount with respect to all other debt
instruments having market discount that the certificateholder acquires during
the year of the election or thereafter. Similarly, a certificateholder that
makes this election for a certificate that is acquired at a premium will be
deemed to have made an election to amortize bond premium with respect to all
debt instruments having amortizable bond premium that the certificateholder owns
or acquires. The election to accrue interest, discount and premium on a constant
yield method with respect to a grantor trust certificate is irrevocable except
with the approval of the Internal Revenue Service.
SALE OR EXCHANGE OF A CERTIFICATE. Sale or exchange of a grantor trust
certificate prior to its maturity will result in the recognition by the owner of
gain or loss equal to the difference, if any, between the amount received and
the owner's adjusted basis in the certificate. The adjusted basis generally will
equal the seller's purchase price for the certificate, increased by any accrued
market discount or original issue discount previously included in the seller's
gross income with respect to the certificate and reduced
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by the amount of any previously amortized premium andby the amount of any
payments on the certificate, other than payments of qualified stated
interest, previously received by the seller. That gain or loss will be
capital gain or loss to an owner for which a grantor trust certificate is a
"CAPITAL ASSET" and will be long-term or short-term depending on whether the
certificate has been owned for the long-term capital gain holding period
(currently more than one year).
FOREIGN CERTIFICATEHOLDERS. Interest or discount income attributable to
contracts which is received by a foreign certificateholder will generally not be
subject to the normal 30% withholding tax imposed with respect to such payments,
provided that (1) the foreign certificateholder does not own, directly or
indirectly, 10% or more of, and is not a controlled foreign corporation related
to, the depositor and (2) the foreign holder fulfills certain certification
requirements. Under those requirements, the holder must certify, under penalty
of perjury, that it is not a "UNITED STATES PERSON" and provide its name and
address on Form W-8 (or successor form). For this purpose, United States person
generally means (a) a citizen or resident of the United States, (b) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, (c) an estate
the income of which is subject to United States federal income taxation
regardless of its source, (d) a trust if a court within the United States is
able to exercise primary jurisdiction over the administration of the trust and
one or more United States persons have the authority to control all substantial
decisions of the trust, or (e) a trust that has a valid election in effect under
applicable United States Treasury Regulations to be treated as a United States
person. Gain realized upon the sale of a certificate by a foreign
certificateholder generally will not be subject to United States withholding
tax. If, however, such interest or gain is effectively connected to the conduct
of a trade or business within the United States by such foreign
certificateholder (or in the case of gain if the certificateholder is an
individual who is present in the United States for a total of 183 days or more
during the taxable year in which such gain is realized), such holder will be
subject to United States federal income tax thereon at the regular rates and, in
addition, an investor that is a foreign corporation may be subject to a branch
profits tax equal to 30% (or lower applicable treaty rate) of its "effectively
connected earnings and profits" within the meaning of the Code for the taxable
year, as adjusted for certain items.
It is not entirely clear whether amounts received by a foreign
certificateholder that are attributable to payments of yield supplement deposits
received pursuant to any yield supplement agreement would not be subject to
withholding tax. Potential investors who are not United States persons should
consult their own tax advisors regarding the specific tax consequences to them
of owning a certificate issued by a grantor trust.
INFORMATION REPORTING AND BACKUP WITHHOLDING. The servicer will furnish
or make available, within a reasonable time after the end of each calendar year,
to each person who was a grantor trust certificateholder at any time during the
year, the information that is deemed necessary or desirable to assist
certificateholders in preparing their federal income tax returns, or to enable
holders to make that information available to beneficial owners or financial
intermediaries that hold grantor trust certificates as nominees on behalf of
beneficial owners. If a non-exempt holder, beneficial owner, financial
intermediary or other recipient of a payment on behalf of a non-exempt
beneficial owner fails to supply a certified taxpayer identification number or
if the Secretary of the Treasury determines that that person has not reported
all interest and dividend income required to be shown on its federal income tax
return, 31% backup withholding may be required with respect to any payments. Any
amounts deducted and withheld from a payment to a recipient would be allowed as
a credit against the recipient's federal income tax liability.
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FASITS
GENERAL DESCRIPTION OF FASIT
Pursuant to legislation enacted by Congress in 1996, a new type of
entity was created called a "financial asset securitization investment trust,"
or FASIT. On February 7, 2000, the Internal Revenue Service released proposed
regulations regarding FASITs. As stated previously in this section of the
prospectus under the caption "GENERAL", the discussion with respect to FASITs is
based upon existing law, including the proposed FASIT regulations, all of which
are subject to change, possibly with retroactive effect.
Treatment of a trust as a FASIT is elective. The FASIT election will be
made by attaching a statement to the income tax return for the owner of the
"OWNERSHIP INTEREST" in the FASIT (as that interest is described below) for the
taxable year that includes the startup day of the FASIT. The owner of the
ownership interest may be the depositor or it may be an independent third party.
There is no prescribed form for the settlement electing FASIT status. If, as is
likely to be the case, an entity is formed to be the FASIT, the election
statement must be signed by the person who would be responsible for signing the
entity's tax return in the absence of FASIT treatment. On the other hand, if
instead of a separate entity the FASIT election is only to apply to a segregated
pool of assets, the election statement must be signed by each person who is the
owner, for federal income tax purposes, of assets in the pool immediately before
the startup day of the FASIT.
If a FASIT election is made for a trust, the accompanying prospectus
supplement will so indicate. For each trust for which one or more FASIT
elections are to be made, Winston & Strawn, as federal tax counsel, is of the
opinion that the trust, or one or more segregated pools of trust assets, will be
treated as a FASIT assuming that there is (1) compliance with the terms of the
pooling agreement (or similar governing documents pertaining to the acquisition
of assets by the trust) and (2) compliance with any changes in the federal
income tax laws pertaining to FASITs, including applicable provisions of the
Code, the proposed FASIT regulations or other treasury regulations, or any
judicial or administrative interpretations of the Code or regulations. The
pooling agreement (or similar governing documents) will require that
substantially all of the trust assets consist only of "PERMITTED ASSETS", as
described below and also contains certain other restrictions necessary for the
trust to be and continue to qualify as a FASIT. Based upon those same
assumptions, tax counsel is of the opinion that each trust, or one or more
segregated pools of trust assets, for which a FASIT election is made is
organized, operated and will continue to operate in a manner so as to qualify
for FASIT status.
Although the Internal Revenue Service recently published regulations in
proposed form with respect to FASITs, the regulations are only in proposed form
and do not attempt to deal with all aspects of FASIT taxation. Accordingly,
definitive statements cannot be made with respect to many aspects of the tax
treatment of FASITs and the holders of certificates issued by FASITs. Investors
should also note that the following FASIT discussion constitutes only a summary
of the United States federal income tax consequences to FASIT
certificateholders. With respect to each series of FASIT certificates, the
related prospectus supplement will provide a detailed discussion regarding the
federal income tax consequences associated with the particular transaction.
FASIT REQUIREMENTS
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A trust fund can qualify to elect FASIT status if it is not a
"regulated investment company" as described in Section 851(a) of the Code, it
issues only "regular interests" and one "ownership interest" (as described
below), and substantially all of its assets are "permitted assets." For this
purpose, permitted assets include (1) cash and cash equivalents, (2) any debt
instrument that provides for interest payments which (A) are payable based on a
fixed rate or certain variable rates, or (B) consist of a specified portion of
the interest payments on the trust assets, which portion does not vary during
the period such interest is outstanding, (3) foreclosure property, (4) certain
hedging instruments (i.e., swap contracts, futures contracts, and guarantee
arrangements) intended to hedge against the risks associated with being the
obligor on FASIT regular interests, (5) contract rights to acquire debt
instruments described in (2) above or hedges described in (4) above, and (6) any
regular interest in a real estate mortgage investment conduit, or REMIC, or in
another FASIT. The term "permitted asset" does not, however, include any debt
instrument issued by the holder of the ownership interest or any person related
to such holder.
In order for substantially all of a FASIT's assets to consist of
"permitted assets", the aggregate adjusted basis of assets held by the FASIT
which are not permitted assets must be less than 1% of the aggregate adjusted
basis of all of the FASIT's assets. The pooling agreement (or similar governing
documents) for each FASIT will require that substantially all of the FASIT's
assets consist of permitted assets at all times. However, there is the
possibility that changes in the assets owned by the FASIT could adversely affect
the ability of the FASIT to comply with the permitted asset requirement. Failure
of the FASIT to comply with this requirement could cause it to lose FASIT
status. However, certain mitigation provisions exist which may be available.
The Code does not provide comprehensive rules describing the
consequences of a cessation of FASIT status. Under the recently proposed
regulations the owner of the FASIT ownership interest would be deemed to dispose
of all of the FASIT's assets in a prohibited transaction and any gain would be
subject to the prohibited transactions tax. The regular interests will be deemed
satisfied for an amount which could generate cancellation of indebtedness income
for investors in those FASIT regular interests. The FASIT which ceased to so
qualify would, under the proposed rules, no longer be treated as a FASIT and
would be prohibited from making a new FASIT election. The trust would then be
classified under general tax principles. In that event, the trust could be
treated as an association or other entity subject to an entity level tax. The
regular interests owned by investors would also be reclassified under general
tax principles. Any of the foregoing could adversely affect investors.
On February 7, 2000, the Clinton Administration submitted to Congress
its budget proposals for fiscal year 2001. The budget proposals include a
provision which would impose on a FASIT secondary liability for the payment of
federal income tax due from the owner of the FASIT's single ownership interest.
As a result, if the proposal were to be enacted, the failure of the owner of the
ownership interest to pay taxes due could cause the holders of regular interests
to be adversely affected by reduced available funds for distribution by the
FASIT. It is unclear at this time whether the Clinton budget proposal will be
enacted.
TAX TREATMENT OF INVESTORS
FASIT interests will be classified as either FASIT regular interests,
which generally will be treated as debt for federal income tax purposes, or a
FASIT ownership interest, which is not treated as debt for such purposes, but
rather represents the residual equity interest in a FASIT. The tax treatment of
each type of interest is discussed briefly below.
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REGULAR INTERESTS. The terms of a FASIT regular interest generally must
satisfy the following requirements: (1) a stated maturity of no greater than 30
years, (2) a specified principal amount, (3) the issue price of the interest
does not exceed 125% of its stated principal amount, (4) the yield to maturity
of the interest is less than the applicable federal rate published by the
Internal Revenue Service for the month of issue plus five percentage points, and
(5) if it pays interest, such interest is payable at either (a) a fixed rate
with respect to the principal amount of the regular interest or (b) certain
permissible variable rates with respect to such principal amount. Regular
interests which do not meet certain of those requirements, referred to as "high
yield interests," may be issued by a FASIT but are permitted to be held by only
certain types of investors such as domestic "C" corporations and other FASITs.
Certain other limitations also apply to high yield interests, such as limits on
the amount of FASIT interest income able to be offset by non-FASIT losses and
deductions otherwise available to the owner of the interest.
FASIT regular interests generally will be subject to the same federal
income tax treatment as applies to debt instruments generally. See "-OWNER
TRUSTS - TAX TREATMENT OF INVESTORS IN NOTES" in this prospectus. One
significant difference, however, is that the holder of a FASIT regular interest
must report income from its interest under the accrual method of accounting,
even if it otherwise uses the cash receipts and disbursement method. The sale or
other disposition of a FASIT regular interest generally will be subject to the
same rules as apply to debt instruments generally.
OWNERSHIP INTEREST. One interest issued by a trust electing to be
treated as a FASIT will be designated as the sole ownership interest in the
FASIT. The ownership interest need not have any particular economic
characteristics. However, the ownership interest must be held directly at all
times by an "ELIGIBLE CORPORATION" which includes a domestic "C" corporation
that is subject to tax and is not a pass-thru entity for tax purposes such as a
regulated investment company, real estate investment trust, real estate mortgage
investment conduit, or cooperative.
Because the ownership interest represents the residual equity interest
in a FASIT, the holder of a FASIT ownership interest determines its taxable
income by taking into account all assets, liabilities, and items of income,
gain, deduction, loss and credit of the related FASIT. In general the character
of the income to the holder of a FASIT ownership interest will be the same as
the character of such income to the FASIT, except that any tax-exempt interest
income taken into account by the holder of a FASIT ownership interest is treated
as ordinary income. In determining that taxable income, the holder of a FASIT
ownership interest must use a constant yield methodology and an accrual method
of accounting and generally will be subject to the same rules of taxation for
original issue discount, market discount, and amortizable premium as apply to
debt instruments generally. See "-OWNER TRUSTS-TAX TREATMENT OF INVESTORS IN
NOTES-PURCHASE AT A DISCOUNT" and "-PURCHASE AT A PREMIUM" in this prospectus.
In addition, a holder of a FASIT ownership interest is subject to the same
limitations on its ability to use non-FASIT losses and deductions to offset
income from the FASIT ownership interest as are holders of FASIT high-yield
regular interests.
Losses on dispositions of a FASIT ownership interest generally will be
disallowed as a deduction if within six months before or after the disposition,
the seller of the interest acquires any other FASIT ownership interest.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan, as well as
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individual retirement accounts and some types of Keogh Plans (each a "Benefit
Plan"), from engaging in transactions involving "plan assets" with persons that
are "parties in interest" under ERISA or "disqualified persons" under the Code
with respect to that Benefit Plan. A violation of these "prohibited transaction"
rules may result in an excise tax or other penalties and liabilities under ERISA
and the Code for those persons. Employee benefit plans that are governmental
plans (as defined in Section 3(32) of ERISA) and some church plans (as defined
in Section 3(33) of ERISA) are not subject to ERISA requirements nor to Section
4975 of the Code. However, governmental plans may be subject to state or local
laws that impose similar requirements. In addition, governmental plans and
church plans that are "qualified" under Section 401(a) of the Code are subject
to restrictions with respect to prohibited transactions under Section
503(a)(1)(B) of the Code, the sanction for violation being loss of "qualified"
status.
Certain exemptions from the prohibited transaction rules could be
applicable to the purchase and holding of securities by a Benefit Plan depending
on the type and circumstances of the plan fiduciary making the decision to
acquire the securities. Potentially available exemptions would include, without
limitation, Prohibited Transaction Class Exemption ("PTCE") 90-1, which exempts
certain transactions involving insurance company pooled separate accounts; PTCE
95-60, which exempts certain transactions involving insurance company general
accounts; PTCE 91-38, which exempts certain transactions involving bank
collective investment funds; PTCE 84-14, which exempts certain transactions
effected on behalf of a plan by a "qualified professional asset manager"; and
PTCE 96-23, which exempts certain transactions effected on behalf of a plan by
an "in-house asset manager." Insurance company general accounts should also
discuss with their legal counsel the availability of exemptive relief under
Section 401(c) of ERISA. A purchaser of securities should be aware, however,
that even if the conditions specified in one or more exemptions are met, the
scope of the relief provided by the applicable exemption or exemptions might not
cover all acts that might be construed as prohibited transactions.
ERISA also imposes certain duties on persons who are fiduciaries of
Benefit Plans subject to ERISA, including the requirements of investment
prudence and diversification, and the requirement that such a Benefit Plan's
investments be made in accordance with the documents governing the Benefit Plan.
Under ERISA, any person who exercises any authority or control respecting the
management or disposition of the assets of a Benefit Plan is considered to be a
fiduciary of such Benefit Plan. Benefit Plan fiduciaries must determine whether
the acquisition and holding of securities and the operations of the trust would
result in prohibited transactions if Benefit Plans that purchase the securities
were deemed to own an interest in the underlying assets of the trust under the
rules discussed below. There may also be an improper delegation of the
responsibility to manage Benefit Plan assets if Benefit Plans that purchase the
securities are deemed to own an interest in the underlying assets of the trust.
Some transactions involving a trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit Plan
that purchased notes or certificates if assets of the trust were deemed to be
assets of the Benefit Plan. Under a regulation issued by the United States
Department of Labor (the "Plan Assets Regulation"), the assets of a trust would
be treated as plan assets of a Benefit Plan for the purposes of ERISA and the
Code only if the Benefit Plan acquired an "equity interest" in the trust and
none of the exceptions contained in the Plan Assets Regulation was applicable.
An equity interest is defined under the Plan Assets Regulation as an interest
other than an instrument which is treated as indebtedness under applicable local
law and which has no substantial equity features. The likely treatment in this
context of notes and certificates of a given series will be discussed in your
prospectus supplement. However, it is anticipated that the certificates will be
considered equity interests
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in the trust for purposes of the Plan Assets Regulation, and that the assets of
the trust may therefore constitute plan assets if certificates are acquired by
Benefit Plans. In such event, the fiduciary and prohibited transaction
restrictions of ERISA and section 4975 of the Code would apply to transactions
involving the assets of the trust. As a result, except in the case of senior
certificates with respect to which the Exemption is available (as described
below), certificates generally shall not be transferred and the trustee shall
not register any proposed transfer of certificates unless it receives (i) a
representation substantially to the effect that the proposed transferee is not a
Benefit Plan and is not acquiring the certificates on behalf of or with the
assets of a Benefit Plan (including assets that may be held in an insurance
company's separate or general accounts where assets in such accounts may be
deemed "plan assets" for purposes of ERISA), or (ii) an opinion of counsel in
form and substance satisfactory to the trustee and the depositor that the
purchase or holding of the certificates by or on behalf of a Benefit Plan will
not constitute a prohibited transaction, will not result in the assets of the
trust being deemed to be "plan assets" and subject to the fiduciary
responsibility provisions of ERISA or the prohibited transaction provisions of
ERISA and the Code or any similar law or and will not subject any trustee, the
certificate administrator or the depositor to any obligation in addition to
those undertaken in the trust agreement.
SENIOR CERTIFICATES ISSUED BY TRUSTS
Unless otherwise specified in your prospectus supplement, the following
discussion applies only to nonsubordinated certificates (referred to here in as
"senior certificates") issued by a trust.
The U.S. Department of Labor (the "DOL") has granted to the lead
underwriter named in your prospectus supplement an exemption (the "Exemption")
from certain of the prohibited transaction rules of ERISA with respect to the
initial purchase, the holding and the subsequent resale by Benefit Plans of
certificates representing interests in asset-backed pass-through trusts that
consist of certain receivables, loans and other obligations that meet the
conditions and requirements of the Exemption. The receivables covered by the
Exemption include motor vehicle installment sales contracts like those contained
in the trust. The Exemption may apply to the acquisition, holding and resale of
the senior certificates by a Benefit Plan, provided that certain conditions
(certain of which are described below) are met.
Among the conditions which must be satisfied for the Exemption to apply
to the senior certificates are the following:
(1) The acquisition of the senior certificates by a Benefit
Plan is on terms (including the price for the senior certificates) that
are at least as favorable to the Benefit Plan as they would be in an
arm's length transaction with an unrelated party;
(2) The rights and interests evidenced by the senior
certificates acquired by the Benefit Plan are not subordinated to the
rights and interests evidenced by other certificates of the trust;
(3) The senior certificates acquired by the Benefit Plan have
received a rating at the time of such acquisition that is in one of the
three highest generic rating categories from either Standard & Poor's
Rating Services, a division of The McGraw-Hill Companies, Inc., Moody's
Investors Service, Inc., Duff & Phelps Inc. or Fitch IBCA, Inc.;
(4) The trustee is not an affiliate of any other member of the
Restricted Group (as defined below);
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(5) The sum of all payments made to the underwriters in
connection with the distribution of the senior certificates represents
not more than reasonable compensation for underwriting the senior
certificates; the sum of all payments made to and retained by the
seller pursuant to the sale of the receivables to the trust represents
not more than the fair market value of such receivables; and the sum of
all payments made to and retained by any servicer represents not more
than reasonable compensation for that servicer's services under the
sale and servicing agreement or pooling and servicing agreement and
reimbursement of the servicer's reasonable expenses in connection
therewith; and
(6) The Benefit Plan investing in senior certificates is an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D of
the Securities and Exchange Commission under the Securities Act of
1933.
On July 21, 1997, the DOL published in the Federal Register an
amendment to the Exemption, which extends exemptive relief to certain
mortgage-backed and asset-backed securities transactions using pre-funding
accounts for trusts issuing pass-through certificates. The amendment generally
allows mortgage loans or other secured receivables supporting payments to
certificateholders, and having a value equal to no more than twenty-five percent
(25%) of the total principal amount of the certificates being offered by the
trust, to be transferred to the trust within a 90-day or three-month period
following the closing date, instead of requiring that all such receivables be
either identified or transferred on or before the closing date. The relief is
available when certain conditions are met.
The Exemption would also provide relief from certain
self-dealing/conflict of interest prohibited transactions that may occur when
the fiduciary (or its affiliate) is an obligor on receivables held in the trust
only if, among other requirements, (i) in the case of the acquisition of senior
certificates in connection with the initial issuance, at least fifty (50)
percent of the senior certificates are acquired by persons independent of the
Restricted Group (as defined below), (ii) such fiduciary (or its affiliate) is
an obligor with respect to five (5) percent or less of the fair market value of
the obligations contained in the trust, (iii) the Benefit Plan's investment in
senior certificates of any class does not exceed twenty-five (25) percent of all
of the senior certificates of that class outstanding at the time of the
acquisition, and (iv) immediately after the acquisition, no more than
twenty-five (25) percent of the assets of any Benefit Plan with respect to which
the fiduciary has discretionary authority or renders investment advice are
invested in certificates representing an interest in one or more trusts
containing assets sold or serviced by the same entity. The Exemption does not
apply to Benefit Plans sponsored by the seller, any underwriter, the trustee,
any servicer, any obligor with respect to receivables included in the trust
constituting more than five percent of the aggregate unamortized principal
balance of the assets in the trust, or any affiliate of such parties (the
"Restricted Group").
Your prospectus supplement for each series of securities will indicate
the classes of securities, if any, offered thereby to which it is expected that
the Exemption will apply.
Due to the complexities of the "prohibited transaction" rules and the
penalties imposed upon persons involved in prohibited transactions, it is
important that the fiduciary of any Benefit Plan considering the purchase of
securities consult with its tax and/or legal advisors regarding whether the
assets of the related trust would be considered plan assets, the possibility of
exemptive relief from the prohibited transaction rules and other issues and
their potential consequences. Moreover, each Benefit Plan fiduciary should
determine whether, under the general fiduciary standards of investment prudence
and diversification, an investment in the securities is appropriate for the
Benefit Plan, taking into account
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the overall investment policy of the Benefit Plan and the composition of the
Benefit Plan's investment portfolio.
RATINGS OF THE SECURITIES
No trust will sell securities under this prospectus unless one or more
nationally recognized statistical rating organizations rate the offered
securities in one of the four highest rating categories. Any rating that is made
may be lowered or withdrawn by the assigning rating agency at any time if, in
its judgment, circumstances so warrant. If a rating or ratings of securities is
qualified, reduced or withdrawn, no person or entity will be obligated to
provide any additional credit enhancement with respect to the securities so
qualified, reduced or withdrawn.
The ratings of the securities should be evaluated independently from
similar ratings on other types of securities. A rating is not a recommendation
to buy, sell or hold securities, inasmuch as a rating does not comment as to
market price or suitability for a particular investor. The ratings of the
securities do not address the likelihood of payment of principal on any class of
securities prior to the stated maturity date of the securities, or the
possibility of the imposition of United States withholding tax with respect to
non-United States persons.
PLAN OF DISTRIBUTION
Each trust may sell securities to or through underwriters by a
negotiated firm commitment underwriting and public reoffering by the
underwriters, and also may sell securities directly to other purchasers or
through agents. The depositor intends to offer the securities through these
various methods from time to time.
The seller, the depositor and certain of its affiliates may agree to
indemnify the underwriters and agents who participate in the distribution of the
securities against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the underwritten
may be required to make.
Funds in cash collateral accounts and the trust accounts may, from time
to time, be invested in certain investments acquired from the underwriters.
LEGAL MATTERS
Winston & Strawn, Chicago, Illinois, will provide a legal opinion
relating to the securities in its capacity as special counsel to the trust, the
depositor, the seller and the servicer. In addition, certain United States
federal income tax matters will be passed upon for the related trust by Winston
& Strawn. Other legal matters for underwriters will be passed upon by counsel to
underwriters.
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WHERE YOU CAN FIND MORE INFORMATION
Federal securities law requires the filing of certain information with
the Securities and Exchange Commission, including annual, quarterly and special
reports, proxy statements and other information. You can read and copy these
documents at the public reference facility maintained by the Securities and
Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. You can also read and copy the reports, proxy statements
and other information at the following regional offices of the Securities and
Exchange Commission:
New York Regional Office Chicago Regional Office
Seven World Trade Center Citicorp Center
Suite 1300 500 West Madison Street, Suite 1400
New York, NY 10048 Chicago, IL 60661
Please call the Securities and Exchange Commission at 1-800-SEC-0330
for more information about the public reference rooms or visit Securities and
Exchange Commission's web site at http://www.sec.gov to access available
filings.
The Securities and Exchange Commission allows offerors of securities to
incorporate by reference some of the information they file with it. This means
that offerors can disclose important information to you by referring you to
those documents. Documents incorporated by reference will be filed under the
depositor's name. The information that the depositor incorporates by reference
is considered to be part of this prospectus, and later information that the
depositor files with the Securities and Exchange Commission will automatically
update and supersede this information.
All documents filed by the depositor, on behalf of a respective trust,
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
after the date of this prospectus and prior to the termination of the offering
of the securities will be incorporated by reference into this prospectus.
If you are a beneficial owner of the securities to whom a prospectus
has been delivered, the depositor will, on request, send you a copy of the
information that has been incorporated by reference in this prospectus. The
depositor will provide this information at no cost to you. Please address
requests to the depositor: c/o Harley-Davidson Credit Corp., 150 South Wacker
Drive, Chicago, Illinois 60606.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following is an itemized list of the estimated expenses to be incurred in
connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
<TABLE>
<S> <C>
SEC Registration Fee $2,640
Printing and Engraving Expenses $50,000
Trustee's Fees and Expenses $12,500
Legal Fees and Expenses $150,000
Blue Sky Fees and Expenses $10,000
Accountants' Fees and Expenses $30,000
Rating Agency Fees $30,000
Miscellaneous Fees $50,000
-------
Total $325,150
========
</TABLE>
- ---------------------------
* All amounts except the SEC Registration Fee are estimates of expenses
incurred or to be incurred in connection with the issuance and distribution
of the securities in an aggregate principal amount assumed for these
purposes to be equal to $10,000,000 of securities registered hereby.
Item 15. Indemnification of Directors and Officers
The Nevada General Corporation Law gives Nevada corporations broad powers to
indemnify their present and former directors and officers and those affiliated
corporations against expenses incurred in the defense of any lawsuit to which
they are made parties by reason of being or having been such directors or
officers, subject to specified conditions and exclusions; gives a director or
officer who successfully defends an action the right to be so indemnified; and
authorizes said corporation to buy director's and officers' liability insurance.
Such indemnification is not exclusive of any other right to which those
indemnified may be entitled under any bylaw, agreement, vote of stockholders or
otherwise.
The registrant has also purchased liability policies which indemnify the
registrant's officers and directors against loss arising from claims by reason
of their legal liability for acts as officers and directors, subject to
limitations and conditions as set forth in the policies.
Pursuant to agreements which the registrant may enter into with underwriters or
agents (forms of which will be included as exhibits to this registration
statement), officers and directors of the registrant, and affiliates thereof,
may be entitled to indemnification by such underwriters or agents against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended, arising from information which has been or will be furnished to the
registrant by such underwriters or agents that appears in the registration
statement or any prospectus.
Item 16. Exhibits
<TABLE>
EXHIBITS
<S> <C>
1.1 Form of Underwriting Agreement
3.1 Articles of Incorporation of the depositor
<PAGE>
3.2 Bylaws of the depositor
4.1 Form of Trust Agreement (including form of certificate)
4.2 Form of Indenture (including form of notes)
5.1 Opinion of Winston & Strawn with respect to legality
8.1 Opinion of Winston & Strawn with respect to tax matters
10.1 Form of Transfer and Sale Agreement
10.2 Form of Sale and Servicing Agreement
10.3 Form of Pooling and Servicing Agreement
10.4 Form of Administration Agreement
23.1 Consent of Winston & Strawn (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP*
24.1 Power of Attorney (included on signature page)
25.1 Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of indenture trustee*
99.1 Agreement to Deposit Contracts
99.2 Security Agreement
</TABLE>
- ----------------------------------
* To be filed by amendment
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement; or
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offer therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the act and
will be governed by the final adjudication of such issue.
That, for purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
That, for the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3, has reasonable grounds to believe
that the security rating requirement set forth in the section captioned "RATINGS
OF SECURITIES" will be met by the time of sale of the securities and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on May 22, 2000.
Harley-Davidson Customer Funding Corp.
By: /s/ Donna F. Zarcone
--------------------------------
Name: Donna F. Zarcone
Title: President
Know all men by these presents, that each person whose signature
appears below constitutes and appoints Michael E. Sulentic and Perry A. Glassgow
and each of them, as his true and lawful attorney-in-fact and agent, with full
powers of substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this registration statement, and to sign any registration statement for the
same offering covered by this registration statement that is to be effective
upon filing pursuant to Rule 462(b) promulgated under the Securities Act of 1933
(and all post-effective amendments thereto), and to file the same, with all
exhibits thereto and all documents in connection therewith with the Securities
and Exchange Commission granting to said attorney-in-fact power and authority to
perform any other act on behalf of the undersigned required to be done in
connection therewith.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities indicated on May 22, 2000:
SIGNATURE TITLE
/s/ Donna F. Zarcone Director and President
--------------------------- (Principal Executive Officer)
Donna F. Zarcone
/s/ Michael E. Sulentic Chief Financial Officer
--------------------------- (Principal Financial Officer and
Michael E. Sulentic Principal Accounting Officer)
/s/ Steven F. Deli
--------------------------- Director
Steven F. Deli
/s/ Donovan A. Langford, III
--------------------------- Director
Donovan A. Langford, III
/s/ Peter M. Husting
--------------------------- Director
Peter M. Husting
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
1.1 Form of Underwriting Agreement
3.1 Articles of Incorporation of the depositor
3.2 Bylaws of the depositor
4.1 Form of Trust Agreement (including form of certificate)
4.2 Form of Indenture (including form of notes)
5.1 Opinion of Winston & Strawn with respect to legality
8.1 Opinion of Winston & Strawn with respect to tax matters
10.1 Form of Transfer and Sale Agreement
10.2 Form of Sale and Servicing Agreement
10.3 Form of Pooling and Servicing Agreement
10.4 Form of Administration Agreement
23.1 Consent of Winston & Strawn (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP*
24.1 Power of Attorney (included on signature page)
25.1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of
indenture trustee*
99.1 Agreement to Deposit Contracts
99.2 Security Agreement
</TABLE>
- -------------------------------
*To be filed by amendment
<PAGE>
EXHIBIT 1.1
FORM OF
UNDERWRITING AGREEMENT
HARLEY-DAVIDSON MOTORCYCLE TRUST [_______]
$___________ _____% 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
$___________ _____% HARLEY-DAVIDSON MOTORCYCLE CONTRACT
BACKED CERTIFICATES
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
Trust Depositor
HARLEY-DAVIDSON CREDIT CORP.
Seller and Servicer
----------, -----
[Underwriter]
Ladies and Gentlemen:
Harley-Davidson Customer Funding Corp., a Nevada corporation (the
"Trust Depositor") and a wholly-owned subsidiary of Harley-Davidson Credit
Corp., a Nevada corporation ("Harley Credit"), proposes to cause Harley-Davidson
Motorcycle Trust [_______] (the "Trust") to issue and sell to you (the
"Underwriters") $___________ principal amount of its ____% Harley-Davidson
Motorcycle Contract Backed Notes, Class A-1 (the "Class A-1 Notes"), $__________
principal amount of its ____% Harley-Davidson Motorcycle Contract Backed Notes,
Class A-2 (the "Class A-2 Notes"), $__________ principal amount of its ____%
Harley-Davidson Motorcycle Contract Backed Notes, Class B (the "Class B Notes"
and, collectively with the Class A-1 Notes and the Class A-2 Notes, the "Notes")
[and $__________ principal amount of its ____% Harley-Davidson Motorcycle
Contract Backed Certificates (the "Certificates")]. The assets of the Trust will
include a pool of Harley-Davidson motorcycle conditional sales contracts and
Buell Motorcycle Company ("Buell") motorcycle conditional sales contracts (the
"Initial
<PAGE>
Contracts"), certain monies received thereon on and after _______, _____ (the
"Initial Cutoff Date"), all insurance proceeds and liquidation proceeds with
respect thereto, security interests in the motorcycles financed thereby, the
related Initial Contracts files, the Trust Accounts, proceeds of the
foregoing, certain rights with respect to funds on deposit from time to time
in the Reserve Fund and the Pre-Funding Account and certain other property.
The Initial Contracts will be serviced for the Trust by Harley Credit. The
Notes will be issued pursuant to the Indenture to be dated as of _________,
_____ (as amended and supplemented from time to time, the "Indenture")
between the Trust and _______________________, as indenture trustee (the
"Indenture Trustee"). The Notes will be secured by the assets of the Trust
pursuant to the Indenture. The Certificates will be issued pursuant to the
Trust Agreement to be dated as of _________, _____ (as amended and
supplemented from time to time, the "Trust Agreement"), between the Trust
Depositor and ____________________, as owner trustee (the "Owner Trustee").
[The Certificates will represent fractional undivided interests in the Trust.]
The Notes and the Certificates are hereinafter referred to collectively as
the "Offered Securities."
The Trust will acquire the Initial Contracts from the Trust Depositor
pursuant to a Sale and Servicing Agreement to be dated as of ___________, ____
(as amended and supplemented from time to time, the "Sale and Servicing
Agreement"), among the Trust, the Trust Depositor, Harley Credit, as servicer,
and _________________, as Indenture Trustee. Harley Credit will also agree to
perform certain administrative functions on behalf of the Trust pursuant to the
Administration Agreement, dated as of ___________, ____ (as amended and
supplemented from time to time, the "Administration Agreement") among Harley
Credit, as administrator, the Trust and the Indenture Trustee. The Trust
Depositor will acquire the Initial Contracts from Harley Credit on the Closing
Date (as defined herein) pursuant to a Transfer and Sale Agreement to be dated
as of _________, _____ (as amended and supplemented from time to time, the
"Transfer and Sale Agreement") among the Trust Depositor, as purchaser, and
Harley Credit, as seller. All of the assets conveyed to the Trust pursuant to
the Sale and Servicing Agreement are referred to herein as the "Trust Property".
Capitalized terms that are used and not otherwise defined herein shall have the
respective meanings assigned thereto in the Sale and Servicing Agreement.
On the Closing Date (as defined herein) $_____________ will be
deposited in the Pre-Funding Account. It is intended that additional motorcycle
conditional sales contracts, including all rights to receive payments thereon on
or after their related Subsequent Cutoff Dates and security interests in the
Harley-Davidson and Buell motorcycles financed thereby (such contracts, together
with all such rights and interests, the "Subsequent Contracts" and, together
with the Initial Contracts, the "Contracts"), will be purchased by the Trust
Depositor from Harley Credit pursuant to one or more related Subsequent Purchase
Agreements and further transferred and assigned by the Trust Depositor to the
Trust and pledged by the Trust to the Indenture Trustee pursuant to one or more
related Subsequent Transfer Agreements from funds on deposit in the Pre-Funding
Account from time to time on or before the date which is 90 days from and
including the Closing Date.
In connection with the sale of the Offered Securities, the Trust
Depositor and Harley Credit have prepared a Prospectus (as defined herein) dated
_________, _____. The Prospectus sets forth certain information concerning the
Trust Depositor, Harley Credit, the Trust and the Offered Securities. The Trust
Depositor and Harley Credit hereby confirm that they have authorized the use of
the Prospectus, and any amendment or supplement thereto, in connection
2
<PAGE>
with the offer and sale of the Offered Securities by the Underwriters. Unless
stated to the contrary, all references herein to the Prospectus are to the
Prospectus (as defined herein) and are not meant to include any amendment or
supplement thereto.
1. REPRESENTATIONS AND WARRANTIES OF HARLEY CREDIT AND THE TRUST
DEPOSITOR. HARLEY CREDIT and the Trust Depositor jointly and severally represent
and warrant to each Underwriter as set forth below in this Section 1:
(a) The Depositor meets the requirements for use of Form S-3
under the Securities Act of 1933, as amended (the "Act"), and
has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (Registration No.
333-______) on such Form, including a related preliminary base
prospectus and a preliminary prospectus supplement, for the
registration under the Act of the offering and sale of the
Offered Securities. Harley Credit may have filed one or more
amendments thereto, each of which amendments has previously
been furnished to you. Harley Credit will next file with the
Commission (i) prior to the effectiveness of such registration
statement, an amendment thereto (including the form of final
base prospectus and the form of final prospectus supplement
relating to the Offered Securities) or (ii) after the
effectiveness of such registration statement, either (A) a
final base prospectus relating to the Offered Securities in
accordance with Rules 430A and 424(b)(1) or (4) under the Act
or (B) a final base prospectus and a final prospectus
supplement relating to the Offered Securities in accordance
with Rules 415 and 424(b)(2) or (5).
In the case of clauses (ii) (A) and (B) above, Harley Credit
has included in such registration statement, as amended at the
Effective Date (as defined herein), all information (other
than Rule 430A Information) required by the Act and the rules
thereunder to be included in the Prospectus with respect to
the Offered Securities and the offering thereof. As filed,
such amendment and form of final prospectus supplement, or
such final prospectus supplement, shall include all Rule 430A
Information, together with all other required information,
with respect to the Offered Securities and the offering
thereof and, except to the extent that the Underwriters shall
agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not completed at the
Execution Time, shall contain only such specific additional
information and other changes (beyond that contained in the
latest preliminary base prospectus and preliminary prospectus
supplement, if any, that have previously been furnished to
you) as Harley Credit has advised you, prior to the Execution
Time, will be included or made therein. If the Registration
Statement contains the undertaking specified by Regulation S-K
Item 512(a), the Registration Statement, at the Execution
Time, meets the requirements set forth in Rule 415(a)(1)(x).
For purposes of this Agreement, "Effective Time" means the
date and time as of which such registration statement, or the
most recent post-effective amendment thereto, if any, was
declared effective by the Commission, and "Effective Date"
means the date of the Effective Time. "Execution Time" shall
mean the date and
3
<PAGE>
time that this Agreement is executed and delivered by the
parties hereto. Such registration statement, as amended
at the Effective Time, including all information
deemed to be a part of such registration statement as of the
Effective Time pursuant to Rule 430A(b) under the Act, and
including the exhibits thereto and any material incorporated
by reference therein, is hereinafter referred to as the
"Registration Statement." "Base Prospectus" shall mean the
base prospectus referred to in the first paragraph of this
Section 1(a) contained in the Registration Statement at the
Effective Date; PROVIDED, THAT, if the Base Prospectus used in
connection with any Preliminary Prospectus Supplement or the
Prospectus shall differ from the Base Prospectus contained in
the Registration Statement at the Effective Date, then "Base
Prospectus" shall mean the Base Prospectus included with such
Preliminary Prospectus Supplement or the Prospectus, as filed
pursuant to Rule 424(b). "Preliminary Prospectus Supplement"
shall mean a preliminary prospectus supplement, if any, to the
Base Prospectus which describes the Offered Securities and the
offering thereof and is used prior to the filing of the
Prospectus. "Prospectus" shall mean the prospectus supplement
relating to the Offered Securities that is first filed
pursuant to Rule 424(b) after the Execution Time, together
with the Base Prospectus or, if no filing pursuant to Rule
424(b) is required, shall mean the prospectus supplement
relating to the Offered Securities, including the Base
Prospectus, included in the Registration Statement at the
Effective Date including in each such case any material and
documents incorporated by reference therein. "Rule 430A
Information" means information with respect to the Offered
Securities and the offering of the Offered Securities
permitted to be omitted from the Registration Statement when
it becomes effective pursuant to Rule 430A. "Rule 415", "Rule
424", "Rule 430A" and "Regulation S-K" refer to such rules or
regulations under the Act. Any reference herein to the
Registration Statement, the Base Prospectus, a Preliminary
Prospectus Supplement or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 which were filed under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), on or before the Effective Date of the Registration
Statement or the issue date of the Base Prospectus, such
Preliminary Prospectus Supplement or the Prospectus, as the
case may be; and any reference herein to the terms "amend",
"amendment" or "supplement" with respect to the Registration
Statement, the Base Prospectus, any Preliminary Prospectus
Supplement or the Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act
after the Effective Date of the Registration Statement or the
issue date of the Base Prospectus, any Preliminary Prospectus
Supplement or the Prospectus, as the case may be, deemed to be
incorporated therein by reference.
(b) On the Effective Date and on the date of this Agreement,
the Registration Statement did or will, and, when the
Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date, the Prospectus (and any
supplements thereto) will, comply in all material respects
with the applicable requirements of the Act, the Exchange Act
and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the respective rules and regulations
4
<PAGE>
of the Commission thereunder (the "Rules and Regulations"); on
the Effective Date, the Registration Statement did not or will
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectus, if not
filed pursuant to Rule 424(b), did not or will not, and on the
date of any filing pursuant to Rule 424(b) and on the Closing
Date, the Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; PROVIDED, HOWEVER, that
Harley Credit makes no representations or warranties as to the
information contained in or omitted from (x) the Registration
Statement or the Prospectus or any supplement thereto in
reliance upon and in conformity with information furnished in
writing to Harley Credit by or on behalf of the Underwriters
through [______________] specifically for use in connection
with the preparation of the Registration Statement or the
Prospectus or any supplement thereto and (y) any Derived
Information set forth in the Computational Materials (each as
defined in Section 11 below), or in any amendment thereof or
supplement thereto, incorporated by reference in such
Registration Statement or such Prospectus (or any amendment
thereof or supplement thereto) except to the extent such
Derived Information results from an error or omission in any
Seller-Provided Information (as defined in Section 11 below).
(c) It is not necessary to qualify the Trust Agreement under
the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(d) Immediately prior to the assignment of the Initial
Contracts to the Trust as contemplated by the Sale
and Servicing Agreement, the Trust Depositor (i) had good
title to, and was the sole owner of, each Initial Contract and
the other property purported to be transferred by it to the
Trust pursuant to the Sale and Servicing Agreement free and
clear of any pledge, mortgage, lien, security interest or
other encumbrance (collectively, "Liens"), (ii) had not
assigned to any person any of its right, title or interest in
such Contracts or property or in the Transfer and Sale
Agreement and (iii) will have the power and authority to sell
such Contracts and property to the Trust, and upon the
execution and delivery of the Sale and Servicing Agreement by
the Owner Trustee on behalf of the Trust, the Trust will have
acquired all of the Trust Depositor's right, title and
interest in and to such Contracts and property free and clear
of any Lien (except for the Lien of the Indenture).
(e) Upon the execution and delivery of the Transfer and Sale
Agreement, the Sale and Servicing Agreement and the Indenture
by the respective parties thereto and the filing with the
Secretaries of State of Illinois and Nevada of UCC-1 financing
statements evidencing the conveyance of the Initial Contracts
(i) by Harley Credit to the Trust Depositor, (ii) by the Trust
Depositor to the Trust and (iii) by the Trust to the Indenture
Trustee for the benefit of the Noteholders, the Trust's
conveyance of the Trust Property to the Indenture Trustee
pursuant to the
5
<PAGE>
Indenture will vest in the Indenture Trustee, for the benefit
of the Noteholders, a first priority perfected security
interest therein, subject to no prior Lien.
(f) Immediately prior to the assignment of any Subsequent
Contract to the Trust as contemplated by a Subsequent Purchase
Agreement, the Trust Depositor (i) had good title to, and was
the sole owner of, each Subsequent Contract and the other
property purported to be transferred by it to the Trust
pursuant to such Subsequent Purchase Agreement free and clear
of any Liens, (ii) had not assigned to any person any of its
right, title or interest in such Contracts or property or in
the Transfer and Sale Agreement and (iii) will have the power
and authority to sell such Contracts and property to the
Trust, and upon the execution and delivery of such Subsequent
Purchase Agreement by the Owner Trustee on behalf of the
Trust, the Trust will have acquired all of the Trust
Depositor's right, title and interest in and to such Contracts
and property free and clear of any Lien (except for the Lien
of the Indenture).
(g) Upon the execution and delivery of a Subsequent Transfer
Agreement and a Subsequent Purchase Agreement by the
respective parties thereto and the filing with the Secretaries
of State of Illinois and Nevada of UCC-1 financing statements
evidencing the conveyance of such Subsequent Contracts (i) by
Harley Credit to the Trust Depositor, (ii) by the Trust
Depositor to the Trust and (iii) by the Trust to the Indenture
Trustee for the benefit of the Noteholders, the Trust's
conveyance of the Trust Property to the Indenture Trustee
pursuant to the Indenture will vest in the Indenture Trustee,
for the benefit of the Noteholders, a first priority perfected
security interest therein, subject to no prior Lien.
(h) Neither the Trust Depositor nor the Trust is, and neither
the issuance and sale of the Offered Securities nor the
activities of the Trust pursuant to the Indenture or the Trust
Agreement will cause the Trust Depositor or the Trust to be,
an "investment company" or under the "control" of an
"investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment
Company Act").
(i) This Agreement has been duly authorized, executed and
delivered by Harley Credit and the Trust Depositor.
(j) None of Harley Credit, the Trust Depositor, any of their
Affiliates or anyone acting on behalf of Harley Credit, the
Trust Depositor or any of their Affiliates has taken any
action that would require qualification of the Trust Agreement
under the Trust Indenture Act or registration of the Trust
Depositor under the Investment Company Act, nor will Harley
Credit, the Trust Depositor or any of their Affiliates act,
nor have they authorized or will they authorize any person to
act, in such manner.
(k) Neither the Trust Depositor nor Harley Credit is in
violation of any provision of any existing law or regulation
or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
6
<PAGE>
contract, indenture, mortgage, deed of trust, loan agreement,
note, lease or other instrument to which it is a party or by
which it is bound or to which any of its property is subject,
which violations or defaults separately or in the aggregate
would have a material adverse effect on the Trust Depositor,
Harley Credit or the Trust.
(l) Neither the issuance and sale of the Offered Securities,
nor the execution and delivery by the Trust Depositor or
Harley Credit of this Agreement, the Offered Securities, the
Sale and Servicing Agreement, the Transfer and Sale Agreement,
the Trust Agreement, the Administration Agreement, the Lockbox
Agreement, each Subsequent Purchase Agreement, the Indenture
or each Subsequent Transfer Agreement, nor the incurrence by
the Trust Depositor or Harley Credit of the obligations herein
and therein set forth, nor the consummation of the
transactions contemplated hereunder or thereunder, nor the
fulfillment of the terms hereof or thereof does or will (i)
violate any existing law or regulation, applicable to it or
its properties or by which it or its properties are or may be
bound or affected, (ii) conflict with, or result in a breach
of, or constitute a default under, any indenture, contract,
agreement, deed, lease, mortgage or instrument to which it is
a party or by which it or its properties are bound or (iii)
result in the creation or imposition of any lien upon any of
its property or assets, except for those encumbrances created
under the Transfer and Sale Agreement, the Sale and Servicing
Agreement, the Trust Agreement, the Indenture, each Subsequent
Purchase Agreement or each Subsequent Transfer Agreement.
(m) All consents, approvals, authorizations, orders, filings,
registrations or qualifications of or with any court or any
other governmental agency, board, commission, authority,
official or body required in connection with the execution and
delivery by the Trust Depositor and Harley Credit of this
Agreement, the Offered Securities, the Sale and Servicing
Agreement, the Transfer and Sale Agreement, the Trust
Agreement, the Administration Agreement, the Indenture, the
Lockbox Agreement, each Subsequent Purchase Agreement or each
Subsequent Transfer Agreement, or to the consummation of the
transactions contemplated hereunder and thereunder, or to the
fulfillment of the terms hereof and thereof, have been or will
have been obtained on or before the Closing Date (and on or
before each Subsequent Transfer Date in the case of Subsequent
Contracts being transferred to the Trust).
(n) All actions required to be taken by the Trust Depositor
and Harley Credit as a condition to the offer and sale of the
Offered Securities as described herein or the consummation of
any of the transactions described in the Prospectus have been
or, prior to the Closing Date (or each Subsequent Transfer
Date in the case of Subsequent Contracts being transferred to
the Trust), will be taken.
(o) The representations and warranties of each of the Trust
Depositor and Harley Credit in (or incorporated in) the Sale
and Servicing Agreement, the Transfer and Sale Agreement, the
Trust Agreement, the Indenture, the
7
<PAGE>
Administration Agreement, the Lockbox Agreement, each
Subsequent Purchase Agreement and each Subsequent
Transfer Agreement and made in any Officers' Certificate
of the Trust Depositor or Harley Credit delivered
pursuant to the Sale and Servicing Agreement, the
Indenture, the Transfer and Sale Agreement, each
Subsequent Purchase Agreement and each Subsequent
Transfer Agreement will be true and correct at the time
made and on and as of the Closing Date (and on each
Subsequent Transfer Date in the case of Subsequent
Contracts being transferred to the Trust) as if set forth
herein.
(p) The Initial Contracts conveyed to the Trust had aggregate
outstanding balances determined as of the Initial Cutoff Date
in the amount set forth in the Prospectus.
(q) Each of the Trust Depositor and Harley Credit agrees it
shall not grant, assign, pledge or transfer to any Person a
security interest in, or any other right, title or interest
in, the Contracts, except as provided in the Sale and
Servicing Agreement, the Trust Agreement, the Indenture, the
Transfer and Sale Agreement, each Subsequent Purchase
Agreement and each Subsequent Transfer Agreement, and each
agrees to take all action necessary in order to maintain the
security interest in the Contracts granted pursuant to the
Sale and Servicing Agreement, the Trust Agreement, the
Indenture, the Transfer and Sale Agreement, each Subsequent
Purchase Agreement and each Subsequent Transfer Agreement.
(r) There are no actions, proceedings or investigations
pending, or to the best knowledge of either the Trust
Depositor or Harley Credit, threatened against the Trust
Depositor or Harley Credit before any court or before any
governmental authority of arbitration board or tribunal which,
if adversely determined, could materially and adversely
affect, either in the individual or in the aggregate, the
financial position, business, operations or prospects of the
Trust Depositor or Harley Credit.
(s) For Illinois income, franchise and excise tax purposes,
under the provisions of Illinois law as of the Closing Date,
the Trust will not be classified as an association taxable as
a corporation. Each Certificateholder will instead be treated
for Illinois income, franchise and excise tax purposes as the
owner of an interest in the Trust, in conformity with the
federal income tax treatment of such Certificateholder. For
Certificateholders who are not residents of, or otherwise
subject to tax in Illinois, ownership of a Certificate will
not be a factor in determining whether such Certificateholders
are subject to Illinois income, franchise or excise taxes as
the case may be.
(t) Under generally accepted accounting principles, Harley
Credit will report its transfer of the Contracts to the Trust
Depositor pursuant to the Transfer and Sale Agreement as a
sale of the Contracts.
2. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS. Each Underwriter
represents and warrants to, and agrees with, the Trust Depositor that:
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(a) It has not offered or sold, and will not offer or sell, any Offered
Security to persons in the United Kingdom, except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances that have not resulted
and will not result in an offer to the public in the United Kingdom for
the purposes of the Public Offers of Securities Regulation 1995.
(b) It has complied and will comply with all applicable provisions of
the Financial Services Act 1986 with respect to anything done by it in
relation to the Offered Securities in, from or otherwise involving the
United Kingdom.
(c) It has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the
issue of the Offered Securities to a person who is of a kind described
in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or is a person to whom such
document may otherwise lawfully be issued or passed on.
3. PURCHASE AND SALE. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Trust
Depositor agrees to sell to each Underwriter, and each Underwriter agrees to
purchase from the Trust Depositor, each of the Offered Securities in the
principal amounts and at the purchase prices set forth opposite the name of each
Underwriter in Schedule I hereto.
4. DELIVERY AND PAYMENT. Delivery of and payment for the Offered
Securities shall be made at 10:00 AM, Chicago time, on __________, 199__, or
such later date (not later than _________, 199__) as the Underwriters shall
designate, which date and time may be postponed by agreement among the
Underwriters and the Trust Depositor (such date and time of delivery and payment
for the Offered Securities being herein called the "Closing Date"). Delivery of
the Offered Securities shall be made to the Underwriters for the account of the
Underwriters against payment by the Underwriters of the purchase price thereof
payable in same day funds wired to such bank as may be designated by the Trust
Depositor, or such other manner of payment as may be agreed by the Trust
Depositor and the Underwriters. Delivery of the Offered Securities shall be made
at such location as the Underwriters shall reasonably designate at least one
business day in advance of the Closing Date, and payment for the Offered
Securities shall be made at the office of Winston & Strawn, 35 Wacker Drive,
Chicago, Illinois. The Offered Securities shall be registered in such names and
in such denominations as the Underwriters may request not less than three full
business days in advance of the Closing Date.
The Trust Depositor agrees to authorize and direct the Trustee to have
the Offered Securities available for inspection, checking and packaging by the
Underwriters in New York, New York, not later than 1:00 PM on the business day
prior to the Closing Date.
5. OFFERING BY THE UNDERWRITERS: It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public
(which may include selected dealers), as set forth in the Prospectus.
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6. AGREEMENTS. The Trust Depositor and Harley Credit, jointly and
severally, agree with the Underwriters that:
(a) Harley Credit and the Trust Depositor will use their
respective best efforts to cause the Registration Statement,
and any amendment thereto, if not effective at the Execution
Time, to become effective. Prior to the termination of the
offering of the Offered Securities, Harley Credit will not
file any amendment of the Registration Statement or supplement
to the Prospectus unless Harley Credit has furnished you a
copy for your review prior to filing and will not file any
such proposed amendment or supplement to which you reasonably
object. Subject to the foregoing sentence, if the Registration
Statement has become or becomes effective pursuant to Rule
430A, or filing of the Prospectus is otherwise required under
Rule 424(b), Harley Credit will file the Prospectus, properly
completed, and any supplement thereto, with the Commission
pursuant to and in accordance with the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide
evidence satisfactory to you of such timely filing.
(b) Harley Credit will advise you promptly of any
proposal to amend or supplement the Registration
Statement, as filed, or the Prospectus and will not
effect such amendment or supplement without your consent,
which consent will not unreasonably be delayed or
withheld; Harley Credit will also advise you promptly of
any request by the Commission for any amendment of or
supplement to the Registration Statement or the
Prospectus or for any additional information; and Harley
Credit will also advise you promptly of the effectiveness
of the Registration Statement (unless the Registration
Statement has become effective prior to Execution Time)
and any amendment thereto, when the Prospectus, and any
supplement thereto, shall have been filed with the
Commission pursuant to Rule 424(b) and of the issuance by
the Commission of any stop order suspending the
effectiveness of the Registration Statement or the
institution or threat of any proceeding for that purpose,
and Harley Credit will use its best efforts to prevent
the issuance of any such stop order and to obtain as soon
as possible the lifting of any issued stop order.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act, any
event occurs as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is
necessary at any time to amend the Registration Statement or
supplement the Prospectus to comply with the Act or the
Exchange Act or the respective rules thereunder, Harley Credit
promptly will notify you and will prepare and file, or cause
to be prepared and filed, with the Commission, subject to the
second sentence of paragraph (a) of this Section 6, an
amendment or supplement that will correct such statement or
omission or effect such compliance. Any such filing shall not
operate as a waiver or limitation of any right of the
Underwriters hereunder.
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(d) As soon as practicable, but not later than fourteen months
after the Closing Date, the Trust Depositor will cause the
Trust to make generally available to holders of the Offered
Securities an earning statement of the Trust covering a period
of at least twelve months beginning after the Closing Date
that will satisfy the provisions of Section 11(a) of the Act.
(e) Harley Credit will furnish to the Underwriters copies of
the Registration Statement (one of which will be signed and
will include all exhibits), each related preliminary
prospectus (including the Preliminary Prospectus Supplement,
if any), the Prospectus and all amendments and supplements to
such documents, in each case as soon as available and in such
quantities as the Underwriters request. Harley Credit will pay
the expenses of printing or other production of all documents
relating to the offering.
(f) The Trust Depositor or Harley Credit will furnish to the
Underwriters and to Counsel for the Underwriters, without
charge, during the period referred to in paragraph (c) below,
as many copies of the Prospectus and any amendments and
supplements thereto as the Underwriters may reasonably
request. The Trust Depositor will pay the expenses of printing
or other production of all documents relating to the offering.
(g) The Trust Depositor will arrange for the qualification of
the Offered Securities for sale by the Underwriters under the
laws of such jurisdictions as the Underwriters may designate
and will maintain such qualifications in effect so long as
required for the sale of the Offered Securities. The Trust
Depositor will promptly advise the Underwriters of the receipt
by the Trust Depositor of any notification with respect to the
suspension of the qualification of the Offered Securities for
sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose.
(h) The Trust Depositor and Harley Credit will cooperate with
the Underwriters and use their best efforts to permit the
Offered Securities to be eligible for clearance and settlement
through The Depository Trust Company.
(i) For a period from the date of this Agreement until the
retirement of the Offered Securities, the Servicer will
deliver to you the monthly servicing report, the annual
statements of compliance and the annual independent certified
public accountants' reports furnished to the Indenture Trustee
or the Owner Trustee pursuant to the Sale and Servicing
Agreement, the Indenture, the Trust Agreement or the
Administration Agreement, as soon as such statements and
reports are furnished to the Indenture Trustee or the Owner
Trustee.
(j) So long as any of the Offered Securities is outstanding,
Harley Credit will furnish to you (i) as soon as practicable
after the end of the fiscal year all documents required to be
distributed to holders of Offered Securities or filed with the
Commission pursuant to the Exchange Act or any order of the
Commission thereunder and (ii) from time to time, any other
information concerning Harley
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Credit or the Trust Depositor filed with any government
or regulatory authority that is otherwise publicly
available, as you may reasonably request.
(k) To the extent, if any, that the rating provided with
respect to the Offered Securities by Moody's Investors
Service, Inc. ("Moody's") or Standard & Poor's Ratings Service
("S&P" and together with Moody's, the "Rating Agencies") is
conditional upon the furnishing of documents or the taking of
any actions by the Trust Depositor, the Trust Depositor shall
furnish such documents and take such actions.
(l) Until 30 days following the Closing Date, neither the
Trust Depositor nor any trust or other entity originated,
directly or indirectly, by the Trust Depositor or Harley
Credit will, without the prior written consent of the
Underwriters, offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering
of, any asset-backed securities collateralized by motorcycle
contracts originated in the United States (other than the
Offered Securities).
(m) The Trust Depositor will enter into the Trust Agreement,
Harley Credit will enter into the Administration Agreement,
the Trust Depositor, Harley Credit, the Indenture Trustee and
the Trust will enter into the Sale and Servicing Agreement and
Harley Credit and the Trust Depositor will enter into the
Transfer and Sale Agreement on or prior to the Closing Date.
(n) Harley Credit will cause any Computational Materials (as
defined in Section 11 hereof) with respect to the Offered
Securities which are delivered by the Underwriters to Harley
Credit pursuant to Section 11 hereof to be filed with the
Commission on a Current Report on Form 8-K on or before the
date of the filing of the Prospectus pursuant to Rule 424.
(o) The Trust Depositor and Harley Credit will cause Winston &
Strawn to deliver to the Underwriters or on before each
Subsequent Transfer Date, one or more opinions, addressed to
the Underwriters, with respect to the transfer of Subsequent
Contracts substantially in the form of the opinions delivered
by Winston & Strawn on the Closing Date with respect to the
transfer of the Initial Contracts.
(p) The Trust Depositor will deliver to the Underwriters on or
before each Subsequent Transfer Date each Officer's
Certificate required to be furnished to the Indenture Trustee
pursuant to Section 2.04(b) of the Sale and Servicing
Agreement.
7. PAYMENT OF EXPENSES, ETC. If the transactions contemplated by this
Agreement are consummated or this Agreement is terminated pursuant to Section
12, the Trust Depositor will pay all expenses incident to the performance of its
obligations under this Agreement, including (i) the printing and filing of the
Registration Statement as originally filed and of each amendment thereto, (ii)
the printing of the Preliminary Prospectus Supplement, the Prospectus and each
amendment thereto, (iii) the fees of the Trustee and its counsel, (iv) the
preparation,
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issuance and delivery of the Offered Securities to the Underwriters, (v) the
fees and disbursements of the Trust Depositor's accountants, (vi) the
qualification of the Offered Securities under securities laws in accordance
with the provisions of Section 6(g), including filing fees in connection
therewith, (vii) the printing and delivery to the Underwriters of copies of
the Registration Statement as originally filed and of each amendment thereto,
(vii) the printing and delivery to the Underwriters of copies of the
Prospectus and of each amendment thereto, (ix) the printing and delivery to
the Underwriters of copies of any blue sky or legal investment survey
prepared in connection with the Offered Securities and (x) any fees charged
by Rating Agencies for the rating of the Offered Securities.
8. CONDITIONS TO THE OBLIGATION OF THE UNDERWRITERS. The obligation of
the Underwriters to purchase the Offered Securities shall be subject to the
accuracy of the representations and warranties on the part of the Trust
Depositor and Harley Credit contained herein at the Execution Time and the
Closing Date, to the accuracy of the statements of the Trust Depositor and
Harley Credit made in any certificates pursuant to the provisions hereof, to the
performance by the Trust Depositor and Harley Credit of their respective
obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Underwriters agree in
writing to a later time, the Registration Statement shall have
become effective not later than (i) 6:00 P.M. New York City
time on the date of determination of the public offering
price, if such determination occurs at or prior to 3:00 P.M.
New York City time on such date or (ii) 12:00 noon New York
City time on the business day following the day on which the
public offering price was determined, if such determination
occurs after 3:00 P.M. New York City time on such date.
(b) The Prospectus and any supplements thereto shall have been
filed (if required) with the Commission in accordance with the
Rules and Regulations and Sections 1(a) and 1(b) hereof, and
prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Trust Depositor or you,
shall be contemplated by the Commission or by any authority
administering any state securities or blue sky law.
(c) The Trust Depositor shall have furnished to the
Underwriters the opinion of Winston & Strawn, counsel for the
Trust Depositor, dated the Closing Date and satisfactory in
form and substance to the Underwriters and Counsel for the
Underwriters, to the effect that:
(i) the Trust Depositor has been duly incorporated
and is validly existing as a corporation in good standing
under the laws of the State of Nevada, with full corporate
power and authority to own its properties and conduct its
business as described in the Prospectus, and is duly qualified
to do business as a foreign corporation and is in good
standing under the laws of the State of Illinois;
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(ii) each of the Transfer and Sale Agreement, the
Sale and Servicing Agreement and the Trust Agreement have been
duly authorized, executed and delivered by the Trust
Depositor, and constitutes a legal, valid and binding
obligation of the Trust Depositor enforceable against the
Trust Depositor in accordance with its terms (subject, as to
the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in effect);
(iii) this Agreement has been duly authorized,
executed and delivered by the Trust Depositor;
(iv) The direction by the Trust Depositor to the
Owner Trustee to authenticate the Certificates has been duly
authorized by the Trust Depositor and, when the Certificates
have been duly executed, authenticated and delivered by the
Owner Trustee in accordance with the Trust Agreement and
delivered and paid for to the Trust Depositor pursuant to the
Sale and Servicing Agreement, the Certificates will be validly
issued and outstanding and entitled to the benefits of the
Trust Agreement;
(v) The direction by the Trust Depositor to the
Indenture Trustee to authenticate the Notes has been duly
authorized by the Trust Depositor and, when the Notes have
been duly executed and delivered by the Owner Trustee and when
authenticated by the Indenture Trustee in accordance with the
Indenture and delivered and paid for pursuant to this
Agreement, the Notes will constitute legal, valid and binding
obligations of the Trust (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditor's
rights generally from time to time in effect) and will be
entitled to the benefits of the Indenture;
(vi) no consent, approval, authorization or order of,
or filing with, any court or governmental agency or body is
required for the consummation of the transactions contemplated
herein or in the Transfer and Sale Agreement, the Sale and
Servicing Agreement, and the Indenture (collectively, the
"Basic Documents"), except such as may be required under the
blue sky or securities laws of any jurisdiction in connection
with the purchase and sale of the Offered Securities by the
Underwriters, the filing of the UCC-1 financing statements
relating to the conveyance of the Contracts by Harley Credit
to the Trust Depositor and of the Contracts and the other
Trust Property by the Trust Depositor to the Trust and by the
Trust to the Indenture Trustee on behalf of the Noteholders,
and such other approvals (which shall be specified in such
opinion) as have been obtained and filings as have been made
or are in the process of being made;
(vii) none of the sale of the Contracts by Harley
Credit to the Trust Depositor pursuant to the Transfer and
Sale Agreement, the sale of the Trust Property to the Trust
pursuant to the Sale and Servicing Agreement, the pledge of
the Trust Property to the Indenture Trustee, the issue and
sale of the Notes or the
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Certificates, the execution and delivery of this
Agreement, the Sale and Servicing Agreement, the Transfer
and Sale Agreement, the Trust Agreement or the Indenture
Agreement, the consummation of any other of the
transactions herein or therein contemplated or the
fulfillment of the terms hereof or thereof will conflict
with, result in a breach or violation of, or constitute a
default under, any law binding on the Trust Depositor or
the charter or bylaws of the Trust Depositor or the terms
of any indenture or other agreement or instrument known
to such counsel and to which the Trust Depositor is a
party or by which it is bound, or any judgment, order or
decree known to such counsel to be applicable to the
Trust Depositor of any court, regulatory body,
administrative agency, governmental body or arbitrator
having jurisdiction over the Trust Depositor;
(viii) there are no actions, proceedings or
investigations pending or, to the best of such counsel's
knowledge after due inquiry, threatened before any court,
administrative agency or other tribunal (A) asserting the
invalidity of any of the Basic Documents, (B) seeking to
prevent the consummation of any of the transactions
contemplated by any of the Basic Documents or the execution
and delivery thereof or (C) that might materially and
adversely affect the performance by the Trust Depositor of its
obligations under, or the validity or enforceability of, this
Agreement or any Basic Document;
(ix) to the best knowledge of such counsel and except
as set forth in the Prospectus, no default exists and no event
has occurred which, with notice, lapse of time or both, would
constitute a default in the due performance and observance of
any term, covenant or condition of any agreement to which the
Trust Depositor is a party or by which it is bound, which
default is or would have a material adverse effect on the
financial condition, earnings, prospects, business or
properties of the Trust Depositor, taken as a whole;
(x) the provisions of the Transfer and Sale Agreement
are effective to transfer to the Trust Depositor all right,
title and interest of Harley Credit in and to the Contracts,
and to the knowledge of such counsel, the other Trust Property
will be owned by the Trust Depositor free and clear of any
Lien except for the Lien of the Sale and Servicing Agreement
and the Indenture;
(xi) the provisions of the Sale and Servicing
Agreement are effective to transfer to the Trust all right,
title and interest of the Trust Depositor in and to the
Collateral and the Contracts and to the knowledge of such
counsel, the other Collateral, will be owned by the Trust free
and clear of any Lien except for the Lien of the Indenture;
(xii) the provisions of the Indenture are effective
to create, in favor of the Indenture Trustee for the benefit
of the Noteholders as security for the Trust's obligations
under the Notes, a valid security interest in the Contracts
and that portion of the other Collateral which is subject to
Article 9 of the Illinois Uniform Commercial Code (the "UCC
Collateral") and the proceeds thereof;
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(xiii) the form UCC-1 financing statements naming (A)
Harley Credit as seller and the Trust Depositor as purchaser,
(B) the Trust Depositor as seller and the Trust as purchaser
and (C) the Trust, as debtor, and the Indenture Trustee, as
secured party are in appropriate form for filing with the
Secretary of State of the State of Nevada, the Secretary of
State of the State of Illinois; the interest of the Indenture
Trustee in the Contracts and the proceeds thereof and, to the
extent that the filing of a financing statement is effective
to perfect an interest in the other Trust Property under
Article 9 of the Illinois Uniform Commercial Code and the
Nevada Uniform Commercial Code, the other Trust Property will
be perfected upon the filing of such financing statements in
such filing offices; and no other interest of any other
purchaser from or creditor of Harley Credit, the Trust
Depositor or the Trust is equal or prior to the interest of
the Trustee in the Contracts and such other Trust Property;
(xiv) the Contracts are "chattel paper" under Article
9 of the Illinois Uniform Commercial Code and the Nevada
Uniform Commercial Code;
(xv) the Basic Documents conform in all material
respects with the descriptions thereof contained in the
Prospectus;
(xvi) the statements in the Prospectus under the
headings "Risk Factors" and "Certain Legal Aspects of the
Contracts", to the extent they constitute matters of law or
legal conclusions with respect thereto, have been reviewed by
such counsel and are correct in all material respects;
(xvii) the statements contained in the Prospectus
under the headings "Description of the Notes", "Description of
the Certificates" and "Certain Information Regarding the
Offered Securities", insofar as such statements constitute a
summary of the Offered Securities and the Basic Documents,
constitute a fair summary of such documents;
(xviii) the Indenture has been duly qualified under
the Trust Indenture Act of 1939, as amended;
(xix) the Trust has been duly formed and is validly
existing as a statutory business trust and is in good standing
under the laws of the State of Delaware, with full power and
authority to execute, deliver and perform its obligations
under the Sale and Servicing Agreement, the Indenture, the
Administration Agreement, and the Notes and the Certificates;
(xx) the Indenture, the Sale and Servicing Agreement
and the Administration Agreement have been duly authorized
and, when duly executed and delivered by the Owner Trustee,
will constitute the legal, valid and binding obligations of
the Trust, enforceable against the Trust in accordance with
their terms, except (A) the enforceability thereof may be
subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights and (B) the remedy of specific performance
and
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injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought;
(xxi) the Trust Depositor is not, nor will the Trust
Depositor become as a result of the offer and sale of the
Offered Securities as contemplated in the Prospectus and the
Basic Documents, an "investment company" as defined in the
Investment Company Act or a company "controlled by" an
"investment company" within the meaning of the Investment
Company Act;
(xxii) to the best knowledge of such counsel, the
Trust Depositor has obtained all material licenses, permits
and other governmental authorizations that are necessary to
the conduct of its business; such licenses, permits and other
governmental authorizations are in full force and effect, and
the Trust Depositor is in all material respects complying
therewith; and the Trust Depositor is otherwise in compliance
with all laws, rules, regulations and statutes of any
jurisdiction to which it is subject, except where
non-compliance would not have a material adverse effect on the
Trust Depositor;
(xxiii) all actions required to be taken, and all
filings required to be made, by the Trust Depositor or Harley
Credit under the Act and the Exchange Act prior to the sale of
the Offered Securities have been duly taken or made;
(xxiv) to the best of such counsel's knowledge and
information, there are no legal or governmental proceedings
pending or threatened that are required to be disclosed in the
Registration Statement, other than those disclosed therein;
(xxv) to the best of such counsel's knowledge and
information, there are no contracts, indentures, mortgages,
loan agreements, notes, leases or other instruments required
to be described or referred to in the Registration Statement
or to be filed as exhibits thereto other than those described
or referred to therein or filed or incorporated by reference
as exhibits thereto, the descriptions thereof or references
thereto are correct, and no default exists in the due
performance or observance of any material obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument so described, referred to, filed or incorporated by
reference;
(xxvi) the Registration Statement has become
effective under the Act, any required filings of the Base
Prospectus, any preliminary Base Prospectus, any Preliminary
Prospectus Supplement and the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) have been made in the manner
and within the time period required by Rule 424(b), and, to
the best knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement has been
issued, and no proceedings for that purpose have been
instituted or are pending or contemplated under the Act, and
the Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective
effective or issue dates, complied as to form in all material
respects with the requirements of
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the Act, the Exchange Act, the Trust Indenture Act and the
Rules and Regulations; and
(xxvii) such counsel has examined the Registration
Statement and the Prospectus and nothing has come to such
counsel's attention that would lead such counsel to believe
that the Registration Statement (exclusive of any
Computational Materials or any financial, numerical and
statistical information contained therein or omitted
therefrom, as to which such counsel may make no statement), at
the time the Registration Statement became effective,
contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or
that the Prospectus (exclusive of any Computational Materials
or any financial, numerical and statistical information
contained therein or omitted therefrom, as to which such
counsel may make no statement), at the date thereof or at the
Closing Date, included or includes any untrue statement of a
material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
Such counsel shall also state that such counsel has no reason to
believe that at the Execution Time the Prospectus contained an untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading or that, at the Closing Date, the Prospectus includes
an untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Illinois, the State of New York, the State of Delaware or the United States, to
the extent such counsel deems proper and specifies in such opinion, upon the
opinion of other counsel of good standing whom such counsel believes to be
reliable and who are satisfactory to Counsel for the Underwriters and (B) as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Trust Depositor and public officials.
All references in this Section 8(c) to the Prospectus shall be deemed
to include any amendment or supplement thereto at the Closing Date.
(d) The Underwriters shall have received the opinion of
______________., General Counsel for Harley Credit, dated the
Closing Date and satisfactory in form and substance to the
Underwriters and to Counsel for the Underwriters, to the
effect that:
(i) Harley Credit is duly qualified to do business as
a foreign corporation and is in good standing under the laws
of each jurisdiction wherein it owns or leases material
properties or conducts material business and which requires
such qualification;
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(ii) Harley Credit has obtained all material
licenses, permits and other governmental authorizations that
are necessary to the conduct of its business; such licenses,
permits and other governmental authorizations are in full
force and effect, and Harley Credit is in all material
respects complying therewith and Harley Credit is otherwise in
compliance with all laws, rules, regulations and statutes of
any jurisdiction to which it is subject, except where
non-compliance would not have a material adverse effect on
Harley Credit;
(iii) none of the execution and delivery of this
Agreement or the Transfer and Sale Agreement, the consummation
of any of the transactions therein contemplated or the
fulfillment of the terms thereof will conflict with, result in
a breach or violation of, or constitute a default under, any
law or the charter or bylaws of Harley Credit or the terms of
any indenture or other agreement or instrument known to such
counsel and to which Harley Credit or the Trust Depositor is a
party or by which it is bound or any judgment, order or decree
known to such counsel to be applicable to Harley Credit or the
Trust Depositor of any court, regulatory body, administrative
agency, governmental body, or arbitrator having jurisdiction
over Harley Credit or the Trust Depositor.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Illinois or the United States, to the extent such counsel deems proper and
specifies in such opinion, upon the opinion of other counsel of good standing
whom such counsel believes to be reliable and who are satisfactory to Counsel
for the Underwriters and (B) as to matters of fact, to the extent such counsel
deems proper, on certificates of responsible officers of Harley Credit and
public officials.
(e) The Underwriters shall have received the opinion of
Winston & Strawn, counsel for Harley Credit, dated the Closing
Date and satisfactory in form and substance to the
Underwriters and to Counsel for the Underwriters, to the
effect that:
(i) Harley Credit has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Nevada, with full corporate power and
authority to own its properties and conduct its business as
described in the Prospectus;
(ii) this Agreement has been duly authorized,
executed and delivered by Harley Credit;
(iii) the Sale and Servicing Agreement has been duly
authorized, executed and delivered by Harley Credit and
constitutes a legal, valid and binding obligation of Harley
Credit, enforceable against Harley Credit in accordance with
its terms (subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium,
or other laws affecting creditors' rights generally from time
to time in effect);
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(iv) the Transfer and Sale Agreement has been duly
authorized, executed and delivered by Harley Credit and
constitutes a legal, valid and binding obligation of Harley
Credit, enforceable against Harley Credit in accordance with
its terms (subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium,
or other laws affecting creditors' rights generally from time
to time in effect);
(v) no consent, approval, authorization or order of,
or filing with, any court or governmental agency or body is
required for the consummation of the transactions contemplated
herein or in any Basic Document, except such as may be
required under the blue sky or securities laws of any
jurisdiction in connection with the purchase and sale of the
Offered Securities by the Underwriters, the filing of the
UCC-1 financing statements relating to the conveyance of the
Contracts by Harley Credit to the Trust Depositor pursuant to
the Transfer and Sale Agreement and of the Contracts and other
Trust Property to the Trust and of the Contracts and other
Trust Property to the Indenture Trustee for the benefit of the
Noteholders pursuant to the Sale and Servicing Agreement, the
Trust Agreement and the Indenture, and such other approvals
(which shall be specified in such opinion) as have been
obtained and filings as have been made or are in the process
of being made; and
(vi) none of the execution and delivery of this
Agreement, the Sale and Servicing Agreement, the Transfer and
Sale Agreement, the consummation of any of the transactions
therein contemplated or the fulfillment of the terms thereof
will conflict with, result in a breach or violation of, or
constitute a default under, the charter or bylaws of Harley
Credit.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
New York, the State of Delaware, the State of Illinois or the United States, to
the extent such counsel deems proper and specifies in such opinion, upon the
opinion of other counsel of good standing whom such counsel believes to be
reliable and who are satisfactory to Counsel for the Underwriters and (B) as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of Harley Credit and public officials.
All references in this Section 8(e) to the Prospectus shall be deemed
to include any amendment or supplement thereto at the Closing Date.
(f) The Underwriters shall have received an opinion addressed
to it of Winston & Strawn, in its capacity as federal tax
counsel for the Trust Depositor, to the effect that the
statements in the Prospectus under the headings "Summary --
Tax Status" and "Federal Income Tax Consequences" accurately
describe the material federal income tax consequences to
holders of the Offered Securities. Winston & Strawn, in its
capacity as special ERISA counsel to the Trust Depositor,
shall have delivered an opinion to the effect that the
statements in the Prospectus under the headings "Summary --
ERISA Considerations" and "ERISA Considerations", to the
extent that they constitute statements of matters
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of law or legal conclusions with respect thereto, have
been prepared or reviewed by such counsel and accurately
describe the material consequences to holders of the
Offered Securities under ERISA.
(g) The Underwriters shall have received from Counsel for the
Underwriters such opinion or opinions, dated the Closing Date,
with respect to the issuance and sale of the Offered
Securities, the Prospectus (as amended or supplemented at the
Closing Date) and other related matters as the Underwriters
may reasonably require, and the Trust Depositor shall have
furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
(h) The Underwriters shall have received an opinion addressed
to the Underwriters, the Trust Depositor and the Servicer of
_____________________, counsel to the Owner Trustee and
special Delaware counsel for the Trust, dated the Closing Date
and satisfactory in form and substance to the Underwriters and
Counsel for the Underwriters, to the effect that:
(i) The Trust has been duly organized and is validly
existing in good standing as a "business trust" within the
meaning of the Delaware Business Trust Act, 12 Del. C. c.38.
(ii) The Trust Company is a Delaware banking
corporation, duly organized and validly existing in good
standing under the laws of the State of ___________ and has
all necessary power and authority to enter into, to deliver
and perform its obligations under the Trust Agreement and to
act as the Owner Trustee and to enter into, deliver and
perform its obligations as Owner Trustee under each of the
other Operative Documents to which the Trust or the Owner
Trustee, as the case may be, is a party.
(iii) The execution, delivery and performance by the
Trust of each of the Operative Documents to which it is a
party (i) has been duly authorized by the Trust Agreement, and
(ii) does not require the consent or approval of, or the
giving of notice to, the registration with, or the taking of
any other action in respect of any governmental authority or
agency of the United States federal government or the State of
Delaware regulating the banking and trust powers of the Trust
Company, other than the filing with the Secretary of State of
a certificate of trust pursuant to 12 Del.C. Section 3810,
which filing has been made. Upon the due execution and
delivery of the Trust Agreement by the Trust Company, the
Trust Agreement duly authorizes the Trust Company, acting
alone, to execute and deliver, on behalf of the Trust, each of
the Operative Documents.
(iv) The Trust Agreement and each other Operative
Document to which the Trust is a party have been duly
authorized, executed and delivered by the Trust, and the Trust
Agreement and each such other Operative Document to the extent
entered into by the Trust constitutes a legal, valid and
binding obligation of the Trust, enforceable against the Trust
in accordance with the terms thereof. The
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Trust Agreement constitutes the legal, valid and binding
obligation of the Trust Company enforceable against the
Trust Company in accordance with its terms.
(v) To the knowledge of such counsel, no litigation,
investigation or proceeding of or before any arbitrator,
court, tribunal or governmental authority is pending or
threatened by or against the Trust or the Trust Company (a)
with respect to any of the Operative Documents or any of the
transactions contemplated thereby, or (b) which if determined
adversely against the Trust or the Trust Company, as the case
may be, individually or in the aggregate, would materially and
adversely affect the Trust Estate or the validity of, or the
right, power or authority of the Trust to enter into or
perform its obligations under, the Operative Documents.
(vi) To the knowledge of such counsel, there exist no
liens affecting the interests of the Trust in and to the Trust
Estate resulting from acts or omissions to act of or claims
against the Trust, except liens created by the Operative
Documents.
(vii) Neither the execution and delivery by the Trust
Company or the Trust, as the case may be, of the Operative
Documents, nor the fulfillment of or compliance by the Trust
Company or the Trust, as the case may be, with the respective
provisions thereof, conflicts with, or results in a breach of
the terms, conditions or provisions of, or constitutes a
default under, or results in a violation of, the charter or
by-laws of the Trust Company, any law of the State of Delaware
or any federal law of the United States of America governing
the banking and trust powers of the Trust Company or, to the
best knowledge of such counsel, any agreement, indenture,
instrument, order, judgment or decree to which the Trust
Company, the Trust or any of their respective properties is
subject.
(viii) Insofar as Article 9 of the Uniform Commercial
Code as in effect in the State of Delaware (the "UCC") is
applicable (without regard to conflict of laws principles),
and assuming that the security interest in Harley Credit's
rights in the Contracts and the proceeds thereof that may be
perfected under the UCC solely by the filing of a financing
statement with the Secretary of State (the "Harley Credit
Collateral"), has been duly created and has attached, upon the
filing of the Harley Credit Financing Statement with the
Secretary of State, the Trust Depositor will have a perfected
security interest in all right, title and interest of Harley
Credit in the Harley Credit Collateral identified in the
Harley Credit Financing Statement.
(ix) Insofar as Article 9 of the UCC is applicable
(without regard to conflict of laws principles), and assuming
that the security interest in the Trust Depositor's rights in
the Contracts and the proceeds thereof that may be perfected
under the UCC solely by the filing of a financing statement
with the Secretary of State (the "Trust Depositor
Collateral"), has been duly created and has attached, upon the
filing of the Trust Depositor Financing Statement with the
Secretary of State, the Trust will have a perfected security
interest in all right, title and interest
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of the Trust Depositor in the Trust Depositor Collateral
identified in the Trust Depositor Financing Statement.
(x) Insofar as Article 9 of the UCC is applicable
(without regard to conflict of laws principles), and assuming
that the security interest in the Trust's rights in the
Contracts and the proceeds thereof that may be perfected under
the UCC solely by the filing of a financing statement with the
Secretary of State (the "Trust Collateral"), has been duly
created and has attached, upon the filing of the Trust
Financing Statement with the Secretary of State, the Indenture
Trustee will have a perfected security interest in all right,
title and interest of the Trust in the Trust Collateral
identified in the Trust Financing Statement.
(xi) Under 12 Del. C. Sections 3805(b), no creditor
of any Certificateholder (including creditors of the Trust
Depositor, as Certificateholder) shall have any right to
obtain possession of, or otherwise exercise legal or equitable
remedies with respect to, the property of the Trust.
(xii) the Certificates have been duly authorized,
executed and authenticated by the Owner Trustee on behalf of
the Trust and, when the Certificates have been issued and
delivered in accordance with the instructions of the Trust
Depositor, the Certificates will be validly issued and
entitled to the benefits of the Trust Agreement.
(i) The Underwriters shall have received an opinion addressed
to the Underwriters and the Trust Depositor of
____________________, counsel to ____________________________
(the "Bank"), dated the Closing Date and satisfactory in form
and substance to the Underwriters and Counsel for the
Underwriters, to the effect that:
(i) the Bank is a banking corporation duly
incorporated and validly existing under the laws of the State
of __________;
(ii) the Bank has the full corporate trust power to
accept the office of Indenture Trustee under the Indenture and
to enter into and perform its obligations under the Indenture
and the Sale and Servicing Agreement;
(iii) the execution and delivery of the Indenture,
the Sale and Servicing Agreement and the performance by the
Bank of its obligations under the Indenture and the Sale and
Servicing Agreement have been duly authorized by all necessary
corporate action of the Bank and each has been duly executed
and delivered by the Bank;
(iv) the Indenture and the Sale and Servicing
Agreement constitute valid and binding obligations of the Bank
enforceable against the Bank in accordance with their terms
under the laws of the State of _________ and the federal law
of the United States;
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(v) the execution and delivery by the Bank of the
Indenture and the Sale and Servicing Agreement do not require
any consent, approval or authorization of, or any registration
or filing with, any ___________ or United States federal
governmental authority;
(vi) each of the Notes has been duly authenticated by
the Bank, as Indenture Trustee;
(vii) neither the consummation by the Bank of the
transactions contemplated in the Indenture or the Sale and
Servicing Agreement nor the fulfillment of the terms thereof
by the Bank will conflict with, result in a breach or
violation of, or constitute a default under, any law or the
charter, bylaws or other organizational documents of the Bank,
or the terms of any indenture or other agreement or instrument
known to such counsel and to which the Bank or any of its
subsidiaries is a party or by which it is bound, or any
judgment, order or decree known to such counsel to be
applicable to the Bank or any of its subsidiaries of any
court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over the Bank or any of
its subsidiaries;
(viii) to the knowledge of such counsel there is no
action, suit or proceeding pending or threatened against the
Bank (as Indenture Trustee under the Indenture or in its
individual capacity) before or by any governmental authority
that, if adversely decided, would materially and adversely
affect the ability of the Bank to perform its obligations
under the Indenture or the Sale and Servicing Agreement; and
(ix) the execution and delivery by the Bank of, and
the performance by the Bank of its obligations under, the
Indenture and the Sale and Servicing Agreement will not
subject any of the property or assets of the Trust, or any
portion thereof, to any lien created by or arising under the
Bank that are unrelated to the transactions contemplated in
such Agreements.
(j) The Underwriters shall have received such opinions,
addressed to the Underwriters and dated the Closing Date, as
are delivered to the Rating Agencies.
(k) The Underwriters shall have received an opinion from
Winston & Strawn, counsel for the Trust Depositor, dated the
Closing Date and satisfactory in form and substance to the
Underwriters and Counsel for the Underwriters regarding 1) the
true-sale of the Contracts by Harley Credit to the Trust
Depositor and 2) the true-sale or first perfected security
interest by the Trust Depositor to the Trust and the
conveyance by the Trust of the Contracts and other Trust
Property to the Indenture Trustee for the benefit of the
Noteholders.
(l) The Underwriters shall have received an opinion from
Winston & Strawn, counsel for the Trust Depositor, dated the
Closing Date and satisfactory in form and substance to the
Underwriters and Counsel for the Underwriters regarding
substantive consolidation.
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(m) The Underwriters shall have received a certificate dated
the Closing Date of any of the Chairman of the Board, the
President, the Executive Vice President, any Vice President,
the Treasurer, any Assistant Treasurer, the principal
financial officer or the principal accounting officer of the
Trust Depositor in which such officer shall state that, to the
best of his or her knowledge after reasonable investigation:
(i) the representations and warranties of the Trust
Depositor contained in this Agreement and the Basic Documents
are true and correct; the Trust Depositor has complied with
all agreements and satisfied all conditions on its part to be
performed or satisfied under such agreements at or prior to
the Closing Date;
(ii) since the date of the Prospectus, no material
adverse change, or any development involving a prospective
material adverse change, in or affecting particularly the
business or properties of the Trust Depositor has occurred;
and
(iii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are contemplated by
the Commission.
(n) The Underwriters shall have received a certificate dated
the Closing Date of any of the Chairman of the Board, the
President, the Executive Vice President, any Vice President,
the Treasurer, any Assistant Treasurer, the principal
financial officer or the principal accounting officer of
Harley Credit in which such officer shall state that, to the
best of his or her knowledge after reasonable investigation:
(i) the representations and warranties of Harley
Credit contained in this Agreement and the Basic Documents are
true and correct; Harley Credit has complied with all
agreements and satisfied all conditions on its part to be
performed or satisfied under such agreements at or prior to
the Closing Date;
(ii) since the date of the most recent financial
information included in the Prospectus, no material adverse
change, or any development involving a prospective material
adverse change, in or affecting particularly the business or
properties of Harley Credit has occurred; and
(iii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are contemplated by
the Commission.
(o) The Underwriters shall have received evidence satisfactory
to it that, on or before the Closing Date, UCC-1 financing
statements have been or are being filed in the office of the
Secretary of State of the State of Nevada, the Secretary of
State of the State of Illinois reflecting the sale of the
Contracts by Harley Credit to the Trust Depositor and of the
Contracts and other Trust Property by the Trust Depositor to
the Trust and the conveyance by the Trust of the contracts and
other Trust Property to the Indenture Trustee for the benefit
of the Noteholders.
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(p) At the Execution Time and at the Closing Date, Arthur
Andersen & Co. shall have furnished to the Underwriters a
letter or letters, dated respectively as of the Execution Time
and as of the Closing Date, substantially in the forms of the
drafts to which the Underwriters have previously agreed and
otherwise in form and substance satisfactory to the
Underwriters and to Counsel for the Underwriters.
(q) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Prospectus, there
shall not have been any change or any development involving a
prospective change in or affecting the business or properties
of Harley Credit or the Trust Depositor the effect of which
is, in the judgment of the Underwriters, so material and
adverse as to make it impractical or inadvisable to market the
Offered Securities as contemplated by the Prospectus.
(r) The Notes shall have been rated "Aaa" by Moody's and "AAA"
by S&P.
(s) The Certificates shall have been rated at least "___" by
Moody's and "____" by S&P.
(t) On or prior to the Closing Date, the Offered Securities
shall have been accepted for settlement through the facilities
of the Depository Trust Company.
(u) On the Closing Date, $___________ aggregate principal
amount of the Certificates shall have been issued and
delivered to the Trust Depositor.
(v) Prior to the Closing Date, the Trust Depositor shall have
furnished to the Underwriters such further information,
certificates and documents as the Underwriters may reasonably
request.
If any of the conditions specified in this Section 8 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriters and Counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Underwriters. Notice of such
cancellation shall be given to the Trust Depositor in writing or by telephone or
telegraph confirmed in writing.
9. REIMBURSEMENT OF EXPENSES. If the sale of the Offered Securities
provided for herein is not consummated because any condition to the obligation
of the Underwriters set forth in Section 8 hereof is not satisfied, because of
any refusal, inability or failure on the part of Harley Credit or the Trust
Depositor to perform any agreement herein or to comply with any provision hereof
other than by reason of a default by the Underwriters in payment for the Offered
Securities on the Closing Date, Harley Credit and the Trust Depositor will
reimburse the Underwriters upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
it in connection with the proposed purchase and sale of the Offered Securities.
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<PAGE>
10. INDEMNIFICATION AND CONTRIBUTION. (a) The Trust Depositor and
Harley Credit, jointly and severally, agree to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person who controls each Underwriter within the meaning of either the
Securities Act or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, Preliminary Prospectus Supplement,
the Prospectus or any information provided by the Trust Depositor or Harley
Credit to any holder or prospective purchaser of Offered Securities or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the Trust Depositor and Harley Credit will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made (x) in the Preliminary Prospectus Supplement or the
Prospectus, or in any amendment thereof or supplement thereto, in reliance upon
and in conformity with written information furnished to Harley Credit by or on
behalf of the Underwriters through [_______________] specifically for inclusion
therein or (y) in any Derived Information (as defined in Section 11 below)
included by the Underwriters in any Computational Materials provided by the
Underwriters to Harley Credit or any amendment or supplement thereof unless such
untrue statement or alleged untrue statement or omission or alleged omission
made in any Derived Information results from an error or omission in any
Seller-Provided Information (as defined herein). This indemnity agreement will
be in addition to any liability that the Trust Depositor or Harley Credit may
otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Trust Depositor and Harley Credit, their directors, their
officers and each person who controls the Trust Depositor or Harley Credit
within the meaning of either the Securities Act or the Exchange Act, to the same
extent as the foregoing indemnity from the Trust Depositor and Harley Credit to
each Underwriter, but only with reference to (x) written information relating to
the Underwriters furnished to the Trust Depositor by the Underwriters through
[______________] specifically for inclusion in the Registration Statement, the
Preliminary Prospectus Supplement or the Prospectus (or in any amendment or
supplement thereto) or (y) any Derived Information included by such Underwriter
in any Computational Materials provided by such Underwriter to Harley Credit or
any amendment or supplement thereof; PROVIDED, HOWEVER that the indemnity with
respect to clause (y) above shall not apply to any untrue statement or alleged
untrue statement or omission or alleged omission made in any Derived Information
that results from an error or omission in any Seller-Provided Information. This
indemnity agreement will be in addition to any liability that an Underwriter may
otherwise have. For the purpose of clause (x) of this indemnity, the Trust
Depositor and Harley Credit acknowledge that the statements set forth in the
first sentence of the next to the last paragraph and in the last paragraph of
the cover page and under the heading "Plan of Distribution" in the
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Preliminary Prospectus Supplement and the Prospectus constitute the only
information furnished in writing by or on behalf of the Underwriters through
[______________] for inclusion in the Registration Statement, the Preliminary
Prospectus Supplement or the Prospectus (or in any amendment or supplement
thereto).
(c) Upon receipt by an indemnified party under this Section 10 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 10, promptly notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
PROVIDED, HOWEVER, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified parties and the indemnifying party and the
indemnified parties shall have reasonably concluded that there may be legal
defenses available to them and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 10 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Trust Depositor, Harley Credit and each
Underwriter agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which the Trust
Depositor, Harley Credit and the several Underwriters may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Trust Depositor and Harley Credit on the one hand and by the several
Underwriters on the other from the offering of the Offered Securities; PROVIDED,
HOWEVER, that in no case shall any Underwriter be responsible for any
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amount in excess of the purchase discount or commission applicable to the
Offered Securities purchased by such Underwriter hereunder. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the Trust Depositor, Harley Credit and each Underwriter shall contribute in
such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Trust Depositor and Harley Credit on the
one hand and of the several Underwriters on the other in connection with the
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Trust Depositor
and Harley Credit shall be deemed to be equal to the total net proceeds from
the offering (before deducting expenses), and benefits received by any
Underwriter shall be deemed to be equal to the total purchase discounts and
commissions received by such Underwriter from the Trust Depositor in
connection with the purchase of the Offered Securities hereunder. Relative
fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by the Trust Depositor
and Harley Credit on the one hand or the several Underwriters on the other.
The Trust Depositor, Harley Credit and the several Underwriters agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation that does not take account of
the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 10, each person
who controls any Underwriter within the meaning of either the Securities Act
or the Exchange Act and each director, officer, employee and agent of such
Underwriter shall have the same rights to contribution as such Underwriter,
and each person who controls the Trust Depositor or Harley Credit within the
meaning of either the Securities Act or the Exchange Act and each officer and
director of the Trust Depositor or Harley Credit shall have the same rights
to contribution as the Trust Depositor or Harley Credit, subject in each case
to the applicable terms and conditions of this paragraph (d).
11. COMPUTATIONAL MATERIALS. It is understood that the Underwriters may
provide to prospective investors certain Computational Materials and ABS Term
Sheets in connection with offering of the Offered Securities, subject to the
following conditions:
(a) Each Underwriter hereby agrees to comply with applicable
laws and regulations in connection with the use of Computational Materials,
including the No-Action Letter of May 20, 1994 issued by the Commission to
Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated and
Kidder Structured Asset Corporation, as made applicable to other issuers and
underwriters by the Commission in response to the request of the Public
Securities Association dated May 24, 1994 (collectively, the "Kidder/PSA
Letter"), as well as the PSA Letter referred to below. Each Underwriter hereby
agrees to comply with applicable laws and regulations in connection with the use
of ABS Term Sheets, including the No Action Letter of February 17, 1995 issued
by the Commission to the Public Securities Association (the PSA Letter" and,
together with the Kidder/PSA Letter, the "No-Action Letters").
(b) For purposes hereof, "Computational Materials" as used
herein shall have the meaning given such term in the No-Action Letters, but
shall include only those Computational Materials that have been prepared or
delivered to prospective investors by or at
29
<PAGE>
the direction of the Underwriters. For purposes hereof, "ABS Term Sheets" and
"Collateral Term Sheets" as used herein shall have the meanings given such
terms in the PSA Letter but shall include only those ABS Term Sheets or
Collateral Term Sheets that have been prepared or delivered to prospective
investors by or at the direction of the Underwriters.
(c) (i) All Computational Materials and ABS Term Sheets
provided to prospective investors that are required to be filed with the
Commission pursuant to the No-Action Letters shall bear a legend including the
following statement:
"THE INFORMATION HEREIN IS PRELIMINARY, AND WILL BE SUPERSEDED
BY THE APPLICABLE PROSPECTUS SUPPLEMENT AND BY ANY OTHER
INFORMATION SUBSEQUENTLY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION."
(ii) In the case of Collateral Term Sheets, such legend shall
also include the following statement:
"THE INFORMATION CONTAINED HEREIN WILL BE SUPERSEDED BY THE
DESCRIPTION OF THE ASSETS CONTAINED IN THE PROSPECTUS
SUPPLEMENT RELATING TO THE SECURITIES AND [EXCEPT WITH RESPECT
TO THE INITIAL COLLATERAL TERM SHEET] SUPERSEDES ALL
INFORMATION CONTAINED IN ANY COLLATERAL TERM SHEETS RELATING
TO THE COLLATERAL PREVIOUSLY PROVIDED BY [__________________]"
Harley Credit shall have the right to require additional specific legends or
notations to appear on any Computational Materials or ABS Term Sheets, the right
to require changes regarding the use of terminology and the right to determine
the types of information appearing therein. Notwithstanding the foregoing, this
subsection (c) will be satisfied if all Computational Materials and ABS Term
Sheets referred to therein bear a legend in a form previously approved in
writing by Harley Credit.
(d) The Underwriters shall provide Harley Credit with
representative forms of all Computational Materials and ABS Term Sheets prior to
their first use, to the extent such forms have not previously been approved by
Harley Credit for use by the Underwriters. The Underwriters shall provide to
Harley Credit, for filing on Form 8-K, copies (in such format as required by
Harley Credit) of all Computational Materials and ABS Term Sheets that are
required to be filed with the Commission pursuant to the No-Action Letters. The
Underwriters may provide copies of the foregoing in a consolidated or aggregated
form including all information required to be filed. All Computational Materials
and ABS Term Sheets described in this subsection (d) must be provided to Harley
Credit not later than 10:00 AM New York time one business day before filing
thereof is required pursuant to the terms of this Agreement. Each Underwriter
agrees that it will not provide to any investor or prospective investor in the
Notes or Certificates any Computational Materials or ABS Term Sheets on or after
the day on which Computational Materials and ABS Term Sheets are required to be
provided to Harley Credit pursuant to this Section 11(d) (other than copies of
Computational Materials or ABS Term Sheets previously submitted to Harley Credit
in accordance with this Section 11(d) for filing
30
<PAGE>
with the Commission), unless such Computational Materials or ABS Term Sheets
are preceded or accompanied by the delivery of a Prospectus to such investor
or prospective investor.
(e) All information included in the Computational Materials
and ABS Term Sheets shall be generated based on substantially the same
methodology and assumptions that are used to generate the information in the
Prospectus Supplement as set forth therein; PROVIDED, HOWEVER, that the
Computational Materials and ABS Term Sheets may include information based on
alternative methodologies or assumptions if specified therein. If any
Computational Materials or ABS Term Sheets that are required to be filed were
based on assumptions with respect to the contracts included in the Trust that
differ from the final Pool Information in any material respect or on structuring
terms of the Offered Securities that were revised in any material respect prior
to the printing of the Prospectus, the Underwriters shall prepare revised
Computational Materials or ABS Term Sheets, as the case may be, based on the
final Pool Information and structuring assumptions, circulate such revised
Computational Materials and ABS Term Sheets to all recipients of the preliminary
versions thereof that indicated or subsequently indicate orally to the
Underwriters they will purchase all or any portion of the Offered Securities,
and include such revised Computational Materials and ABS Term Sheets (marked,
"as revised") in the materials delivered to Harley Credit pursuant to subsection
(d) above. As used herein, "Pool Information" means information with respect to
the characteristics of the contracts , as provide by or on behalf of Harley
Credit to the Underwriters in final form and set forth in the Prospectus
Supplement.
(f) Harley Credit shall not be obligated to file any
Computational Materials or ABS Term Sheets that have been determined to contain
any material error or omission; PROVIDED, HOWEVER, that, at the request of the
Underwriters, Harley Credit will file Computational Materials or ABS Term Sheets
that contain a material error or omission if clearly marked "superseded by
materials dated _____" and accompanied by corrected Computational Materials or
ABS Term Sheets that are marked, "material previously dated _____, as
corrected." In the event that, within the period during which the Prospectus is
required to be delivered under the Act, any Computational Materials or ABS Term
Sheets are determined, in the reasonable judgment of Harley Credit or the
Underwriters, to contain a material error or omission, the Underwriters shall
prepare a corrected version of such Computational Materials or ABS Term Sheets,
shall circulate such corrected Computational Materials and ABS Term Sheets to
all recipients of the prior versions thereof that either indicated orally to the
Underwriters they would purchase all or any portion of the Offered Securities,
or actually purchased all or any portion thereof, and shall deliver copies of
such corrected Computational Materials and ABS Term Sheets (marked, "as
corrected") to Harley Credit for filing with the Commission in a subsequent Form
8-K submission.
(g) Harley Credit and the Underwriters shall receive a letter
from Arthur Andersen & Co., certified public accountants, satisfactory in form
and substance to Harley Credit and the Underwriters, to the effect that such
accountants have performed certain specified procedures agreed to by Harley
Credit and the Underwriters, as a result of which they determined that the
specified information that is included in the Computational Materials and ABS
Term Sheets (if any) provided by the Underwriters to Harley Credit for filing on
Form 8-K as provided in this Section 11 has been accurately computed or compiled
from the Seller Provided Information.
31
<PAGE>
(h) If the Underwriters do not provide any Computational
Materials or ABS Term Sheets to Harley Credit pursuant to subsection (d) above,
each Underwriter shall be deemed to have represented, as of the Closing Date,
that it did not provide any prospective investors with any information in
written or electronic form in connection with the offering of the Offered
Securities that is required to be filed with the Commission in accordance with
the No-Action Letters.
(i) In the event of any delay in the delivery by the
Underwriters to Harley Credit of all Computational Materials and ABS Term Sheets
required to be delivered in accordance with subsection (d) above, or in the
delivery of the accountant's comfort letter in respect thereof pursuant to
Section 11(g), Harley Credit shall have the right to delay the release of the
Prospectus to investors or to the Underwriters, to delay the Closing Date and to
take other appropriate actions in each case as necessary in order to allow
Harley Credit to comply with its obligation to file the Computational Materials
and ABS Term Sheets with the Commission.
(j) For purposes of this Agreement, as to the Underwriters,
the term "Derived Information" means such portion, if any, of the information
that:
(i) is delivered to Harley Credit by the Underwriters
pursuant to this Section 11 for filing with the Commission on
Form 8-K;
(ii) is not contained in the Prospectus without
taking into account information incorporated therein by
reference; and
(iii) does not constitute Seller-Provided
Information.
"Seller-Provided Information" means any computer tape concerning the assets
comprising the Trust and any other information with respect to the Offered
Securities or such assets furnished to the Underwriters by Harley Credit for use
as contemplated herein.
12. TERMINATION. This Agreement shall be subject to termination in the
absolute discretion of the Underwriters, by notice given to the Trust Depositor
prior to delivery of and payment for the Offered Securities, if prior to such
time (i) trading in securities generally on the New York Stock Exchange or the
Nasdaq Stock Market's National Market shall have been suspended or limited or
minimum prices shall have been established on either such exchange, (ii) a
banking moratorium shall have been declared either by federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the judgment of the Underwriters, impracticable or inadvisable to
proceed with the offering or delivery of the Offered Securities as contemplated
by the Prospectus.
13. NO BANKRUPTCY PETITION. Each Underwriter covenants and agrees that,
prior to the date which is one year and one day after the payment in full of all
securities issued by the Trust Depositor or by a trust for which the Trust
Depositor was the depositor, which securities were rated by any nationally
recognized statistical rating organization, it will not institute against, or
join any other Person in instituting against, the Trust Depositor any
bankruptcy, reorganization,
32
<PAGE>
arrangement, insolvency or liquidation proceedings or other proceedings under
any federal or state bankruptcy or similar law.
14. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Trust Depositor and Harley Credit and their respective officers and of the
several Underwriters set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter, the Trust Depositor or Harley Credit or any of the officers,
directors or controlling persons referred to in Section 12 hereof, and will
survive delivery of and payment for the Offered Securities. The provisions of
Sections 9 and 10 hereof shall survive the termination or cancellation of this
Agreement.
15. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Underwriters, will be mailed,
delivered or telegraphed and confirmed to them c/o [_______________]; or if sent
to the Trust Depositor, will be mailed, delivered or telegraphed and confirmed
to it at Harley-Davidson Customer Funding Corp., 4150 Technology Way, Carson
City, Nevada 89706, Attention: President; or if sent to Harley Credit, will be
mailed, delivered, telegraphed and confirmed to it at Harley-Davidson Credit
Corp., 4150 Technology Way, Carson City, Nevada 89706, Attention: President.
16. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 10 hereof, and,
except as expressly set forth herein, no other person will have any right or
obligation hereunder.
17. APPLICABLE LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
18. BUSINESS DAY. For purposes of this Agreement, "business day" means
each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
national banking associations in the cities of Chicago, Illinois or New York,
New York are authorized or obligated by law, executive order or regulation to
close.
19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but all such
Counterparts will together constitute one and the same agreement.
33
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this Agreement and your acceptance shall represent a binding agreement among the
Trust Depositor, Harley Credit and the several Underwriters.
Very truly yours,
HARLEY-DAVIDSON CUSTOMER FUNDING
CORP.
By:
------------------------------
Name:
Title:
HARLEY-DAVIDSON CREDIT CORP.
By:
------------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
[ ]
-------------------
- ----------------------------------
By: [ ]
----------------------
By:
---------------------------
Name:
Title:
34
<PAGE>
SCHEDULE I
HARLEY-DAVIDSON MOTORCYCLE TRUST [_____]
<TABLE>
<CAPTION>
OFFERED SECURITY PRINCIPAL AMOUNT PRICE
<S> <C> <C>
CLASS A-1 NOTES
- ------------------------- $---------- -------%
CLASS A-2 NOTES
- ------------------------- $---------- -------%
CLASS B NOTES
- ------------------------- $---------- -------%
[CERTIFICATES
- ------------------------- $---------- -------%]
</TABLE>
35
<PAGE>
ARTICLES OF INCORPORATION
OF HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
ARTICLE I
NAME
The name of the corporation (hereinafter called the "CORPORATION") is
Harley-Davidson Customer Funding Corp.
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The address of the Corporation's registered office in the State of
Nevada is One East First Street, Reno, Nevada 89501. The name of its registered
agent at such address is The Corporation Trust Company of Nevada.
ARTICLE III
CORPORATE PURPOSES
The nature of the business to be conducted or promoted by the
Corporation is to engage in the following activities:
(a) to purchase or otherwise acquire, own, hold, transfer or
sell interests in, or interests in pools of, accounts, drafts, notes
receivable, installment sale agreements, conditional sale agreements,
promissory notes with or without related security agreements, operating
and finance leases, installment payment agreements and similar types of
financing agreements or obligations or rights to payment thereunder or
arising in connection therewith, including monies paid, due or to
become due thereunder or in connection therewith, and together with any
related collateral security or contract rights, whether constituting
real or personal property, securing such agreements or obligations or
supporting the payment thereof (including the acquisition of ownership
interests in real or personal property the subject of leases)
(collectively, any of the foregoing the "ASSETS");
(b) to enter into, and perform its obligations under, any
agreements with affiliates relating to or effecting the transfers and
conveyances of Assets as described above;
(c) to transfer the Assets or interests therein (including for
the purpose of establishing, forming or funding one or more trusts
("TRUSTS")), pursuant to one or more indentures, pooling agreements,
pooling and servicing agreements, sale agreements, receivables purchase
agreements, sale and servicing agreements or other agreements
("AGREEMENTS") entered into by and among, among others, the
Corporation, any trustee or trustees or collateral agent named therein
(a "TRUSTEE"), and any entity acting as servicer
<PAGE>
for the Assets, as well as certain other financing entities
(collectively hereinafter referred to as the "ENTITIES"), and to
perform its obligations under any such Agreements;
(d) to hold and enjoy any and all of the rights and privileges
of any certificates ("CERTIFICATES"), notes ("NOTES"), participation
interests ("PARTICIPATION INTERESTS"), deferred payments ("DEFERRED
PAYMENTS") or other ownership interests ("OWNERSHIP INTERESTS") issued
by or sold by the Entities to the Corporation under the related
Agreements and to hold and enjoy all of the rights and privileges of
any class of any series of Certificates, Notes, Participation
Interests, Deferred Payments or Ownership Interests including any class
of Certificates, Notes, Participation Interests, Deferred Payments or
Ownership Interests which may be subordinate to any other class of
Certificates, Notes, Participation Interests, Deferred Payments or
Ownership Interests and except to the extent otherwise provided in any
Certificates, Notes, Participation Interests, Deferred Payments,
Ownership Interests or Agreement, to sell, assign, pledge or otherwise
transfer any such Certificates, Notes, Participation Interests,
Deferred Payments or Ownership Interests or any interest therein;
(e) to issue, sell, authorize and deliver one or more series
and/or classes or certificates, bonds, notes or other evidences of
indebtedness secured or collateralized by, or otherwise representing
interests in, one or more pools of Assets (or by notes or certificates
of any series or class issued by one or more Trusts established or
funded by the Corporation) (collectively, any of the foregoing being
"Securities");
(f) to perform its obligations under the Agreements pursuant
to which any Certificates, Notes, Participation Interests, Deferred
Payments or other Ownership Interests are issued, sold or serviced;
(g) to invest the proceeds derived from the sale or ownership
of the Assets as determined by the Corporation's Board of Directors;
and
(h) to enter into any additional agreements or undertakings,
engage in any further activities, and to exercise any other powers
permitted to corporations organized under the laws of the State of
Nevada, that are related or incidental to the foregoing and necessary,
convenient or advisable to accomplish the foregoing.
ARTICLE IV
COMMON STOCK
The total number of shares of capital stock which the Corporation has
authority to issue is one thousand (1,000) shares, designated as Common Stock,
and all of such shares shall be without par value.
-2-
<PAGE>
ARTICLE V
DENIAL OF PREEMPTIVE RIGHTS
No holder of any class of capital stock of the Corporation, whether now
or hereafter authorized, shall be entitled, as such, as a matter of right, to
subscribe for or purchase any part of any new or additional issue of capital
stock of the Corporation of any class whatsoever, or of securities convertible
into or exchangeable for capital stock of the Corporation of any class
whatsoever, whether now or hereafter authorized, or whether issued for cash,
property or services.
ARTICLE VI
BOARD OF DIRECTORS; POWERS
The Corporation shall be governed by a Board of Directors. The number
of directors shall be fixed pursuant to the By-laws. The initial Board of
Directors consists of four directors, the names and addresses of which are as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------ ---------------------------------------------------------
NAME ADDRESS
- ------------------------------------------------------------ ---------------------------------------------------------
<S> <C>
Donna F. Zarcone 150 South Wacker Drive
Suite 3100
Chicago, Illinois 60606
- ------------------------------------------------------------ ---------------------------------------------------------
Steven F. Deli 150 South Wacker Drive
Suite 3100
Chicago, Illinois 60606
- ------------------------------------------------------------ ---------------------------------------------------------
Donovan A. Langford, III Oakbrook Terrance Tower
Suite 2242
1 Tower Lane
Oakbrook Terrace, Illinois 60181
- ------------------------------------------------------------ ---------------------------------------------------------
Peter M. Husting 12 Indian Hill Road
Winnetka, Illinois 60093
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation is expressly authorized:
(a) To make, alter, amend or repeal the By-Laws, except as
otherwise expressly provided in any By-Law made by the holders of the
capital stock of the Corporation entitled to vote thereon. Any By-Law
may be altered, amended or repealed by the holders of the capital stock
of the Corporation entitled to vote thereon at any annual meeting or at
any special meeting called for that purpose; PROVIDED, HOWEVER, that no
By-Laws hereafter adopted by the stockholders shall invalidate any
prior act of the Board of Directors which would have been valid if such
By-Laws had not been adopted.
-3-
<PAGE>
(b) Subject to the provisions of Article III, to take, lease,
purchase or otherwise acquire, and to own, use, hold, sell, convey,
exchange, lease, mortgage or otherwise encumber, work, improve,
develop, divide and otherwise handle, deal in, or dispose of real
estate, real and personal property and any interest or right therein.
(c) To determine the use and disposition of any surplus and
net profits of the Corporation, including the determination of the
amount of working capital required, to set apart out of any of the
funds of the Corporation, whether or not available for dividends, a
reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
(d) To designate, by resolution passed by a majority of the
whole Board of Directors, one or more committees, each committee to
consist of one or more directors of the Corporation, which, to the
extent provided in the resolution designating the committee or in the
By-Laws of the Corporation, shall, subject to the limitations
prescribed by law, have and may exercise all the powers and authority
of the Board of Directors in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from time
to time by resolution adopted by a majority of the whole Board of
Directors.
(e) To exercise, in addition to the powers and authorities
hereinbefore or by law conferred upon it, any such powers and
authorities and do all such acts and things as may be exercised or done
by the Corporation, subject, nevertheless, to the provisions of the
laws of the State of Nevada and of the Articles of Incorporation,
including without limitation Article III hereof and of the By-Laws of
the Corporation.
ARTICLE VII
CORPORATE RESTRICTIONS
(a) At all times that the Corporation has issued and has outstanding,
or any Trust established or funded by the Corporation has issued and has
outstanding, any series or class of Securities which has been rated by a
nationally recognized rating agency outstanding, the Board of Directors shall
include at least two individuals who are Independent Directors. As used herein,
an "INDEPENDENT DIRECTOR" shall be an individual who: (i) is not and has not
been employed by Harley-Davidson Credit Corp. ("HDCC") or any of its
subsidiaries or affiliates, as a director, officer, employee, partner, attorney
or counsel within the five years immediately prior to such individual's
appointment as an Independent Director; (ii) is not (and is not affiliated with
a company or a firm that is) a significant advisor or consultant to HDCC or any
of its subsidiaries and affiliates; (iii) is not affiliated with a significant
customer or supplier of HDCC or any of its subsidiaries or affiliates; (iv) is
not affiliated with a company of which HDCC or any of its subsidiaries and
affiliates is a significant customer or supplier, (v) does not have significant
personal services contract(s) with HDCC or any of its subsidiaries or
affiliates; (vi) is not affiliated with a tax-exempt entity that receives
significant contributions from HDCC or any of its subsidiaries or affiliates;
(vii) is not the beneficial owner at the time of such individual's appointment
as an Independent Director, or at any time thereafter while serving as an
-4-
<PAGE>
Independent Director, of such number of shares of any classes of common stock of
HDCC the value of which constitutes more than 5% of the outstanding common stock
of HDCC; (viii) does not at any time hold any beneficial or economic interest in
the Corporation; and (ix) is not a spouse, parent, sibling or child of any
person described in clauses (i) through (viii).
(b) As used in paragraph (a) of this Article VII, the following terms
shall have the following meanings:
(i) an "AFFILIATE" of a person, or a person "AFFILIATED WITH,"
a specified person, shall mean a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or
is under common control with, the specified person.
(ii) The term "CONTROL" (including the terms "CONTROLLING,"
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH") shall mean the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through
the ownership of voting securities, by contract, or otherwise;
provided, however, that a person shall not be deemed to control another
person solely because he or she is a director of such other person.
(iii) The term "PERSON" shall mean any individual,
partnership, firm, corporation, association, trust, unincorporated
organization or other entity, as well as any syndicate or group deemed
to be a person pursuant to Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended, as in effect on the date of incorporation of
the Corporation.
(iv) A "SUBSIDIARY" of HDCC shall mean any corporation a
majority of the voting stock of which is owned, directly or indirectly
through one or more other subsidiaries by HDCC.
(v) A person shall be deemed to be, or to be affiliated with,
a company or firm that is a "SIGNIFICANT ADVISOR OR CONSULTANT TO HDCC
OR ANY OF ITS SUBSIDIARIES OR AFFILIATES" if he, she, or it, as the
case may be, received or would receive fees or similar compensation
from HDCC or any of its subsidiaries or affiliates in excess of the
lesser of (A) 3% of the consolidated gross revenues which HDCC and its
subsidiaries received for the sale of their products and services
during the last fiscal year of HDCC; (B) 5% of the gross revenues of
the person during the last calendar year if such person is a
self-employed individual; and (C) 5% of the consolidated gross revenues
received by such company or firm for the sale of its products and
services during its last fiscal year, if the person is a company or
firm; PROVIDED, HOWEVER, that director's fees and expense
reimbursements shall not be included in the gross revenues of an
individual for purposes of this determination.
(vi) A "SIGNIFICANT CUSTOMER OF HDCC OR ANY OF ITS
SUBSIDIARIES OR AFFILIATES" shall mean a customer from which HDCC and
any of its subsidiaries or affiliates collectively in the last fiscal
year of HDCC received payments in consideration for the products and
services of HDCC and its subsidiaries or affiliates which are in excess
of
-5-
<PAGE>
3% of the consolidated gross revenues of HDCC and its subsidiaries
during such fiscal year.
(vii) A "SIGNIFICANT SUPPLIER OF HDCC OR ANY OF ITS
SUBSIDIARIES OR AFFILIATES" shall mean a supplier to which HDCC and any
of its subsidiaries or affiliates collectively in the last fiscal year
of HDCC made payments in consideration for the supplier's products and
services in excess of 3% of the consolidated gross revenues of HDCC and
its subsidiaries during such fiscal year.
(viii) HDCC or any of its subsidiaries and affiliated shall be
deemed a "SIGNIFICANT CUSTOMER" of a company if HDCC and any of its
subsidiaries and affiliates collectively were the direct source during
such company's last fiscal year of in excess of 5% of the gross
revenues which such company received for the sale of its products and
services during such fiscal year.
(ix) HDCC or any of its subsidiaries and affiliates shall be
deemed a "SIGNIFICANT SUPPLIER" of a company if HDCC and any of its
subsidiaries and affiliates collectively received in such company's
last fiscal year payments from such company in excess of 5% of the
gross revenues which such company received during such fiscal year for
the sale of its products and services.
(x) A person shall be deemed to have "SIGNIFICANT PERSONAL
SERVICES CONTRACT(S) WHICH HDCC OR ANY OF ITS SUBSIDIARIES OR
AFFILIATES" if the fees and other compensation received by the person
pursuant to personal services contract(s) with HDCC and any of its
subsidiaries or affiliates exceed or would exceed 5% of his or her
gross revenues during the last calendar year.
(xi) A tax-exempt entity shall be deemed to receive
"SIGNIFICANT CONTRIBUTIONS FROM HDCC OR ANY OF ITS SUBSIDIARIES OR
AFFILIATES" if such tax-exempt entity received during its last fiscal
year contributions from HDCC or its subsidiaries or affiliates in
excess of the lesser of (A) 3% of the consolidated gross revenues of
HDCC and its subsidiaries during such fiscal year and (B) 5% of the
contributions received by the tax-exempt entity during such fiscal
year.
(c) Notwithstanding any other provision of the Articles of
Incorporation or any provision of law that otherwise so empowers the
Corporation, the Corporation shall not, without (i) the affirmative vote of 100%
of the members of the Board of Directors of the Corporation, including the
affirmative vote of the Independent Directors (ii) the affirmative vote of
shareholders holding at least two-thirds (2/3) of the total number of
outstanding shares of Common Stock of the Corporation, and (iii) written
confirmation, from each nationally recognized rating agency which has rated
Securities issued by the Corporation or by any Trust established or funded by
the Corporation, that the then-current ratings on such Securities will not be
reduced or withdrawn as a result thereof, do any of the following:
(A) engage in any business or activity other than those set forth
in Article III;
-6-
<PAGE>
(B) incur any indebtedness for borrowed money, or assume or guaranty
any indebtedness of any other entity, other than (x) indebtedness evidenced by,
or incurred in connection with, any issue of Securities, (y) indebtedness not
exceeding 1% of the Corporation's total assets at such time on account of
incidentals or services supplied or furnished to the Corporation in the ordinary
course of its business, and (z) indebtedness to HDCC or any affiliate thereof
incurred in connection with the acquisition of Assets, which indebtedness shall
be subordinated to all obligations under the Agreements;
(C) dissolve or liquidate, in whole or in part; or consolidate or merge
with or into any other entity or convey, transfer or lease its properties and
assets substantially as an entirety to any entity, or permit any entity to merge
into it or convey, transfer or lease its properties and assets substantially as
an entirety to it, unless:
(y) the entity (if other than the Corporation) formed or surviving
the consolidation or merger or which acquires the properties and assets
of the Corporation is organized and existing under the laws of any
State of the United States or the District of Columbia; expressly
assumes the due and punctual payment of, and all obligations of the
Corporation, including those obligations of the Corporation under any
Agreement; and has articles of incorporation containing provisions
substantially identical to the provisions of Article III, this Article
VII, Article XIV, and Article XV; and
(z) immediately after giving effect to the transaction, no default
or event of default has occurred and is continuing under any
indebtedness of the Corporation or any agreement relating to such
indebtedness.
(d) Notwithstanding any other provision of these Articles of
Incorporation or any provision of law that otherwise so empowers the
Corporation, the Corporation shall not, for so long as the Corporation is able
to pay its debts generally as they become due, and without the affirmative vote
of 100% of the members of the Board of Directors of the Corporation, (i)
institute proceedings to be adjudicated bankrupt or insolvent, (ii) consent to
the 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) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, or sequestrator (or
other similar official) of the Corporation or a substantial part of its
property, (v) make any assignment for the benefit of creditors or admit its
inability to pay its debts generally as they become due, or (vi) authorize or
take corporate action in furtherance of any such action. If there shall not be,
as and to the extent required by this Article VII, Independent Directors then in
office and acting as required by this Article VII, a vote on any matter set
forth in this paragraph (d) shall not be taken unless and until Independent
Directors meeting the requirements of this Article VII shall have been appointed
and qualified.
ARTICLE VIII
DIRECTORS PROTECTED
A member of the Board of Directors of the Corporation, or a member of
any committee designated by the Board of Directors, shall, in the performance of
his/her duties, be fully
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protected in relying in good faith upon the books of account or other records of
the Corporation and upon such information, opinions, report or statements as are
presented to the Corporation by any of the Corporation's officers or employees
or committees of the Board of Directors, or by any other person as to matters
the member reasonably believes are within such other person's professional or
expert competence and who has been selected with reasonable care by or on behalf
of the Corporation. Neither the amendment nor repeal of this Article VIII, nor
the adoption of any provision of these Articles of Incorporation inconsistent
with this Article VIII, shall eliminate or reduce the effect of this Article
VIII in respect of any matter occurring, or any cause of action, suit or claim
that, but for this Article VIII, would accrue or arise prior to such amendment,
repeal or adoption of an inconsistent provision.
ARTICLE IX
CORPORATE EXISTENCE
The Corporation is to have perpetual existence.
ARTICLE X
NO LIABILITY OF HOLDERS OF CAPITAL STOCK
FOR CORPORATE DEBTS
The holder or holders of the capital stock of the Corporation shall not
be personally or directly liable for the payment of the Corporation's debts and
the private property of the holders of the capital stock of the Corporation
shall not be subjected to the payment of debts of the Corporation to any extent
whatsoever.
ARTICLE XI
TRANSACTIONS WITH DIRECTORS AND OFFICERS
No contract or transaction between the Corporation and one or more of
its directors or officers, or between the Corporation and any other corporation,
partnership, association or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board of
Directors or committee thereof which authorizes the contract or transaction, or
solely because his/her or their votes are counted for such purpose, if: (1) the
material facts as to the relationship or interest and as to the contract or
transaction are disclosed or are known to the Board of Directors or the
committee, and the Board of Directors or committee in good faith authorizes the
contract or transaction by the affirmative vote of a majority of disinterested
directors, even though the disinterested directors be less than a quorum; or (2)
the material facts as to the relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by the vote of the stockholders; or (3) the contract or transaction is fair as
to the Corporation as of the time it is authorized, approved or ratified by the
Board of Directors, a committee thereof or the stockholders. Common or
interested directors may be counted in determining the presence of a
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quorum at a meeting of the Board of Directors or of a committee thereof which
authorizes the contract or transaction.
ARTICLE XII
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS
(a) Any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Corporation), by reason of the fact that he/she is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent (for purposes of this Article, such person shall include a trustee) of
another corporation, partnership, joint venture, trust or other enterprise,
shall be indemnified and held harmless by the Corporation to the fullest extent
legally permissible under the General Corporation Law of the State of Nevada, as
amended from time to time, against all expenses, liabilities and losses
(including attorneys' fees and disbursements), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if he/she acted in good faith and in a manner
he/she reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; PROVIDED, that any amounts
payable by the Corporation in accordance with this subsection (a) of Article XII
hereof, shall be payable solely to the extent of funds actually received by the
Corporation in excess of funds necessary to pay in full all outstanding
Securities rated by a nationally recognized rating agency. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that the person seeking indemnification did not act in good faith
and in a manner which he/she reasonably believed to be in or not opposed to the
best interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his/her conduct was unlawful.
Entry of a judgment by consent as part of a settlement shall not be deemed a
final adjudication of liability for negligence or misconduct in the performance
of duty, nor of any other issue or matter.
(b) To the extent that a director, officer, employee or agent of, or
serving at the request of, the Corporation (as described in clause (a) of this
Article XII) has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in clause (a), or in defense of any
claim, issue or matter therein, he/she shall be indemnified by the Corporation
against expenses (including attorneys' fees and disbursements) actually and
reasonably incurred by him/her in connection therewith without the necessity of
any action being taken by the Corporation other than the determination, in good
faith, that such defense has been successful. In all other cases wherein
indemnification is provided by this Article XII, unless ordered by a court,
indemnification shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he/she has met
the applicable standard of conduct specified in this Article XII. Such
determination shall be made (1) by a majority vote of the directors who are not
parties to such action, suit or proceeding, even though less than a quorum, or
(2) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or
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(3) by the holders of a majority of the shares of capital stock of the
Corporation entitled to vote thereon.
(c) Expenses (including attorneys' fees and disbursements) incurred by
an officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors in the specific case upon receipt of any
undertaking by or on behalf of such director or officer to repay such amount
unless it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation. Expenses (including attorneys' fees and
disbursements) incurred by other employees or agents in defending any civil,
criminal, administrative or investigative action, suit or proceeding may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding upon such terms and conditions, if any, as the Board of Directors
deems appropriate.
(d) No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct, fraud or
a knowing violation of law, (iii) pursuant to Section 78.300 of the Nevada
General Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit. No amendment to or repeal of this clause
(d) of this Article XII shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment or repeal.
(e) The indemnification and advancement of expenses provided by this
Article XII shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement may be entitled under any By-Law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in an official capacity and as to action in another capacity while
holding such office, and shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such person.
(f) By action of the Board of Directors, notwithstanding any interest
of the directors in such action, the Corporation may purchase and maintain
insurance, in such amounts as the Board of Directors deems appropriate, on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against
him/her and incurred by him/her in any such capacity, or arising out of his/her
status as such, whether or not the Corporation shall have the power to indemnify
him against such liability under the provisions of this Article XII.
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ARTICLE XIII
COMPROMISE OR ARRANGEMENT BETWEEN CORPORATION
AND ITS CREDITORS OR STOCKHOLDERS
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Nevada may, on the application in a summary way
of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Sections 78.347 or 78.630 of the Nevada General Corporation Law or
on the application of trustees in dissolution or of any receiver or receivers
appointed for the Corporation under the provisions of Sections 78.590, 78.635
and 78.650 of the Nevada General Corporation Law, order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
ARTICLE XIV
RESERVATION OF RIGHT TO AMEND
ARTICLES OF INCORPORATION
The Corporation shall not amend, alter, change or repeal Article III,
Article VII, this Article XIV or Article XV unless it has received (i) prior
written confirmation from each nationally recognized rating agency which has
rated any Securities that the current ratings on such Securities will not be
reduced or withdrawn as a result of such amendment, alteration, change or
repeal, (ii) the affirmative vote of 100% of the members of the Board of
Directors (which shall include the Independent Directors) of the Corporation,
and (iii) the affirmative vote of shareholders holding at least two-thirds (2/3)
of the total number of outstanding shares of capital stock of the Corporation
entitled to vote thereon. Subject to the foregoing limitation, the Corporation
reserves the right to amend, alter, change or repeal any provision contained in
these Articles of Incorporation, in the manner now or hereafter prescribed by
the law of the State of Nevada, and all the provisions of these Articles of
Incorporation and all rights and powers conferred in these Articles of
Incorporation on stockholders, directors and officers are subject to this
reserved power.
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ARTICLE XV
CORPORATE PROCEDURES
(a) The Corporation's assets will not be commingled with those of any
direct or ultimate parent of the Corporation or any other person or entity and
will hold all of its assets in its own name;
(b) The Corporation will maintain separate corporate records and books
of account from those of any subsidiaries, affiliates, or the direct or ultimate
parent of the Corporation or any other person or entity;
(c) The Corporation will not transfer any direct or indirect ownership
interest of more than a 49% interest therein, unless such transfer is
conditioned upon the delivery of a non-consolidation opinion acceptable to the
Entities;
(d) The Corporation will maintain bank accounts separate from any other
person or entity;
(e) The Corporation will maintain separate financial statements,
showing its assets and liabilities separate and apart from those of any other
person or entity and not to have its assets listed on the financial statement of
any other entity;
(f) The Corporation will pay its own liabilities and expenses solely
out of its own funds;
(g) The Corporation will observe all corporate and other organizational
formalities;
(h) The Corporation will maintain an arm's length relationship with its
affiliates and to enter into transactions with affiliates only on a commercially
reasonable basis;
(i) The Corporation will pay the salaries of its own employees from its
own funds;
(j) The Corporation will maintain a sufficient number of employees in
light of its contemplated business operations;
(k) The Corporation will not guarantee or become obligated for the
debts of any other entity or person;
(l) The Corporation will not hold out its credit as being available to
satisfy the obligations of any other person or entity;
(m) The Corporation will not acquire the obligations or securities of
its affiliates or owners, including partners, members or shareholders, as
appropriate;
(n) The Corporation will not make loans to any other person or entity
or to buy or hold evidence of indebtedness issued by any other person or entity
(other than cash, investment grade securities or from the Entities);
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(o) The Corporation will allocate fairly and reasonably any overhead
expenses that are shared with an affiliate, including paying for office space
and services performed by any employee of an affiliate;
(p) The Corporation will hold itself out as a separate entity;
(q) The Corporation will correct any known misunderstanding regarding
its separate identity;
(r) The Corporation will not identify itself as a division of any other
person or entity; and
(s) The Corporation will maintain adequate capital in light of its
contemplated business purposes.
ARTICLE XVI
ELECTION OF DIRECTORS
Elections of directors need not be by written ballot unless the By-Laws
of the Corporation shall so provide.
ARTICLE XVII
RECORDS OUTSIDE STATE
The books and records of the Corporation may, subject to any statutory
requirements, be kept at a location or locations outside the State of Nevada as
may be designated by the Board of Directors or in the By-Laws of the
Corporation.
ARTICLE XVIII
COMBINATIONS WITH INTERESTED
SHAREHOLDES ELECTION
The Corporation expressly elects not to be governed by Sections 78.411
to 78.444, inclusive, of the Nevada General Corporation Law.
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ARTICLE XIX
INCORPORATOR
The name and the mailing address of the Incorporator are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------ ---------------------------------------------------------
NAME ADDRESS
- ------------------------------------------------------------ ---------------------------------------------------------
<S> <C>
Michael T. Mullins Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
- ------------------------------------------------------------ ---------------------------------------------------------
* * * * * * *
</TABLE>
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT: The Corporation
Trust Company of Nevada hereby accepts appointment as Resident Agent for
Harley-Davidson Customer Funding Corp.
The Corporation Trust Company of Nevada by:
- ---------------------------------------- ----------------------
(Signature of Resident Agent) (Date)
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The undersigned, being the Incorporator named above, in order to form a
corporation pursuant to Title 7, Chapter 78 of the Nevada Revised Statutes, does
make this certificates hereby declaring and certifying that this is my act and
deed and that the facts herein stated are true, and accordingly have hereunto
set my hand this 12th day of May, 2000.
/s/ Michael T. Mullins
-------------------------
Sole Incorporator
STATE OF ILLINOIS)
) SS.
COUNTY OF COOK )
On this 12th day of May, 2000 personally appeared before me, a Notary
Public in and for the State of County aforesaid, Michael T. Mullins, known to me
to be the person who executed the foregoing Articles of Incorporation, and who
acknowledged to me that he executed the same freely and voluntarily and for the
uses and purposes therein described.
WITNESS my hand and official seal, this 12th day of May, 2000.
/s/ Notary Public
<PAGE>
BY-LAWS OF
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
ARTICLE I
OFFICES
Section 1.1. REGISTERED OFFICE. The registered office of the
Corporation shall be as set forth in the Corporations Articles of Incorporation,
as they may be amended from time to time.
Section 1.2. OTHER OFFICES. The Corporation may also have
offices at such other places both within and without the State of Nevada as the
Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
STOCKHOLDERS' MEETING
Section 2.1. PLACE OF MEETINGS. All meetings of the
stockholders, whether annual or special, shall be held in the City of Chicago,
State of Illinois, at such place as may be fixed from time to time by the Board
of Directors, or at such other place either within or without the State of
Nevada as may be designated from time to time by the Board of Directors and
stated in the notice of meeting.
Section 2.2. ANNUAL MEETINGS. An annual meeting of the
stockholders, commencing with the year 2001, shall be held on the second Monday
in December in each year, if not a legal holiday in the City of Chicago, State
of Illinois, and if a legal holiday in the City of Chicago, State of Illinois,
then on the next secular day following, at 12:00 noon, or at such other date and
time as shall be designated by the Board of Directors and stated in the notice
of meeting, at which they shall elect a Board of Directors, and transact such
other business as may properly be brought before the meeting.
Section 2.3. NOTICE OF MEETING. Written notice of the annual
meeting stating the place, date and hour of the meeting, shall be given not less
than ten or more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting. If mailed, notice is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
Section 2.4. STOCKHOLDERS' LIST. At least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at said meeting, arranged in alphabetical order and showing the address of
each stockholder and the number of shares
<PAGE>
registered in the name of each stockholder, shall be prepared by the Secretary.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting at the place within the city where the meeting is
to be held which place shall be specified in the notice of meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 2.5. SPECIAL MEETINGS. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by
statute or by the Articles of Incorporation, may be called by the President and
shall be called by the Secretary at the request of a majority of the Board of
Directors, or at the request in writing of stockholders owning at least a
majority of the number of shares of the Corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting. Business transacted at any special meeting shall be limited to
the purposes stated in the notice of special meeting.
Section 2.6. NOTICE OF SPECIAL MEETING. Written notice of a
special meeting, stating the place, date and hour of the meeting and the purpose
or purposes for which the meeting is called, shall be given not less than ten
nor more than sixty days before the date of the meeting to each stockholder
entitled to vote at such meeting. If mailed, notice is given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the Corporation.
Section 2.7. QUORUM. The holders of a majority of the shares
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall be requisite and shall constitute a quorum at all
meetings of the stockholders for the transaction of business except as otherwise
provided by statute, by the Articles of Incorporation or by these By-Laws. If,
however, such quorum shall not be present or represented at any meeting of the
stockholders, the stockholder entitled to vote thereat, present in person or
represented by proxy, shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, of the place, date
and hour of the adjourned meeting, until a quorum shall again be present or
represented by proxy. At the adjourned meeting at which a quorum shall be
present or represented by proxy, the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than sixty days, or if after the adjournment, a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 2.8. VOTING. When a quorum is present at any meeting,
the vote of the holders of a majority of the shares having voting power, present
in person or represented by proxy, shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of the
statutes or of the Articles of Incorporation or of these By-Laws, a different
vote is required in which case such express provision shall govern and control
the decision of such question. Each stockholder shall have one vote for each
share of stock having voting power registered in his name on the books of the
Corporation, except as otherwise provided in the Articles of Incorporation.
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Section 2.9. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for him
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 2.10. UNANIMOUS CONSENT. Whenever the vote of
stockholders at a meeting thereof is required or permitted to be taken for or in
connection with any corporate action by any provisions of the statutes or of the
Articles of Incorporation or these By-Laws, the meeting, notice of the meeting,
and vote of stockholders may be dispensed with if all the stockholders who would
have been entitled to vote upon the action, if such meeting were held, shall
consent in writing to such corporate action being taken.
ARTICLE III
DIRECTORS
Section 3.1. GENERAL POWERS. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of Directors
which may exercise all such powers of the Corporation and do all such acts and
things as are not by the Nevada General Corporation Law nor by the Articles of
Incorporation nor by these By-Laws directed or required to be exercised or done
by the stockholders.
Section 3.2. NUMBER OF DIRECTORS. The number of directors
which shall constitute the whole Board shall be not less than three (3) nor more
than eight (8). Each director shall be elected at the annual meeting of the
stockholders, and shall hold office until his successor is elected and qualified
or until his earlier resignation or removal.
Section 3.3. VACANCIES. If the office of a director becomes
vacant by reason of death, resignation, retirement disqualification, removal
from office, or otherwise, or a new directorship is created, the holders of a
plurality of shares issued and outstanding and entitled to vote in elections of
directors, shall choose a successor or successors, or a director to fill the
newly created directorship, who shall hold office for the unexpired term or
until the next election of directors.
Section 3.4. PLACE OF MEETINGS. The Board of Directors may
hold its meetings outside of the State of Nevada, at the office of the
Corporation or at such other places as they may from time to time determine, or
as shall be fixed in the respective notices or waivers of notice of such
meetings.
Section 3.5. COMMITTEES OF DIRECTORS. The Board of Directors
may, by resolution or resolutions passed by a majority of the whole Board,
designate one or more committees, each committee to consist of one or more of
the directors of the Corporation. The Board may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to the
extent provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be
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affixed to all papers which may require it; but no such committee shall have the
power of authority in reference to amending the Articles of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amendment to
the By-Laws, of the Corporation; and, unless the resolution, By-Laws, or
Articles of Incorporation expressly so provide, no such committee shall have the
power or authority to declare a dividend or to authorize the issuance of stock.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board of Directors. The
committees shall keep regular minutes of their proceedings and report the same
to the Board of Directors when required.
Section 3.6. COMPENSATION OF DIRECTORS. Directors, as such,
may receive such stated salary for their services and/or such fixed sums and
expenses of attendance for attendance at each regular or special meeting of the
Board of Directors as may be established by resolution of the Board; provided
that nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
Section 3.7. ANNUAL MEETING. The annual meeting of the Board
of Directors shall be held within ten days after the annual meeting of the
stockholders in each year. Notice of such meeting, unless waived, shall be given
by mail or telegram to each director elected at such annual meeting, at his
address as the same may appear on the records of the Corporation, or in the
absence of such address, at his residence or usual place of business, at least
three days before the day on which such meeting is to be held. Said meeting may
be held at such place as the Board may fix from time to time or as may be
specified or fixed in such notice or waiver thereof.
Section 3.8. SPECIAL MEETINGS. Special meetings of the Board
of Directors may be held at any time on the call of the President or at the
request in writing of at least 40% of the directors. Notice of any such meeting,
unless waived, shall be given by mail or telegram to each director at his
address as the same appears on the records of the Corporation not less than one
day prior to the day on which such meeting is to be held if such notice is by
telegram, and not less than two days prior to the day on which the meeting is to
be held if such notice is by mail. If the Secretary shall fail or refuse to give
such notice, then the notice may be given by the officer or any one of the
directors making the call. Any such meeting may be held at such place as the
Board may fix from time to time or as may be specified or fixed in such notice
or waiver thereof. Any meeting of the Board of Directors shall be a legal
meeting without any notice thereof having been given, if all the directors shall
be present thereat, and no notice of a meeting shall be required to be given to
any directors who shall attend such meeting.
Section 3.9. ACTION WITHOUT MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
thereof may be taken without a meeting, if a written consent to such action is
signed by all members of the Board or such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the Board of
Directors.
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Members of the Board of Directors, or any committee designated
by the Board, may participate in a meeting of the Board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting.
Section 3.10. QUORUM AND MANNER OF ACTING. Except as otherwise
provided in these By-Laws, a majority of the total number of directors as at the
time specified by the By-Laws shall constitute a quorum at any regular or
special meeting of the Board of Directors. Except as otherwise provided by
statute, by the Articles of Incorporation or by these By-Laws, the vote of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors. In the absence of a quorum, a
majority of the directors present may adjourn the meeting from time to time
until a quorum shall be present. Notice of any adjourned meeting need not be
given, except that notice shall be given to all directors if the adjournment is
for more than thirty days.
ARTICLE IV
OFFICERS
Section 4.1. EXECUTIVE OFFICERS. The executive officers of the
Corporation shall be a President, such number of Vice Presidents, if any, as the
Board of Directors may determine, a Secretary and a Treasurer. One person may
hold any number of said offices.
Section 4.2. ELECTION, TERM OF OFFICE AND ELIGIBILITY. The
executive officers of the Corporation shall be elected annually by the Board of
Directors at its annual meeting or at a special meeting held in lieu thereof.
Each officer, except such officers as may be appointed in accordance with the
provisions of Section 4.3, shall hold office until his successor shall have been
duly chosen and qualified or until his death, resignation or removal. None of
the officers need be members of the Board.
Section 4.3. SUBORDINATE OFFICERS. The Board of Directors may
appoint such Assistant Secretaries, Assistant Treasurers, Controller and other
officers, and such agents as the Board may determine, to hold office for such
period and with such authority and to perform such duties as the Board may from
time to time determine. The Board may, by specific resolution, empower the chief
executive officer of the Corporation or the Executive Committee to appoint any
such subordinate officers or agents.
Section 4.4. REMOVAL. The President, any Vice President, the
Secretary and/or the Treasurer may be removed at any time, either with or
without cause, but only by the affirmative vote of the majority of the total
number of directors as at the time specified by the By-Laws. Any subordinate
officer appointed pursuant to Section 4.3 may be removed at any time, either
with or without cause, by the majority vote of the directors present at any
meeting of the Board or by any committee or officer empowered to appoint such
subordinate officers.
Section 4.5. THE PRESIDENT. The President shall be the chief
executive officer of the Corporation. He shall have executive authority to see
that all orders and resolutions of the
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Board of Directors are carried into effect and, subject to the control vested in
the Board of Directors by statute, by the Articles of Incorporation, or by these
By-Laws, shall administer and be responsible for the management of the business
and affairs of the Corporation. He shall preside at all meetings of the
stockholders and the Board of Directors; and in general shall perform all duties
incident to the office of the President and such other duties incident to the
office of the President and such other duties as from time to time may be
assigned to him by the Board of Directors.
Section 4.6. THE VICE PRESIDENTS. In the event of the absence
or disability of the President, each Vice President, in the order designated, or
in the absence of any designation, then in the order of their election, shall
perform the duties of the President. The Vice Presidents shall also perform such
other duties as from time to time may be assigned to the them by the Board of
Directors or by the chief executive officer of the Corporation.
Section 4.7. THE SECRETARY. The Secretary shall:
(a) Keep the minutes of the meetings of the stockholders
and of the Board of Directors;
(b) See that all notices are duly given in accordance with the
provisions of these By-Laws or as required by law;
(c) Be custodian of the records and of the seal of the
Corporation and see that the seal or a facsimile or equivalent thereof
is affixed to or reproduced on all documents, the execution of which on
behalf of the Corporation under its seal is duly authorized;
(d) Have charge of the stock record books of the Corporation;
(e) In general, perform all duties incident to the office of
Secretary, and such other duties as are provided by these By-Laws and
as from time to time are assigned to him by the Board of Directors or
by the chief executive officer of the Corporation.
Section 4.7 THE ASSISTANT SECRETARIES. If one or more
Assistant Secretaries shall be appointed pursuant to the provisions of Section
4.3 respecting subordinate officers, then, at the request of the Secretary, or
in his absence or disability, the Assistant Secretary designated by the
Secretary (or in the absence of such designations, then any one of such
Assistant Secretaries) shall perform the duties of the Secretary and when so
acting shall have all the powers of, and be subject to all the restrictions
upon, the Secretary.
Section 4.8. THE TREASURER. The Treasurer shall:
(a) Receive and be responsible for all funds of and securities
owned or held by the Corporation and, in connection therewith, among
other things: keep or cause to be kept full and accurate records and
accounts for the Corporation; deposit or cause to be deposited to the
credit of the Corporation all moneys, funds and securities so received
in such bank or other depositary as the Board of
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Directors or an officer designated by the Board may from time to time
establish; and disburse or supervise the disbursement of the funds of
the Corporation as may be properly authorized.
(b) Render to the Board of Directors at any meeting thereof,
or from time to time when ever the Board of Directors or the chief
executive officer of the Corporation may require, financial and other
appropriate reports on the condition of the Corporation;
(c) In general, perform all the duties incident to the office
of Treasurer and such other duties as from time to time may be assigned
to him by the Board of Directors or by the chief executive officer of
the Corporation.
Section 4.9. THE ASSISTANT TREASURERS. If one or more
Assistant Treasurers shall be appointed pursuant to the provisions of Section
4.3 respecting subordinate officers, then, at the request of the Treasurer, or
in his absence or disability, the Assistant Treasurer designated by the
Treasurer (or in the absence of such designation, then any one of such Assistant
Treasurers) shall perform all the duties of the Treasurer and when so acting
shall have all the powers of and be subject to all the restrictions upon, the
Treasurer.
Section 4.10. SALARIES. The salaries of the officers shall be
fixed from time to time by the Board of Directors, and no officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the Corporation.
Section 4.11. BONDS. If the Board of Directors or the chief
executive officer shall so require, any officer or agent of the Corporation
shall give bond to the Corporation in such amount and with such surety as the
Board of Directors or the chief executive officer, as the case may be, may deem
sufficient, conditioned upon the faithful performance of their respective duties
and offices.
Section 4.12. DELEGATION OF DUTIES. In case of the absence of
any officer of the Corporation or for any other reason which may seem sufficient
to the Board of Directors, the Board of Directors may, for the time being,
delegate his powers and duties, or any of them, to any other officer or to any
director.
ARTICLE V
SHARES OF STOCK
Section 5.1. REGULATION. Subject to the terms of any contract
of the Corporation, the Board of Directors may make such rules and regulations
as it may deem expedient concerning the issue, transfer, and registration of
certificates for shares of the stock of the Corporation, including the issue of
new certificates for lost, stolen or destroyed certificates, and including the
appointment of transfer agents and registrars.
Section 5.2. STOCK CERTIFICATES. Certificates for shares of
the stock of the Corporation shall be respectively numbered serially for each
class of stock, or series thereof, as they are issued, shall be impressed with
the corporate seal or a facsimile thereof, and shall be
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signed by the President or a Vice President, and by the Secretary or Treasurer,
or an Assistant Secretary or an Assistant Treasurer, provided that such
signatures may be facsimiles on any certificate countersigned by a transfer
agent other than the Corporation or its employee. Each certificate shall exhibit
the name of the Corporation, the class (or series of any class) and number of
shares represented thereby, and the name of the holder. Each certificate shall
be otherwise in such form as may be prescribed by the Board of Directors.
Section 5.3. RESTRICTION ON TRANSFER OF SECURITIES. A
restriction on the transfer or registration of transfer of securities of the
Corporation may be imposed either by the Articles of Incorporation or by these
By-Laws or by an agreement among any number of security holders or among such
holders and the Corporation. No restriction so imposed shall be binding with
respect to securities issued prior to the adoption of the restriction unless the
holders of the securities are parties to an agreement or voted in favor of the
restriction.
A restriction on the transfer of securities of the Corporation
is permitted by this Section if it:
(a) Obligates the holder of the restricted securities to offer
to the Corporation or to any other holders of securities of the
Corporation or to any other person or to any combination of the
foregoing a prior opportunity, to be exercised within a reasonable
time, to acquire the restricted securities; or
(b) Obligates the Corporation or any holder of securities of
the Corporation or any other person or any combination of the foregoing
to purchase the securities which are the subject of an agreement
respecting the purchase and sale of the restricted securities; or
(c) Requires the Corporation or the holders of any class of
securities of the Corporation to consent to any proposed transfer of
the restricted securities or to approve the proposed transferee of the
restricted securities; or
(d) Prohibits the transfer of the restricted securities to
designated persons or classes of persons; and such designation is not
manifestly unreasonable; or
(e) Restricts transfer or registration of transfer in any
other lawful manner.
Unless noted conspicuously on the security, a restriction,
even though permitted by this Section, is ineffective except against a person
with actual knowledge of the restriction.
Section 5.4. TRANSFER OF SHARES. Subject to the restrictions
permitted by Section 5.3, shares of the capital stock of the Corporation shall
be transferable on the books of the Corporation by the holder thereof in person
or by his duly authorized attorney, upon the surrender or cancellation of a
certificate or certificates for a like number of shares. As against the
Corporation, a transfer of shares can be made only on the books of the
Corporation and in the manner hereinabove provided, and the Corporation shall be
entitled to treat the registered holder of any share as the owner thereof and
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person, whether or not it shall have express
or other notice thereof, save as expressly provided by the statutes of the State
of Nevada.
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Section 5.5. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF
RECORD. (a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
is fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; providing, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors. If no record date has been fixed by the Board of
Directors, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by the Nevada Corporation Law, shall be the first date
on which a signed written consent setting forth the action taken or proposed to
be taken is delivered to the Corporation by delivery to its registered office in
the State of Nevada, its principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings by
stockholders are recorded. Delivery made to a Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by the Nevada General Corporation Law, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action.
(c) In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect to any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty days
prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
Section 5.6. LOST CERTIFICATE. Any stockholder claiming that a
certificate representing shares of stock has been lost, stolen or destroyed may
make an affidavit or affirmation of the fact and, if the Board of Directors so
requires, advertise the same in a manner designated by the Board, and give the
Corporation a bond of indemnity in form and with security for an amount
satisfactory to the Board (or an officer or officers designated by the Board),
whereupon a new certificate may be issued of the same tenor and representing the
same number,
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class and/or series of shares as were represented by the certificate alleged to
have been lost, stolen or destroyed.
ARTICLE VI
BOOKS AND RECORDS
Section 6.1. LOCATION. The books, accounts and records of the
Corporation may be kept at such place or places within or without the State of
Nevada as the Board of Directors may from time to time determine.
Section 6.2. INSPECTION. The books, accounts, and records of
the Corporation shall be open to inspection by any member of the Board of
Directors at all times; and open to inspection by the stockholders at such
times, and subject to such regulations as the Board of Directors may prescribe,
except as otherwise provided by statute.
ARTICLE VII
DIVIDENDS AND RESERVES
Section 7.1. DIVIDENDS. The Board of Directors of the
Corporation, subject to any restrictions contained in the Articles of
Incorporation and other lawful commitments of the Corporation, may declare and
pay dividends upon the shares of its capital stock either out of the surplus of
the Corporation, as defined in and computed in accordance with the Nevada
General Corporation Law, or in case there shall be no such surplus, out of the
net profits of the Corporation for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. If the capital of the Corporation,
computed in accordance with the Nevada General Corporation Law, shall have been
diminished by depreciation in the value of its property, or by losses, or
otherwise, to an amount less than the aggregate amount of the capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets, the Board of Directors of the
Corporation shall not declare and pay out of such net profits any dividends upon
any shares of any classes of its capital stock until the deficiency in the
amount of capital represented by the issued and outstanding stock of all classes
having a preference upon the distribution of assets shall have been repaired.
Dividends may be paid in cash, in property, or in shares of the Corporation's
capital stock.
Section 7.2. RESERVES. The Board of Directors of the
Corporation may set apart, out of any of the funds of the Corporation available
for dividends, a reserve or reserves for any proper purpose and may abolish any
such reserve.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. FISCAL YEAR. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
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Section 8.2. DEPOSITORIES. The Board of Directors or an
officer designated by the Board shall appoint banks, trust companies, or other
depositories in which shall be deposited from time to time the money or
securities of the Corporation.
Section 8.3. CHECKS, DRAFTS AND NOTES. All checks, drafts, or
other orders for the payment of money and all notes or other evidence or
indebtedness issued in the name of the Corporation shall be signed by such
officer or officers or agent or agents as shall from time to time be designated
by resolution of the Board of Directors or by an officer appointed by the Board.
Section 8.4. CONTRACTS AND OTHER INSTRUMENTS. The Board of
Directors may authorize any officer, agent or agents to enter into any contract
or execute and deliver any instrument in the name and on behalf of the
Corporation and such authority may be general or confined to specific instances.
Section 8.5. INSURANCE. The Corporation may maintain
insurance, at its expense, to protect itself and any director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another Corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the Nevada General Corporation Law.
Section 8.6. NOTICES. Whenever under the provisions of the
statutes or of the Articles of Incorporation or of these By-Laws notice is
required to be given to any director or stockholder, it shall not be construed
to mean personal notice, but such notice may be given in writing, by mail, by
depositing the same in post office or letter box, in a postpaid sealed wrapper,
or by delivery to a telegraph company, addressed to such director or stockholder
at such address as appears on the records of the Corporation, and such notice
shall be deemed to be given at the time when the same shall be thus mailed or
delivered to a telegraph company. Notice may also be given by facsimile
transmission provided that such notice shall be immediately confirmed by a
telephone call to the recipient at the number specified in the records of the
Corporation and such notice shall be deemed to be given at the time when the
same shall be transmitted by facsimile machine.
Section 8.7. WAIVERS OF NOTICE. Whenever any notice is
required to be given under the provisions of the statutes or of the Articles of
Incorporation or of these By-Laws, a waiver thereof in writing signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a person at
a meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders, directors or
members of a committee of directors need be specified in any written waiver of
notice.
Section 8.8. STOCK IN OTHER CORPORATIONS. Any shares of stock
in any other Corporation which may be from time to time be held by this
Corporation may be represented and
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voted at any meeting of shareholders of such Corporation by the President or a
Vice President, or by any other person or persons thereunto authorized by the
Board of Directors, or by any proxy designated by written instrument of
appointment executed in the name of this Corporation by its President or a Vice
President. Shares of stock belonging to the Corporation need not stand in the
name of the Corporation, but may be held for the benefit of the Corporation in
the individual name of the Treasurer of any other nominee designated for the
purpose by the Board of Directors. Certificates for shares so held for the
benefit of the Corporation shall be endorsed in blank or have proper stock
powers attached so that said certificates are at all times in due form for
transfer, and shall be held for safekeeping in such manner as shall be
determined from time to time by the Board of Directors.
Section 8.9. AMENDMENT OF BY-LAWS. The stockholders, by the
affirmative vote of the holders of a majority of the stock issued and
outstanding and having voting power may, at any annual or special meeting if
notice of such alteration or amendment of the By-Laws is contained in the notice
of such meeting, adopt, amend, or repeal these By-Laws, and alterations or
amendments of By-Laws made by the stockholders shall not be altered or amended
by the Board of Directors.
The Board of Directors, by the affirmative vote of a majority
of the whole Board, may adopt, amend, or repeal these By-Laws at any meeting,
except as provided in the above paragraph. By-Laws made by the Board of
Directors may be altered or repealed by the stockholders.
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EXHIBIT 4.1
FORM OF
TRUST AGREEMENT
by and between
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,
as Trust Depositor,
and
[___________________],
as Owner Trustee
Dated as of [___________]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE ONE DEFINITIONS..............................................................................1
Section 1.01. Capitalized Terms......................................................................1
Section 1.02. Other Definitional Provisions..........................................................4
Section 1.03. Usage of Terms.........................................................................4
Section 1.04. Section References.....................................................................4
Section 1.05. Accounting Terms.......................................................................5
ARTICLE TWO ORGANIZATION.............................................................................5
Section 2.01. Name...................................................................................5
Section 2.02. Office.................................................................................5
Section 2.03. Purposes and Powers....................................................................5
Section 2.04. Appointment of Owner Trustee...........................................................6
Section 2.05. Initial Capital Contribution of Owner Trust Estate.....................................6
Section 2.06. Declaration of Trust...................................................................6
Section 2.07. Liability of Trust Depositor...........................................................7
Section 2.08. Title to Trust Property................................................................7
Section 2.09. Situs of Trust.........................................................................7
Section 2.10. Representations and Warranties of the Trust Depositor..................................7
Section 2.11. Federal Income Tax Allocations.........................................................9
ARTICLE THREE TRUST CERTIFICATES AND TRANSFER OF INTERESTS............................................10
Section 3.01. Initial Ownership.....................................................................10
Section 3.02. The Trust Certificates................................................................10
Section 3.03. Authentication and Delivery of Trust Certificates.....................................10
Section 3.04. Registration of Transfer and Exchange of Trust Certificates...........................11
Section 3.05. Mutilated, Destroyed, Lost or Stolen Trust Certificates...............................12
Section 3.06. Persons Deemed Owners.................................................................12
Section 3.07. Access to List of Certificateholders' Names and Addresses.............................12
Section 3.08. Maintenance of Office or Agency.......................................................13
Section 3.09. Temporary Trust Certificates..........................................................13
Section 3.10. Appointment of Paying Agent...........................................................13
Section 3.11. Ownership by Trust Depositor of Trust Certificates....................................14
Section 3.12. Book-Entry Certificates...............................................................14
Section 3.13. Notices to Clearing Agency............................................................15
Section 3.14. Definitive Trust Certificates.........................................................15
ARTICLE FOUR ACTIONS BY OWNER TRUSTEE................................................................16
Section 4.01. Prior Notice to Owners with Respect to Certain Matters................................16
Section 4.02. Action by Owners with Respect to Certain Matters......................................17
Section 4.03. Action by Owners with Respect to Bankruptcy...........................................17
Section 4.04. Restrictions on Owners' Power.........................................................17
Section 4.05. Majority Control......................................................................17
ARTICLE FIVE APPLICATION OF TRUST FUNDS; CERTAIN DUTIES..............................................17
Section 5.01. Establishment of Trust Account........................................................17
Section 5.02. Application of Trust Funds............................................................18
Section 5.03. Method of Payment.....................................................................18
Section 5.04. No Segregation of Moneys; No Interest.................................................19
Section 5.05. Accounting and Reports to the Certificateholders, Owners, the Internal Revenue Service
and Others............................................................................19
Section 5.06. Signature on Returns; Tax Matters Partner.............................................19
ARTICLE SIX AUTHORITY AND DUTIES OF OWNER TRUSTEE...................................................20
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Section 6.01. General Authority.....................................................................20
Section 6.02. General Duties........................................................................20
Section 6.03. Action Upon Instruction...............................................................20
Section 6.04. No Duties Except as Specified in this Agreement or in Instructions....................21
Section 6.05. No Action Except Under Specified Documents or Instructions............................22
Section 6.06. Restrictions..........................................................................22
ARTICLE SEVEN CONCERNING THE OWNER TRUSTEE............................................................22
Section 7.01. Acceptance of Trusts and Duties.......................................................22
Section 7.02. Furnishing of Documents...............................................................23
Section 7.03. Representations and Warranties........................................................23
Section 7.04. Reliance; Advice of Counsel...........................................................24
Section 7.05. Not Acting in Individual Capacity.....................................................24
Section 7.06. Owner Trustee Not Liable for Trust Certificates, Notes or Contracts...................24
Section 7.07. Owner Trustee May Own Trust Certificates and Notes....................................25
ARTICLE EIGHT COMPENSATION OF OWNER TRUSTEE...........................................................25
Section 8.01. Owner Trustee's Fees and Expenses.....................................................25
Section 8.02. Indemnification.......................................................................25
Section 8.03. Payments to the Owner Trustee.........................................................26
ARTICLE NINE TERMINATION OF TRUST AGREEMENT..........................................................26
Section 9.01. Termination of Trust Agreement........................................................26
Section 9.02. Dissolution upon Bankruptcy of Trust Depositor or Withdrawal or Removal of Trust
Depositor.............................................................................27
ARTICLE TEN SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES..................................28
Section 10.01. Eligibility Requirements for Owner Trustee............................................28
Section 10.02. Resignation or Removal of Owner Trustee...............................................28
Section 10.03. Successor Owner Trustee...............................................................29
Section 10.04. Merger or Consolidation of Owner Trustee..............................................29
Section 10.05. Appointment of Co-Trustee or Separate Trustee.........................................30
ARTICLE ELEVEN MISCELLANEOUS...........................................................................31
Section 11.01. Supplements and Amendments............................................................31
Section 11.02. No Legal Title to Trust Estate in Owners..............................................32
Section 11.03. Limitations on Rights of Others.......................................................32
Section 11.04. Notices...............................................................................33
Section 11.05. Severability of Provisions............................................................34
Section 11.06. Counterparts..........................................................................35
Section 11.07. Successors and Assigns................................................................35
Section 11.08. Covenants of the Trust Depositor......................................................35
Section 11.09. No Petition...........................................................................35
Section 11.10. No Recourse...........................................................................35
Section 11.11. Headings..............................................................................35
Section 11.12. Governing Law.........................................................................35
Section 11.13. Trust Certificate Transfer Restrictions...............................................36
Section 11.14. Trust Depositor Payment Obligation....................................................36
EXHIBITS
Exhibit A - Form of Certificate of Trust......................................................................A-1
Exhibit B - Form of Trust Certificate.........................................................................B-1
</TABLE>
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TRUST AGREEMENT dated as of [___________], between HARLEY-DAVIDSON
CUSTOMER FUNDING CORP., a Nevada corporation, as Trust Depositor (the "TRUST
DEPOSITOR"), and [____________], a Delaware banking corporation, as owner
trustee (the "OWNER TRUSTEE").
WHEREAS, in connection herewith, the Trust Depositor is willing to
assume certain obligations pursuant hereto; and
WHEREAS, in connection herewith, the Trust Depositor is willing to
purchase the Trust Depositor Certificate (as defined herein) to be issued
pursuant to this Agreement and to assume certain obligations pursuant hereto;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. CAPITALIZED TERMS. Except as otherwise provided in this
Agreement, whenever used in this Agreement the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"ADMINISTRATION AGREEMENT" means the administration agreement, dated as
of the date hereof, among the Trust, the Trust Depositor, the Indenture Trustee
and Harley-Davidson Credit, as administrator.
"AGREEMENT" means this Trust Agreement, as the same may be amended and
supplemented from time to time.
"APPLICANT" shall have the meaning set forth in Section 3.07.
"BENEFIT PLAN" means (i) an employee benefit plan (as such term is
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code or (iii) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity.
"BOOK-ENTRY TRUST CERTIFICATE" means a beneficial interest in the Trust
Certificates, the ownership of which shall be evidenced by, and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 3.12.
"BUSINESS TRUST STATUTE" means Chapter 38 of Title 12 of the Delaware
Code, 12 DEL. CODE Section 3801 ET SEQ., as the same may be amended from time to
time.
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"CERTIFICATE DEPOSITORY AGREEMENT" means the agreement dated as of the
Closing Date, by and among the Trust, the Owner Trustee, the Administrator and
DTC, as the initial Clearing Agency, substituting, in the form attached hereto
as EXHIBIT A, relating to the Trust Certificates, other than the Trust Depositor
Certificate, as the same may be amended and supplemented from time to time.
"CERTIFICATE DISTRIBUTION ACCOUNT" means the account established and
maintained as such pursuant to Section 5.01.
"CERTIFICATE OF TRUST" means the Certificate of Trust filed for the
Trust pursuant to Section 3810(a) of the Business Trust Statute, substantially
in the form of EXHIBIT A hereto.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" mean the register
maintained and the registrar (or any successor thereto) appointed pursuant to
Section 3.04(a).
"CERTIFICATEHOLDER" or "HOLDER" means with respect to Definitive Trust
Certificates the Person in whose name a Trust Certificate is registered in the
Certificate Register and with respect to a Book-Entry Trust Certificate, the
Person who is the owner of such Book-Entry Trust Certificate, as reflected on
the books of the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly or as an indirect participant, in
either case, in accordance with the rules of such Clearing Agency), except that,
solely for the purposes of giving any consent, waiver, request or demand
pursuant to this Agreement, the interest evidenced by any Trust Certificate
registered in the name of the Trust Depositor, Harley-Davidson Credit or any of
their respective Affiliates shall not be taken into account in determining
whether the requisite percentage necessary to effect any such consent, waiver,
request or demand in respect of the Trust Certificate shall have been obtained.
"CLEARING AGENCY" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"CLOSING DATE" means on or about [______________].
"CODE" means the Internal Revenue Code of 1986, as amended.
"DEFINITIVE TRUST CERTIFICATES" shall have the meaning set forth in
Section 3.12.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXPENSES" shall have the meaning assigned to such term in Section
8.02.
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"HARLEY-DAVIDSON CREDIT" means Harley-Davidson Credit Corp., a Nevada
corporation.
"INDEMNIFIED PARTIES" shall have the meaning assigned to such term in
Section 8.02.
"INDENTURE" means the Indenture dated as of the date hereof between the
Trust and [_____________], as Indenture Trustee.
"INITIAL CERTIFICATE BALANCE" means $____________.
"NOTE DEPOSITORY AGREEMENT" means the Agreement dated as of the Closing
Date among the Trust, the Indenture Trustee, the Administrator and DTC, as the
initial Clearing Agency, relating to the Notes, as the same may be amended and
supplemented from time to time.
"NOTES" means the Class A-1 Notes, the Class A-2 Notes and the Class B
Notes, in each case issued pursuant to the Indenture.
"OWNER" means each Holder of a Trust Certificate.
"OWNER TRUSTEE" means [_____________], a _________ corporation, not in
its individual capacity but solely as owner trustee under this Agreement, and
any successor Owner Trustee hereunder.
"OWNER TRUSTEE CORPORATE TRUST OFFICE" means the office of the Owner
Trustee at which its corporate trust business shall be administered, which
initially shall be [_________________________] Attn: [_________], or such other
office at such other address as the Owner Trustee may designate from time to
time by notice to the Certificateholders, the Servicer, the Trust Depositor and
Harley-Davidson Credit.
"PAYING AGENT" means any paying agent or co-paying agent appointed
pursuant to Section 3.10.
"PERSON" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof) unincorporated organization or government or any agency or political
subdivision thereof.
"RECORD DATE" means, with respect to any Distribution Date, the last
Business Day of the preceding calendar month.
"SALE AND SERVICING AGREEMENT" means the sale and servicing agreement,
dated as of the date hereof, among the Trust, as Issuer, the Trust Depositor,
Harley-Davidson Credit, as servicer, and [_____________], as Indenture Trustee
as the same may be amended or supplemented from time to time.
"SECRETARY OF STATE" means the Secretary of State of the State of
Delaware.
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"TAX MATTERS PARTNER" shall have the meaning provided in Section
5.06(b) hereof.
"TREASURY REGULATIONS" means regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"TRUST" means the trust established by this Agreement.
"TRUST CERTIFICATES" means the trust certificates evidencing the
beneficial equity interest of an Owner in the Trust, substantially in the form
of EXHIBIT B hereto.
"TRUST DEPOSITOR" means Harley-Davidson Customer Funding Corp. in its
capacity as Trust Depositor hereunder, and its successors.
"TRUST DEPOSITOR CERTIFICATE" means the Trust Certificate purchased by
the Trust Depositor on the Closing Date pursuant to Section 3.11, having an
initial principal balance equal to $171,000.
"TRUST ESTATE" means all right, title and interest of the Trust in and
to the property and rights assigned to the Trust pursuant to Article Two of the
Sale and Servicing Agreement, all funds on deposit from time to time in the
Trust Accounts and the Certificate Distribution Account and all other property
of the Trust from time to time, including any rights of the Owner Trustee and
the Trust pursuant to the Sale and Servicing Agreement and the Administration
Agreement.
"UNDERWRITERS" means [_______________] and [_________________].
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS. Capitalized terms used
that are not otherwise defined herein shall have the meanings ascribed thereto
in the Sale and Servicing Agreement or, if not defined therein, in the
Indenture.
SECTION 1.03. 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 1.04. SECTION REFERENCES. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
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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
ORGANIZATION
SECTION 2.01. NAME. The Trust created hereby shall be known as
"HARLEY-DAVIDSON MOTORCYCLE TRUST [_______]", in which name the Owner Trustee
may conduct the activities of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
SECTION 2.02. OFFICE. The office of the Trust shall be in care of the
Owner Trustee at the Owner Trustee Corporate Trust Office or at such other
address in Delaware as the Owner Trustee may designate by written notice to the
Owners and the Trust Depositor.
SECTION 2.03. PURPOSES AND POWERS.
(a) The sole purpose of the Trust is to manage the Trust
Estate and collect and disburse the periodic income therefrom for the use and
benefit of the Owners, and in furtherance of such purpose to engage in the
following ministerial activities:
(i) to issue the Notes pursuant to the Indenture
and the Trust Certificates pursuant to this Agreement and to sell the
Notes and the Trust Certificates;
(ii) with the proceeds of the sale of the Notes
and the Trust Certificates, to purchase the Contracts, to fund the
Pre-Funding Account and to pay the organizational, start-up and
transactional expenses of the Trust and to pay the balance to the Trust
Depositor pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage
and convey the Trust Estate pursuant to the Indenture and to hold,
manage and distribute to the Owners pursuant to the Sale and Servicing
Agreement any portion of the Trust Estate released from the Lien of,
and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations
under the Transaction Documents to which it is to be a party;
(v) to engage in those activities, including
entering into agreements, that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected
therewith; and
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(vi) subject to compliance with the Transaction
Documents, to engage in such other activities as may be required in
connection with conservation of the Trust Estate and the making of
distributions to the Owners and the Noteholders.
The Trust shall not engage in any activities other than in connection with the
foregoing. Nothing contained herein shall be deemed to authorize the Owner
Trustee to engage in any business operations or any activities other than those
set forth in the introductory sentence of this Section. Specifically, the Owner
Trustee shall have no authority to engage in any business operations, or acquire
any assets other than those specifically included in the Trust Estate under
Section 1.01, or otherwise vary the assets held by the Trust. Similarly, the
Owner Trustee shall have no discretionary duties other than performing those
ministerial acts set forth above necessary to accomplish the purpose of this
Trust as set forth in the introductory sentence of this Section.
SECTION 2.04. APPOINTMENT OF OWNER TRUSTEE. The Trust Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein, and the
Owner Trustee hereby accepts such appointment.
SECTION 2.05. INITIAL CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE. The
Trust Depositor hereby sells, assigns, transfers, conveys and sets over to the
Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Trust Depositor, as of the date hereof,
of the foregoing contribution, which shall constitute the initial Trust Estate
and shall be deposited in the Reserve Account pursuant to Section 7.04 of the
Sale and Servicing Agreement. The Trust Depositor shall pay organizational
expenses of the Trust as they may arise or shall, upon the request of the Owner
Trustee, promptly reimburse the Owner Trustee for any such expenses paid by the
Owner Trustee.
SECTION 2.06. DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Trust Estate in trust upon and subject to the conditions
set forth herein for the sole purpose of conserving the Trust Estate and
collecting and disbursing the periodic income therefrom for the use and benefit
of the Owners, subject to the obligations of the Trust under the Transaction
Documents. It is the intention of the parties hereto that the Trust constitute a
business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. It is the intention
of the parties hereto that, solely for income and franchise tax purposes, the
Trust shall be treated as a partnership, with the assets of the partnership
being the Contracts and other assets held by the Trust, the partners of the
partnership being the Certificateholders (including the Trust Depositor) and the
Notes being debt of the partnership. The parties agree that, unless otherwise
required by a final determination to the contrary, the Trust will file or cause
to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust as a partnership, the partners
of the partnership being the Certificateholders (including the Trust Depositor)
and the Notes being debt of the partnership, for such tax purposes. The Tax
Matters Partner shall prepare and the Owner Trustee shall file, on behalf of the
Trust and Certificateholders, IRS Form 8832 making the protective election for
the Trust to be treated as a partnership for federal income tax purposes as of
the Closing Date. Effective as of the date hereof, the Owner Trustee shall have
all rights,
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powers and duties set forth herein and in the Business Trust Statute for the
sole purpose and to the extent necessary to accomplish the purpose of this Trust
as set forth in the introductory sentence of Section 2.03.
SECTION 2.07. [LIABILITY OF TRUST DEPOSITOR.
(a) Pursuant to Section 3803(a) of the Business Trust
Statute, 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 the 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 (including any Illinois personal property replacement tax that is
imposed on the Trust as a partnership); PROVIDED, HOWEVER, that Trust Depositor
shall not be liable for any losses incurred by a Certificateholder in the
capacity of an investor in the Trust Certificates 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 the Trust Depositor shall not be
liable) shall be deemed third party beneficiaries of this paragraph. The
obligations of the Trust Depositor under this paragraph shall be evidenced by
the Trust Certificates described in Section 3.11, which for purposes of the
Business Trust Statute shall be deemed to be a separate class of Trust
Certificates from all other Trust Certificates issued by the Trust; provided
that the rights and obligations evidenced by all Trust Certificates, regardless
of class, shall, except as provided in this Section, be identical.
(b) Other than to the extent set forth in Section
2.07(a), no Owner, solely by virtue of its being the Holder of a Trust
Certificate, shall have any personal liability for any liability or obligation
of the Trust.]
SECTION 2.08. TITLE TO TRUST PROPERTY. Legal title to the Trust Estate
shall be vested at all times in the Trust as a separate legal entity except
where applicable law in any jurisdiction requires title to any part of the Trust
Estate to be vested in a trustee or trustees, in which case title shall be
deemed to be vested in the Owner Trustee, a co-trustee and/or a separate
trustee, as the case may be.
SECTION 2.09. SITUS OF TRUST. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the State of Illinois or the
State of Delaware. The Trust shall not have any employees in any state other
than Delaware; PROVIDED, HOWEVER, that nothing herein shall restrict or prohibit
the Owner Trustee from having employees within or without the State of Delaware.
Payments will be received by the Trust only in Delaware and payments will be
made by the Trust only from Delaware. The only office of the Trust will be at
the Owner Trustee Corporate Trust Office.
SECTION 2.10. REPRESENTATIONS AND WARRANTIES OF THE TRUST DEPOSITOR.
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The Trust Depositor hereby represents and warrants to the Owner Trustee
that:
(i) The Trust Depositor is duly organized and
validly existing as a corporation organized and existing and in good
standing under the laws of the State of Nevada, with power and
authority to own its properties and to conduct its business and had at
all relevant times, and has, power, authority and legal right to
acquire and own the Contracts.
(ii) The Trust Depositor is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business requires
such qualifications.
(iii) The Trust Depositor has the power and
authority to execute and deliver this Agreement and to carry out its
terms; the Trust Depositor has full power and authority to sell and
assign the property to be sold and assigned to and deposited with the
Trust as part of the Trust Estate and has duly authorized such sale and
assignment and deposit with the Trust by all necessary corporate
action; and the execution, delivery and performance of this Agreement
have been duly authorized by the Trust Depositor by all necessary
corporate action.
(iv) The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
do not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time)
a default under, the articles of incorporation or bylaws of the Trust
Depositor, or any indenture, agreement or other instrument to which the
Trust Depositor is a party or by which it is bound; nor result in the
creation or imposition of any Lien upon any of the properties of the
Trust Depositor pursuant to the terms of any such indenture, agreement
or other instrument (other than pursuant to the Transaction Documents);
nor violate any law or any order, rule or regulation applicable to the
Trust Depositor of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality
having jurisdiction over the Trust Depositor or its properties.
(v) There are no proceedings or investigations
pending, or to the Trust Depositor's best knowledge threatened, before
any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Trust Depositor or its
properties: (A) asserting the invalidity of this Agreement, any of the
other Transaction Documents or the Trust Certificates, (B) seeking to
prevent the issuance of the Trust Certificates or the consummation of
any of the transactions contemplated by this Agreement or any of the
other Transaction Documents, (C) seeking any determination or ruling
that might materially and adversely affect the performance by the Trust
Depositor of its obligations under, or the validity or enforceability
of, this
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Agreement, any of the other Transaction Documents or the Trust
Certificates or (D) involving the Trust Depositor and which might
adversely affect the federal income tax or other federal, state or
local tax attributes of the Trust Certificates.
SECTION 2.11. FEDERAL INCOME TAX ALLOCATIONS.
(a) Trust items of income, gain, loss and deduction for
any month as determined for federal income tax purposes shall be allocated as
follows:
(i) The Certificateholders, as of the first
Record Date following the end of such month, shall be allocated the
following items in proportion to their ownership of the principal
amount of Trust Certificates on such date: (A) interest equal to the
Certificate Interest Distributable Amount for such month, (B) accrued
interest on the excess, if any, of the Certificate Interest
Distributable Amount for the preceding Distribution Date over the
amount in respect of interest that is actually deposited in the
Certificate Distribution Account on such preceding Distribution Date,
to the extent permitted by law, at the Pass-Through Rate from such
preceding Distribution Date through the current Distribution Date, (C)
the portion of the market discount on the Contracts accrued during such
quarter that is allocable to the excess, if any, of the initial
aggregate principal amount of the Trust Certificates over their initial
aggregate issue price and (D) any other items of income and gain
payable to the Certificateholders for such month; such sum to be
reduced by any amortization deduction by the Trust of premium on
Contracts that corresponds to any excess of the issue price of Trust
Certificates over their principal amount; and
(ii) to the Trust Depositor to the extent of any
remaining items of income, gain, loss and deduction.
If the items of income or gain of the Trust for any calendar quarter are
insufficient for the allocations described in Section 2.11(a)(i), subsequent
items of income or gain shall first be allocated to make up such shortfall
before being allocated as provided in Section 2.11(a)(ii).
(b) To the extent that the Trust Depositor would be
allocated cumulative items of loss and deduction in excess of the sum of (A) the
cumulative items of income and gain, if any, allocated to the Trust Depositor,
PLUS (B) the cumulative contributions made by the Trust Depositor to the Trust,
PLUS (C) the amount of Trust liabilities or claims, if any, for which the Trust
Depositor is liable pursuant to Section 2.07 or otherwise allocated under
Section 752 of the Code, LESS (D) the cumulative distributions made to the Trust
Depositor pursuant to Section 5.02 hereof, then such excess items of loss and
deduction shall instead be allocated among the Certificateholders (other than
the Trust Depositor) as of the first Record Date following the end of such
quarter in proportion to their ownership of the principal amount of Trust
Certificates on such Record Date until the cumulative items of loss and
deduction allocated to such Certificateholders equal the sum of (I) the
cumulative items of income and gain allocated to such Certificateholders, PLUS
(II) the cumulative contributions made by such Certificateholders to the
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Trust, PLUS (III) the amount of Trust liabilities allocated to such
Certificateholders under Section 752 of the Code, LESS (IV) the cumulative
distributions made to the Trust Depositor pursuant to Section 5.02 hereof.
Thereafter, any such excess items of loss and deduction shall be allocated among
the Trust Depositor and the other Certificateholders in accordance with how such
Persons are reasonably expected to bear the economic burden of such items.
(c) The provisions of this Agreement relating to the
allocations are intended to comply with Treasury Regulation Sections 1.704-1 and
1.704-2. The Trust Depositor and Harley-Davidson Credit are authorized to modify
the allocations in this paragraph if necessary or appropriate, in its sole
discretion, for the allocations to fairly reflect the economic income, gain or
loss to the Trust Depositor or to the Certificateholders, or as otherwise to
cause such allocations to have substantial economic effect within the meaning of
Regulations Section 1.704-1(b)(2) or to be deemed to be in accordance with the
interests in the Trust under such Treasury Regulations.
ARTICLE THREE
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.01. INITIAL OWNERSHIP. Upon the formation of the Trust by the
contribution by the Trust Depositor pursuant to Section 2.05 and until the
issuance of the Trust Certificates, the Trust Depositor shall be the sole
beneficiary of the Trust.
SECTION 3.02. THE TRUST CERTIFICATES. The Trust Certificates shall be
substantially in the form of EXHIBIT B hereto. The Trust Certificates shall be
issuable in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof; PROVIDED, HOWEVER, that the Trust Certificates issued to the
Trust Depositor pursuant to Section 3.11 may be issued in such denomination as
required to include any residual amount. The Trust Certificates shall be
executed by the Owner Trustee on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee and shall be deemed to
have been validly issued when so executed. Trust Certificates bearing the manual
or facsimile signature of individuals who were, at the time when such signatures
were affixed, authorized to sign on behalf of the Owner Trustee shall be valid
and binding obligations of the Trust, notwithstanding that such individuals or
any of them have ceased to be so authorized prior to the authentication and
delivery of such Trust Certificates or did not hold such offices at the date of
such Trust Certificates. All Trust Certificates shall be dated the date of their
authentication.
SECTION 3.03. AUTHENTICATION AND DELIVERY OF TRUST CERTIFICATES. The
Owner Trustee shall cause to be authenticated and delivered upon the order of
the Trust Depositor, in exchange for the Contracts and the other assets of the
Trust, simultaneously with the sale, assignment and transfer to the Trust of the
Contracts, and the constructive delivery to the Owner Trustee of the Contract
Files and the other assets of the Trust, Trust Certificates duly authenticated
by the Owner Trustee, in authorized denominations equaling in the aggregate the
Initial Certificate
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Balance evidencing the entire ownership of the Trust and Notes issued by the
Owner Trustee and authenticated by the Indenture Trustee in aggregate principal
amount of, in the case of (i) Class A-1 Notes, $[___________], (ii) Class A-2
Notes, $[__________] and (iii) Class B Notes, $[__________]. No Trust
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Trust Certificate a certificate of
authentication substantially in the form set forth in the form of Trust
Certificate attached hereto as EXHIBIT B, executed by the Owner Trustee or its
authenticating agent, by manual signature, and such certificate upon any Trust
Certificate shall be conclusive evidence, and the only evidence, that such Trust
Certificate has been duly authenticated and delivered hereunder. Upon issuance,
authorization and delivery pursuant to the terms hereof, the Trust Certificates
will be entitled to the benefits of this Agreement.
SECTION 3.04. REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST
CERTIFICATES.
(a) The Owner Trustee shall cause to be kept at the
office or agency to be maintained pursuant to SECTION 3.8 by a certificate
registrar (the "CERTIFICATE REGISTRAR"), a register (the "CERTIFICATE REGISTER")
in which, subject to such reasonable regulations as it may prescribe, the
Certificate Registrar shall provide for the registration of Trust Certificates
and of transfers and exchanges of Trust Certificates as herein provided. The
Owner Trustee is hereby initially appointed Certificate Registrar for the
purpose of registering Trust Certificates and transfers and exchanges of Trust
Certificates as herein provided. In the event that, subsequent to the Closing
Date, the Owner Trustee notifies the Servicer that it is unable to act as
Certificate Registrar, the Servicer shall appoint another bank or trust company,
having an office or agency located in the City of Chicago, Illinois, agreeing to
act in accordance with the provisions of this Agreement applicable to it, and
otherwise acceptable to the Owner Trustee, to act as successor Certificate
Registrar hereunder.
(b) Upon surrender for registration of transfer of any
Trust Certificate at the Owner Trustee Corporate Trust Office, the Owner Trustee
shall execute, authenticate and deliver (or shall cause its authenticating agent
to authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Trust Certificates in authorized denominations of a
like aggregate principal amount.
(c) At the option of a Certificateholder, Trust
Certificates may be exchanged for other Trust Certificates in authorized
denominations of a like aggregate principal amount, upon surrender of the Trust
Certificates to be exchanged at any such office or agency. Whenever any Trust
Certificates are so surrendered for exchange, the Owner Trustee on behalf of the
Trust shall execute, authenticate and deliver (or shall cause its authenticating
agent to authenticate and deliver) the Trust Certificates that the
Certificateholder making the exchange is entitled to receive. Every Trust
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in form satisfactory to
the Owner Trustee and the Certificate Registrar duly executed by the Holder
thereof or his attorney duly authorized in writing.
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(d) No service charge shall be made for any registration
of transfer or exchange of Trust Certificates, but the Owner Trustee may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Trust Certificates.
(e) All Trust Certificates surrendered for registration
of transfer or exchange shall be canceled and subsequently destroyed by the
Owner Trustee.
SECTION 3.05. MUTILATED, DESTROYED, LOST OR STOLEN TRUST CERTIFICATES.
If (i) any mutilated Trust Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Trust Certificate, and (ii) there is
delivered to the Certificate Registrar and the Owner Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice that such Trust Certificate has been acquired by a bona fide
purchaser, the Owner Trustee on behalf of the Trust shall execute and the Owner
Trustee or its authenticating agent shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Certificate, a new Trust Certificate of like tenor and fractional undivided
interest. In connection with the issuance of any new Trust Certificate under
this Section, the Owner Trustee may require the payment by the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto. Any duplicate Trust Certificate issued pursuant to this
Section shall constitute complete and indefeasible evidence of ownership in the
Trust, as if originally issued, whether or not the lost, stolen or destroyed
Trust Certificate shall be found at any time.
SECTION 3.06. PERSONS DEEMED OWNERS. Prior to due presentation of a
Trust Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar and any of their respective agents may treat the Person in
whose name any Trust Certificate is registered as the owner of such Trust
Certificate for the purpose of receiving distributions pursuant to Section 5.02
and for all other purposes whatsoever, and none of the Owner Trustee, the
Certificate Registrar, any Paying Agent or any of their respective agents shall
be bound by any notice of the contrary.
SECTION 3.07. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Certificate Registrar shall furnish or cause to be furnished to
the Servicer and the Trust Depositor, within 15 days after receipt by the
Certificate Registrar of a written request therefor from the Servicer or the
Trust Depositor, a list, in such form as the Servicer or the Trust Depositor may
reasonably require, of the names and addresses of the Certificateholders as of
the most recent Record Date. If three or more Certificateholders, or one or more
Certificateholders of Trust Certificates evidencing not less than 25% of the
percentage interests of the Trust Certificates (hereinafter referred to as
"APPLICANTS"), apply in writing to the Owner Trustee, and such application
states that the Applicants desire to communicate with other Certificateholders
with respect to their rights hereunder or under the Trust Certificates and such
application is accompanied by a copy of the communication that such Applicants
propose to transmit, then the Owner Trustee shall, within five Business Days
after the receipt of such application, afford such
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Applicants access, during normal business hours, to the current list of
Certificateholders. Every Certificateholder, by receiving and holding a Trust
Certificate, agrees with the Servicer, the Trust Depositor and the Owner Trustee
that none of the Servicer, the Trust Depositor or the Owner Trustee shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the Certificateholders hereunder, regardless of the
source from which such information was derived.
SECTION 3.08. MAINTENANCE OF OFFICE OR AGENCY. The Owner Trustee shall
maintain in [_________], Delaware, an office or offices or agency or agencies
where Trust Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Owner Trustee in respect
of the Trust Certificates and this Agreement may be served. The Owner Trustee
hereby designates the Owner Trustee Corporate Trust Office as its office for
such purposes. The Owner Trustee shall give prompt written notice to the Trust
Depositor, the Servicer and to Certificateholders of any change in the location
of the Certificate Register or any such office or agency.
SECTION 3.09. TEMPORARY TRUST CERTIFICATES. Pending the preparation of
Definitive Trust Certificates, the Owner Trustee, on behalf of the Trust, may
execute, authenticate and deliver, temporary Trust Certificates that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Trust
Certificates in lieu of which they are issued. If temporary Trust Certificates
are issued, the Trust Depositor will cause definitive Trust Certificates to be
prepared without unreasonable delay. After the preparation of definitive Trust
Certificates, the temporary Trust Certificates shall be exchangeable for
definitive Trust Certificates upon surrender of the temporary Trust Certificates
at the office or agency to be maintained as provided in Section 3.08, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Trust Certificates, the Owner Trustee shall execute and authenticate
and deliver in exchange therefor a like principal amount of definitive Trust
Certificates in authorized denominations. Until so exchanged, the temporary
Trust Certificates shall in all respects be entitled to the same benefits
hereunder as definitive Trust Certificates.
SECTION 3.10. APPOINTMENT OF PAYING AGENT. The Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.02(a) and shall report the amounts of such distributions
to the Owner Trustee. Any Paying Agent shall have the revocable power to
withdraw funds from the Certificate Distribution Account for the purpose of
making the distributions referred to above. The Owner Trustee may revoke such
power and remove the Paying Agent if the Owner Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Agreement in any material respect. The Paying Agent initially shall
be [_____________], and any co-paying agent chosen by the Paying Agent that is
acceptable to the Owner Trustee. Each Paying Agent shall be permitted to resign
as Paying Agent upon 30 days' written notice to the Owner Trustee. In the event
that [_____________] shall no longer be the Paying Agent, the Owner Trustee
shall appoint a successor to act as Paying Agent (which shall be a bank or trust
company). The Owner Trustee shall cause such successor Paying Agent or any
additional Paying Agent appointed by
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the Owner Trustee to execute and deliver to the Owner Trustee an instrument in
which such successor Paying Agent or additional Paying Agent shall agree with
the Owner Trustee that, as Paying Agent, such successor Paying Agent or
additional Paying Agent will hold all sums, if any, held by it for payment to
the Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders. The
Paying Agent shall return all unclaimed funds to the Owner Trustee and upon
removal of a Paying Agent such Paying Agent shall also return all funds in its
possession to the Owner Trustee. The provisions of Sections 7.01, 7.03, 7.04 and
8.01 shall apply to the Owner Trustee also in its role as Paying Agent, for so
long as the Owner Trustee shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
SECTION 3.11. [OWNERSHIP BY TRUST DEPOSITOR OF TRUST CERTIFICATES. The
Trust Depositor shall on the Closing Date purchase from the Underwriters Trust
Certificates representing at least 1% of the Initial Certificate Balance and
shall thereafter retain beneficial and record ownership of Trust Certificates
representing at least 1% of the Certificate Balance. Any attempted transfer of
any Trust Certificate that would reduce such interest of the Trust Depositor
below 1% of the Certificate Balance shall be void. The Owner Trustee shall cause
any Trust Certificate issued to the Trust Depositor on the Closing Date (and any
Trust Certificate issued in exchange therefor) to contain a legend stating "THIS
CERTIFICATE IS NON-TRANSFERABLE".]
SECTION 3.12. BOOK-ENTRY CERTIFICATES. The Trust Certificates upon
original issuance will be issued in the form of one or more typewritten
certificates representing the Book-Entry Trust Certificates, to be delivered to
DTC, the initial Clearing Agency, by, or on behalf of, the Trust; [provided,
however, that one Definitive Trust Certificate (as defined below) may be issued
to the Trust Depositor pursuant to Section 3.11]. The certificate or
certificates delivered to DTC evidencing such Trust Certificates shall initially
be registered on the Certificate Register in the name of Cede & Co., the nominee
of the initial Clearing Agency, and no Certificateholder (other than the
Company) will receive a definitive certificate representing such
Certificateholders' interest in the Trust Certificates, except as provided in
Section 3.14. Unless and until definitive, fully registered Trust Certificates
(the "DEFINITIVE TRUST CERTIFICATES") have been issued to Certificateholders
pursuant to Section 3.14:
(i) the provisions of this Section shall be in
full force and effect;
(ii) the Trust Depositor, the Servicer, the
Certificate Registrar and the Owner Trustee, subject to the provisions
and limitations of Sections 2.03 and 2.06, may deal with the Clearing
Agency for all purposes (including the making of distributions on the
Trust Certificates) as the authorized representative of the
Certificateholders;
(iii) to the extent that the provisions of this
section conflict with any other provisions of this agreement, the
provisions of this Section shall control;
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(iv) the rights of Certificateholder shall be
exercised only through the Clearing Agency (or through procedures
established by the Clearing agency) and shall be limited to those
established by law and agreements between the Holder and the Clearing
Agency and/or the Clearing Agency Participants; pursuant to the
Certificate Depository Agreement, unless and until Definitive Trust
Certificates are issued pursuant to Section 3.14, the Clearing Agency
will make book-entry transfers among the Clearing Agency Participants
and receive and transmit distributions of principal and interest on the
Trust Certificates to such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits
actions to be taken based upon instructions or directions of
Certificateholders evidencing a specified percentage of the percentage
interests thereof, the Clearing Agency shall be deemed to represent
such percentage only to the extent that it has received instructions to
such effect from Certificateholders and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of the
beneficial interest in Trust Certificates and has delivered such
instructions to the Owner Trustee.
SECTION 3.13. NOTICES TO CLEARING AGENCY. Whenever notice or other
communication to the Certificateholders is required hereunder, unless and until
Definitive Trust Certificates shall have been issued to Certificateholders
pursuant to Section 3.14, the Owner Trustee shall give all such notices and
communications specified herein to be given to Certificateholders to the
Clearing Agency.
SECTION 3.14. DEFINITIVE TRUST CERTIFICATES. If (i)(A) the
Administrator advises the Owner Trustee in writing that the Clearing Agency is
no longer willing or able to properly discharge its responsibilities as
described in the Certificate Depository Agreement and (B) the Owner Trustee or
the Administrator is unable to locate a qualified successor, (ii) the
Administrator, at its option, advises the Owner Trustee in writing that it
elects to terminate the book-entry system through the Clearing Agency, or (iii)
after the occurrence of an Event of Default or a Servicer Default,
Certificateholders representing beneficial interests aggregating more than 50%
of the Certificate Balance advise the Owner Trustee and the Clearing Agency
through the Clearing Agency Participants in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Certificateholders, then the Clearing Agency shall notify all
Certificateholders and the Owner Trustee of the occurrence of any such event and
of the availability of Definitive Trust Certificates to Certificateholders
requesting the same. Upon surrender to the Owner Trustee by the Clearing Agency
of the certificates evidencing the Book-Entry Trust Certificates, accompanied by
registration instructions from the Clearing Agency for registration, the Owner
Trustee shall issue the Definitive Trust Certificates and deliver such
Definitive Trust Certificates in accordance with the instructions of the
Clearing Agency. Neither the Trust Depositor, the Certificate Registrar nor the
Owner Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Trust Certificates, the Owner
Trustee shall recognize the Certificateholders of the Definitive Trust
Certificates as Certificateholders hereunder. The Owner Trustee shall not be
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liable if the Owner Trustee or the Administrator is unable to locate a qualified
successor Clearing Agency. The Definitive Trust Certificates shall be printed,
lithographed or engraved or may be produced in any manner as is reasonably
acceptable to the Owner Trustee, as evidenced by its execution thereof.
ARTICLE FOUR
ACTIONS BY OWNER TRUSTEE
SECTION 4.01. PRIOR NOTICE TO OWNERS WITH RESPECT TO CERTAIN MATTERS.
Subject to the provisions and limitations of SECTION 4.04, with respect to the
following matters, the Owner Trustee shall not take action unless at least 30
days before the taking of such action, the Owner Trustee shall have notified the
Certificateholders in writing of the proposed action, the Indenture Trustee
shall have consented to such action in the event any Notes are outstanding and
the Owners shall not have notified the Owner Trustee in writing prior to the
30th day after such notice is given that such Owners have withheld consent or
provided alternative direction:
(a) the initiation of any claim or lawsuit by the Trust
(except claims or lawsuits brought in connection with the collection of the
Contracts) and the compromise of any action, claim or lawsuit brought by or
against the Trust (except with respect to the aforementioned claims or lawsuits
for collection of the Contracts);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute);
(c) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder is not required
and such amendment materially and adversely affects the interest of the Owners;
(e) the amendment, change or modification of the
Administration Agreement, except to cure any ambiguity or to amend or supplement
any provision in a manner or add any provision that would not materially and
adversely affect the interests of the Owners;
(f) the amendment, change or modification of the Sale and
Servicing Agreement, except any amendment where the consent of any
Certificateholder is not required under the terms of the Sale and Servicing
Agreement; or
(g) the appointment pursuant to the Indenture of a
successor Note Registrar, Paying Agent or Indenture Trustee or pursuant to this
Agreement of a successor Certificate Registrar, or the consent to the assignment
by the Note Registrar, Paying Agent, Indenture
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Trustee or Certificate Registrar of its obligations under the Indenture or the
Agreement, as applicable.
SECTION 4.02. ACTION BY OWNERS WITH RESPECT TO CERTAIN MATTERS. Subject
to the provisions and limitations of Section 4.04, the Owner Trustee shall not
have the power, except upon the direction of the Owners, to (a) remove the
Administrator pursuant to Section 8 of the Administration Agreement, (b) appoint
a successor Administrator pursuant to Section 8 of the Administration Agreement,
(c) remove the Servicer pursuant to Section 8.03 of the Sale and Servicing
Agreement, (d) except as expressly provided in the Transaction Documents, sell
the Contracts after the termination of the Indenture, (e) initiate any claim,
suit or proceeding by the Trust or compromise any claim, suit or proceeding
brought by or against the Trust, (f) authorize the merger or consolidation of
the Trust with or into any other business trust or entity (other than in
accordance with Section 3.10 of the Indenture) or (g) amend the Certificate of
Trust. The Owner Trustee shall take the actions referred to in the preceding
sentence only upon written instructions signed by the Owners.
SECTION 4.03. ACTION BY OWNERS WITH RESPECT TO BANKRUPTCY. The Owner
Trustee shall not have the power to commence a voluntary proceeding in a
bankruptcy relating to the Trust without the unanimous prior approval of all
Owners and the delivery to the Owner Trustee by each such Owner of a certificate
certifying that such Owner reasonably believes that the Trust is insolvent.
SECTION 4.04. RESTRICTIONS ON OWNERS' POWER. The Owners shall not
direct the Owner Trustee to take or to refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust or the Owner
Trustee under this Agreement or any of the Transaction Documents or would be
contrary to the purpose of this Trust as set forth in Section 2.03, nor shall
the Owner Trustee be obligated to follow any such direction, if given.
SECTION 4.05. MAJORITY CONTROL. Except as expressly provided herein,
any action that may be taken by the Owners under this Agreement may be taken by
the Holder of Trust Certificates evidencing not less than a majority of the
Certificate Balance. Except as expressly provided herein, any written notice of
the Owners delivered pursuant to this Agreement shall be effective if signed by
Holder of Trust Certificates evidencing not less than a majority of the
Certificate Balance at the time of the delivery of such notice.
ARTICLE FIVE
APPLICATION OF TRUST FUNDS;
CERTAIN DUTIES
SECTION 5.01. ESTABLISHMENT OF TRUST ACCOUNT. The Owner Trustee, for
the benefit of the Certificateholders, shall establish and maintain in the name
of the Trust an Eligible Account (the
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"CERTIFICATE DISTRIBUTION ACCOUNT"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Certificateholders.
The Owner Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Certificate Distribution Account and
in all proceeds thereof. Except as otherwise expressly provided herein, the
Certificate Distribution Account shall be under the sole dominion and control of
the Owner Trustee for the benefit of the Certificateholders. If, at any time,
the Certificate Distribution Account ceases to be an Eligible Account, the Owner
Trustee (or the Trust Depositor on behalf of the Owner Trustee, if the
Certificate Distribution Account is not then held by the Owner Trustee or an
Affiliate thereof) shall within ten Business Days (or such longer period, not to
exceed 30 calendar days, as to which each Rating Agency may consent) establish a
new Certificate Distribution Account as an Eligible Account and shall transfer
any cash and/or any investments to such new Certificate Distribution Account.
SECTION 5.02. APPLICATION OF TRUST FUNDS.
(a) On each Distribution Date, the Owner Trustee will
distribute to Certificateholders, on a pro rata basis, amounts deposited in the
Certificate Distribution Account pursuant to Section 7.05 of the Sale and
Servicing Agreement with respect to such Distribution Date.
(b) On each Distribution Date, the Owner Trustee shall
send to each Certificateholder the statement or statements provided to the Owner
Trustee by the Servicer pursuant to Section 9.06 of the Sale and Servicing
Agreement with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on
the Trust's payment (or allocation of income) to a Certificateholder, such tax
shall reduce the amount otherwise distributable to the Certificateholder in
accordance with this Section. The Owner Trustee is hereby authorized and
directed to retain from amounts otherwise distributable to the Owners sufficient
funds for the payment of any tax that is legally owed by the Trust (but such
authorization shall not prevent the Owner Trustee from contesting any such tax
in appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings). The amount of any withholding tax
imposed with respect to a Certificateholder shall be treated as cash distributed
to such Certificateholder at the time it is withheld by the Trust and remitted
to the appropriate taxing authority. If there is a possibility that withholding
tax is payable with respect to a distribution, the Owner Trustee may in its sole
discretion withhold such amounts in accordance with this paragraph (c).
SECTION 5.03. METHOD OF PAYMENT. Subject to SECTION 9.01(c) respecting
the final payment upon retirement of each Certificate, distributions required to
be made to each Certificateholder of record on the related Record Date shall be
made either (a) by wire transfer, in immediately available funds, to the account
of such Certificateholder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder shall have provided to the
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Certificate Registrar appropriate written instructions at least five Business
Days prior to the Distribution Date and such Certificateholder's Certificates in
the aggregate evidence a denomination of not less than $1,000,000 or (b) by
check mailed to such Certificateholder at the address of such Holder appearing
in the Certificate Register; PROVIDED that, unless Definitive Certificates have
been issued pursuant to SECTION 3.14, with respect to Trust Certificates
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), distributions will made by wire
transfer in immediately available funds to the account designated by such
nominee.
SECTION 5.04. NO SEGREGATION OF MONEYS; NO INTEREST. Subject to
Sections 5.01 and 5.02, moneys received by the Owner Trustee hereunder need not
be segregated in any manner except to the extent required by law or the Sale and
Servicing Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
SECTION 5.05. ACCOUNTING AND REPORTS TO THE CERTIFICATEHOLDERS, OWNERS,
THE INTERNAL REVENUE SERVICE AND OTHERS. The Owner Trustee shall (a) maintain
(or cause to be maintained) the books of the Trust on a calendar year basis and
the accrual method of accounting, (b) deliver to each Owner, as may be required
by the Code and applicable Treasury Regulations, such information as may be
required (including Schedule K-1) to enable each Owner to prepare its federal
and state income tax returns, (c) file such tax returns relating to the Trust
(including a partnership information return, IRS Form 1065) and make such
elections as from time to time may be required or appropriate under any
applicable state or federal statute or any rule or regulation thereunder so as
to maintain the Trust's characterization as a partnership for federal income tax
purposes, (d) cause such tax returns to be signed in the manner required by law
and (e) collect or cause to be collected any withholding tax as described in and
in accordance with Section 5.02(c) with respect to income or distributions to
Owners. The Owner Trustee shall elect under Section 1278 of the Code to include
in income currently any market discount that accrues with respect to the
Contracts. The Owner Trustee shall not make the election provided under Section
754 or Section 761 of the Code.
SECTION 5.06. SIGNATURE ON RETURNS; TAX MATTERS PARTNER.
(a) The Trust Depositor shall sign on behalf of the Trust
the tax returns of the Trust.
(b) The Trust Depositor shall be designated the "TAX
MATTERS PARTNER" of the Trust pursuant to Section 6231(a)(7)(A) of the Code and
applicable Treasury Regulations.
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ARTICLE SIX
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.01. GENERAL AUTHORITY. Subject to the provisions and
limitations of Sections 2.03 and 2.06, the Owner Trustee is authorized and
directed to execute and deliver the Transaction Documents to which the Trust is
to be a party and each certificate or other document attached as an exhibit to
or contemplated by the Transaction Documents to which the Trust is to be a party
and any amendment or other agreement, as evidenced conclusively by the Owner
Trustee's execution thereof. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions required of the
Trust pursuant to the Transaction Documents. The Owner Trustee is further
authorized from time to time to take such action as the Administrator recommends
with respect to the Transaction Documents.
SECTION 6.02. GENERAL DUTIES. Subject to the provisions and limitations
of Sections 2.03 and 2.06, it shall be the duty of the Owner Trustee to
discharge (or cause to be discharged through the Administrator) all of its
responsibilities pursuant to the terms of this Agreement and the Transaction
Documents to which the Trust is a party and to administer the Trust in the
interest of the Owners, subject to the Transaction Documents and in accordance
with the provisions of this Agreement. Without limiting the foregoing, the Owner
Trustee shall on behalf of the Trust file and prove any claim or claims that may
exist against Harley-Davidson Credit in connection with any claims paying
procedure as part of an insolvency or receivership proceeding involving
Harley-Davidson Credit. Notwithstanding the foregoing, the Owner Trustee shall
be deemed to have discharged its duties and responsibilities hereunder and under
the Transaction Documents to the extent the Administrator has agreed in the
Administration Agreement to perform any act or to discharge any duty of the
Owner Trustee hereunder or under any Transaction Document, and the Owner Trustee
shall not be held liable for the default or failure of the Administrator to
carry out its obligations under the Administration Agreement.
SECTION 6.03. ACTION UPON INSTRUCTION.
(a) Subject to Article Four, in accordance with the terms
of the Transaction Documents the Owners may by written instruction direct the
Owner Trustee in the management of the Trust.
(b) The Owner Trustee shall not be required to take any
action hereunder or under any other Transaction Document if the Owner Trustee
shall have reasonably determined, or shall have been advised by counsel, that
such action is likely to result in liability on the part of the Owner Trustee or
is contrary to the terms hereof or of any other Transaction Document or is
otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide
between alternative courses of action permitted or required by the terms of this
Agreement or under any other
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Transaction Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Owners requesting
instruction as to the course of action to be adopted, and to the extent the
Owner Trustee acts in good faith in accordance with any written instruction of
the Owners received, the Owner Trustee shall not be liable on account of such
action to any Person. If the Owner Trustee shall not have received appropriate
instruction within ten days of such notice (or within such shorter period of
time as reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action not inconsistent with this Agreement and the other
Transaction Documents, as it shall deem to be in the best interests of the
Owners, and shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to
the applicability of any provision of this Agreement or any other Transaction
Document or any such provision is ambiguous as to its application, or is, or
appears to be, in conflict with any other applicable provision, or in the event
that this Agreement permits any determination by the Owner Trustee or is silent
or in incomplete as to the course of action that the Owner Trustee is required
to take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Owners requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within ten days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement or the other
Transaction Documents, as it shall deem to be in the best interests of the
Owners, and shall have no liability to any Person for such action or inaction.
SECTION 6.04. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of or
otherwise deal with the Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or any document or written instruction received by the Owner
Trustee pursuant to Section 6.03; and no implied duties or obligations shall be
read into this Agreement or any other Transaction Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for the Trust or to
record this Agreement or any other Transaction Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens on any part of the Trust
Estate that result from actions by, or claims against, the Owner Trustee that
are not related to the ownership or the administration of the Trust Estate.
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SECTION 6.05. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Trust Estate except (i) in accordance
with the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, (ii) in accordance with the other Transaction
Documents and (iii) in accordance with any document or instruction delivered to
the Owner Trustee pursuant to Section 6.03.
SECTION 6.06. RESTRICTIONS. The Owner Trustee shall not take any action
(i) that is inconsistent with the purposes of the Trust set forth in Section
2.03 or (ii) that, to the actual knowledge of the Owner Trustee, would result in
the Trust's becoming taxable as a corporation for federal or state income tax
purposes. The Owners shall not direct the Owner Trustee to take action that
would violate the provisions of this Section.
ARTICLE SEVEN
CONCERNING THE OWNER TRUSTEE
SECTION 7.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Trust Estate upon the terms of the Transaction Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any other Transaction Document under any circumstances, except (i) for its
own willful misconduct or negligence or (ii) in the case of the inaccuracy of
any representation or warranty contained in Section 7.03 expressly made by the
Owner Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error
of judgment made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in accordance with the
instructions of the Administrator or any Owner;
(c) no provision of this Agreement or any other
Transaction Document shall require the Owner Trustee to expend or risk funds or
otherwise incur any financial liability in the performance of any of its rights
or powers hereunder or under any Transaction Document if the Owner Trustee shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or provided
to it;
(d) under no circumstances shall the Owner Trustee be
liable for indebtedness evidenced by or arising under any of the Transaction
Documents, including the principal of and interest on the Notes;
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(e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Trust Depositor or for the form, character, genuineness,
sufficiency, value or validity of any of the Trust Estate, or for or in respect
of the validity or sufficiency of the Transaction Documents, other than the
certificate of authentication on the Trust Certificates, and the Owner Trustee
shall in no event assume or incur any liability, duty, or obligation to any
Noteholder or to any Owner, other than as expressly provided for herein or
expressly agreed to in the Transaction Documents;
(f) the Owner Trustee shall not be liable for the default
or misconduct of the Administrator, the Trust Depositor, the Indenture Trustee
or the Servicer under any of the Transaction Documents or otherwise and the
Owner Trustee shall have no obligation or liability to perform the obligations
of the Trust under this Agreement or the other Transaction Documents that are
required to be performed by the Administrator under the Administration
Agreement, the Indenture Trustee under the Indenture or the Servicer, or the
Trust Depositor under the Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by the Agreement, or to
institute, conduct or defend any litigation under this Agreement or otherwise or
in relation to this Agreement or any other Transaction Document, at the request,
order or direction of the Owners, unless such Owners have offered to the Owner
Trustee security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any other Transaction Document shall not be construed as a duty,
and the Owner Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of any such act.
SECTION 7.02. FURNISHING OF DOCUMENTS. The Owner Trustee shall furnish
to the Owner promptly upon receipt of a written request therefor, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Owner Trustee under the
Transaction Documents.
SECTION 7.03. REPRESENTATIONS AND WARRANTIES. The Owner Trustee hereby
represents and warrants to the Trust Depositor and the Owners that:
(a) It is a banking corporation duly organized and
validly existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
(b) It has taken all corporate action necessary to
authorize the execution an delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf.
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(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order binding on
it, or constitute any default under its charter documents or bylaws or any
indenture, mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound or result in the creation or
imposition of any lien, charge or encumbrance on the Trust Estate resulting from
actions by or claims against the Owner Trustee individually which are unrelated
to this Agreement or the other Transaction Documents.
SECTION 7.04. RELIANCE; ADVICE OF COUNSEL.
(a) The Owner Trustee shall incur no liability to anyone
in acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper believed by
it to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of determination of
which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts
hereunder and in the performance of its duties and obligations under this
Agreement or the other Transaction Documents, the Owner Trustee (i) may act
directly or through its agents or attorneys pursuant to agreements entered into
by any of them, and the Owner Trustee shall not be liable for the conduct or
misconduct of such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons.
SECTION 7.05. NOT ACTING IN INDIVIDUAL CAPACITY. Except as provided in
this Article Seven, in accepting the trusts hereby created, [_____________] acts
solely as Owner Trustee hereunder and not in its individual capacity, and all
Persons having any claim against the Owner Trustee by reason of the transactions
contemplated by this Agreement or any other Transaction Document shall look only
to the Trust Estate for payment or satisfaction thereof.
SECTION 7.06. OWNER TRUSTEE NOT LIABLE FOR TRUST CERTIFICATES, NOTES OR
CONTRACTS. The recitals contained herein and in the Trust Certificates (other
than the signature and countersignature of the Owner Trustee and the certificate
of authentication on the Trust Certificates) shall be taken as the statements of
the Trust Depositor, and the Owner Trustee
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assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Agreement, any
other Transaction Document or the Trust Certificates (other than the signature
and countersignature of the Owner Trustee and the certificate of authentication
on the Trust Certificates) or the Notes, or of any Contract or related
documents. The Owner Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Contract, or the perfection and priority of any security interest created by
any Contract in any Motorcycle or the maintenance of any such perfection and
priority, or for or with respect to the sufficiency of the Trust Estate or its
ability to generate the payments to be distributed to Certificateholders under
this Agreement or the Noteholders under the Indenture, including, without
limitation, the existence, condition and ownership of any Motorcycle; the
existence and enforceability of any insurance thereon; the existence and
contents of any Contract on any computer or other record thereof; the validity
of the assignment of any Contract to the Trust or of any intervening assignment;
the completeness of any Contract; the performance or enforcement of any
Contract; the compliance by the Trust Depositor or the Servicer with any
warranty or representation made under any Transaction Document or in any related
document or the accuracy of any such warranty or representation; or any action
of the Administrator, the Indenture Trustee or the Servicer or any subservicer
taken in the name of the Owner Trustee.
SECTION 7.07. OWNER TRUSTEE MAY OWN TRUST CERTIFICATES AND NOTES. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Trust Certificates or Notes and may deal with the Trust Depositor,
the Administrator, the Indenture Trustee and the Servicer in banking
transactions with the same rights as it would have if it were not Owner Trustee.
ARTICLE EIGHT
COMPENSATION OF OWNER TRUSTEE
SECTION 8.01. OWNER TRUSTEE'S FEES AND EXPENSES. The Owner Trustee
shall receive as compensation for its services hereunder such fees as have been
separately agreed upon and which shall be paid consistent with Section 7.05(a)
of the Sale and Servicing Agreement. Additionally, the Owner Trustee shall be
entitled to be reimbursed by the Servicer for its other reasonable expenses
hereunder, including the reasonable compensation, expenses and disbursements of
such agents, representatives, experts and counsel as the Owner Trustee may
employ in connection with the exercise and performance of its rights and its
duties hereunder.
SECTION 8.02. INDEMNIFICATION. The Trust Depositor shall be liable as
primary obligor for, and shall indemnify the Owner Trustee and its successors,
assigns and servants (collectively, the "INDEMNIFIED PARTIES") from and against,
any and all liabilities, obligations, losses, damages, taxes, claims, actions
and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "EXPENSES") which may at any time be imposed on, incurred by or
asserted against the Owner
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<PAGE>
Trustee or any Indemnified Party in any way relating to or arising out of this
Agreement, the other Transaction Documents, the Trust Estate, the administration
of the Trust Estate or the action or inaction of the Owner Trustee hereunder,
except only that the Trust Depositor shall not be liable for or required to
indemnify an Indemnified Party from and against Expenses arising or resulting
from any of the matters described in the third sentence of Section 7.01. The
indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In the
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the Trust Depositor, which approval shall not be
unreasonably withheld.
SECTION 8.03. PAYMENTS TO THE OWNER TRUSTEE. Any amounts paid to the
Owner Trustee pursuant to this Article shall be deemed not to be a part of the
Trust Estate immediately after such payment.
ARTICLE NINE
TERMINATION OF TRUST AGREEMENT
SECTION 9.01. TERMINATION OF TRUST AGREEMENT.
(a) This Agreement (other than Article Eight) and the
Trust shall terminate and be of no further force or effect upon the earlier of
(i) final distribution by the Owner Trustee of all moneys or other property or
proceeds of the Trust Estate in accordance with terms of the Indenture, the Sale
and Servicing Agreement and Article Five, (ii) the expiration of 21 years from
the death of the survivor of the descendants of Joseph P. Kennedy, the late
Ambassador of the United States to the Court of St. James's, living on the date
hereof and (iii) the time provided in Section 9.02. The bankruptcy,
liquidation, dissolution, death or incapacity of any Owner, other than the Trust
Depositor as described in Section 9.02, shall not (i) operate to terminate this
Agreement or the Trust, (ii) entitle such Owner's legal representatives or heirs
to claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Trust Estate or (iii)
otherwise affect the rights, obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), neither the
Trust Depositor nor any Holder shall be entitled to revoke or terminate the
Trust.
(c) Notice of any termination of the Trust, specifying
the Distribution Date upon which Certificateholders shall surrender their Trust
Certificates to the Paying Agent for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five Business Days of receipt of notice of such
termination from the Servicer given pursuant to Section 10.01 of the Sale and
Servicing Agreement, stating (i) the Distribution Date upon or with respect to
which final payment of the Trust Certificates
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shall be made upon presentation and surrender of the Trust Certificates at the
office of the Paying Agent therein designated, (ii) the amount of any such final
payment and (iii) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and surrender
of the Trust Certificates at the office of the Paying Agent therein specified.
The Owner Trustee shall give such notice to the Certificate Registrar (if other
than the Owner Trustee) and the Paying Agent at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Trust Certificates,
the Paying Agent shall cause to be distributed to Certificateholders amounts
distributable on such Distribution Date pursuant to Section 5.02.
(d) In the event that all of the Certificateholders shall
not surrender their Trust Certificates for cancellation within six months after
the date specified in the above mentioned written notice, the Owner Trustee
shall give a second written notice to the remaining Certificateholders to
surrender their Trust Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second notice
all the Trust Certificates shall not have been surrendered for cancellation, the
Owner Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Trust Certificates, and the cost thereof shall be paid out of
the funds and other assets that shall remain subject to this Agreement. Any
funds remaining in the Trust after exhaustion of such remedies shall be
distributed by the Owner Trustee to the Trust Depositor.
(e) Upon the winding up of the Trust and its termination,
the Owner Trustee shall cause the Certificate of Trust to be canceled by filing
a certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
SECTION 9.02. [DISSOLUTION UPON BANKRUPTCY OF TRUST DEPOSITOR OR
WITHDRAWAL OR REMOVAL OF TRUST DEPOSITOR. In the event that an Insolvency Event
shall occur with respect to the Trust Depositor or the Trust Depositor shall
withdraw, liquidate or be removed from the Trust, this Agreement shall be
terminated in accordance with Section 9.01 90 days after the date of such event,
unless before the end of such 90-day period, the Owner Trustee shall have
received written instructions from (a) each of the (i) Holders (as defined in
the Indenture) of Class A-1 Notes representing more than 50% of the Outstanding
Amount of the Class A-1 Notes, (ii) Holders of Class A-2 Notes representing more
than 50% of the Outstanding Amount of the Class A-2 Notes, and (iii) Holders of
Class B Notes representing more than 50% of the Outstanding Amount of the Class
B Notes or (b) if there are no Notes outstanding, Certificateholders (other than
the Depositor) representing more than 50% of the Certificate Balance (not
including the Certificate Balance of the Trust Certificate held by the
Depositor), to the effect that each such party disapproves of the liquidation of
the Collateral and termination of the Trust. Promptly after the occurrence of
any Insolvency Event with respect to the Trust Depositor, (A) the Trust
Depositor shall give the Indenture Trustee and the Owner Trustee written notice
of such Insolvency Event, (B) the Owner Trustee shall, upon the receipt of such
written notice from the Trust Depositor, give prompt written notice to the
Certificateholders and the Indenture Trustee,
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of the occurrence of such event and (C) the Indenture Trustee shall, upon
receipt of written notice of such Insolvency Event from the Owner Trustee or the
Trust Depositor, give prompt written notice to the Noteholders of the occurrence
of such event; PROVIDED, HOWEVER, that any failure to give a notice required by
this sentence shall not prevent or delay, in any manner, a termination of the
Trust pursuant to the first sentence of this SECTION 9.02. Upon a termination
pursuant to this Section, the Owner Trustee shall direct the Indenture Trustee
promptly to sell the assets of the Trust (other than the Trust Accounts and the
Certificate Distribution Account) in a commercially reasonable manner and on
commercially reasonable terms. The proceeds of such a sale of the assets of the
Trust shall be treated as collections under the Sale and Servicing Agreement.]
ARTICLE TEN
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.01. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate trust
powers; having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authorities; and
having (or having a parent that has) a rating of at least Baa3 by Moody's. If
such corporation shall publish reports of condition at least annually pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.02.
SECTION 10.02. RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Administrator. Upon receiving such
notice of resignation, the Administrator shall promptly appoint a successor
Owner Trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Owner Trustee and one copy to the successor
Owner Trustee. If no successor Owner Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the
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Administrator, may remove the Owner Trustee. If the Administrator shall remove
the Owner Trustee under the authority of the immediately preceding sentence, the
Administrator shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
outgoing Owner Trustee so removed and one copy to the successor Owner Trustee,
and shall pay all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each Rating Agency.
SECTION 10.03. SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator, and to its predecessor Owner Trustee an instrument accepting
such appointment under this Agreement, and thereupon the resignation or removal
of the predecessor Owner Trustee shall become effective, and such successor
Owner Trustee, without any further act, deed or conveyance, shall become fully
vested with all the rights, powers, duties and obligations of its predecessor
under this Agreement, with like effect as if originally named as Owner Trustee.
The predecessor Owner Trustee shall upon payment of its fees and expenses
deliver to the successor Owner Trustee all documents and statements and monies
held by it under this Agreement; and the Administrator and the predecessor Owner
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice thereof to all
Certificateholders, the Indenture Trustee, the Noteholders and each Rating
Agency. If the Administrator shall fail to mail such notice within ten days
after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Administrator.
SECTION 10.04. MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, without the execution or filing of any instrument or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; PROVIDED, that such corporation shall be
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eligible pursuant to Section 10.01 and, PROVIDED, FURTHER, that the Owner
Trustee shall mail notice of such merger or consolidation to each Rating Agency.
SECTION 10.05. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Estate or any financed Motorcycle may at the time be located, the
Administrator and the Owner Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Administrator and Owner Trustee to act as co-trustee, jointly
with the Owner Trustee, or as separate trustee or separate trustees, of all or
any part of the Trust Estate, and to vest in such Person, in such capacity, such
title to the Trust or any part thereof and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the
Administrator and the Owner Trustee may consider necessary or desirable. If the
Administrator shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, the Owner Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
Owner Trustee pursuant to Section 10.01 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(a) all rights, powers, duties and obligations conferred
or imposed upon the Owner Trustee shall be conferred upon and exercised
or performed by the Owner Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Owner
Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust Estate or
any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Owner Trustee;
(b) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(c) the Administrator and the Owner Trustee acting
jointly may at any time accept the resignation of or remove any
separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its
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instrument of appointment, either jointly with the Owner Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of or affording protection to, the Owner Trustee.
Each such instrument shall be filed with the Owner Trustee and a copy thereof
given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor co-trustee or separate trustee.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. SUPPLEMENTS AND AMENDMENTS.
(a) This Agreement may be amended from time to time by
the Depositor and the Owner Trustee, with notice to the Rating Agencies, but
without the consent of the Trustees or any of the Securityholders, to correct
manifest error, to cure any ambiguity, to correct or supplement any provisions
herein which may be ambiguous or inconsistent with any other provisions herein
or in any other Transaction Document, as the case may be, 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; PROVIDED,
HOWEVER, that such action shall not, as evidenced by an Opinion of Counsel,
materially and adversely affect the interests of any Securityholder.
(b) This Agreement may also be amended from time to time
by the Depositor and the Owner Trustee, with the consent of Noteholders of more
than 50% of the aggregate principal amount of the Class A-1 Notes or Class A-2
Notes, or, if there are no Class A-1 Notes or Class A-2 Notes outstanding, with
the consent of Noteholders of more than 50% of the aggregate principal amount of
the Class B Notes, or, if there are no Notes outstanding, with the consent of
Certificateholders of more than 50% of the Certificate Balance, 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 Certificateholders; PROVIDED, HOWEVER, that no such amendment or
waiver shall (x) increase or reduce in any manner the amount of, or accelerate
or delay the timing of, collections of payments on the Contracts or
distributions which are required to be made on any Note or Certificate, (y)
change the interest rate on any Notes or Certificates which such change
adversely affects the priority of payment of
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<PAGE>
principal or interest made to the Noteholders or Certificateholders or (z)
reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the Noteholders and Certificateholders then outstanding;
and PROVIDED, FURTHER, that no such amendment or consent shall be effective
unless each Rating Agency delivers written confirmation that such amendment or
consent will not cause its then-current rating on any class of Notes or the
Certificates to be qualified, reduced or withdrawn.
(c) The consent of any Holder of a Note or Trust
Certificate given pursuant to this Section or pursuant to any other provision of
this Agreement shall be conclusive and binding on such Holders and on all future
Holder of such Note or Trust Certificate, as the case may be, issued upon the
transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made thereon
(d) Promptly after the execution of any such amendment or
consent, the Owner Trustee shall furnish written notification of the substance
of such amendment or consent, together with a copy thereof, to the Indenture
Trustee, the Administrator and each Rating Agency.
(e) Promptly after the execution of any amendment to the
Certificate of Trust, the Owner Trustee shall cause the filing of such amendment
with the Secretary of State.
(f) Prior to the execution of any amendment to this
Agreement or the Certificate of Trust, the Owner 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 may,
but shall not be obligated to, enter into any such amendment that affects the
Owner Trustee's own rights, duties or immunities under this Agreement or
otherwise.
SECTION 11.02. NO LEGAL TITLE TO TRUST ESTATE IN OWNERS. The Owners
shall not have legal title to any part of the Trust Estate. The Owners shall be
entitled to receive distributions with respect to their undivided ownership
interest herein only in accordance with Articles Five and Nine. No transfer, by
operation of law or otherwise, of any right, title or interest of the Owners to
and in their ownership interest in the Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Trust
Estate.
SECTION 11.03. LIMITATIONS ON RIGHTS OF OTHERS. Except for Section
2.07, the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Trust Depositor, the Owners, the Administrator and, to the extent
expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement (other than Section 2.07), whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Trust Estate or under or in respect of this Agreement or
any covenants, conditions or provisions contained herein.
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<PAGE>
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.
150 South Wacker Drive, Suite 3100
Chicago, Illinois 60606
Attention: Perry A. Glassgow
Telecopier No.: (312) 368-4372
(ii) If to the Trust Depositor:
Harley-Davidson Customer Funding Corp.
4150 Technology Way
Carson City, Nevada 89706
Telecopier No.: (775) 884-4469
(iii) If to the Indenture Trustee:
--------------------
--------------------
--------------------
Telecopier No.: ________________
(iv) If to the Owner Trustee:
--------------------
--------------------
--------------------
Telecopier No.: ________________
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<PAGE>
(v) If to Moody's:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Department
Telecopier No.: (212) 553-0344
(vi) If to Standard & Poor's:
Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies
25 Broadway
New York, New York 10004
Telecopier No.: (212) 208-1582
(vii) If to the Underwriters:
--------------------
--------------------
--------------------
Telecopier No.: ______________
--------------------
--------------------
--------------------
Telecopier No.: ______________
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 any 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 Trust
Certificates or the rights of the Holders thereof.
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<PAGE>
SECTION 11.06. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 11.07. SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
Trust Depositor, and the Owner Trustee and their respective successors and
permitted assigns and each Owner and its successors and permitted assigns, all
as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by an Owner shall bind the successors and assigns of such
Owner.
SECTION 11.08. NO PETITION.
(a) The Trust Depositor will not at any time institute
against the Trust any bankruptcy proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Trust Certificates, the Notes, this Agreement or any of the other
Transaction Documents.
(b) The Owner Trustee, by entering into this Agreement,
each Certificateholder, by accepting a Trust Certificate, and the Indenture
Trustee and each Noteholder, by accepting the benefits of this Agreement, hereby
covenant and agree that they will not at any time institute against the Trust
Depositor or the Trust, or join in any institution against the Trust Depositor,
or the Trust of, any bankruptcy proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Trust Certificates, the Notes, this Agreement or any of the other
Transaction Documents.
SECTION 11.09. NO RECOURSE. Each Certificateholder by accepting a Trust
Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Trust Depositor, the Servicer, the Seller, the
Administrator, the Owner Trustee, the Indenture Trustee or any of the respective
Affiliates and no recourse may be had against such parties or their assets,
except as my be expressly set forth or contemplated in this Agreement, the Trust
Certificates or the other Transaction Documents.
SECTION 11.10. 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 11.11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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<PAGE>
SECTION 11.12. TRUST CERTIFICATE TRANSFER RESTRICTIONS. The Trust
Certificates may not be acquired by or for the account of a Benefit Plan. By
accepting and holding a Trust Certificate, the Holder thereof shall be deemed to
have represented and warranted that it is not a Benefit Plan nor will it hold
such Trust Certificate for the account of a Benefit Plan. By accepting and
holding a Trust Certificate, the Holder thereof shall be deemed to have
represented and warranted that it is not a Benefit Plan.
SECTION 11.13. SERVICER PAYMENT OBLIGATION. The Servicer shall be
responsible for payment of the Administrator's compensation pursuant to Section
3 of the Administration Agreement and shall reimburse the Administrator for all
expenses and liabilities of the Administrator incurred thereunder.
[signature page follows]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the
day and year first above written.
HARLEY-DAVIDSON CUSTOMER FUNDING
CORP.,
as Trust Depositor
By:________________________________________
Printed Name: Perry A. Glassgow
Title: Treasurer
[__________________],
as Owner Trustee
By:________________________________________
Printed Name:_____________________________
Title:_____________________________________
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE OF TRUST OF
Harley-Davidson Motorcycle Trust [_______]
This Certificate of Trust of Harley-Davidson Motorcycle Trust [_______]
(the "TRUST"), dated __________, ______, is being duly executed and filed by
[_____________], a Delaware banking corporation, as Owner Trustee, to form a
business trust under the Delaware Business Trust Act (12 DEL. CODE, Section 3801
ET SEQ.).
1. NAME. The name of the business trust formed hereby is
Harley-Davidson Motorcycle Trust [__________].
2. DELAWARE TRUSTEE. The name and business address of the Owner
Trustee of the Trust in the State of Delaware is
[_______________],[____________________].
IN WITNESS WHEREOF, the undersigned, being the sole Owner Trustee of
the Trust, has executed this Certificate of Trust as of the date first above
written.
[_______________],
not in its individual capacity but solely as
Owner Trustee
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
<PAGE>
EXHIBIT B
FORM OF TRUST CERTIFICATE
[TO BE INSERTED ON CEDE & CO. CERTIFICATE -
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUST OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS TRUST CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE NOTES TO THE
EXTENT DESCRIBED IN THE SALE AND SERVICING AGREEMENT AND INDENTURE REFERRED TO
HEREIN.
THIS TRUST CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
HARLEY-DAVIDSON CUSTOMER FUNDING CORP., HARLEY-DAVIDSON CREDIT CORP. OR ANY
AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH IN THE TRUST AGREEMENT. THIS
TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN UNLESS
THE CONDITIONS SET FORTH IN SECTION 3.04 OF THE TRUST AGREEMENT HAVE BEEN
COMPLIED WITH.
[TO BE INSERTED ON COMPANY CERTIFICATE--
THIS CERTIFICATE IS NON-TRANSFERABLE]
HARLEY-DAVIDSON MOTORCYCLE TRUST [_______] CERTIFICATE
NO. ___________ Initial Trust Certificate
Principal Balance $______________
Fractional Interest _________%
THIS CERTIFIES THAT _______________ is the registered owner of
equity $ nonassessable, fully-paid, fractional undivided interest in the
Harley-Davidson
<PAGE>
Motorcycle Trust [_______] (the "TRUST") formed by Harley-Davidson Customer
Funding Corp., a Nevada corporation (the "TRUST DEPOSITOR").
The Trust was created pursuant to a Trust Agreement, dated as of
[___________] (as amended and supplemented from time to time, the "TRUST
AGREEMENT"), among Harley-Davidson Customer Funding Corp., as Trust Depositor
(the "TRUST DEPOSITOR"), Harley-Davidson Credit Corp. (the "SELLER") and
[_____________], as owner trustee (the "OWNER TRUSTEE"), a summary of certain of
the pertinent provisions of which is set forth below. To the extent not
otherwise defined herein, the capitalized terms used herein have the meanings
assigned to them in (i) the Trust Agreement, (ii) the Sale and Servicing
Agreement, dated as of [___________] (the "SALE AND SERVICING AGREEMENT"), among
the Trust, Harley-Davidson Customer Funding Corp., as depositor (the "TRUST
DEPOSITOR"), Harley-Davidson Credit Corp. ("HARLEY-DAVIDSON CREDIT"), as
Servicer (in such capacity, the "SERVICER") and [_____________], as Indenture
Trustee (the "Indenture Trustee") or (iii) the Indenture, dated as of
[___________] (the "INDENTURE"), between the Trust and the Indenture Trustee.
This Trust Certificate is one of the duly authorized Trust Certificates
designated as "___% HARLEY-DAVIDSON MOTORCYCLE CONTRACT BACKED CERTIFICATES"
(the "TRUST CERTIFICATES"). Also issued under the Indenture are two classes of
notes designated as "___% HARLEY-DAVIDSON MOTORCYCLE CONTRACT BACKED NOTES,
CLASS A-1", "___% HARLEY-DAVIDSON MOTORCYCLE CONTRACT BACKED NOTES, CLASS A-2"
and "___% HARLEY-DAVIDSON MOTORCYCLE CONTRACT BACKED NOTES, CLASS B"
(collectively, the "NOTES"). This Trust Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement, to which
Trust Agreement the Holder of this Trust Certificate by virtue of its acceptance
hereof assents and by which such Holder is bound. The property of the Trust
includes, among other things, (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 (the property in clauses (i)-(viii)
above.
<PAGE>
Under the Trust Agreement, there will be distributed on the fifteenth
day of each month or if such day is not a Business Day the next succeeding
Business Day commencing [ ], [____] (each, a "DISTRIBUTION DATE") and ending no
later than the Distribution Date in ___ to the person in whose name this Trust
Certificate is registered as of the last Business Day immediately preceding the
calendar month in which such Distribution Date occurs (each, a "RECORD DATE"),
such Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date.
The holder of this Trust Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders to the extent described in the
Sale and Servicing Agreement and the Indenture.
It is the intent of the Seller, the Servicer, the Trust Depositor,
Owner Trustee, Indenture Trustee and the Certificateholders that, for purposes
of federal income, state and local income and single business tax and any other
income taxes, the Trust will be treated as a partnership and the
Certificateholders (including the Trust Depositor) will be treated as partners
in that partnership. The Trust Depositor and the other Certificateholders, by
acceptance of a Trust Certificate, agree to treat, and to take no action
inconsistent with the treatment of, the Trust Certificates for such tax purposes
as partnership interests in the Trust and the Certificateholders (including the
Trust Depositor) as partners in that partnership.
Each Certificateholder, by its acceptance of a Trust Certificate or
beneficial interest in a Trust Certificate, covenants and agrees that such
Certificateholder will not at any time institute against the Trust or the Trust
Depositor, or join in any institution against the Trust or the Trust Depositor,
Harley-Davidson Credit or the Servicer any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Trust Certificates, the Notes, the Trust
Agreement or any of the other Transaction Documents.
Distributions on this Trust Certificate will be made as provided in the
Trust Agreement by the Owner Trustee or its Agent by wire transfer or check
mailed to the Certificateholder of record in the Certificate Register without
the presentation or surrender of this Trust Certificate or the making of any
notation hereon, except that with respect to Trust Certificates registered on
the Record Date in the name of the nominee of the Clearing Agency (initially,
such nominee to be Cede & Co.), payments will be made by wire transfer in
immediately available funds to the account designated by such nominee. Except as
otherwise provided in the Trust Agreement and notwithstanding the above, the
final distribution on this Trust Certificate will be made after due notice by
the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Trust Certificate at the office or agency
maintained for that purpose by the Owner Trustee in the City of [__________],
Delaware.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
<PAGE>
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Trust Certificate shall not entitle the holder hereof to any benefit under
the Trust Agreement or any other Transaction Document or be valid for any
purpose.
THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
<PAGE>
[REVERSE OF CERTIFICATE]
The Trust Certificate does not represent an obligation of, or an
interest in the Trust Depositor, Harley-Davidson Credit, as the Seller or
Servicer, the Owner Trustee, the Indenture Trustee or any of their respective
Affiliates and no recourse may be had against such parties or their assets,
except as expressly set forth or contemplated herein or in the Trust Agreement
or the other Transaction Documents. In addition, this Trust Certificate is not
guaranteed by any governmental agency or instrumentality and is limited in right
of payment to certain collections and recoveries with respect to the Contracts
and certain other amounts, in each case as more specifically set forth herein
and in the Sale and Servicing Agreement. A copy of each of the Sale and
Servicing Agreement and the Trust Agreement may be examined by any
Certificateholder upon written request during normal business hours at the
principal office of the Trust Depositor and at such other places, if any,
designated by the Trust Depositor.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Trust Depositor and the rights of the Certificateholders under the Trust
Agreement at any time by the Trust Depositor and the Owner Trustee with the
consent of Noteholders of more than 50% of the aggregate principal amount of the
Class A-1 Notes and Class A-2 Notes, or, if there are no Class A-1 Notes or
Class A-2 Notes outstanding, with the consent of Noteholders of more than 50% of
the aggregate principal amount of the Class B Notes, or, if there are no Notes
outstanding, with the consent of Certificateholders of more than 50% of the
Certificate Balance. Any such consent by the Holder of this Trust Certificate
shall be conclusive and binding on such Holder and on all future Holders of this
Trust Certificate and of any Trust Certificate issued upon the transfer hereof
or in exchange herefor or in lieu hereof, whether or not notation of such
consent is made upon this Trust Certificate. The Trust Agreement also permits
the amendment thereof, in certain limited circumstances, without the consent of
the Holders of any of the Trust Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Trust Certificate is registerable in the
Certificate Register upon surrender of this Trust Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in [___________], Delaware, accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar in Chicago, Illinois executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Trust Certificates of authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee. The initial
Certificate Registrar appointed under the Trust Agreement is [_____________].
Except as provided in the Trust Agreement, the Trust Certificates are
issuable only as registered Trust Certificates without coupons in denominations
of $1,000 and in integral multiples of $1,000 in excess thereof. As provided in
the Trust Agreement and subject to certain limitations therein set forth, Trust
Certificates are exchangeable for new Trust Certificates of
<PAGE>
authorized denominations evidencing the same aggregate denomination, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar and any of their
respective agents may treat the Person in whose name this Trust Certificate is
registered as the owner hereof for all purposes, and none of the Owner Trustee,
the Certificate Registrar or any such agent shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement and
the Sale and Servicing Agreement and the deposition of all property held as part
of the Trust Estate. The Trust Depositor may at its option purchase the Trust
Estate at a price specified in the Sale and Servicing Agreement, and such
purchase of the Contracts and other property of the Trust will affect early
retirement of the Trust Certificates; however, such right of purchase is
exercisable only as of any Distribution Date on which the on which the unpaid
Aggregate Principal Balance is less than 10% of the sum of (i) the Aggregate
Principal Balance as of the Cutoff Date and (ii) the Pre-Funded Amount on the
Closing Date.
The Trust Certificates may not be acquired by a Benefit Plan. By
accepting and holding this Trust Certificate, the Holder hereof or, in the case
of Book-Entry Trust Certificate, by accepting a beneficial interest in this
Trust Certificate, the related Certificate Owner, shall be deemed to have
represented and warranted that it is not a Benefit Plan and is not acquiring
this Trust Certificate or an interest therein for the account of such an entity.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Trust Certificate to be duly
executed.
Dated: Harley-Davidson Motorcycle Trust [_______]
By: [_____________], not in its individual
capacity but solely as Owner Trustee
By:____________________________________________
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the
within-mentioned Trust Agreement.
[_______________],
not in its individual capacity but solely
as Owner Trustee
By:_________________________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________________________________________________
to transfer said Trust Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:_______________
Signature Guaranteed:
____________________________ _________________________________________
NOTICE: Signature(s) must be NOTICE: The signature to this assignment
guaranteed by an eligible must correspond with the name of the
guarantor institution. registered owner as it appears on the
face of the within Trust Certificate in
every particular, without alteration or
enlargement or any change whatever.
<PAGE>
EXHIBIT 4.2
================================================================================
FORM OF INDENTURE
HARLEY-DAVIDSON MOTORCYCLE TRUST [________],
as Issuer,
and
[_________________],
not in its individual capacity but solely in its capacity
as Indenture Trustee
-----------------------------------
Dated as of [________]
-----------------------------------
$[___________] [_____]% 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
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1)................................................................................................6.11
(a)(2)..............................................................................................6.11
(a)(3)..............................................................................................6.10
(a)(4)..............................................................................................N.A.
(a)(5)..............................................................................................6.11
(b) ...................................................................................6.08; 6.11; 11.04
(c) ................................................................................................N.A.
311(a) ................................................................................................6.13
(b) ................................................................................................6.13
(c) ................................................................................................N.A.
312(a) ..........................................................................................7.01; 7.02
(b) ................................................................................................7.02
(c) ................................................................................................7.02
313(a) ................................................................................................7.04
(b) ................................................................................................7.04
(c) ................................................................................................7.04
(d) ................................................................................................7.04
314(a) ................................................................................................7.03
(b) ................................................................................................3.06
(c)(1).................................................................................2.02; 6.02; 11.01
(c)(2).............................................................................................11.01
(c)(3).............................................................................................11.01
(d) ...............................................................................................11.01
(e) ...............................................................................................11.01
(f) ................................................................................................N.A.
315(a) ................................................................................................6.01
(b) ................................................................................................6.05
(c) ................................................................................................6.01
(d) ..........................................................................................5.12; 6.01
(e) ................................................................................................5.14
316(a)(1)(A)...........................................................................................5.12
(a)(1)(B)...........................................................................................5.02
(a)(2)..............................................................................................N.A.
(b) ................................................................................................5.08
(c) ................................................................................................N.A.
317(a) ..........................................................................................5.03; 5.04
(b) ................................................................................................3.03
318(a) ...............................................................................................11.18
</TABLE>
- --------------------
* N.A. means Not Applicable
* This Cross-Reference Table shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE...........................................................2
SECTION 1.01. DEFINITIONS.................................................................................2
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT...........................................9
SECTION 1.03. RULES OF CONSTRUCTION.......................................................................9
ARTICLE TWO THE NOTES...........................................................................................10
SECTION 2.01. FORM.......................................................................................10
SECTION 2.02. EXECUTION, AUTHENTICATION AND DELIVERY.....................................................10
SECTION 2.03. TEMPORARY NOTES............................................................................11
SECTION 2.04. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE........................................11
SECTION 2.05. MUTILATED, DESTROYED, LOST OR STOLEN NOTES.................................................12
SECTION 2.06. PERSONS DEEMED OWNER.......................................................................13
SECTION 2.07. PAYMENT OF PRINCIPAL AND INTEREST; DEFAULTED INTEREST......................................13
SECTION 2.08. CANCELLATION...............................................................................14
SECTION 2.09. BOOK-ENTRY NOTES...........................................................................14
SECTION 2.10. NOTICES TO CLEARING AGENCY.................................................................15
SECTION 2.11. DEFINITIVE NOTES...........................................................................15
SECTION 2.12. RELEASE OF COLLATERAL......................................................................16
SECTION 2.13. TAX TREATMENT..............................................................................16
ARTICLE THREE COVENANTS.........................................................................................16
SECTION 3.01. PAYMENT OF PRINCIPAL AND INTEREST..........................................................16
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY............................................................17
SECTION 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST.....................................................17
SECTION 3.04. EXISTENCE..................................................................................18
SECTION 3.05. PROTECTION OF COLLATERAL...................................................................19
SECTION 3.06. OPINIONS AS TO COLLATERAL..................................................................19
SECTION 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING OF CONTRACTS.........................................20
SECTION 3.08. NEGATIVE COVENANTS.........................................................................20
SECTION 3.09. ANNUAL STATEMENT AS TO COMPLIANCE..........................................................21
SECTION 3.10. ISSUER MAY CONSOLIDATE, ETC. ONLY ON CERTAIN TERMS.........................................21
SECTION 3.11. SUCCESSOR OR TRANSFEREE....................................................................23
SECTION 3.12. NO OTHER BUSINESS..........................................................................23
SECTION 3.13. NO BORROWING...............................................................................23
SECTION 3.14. SERVICER'S OBLIGATIONS.....................................................................23
SECTION 3.15. GUARANTEES, LOANS ADVANCES AND OTHER LIABILITIES...........................................24
SECTION 3.16. CAPITAL EXPENDITURES.......................................................................24
SECTION 3.17. RESTRICTED PAYMENTS........................................................................24
SECTION 3.18. NOTICE OF EVENTS OF DEFAULT................................................................24
SECTION 3.19. FURTHER INSTRUMENTS AND ACTS...............................................................24
SECTION 3.20. COMPLIANCE WITH LAWS.......................................................................24
SECTION 3.21. AMENDMENTS OF SALE AND SERVICING AGREEMENT AND TRUST AGREEMENT.............................24
i
<PAGE>
SECTION 3.22. REMOVAL OF ADMINISTRATOR...................................................................25
ARTICLE FOUR SATISFACTION AND DISCHARGE.........................................................................25
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE....................................................25
SECTION 4.02. APPLICATION OF TRUST MONEY.................................................................26
SECTION 4.03. REPAYMENT OF MONEYS HELD BY PAYING AGENT...................................................26
SECTION 4.04. RELEASE OF COLLATERAL......................................................................26
ARTICLE FIVE REMEDIES...........................................................................................27
SECTION 5.01. EVENTS OF DEFAULT..........................................................................27
SECTION 5.02. RIGHTS UPON EVENT OF DEFAULT...............................................................28
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY INDENTURE TRUSTEE; AUTHORITY OF
INDENTURE TRUSTEE. ...........................................................................................28
SECTION 5.04. REMEDIES...................................................................................30
SECTION 5.05. OPTIONAL PRESERVATION OF THE CONTRACTS.....................................................31
SECTION 5.06. PRIORITIES.................................................................................31
SECTION 5.07. LIMITATION OF SUITS........................................................................32
SECTION 5.08. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL AND INTEREST......................33
SECTION 5.09. RESTORATION OF RIGHTS AND REMEDIES.........................................................33
SECTION 5.10. RIGHTS AND REMEDIES CUMULATIVE.............................................................33
SECTION 5.11. DELAY OR OMISSION NOT A WAIVER.............................................................33
SECTION 5.12. CONTROL BY NOTEHOLDERS.....................................................................33
SECTION 5.13. WAIVER OF PAST DEFAULTS....................................................................34
SECTION 5.14. UNDERTAKING FOR COSTS......................................................................34
SECTION 5.15. WAIVER OF STAY OR EXTENSION LAWS...........................................................34
SECTION 5.16. ACTION ON NOTES............................................................................35
SECTION 5.17. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.........................................35
ARTICLE SIX THE INDENTURE TRUSTEE...............................................................................35
SECTION 6.01. DUTIES OF INDENTURE TRUSTEE................................................................35
SECTION 6.02. RIGHTS OF INDENTURE TRUSTEE................................................................37
SECTION 6.03. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE.....................................................38
SECTION 6.04. INDENTURE TRUSTEE'S DISCLAIMER.............................................................38
SECTION 6.05. NOTICE OF DEFAULTS.........................................................................38
SECTION 6.06. REPORTS BY INDENTURE TRUSTEE TO HOLDERS....................................................38
SECTION 6.07. COMPENSATION AND INDEMNITY.................................................................38
SECTION 6.08. REPLACEMENT OF INDENTURE TRUSTEE...........................................................39
SECTION 6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER......................................................40
SECTION 6.10. APPOINTMENT OF CO-INDENTURE TRUSTEE OR SEPARATE INDENTURE TRUSTEE..........................40
SECTION 6.11. ELIGIBILITY................................................................................42
SECTION 6.12. PENNSYLVANIA MOTOR VEHICLE SALES FINANCE ACT LICENSES......................................43
SECTION 6.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER...........................................43
ARTICLE SEVEN NOTEHOLDERS' LISTS AND REPORTS....................................................................43
SECTION 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND ADDRESSES OF NOTEHOLDERS.....................43
ii
<PAGE>
SECTION 7.02. PRESERVATION OF INFORMATION: COMMUNICATION TO NOTEHOLDERS..................................43
SECTION 7.03. REPORTS BY ISSUER..........................................................................44
SECTION 7.04. REPORTS BY INDENTURE TRUSTEE...............................................................44
ARTICLE EIGHT ACCOUNTS, DISBURSEMENTS AND RELEASES..............................................................45
SECTION 8.01. COLLECTION OF MONEY........................................................................45
SECTION 8.02. TRUST ACCOUNTS.............................................................................45
SECTION 8.03. GENERAL PROVISIONS REGARDING ACCOUNTS......................................................47
SECTION 8.04. RELEASE OF COLLATERAL......................................................................47
SECTION 8.05. OPINION OF COUNSEL.........................................................................48
ARTICLE NINE SUPPLEMENTAL INDENTURES............................................................................48
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.....................................48
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS........................................50
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES.......................................................51
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURE...........................................................51
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT........................................................51
SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES..............................................51
ARTICLE TEN REDEMPTION OF NOTES.................................................................................52
SECTION 10.01. REDEMPTION.................................................................................52
SECTION 10.02. FORM OF REDEMPTION NOTICE..................................................................52
SECTION 10.03. NOTES PAYABLE ON REDEMPTION DATE...........................................................53
ARTICLE ELEVEN MISCELLANEOUS....................................................................................53
SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC..................................................53
SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE...........................................55
SECTION 11.03. ACTS OF NOTEHOLDERS........................................................................56
SECTION 11.04. NOTICES....................................................................................56
SECTION 11.05. NOTICES TO NOTEHOLDERS; WAIVER.............................................................58
SECTION 11.06. ALTERNATE PAYMENT AND NOTICE PROVISIONS....................................................58
SECTION 11.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS...................................................58
SECTION 11.08. SUCCESSORS AND ASSIGNS.....................................................................58
SECTION 11.09. SEPARABILITY...............................................................................59
SECTION 11.10. BENEFITS OF INDENTURE......................................................................59
SECTION 11.11. LEGAL HOLIDAYS.............................................................................59
SECTION 11.12. GOVERNING LAW..............................................................................59
SECTION 11.13. COUNTERPARTS...............................................................................59
SECTION 11.14. RECORDING OF INDENTURE.....................................................................59
SECTION 11.15. TRUST OBLIGATION...........................................................................59
SECTION 11.16. NO PETITION................................................................................60
SECTION 11.17. INSPECTION.................................................................................60
SECTION 11.18. CONFLICT WITH TRUST INDENTURE ACT..........................................................60
</TABLE>
iii
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Exhibit A - Form of Sale and Servicing Agreement A-1
Exhibit B - Form of Class A-1 Note B-1
Exhibit C - Form of Class A-2 Note C-1
Exhibit D - Form of Class B Note D-1
Exhibit E - Form of Assignment E-1
Exhibit F - Form of Note Depository Agreement F-1
</TABLE>
iv
<PAGE>
INDENTURE
Indenture, dated as of [________] (this "Indenture"), between
Harley-Davidson Motorcycle Trust [________], a Delaware business trust (the
"Issuer") and [________________], in its capacity as indenture trustee (the
"Indenture Trustee") and not in its individual capacity.
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Issuer's [_____]%
Harley-Davidson Motorcycle Contract Backed Notes, Class A-1 (the "Class A-1
Notes"), [_____]% Harley-Davidson Motorcycle Contract Backed Notes, Class A-2
(the "Class A-2 Notes") and [_____]% Harley-Davidson Motorcycle Contract Backed
Notes, Class B (the "Class B Notes" and, together with the Class A-1 Notes and
the Class A-2 Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby grants, transfers, assigns and otherwise conveys to
the Indenture Trustee on the Closing Date, on behalf of and for the benefit of
the Holders of the Notes, without recourse, all of the Issuer's right, title and
interest (exclusive of the amount, if any, allocable to any rebatable insurance
premium financed by any Contract) in, to and under: (i) the Initial Contracts
and Subsequent Contracts secured by the Motorcycles (which Contracts shall be
listed in the List of Contracts and Subsequent List of Contracts); (ii) certain
monies due under the Initial Contracts and Subsequent Contracts on and after the
Initial Cutoff Date and Subsequent Cutoff Date, respectively, including, without
limitation, all payments of principal and interest with respect to any
Motorcycles to which a Contract relates received on or after the Initial Cutoff
Date or Subsequent Cutoff Date and all other proceeds received on or in respect
of such Contracts (other than payments of principal and interest due prior to
the Initial Cutoff Date or Subsequent Cutoff Date); (iii) security interests in
the Motorcycles; (iv) amounts on deposit in the Collection Account, the Note
Distribution Account, the Reserve Fund, the Pre-Funding Account and the Interest
Reserve Account, including all Eligible Investments therein and all income from
the investment of funds therein and all proceeds therefrom; (v) proceeds from
claims under certain insurance policies in respect of individual Motorcycles or
obligors under the Contracts; (vi) certain rights under the Sale and Servicing
Agreement; (vii) the protective security interest in certain of the
above-described property granted by the Trust Depositor in favor of the Issuer;
(viii) all present and future claims, demands, causes of and choses in action in
respect of any or all of the foregoing; and (ix) all payments on or under and
all proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary or involuntary,
into cash of other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing (as each such defined term is defined in Section 1.01)
(collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction, except for the
subordination of the Class B Notes provided herein, and all
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other sums owing by the Issuer hereunder or under any other Transaction
Document, and to secure compliance with the provisions of this Indenture, all as
provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders of
the Notes, acknowledges such Grant, accepts the trust under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture in accordance with its terms and the terms of
the other Transaction Documents to which it is a party.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
(a) Except as otherwise specified herein or as the context may
otherwise require, the following terms have the respective meanings set forth
below for all purposes of this Indenture.
"ACT" shall have the meaning specified in Section 11.03(a).
"ADMINISTRATION AGREEMENT" means the Administration Agreement, dated as
of the date hereof, among the Administrator, the Issuer, the Trust Depositor and
the Indenture Trustee.
"ADMINISTRATOR" means Harley-Davidson Credit Corp. or any successor
Administrator under the Administration Agreement.
"AFFILIATE" means, with respect to any specified Person, 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 Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.
"AUTHORIZED OFFICER" means, with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter) and, so
long as the Administration Agreement is in effect, any Vice President or more
senior officer of the Administrator who is authorized to act for the
Administrator in matters relating to the Issuer and to be acted upon by the
Administrator pursuant to the Administration Agreement and who is identified on
the list of Authorized Officers delivered by the Administrator to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
"BOOK ENTRY NOTES" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.09.
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"BUSINESS DAY" means any day other than a Saturday, Sunday or other 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.
"CERTIFICATE FINAL DISTRIBUTION DATE" means the [__________]
Distribution Date.
"CERTIFICATE OF TRUST" means the Certificate of Trust of the Issuer
substantially in the form of EXHIBIT B to the Trust Agreement.
"CLASS" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"CLASS A-1 FINAL DISTRIBUTION DATE" means the [___________]
Distribution Date.
"CLASS A-1 RATE" means [____]% per annum (computed on the basis of a
360-day year of twelve 30-day months).
"CLASS A-1 NOTES" means the Class A-1 Notes, substantially in the form
of EXHIBIT B.
"CLASS A-2 FINAL DISTRIBUTION DATE" means the [_________] Distribution
Date.
"CLASS A-2 RATE" means [____]% per annum (computed on the basis of a
360-day year of twelve 30-day months).
"CLASS A-2 NOTES" means the Class A-2 Notes, substantially in the form
of EXHIBIT C.
"CLASS B FINAL DISTRIBUTION DATE" means the [_________] Distribution
Date.
"CLASS B RATE" means [____]% per annum (computed on the basis of a
360-day year of twelve 30-day months).
"CLASS B NOTES" means the Class B Notes, substantially in the form of
EXHIBIT D.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"CLOSING DATE" means [____________].
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means the Collateral Granted to the Indenture Trustee
under this Indenture, including all proceeds thereof.
"COMMISSION" means the Securities and Exchange Commission.
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"CORPORATE TRUST OFFICE" means the principal office of the Indenture
Trustee at which at any particular time its corporate trusts business shall be
administered which office at date of the execution of this Agreement is located
at [_______________], Attention: [______________]; or at such other address as
the Indenture Trustee may designate from time to time by notice to the
Noteholders and the Issuer, or the principal corporate trust office of any
successor Indenture Trustee (the address of which the successor Indenture
Trustee will notify the Noteholders and the Issuer).
"DEFAULT" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"DEFINITIVE NOTES" shall have the meaning specified in Section 2.09.
"DISTRIBUTION DATE" means the fifteenth day of each month or, if such
date shall not be a Business Day, the next succeeding Business Day, commencing
[_________].
"DTC" means The Depository Trust Company, and its successors and
assigns.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" shall have the meaning specified in Section 5.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXECUTIVE OFFICER" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; and with respect to any partnership, any general partner
thereof.
"GENERAL PARTNER" means each Certificateholder obligated to pay the
expenses of the Issuer pursuant to Section 2.07 of the Trust Agreement.
"GRANT" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"HARLEY-DAVIDSON CREDIT" means Harley-Davidson Credit Corp., and its
successors and assigns.
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"HOLDER" or "NOTEHOLDER" OR "NOTE OWNER" means, with respect to a
Book-Entry Note, the Person who is the owner of such Book-Entry Note, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency) and with respect to a Definitive Note the Person
in whose name a Note is registered on the Note Register.
"INDEBTEDNESS" means, with respect to any Person at any time, (i)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (ii)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (iii) current liabilities of such Person in respect of
unfunded vested benefits under plans covered by Title IV of ERISA; (iv)
obligations issued for or liabilities incurred on the account of such Person;
(v) obligations or liabilities of such Person arising under acceptance
facilities; (vi) obligations of such Person under any guaranties, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds to invest in any Person or otherwise to assure a creditor against
loss; (vii) obligations of such Person secured by any lien on property or assets
of such Person, whether or not the obligations have been assumed by such Person;
or (viii) obligations of such Person under any interest rate or currency
exchange agreement.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time.
"INDENTURE SECURITIES" means the Notes.
"INDENTURE SECURITY HOLDER" means a Noteholder.
"INDENTURE TRUSTEE" means [______________], as Indenture Trustee under
this Indenture, or any successor Indenture Trustee under this Indenture.
"INDEPENDENT" means, when used with respect to any specified Person,
that the Person (i) is in fact independent of the Issuer, any other obligor upon
the Notes, the Trust Depositor, the Seller and any of their respective
Affiliates, (ii) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Seller or
any of their respective Affiliates, and (iii) is not connected with the Issuer,
any such other obligor, the Seller or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriters, trustee, partner,
director or person performing similar functions.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01, made by
an Independent appraiser or other expert appointed by an Issuer Order and
approved by the Indenture Trustee in the exercise of reasonable care, and such
opinion or certificate shall state that the signer has read the definition of
"INDEPENDENT" in this Indenture and that the signer is Independent within the
meaning thereof.
"INTEREST PERIOD" means, with respect to any Distribution Date and any
Class of Notes, the period from and including the fifteenth day of the month of
the Distribution Date
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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 and the
Class B Rate, as applicable.
"ISSUER" means Harley-Davidson Motorcycle Trust [________] until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Notes.
"ISSUER ORDER" and "ISSUER REQUEST" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"NOTE" means a Class A-1 Note, a Class A-2 Note or a Class B Note.
"NOTE DEPOSITORY AGREEMENT" means the agreement dated as of the Closing
Date, among the Issuer, the Administrator, the Indenture Trustee and DTC, as the
initial Clearing Agency, relating to the Notes, substantially in the form of
EXHIBIT E hereto.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
specified in Section 2.04.
"OFFICER'S CERTIFICATE" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to,
the Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"OPINION OF COUNSEL" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer and who shall be satisfactory to the Indenture Trustee
and which shall comply with any applicable requirements of Section 11.01, and
shall be in form and substance satisfactory to the Indenture Trustee.
"OUTSTANDING" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money
in the necessary amount has been theretofore deposited with the
Indenture Trustee or any Paying Agent in trust for the Holders of such
Notes (PROVIDED, HOWEVER, that if such Notes are to be redeemed, notice
of such redemption has been duly given pursuant to this Indenture or
provision for such notice has been made, satisfactory to the Indenture
Trustee, has been made); and
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(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
Outstanding Amount have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any other Transaction Document,
Notes owned by the Issuer, any other obligor upon the Notes, the Trust
Depositor, Harley-Davidson Credit or any of their respective Affiliates shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
that the Indenture Trustee knows to be so owned shall be so disregarded. Notes
so owned that have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Indenture Trustee the
pledgee's right so to act with respect to such Notes and that the pledgee is not
the Issuer, any other obligor upon the Notes, the Trust Depositor,
Harley-Davidson Credit or any of their respective Affiliates.
"OUTSTANDING AMOUNT" means the aggregate principal amount of all Notes
of one Class or of all Classes, as the case may be, Outstanding at the date of
determination.
"OWNER TRUSTEE" means [_____________], not in its individual capacity
but solely as Owner Trustee under the Trust Agreement, or any successor trustee
under the Trust Agreement.
"PAYING AGENT" means the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.11 and is authorized by the Issuer to make the distributions from the Note
Distribution Account, including payment of principal of or interest on the Notes
on behalf of the Issuer.
"PERSON" means any individual, corporation, limited liability company,
state, partnership, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"PREDECESSOR NOTE" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"PROCEEDING" means any suit in equity, action at law or other judicial
or administrative proceeding.
"RATING AGENCY" means each of Moody's and Standard & Poor's.
"RATING AGENCY CONDITION" means, with respect to any action, that each
Rating Agency shall have been given ten days (or such shorter period as is
acceptable to each Rating Agency) prior notice thereof and that each Rating
Agency shall have notified the Trust Depositor, the Indenture Trustee, the
Servicer and the Issuer in writing that such action will not result in a
qualification, reduction or withdrawal of its then-current rating of any Class
of Notes.
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"RATING EVENT" means the qualification, reduction or withdrawal by
either Rating Agency of its then-current rating of any Class of Notes.
"RECORD DATE" means, with respect to a Distribution Date or Redemption
Date, the close of business on the last Business Day of the immediately
preceding month.
"REDEMPTION DATE" means (a) in the case of a redemption of the Notes
pursuant to Section 10.01(a) or a payment to Noteholders pursuant to Section
10.01(b), the Distribution Date specified by the Servicer or the Issuer pursuant
to Section 10.01(a) or 10.01(b), as the case may be and (b) in the case of a
redemption of Notes pursuant to Section 10.01, the Distribution Date specified
in Section 7.07 of the Sale and Servicing Agreement on which the Indenture
Trustee shall withdraw any amount remaining in the Pre-Funding Account and
deposit the applicable amount in the Note Distribution Account.
"REDEMPTION DATE AMOUNT" means (i) in the case of a redemption of the
Notes pursuant to Section 10.01(a), an amount equal to the unpaid principal
amount of the Notes redeemed plus accrued and unpaid interest thereon at the
weighted average of the Interest Rate for each Class of Notes being so redeemed
to but excluding the Redemption Date, or (ii) in the case of a payment made to
Noteholders pursuant to Section 10.01(b), the amount on deposit in the Note
Distribution Account, but not in excess of the amount specified in clause (i)
above.
"REGISTERED HOLDER" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"RESPONSIBLE OFFICER" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office (or any successor group of the
Indenture Trustee), including any Vice President, assistant secretary or other
officer or assistant officer of the Indenture Trustee customarily performing
functions similar to those performed by the people who at such time shall be
officers, respectively, or to whom any corporate trust matter is referred at the
Corporate Trust Office of the Indenture Trustee because of his knowledge of and
familiarity with the particular subject.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement,
dated as of the date hereof, among the Issuer, the Trust Depositor, the
Indenture Trustee and the Servicer, substantially in the form of EXHIBIT A
hereto.
"SELLER" means Harley-Davidson Credit Corp., in its capacity as Seller
under the Transfer and Sale Agreement, and any successors and assigns.
"SERVICER" means Harley-Davidson Credit Corp., in its capacity as
Servicer under the Sale and Servicing Agreement, and any Successor Servicer
thereunder.
"STATE" means any one of the 50 states of the United States or any of
its territories, or the District of Columbia.
"TERMINATION DATE" means the date on which the Indenture Trustee shall
have received payment and performance of all amounts and obligations which the
Issuer may owe to or on
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behalf of the Indenture Trustee for the benefit of the Noteholders under this
Indenture or the Notes.
"TRUST AGREEMENT" means the Trust Agreement, dated as of the date
hereof, between the Trust Depositor and the Owner Trustee.
"TRUST DEPOSITOR" shall mean Harley-Davidson Customer Funding Corp., in
its capacity as trust depositor under the Sale and Servicing Agreement.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of 1939,
as amended.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
"UNITED STATES" means the United States of America.
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Sale and Servicing Agreement.
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"COMMISSION" means the Securities and Exchange Commission.
"INDENTURE SECURITIES" means the Notes.
"INDENTURE SECURITY HOLDER" means a Noteholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"OBLIGOR" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.03. RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
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(iii) "OR" is not exclusive;
(iv) "INCLUDING" means including without limitation;
(v) words in the singular include the plural and words in
the plural include the singular.
(vi) any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to time
amended, modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments incorporated
therein; references to a Person are also to its permitted successors and
assigns; and
(vii) the words "HEREOF," "HEREIN" and "HEREUNDER" and
words of similar import when used in this Indenture shall refer to this
Indenture as a whole and not to any particular provision of this Indenture;
Section, subsection and Schedule references contained in this Indenture are
references to Sections, subsections and Schedules in or to this Indenture unless
otherwise specified.
ARTICLE TWO
THE NOTES
SECTION 2.01. FORM. The Class A-1 Notes, the Class A-2 Notes and the
Class B Notes, in each case together with the Indenture Trustee's certificate of
authentication, shall be in substantially the forms set forth as Exhibits to
this Indenture with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibits hereto are part of the terms of this Indenture.
SECTION 2.02. EXECUTION, AUTHENTICATION AND DELIVERY. The Notes shall
be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall, upon receipt of an Issuer Order,
authenticate and deliver for original issue (i) Class A-1 Notes in an aggregate
principal amount of $[__________], (ii) Class
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A-2 Notes in an aggregate principal amount of $[__________] and (iii) Class B
Notes in an aggregate principal amount of $[__________]. The aggregate principal
amount of the Class A-1 Notes, Class A-2 Notes and Class B Notes Outstanding at
any time may not exceed such respective amounts, except as otherwise provided in
Section 2.05.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein by
the Indenture Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.03. TEMPORARY NOTES. Pending the preparation of Book-Entry
Notes or Definitive Notes, the Issuer may execute, and upon receipt of an Issuer
Order the Indenture Trustee shall authenticate and deliver, temporary Notes that
are printed, lithographed, typewritten, mimeographed or otherwise produced, of
the tenor of the definitive Notes in lieu of which they are issued and with such
variations not inconsistent with the terms of this Indenture as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes.
If temporary Notes are issued, the Issuer will cause Book-Entry Notes
or Definitive Notes to be prepared without unreasonable delay. After the
preparation of Book-Entry Notes or Definitive Notes, the temporary Notes shall
be exchangeable for Book-Entry Notes or Definitive Notes upon surrender of the
temporary Notes at the office or agency of the Issuer to be maintained as
provided in Section 3.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes, the Issuer shall execute and
the Indenture Trustee shall authenticate and deliver in exchange therefor a like
tenor and principal amount of definitive Notes of authorized denominations.
Until so exchanged, the temporary Notes shall in all respects be entitled to the
same benefits under this Indenture as Book-Entry Notes or Definitive Notes.
SECTION 2.04. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Note Registrar shall
provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee shall be "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate
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executed on behalf of the Note Registrar by an Executive Officer thereof as to
the names and addresses of the Holders of the Notes and the principal amounts
and the amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes of the same Class in any
authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, the Notes which the Noteholder making the exchange
is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located in the city in which the Corporate Trust Office is
located, or by a member firm of a national securities exchange, and such other
documents as the Indenture Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.03 not involving
any transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make, and the Note Registrar need not register,
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to the
Notes of that Class.
SECTION 2.05. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by them to hold the Issuer and the Indenture
Trustee harmless, then, in the absence of notice to the Issuer, the Note
Registrar or the Indenture Trustee that such Note has been acquired by a bona
fide purchaser, the Issuer shall execute and upon its request the Indenture
Trustee shall authenticate and deliver, in exchange for
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or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement
Note of the same Class and denomination; PROVIDED, HOWEVER, that if any such
destroyed, lost or stolen Note, but not a mutilated Note, shall have become or
within seven days shall be due and payable, or shall have been called for
redemption, instead of issuing a replacement Note, the Issuer may pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. If, after the delivery of such replacement Note
or payment of a destroyed, lost or stolen Note pursuant to the proviso to the
preceding sentence, a bona fide purchaser of the original Note in lieu of which
such replacement Note was issued presents for payment such original Note, the
Issuer, and the Indenture Trustee shall be entitled to recover such replacement
Note (or such payment) from the Person to whom it was delivered or any Person
taking such replacement Note from such Person to whom such replacement Note was
delivered or any assignee of such Person, except a bona fide purchaser, and
shall be entitled to recover upon the security or indemnity provided therefor to
the extent of any loss, damage, cost or expense incurred by the Issuer or the
Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer or the Indenture Trustee may require the payment by the Holder of such
Note of a sum sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other reasonable expenses (including the
fees and expenses of the Indenture Trustee or the Note Registrar) connected
therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost of stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.06. PERSONS DEEMED OWNER. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee, and any
of their respective agents may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Issuer, the Indenture Trustee nor any of their respective agents
shall be affected by notice to the contrary.
SECTION 2.07. PAYMENT OF PRINCIPAL AND INTEREST.
(a) Each Class of Notes shall accrue interest at the related
Interest Rate, and such interest shall be payable on each Distribution Date as
specified therein, subject to Section 3.01. Any installment of interest or
principal, if any, payable on any Note which is punctually paid or duly provided
for by the Issuer on the applicable Distribution Date shall be paid to the
Person in whose name such Note (or one or more Predecessor Notes) is registered
on the Record Date, by check mailed first-class, postage prepaid, to such
Person's address as it appears on the Note
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Register on such Record Date, except that, unless Definitive Notes have been
issued pursuant to SECTION 2.11, with respect to the Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a
Distribution Date or on the related Final Distribution Date, as the case may be
(and except for the Redemption Price for any Note called for redemption pursuant
to Section 10.01(a)), which shall be payable as provided below. The funds
represented by any such checks returned undelivered shall be held in accordance
with Section 3.03.
(b) The principal of each Note shall be payable on each
Distribution Date to the extent provided in the form of the related Note set
forth as an Exhibit hereto. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable, if not previously paid,
on the date on which the maturity of the Notes has been accelerated in the
manner provided in SECTION 5.02. All principal payments on each Class of Notes
shall be made pro rata to the Noteholders of such Class entitled thereto. The
Indenture Trustee shall notify the Person in whose name a Note is registered at
the close of business on the Record Date preceding the Distribution Date on
which the Issuer expects that the final installment of principal of and interest
on such Note will be paid. Such notice shall be (i) transmitted by facsimile on
such Record Date if Book-Entry Notes are outstanding or (ii) mailed as provided
in SECTION 10.02 not later than three Business Days after such Record Date if
Definitive Notes are outstanding and shall specify that such final installment
will be payable only upon presentation and surrender of such Note and shall
specify the place where such Note may be presented and surrendered for payment
of such installment. Notices in connection with redemptions of Notes shall be
mailed to Noteholders as provided in SECTION 10.02.
SECTION 2.08. CANCELLATION. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Notes may be held or disposed of by the
Indenture Trustee in accordance with its standard retention or disposal policy
as in effect at the time unless the Issuer shall direct by an Issuer Order that
they be destroyed or returned to it; provided that such Issuer Order is timely
and the Notes have not been previously disposed of by the Indenture Trustee.
SECTION 2.09. BOOK-ENTRY NOTES. The Notes, upon original issuance, will
be issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to DTC, the initial Depository, by, or on behalf of, the
Issuer. Such Notes shall initially be registered on the Note Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, and no
Noteholder will receive a Definitive Note representing such Noteholder's
interest in such Note, except as provided in Section 2.11. Unless and until
definitive, fully registered Notes (the "Definitive Notes") have been issued to
Noteholders pursuant to Section 2.11:
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(i) the provisions of this Section shall be in full force
and effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the giving
of instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Noteholders;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of this
Section shall control;
(iv) the rights of Noteholders shall be exercised only
through the Clearing Agency and shall be limited to those established by law and
agreements between such Noteholders and the Clearing Agency and/or the Clearing
Agency Participants, and all references in this Indenture to actions by the
Noteholders shall refer to actions taken by the Clearing Agency upon
instructions from the Clearing Agency Participants, and all references in this
Indenture to distributions, notices, reports and statements to the Noteholders
shall refer to distributions, notices, reports and statements to the Clearing
Agency, as registered holder of the Notes, as the case may be, for distribution
to the Noteholders in accordance with the procedures of the Clearing Agency.
Pursuant to the Note Depository Agreement, unless and until Definitive Notes are
issued pursuant to SECTION 2.11, the Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
payments of principal of and interest on the Notes to such Clearing Agency
Participants;
(v) whenever this Indenture requires or permits actions
to be taken based upon instructions or directions of Noteholders evidencing a
specified percentage of the Outstanding Amount, the Clearing Agency shall be
deemed to represent such percentage only to the extent that it has received
instructions to such effect from Noteholders and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of the beneficial
interest in the Notes and has delivered such instructions to the Indenture
Trustee; and
(vi) without the consent of the Issuer and the Indenture
Trustee, no such Note may be transferred by the Clearing Agency except to a
successor Clearing Agency that agrees to hold such Note for the account of the
Owners or except upon the election of the Owner thereof or a subsequent
transferee to hold such Note in physical form.
Neither the Indenture Trustee nor the Note Registrar shall have any
responsibility to monitor or restrict the transfer of beneficial ownership in
any Note an interest in which is transferable through the facilities of the
Clearing Agency.
SECTION 2.10. NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Noteholders pursuant to Section
2.11, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Noteholders of the Notes to the Clearing Agency,
and shall have no obligation to the Noteholders.
SECTION 2.11. DEFINITIVE NOTES. If (i)(A) the Administrator advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its
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responsibilities as described in the Note Depository Agreement, and (B)
Indenture Trustee or the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Indenture Trustee in
writing that it elects to terminate the book-entry system through the Clearing
Agency, or (iii) after the occurrence of an Event of Default, the Noteholders
representing not less than 66 2/3% of the Outstanding Amount of such Class of
Notes advises the Indenture Trustee and the Clearing Agency through the Clearing
Agency Participants in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interests of the related
Noteholders, then the Indenture Trustee shall notify all Noteholders of the
related Class of Notes, through the Clearing Agency, of the occurrence of any
such event and of the availability of Definitive Notes of the related Class of
Notes to Noteholders requesting the same. Upon surrender to the Indenture
Trustee of the Note or Notes representing the Book-Entry Notes by the Clearing
Agency, accompanied by registration instructions, the Issuer shall execute and
the Indenture Trustee shall authenticate the Definitive Notes in accordance with
the instructions of the Clearing Agency. None of the Issuer, the Note Registrar
or the Indenture Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Notes of a Class, the
Indenture Trustee shall recognize the Noteholders of the Definitive Notes as
Noteholders hereunder.
The Indenture Trustee shall not be liable if the Indenture Trustee or
the Administrator is unable to locate a qualified successor Clearing Agency. The
Definitive Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing such Notes, as evidenced
by their execution of such Notes.
SECTION 2.12. RELEASE OF COLLATERAL. Subject to Sections 4.04, 8.04 and
11.01 and the terms of the Transaction Documents, the Indenture Trustee shall
release property from the lien of this Indenture only upon receipt of an Issuer
Request accompanied by an Officer's Certificate.
SECTION 2.13. TAX TREATMENT. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that, for federal,
state and local income, single business and franchise tax purposes, the Notes
will qualify as indebtedness of the Issuer secured by the Collateral. The
Issuer, by entering into this Indenture, and each Noteholder, by its acceptance
of its Note agree to treat the Notes for federal, state and local income, single
business and franchise tax purposes as indebtedness of the Issuer.
ARTICLE THREE
COVENANTS
SECTION 3.01. PAYMENT OF PRINCIPAL AND INTEREST. The Issuer will duly
and punctually pay the principal of and interest, if any, on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, subject to Section 8.02(c), the Issuer will cause to be distributed
all amounts on deposit in the Note Distribution Account on a Distribution Date
deposited therein pursuant to the Sale and Servicing Agreement (i) for the
benefit of the Class A-1 Notes, to the Class A-1 Noteholders, (ii) for the
benefit of the Class A-2 Notes, to the
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Class A-2 Noteholders and (iii) for the benefit of the Class B Notes, to the
Class B Noteholders. Amounts properly withheld under the Code by any Person from
a payment to any Noteholder of interest and/or principal shall be considered as
having been paid by the Issuer to such Noteholder for all purposes of this
Indenture.
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will maintain
in [_________________], an office or agency where Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes. The Issuer will give prompt written notice to the Indenture
Trustee of the location, and of any change in the location, of any such office
or agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
SECTION 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided in
Section 8.02, all payments of amounts due and payable with respect to any Notes
that are to be made from amounts withdrawn from the Collection Account and the
Note Distribution Account pursuant to Section 8.02(b) shall be made on behalf of
the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts
so withdrawn from the Collection Account and the Note Distribution Account for
payments of Notes shall be paid over to the Issuer except as provided in this
Section.
On or before the Business Day immediately preceding each Distribution
Date and Redemption Date, the Issuer shall deposit or cause to be deposited in
the Note Distribution Account an aggregate sum sufficient to pay the amounts
then becoming due, such sum to be held in trust for the benefit of the Persons
entitled thereto and (unless the Paying Agent is the Indenture Trustee) shall
promptly notify the Indenture Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts
due with respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by
the Issuer (or any other obligor upon the Notes) in the making of any payment
required to be made with respect to the Notes;
(iii) at any time during the continuance of any such
default, upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
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(iv) immediately resign as a Paying Agent and forthwith
pay to the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met by a
Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect
to the withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and upon receipt of an Issuer Request shall be paid to the Issuer; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof, and all liability of the Indenture
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; PROVIDED, HOWEVER, that if such money or any portion thereof had been
previously deposited by the Issuer with the Indenture Trustee for the payment of
principal or interest on the Notes; and PROVIDED, FURTHER, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Issuer cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in The City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to or for the account of the Issuer.
The Indenture Trustee may also adopt and employ, at the expense of the Issuer,
any other reasonable means of notification of such repayment (including, but not
limited to, mailing notice of such repayment to Holders whose Notes have been
called but not have not been surrendered for redemption or whose right to or
interest in moneys due and payable but not claimed is determinable from the
records of the Indenture Trustee or of any Paying Agent, at the last address of
record for each such Holder).
SECTION 3.04. EXISTENCE. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States, in which
case the Issuer will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) 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
Indenture, the Notes, the Collateral and each other instrument or agreement
included in the Collateral.
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SECTION 3.05. PROTECTION OF COLLATERAL. The Issuer intends the security
interest Granted pursuant to this Indenture in favor of the Indenture Trustee on
behalf of the Noteholders to be prior to all other liens in respect of the
Collateral, and the Issuer shall take all actions necessary to obtain and
maintain, for the benefit of the Indenture Trustee on behalf of the Noteholders,
a first lien on and a first priority, perfected security interest in the
Collateral. The Issuer will from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
all as prepared by the Servicer and delivered to the Issuer, and will take such
other action necessary or advisable to:
(i) grant more effectively all or any portion of the
Collateral;
(ii) maintain or preserve the lien and security interest
(and the priority thereof) created by this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Collateral and the
rights of the Indenture Trustee and the Noteholders in such Collateral against
the claims of all persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon
the Collateral when due.
The Issuer hereby designates the Indenture Trustee its agent
and attorney-in-fact to execute all financing statements, continuation
statements or other instruments required to be executed pursuant to this
Section.
SECTION 3.06. OPINIONS AS TO COLLATERAL.
(a) Promptly after the execution and delivery of this Indenture,
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel to the
effect that, in the opinion of such counsel, either (i) all financing statements
and continuation statements have been executed and filed that are necessary to
create and continue the Indenture Trustee's first priority perfected security
interest in the Collateral for the benefit of the Noteholders, and reciting the
details of such filings or referring to prior Opinions of Counsel in which such
details are given, or (ii) no such action shall be necessary to perfect such
security interest; and
(b) Within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months after
the Cutoff Date, the Issuer shall furnish to the Indenture Trustee an Opinion of
Counsel, dated as of a date during such 90-day period, to the effect that, in
the opinion of such counsel, either (i) all financing statements and
continuation statements have been executed and filed that are necessary to
create and continue the Indenture Trustee's first priority perfected security
interest in the Collateral for the benefit of the Noteholders, and reciting the
details of such filings or referring to prior Opinions of Counsel in
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which such details are given, or (ii) no such action shall be necessary to
perfect such security interest.
SECTION 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING OF CONTRACTS.
(a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any such Person's material covenants or obligations under any
instrument or agreement included in the Collateral or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
expressly provided in the Transaction Documents or such other instrument or
agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties and obligations under this Indenture, and any performance
of such duties by a Person identified to the Indenture Trustee in an Officer's
Certificate shall be deemed to be action taken by the Issuer. The Indenture
Trustee shall not be responsible for the action or inaction of the Servicer or
the Administrator. Initially, the Issuer has contracted with the Servicer and
the Administrator to assist the Issuer in performing its duties under this
Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other Transaction
Documents and in the instruments and agreements included in the Collateral,
including but not limited to filing or causing to be filed all UCC financing
statements and continuation statements required to be filed by the terms of this
Indenture and the Sale and Servicing Agreement in accordance with and within the
time periods provided for herein and therein. Except as otherwise expressly
provided therein, the Issuer shall not waive, amend, modify, supplement or
terminate any Transaction Document or any provision thereof without the consent
of the Indenture Trustee or the Holders of at least a majority of the
Outstanding Amount of the Class A-1 Notes and the Class A-2 Notes, voting as a
single class, or if there are no Class A-1 Notes or Class A-2 Notes outstanding,
the Holders of at least a majority of the Outstanding Amount of the Class B
Notes; PROVIDED that no such amendment shall (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, distributions that
are required to be made for the benefit of the Noteholders, or (ii) reduce the
aforesaid percentage of the Notes which are required to consent to any such
amendment, without the consent of the Holders of all the Outstanding Notes.
(d) If the Issuer shall have knowledge of the occurrence of a
Servicer Default, the Issuer shall promptly notify the Indenture Trustee and
each Rating Agency thereof. Upon any termination of the Servicer's rights and
powers pursuant to the Sale and Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee. As soon as a successor Servicer is appointed, the
Issuer shall notify the Indenture Trustee and the Rating Agencies of such
appointment, specifying in such notice the name and address of such successor
Servicer.
SECTION 3.08. NEGATIVE COVENANTS. Until the Termination Date, the
Issuer shall not:
(i) except as expressly permitted by the Transaction
Documents, sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the Collateral,
unless directed to do so by the Indenture Trustee;
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(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than amounts
properly withheld from such payments under the Code or applicable state law) or
assert any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Collateral; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien created by this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenant; or obligations with respect to the
Notes under this Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or other
encumbrance (other than the lien of this Indenture) to be created on or extend
to or otherwise arise upon or burden the Collateral or any part thereof or any
interest therein or the proceeds thereof (other than tax liens, mechanics' liens
and other liens that arise by operation of law, in each case on a Motorcycle and
arising solely as a result of an action or omission of the related Obligor), (C)
permit the lien created by this Indenture not to constitute a valid first
priority (other than with respect to any such tax, mechanics' or other lien)
security interest in the Collateral, or (D) amend, modify or fail to comply with
the provisions of the Transaction Documents without the prior written consent of
the Indenture Trustee, except where the Transaction Documents allow for
amendment or modification without the consent or approval of the Indenture
Trustee; or
(iv) dissolve or liquidate in whole or in part.
SECTION 3.09. ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will
deliver to the Indenture Trustee, on or before 120 days after the end of each
fiscal year of the Issuer (commencing with the fiscal year ended
[____________]), an Officer's Certificate stating, as to the Authorized Officer
signing such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year and
of performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants under
this Indenture throughout such year, or, if there has been a default in the
compliance of any such condition or covenant, specifying each such default known
to such Authorized Officer and the nature and status thereof.
SECTION 3.10. ISSUER MAY CONSOLIDATE, ETC. ONLY ON CERTAIN TERMS.
(a) The Issuer shall not consolidate or merge with or into any
other Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and existing
under the laws of the United States or any State and shall expressly assume, by
an indenture supplemental hereto, executed and delivered to the Indenture
Trustee, in form and substance satisfactory to the Indenture Trustee, the due
and punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this Indenture and
each other Transaction Document on the part of the Issuer to be performed or
observed, all as provided herein;
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(ii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the Indenture Trustee
to the effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel (which shall describe
the actions taken as required by clause (v) above or that no such actions will
be taken) each stating that such consolidation or merger and such supplemental
indenture comply with this Article Three and that all conditions precedent
herein provided for relating to such transaction have been compiled with; and
(vii) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger has a net worth, immediately after such
consolidation or merger, that is (A) greater than zero and (B) not less than the
net worth of the Issuer immediately prior to giving effect to such consolidation
or merger.
(b) The Issuer shall not convey or transfer all or substantially
all of its properties or assets, including those included in the Collateral, to
any Person (except as expressly permitted by the Transaction Documents), unless:
(i) the Person that acquires by conveyance to transfer
the properties and assets of the Issuer shall (A) be a United States citizen or
a Person organized and existing under the laws of the United States or any
State, (B) expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form and substance satisfactory to the
Indenture Trustee, the due and punctual payment of the principal of and interest
on all Notes and the performance or observance of every agreement and covenant
of this Indenture and each other Transaction Document on the part of the Issuer
to be performed or observed, all as provided herein, (C) expressly agree by
means of such supplemental indenture that all right, title and interest so
conveyed or transferred shall be subject and subordinate to the rights of
Holders of the Notes and (D) unless otherwise provided in such supplemental
indenture, expressly agree to indemnify, defend and hold harmless the Issuer
against and from any loss, liability or expense arising under or related to this
Indenture and the Notes.
(ii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
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(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the Indenture Trustee
to the effect that such transaction will not have any material adverse tax
consequence to the Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel (which shall describe
the actions taken as required by clause (v) above or that no such actions will
be taken) each stating that such conveyance or transfer and such supplemental
indenture comply with this Article Three and that all conditions precedent
herein provided for relating to such transaction have been complied with
(including any filings required by Exchange Act); and
(vii) the Issuer has a net worth, immediately after such
conveyance or transfer, that is (A) greater than zero and (B) not less than the
net worth of the Issuer immediately prior to giving effect to such conveyance or
transfer.
SECTION 3.11. SUCCESSOR OR TRANSFEREE.
(a) Upon any consolidation or merger of the Issuer in accordance
with Section 3.10(a), the Person formed by or surviving such consolidation or
merger (if other than the Issuer) shall succeed to, and be substituted for, and
may exercise every right and power of, the Issuer under this Indenture with same
effect as if such Person has been named as the Issuer herein.
(b) Upon a conveyance or transfer of all or substantially all the
assets or properties of the Issuer pursuant to Section 3.10(b), the Issuer will
be released from every covenant and agreement of this Indenture to be observed
or performed on the part of the Issuer with respect to the Notes immediately
upon the delivery of written notice to the Indenture Trustee stating that the
Issuer is to be so released.
SECTION 3.12. NO OTHER BUSINESS. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Contracts in the manner contemplated by this Indenture and the other Transaction
Documents and activities incidental thereto.
SECTION 3.13. NO BORROWING. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes and (ii) any other Indebtedness permitted
by or arising under the other Transaction Documents. The proceeds of the Notes
and the Certificates shall be used exclusively to fund the Issuer's purchase of
the Contracts and the other assets specified in the Sale and Servicing
Agreement, to fund the Reserve Fund and to pay the transactional expenses of the
Issuer.
SECTION 3.14. SERVICER'S OBLIGATIONS. The Issuer shall cause the
Servicer to comply with Sections 4.09, 4.10, 4.11, as well as Article Five and
Article Nine of the Sale and Servicing Agreement.
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SECTION 3.15. GUARANTEES, LOANS ADVANCES AND OTHER LIABILITIES. Except
as otherwise contemplated by the Transaction Documents, the Issuer 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.
SECTION 3.16. CAPITAL EXPENDITURES. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17. RESTRICTED PAYMENTS. Except as permitted by the
Transaction Documents, the Issuer shall not, directly or indirectly, (i) pay any
dividend or make any distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest or security in or of the Issuer or
to the Servicer, (ii) redeem, purchase, retire or otherwise acquire for value
any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, (A) distributions to the Servicer, the
Trust Depositor, the Owner Trustee and the Certificateholders as contemplated
by, and to the extent funds are available for such purpose under, the Sale and
Servicing Agreement or the Trust Agreement and (B) payments to the Indenture
Trustee and the Owner Trustee pursuant to Section 1(a)((ii) of the
Administration Agreement. The Issuer will not, directly or indirectly, make
payments to or distributions from the Collection Account except in accordance
with this Indenture and the other Transaction Documents.
SECTION 3.18. NOTICE OF EVENTS OF DEFAULT. The Issuer agrees to give
the Indenture Trustee and each Rating Agency prompt written notice of each Event
of Default hereunder and a Servicer Default under the Sale and Servicing
Agreement.
SECTION 3.19. FURTHER INSTRUMENTS AND ACTS. Upon request of the
Indenture Trustee, the Issuer will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
SECTION 3.20. COMPLIANCE WITH LAWS. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
other Transaction Document.
SECTION 3.21. AMENDMENTS OF SALE AND SERVICING AGREEMENT AND TRUST
AGREEMENT. The Issuer shall not agree to any amendment to Section 11.01 of the
Trust Agreement to eliminate the requirements thereunder that the Indenture
Trustee or the Holders of the Notes consent to amendments thereto as provided
therein.
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SECTION 3.22. REMOVAL OF ADMINISTRATOR. So long as any Notes are issued
and outstanding, the Issuer shall not remove the Administrator without cause
unless the Rating Agency Condition shall have been satisfied in connection with
such removal.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.01, 3.03, 3.04, 3.05,
3.07, 3.08, 3.10, 3.12, 3.13, 3.20 and 3.21, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.07 and the obligations of the Indenture
Trustee under Section 4.02) and (vi) the rights of Noteholders as beneficiaries
hereof with respect to the property so deposited with the Indenture Trustee
payable to all or any of them, and the Indenture Trustee, on demand of and at
the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes, when
(A) either
(1) all Notes therefore authenticated and
delivered (other than (i) Notes that have been destroyed, lost
or stolen and that have been replaced or paid as provided in
Section 2.05 and (ii) Notes for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have
been delivered to the Indenture Trustee for cancellation;
(2) all Notes not theretofore delivered to the
Indenture Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at
their respective final Distribution Dates within one year, or
(iii) are to be called for redemption
within one year under arrangements satisfactory to the
Indenture Trustee for the giving of notice of redemption by
the Indenture Trustee in the name, and at the expense, of the
Issuer, and the Issuer, in the case of (i), (ii) or (iii)
above, has irrevocably deposited or caused to be irrevocably
deposited with the Indenture Trustee cash or direct
obligations of or obligations guaranteed by the United States
(which will mature prior to the date such amounts are
payable), in trust in an Eligible Account for such purpose, in
an amount sufficient to pay and discharge the entire unpaid
principal and accrued interest on such Note not theretofore
delivered to the Indenture Trustee for cancellation when due
on their respective final scheduled
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Distribution Date (if Notes shall have been called for
redemption pursuant to Section 10.01(a)), as the case maybe;
(B) the Issuer has paid or performed or caused to be paid
or performed all amounts and obligations which the Issuer may owe to or on
behalf of the Indenture Trustee for the benefit of the Noteholders under this
Indenture or the Notes; and
(C) the Issuer has delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel and (if required by the TIA or
the Indenture Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of Section 11.01(a)
and, subject to Section 11.02, stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with and the Rating Agency Condition has been satisfied.
SECTION 4.02. APPLICATION OF TRUST MONEY. All moneys deposited with the
Indenture Trustee pursuant to Section 4.01 shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Indenture Trustee
may determine, to the Holders of the particular Notes for the payment or
redemption of which such moneys have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal and interest; but such
moneys need not be segregated from other funds except to the extent required
herein or in the Sale and Servicing Agreement or required by law.
SECTION 4.03. REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied according
to Section 3.03 and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys.
SECTION 4.04. RELEASE OF COLLATERAL. Subject to Section 11.01 and the
terms of the Transaction Documents, the Indenture Trustee shall release property
from the lien of this Indenture only upon receipt of an Issuer Request
accompanied by an Officer's Certificate and an Opinion of Counsel and
Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) or
an Opinion of Counsel in lieu of such Independent Certificates to the effect
that the TIA does not require any such Independent Certificates.
SECTION 4.05. DURATION OF THE POSITION OF THE INDENTURE TRUSTEE FOR THE
BENEFIT OF CERTIFICATEHOLDERS. Notwithstanding (i) the earlier payment in full
of all principal and interest due to the Noteholders under the terms of the
Notes of each Class, (ii) the cancellation of the Notes pursuant to SECTION 2.8
and (iii) the discharge of the Indenture Trustee's duties hereunder with respect
to the Notes, the Indenture Trustee shall continue to act in the capacity of the
Indenture Trustee hereunder for the benefit of the Certificateholders, and the
Indenture Trustee, for the benefit of the Certificateholders, shall comply with
its obligations under the Sale and Servicing Agreement, as appropriate, until
such time as all distributions in respect of the Certificate Balance and
interest due to the Certificateholders have been paid in full.
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ARTICLE FIVE
REMEDIES
SECTION 5.01. EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note
when the same becomes due and payable, and such default shall continue for a
period of five days;
(ii) default in the payment of the unpaid amount of any
Class of Notes on the final Distribution Date for such Class;
(iii) default in the observance or performance of any
covenant or agreement of the Issuer made in this Indenture (other than a
covenant or agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with) which default has a material
adverse effect on the Noteholders, or any representation or warranty of the
Issuer made in this Indenture or in any certificate or other writing delivered
pursuant hereto or in connection herewith proving to have been incorrect in any
material respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or condition in
respect of which such misrepresentation or warranty was incorrect shall not have
been eliminated or otherwise cured, for a period of 60 days after there shall
have been given, by registered or certified mail, to the Indenture Trustee by
the Holders of at least 25% of the Outstanding Amount of the Class A-1 Notes and
the Class A-2 Notes, taken together as a single class, or, if there are no Class
A-1 Notes or Class A-2 Notes Outstanding, by the Holders of at least 25% of the
Outstanding Amount of the Class B Notes a written notice specifying such default
or incorrect representation or warranty and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder;
(iv) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any substantial
part of the Collateral in an involuntary case under any applicable federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Collateral, or
ordering the winding-up or liquidation of the Issuer's affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or
(v) the commencement by the Issuer of a voluntary case
under any applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by the Issuer to the entry of an
order for relief in an involuntary case under any such law, or the consent by
the Issuer to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Issuer or
for any substantial part of the Collateral, or the making by the Issuer of any
general assignment for the benefit of
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creditors, or the failure by the Issuer generally to pay its debts as such debts
become due, or the taking of action by the Issuer in furtherance of any of the
foregoing.
The Issuer shall deliver to the Indenture Trustee within five
days after obtaining knowledge of the occurrence thereof, written notice in the
form of an Officer's Certificate of any event which with the giving of notice
and the lapse of time would become an Event of Default under clause (iii) above,
its status and what action the Issuer is taking or proposes to take with respect
thereto.
SECTION 5.02. RIGHTS UPON EVENT OF DEFAULT. If an Event of Default
shall have occurred and be continuing, other than an Event of Default described
in SECTION 5.01(iv) or (v) above, the Indenture Trustee or Holders holding Class
A-1 Notes or Class A-2 Notes representing not less than 50% of the aggregate
Outstanding Amount of the Class A-1 Notes and the Class A-2 Notes or, if there
are no Class A-1 Notes or Class A-2 Notes Outstanding, Holders holding Class B
Notes representing not less than 50% of the Outstanding Amount of the Class B
Notes may declare the principal amount of the Notes immediately due and payable
at par. At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this ARTICLE 5, PROVIDED,
Holders holding Class A-1 Notes or Class A-2 Notes representing not less than
50% of the aggregate Outstanding Amount of the Class A-1 Notes and the Class A-2
Notes or, if there are no Class A-1 Notes or Class A-2 Notes Outstanding,
Holders holding Class B Notes representing not less than 50% of the Outstanding
Amount of the Class B Notes may rescind such declaration if (i) the Issuer has
made all payments of principal of and interest on all Notes when the same
becomes due and payable and (ii) the Issuer has paid all amounts due and payable
to the Indenture Trustee. If an Event of Default described in SECTION 5.01(iv)
or (v) shall have occurred and be continuing, the principal amount of the Notes
shall become immediately due and payable.
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE; AUTHORITY OF INDENTURE TRUSTEE.
(a) The Issuer covenants that if the Notes are accelerated
following the occurrence of an Event of Default, the Issuer will, upon demand of
the Indenture Trustee, pay to it, for the benefit of the Holders of the Notes,
the whole amount then due and payable on such Notes for principal and interest,
with interest upon the overdue principal, and, to the extent payment at such
rate of interest shall be legally enforceable, upon overdue installments of
interest, at the applicable Interest Rate and in addition thereto such further
amount as shall be sufficient to cover costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee and its agents and counsel.
(b) The Indenture Trustee following the occurrence of an Event of
Default, shall have full right, power and authority to take, or defer from
taking, any and all acts with respect to the administration, maintenance or
disposition of the Collateral.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may in its discretion (except as provided in Section 5.03(d)), proceed
to protect and enforce its rights and the rights of the Noteholders, by such
appropriate Proceedings as the Indenture Trustee shall
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deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy
or legal or equitable right vested in the Indenture Trustee by this Indenture or
by law.
(d) Notwithstanding anything to the contrary contained in this
Indenture, if an Event of Default shall have occurred and be continuing, if the
Issuer fails to perform its obligations under SECTION 10.01(b) when and as due,
the Indenture Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Noteholders by such appropriate proceedings as the
Indenture Trustee shall deem most effective to protect and enforce any such
rights, whether for specific performance of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy or legal or equitable right vested in the Indenture
Trustee by this Indenture or by law, provided that the Indenture Trustee shall
only be entitled to take any such actions to the extent such actions (i) are
taken only to enforce the Issuer's obligations to redeem the principal amount of
Notes, and (ii) are taken only against the Collateral any investments therein
and any proceeds thereof.
(e) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Collateral, Proceedings under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the
whole amount of principal and interest owing and unpaid in respect of
the Notes and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for reasonable compensation to the
Indenture Trustee and each predecessor Indenture Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities incurred, and all advances made, by the
Indenture Trustee and each predecessor Indenture Trustee, except as a
result of negligence or bad faith) and of the Noteholders allowed in
such Proceedings;
(ii) unless prohibited by applicable law and
regulations, to vote on behalf of the Holders of Notes in any election
of a trustee, a standby trustee or Person performing similar functions
in any such Proceedings;
(iii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute
all amounts received with respect to the claims of the Noteholders and
of the Indenture Trustee on their behalf; and
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(iv) to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have
the claims of the Indenture Trustee or the Holders of Notes allowed in
any judicial proceedings relative to the Issuer, its creditors and its
property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Trustee except as a result of negligence or bad faith.
(f) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
compensation affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(g) All rights of action and of asserting claims under this
Indenture or under any of the Notes, may be enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
trial or other Proceedings relative thereto, and any such action or Proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Holders of the Notes.
(h) In any Proceedings brought by the Indenture Trustee (including
any Proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all of the Holders
of the Notes, and it shall not be necessary to make any Noteholder a party to
any such proceedings.
SECTION 5.04. REMEDIES. If an Event of Default shall have occurred and
be continuing, the Indenture Trustee (subject to Section 5.05) may do one or
more of the following:
(i) institute Proceedings in its own name and as or on
behalf of a trustee of an express trust for the collection of all amounts then
payable on the Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect from the
Issuer and any other obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the
Collateral;
(iii) exercise any remedies of a secured party under the
UCC and any other remedy available to the Indenture Trustee and take any other
appropriate action to protect and
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enforce the rights and remedies of the Indenture Trustee on behalf of the
Noteholders under this Indenture or the Notes; and
(iv) sell the Collateral or any portion thereof or rights
or interest therein, at one or more public or private sales called and conducted
in any manner permitted by law; PROVIDED, HOWEVER, that the Indenture Trustee
may not sell or otherwise liquidate the Collateral following an Event of
Default, unless (A) the Holders of 100% of the Outstanding Amount of the Notes,
consent thereto, (B) the proceeds of such sale or liquidation distributable to
the Noteholders are sufficient to discharge in full all amounts then due and
unpaid upon such Notes for principal and interest or (C) there has been an Event
of Default described in Section 5.01(i) or (ii) and the Indenture Trustee
determines that the Collateral will not continue to provide sufficient funds for
the payment of principal of and interest on the Notes as they would have become
due if the Notes had not been declared due and payable, and the Indenture
Trustee provides prior written notice to each Rating Agency and obtains the
consent of Holders representing not less than 66-2/3% of the Outstanding Amount
of the Notes. In determining such sufficiency or insufficiency with respect to
clauses (B) and (C), the Indenture Trustee may, but need not, obtain and rely
upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose; provided, however, upon the
occurrence of an Event of Default described in Section 5.01(iv) or (v), caused
solely from an event described in such subparagraphs occurring with respect to
the Trust Depositor, the related Contracts of the Trust will be liquidated by
the Indenture Trustee and the Trust will be terminated 90 days after the date of
such Insolvency Event, unless, before the end of such 90-day period, the related
Trustee shall have received written instructions from (i) holders of each class
of Certificates (excluding any Certificates held by the Trust Depositor) with
respect to such Trust representing more than 50% of the aggregate unpaid
principal amount of each such class (not including the principal amount of such
Certificates held by the Trust Depositor) and (ii) holders of each class of
Notes, if any, with respect to such Trust representing more than 50% of the
aggregate unpaid principal amount of each such class, to the effect that each
such party disapproves of the liquidation of such Contracts and termination of
such Trust.
SECTION 5.05. OPTIONAL PRESERVATION OF THE CONTRACTS. Following an
Event of Default and such Event of Default has not been rescinded and annulled,
the Indenture Trustee may, but need not, elect to maintain possession of the
Collateral,. It is the desire of the parties hereto and the Noteholders that
there be at all times sufficient funds for the payment of principal and interest
on the Notes, and the Indenture Trustee shall take such desire into account when
determining whether or not to maintain possession of the Collateral. In
determining whether to maintain possession of the Collateral, the Indenture
Trustee may, but need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Collateral
for such purpose.
SECTION 5.06. PRIORITIES.
(a) If the Indenture Trustee collects any money or property
pursuant to this Article Five, it shall pay out the money or property in the
following order and priority:
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(i) amounts due and owing to the Indenture Trustee
pursuant to SECTION 6.07; and
(ii) to the Collection Account for distribution pursuant
to the priorities described in SECTION 7.05(a) of the Sale and
Servicing Agreement and not previously distributed, in the order of
such priorities and without preference or priority of any kind within
such priorities.
(b) The Indenture Trustee may fix a record date and payment date
for any payment to Noteholders pursuant to this Section. At least 15 days before
such record date, the Issuer shall mail to each Noteholder and the Indenture
Trustee a notice that states the record date, the payment date and the amount to
be paid.
SECTION 5.07. LIMITATION OF SUITS. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to
the Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding
Amount of the Class A-1 Notes and the Class A-2 Notes or, if there are no Class
A-1 Notes or Class A-2 Notes Outstanding, Holders of not less than 50% of the
Outstanding Amount of the Class B Notes have made written request to the
Indenture Trustee to institute such Proceeding in respect of such Event of
Default in its own name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture
Trustee reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt
of such notice, request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request
has been given to the Indenture Trustee during such 60-day period by the Holders
of a majority of the Outstanding Amount of the Class A-1 Notes and the Class A-2
Notes, voting together as a single class, or, if there are no Class A-1 Notes or
Class A-2 Notes Outstanding, Holders of a majority of the Outstanding Amount of
the Class B Notes.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Class
A-1 Notes, the Class A-2 Notes or the Class B Notes, as
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the case may be, the Indenture Trustee in its sole discretion may determine that
action, if any, shall be taken, notwithstanding any other provisions of this
Indenture.
SECTION 5.08. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST. Notwithstanding any other provisions in the Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
SECTION 5.09. RESTORATION OF RIGHTS AND REMEDIES. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Indenture Trustee
and the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.
SECTION 5.10. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. DELAY OR OMISSION NOT A WAIVER. No delay or omission of
the Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default of Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article Five or by
law to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
SECTION 5.12. CONTROL BY NOTEHOLDERS. The Holders representing more
than 50% of the Outstanding Amount of the Class A-1 Notes and the Class A-2
Notes, or, if there are no Class A-1 Notes or Class A-2 Notes Outstanding,
Holders representing more than 50% of the Outstanding Amount of the Class B
Notes shall have the right to direct the time, method and place of conducting
any Proceeding for any remedy available to the Indenture Trustee with respect to
the Notes or exercising any trust or power conferred on the Indenture Trustee;
provided that:
(i) such direction shall not be in conflict with any rule
of law or with this Indenture;
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(ii) subject to the terms of Section 5.04, any direction
to the Indenture Trustee to sell or liquidate the Collateral shall be by the
Holders of Notes representing not less than 100% of the Outstanding Amount of
the Notes;
(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Indenture Trustee elects to retain the Collateral pursuant to
such Section, then any direction to the Indenture Trustee by Holders of Notes
representing less than 100% of the Outstanding Amount of the Notes to sell or
liquidate the Collateral shall be of no force and effect; and
(iv) the Indenture Trustee may take any other action
deemed proper by the Indenture Trustee that is not inconsistent with such
direction.
Notwithstanding the rights of Noteholders set forth in this
Section, subject to Section 6.01, the Indenture Trustee need not take any action
that it determines might involve it in liability or might materially and
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.13. WAIVER OF PAST DEFAULTS. In the case of any waiver of an
Event of Default, the Issuer, the Indenture Trustee and the Holders of the Notes
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other Default or impair any
right consequent thereto. Upon any such waiver, such Default shall cease to
exist and be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.14. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (i) any suit instituted by the
Indenture Trustee, (ii) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Class A-1 Notes and the Class A-2 Notes, or, if there
are no Class A-1 Notes or Class A-2 Notes Outstanding, any Noteholder or group
of Noteholders holding in the aggregate 10% of the Outstanding Amount of the
Class B Notes or (iii) any suit instituted by any Noteholder for the enforcement
of the payment of principal of or interest on any Note on or after the
respective due dates expressed in such Note and in this Indenture (or, in the
case of redemption, on or after the Redemption Date).
SECTION 5.15. WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly
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waives all benefit or advantages of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Indenture Trustee, but will suffer and permit the execution of every such power
as though no such law had been enacted.
SECTION 5.16. ACTION ON NOTES. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Issuer or by the
levy of any execution under such judgment upon any portion of the Collateral or
upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.06.
SECTION 5.17. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.
(a) Promptly following a request from the Indenture Trustee to do
so and at the Administrator's expense, the Issuer shall take all such lawful
action as the Indenture Trustee may request to compel or secure the performance
and observance by the Trust Depositor and the Servicer, as applicable, of each
of their respective obligations to the Issuer under or in connection with the
Sale and Servicing Agreement in accordance with the terms thereof, and to
exercise any and all rights, remedies, powers and privileges lawfully available
to the Issuer under or in connection with the Sale and Servicing Agreement to
the extent and in the manner directed by the Indenture Trustee, including the
transmission of notices of default on the part of the Trust Depositor or the
Servicer thereunder and the institution of legal of administrative actions or
proceedings to compel or secure performance by the Trust Depositor or the
Servicer of each of their respective obligations under the Sale and Servicing
Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in
writing, including facsimile) of the Holders representing not less than 66-2/3%
of the Outstanding Amount of the Class A-1 Notes and the Class A-2 Notes, voting
together as a single class, or, if there are no Class A-1 Notes or Class A-2
Notes Outstanding, Holders representing not less than 66 2/3% of the Outstanding
Amount of the Class B Notes shall, foreclose upon its security interest in the
Issuer's rights under the Sale and Servicing Agreement and exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Trust
Depositor or the Servicer under or in connection with the Sale and Servicing
Agreement, including the right or power to take any action to compel or secure
performance or observance by the Trust Depositor or the Servicer of each of
their obligations to the Issuer thereunder and to give any consent, request,
notice, direction, approval, extension or waiver under the Sale and Servicing
Agreement, and any right of the Issuer to take such action shall be suspended.
ARTICLE SIX
THE INDENTURE TRUSTEE
SECTION 6.01. DUTIES OF INDENTURE TRUSTEE.
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(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and the Sale and Servicing Agreement and in the same degree of care
and skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform
such duties and only such duties as are specifically set forth in this
Indenture or the Sale and Servicing Agreement and no implied covenants
or obligations shall be read into this Indenture or the Sale and
Servicing Agreement against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; however, the
Indenture Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture and the other Transaction Documents to which the Indenture
Trustee is a party.
(c) The Indenture Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
Section 6.01(b);
(ii) the Indenture Trustee shall not be liable
for any error of judgment made in good faith by a Responsible Officer
unless it is proved that the Indenture Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable
with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to
the Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayments of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
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(h) The Indenture Trustee shall have no discretionary duties other
than performing those ministerial acts set forth above necessary to accomplish
the purpose of this Trust as set forth in this Indenture.
(i) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this section and to the provisions of the
TIA.
SECTION 6.02. RIGHTS OF INDENTURE TRUSTEE.
(a) The Indenture Trustee may rely on any document believed by it
to be genuine and to have been signed or presented by the proper person. The
Indenture Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officer's Certificate (with respect to factual matters) or an
Opinion of Counsel, as applicable. The Indenture Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance on the Officer's
Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
Affiliates, agents or attorneys or a custodian or nominee, and the Indenture
Trustee shall not be responsible for any misconduct or negligence on the part
of, or for the supervision of, any such agent, attorney, custodian or nominee
appointed with due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to
institute, conduct or defend any litigation under this Indenture or in relation
to this Indenture or exercise any remedy under SECTION 5.05(i) through (iv) at
the request, order or direction of any of the Holders of Notes, pursuant to the
provisions of this Indenture, unless such Holders of Notes shall have offered to
the Indenture Trustee reasonable security or indemnity against the costs,
expenses and liabilities that may be incurred therein or thereby; PROVIDED,
HOWEVER, that the Indenture Trustee shall, upon the occurrence of an Event of
Default (that has not been cured), exercise the rights and powers vested in it
by this Indenture in a manner consistent with SECTION 6.01.
(g) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless so requested by the
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Holders of Notes evidencing not less than 25% of the Outstanding Amount of the
Notes; provided, however, that if the payment within a reasonable time to the
Indenture Trustee of the costs, expenses or liabilities likely to be incurred by
it in the making of such investigation is, in the opinion of the Indenture
Trustee, not reasonably assured to the Indenture Trustee by the security
afforded to it by the terms of this Indenture or the Sale and Servicing
Agreement, the Indenture Trustee may require reasonable indemnity against such
cost, expense or liability as a condition to so proceeding; the reasonable
expense of every such examination shall be paid by the Person making such
request, or, if paid by the Indenture Trustee, shall be reimbursed by the Person
making such request upon demand.
SECTION 6.03. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee is required to comply with Section 6.11.
SECTION 6.04. INDENTURE TRUSTEE'S DISCLAIMER. The Indenture Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, the Collateral or the Notes, it shall not be
accountable for the Issuer's use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Issuer in this Indenture or in any
document issued in connection with the sale of the Notes or in the Notes other
than the Indenture Trustee's certificate of authentication.
SECTION 6.05. NOTICE OF DEFAULTS. If a Default occurs and is continuing
and if it is known to a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall mail to each Noteholder notice of the Default within 90
days after it occurs. Except in the case of a Default in payment of principal of
or interest on any Note (including payments pursuant to the redemption of such
Notes), the Indenture Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Noteholders.
SECTION 6.06. REPORTS BY INDENTURE TRUSTEE TO HOLDERS. The Indenture
Trustee shall deliver to each Noteholder such information, including without
limitation, IRS Form 1099, as may be required by applicable law to enable such
holder to prepare its federal and state income tax returns.
SECTION 6.07. COMPENSATION AND INDEMNITY. The Issuer shall pay or shall
cause the Administrator to pay to the Indenture Trustee from time to time
reasonable compensation for its services. The Indenture Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Issuer shall or shall cause the Administrator to reimburse the
Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by
it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Indenture Trustee's agents, counsel,
accountants and experts. The Issuer shall indemnify or shall cause the
Administrator to indemnify the Indenture Trustee against any and all loss,
liability or expense (including attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder. The Indenture Trustee shall notify the Issuer
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and the Administrator promptly of any claim for which it may seek indemnity.
Failure by the Indenture Trustee to so notify the Issuer and the Administrator
shall not relieve the Issuer or the Administrator of its obligations hereunder.
The Issuer shall defend or shall cause the Administrator to defend any such
claim, and the Indenture Trustee may have separate counsel and the Issuer shall
pay or shall cause the Administrator to pay the fees and expenses of such
counsel. Neither the Issuer nor the Administrator need reimburse any expense or
indemnify against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own willful misconduct, negligence or
bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section shall survive the resignation or removal of the Indenture Trustee
and the discharge of this Indenture; provided that the Indenture Trustee shall
be entitled only to compensation for its services for the period prior to the
date of such resignation or removal of the Indenture Trustee. When the Indenture
Trustee incurs expenses after the occurrence of an Event of Default specified in
Section 5.01(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
SECTION 6.08. REPLACEMENT OF INDENTURE TRUSTEE. The Indenture Trustee
may resign at any time by so notifying the Issuer and the Servicer. The Holders
of a majority of the Outstanding Amount of the Class A-1 Notes and the Class A-2
Notes, voting as a single class, or, if there are no Class A-1 Notes or Class
A-2 Notes Outstanding, Holders of a majority of the Outstanding Amount of the
Class B Notes may remove the Indenture Trustee by so notifying the Indenture
Trustee and may appoint a successor Indenture Trustee. The Issuer shall remove
the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section
6.11;
(ii) a court having jurisdiction in the premises in
respect of the Indenture Trustee in an involuntary case or proceeding under
federal or state banking or bankruptcy laws, as now or hereafter constituted, or
any other applicable federal or state bankruptcy, insolvency or other similar
law, shall have entered a decree or order granting relief or appointing a
receiver, liquidator, assignee, custodian, trustee, conservator, sequestrator
(or similar official) for the Indenture Trustee or for any substantial part of
the Indenture Trustee's property, or ordering the winding-up or liquidation of
the Indenture Trustee's affairs, provided any such decree or order shall have
continued unstayed and in effect for a period of 30 consecutive days;
(iii) the Indenture Trustee commences a voluntary case
under any federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy, insolvency or
other similar law, or consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, conservator, sequestrator or
other similar official for the Indenture Trustee or for any substantial part of
the Indenture Trustee's property, or makes any assignment for the benefit of
creditors or fails generally to pay its debts as such debts become due or takes
any corporate action in furtherance of any of the foregoing; or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
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If the Indenture Trustee resigns or is removed, the Issuer shall
promptly appoint a successor Indenture Trustee. A successor Indenture Trustee
shall deliver a written acceptance of its appointment to the retiring Indenture
Trustee and to the Issuer. Thereupon the resignation or removal of the retiring
Indenture Trustee shall become effective, and the successor Indenture Trustee
shall have all the rights, powers and duties of the Indenture Trustee under this
Indenture. The Issuer or the successor Indenture Trustee shall mail a notice of
its succession to Noteholders. The retiring Indenture Trustee shall promptly
transfer all property held by it as Indenture Trustee to the successor Indenture
Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority in Outstanding Amount
of the Notes may appoint or petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Any resignation or removal of the Indenture Trustee and appointment of
a successor Indenture Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to this Section and payment of all fees and expenses
owed to the outgoing Indenture Trustee. Notwithstanding the replacement of the
Indenture Trustee pursuant to this Section, the retiring Indenture Trustee shall
be entitled to payment or reimbursement of such amounts as such Person is
entitled pursuant to Section 6.07.
SECTION 6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee; provided, that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11. The Indenture Trustee shall provide each Rating
Agency prompt notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture, any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor Indenture Trustee, and deliver such Notes
so authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
SECTION 6.10. APPOINTMENT OF CO-INDENTURE TRUSTEE OR SEPARATE INDENTURE
TRUSTEE.
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(a) Notwithstanding any other provision of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Collateral may at the time be located, the Indenture
Trustee and the Administrator acting jointly shall have the power and may
execute and deliver all instruments to appoint one or more Persons to act as a
co-Indenture Trustee or co-Indenture Trustees, jointly with the Indenture
Trustee, or separate Indenture Trustee or separate Indenture Trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Noteholders, such title to the Collateral, or any
part hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Indenture Trustee and the
Administrator may consider necessary or desirable. If the Administrator shall
not have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Indenture Trustee alone shall have the power to make such
appointment. No co-Indenture Trustee or separate Indenture Trustee hereunder
shall be required to meet the terms of eligibility of a successor Indenture
Trustee under Section 6.11 and no notice to Noteholders of the appointment of
any co-Indenture Trustee or separate Indenture Trustee shall be required under
Section 6.08.
(b) Every separate Indenture Trustee and co-Indenture Trustee
shall, to the extent permitted by law, be appointed and act subject to the
following provisions and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be conferred or
imposed upon and exercised or performed by the Indenture Trustee and
such separate Indenture Trustee or co-Indenture Trustee jointly (it
being understood that such separate Indenture Trustee or co-Indenture
Trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed the Indenture Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate Indenture Trustee or co-Indenture
Trustee, but solely at the direction of the Indenture Trustee;
(ii) no Indenture Trustee hereunder shall be
personally liable by reason of any act or omission of any other
Indenture Trustee hereunder; and
(iii) the Indenture Trustee and the Administrator
may at any time accept the resignation of or remove any separate
Indenture Trustee or co-Indenture Trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate
Indenture Trustees and co-Indenture Trustees, as effectively as if given to each
of them. Every instrument appointing any separate Indenture Trustee or
co-Indenture Trustee shall refer to this Agreement and the conditions of this
Article. Each separate Indenture Trustee and co-Indenture Trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of co-appointment, either jointly with the Indenture
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision of this Indenture
relating to the conduct of, affecting the liability of or affording protection
to, the
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Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee and a copy thereof given to the Administrator.
(d) Any separate Indenture Trustee or co-Indenture Trustee may at
any time constitute the Indenture Trustee, its agent or attorney-in-fact with
full power and authority, to the extent not prohibited by law, to do any lawful
act under or in respect of this Agreement on its behalf and in its name. If any
separate Indenture Trustee or co-Indenture Trustee shall die, become incapable
of acting, resign or be removed, all of its estates, properties, rights,
remedies and trusts shall vest in and be exercised by the Indenture Trustee, to
the extent permitted by law, without the appointment of a new or successor
Indenture Trustee. Notwithstanding anything to the contrary in this Indenture,
the appointment of any separate Indenture Trustee or co-Indenture Trustee shall
not relieve the Indenture Trustee of its obligations and duties under this
Indenture.
SECTION 6.11. ELIGIBILITY. (a) The Indenture Trustee shall at all times
satisfy the requirements of TIA Section 310(a). The Indenture Trustee hereunder
shall at all times be a financial institution organized and doing business under
the laws of the United States of America or any state, authorized under such
laws to exercise corporate trust powers, whose long term unsecured debt is rated
at least Baa3 by Moody's and shall have a combined capital and surplus of at
least $50,000,000 or shall be a member of a bank holding system the aggregate
combined capital and surplus of which is $50,000,000 and subject to supervision
or examination by federal or state authority, provided that the Indenture
Trustee's separate capital and surplus shall at all times be at least the amount
required by Section 310(a)(2) of the TIA. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of a
supervising or examining authority, then for the purposes of this Section 6.11,
the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published.
(b) If a Default occurs and is continuing and the
Indenture Trustee is deemed to have a conflicting interest as a result of acting
as trustee for both the Class A-1 Notes and the Class A-2 Notes and the Class B
Notes, the Issuer shall appoint a successor Indenture Trustee for the Class A-1
Notes and the Class A-2 Notes or a successor for the Class A-1 Notes and the
Class A-2 Notes and a successor for the Class B Notes so that there will be
separate Indenture Trustees for the Class A-1 Notes and the Class A-2 Notes and
for the Class B Notes. No such event shall alter the voting rights of the
Noteholders under this Indenture or under any of the other Transaction
Documents.
(c) In the case of an appointment hereunder of a
successor Indenture Trustee with respect to any Class of Notes, the retiring
Indenture Trustee and the successor Indenture Trustee with respect to such Class
of Notes shall execute and deliver an indenture supplement hereto wherein the
successor Indenture Trustee shall accept such appointment and which (i) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, the successor Indenture Trustee all rights, powers,
trusts and duties of the retiring Indenture Trustee with respect to the Notes of
such Class as to which the appointment of such Indenture Trustee relates, (ii)
if the retiring Indenture Trustee is not retiring with respect to all Classes of
Notes, shall contain such provisions as shall be deemed necessary or desirable
to confirm that all the rights, powers, trusts and duties of the retiring
Indenture Trustee with respect to the Notes of each Class as to which the
retiring Indenture Trustee is not retiring shall continue to be vested in
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the retiring Indenture Trustee and (iii) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Indenture Trustee,
it being understood that nothing herein or in such supplemental indenture shall
constitute such Indenture Trustees co-trustees of the same trust and that each
such Indenture Trustee shall be trustee of a trust or trusts hereunder separate
and apart from any trust or trusts hereunder administered by any other such
Indenture Trustee; and upon execution and delivery of such supplemental
indenture the resignation or removal of the retiring Indenture Trustee shall
become effective to the extent provided therein.
In case at any time the Indenture Trustee shall cease to be eligible in
accordance with the provisions of this SECTION 6.11, the Indenture Trustee shall
resign immediately in the manner and with the effect specified in SECTION 6.08.
The Indenture Trustee shall comply with TIA Section 310(b); provided, however,
that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.
SECTION 6.12. PENNSYLVANIA MOTOR VEHICLE SALES FINANCE ACT LICENSES.
The Indenture Trustee shall use its best efforts to maintain the effectiveness
of all licenses required under the Pennsylvania Motor Vehicle Sales Finance Act
in connection with this Indenture and the transactions contemplated hereby until
the lien and security interest of this Indenture shall no longer be in effect in
accordance with the terms hereof.
SECTION 6.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE SEVEN
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND ADDRESSES
OF NOTEHOLDERS. The Issuer will furnish or cause to be furnished to the
Indenture Trustee (i) not more than five days after the earlier of (a) each
Record Date and (b) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Noteholders as of such Record Date and (ii) at such other times as the
Indenture Trustee may request in writing, within 30 days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than ten days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished.
SECTION 7.02. PRESERVATION OF INFORMATION: COMMUNICATION TO
NOTEHOLDERS.
(a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Noteholders contained
in the most recent list furnished to the Indenture Trustee as provided in
Section 7.01 and the names and addresses of
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Noteholders received by the Indenture Trustee in its capacity as Note Registrar
and shall otherwise comply with TIA Section 312(a). The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
SECTION 7.03. REPORTS BY ISSUER.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15
days after the Issuer is required (if at all) to file the same with the
Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and
regulations prescribe) that the Issuer may be required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the
Commission in accordance with rules and regulations prescribed from
time to time by the Commission such additional information, documents
and reports with respect to compliance by the Issuer with the
conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations;
(iii) supply to the Indenture Trustee (and the
Indenture Trustee shall transmit by mail to all Noteholders described
in TIA Section 313(c)) such summaries of any information, documents and
reports required to be filed by the issuer pursuant to clauses (i) and
(ii) of this Section 7.03(a) and by rules and regulations prescribed
from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.04. REPORTS BY INDENTURE TRUSTEE. If required by TIA Section
313(a), within 60 days after each January 31 beginning with January 31,
[______], the Indenture Trustee shall mail to each Noteholder as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each stock exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
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ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture
and the Sale and Servicing Agreement. Except as otherwise expressly provided in
this Indenture, if any default occurs in the making of any payment or
performance under any agreement or instrument that is part of the Collateral,
the Indenture Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article Five.
SECTION 8.02. TRUST ACCOUNTS.
(a) On or prior to the Closing Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Indenture Trustee, for
the benefit of the Noteholders and the Certificateholders, the Trust Accounts as
provided in Section 5.05 of the Sale and Servicing Agreement.
(b) All Available Monies with respect to each Due Period will be
deposited in the Collection Account as provided in Section 5.05 of the Sale and
Servicing Agreement. On or before each Distribution Date, all amounts required
to be deposited in the Note Distribution Account with respect to the preceding
Due Period pursuant to Section 7.05 of the Sale and Servicing Agreement will be
transferred from the Collection Account and/or the Reserve Account to the Note
Distribution Account.
(c) On each Distribution Date, the Indenture Trustee shall
distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes for principal and interest in the following order of priority:
(i) to the Class A-1 Noteholders, accrued and
unpaid interest on the outstanding principal amount of the Class A-1
Notes and to the Class A-2 Noteholders, accrued and unpaid interest on
the outstanding principal amount of the Class A-2 Notes; PROVIDED,
HOWEVER, that if there are insufficient funds on deposit in the Note
Distribution Account to pay the entire amount of accrued and unpaid
interest then due on the Class A-1 Notes and Class A-2 Notes, the
amount in the Note Distribution Account shall be applied to the payment
of interest on the Class A-1 Notes and the Class A-2 Notes pro rata on
the basis of the respective aggregate amounts of interest due and
unpaid on the Class A-1 Notes and Class A-2 Notes, respectively;
(ii) only to the extent of funds withdrawn from
the Pre-Funding Account and deposited in the Note Distribution Account
by the Indenture Trustee pursuant to Section 7.07 of the Sale and
Servicing Agreement:
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(A) if the amount of such funds is
equal to or less than $150,000, to the Holders of the
Class A-1 Notes on account of principal up to the
Outstanding Amount thereof; and
(B) if the amount of such funds is
greater than $150,000, pro rata, calculated on the
then current principal balance of the Class A-1 and
Class A-2 Notes, to the Holders of the Class A-1
Notes and the Holders of the Class A-2 Notes;
(iii) unless otherwise provided in clause (v)
below, to the Class B Noteholders, accrued and unpaid interest on the
outstanding principal amount of the Class B Notes;
(iv) unless otherwise provided in clause (v) or
(vi) below, the Note Principal Distributable Amount with respect to
such Distribution Date shall be applied as follows:
(A) to the Class A-1 Noteholders in
reduction of the Outstanding Amount of the Class A-1
Notes until the Outstanding Amount of the Class A-1
Notes is reduced to zero;
(B) to the Class A-2 Noteholders in
reduction of the Outstanding Amount of the Class A-2
Notes until the Outstanding Amount of the Class A-2
Notes is reduced to zero; and
(C) to the Class B Noteholders in
reduction of the Outstanding Amount of the Class B
Notes until the Outstanding Amount of the Class B
Notes is reduced to zero.
(v) if the Notes have been declared immediately
due and payable as provided in SECTION 5.02 following the occurrence of
an Event of Default in Section 5.01(i) or (ii) until such time as the
Notes have been paid in full, any funds remaining in the Note
Distribution Account after the application described in SECTION
8.02(c)(i) shall be applied in the following order of priority:
(A) to the Class A-1 Noteholders and
the Class A-2 Noteholders in reduction of the
Outstanding Amounts of the Class A-1 Notes and the
Class A-3 Notes pro rata on the basis of the
Outstanding Amounts of the Class A-1 Notes and the
Class A-2 Notes;
(B) to the Class B Noteholders, accrued
and unpaid interest on the outstanding principal
amount of the Class B Notes; and
(C) to the Class B Noteholders in
reduction of the Outstanding Amount of the Class B
Notes;
(vi) if the Notes have been declared immediately
due and payable as provided in Section 5.02 following the occurrence of
an Event of Default in Section
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5.01(iii), (iv) or (v) until such time as the Notes have been paid in
full, any funds remaining in the Note Distribution Account after the
applications described in Sections 8.02(c)(i) and (ii) shall be applied
in the following order of priority:
(A) to the Class A-1 Noteholders and
the Class A-2 Noteholders in reduction of the
Outstanding Amounts of the Class A-1 Notes and the
Class A-2 Notes pro rata on the basis of the
Outstanding Amounts of the Class A-1 Notes and the
Class A-2 Notes; and
(B) to the Class B Noteholders in
reduction of the Outstanding Amount of the Class B
Notes.
SECTION 8.03. GENERAL PROVISIONS REGARDING ACCOUNTS.
(a) So long as no Default or Event of Default shall have occurred
and be continuing, all or a portion of the funds in the Trust Accounts shall be
invested in Eligible Investments and reinvested by the Indenture Trustee upon
receipt of an Issuer Order, subject to the provisions of Section 5.05 of the
Sale and Servicing Agreement. Except as otherwise provided in Section 5.05 of
the Sale and Servicing Agreement, all income or other gain from investments of
moneys deposited in such Trust Accounts shall be deposited by the Indenture
Trustee in the Collection Account, and any loss resulting from such investments
shall be charged to the related Trust Account. The Issuer will not direct the
Indenture Trustee to make any investment of any funds or to sell any investment
held in any of the Trust Accounts unless the security interest granted and
perfected in such account will continue to be perfected in such investment or
the proceeds of such sale, in either case without any further action by any
Person, and, in connection with any direction to the Indenture Trustee to make
any such investment or sale, if requested by the Indenture Trustee, the Issuer
shall deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the
Indenture Trustee, to such effect.
(b) Subject to Section 6.01(c), the Indenture Trustee shall not in
any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment included therein
except for losses attributable to the Indenture Trustee's failure to make
payments on such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as Indenture Trustee, in
accordance with their terms.
(c) If (i) the Issuer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Indenture
Trustee by 11:00 a.m., New York City time (or such other time as may be agreed
by the Issuer and Indenture Trustee), on any Business Day or (ii) a Default or
Event of Default shall have occurred and be continuing with respect to the Notes
but the Notes shall not have been declared due and payable pursuant to Section
5.02 or (iii) if such Notes shall have been declared due and payable following
an Event of Default, amounts collected or receivable from the Collateral are
being applied in accordance with Section 5.05 as if there had not been such a
declaration, then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Trust Accounts in one or more
Eligible Investments.
SECTION 8.04. RELEASE OF COLLATERAL.
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(a) Subject to the payment of its fees and expenses pursuant to
Section 6.07, the Indenture Trustee may, and when required by the provisions of
this Indenture shall, execute instruments to release property from the lien of
this Indenture, or convey the Indenture Trustee's interest in the same, in a
manner and under circumstances that are not inconsistent with the provisions of
this Indenture. No party relying upon an instrument executed by the Indenture
Trustee as provided in this Article shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no
Notes Outstanding and all sums due the Indenture Trustee pursuant to Section
6.07 have been paid, release any remaining portion of the Collateral that
secured the Notes from the lien of this Indenture and release to the Issuer or
any other Person entitled thereto any funds then on deposit in the Trust
Accounts. The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA as so stated in the Opinion of Counsel) Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the
applicable requirements of Section 11.01.
SECTION 8.05. OPINION OF COUNSEL. The Indenture Trustee shall receive
at least seven days notice when requested by the Issuer to take any action
pursuant to Section 8.04(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require, as a condition to such action, an
Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all conditions precedent to the taking of
such action have been complied with and such action will not materially and
adversely impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions for this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Collateral. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any such
action.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
(a) Without the consent of the Holders of any Notes and with prior
notice to each Rating Agency, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, and the other parties hereto at any time from
time to time, may enter into one or more indentures supplemental hereto (which
shall conform to the provisions of the TIA as in force at the date of the
execution thereof), in form satisfactory to the Indenture Trustee, for any of
the following purposes:
(i) to correct or amplify the description of any
property at any time subject to the lien of this Indenture, or better
to assure, convey and confirm unto the
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Indenture Trustee any property subject or required to be subjected to
the lien created by this Indenture, or to subject additional property
to the lien created by this Indenture;
(ii) to evidence the succession, in compliance
with the applicable provisions hereof, of another Person to the Issuer,
and the assumption by any such successor of the covenants of the Issuer
herein and in the Notes contained;
(iii) to add to the covenants of the Issuer, for
the benefit of the Holders of the Notes, or to surrender any right or
power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or
pledge any property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or
supplement any provision herein or in any supplemental indenture which
may be inconsistent with any other provision herein or in any
supplemental indenture or the Transaction Documents or to make any
other provisions with respect to matters or questions arising under
this Indenture or in any supplemental indenture; provided that such
action shall not adversely affect the interests of the Holders of the
Notes;
(vi) to evidence and provide for the acceptance
of the appointment hereunder by a successor Indenture Trustee with
respect to the Notes and to add to or change any of the provisions of
this Indenture as shall be necessary to facilitate the administration
of the trusts hereunder by more than one Indenture Trustee, pursuant to
the requirements of Article Six;
(vii) to modify, eliminate or add to the
provisions of this Indenture to such extent as shall be necessary to
effect the qualification of this Indenture under the TIA or under any
similar federal statute hereafter enacted and to add to this Indenture
such other provisions as may be expressly required by the TIA; and
(viii) to elect into the FASIT provisions of the
Code, provided an Opinion of Counsel to the effect that such election
will not adversely affect the Noteholders, is delivered to the Issuer
and Indenture Trustee.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Holders of the Notes
and with prior notice to each Rating Agency, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder.
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SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to each Rating Agency, and with the consent of the Holders of
not less than 50% of the Outstanding Amount of the Class A-1 Notes and the Class
A-2 Notes, voting together as a single class, or, if there are no Class A-1
Notes or Class A-2 Notes Outstanding, with the consent of the Holders of not
less than 50% of the Outstanding Amount of the Class B Notes, by Act of such
Holders delivered to the Issuer and the Indenture Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce the principal amount thereof,
the interest rate thereon or the Redemption Date Amount with respect thereto,
change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Collateral to payment of
principal of or interest on the Notes, or change any place of payment where, or
the coin or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided in
Article Five, to the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or after the
Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of
the Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required for
any waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
(iii) modify or alter the provisions of the second proviso
to the definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of
the Notes required to direct the Indenture Trustee to sell or liquidate the
Collateral pursuant to Section 5.04 or amend the provisions of this Article
which specify the percentage of the Outstanding Amount of the Notes required to
amend this Indenture or the other Transaction Documents;
(v) modify any provision of this Section except to
increase any percentage specified herein or to provide that certain additional
provisions of this Indenture or the other Transaction Documents cannot be
modified or waived without the consent of the Holder of each Outstanding Note
affected thereby;
(vi) modify any of the provisions of this Indenture in
such manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Distribution Date (including the
calculation of any of the individual components of such calculation); or
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(vii) permit the creation of any lien ranking prior to or
on a parity with the lien created by this Indenture with respect to any part of
the Collateral or, except as otherwise permitted or contemplated herein,
terminate the lien created by this Indenture on any property at any time subject
hereto or deprive the Holder of any Note of the security provided by the lien
created by this Indenture.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of the Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the parties hereto of any supplemental
indenture pursuant to this Section, the Indenture Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Indenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Indenture Trustee shall be entitled to receive, and subject
to Sections 6.01 and 6.02 shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the parties hereto and the Holders of the Notes shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture Act as then in
effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and if
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required by the Indenture Trustee shall, bear a notation in form approved by the
Indenture Trustee as to any matter provided for in such supplemental indenture.
If the Issuer or the Indenture Trustee shall so determine, new notes so modified
as to conform, in the opinion of the Indenture Trustee and the Issuer, to any
such supplemental indenture. If the Issuer or the Indenture Trustee shall so
determine, new notes so modified as to conform, in the opinion of the Indenture
Trustee and the Issuer, to any such supplemental indenture may be prepared and
executed by the Issuer and authenticated and delivered by the Indenture Trustee
in exchange for Outstanding Notes.
ARTICLE TEN
REDEMPTION OF NOTES
SECTION 10.01. REDEMPTION.
(a) In the event that the Seller pursuant to Section 7.10 of the
Sale and Servicing Agreement purchases the corpus of the Trust, the Notes are
subject to redemption in whole, but not in part, on the Distribution Date on
which such repurchase occurs, in an amount equal to the outstanding principal
amount thereof, and accrued interest on the Notes; provided, however, that the
Issuer has available funds sufficient to pay such amounts. Seller, the Servicer
or the Issuer shall furnish each Rating Agency notice of such redemption. If the
Notes are to be redeemed pursuant to this Section 10.01(a), the Servicer or the
Issuer shall furnish notice of such election to the Indenture Trustee not later
than 20 days prior to the Redemption Date and the Issuer shall deposit with the
Indenture Trustee in the Note Distribution Account the Redemption Price of the
Notes to be redeemed whereupon all such Notes shall be due and payable on the
Redemption Date upon the furnishing of a notice complying with Section 10.02 to
each Holder of the Notes.
(b) In the event that the assets of the Trust are sold pursuant to
Section 9.02 of the Trust Agreement or Section 5.03(b) of this Indenture, the
proceeds of such sale shall be distributed as provided in Section 5.06. If
amounts are to be paid to Noteholders pursuant to this Section 10.01(b), the
Servicer or the Issuer shall, to the extent practicable, furnish notice of such
event to the Indenture Trustee not later than 20 days prior to the Redemption
Date whereupon all such amounts shall be payable on the Redemption Date.
(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 Distribution Date, in either case after
giving effect to any reductions in the Pre-Funded Amount on such Distribution
Date pursuant to Section 7.07 of the Sale and Servicing Agreement, one or more
classes of Notes then outstanding will be redeemed, in whole or in part, as
described in Section 8.02(c) in a principal amount described therein.
SECTION 10.02. FORM OF REDEMPTION NOTICE.
(a) Notice of redemption under Section 10.01(a) shall be given by
the Indenture Trustee by first-class mail, postage prepaid, mailed not less than
five days prior to the applicable
52
<PAGE>
Redemption Date to each Holder of Notes, as of the close of business on the
Record Date preceding the applicable Redemption Date, at such Holder's address
appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Date Amount; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Date Amount (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
(b) Prior notice of redemption under Section 10.01(b) is not
required to be given to Noteholders.
SECTION 10.03. NOTES PAYABLE ON REDEMPTION DATE. The Notes or portions
thereof to be redeemed shall, following notice of redemption (if any) as
required by Section 10.02, on the Redemption Date become due and payable at the
Redemption Date Amount and (unless the Issuer shall default in the payment of
the Redemption Date Amount) no interest shall accrue on the Redemption Date
Amount for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Date Amount.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, and (iii) (if required by the TIA as so stated in the Opinion of
Counsel) an Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section and TIA Section 314(c),
except that, in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture, no additional certificate or opinion need be furnished.
53
<PAGE>
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such
certificate or opinion has read or has caused to be read such covenant
or condition and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope
of the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each
such signatory, such signatory has made such examination or
investigation as is necessary to enable such signatory to express an
informed opinion as to whether or not such covenant or condition has
been complied with; and
(iv) a statement as to whether, in the opinion of
each such signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other
property or securities with the Indenture Trustee that is to be made the basis
for authentication and delivery of the Notes or the release of any property
subject to the lien created by this Indenture, the Issuer shall, in addition to
any obligation imposed in Section 11.01(a) or elsewhere in this Indenture,
furnish to the Indenture Trustee an Officer's Certificate certifying or stating
the opinion of the signer thereof such certificate as to the fair value (within
90 days of such deposit) to the Issuer of the Collateral or other property or
securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the opinion of
any signer thereof as to the matters described in clause (i) above, the Issuer
shall also deliver to the Indenture Trustee an Independent Certificate as to the
named matters, if the fair value to the Issuer of the property to be so
deposited and of all other such property made the basis of any such withdrawal
or release since the commencement of the then-current fiscal year of the Issuer,
as set forth in the certificates delivered pursuant to clause (i) above and this
clause (ii), is 10% or more of the Outstanding Amount of the Notes, but such a
certificate need not be furnished with respect to any property so deposited, if
the fair value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the Outstanding
Amount of the Notes.
(iii) Other than with respect to any release described in
clause (A) or (B) of Section 11.01(b)(v), whenever any property or securities
are to be released from the lien created by this Indenture, the Issuer shall
also furnish to the Indenture Trustee an Officer's Certificate certifying or
stating the opinion of each person signing such certificate as to the fair value
(within 90 days of such release) of the property or securities proposed to be
released and stating that in the opinion of such person the proposed release
will not impair the security created by this Indenture in contravention of the
provisions hereof.
54
<PAGE>
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the opinion of
any signer thereof as to the matters described in clause (iii) above, the Issuer
shall also furnish to the Indenture Trustee an Independent Certificate as to the
same matters if the fair value of the property or securities and of all other
property or securities (other than property described in clauses (A) or (B) of
Section 11.01(b)(v)) released from the lien created by this Indenture since the
commencement of the then current fiscal year, as set forth in the certificates
required by clause (iii) above and this clause (iv), equals 10% or more of the
Outstanding Amount of the Notes, but such certificate need not be furnished in
the case of any release of property or securities if the fair value thereof as
set forth in the related Officer's Certificate is less than $25,000 or less than
one percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding any other provision of this Section,
the Issuer may, without compliance with the other provisions of this Section,
(A) collect, liquidate, sell or otherwise dispose of the Contracts and the
Motorcycles as and to the extent permitted or required by the Transaction
Documents, (B) make cash payments out of the Trust Accounts as and to the extent
permitted or required by the Transaction Documents, so long as the Issuer shall
deliver to the Indenture Trustee every six months, commencing [_________], an
Officer's Certificate stating that all the dispositions of Collateral described
in clauses (A) or (B) that occurred during the preceding six calendar months
were in the ordinary course of the Issuer's business and that the proceeds
thereof were applied in accordance with the Transaction Documents.
SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Person as to other matters, and any such Person may certify or given an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Seller or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the Seller
or the Issuer, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one
instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of
55
<PAGE>
the granting of such application, or as evidence of the Issuer's compliance with
any term hereof, it is intended that the truth and accuracy, at the time of the
granting of such application or at the effective date of such certificate or
report (as the case may be), of the facts and opinions stated in such document
shall in such case be conditions precedent to the right of the Issuer to have
such application granted or to the sufficiency of such certificate or report.
The foregoing shall not, however, be construed to affect the Indenture Trustee's
right to rely upon the truth and accuracy of any statement or opinion contained
in any such document as provided in Article Six.
SECTION 11.03. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration or transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Indenture Trustee or the Issuer in reliance thereon, whether or
not notation of such action is made upon such Note.
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.
150 South Wacker Drive, Suite 3100
Chicago, Illinois 60606
Attention: Perry A. Glassgow
56
<PAGE>
Telecopier No.: (312) 368-4372
(ii) If to the Trust Depositor:
Harley-Davidson Customer Funding Corp.
4150 Technology Way
Carson City, Nevada 89706
Telecopier No.: (775) 884-4469
(iii) If to the Indenture Trustee:
--------------------
--------------------
--------------------
Telecopier No.: ________________
(iv) If to the Owner Trustee or the Issuer:
--------------------
--------------------
--------------------
Telecopier No.: ________________
(v) If to Moody's:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Department
Telecopier No.: (212) 553-1350
(vi) If to Standard & Poor's:
Standard & Poor's Ratings Services, A
Division of The McGraw Hill Companies
55 Water Street
New York, New York 10041
Telecopier No.: (212) 428-2657
(vii) If to the Underwriters:
--------------------
--------------------
--------------------
Telecopier No.: ________________
--------------------
57
<PAGE>
--------------------
--------------------
Telecopier No.: ________________
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. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event of Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.06. ALTERNATE PAYMENT AND NOTICE PROVISIONS. Notwithstanding
any provisions of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder,
that is different from the methods provided for in this Indenture for such
payments or notices. The Issuer will furnish to the Indenture Trustee a copy of
each such agreement and the Indenture Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
SECTION 11.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 11.08. SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not.
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<PAGE>
All agreements of the Indenture Trustee in this Indenture shall bind its
successors, co-Indenture Trustees and agents.
SECTION 11.09. SEPARABILITY. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.10. BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Collateral, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 11.11. LEGAL HOLIDAYS. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.12. GOVERNING LAW. THIS INDENTURE 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.
SECTION 11.13. COUNTERPARTS. This Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 11.14. RECORDING OF INDENTURE. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or any other Person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
SECTION 11.15. TRUST OBLIGATION. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficiary interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable,
59
<PAGE>
to the extent provided by applicable law, for any unpaid consideration for
stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity. For all purposes of this Indenture, 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 Article
Six, Seven and Eight of the Trust Agreement.
SECTION 11.16. NO PETITION. The parties hereto, by entering into this
Indenture, and each Noteholder, by accepting a Note or a beneficial interest in
a Note, hereby covenant and agree that they will not at any time institute
against the Trust Depositor or the Issuer or join in any institution against the
Trust Depositor or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Indenture or any of the other
Transaction Documents.
SECTION 11.17. INSPECTION. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees and independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested, the Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
SECTION 11.18. CONFLICT WITH TRUST INDENTURE ACT. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
[signature page follows]
60
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and delivered as of the day and year first above written.
HARLEY-DAVIDSON MOTORCYCLE
TRUST [________]
By: [____________], not in its individual
capacity but solely on behalf of the
Issuer as Owner Trustee under the Trust
Agreement
By:______________________________________________
Printed Name:____________________________________
Title:___________________________________________
[____________________], not in its individual
capacity but solely as Indenture Trustee
By:______________________________________________
Printed Name:____________________________________
Title:___________________________________________
Signature Page to Indenture
<PAGE>
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On
-------------------------------------------------------------------
[insert date]
before me,
--------------------------------------------------------------------
[Insert name and title of notary]
personally appeared ,
---------------------------------------------------
/ / personally known to me, or
/ / proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature [Seal]
----------------------------------------------------
<PAGE>
STATE OF DELAWARE )
) SS
COUNTY OF NEW CASTLE )
On
-------------------------------------------------------------------
[insert date]
before me,
--------------------------------------------------------------------
[Insert name and title of notary]
personally appeared ,
-----------------------------------------------------------
/ / personally known to me, or
/ / proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature [Seal]
-------------------------------------------
<PAGE>
EXHIBIT A
FORM OF SALE AND SERVICING AGREEMENT
A-1
<PAGE>
EXHIBIT B
FORM OF CLASS A-1 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OF FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
HARLEY-DAVIDSON MOTORCYCLE TRUST [________]
___% HARLEY-DAVIDSON MOTORCYCLE CONTRACT, CLASS A-1
REGISTERED $
No. R- CUSIP No. ___________________
Harley-Davidson Motorcycle Trust [________], a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to [________], or
registered assigns, the principal sum of ___________ ($_____) payable on the
earlier of _______, ____ (the "Class A-1 Final Distribution Date") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred to
on the reverse hereof.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained on Section 3.01 of the Indenture. Interest on this Note will accrue
for each Distribution Date from the most recent Distribution Date on which
interest has been paid to but excluding such Distribution Date or, if no
interest has yet been paid, from the Closing Date. Interest will be computed on
the basis of a 360-day year of twelve
B-1
<PAGE>
30-day months. Such principal of and interest on this Note shall be paid the
manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
B-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as of the date set forth
below.
Date: ____________ HARLEY-DAVIDSON MOTORCYCLE
TRUST [________]
By: [____________], not in its
individual capacity but solely on
behalf of the Issuer as Owner
Trustee, under the Trust
Agreement
By: __________________________________
Printed Name:_________________________
Title:________________________________
B-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
[_______________________]
not in its individual capacity but solely as
Indenture Trustee
By: _____________________________
Authorized Signatory
B-4
<PAGE>
[REVERSE OF CLASS A-1 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ___% Harley-Davidson Motorcycle Contract Backed Notes, Class
A-1 (the "Class A-1 Notes"), all issued under an Indenture, dated as of
[________] (the "Indenture"), among the Issuer and [_____________], as Indenture
Trustee (the "Indenture Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Notes. The Class A-1 Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class A-1 Notes, the Class A-2 Notes and Class B Notes
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture subject to
the subordination of the Class B Notes under certain circumstances.
Principal of the Class A-1 Notes will be payable on the earlier of the
Class A-1 Final Distribution Date. Notwithstanding the foregoing, the entire
unpaid principal amount of the Class A-1 Notes shall be due and payable on the
date following the occurrence of an Event of Default on which the maturity of
the Notes shall have been accelerated in the manner provided in the Indenture.
All principal payments on the Class A-1 Notes shall be made pro rata to the
Class A-1 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Distribution
Date shall be made by check to the Person whose name appears as the Registered
Holder of this Note (or one or more Predecessor Notes) on the Note Register as
of the close of business on each Record Date except that with respect to Notes
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payments will be made by wire
transfer in immediately available funds to the account designated by such
nominee. Such checks shall be mailed to the Person entitled thereto at the
address of such Person as it appears on the Note Register as of the applicable
Record Date without requiring that this Note be submitted for notation of
payment. Any reduction in the principal amount of this Note (or any one or more
Predecessor Notes) affected by any payments made on any Distribution Date shall
be binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Distribution Date, then the Indenture Trustee, in the name of and
on behalf of the Issuer, will notify the Person who was the Registered Holder
hereof as of the Record Date preceding such Distribution Date by notice mailed
transmitted by facsimile on such Record Date if Book-Entry Notes are outstanding
or mailed not later than three Business Days after such Record Date if
Definitive Notes are outstanding and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Corporate Trust
Office of the Indenture Trustee or at the office of the Indenture Trustee's
agent appointed for such purposes located in the City of Chicago, Illinois.
B-5
<PAGE>
The Issuer shall pay interest on overdue installments of interest on
this Note at the Class A-1 Rate to the extent lawful.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an eligible guarantor
institution which is a participant in the Securities Transfer Agent's Medallion
Program (STAMP) or similar signature guarantee program, and such other documents
as the Indenture Trustee may require, and thereupon one or more new program, and
such other documents as the Indenture Trustee may require, and thereupon one or
more new Notes of authorized denominations and in the same aggregate principal
amount will be issued to the designated transferee or transferees. No service
charge will be charged for any registration of transfer or exchange of this
Note, but the transferor may be required to pay a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or assign
of the Indenture Trustee or the Owner Trustee in its individual capacity, except
as any such Person may have expressly agreed and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Collateral. Each Noteholder, by acceptance of a Note (and each
Noteholder by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for the federal, state and local income, single business and franchise
tax purposes as indebtedness of the Issuer.
B-6
<PAGE>
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer and the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the consent of the Noteholders representing not less than 50% of the
Outstanding Amount of the Class A-1 Notes and the Class A-2 Notes, voting
together as a single class, or, if there are no Class A-1 Notes or Class A-2
Notes Outstanding, with the consent of the Noteholders representing not less
than 50% of the Outstanding Amount of the Class B Notes. The Indenture also
contains provisions permitting the Noteholders representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the
Noteholders, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Noteholder (or any one of more Predecessor
Notes) shall be conclusive and binding upon such Holders and upon all future
Noteholders and of any Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the Indenture Trustee
to amend or waive certain terms and conditions set forth in the Indenture
without the consent of Noteholders issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of Illinois, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
B-7
<PAGE>
EXHIBIT C
FORM OF CLASS A-2 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OF FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
HARLEY-DAVIDSON MOTORCYCLE TRUST [________]
___% HARLEY-DAVIDSON MOTORCYCLE CONTRACT, CLASS A-2
REGISTERED $
No. R- CUSIP No. ____________
Harley-Davidson Motorcycle Trust [________], a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to [___________], or
registered assigns, the principal sum of ___________ ($__________) payable on
the earlier of _______, ____ (the "Class A-2 Final Distribution Date") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred to
on the reverse hereof. No payments of principal of the Class A-2 Notes shall be
made until the principal on the Class A-1 Notes have been paid in full.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in the Indenture. Interest on this Note will accrue for each
Distribution Date from the most recent Distribution Date on which interest has
been paid to
C-1
<PAGE>
but excluding such Distribution Date or, if no interest has yet been paid, from
the Closing Date. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. Such principal of and interest on this Note shall be paid
in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
C-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as of the date set forth
below.
Date: ____________ HARLEY-DAVIDSON MOTORCYCLE
TRUST [________]
By: [____________], not in its
individual capacity but solely on
behalf of the Issuer as Owner
Trustee, under the Trust
Agreement
By: __________________________________
Printed Name:_________________________
Title:________________________________
C-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
[____________________]
not in its individual capacity but solely as
Indenture Trustee
By: _____________________________
Authorized Signatory
C-4
<PAGE>
[REVERSE OF CLASS A-2 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ___% Harley-Davidson Motorcycle Contract, Class A-2 (the
"Class A-2 Notes"), all issued under an Indenture, dated as of [________] (the
"Indenture"), among the Issuer and [______________], as Indenture Trustee (the
"Indenture Trustee"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class A-1 Notes, the Class A-2 Notes and the Class B Notes
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture subject to
no payment of principal on the Class A-2 Notes until all principal has been paid
on the Class A-1 Notes and the subordination of the Class B Notes.
Principal of the Class A-2 Notes will be payable on the Class A-2 Final
Distribution Date. Notwithstanding the foregoing, the entire unpaid principal
amount of the Class A-2 Notes shall be due and payable on the date following the
occurrence of an Event of Default on which the maturity of the Notes shall have
been accelerated in the manner provided in the Indenture. All principal payments
on the Class A-2 Notes shall be made pro rata to the Class A-2 Noteholders
entitled thereto.
Payments of interest on this Note due and payable on each Distribution
Date shall be made by check mailed to the Person whose name appears as the
Registered Holder of this Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of the
applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) affected by any payments made on any Distribution
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice transmitted by facsimile on such Record Date if
Book-Entry Notes are outstanding or mailed not later than three Business Days
after such Record Date if Definitive Notes are outstanding and the amount then
due and payable shall be payable only upon presentation and surrender of this
Note at the Indenture Trustee's principal Corporate Trust Office or at the
office of the Indenture Trustee's agent appointed for such purposes located in
the City of Chicago, Illinois.
C-5
<PAGE>
The Issuer shall pay interest on overdue installments of interest on
this Note at the Class A-2 Rate to the extent lawful.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an eligible guarantor
institution which is a participant in the Securities Transfer Agent's Medallion
Program (STAMP) or similar signature guarantee program, and such other documents
as the Indenture Trustee may require, and thereupon one or more new program, and
such other documents as the Indenture Trustee may require, and thereupon one or
more new Class A-2 Notes of authorized denomination and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Note, but the transferor may be required to pay a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Collateral. Each Noteholder, by acceptance of a Note or of a
beneficial interest in a Note, agrees to treat the Notes for the
C-6
<PAGE>
federal, state and local income, single business and franchise tax purposes as
indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer, the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the consent of the Noteholders representing not less than 50% of the
Outstanding Amount of the Class A-1 Notes and the Class A-2 Notes, voting
together as a single class, or, if there are no Class A-1 Notes or Class A-2
Notes Outstanding, with the consent of the Noteholders representing not less
than 50% of the Outstanding Amount of the Class B Notes. The Indenture also
contains provisions permitting the Noteholders representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the
Noteholders, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Noteholder (or any one of more Predecessor
Notes) shall be conclusive and binding upon such Holders and upon all future
Noteholders and of any Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the Indenture Trustee
to amend or waive certain terms and conditions set forth in the Indenture
without the consent of Noteholders issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of Illinois, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
C-7
<PAGE>
EXHIBIT D
FORM OF CLASS B NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OF FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
HARLEY-DAVIDSON MOTORCYCLE TRUST [________]
___% HARLEY-DAVIDSON MOTORCYCLE CONTRACT, CLASS B
REGISTERED $
No. R- CUSIP No. ____________
Harley-Davidson Motorcycle Trust [________], a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to [___________], or
registered assigns, the principal sum of ___________ ($__________) payable on
the earlier of _______, ____ (the "Class B Final Distribution Date") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred to
on the reverse hereof. No payments of principal of the Class B Notes shall be
made until the principal on the Class A-1 Notes and the Class A-2 Notes have
been paid in full.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in the Indenture. Interest on this Note will accrue for each
Distribution Date from the most recent Distribution Date on which interest has
been paid to
D-1
<PAGE>
but excluding such Distribution Date or, if no interest has yet been paid, from
the Closing Date. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. Such principal of and interest on this Note shall be paid
in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
D-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as of the date set forth
below.
Date: ____________ HARLEY-DAVIDSON MOTORCYCLE
TRUST [________]
By: [____________], not in its
individual capacity but solely on
behalf of the Issuer as Owner
Trustee, under the Trust
Agreement
By: __________________________________
Printed Name:_________________________
Title:________________________________
D-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
[_______________________]
not in its individual capacity but solely as
Indenture Trustee
By: _____________________________
Authorized Signatory
D-4
<PAGE>
[REVERSE OF CLASS B NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ___% Harley-Davidson Motorcycle Contract, Class B (the "Class
B Notes"), all issued under an Indenture, dated as of [________] (the
"Indenture"), among the Issuer and [______________], as Indenture Trustee (the
"Indenture Trustee"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class A-1 Notes, the Class A-2 Notes and the Class B Notes
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture subject to
no payment of principal on the Class A-2 Notes until all principal has been paid
on the Class A-1 Notes and the Class A-2 Notes.
Principal of the Class B Notes will be payable on the Class B Final
Distribution Date. Notwithstanding the foregoing, the entire unpaid principal
amount of the Class B Notes shall be due and payable on the date following the
occurrence of an Event of Default on which the maturity of the Notes shall have
been accelerated in the manner provided in the Indenture. All principal payments
on the Class B Notes shall be made pro rata to the Class B Noteholders entitled
thereto.
Payments of interest on this Note due and payable on each Distribution
Date shall be made by check mailed to the Person whose name appears as the
Registered Holder of this Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of the
applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) affected by any payments made on any Distribution
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice transmitted by facsimile on such Record Date if
Book-Entry Notes are outstanding or mailed not later than three Business Days
after such Record Date if Definitive Notes are outstanding and the amount then
due and payable shall be payable only upon presentation and surrender of this
Note at the Indenture Trustee's principal Corporate Trust Office or at the
office of the Indenture Trustee's agent appointed for such purposes located in
the City of Chicago, Illinois.
D-5
<PAGE>
The Issuer shall pay interest on overdue installments of interest on
this Note at the Class B Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01(a) of the Indenture, in whole, but not in part, at the option of
the Seller, on any Distribution Date on or after the date on which the unpaid
Aggregate Principal Balance is less than 10% of the sum of (i) the Aggregate
Principal Balance as of the Cutoff Date and (ii) the Pre-Funded Amount on the
Closing Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an eligible guarantor
institution which is a participant in the Securities Transfer Agent's Medallion
Program (STAMP) or similar signature guarantee program, and such other documents
as the Indenture Trustee may require, and thereupon one or more new program, and
such other documents as the Indenture Trustee may require, and thereupon one or
more new Class A-2 Notes of authorized denomination and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Note, but the transferor may be required to pay a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Transaction Documents.
D-6
<PAGE>
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Collateral. Each Noteholder, by acceptance of a Note or of a
beneficial interest in a Note, agrees to treat the Notes for the federal, state
and local income, single business and franchise tax purposes as indebtedness of
the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer, the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the consent of the Noteholders representing not less than 50% of the
Outstanding Amount of the Class A-1 Notes and the Class A-2 Notes, voting
together as a single class, or, if there are no Class A-1 Notes or Class A-2
Notes Outstanding, with the consent of the Noteholders representing not less
than 50% of the Outstanding Amount of the Class B Notes. The Indenture also
contains provisions permitting the Noteholders representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the
Noteholders, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Noteholder (or any one of more Predecessor
Notes) shall be conclusive and binding upon such Holders and upon all future
Noteholders and of any Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the Indenture Trustee
to amend or waive certain terms and conditions set forth in the Indenture
without the consent of Noteholders issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of Illinois, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
D-7
<PAGE>
EXHIBIT E
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- --------------------------------------------------------------------------
the within Note, and all rights thereunder, hereby irrevocably constituting
and appointing
- --------------------------------------------------------------------------
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:
---------------------------------------
Signature Guaranteed:
- ---------------------------------------------
Signature must be guaranteed by an eligible
guarantor institution which is a participant
in the Securities Transfer Agent's Medallion
Program (STAMP) or similar signature
guarantee program.
- ---------------------------------------------
Notice: The signature(s) on this assignment
must correspond with the name(s) as it
appears on the face of the within Note in
every particular, without alteration or
enlargement or any change whatsoever.
- -------------------------------------
(Authorized Officer)
E-1
<PAGE>
EXHIBIT F
FORM OF NOTE DEPOSITORY AGREEMENT
F-1
<PAGE>
EXHIBIT 5.1
Form of Opinion of Winston & Strawn
with respect to Legality
May 22, 2000
Harley-Davidson Customer Funding Corp.,
as Trust Depositor
150 South Wacker
Chicago, Illinois 60606
Re: Asset-Backed Notes and Asset-Backed Certificates
Registration Statement on Form S-3 (Registration No. 333- )
-----------------------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Harley-Davidson Customer Funding
Corp. (the "COMPANY"), as depositor of the trusts (each, a "TRUST") to be
created to issue asset-backed notes (the "NOTES") and asset-backed certificates
(the "CERTIFICATES", and together with the Notes, the "SECURITIES"), in
connection with the filing of the Registration Statement on Form S-3
(Registration No. 333-___________) (such registration statement, together with
the exhibits and any amendments thereto, the "REGISTRATION STATEMENT"),
registering the Notes and Certificates. The Registration Statement has been
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "SECURITIES ACT"). As described in the Registration
Statement, the Notes and Certificates will be issued under and pursuant to the
terms of one or more Pooling and Servicing Agreements, Sale and Servicing
Agreements, Trust Agreements and Indentures (collectively, the "AGREEMENTS" and
each, individually, an "AGREEMENT"). Capitalized terms used but not defined
herein have the meanings given to them in the Registration Statement.
This opinion letter is being delivered to you pursuant to the
requirements of Item 601(b)(5) of Regulation S-K under the Securities Act.
<PAGE>
We are familiar with the proceedings to date with respect to the
proposed issuance and delivery of the Securities and have examined copies of the
Articles of Incorporation and by-laws of the Company, the Registration Statement
and the prospectus and prospectus supplements included therein, the form of each
Agreement and such other documents, records and questions of law, and satisfied
ourselves as to such matters of fact, as we have considered relevant and
necessary as a basis for this opinion letter.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents that will be executed in connection with the issuance
of the Securities, we have assumed that the parties to such documents will have
at the time of execution of such documents, the power, corporate or other, to
enter into and perform all obligations thereunder and have also assumed the due
authorization by all requisite action, corporate or other, and execution and
delivery by such parties of such documents and the validity and binding effect
of such documents. As to any facts material to the opinions expressed herein
which we did not independently establish or verify, we have relied upon oral and
written statements and representations of officers and other representatives of
the Company and others. In addition, we have also relied upon the accuracy and
completeness of all certificates and other statements, representations,
documents, records, financial statements and papers reviewed by us, and the
accuracy and completeness of all representations, warranties, schedules and
exhibits contained in such documents, with respect to the factual matters set
forth therein.
Based on the foregoing, we are of the opinion that when (i) the
Registration Statement, as finally amended, has become effective under the
Securities Act, (ii) the terms, prices and interest rates of the Securities
have been duly approved by the Board of Directors, (iii) the applicable
Agreements relating to such Securities have been duly executed and delivered
by the parties thereto in substantially the forms filed as exhibits to the
Registration Statement, (iv) with respect to each Trust which will issue the
Securities, the Certificate of Trust for such Trust has been duly executed
and filed by the Owner Trustee with the Secretary of State of the State of
Delaware, (v) the Indenture pursuant to which the Notes will be issued has
been qualified under the Trust Indenture Act of 1939, as amended, (vi) the
purchasers of the Securities shall have paid the purchase price therefor and
the Securities have been duly executed and authenticated in accordance with
the applicable Agreements pertaining to them, the Securities will be legally
issued, fully paid and non-assessable and will be legally valid and binding
obligations of the issuing Trust as issuer of such Securities enforceable in
accordance with their terms, and entitled to the benefits of the applicable
Agreements (subject to the effect of bankruptcy, fraudulent conveyance or
transfer, insolvency, reorganization, arrangement, liquidation,
conservatorship and moratorium laws and subject to the limitations imposed by
other laws and judicial decisions relating to or affecting the rights of
creditors generally, to general principles of equity, regardless of whether
enforcement is considered in proceedings in equity or at law, and to an
implied covenant of good faith and fair dealing).
We do not find it necessary for the purposes of this opinion letter to
cover, and accordingly we express no opinion as to, the application of the
securities or blue sky laws of the various states to the offering of the
Securities.
-2-
<PAGE>
This opinion letter is limited to the laws of the United States of
America and the States of Illinois and New York, and we express no opinion
with respect to the laws of any other state or jurisdiction.
Our opinions set forth in this letter are based on the facts in
existence and the laws in effect on the date hereof and we expressly disclaim
any obligation to update our opinions herein, regardless of whether changes in
such facts or laws come to our attention after the delivery hereof.
We hereby consent to the filing of this opinion letter as an Exhibit to
the Registration Statement and to all references to our firm included in or made
a part of the Registration Statement. In giving such consent, we do not concede
that we are experts within the meaning of the Securities Act or the rules and
regulations thereunder or that this consent is required by Section 7 of the
Securities Act.
Very truly yours,
/s/ Winston & Strawn
-3-
<PAGE>
EXHIBIT 8.1
Form of Opinion of Winston & Strawn
with respect to Tax Matters
May 22, 2000
Re: Harley-Davidson Customer Funding Corp.
Registration Statement on Form S-3 (Reg. No. 333- )
--------------------------------------------------------------
Ladies and Gentlemen:
We have acted as special federal tax counsel to
Harley-Davidson Customer Funding Corp., a Nevada corporation (the
"REGISTRANT"), in connection with the proposed issuance and sale of its
Harley-Davidson Motorcycle Contract Backed Notes (collectively, the "Notes")
and/or Harley-Davidson Motorcycle Contract Backed Certificates (collectively,
the "Certificates") to be issued from the Harley-Davidson Motorcycle Trusts,
limited purpose Delaware business trusts (each, a "TRUST"). The property of
the Trust will include retail installment contracts relating to the purchase
of new or used motorcycles. The Notes will be issued pursuant to an indenture
(the "INDENTURE") between the applicable Trust and an indenture trustee.
As special tax counsel to Registrant, we have expressed our
opinion regarding the material United States federal income tax consequences
of the proposed issuance of the Notes and Certificates to the holders
thereof. Our opinion is contained in the sections titled "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES" in the prospectus and prospectus supplement relating
to the Notes (the "PROSPECTUS"), which is a part of the Registration
Statement on Form S-3 (the "REGISTRATION STATEMENT") filed with the
Securities and Exchange Commission (the "COMMISSION") initially on May 22,
2000, under the Securities Act of 1933, as amended (the "Act"), for the
registration of the Notes and Certificates under the Act. We hereby adopt and
confirm as our opinion that the statements contained in the section of the
Prospectus titled "MATERIAL FEDERAL INCOME TAX CONSEQUENCES", to the extent
that they concern matters of United States federal income tax law, are
correct in all material respects.
Our opinion is based upon the current provisions of the Code,
Treasury Regulations promulgated thereunder, current administrative rulings,
judicial decisions, and other applicable authorities, all as in effect on the
date of such opinions. All of the foregoing authorities are subject to change or
new interpretation, both prospectively and retroactively, and such changes or
interpretation, as well as the changes in the facts as they have been
represented to us or assumed by us, could affect our opinions. Our opinion does
not foreclose the possibility of a contrary determination by the Internal
Revenue Service (the "IRS") or by a court of
<PAGE>
competent jurisdiction, or of a contrary position by the IRS or Treasury
Department in regulations or rulings issued in the future. Furthermore, our
opinion assumes that all the transactions contemplated by the Prospectus will be
consummated in accordance with the terms of the Prospectus, including without
limitation, that holders of Notes will treat such Notes as indebtedness.
We hereby consent to the filing of this letter as an exhibit
to the Registration Statement and to a reference to this firm (as counsel to the
Registrant) under the heading "Material Federal Income Tax Consequences" and
"Legal Matters" in the Prospectus forming a part of the Registration Statement,
without implying or admitting that we are "experts" within the meaning of the
Act or the rules and regulations of the Commission issued thereunder, with
respect to any part of the Registration Statement, including this exhibit.
Very truly yours,
/s/ Winston & Strawn
-2-
<PAGE>
EXHIBIT 10.1
===============================================================================
FORM OF
TRANSFER AND SALE AGREEMENT
by and between
HARLEY-DAVIDSON CREDIT CORP.,
as Seller
and
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,
as Purchaser
Dated as of [____________]
===============================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I DEFINITION.............................................................................................1
SECTION 1.01. GENERAL.......................................................................................1
ARTICLE II TRANSFER OF CONTRACTS; ASSIGNMENT OF AGREEMENT.........................................................1
SECTION 2.01. CLOSING.......................................................................................1
SECTION 2.02. CONDITIONS TO THE CLOSING.....................................................................2
SECTION 2.03. ASSIGNMENT OF AGREEMENT.......................................................................3
SECTION 2.04. SUBSEQUENT CONTRACTS..........................................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES........................................................................5
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING SELLER...............................................6
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING EACH CONTRACT........................................7
SECTION 3.03. REPRESENTATIONS AND WARRANTIES REGARDING THE CONTRACTS IN THE AGGREGATE......................11
SECTION 3.04. REPRESENTATIONS AND WARRANTIES REGARDING THE CONTRACT FILES..................................12
ARTICLE IV PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS...........................................12
SECTION 4.01. CUSTODY OF CONTRACTS.........................................................................12
SECTION 4.02. FILING.......................................................................................13
SECTION 4.03. NAME CHANGE OR RELOCATION....................................................................13
SECTION 4.04. CHIEF EXECUTIVE OFFICE.......................................................................13
SECTION 4.05. COSTS AND EXPENSES...........................................................................13
SECTION 4.06. SALE TREATMENT...............................................................................13
ARTICLE V REMEDIES UPON MISREPRESENTATION........................................................................14
SECTION 5.01. REPURCHASES OF CONTRACTS FOR BREACH OF REPRESENTATIONS AND WARRANTIES........................14
SECTION 5.02. SELLER'S REPURCHASE OPTION...................................................................14
ARTICLE VI INDEMNITIES...........................................................................................15
SECTION 6.01. SELLER INDEMNIFICATION.......................................................................15
SECTION 6.02. LIABILITIES TO OBLIGORS......................................................................15
SECTION 6.03. TAX INDEMNIFICATION..........................................................................15
SECTION 6.04. OPERATION OF INDEMNITIES.....................................................................16
ARTICLE VII MISCELLANEOUS........................................................................................16
SECTION 7.01. PROHIBITED TRANSACTIONS WITH RESPECT TO THE TRUST............................................16
SECTION 7.02. MERGER OR CONSOLIDATION......................................................................16
SECTION 7.03. TERMINATION..................................................................................16
SECTION 7.04. ASSIGNMENT OR DELEGATION BY SELLER...........................................................17
SECTION 7.05. AMENDMENT....................................................................................17
SECTION 7.06. NOTICES......................................................................................18
SECTION 7.07. MERGER AND INTEGRATION.......................................................................19
SECTION 7.08. HEADINGS.....................................................................................19
SECTION 7.09. GOVERNING LAW................................................................................19
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A Form of Assignment
Exhibit B Form of Officer's Certificate
Exhibit C Form of Subsequent Purchase Agreement
</TABLE>
-ii-
<PAGE>
THIS AGREEMENT, dated as of [____________], is made by and between
Harley-Davidson Credit Corp., a Nevada corporation, as seller hereunder
(together with its successors and assigns "HARLEY-DAVIDSON CREDIT" or "SELLER"),
and Harley-Davidson Customer Funding Corp., a Nevada corporation and
wholly-owned subsidiary of Seller (together with its successors and assigns
"TRUST DEPOSITOR"), as purchaser hereunder.
WHEREAS, in the regular course of its business, Seller purchases and
services motorcycle conditional sales contracts from Harley-Davidson motorcycle
retailers, each of which contracts provides for installment payment obligations
by or on behalf of the retailer's customer/purchaser and grants a security
interest in a motorcycle in order to secure such obligations;
WHEREAS, Seller and Trust Depositor wish to set forth the terms and
conditions pursuant to which Trust Depositor will acquire from time to time the
"CONTRACT ASSETS," as hereinafter defined; and
WHEREAS, Trust Depositor intends concurrently with its purchases from
time to time of Contract Assets hereunder to convey all right, title and
interest in such Contract Assets to Harley-Davidson Motorcycle Trust [_____]
(the "TRUST") pursuant to the Sale and Servicing Agreement dated as of
[____________] by and among Trust Depositor, Harley-Davidson Credit, as
Servicer, and Harley-Davidson Motorcycle Trust [_____], as issuer (the "ISSUER")
(as amended, supplemented or otherwise modified from time to time, the "SALE AND
SERVICING AGREEMENT"), executed concurrently herewith;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, Seller and Trust Depositor agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. GENERAL. Unless otherwise defined in this Agreement,
capitalized terms used herein (including in the preamble above) shall have
the meanings assigned to them in the Sale and Servicing Agreement.
ARTICLE II
TRANSFER OF CONTRACTS; ASSIGNMENT OF AGREEMENT
SECTION 2.01. CLOSING. Subject to and upon the terms and conditions
set forth in this Agreement, Seller hereby sells, transfers, assigns, sets
over and otherwise conveys to Trust Depositor, in consideration of Trust
Depositor's payment of [$____________] in cash as the purchase price
therefor, (i) all the right, title and interest of Seller in and to the
Initial Contracts listed on the initial List of Contracts in effect on the
Closing Date (including, without limitation, all security interests and all
rights to receive payments which are collected pursuant thereto on or
<PAGE>
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 Seller under
any physical damage or other individual insurance policy (including 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 of Seller in the Lockbox, Lockbox Account and related Lockbox
Agreement to the extent they relate to the Contracts, (vi) all rights (but
not the obligations) of the Seller under any motorcycle dealer agreements
between the dealers (i.e. the originators of the Contracts) and the Seller,
and (vii) all proceeds and products of the foregoing (items (i) - (vii),
together with the additional assets referred to in Section 2.04 below which
may be transferred from time to time in respect of Subsequent Contracts,
being collectively referred to herein as the "CONTRACT ASSETS"). Although
Seller and Trust Depositor agree that any such transfer is intended to be a
sale of ownership in the Contract Assets, rather than the mere granting of a
security interest to secure a borrowing, in the event such transfer is deemed
to be of a mere security interest to secure indebtedness, Seller shall be
deemed to have granted Trust Depositor a perfected first priority security
interest in such Contract Assets and this Agreement shall constitute a
security agreement under applicable law. If such transfer is deemed to be the
mere granting of a security interest to secure a borrowing, Trust Depositor
may, to secure Trust Depositor's own borrowing under the Sale and Servicing
Agreement (to the extent that the transfer of the Contract Assets thereunder
is deemed to be a mere granting of a security interest to secure a borrowing)
repledge and reassign (i) all or a portion of the Contract Assets pledged to
Trust Depositor and not released from the security interest of this Agreement
at the time of such pledge and assignment, and (ii) all proceeds thereof.
Such repledge and reassignment may be made by Trust Depositor with or without
a repledge and reassignment by Trust Depositor of its rights under this
Agreement, and without further notice to or acknowledgment from Seller.
Seller waives, to the extent permitted by applicable law, all claims, causes
of action and remedies, whether legal or equitable (including any right of
setoff), against Trust Depositor or any assignee of Trust Depositor relating
to such action by Trust Depositor in connection with the transactions
contemplated by the Sale and Servicing Agreement.
SECTION 2.02. CONDITIONS TO THE CLOSING. On or before the Closing
Date, Seller shall deliver or cause to be delivered to Trust Depositor each
of the documents, certificates and other items as follows:
(a) The initial List of Contracts, certified by the Chairman
of the Board, President or any Vice President of Seller together with
an Assignment substantially in the form attached as EXHIBIT A hereto.
(b) A certificate of an officer of Seller substantially in the
form of EXHIBIT B hereto.
(c) An opinion of counsel for Seller substantially in the form
of EXHIBIT D to the Sale and Servicing Agreement.
2
<PAGE>
(d) A letter or letters from Arthur Andersen LLP, or another
nationally recognized accounting firm, addressed to Trust Depositor and
the Issuer and the Trustees 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 identifying
those Initial Contracts which do not so conform.
(e) Copies of resolutions of the Board of Directors of Seller
or of the Executive Committee of the Board of Directors of Seller
approving the execution, delivery and performance of this Agreement and
the transactions contemplated hereunder, certified in each case by the
Secretary or an Assistant Secretary of Seller.
(f) Officially certified recent evidence of due incorporation
and good standing of Seller under the laws of Nevada.
(g) Evidence of proper filing with the appropriate offices in
Nevada and Illinois of UCC financing statements executed by Seller as
debtor/seller, naming Trust Depositor as secured party/purchaser and
the Owner Trust as assignee, and listing the Contract Assets as
collateral as well as evidence of proper filing with the appropriate
offices in Delaware of UCC Financing statements executed by the Issuer
as debtor, naming the Indenture Trustee, as assignee, and listing the
Contract Assets as collateral.
(h) An Officer's Certificate from Seller confirming that
Seller's compliance officer has reviewed the original of each Initial
Contract and each related Contract File, that each Initial Contract and
related Contract File conforms in all material respects with the
initial List of Contracts and each such Contract File is complete, that
each document required be an original, and that the face of each
original Initial Contract has been stamped with the following notation:
"This Contract/Note is subject to a security interest
granted to Harley-Davidson Motorcycle Trust [_____]. UCC-1
financing statements covering this Contract/Note have been
filed with the Secretary of State of the State of Nevada and
the Secretary of State of the State of Illinois. 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."
(i) The documents, certificates and other items described in
Section 2.02 of the Sale and Servicing Agreement, to the extent not
already described above.
SECTION 2.03. ASSIGNMENT OF AGREEMENT. Trust Depositor has the
right to assign its interest under this Agreement to the Issuer and Owner
Trustee as may be required to effect the purposes of the Sale and Servicing
Agreement, without further notice to, or consent of, Seller, and the Issuer
and the Trustees shall succeed to such of the rights of Trust Depositor
hereunder
3
<PAGE>
as shall be so assigned. Seller acknowledges that, pursuant to the Sale and
Servicing Agreement, the Trust Depositor will assign all of its right, title
and interest in and to the Contract Assets and all of its rights hereunder to
the Issuer and that the Issuer will pledge the Contract Assets and all of the
Depositor's rights hereunder to the Indenture Trustee for the benefit of the
Noteholders and Certificateholders. The Seller agrees that, upon such
assignment to the Issuer and the Indenture Trustee, such rights will run to
and be for the benefit of the Issuer and the Indenture Trustee and the Issuer
and the Indenture Trustee may enforce directly without joinder of the
Depositor, the obligations of the Seller set forth herein.
SECTION 2.04. SUBSEQUENT CONTRACTS. (a) Subject to and upon the
terms and conditions set forth in paragraph (b) below and in the related
Subsequent Purchase Agreement, Seller hereby agrees to sell, transfer,
assign, set over and otherwise convey to Trust Depositor, in consideration of
Trust Depositor's payment on the related Subsequent Transfer Date of the
purchase price therefor (as set forth in the related Subsequent Purchase
Agreement), and Trust Depositor hereby agrees to purchase, (i) all the right,
title and interest of Seller in and to the Subsequent Contracts listed on the
related 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 applicable 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 Seller under any physical damage or other
individual insurance policy (including 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 of Seller
in the Lockbox, Lockbox Account and related Lockbox Agreement to the extent
they relate to the Contracts, (vi) all rights (but not the obligations) of
the Seller under any motorcycle dealer agreements between the dealers (I.E.
the originators of such Subsequent Contracts) and the Seller, and (vii) all
proceeds and products of the foregoing (items (i) - (vii), upon consummation
of any above-described purchase, becoming part of the "CONTRACT ASSETS").
Seller agrees, subject to the terms and conditions herein applicable to
transfers of Subsequent Contracts, to sell an aggregate Principal Balance of
Subsequent Contracts at or prior to the end of the Funding Period equal to
the Pre-Funded Amount on the Closing Date.
(b) Seller shall transfer to Trust Depositor, and
Trust Depositor shall purchase, the Subsequent Contracts and related assets
to be transferred on any Subsequent Transfer Date only upon the satisfaction
of each of the following conditions on or prior to the Subsequent Transfer
Date:
(i) The Seller shall have provided the Trustees, 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;
4
<PAGE>
(iii) the Seller shall have delivered to the Trust Depositor a
duly executed Purchase Agreement and Assignment in substantially the
form of EXHIBIT C hereto (the "SUBSEQUENT PURCHASE AGREEMENT"), which
shall include a Subsequent List of Contracts listing the Subsequent
Contracts being purchased;
(iv) 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;
(v) each Rating Agency shall have notified the Trust Depositor
and the Trustees in writing that following such transfer, and the
transfer immediately thereafter of the Subsequent Contracts to the
Trust, the Class A-1 Notes and the 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 "BBB" by Standard & Poor's and "BAA1" by
Moody's;
(vi) such addition will not result in a material adverse tax
consequence to the Issuer, the Noteholders as evidenced by an Opinion
of Counsel to be delivered by the Seller to the Issuer, the Trustees,
and the Underwriters;
(vii) the Seller shall have delivered to the Rating Agencies
and to 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;
(viii) the Seller shall have taken any action necessary to
maintain the first perfected ownership interest of the Trust in the
Trust Corpus and the first perfected security interest of the Trust
Depositor in the Contract Assets, the Trust in the Trust Corpus and the
Indenture Trustee in the Reserve Fund Deposits; and
(ix) no selection procedures believed by the Seller to be
adverse to the interests of the Noteholders shall have been utilized in
selecting the Subsequent Contracts.
(c) Seller agrees to pay all reasonable out-of-pocket expenses in
connection with any request for the conveyance of Subsequent Contracts, whether
or not such conveyance is actually consummated.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Seller makes the following representations and warranties, on which
Trust Depositor will rely in purchasing the initial Contract Assets on the
Closing Date (and any Subsequent Contracts on the related Subsequent Transfer
Date) and concurrently reconveying the same to the Trust, and on which the
Trust, the Noteholders will rely under the Sale and Servicing Agreement. Such
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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 Subsequent Contracts, but
shall survive the sale, transfer and assignment of the Contracts to the Trust
and the pledge of the Contracts to the Indenture Trustee. The repurchase
obligation of Seller set forth in Section 5.01 below and in Section 7.08 of
the Sale and Servicing Agreement constitutes the sole remedy available for a
breach of a representation or warranty of Seller set forth in Section 3.02,
3.03 or 3.04 of this Agreement.
SECTION 3.01. 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
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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.
(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) PLACE OF BUSINESS; NO CHANGES. Seller's sole place of
business (within the meaning of Article 9 of the UCC) is as set forth
in Section 7.06 below. Seller 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.
(g) OPERATIONS. Approximately [_____]% of the aggregate
principal balance of contracts financed from time to time by the Seller
are secured by motorcycles manufactured by Buell.
SECTION 3.02. 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.
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(d) BINDING OBLIGATION. Each Contract is the genuine, legal,
valid and binding obligation of the Obligor thereunder and is
enforceable in accordance with its terms, 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 time of origination of the Contract,
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 sale,
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 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
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Trustees' inspection, and shall deliver to Trust Depositor or the
Trustee upon demand, evidence of compliance with all such requirements.
(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 the 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 and Owner Trustee
pursuant to this Agreement. Immediately after the sale, 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,
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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
the Owner Trustee, and, as of the Closing Date (or the applicable
Subsequent Transfer Date in the case of Subsequent Contracts), the
Issuer and the Owner Trustee 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. 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.
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(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.
(v) CHATTEL PAPER. The Contracts constitute chattel paper
within the meaning of the UCC as in effect in the States of Nevada and
Illinois.
(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.
SECTION 3.03. 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 Notes [and Certificates] 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 [____]
months; and (iii) the final scheduled payment on the Initial Contract
with the latest maturity is due no later than [_________].
Approximately [____]% 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 [______]% 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 [______]%. The first scheduled payment date of the Contracts
(including any Subsequent Contracts) is due no later than
[____________].
(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.
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(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 [______]% of the Principal
Balance of the Contracts as of the end of the Funding Period is
attributable to Delta Loans.
SECTION 3.04. 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 this 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.
ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
SECTION 4.01. CUSTODY OF CONTRACTS. Subject to the terms and
conditions of this Section 4.01, the contents of each Contract File shall be
held in the custody of Seller in its capacity as Servicer for the benefit of
the Owner Trustee as the owner thereof. Seller agrees to comply with all its
obligations under the Sale and Servicing Agreement in respect of the Contract
Assets,
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which agreement it is executing concurrently herewith in its capacity as
Servicer thereunder, and acknowledges and consents to the transactions
contemplated therein.
SECTION 4.02. FILING. On or prior to the Closing Date and each
Subsequent Transfer Date, Seller shall cause the UCC financing statement(s)
referred to in Section 2.02(g) hereof and in Section 2.02(g) of the Sale and
Servicing Agreement to be filed and from time to time Seller shall take and
cause to be taken such actions and execute such documents as are necessary or
desirable or as Trust Depositor or the Owner Trustee may reasonably request
to perfect and protect the Owner Trustee's ownership interest in the Contract
Assets 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, Seller shall not change its name, identity or structure or
relocate its chief executive office without first giving at least 30 days'
prior written notice to Trust Depositor and to the Trustees.
(b) If any change in Seller's name, identity or structure or other
action would make any financing or continuation statement or notice of
ownership interest or lien filed under this Agreement seriously misleading
within the meaning of applicable provisions of the UCC or any title statute,
Seller, no later than five (5) days after the effective date of such change,
shall file such amendments as may be required to preserve and protect the
Trustees' interests in the Contract Assets and proceeds thereof. In addition,
Seller shall not change its place of business or its chief executive office
(within the meaning of Article 9 of the UCC) from the location specified in
Section 7.06 below unless it has first taken such action as is advisable or
necessary to preserve and protect the Issuer's and Trustees' interest in the
Contract Assets. Promptly after taking any of the foregoing actions, Seller
shall deliver to Trust Depositor and the Trustees an opinion of counsel
stating that, in the opinion of such counsel, all financing statements or
amendments necessary to preserve and protect the interests of the Trustees in
the Contract Assets have been filed, and reciting the details of such filing.
SECTION 4.04. CHIEF EXECUTIVE OFFICE. During the term of this
Agreement, Seller will maintain its chief executive office in one of the
States of the United States, except Louisiana, Tennessee, Colorado, Kansas,
New Mexico, Oklahoma, Utah or Wyoming.
SECTION 4.05. COSTS AND EXPENSES. Seller agrees to pay all
reasonable costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of (i) Trust
Depositor's and the Trustees' right, title and interest in and to the
Contract Assets (including, without limitation, the security interest in the
Motorcycles related thereto) and (ii) the security interests provided for in
the Indenture.
SECTION 4.06. SALE TREATMENT. Each of Seller and Trust Depositor
shall treat the transfer of Contract Assets made hereunder (including in
respect of Subsequent Contracts) for all
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purposes (including tax and financial accounting purposes) as a sale and
purchase on all of its relevant books, records, financial statements and
other applicable documents.
ARTICLE V
REMEDIES UPON MISREPRESENTATION
SECTION 5.01. REPURCHASES OF CONTRACTS FOR BREACH OF
REPRESENTATIONS AND WARRANTIES. Seller hereby agrees, for the benefit of the
Trustees and the Trust Depositor, that it shall repurchase a Contract
including any Subsequent Contracts (together with all related Contract
Assets), at its Repurchase Price, not later than two Business Days prior to
the first Determination Date after Seller becomes aware, or should have
become aware, or receives written notice from Trust Depositor, either of the
Trustees or the Servicer of any breach of a representation or warranty of
Seller set forth in Article III of this Agreement that materially adversely
affects Trust Depositor's or the Trust's interest in such Contract (without
regard to the benefits of the Reserve Fund) 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 Seller would otherwise be required to repurchase pursuant to this
Section 5.01 and Section 7.08 of the Sale and Servicing Agreement, Seller
may, in lieu of repurchasing such Contract, deposit in the Collection Account
not later than two Business Days prior to such Determination Date cash in an
amount sufficient to cure such deficiency or discrepancy; and PROVIDED
FURTHER that with respect to a breach of a representation or warranty
relating to the Contracts in the aggregate and not to any particular
Contract, Seller may select Contracts (without adverse selection) to
repurchase such that had such Contracts not been reconveyed by Trust
Depositor and included as part of the Trust 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 the Sale and Servicing Agreement, shall be deemed to be a breach
materially and adversely affecting the Trust's interest in the Contracts or
in the related Contract Assets. Notwithstanding any other provision of this
Agreement, the obligation of Seller under this Section 5.01 and under Section
7.08 of the Sale and Servicing Agreement shall not terminate upon a Service
Transfer pursuant to Article VIII of the Sale and Servicing Agreement.
SECTION 5.02. SELLER'S REPURCHASE OPTION. On written notice to the
Owner Trustee and the Indenture Trustee at least twenty (20) days prior to a
Distribution Date, provided the sum of (i) the aggregate unpaid principal
balances of the Class A-1 Notes, the Class A-2 Notes and the Class B Notes
and (ii) the Certificate Balance on such Distribution Date is less than 10%
of the Aggregate Principal Balance as of the Cutoff Date, the Seller may (but
is not required to) repurchase from the Issuer on that Distribution Date all
outstanding Contracts (and related Contract Assets) at a price equal to the
sum of (i) the aggregate unpaid principal balances of the Class A-1 Notes,
the Class A-2 Notes and the Class B Notes and (ii) the Certificate Balance as
of that Distribution Date plus the aggregate of the Note Interest
Distributable Amount and the
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Certificate Interest Distributable Amount for the current Distribution Date
as well as any unreimbursed Servicer Advances and the accrued and unpaid
Monthly Servicing Fee and Indenture Trustee Fees to the date of such
repurchase; provided the Seller is in receipt of a valuation letter by the
Seller's financial advisor that the Seller's repurchase is for fair and
adequate consideration. Such price will be deposited in the Collection
Account not later than one Business Day before such Distribution Date,
against the Trustees' release of the Contracts and Contract Files as
described in Section 7.10 of the Sale and Servicing Agreement.
ARTICLE VI
INDEMNITIES
SECTION 6.01. SELLER INDEMNIFICATION. Seller will defend and
indemnify Trust Depositor, the Trust, the Trustees, any agents of the
Trustees and the Securityholders against any and all costs, expenses, losses,
damages, claims and liabilities, joint or several, including reasonable fees
and expenses of counsel and expenses of litigation arising out of or
resulting from (i) this Agreement or the use, ownership or operation of any
Motorcycle by Seller or the Servicer or any Affiliate of either and (ii) any
representation or warranty or covenant made by Seller in this Agreement being
untrue or incorrect (subject to the second sentence of the preamble to
Article III of this Agreement above). Notwithstanding any other provision of
this Agreement, the obligation of Seller under this Section 6.01 shall not
terminate upon a Service Transfer pursuant to Article VIII of the Sale and
Servicing Agreement and shall survive any termination of that agreement or
this Agreement.
SECTION 6.02. LIABILITIES TO OBLIGORS. No obligation or liability
to any Obligor under any of the Contracts is intended to be assumed by the
Trustees, the Trust, the Securityholders under or as a result of this
Agreement and the transactions contemplated hereby.
SECTION 6.03. TAX INDEMNIFICATION. Seller agrees to pay, and to
indemnify, defend and hold harmless the Trust Depositor, the Trust, the
Trustees, the Securityholders from, any taxes which may at any time be
asserted with respect to, and as of the date of, the transfer of the
Contracts to Trust Depositor hereunder and the concurrent reconveyance to the
Trust and the further pledge by the Trust to the Indenture Trustee,
including, without limitation, any sales, gross receipts, general
corporation, personal property, privilege or license taxes (but not including
any federal, state or other taxes arising out of the creation of the Trust
and the issuance of the Notes and Certificates) and costs, expenses and
reasonable counsel fees in defending against the same, whether arising by
reason of the acts to be performed by Seller under this Agreement or the
Servicer under the Sale and Servicing Agreement or imposed against the Trust,
a Noteholder, a Certificateholder or otherwise. Notwithstanding any other
provision of this Agreement, the obligation of Seller under this Section 6.03
shall not terminate upon a Service Transfer pursuant to Article VIII of the
Sale and Servicing Agreement and shall survive any termination of this
Agreement.
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SECTION 6.04. OPERATION OF INDEMNITIES. Indemnification under this
Article VI shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If Seller has made any indemnity payments
to Trust Depositor or the Trustees pursuant to this Article VI and Trust
Depositor or the Trustees thereafter collects any of such amounts from
others, Trust Depositor or the Trustees will repay such amounts collected to
Seller, except that any payments received by Trust Depositor or the Trustees
from an insurance provider as a result of the events under which the Seller's
indemnity payments arose shall be repaid prior to any repayment of the
Seller's indemnity payment.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. PROHIBITED TRANSACTIONS WITH RESPECT TO THE TRUST.
Seller shall not:
(a) Provide credit to any Noteholder or Certificateholder for
the purpose of enabling such Noteholder or Certificateholder to
purchase Notes or Certificates, respectibely;
(b) Purchase any Notes or Certificates in an agency or trustee
capacity; or
(c) Except in its capacity as Servicer as provided in the Sale
and Servicing Agreement, lend any money to the Trust.
SECTION 7.02. MERGER OR CONSOLIDATION. (a) Except as otherwise
provided in this Section 7.02, Seller will keep in full force and effect its
existence, rights and franchises as a Nevada corporation, and will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect
the validity and enforceability of this Agreement and of any of the Contracts
and to perform its duties under this Agreement.
(b) Any person into which Seller may be merged or consolidated, or
any corporation or other entity resulting from such merger or consolidation
to which Seller is a party, or any person succeeding to the business of
Seller, shall be the successor to Seller 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.
(c) Upon the merger or consolidation of the Seller as described in
this Section 7.02, the Seller shall provide Standard & Poor's and Moody's
notice of such merger or consolidation within thirty (30) days after
completion of the same.
SECTION 7.03. TERMINATION. This Agreement shall terminate (after
distribution of any Note Distributable Amount and Certificate Distributable
Amount due pursuant to Section 7.05 of the Sale and Servicing Agreement) on
the Distribution Date on which the principal balance of
16
<PAGE>
the Notes and the Certificate Balance is reduced to zero; PROVIDED, that
Seller's representations and warranties and indemnities by Seller shall
survive termination.
SECTION 7.04. ASSIGNMENT OR DELEGATION BY SELLER. Except as
specifically authorized hereunder, Seller may not convey and assign or
delegate any of its rights or obligations hereunder absent the prior written
consent of Trust Depositor and the Trustees, and any attempt to do so without
such consent shall be void.
SECTION 7.05. AMENDMENT. (a) This Agreement may be amended from
time to time by Seller and Trust Depositor, with notice to the Rating
Agencies, but without the consent of the Trustees or any of the
Securityholders, to correct manifest error, to cure any ambiguity, to correct
or supplement any provisions herein or therein which may be ambiguous or
inconsistent with any other provisions herein or therein, as the case may be,
or to add any other provisions with respect to matters or questions arising
under this Agreement which shall not be inconsistent with the provisions of
this Agreement; PROVIDED, HOWEVER, that such action shall not, as evidenced
by an Opinion of Counsel, materially and adversely affect the interests of
any Securityholder.
(b) This Agreement may also be amended from time to time by the
Seller and the Depositor, with the consent of Noteholders of more than 50% of
the aggregate principal amount of the Class A-1 Notes and Class A-2 Notes, or
if there are no Class A-1 Notes or Class A-2 Notes outstanding, with the
consent of Noteholders of more than 50% of the aggregate principal amount of
the Class B Notes [or, if there are no Notes outstanding, the consent of
Certificateholders of more than 50% of the Certificate Balance,] 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 Certificateholders; PROVIDED, HOWEVER, that no
such amendment or waiver shall (x) reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on the Contracts
or distributions which are required to be made on any Note or Certificate,
(y) change the interest rate on any Notes or Certificates which such change
adversely affects the priority of payment of principal or interest made to
the Noteholders or Certificateholders or (z) increase or reduce the aforesaid
percentage required to consent to any such amendment, without the consent of
the Noteholders and Certificateholders then outstanding; and PROVIDED,
FURTHER, that no such amendment or consent shall be effective unless each
Rating Agency delivers written confirmation that such amendment or consent
will not cause its then-current rating on any Class of Notes or the
Certificates to be qualified, reduced or withdrawn.
(c) Promptly after the execution of any amendment or consent
pursuant to this Section 7.05, Trust Depositor shall furnish written
notification of the substance of such amendment and a copy of such amendment
to each Trustee and each Rating Agency.
(d) It shall not be necessary for the consent of Noteholders or
Certificateholders under this Section 7.05 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Noteholders and
17
<PAGE>
Certificateholders shall be subject to such reasonable requirements as the
Trustees may prescribe.
(e) Upon the execution of any amendment or consent pursuant to this
Section 7.05, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all
purposes, and every holder of Notes and or Certificates theretofore or
thereafter issued hereunder shall be bound thereby.
SECTION 7.06. 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 Seller:
Harley-Davidson Credit Corp.
150 South Wacker Drive, Suite 3100
Chicago, Illinois 60606
Attention: Perry A. Glassgow
Telecopier No.: (312) 368-4372
(ii) If to the Trust Depositor:
Harley-Davidson Customer Funding Corp.
4150 Technology Way
Carson City, Nevada 89706
Telecopier No.: (775) 884-4469
(iii) If to the Indenture Trustee:
--------------------------
--------------------------
--------------------------
Telecopier No.: ______________
(iv) If to the Owner Trustee:
18
<PAGE>
--------------------------
--------------------------
--------------------------
Telecopier No.: ______________
(v) If to Moody's:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Department
Telecopier No.: (212) 553-1350
(vi) If to Standard & Poor's:
Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies
55 Water Street
New York, New York 10041
Telecopier No.: (212) 438-2657
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.
All communications and notices pursuant hereto to a Noteholder or
Certificateholder shall be in writing and delivered or mailed at the address
shown in the Note Register or Certificate Register, respectively.
SECTION 7.07. MERGER AND INTEGRATION. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
SECTION 7.08. HEADINGS. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
SECTION 7.09. GOVERNING LAW. This Agreement shall be governed
by, and construed and enforced in accordance with, the internal laws of the
State of Illinois.
[signature page follows]
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first written above.
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
By: __________________________________________
Printed Name: Perry A. Glassgow
Title: Treasurer
HARLEY-DAVIDSON CREDIT CORP.
By:___________________________________________
Printed Name: Perry A. Glassgow
Title: Treasurer
Signature Page to Transfer and Sale
Agreement
<PAGE>
Exhibit A
Transfer and Sale
Agreement
FORM OF ASSIGNMENT
In accordance with the Transfer and Sale Agreement (the "AGREEMENT")
dated as of [____________] made by and between the undersigned, as seller
thereunder ("SELLER"), and Harley-Davidson Customer Funding Corp., a Nevada
corporation and wholly-owned subsidiary of Seller ("TRUST DEPOSITOR"), as
purchaser thereunder, the undersigned does hereby sell, transfer, convey and
assign, set over and otherwise convey to Trust Depositor (i) all right, title
and interest in and to the Initial Contracts (including, without limitation,
all security interests and any and all rights to receive payments which are
collected pursuant thereto on or after the Initial Cutoff Date (including
liquidation proceeds therefrom) but excluding any rights to receive payments
which were collected pursuant thereto prior to the Initial Cutoff Date)
identified in the initial List of Contracts delivered pursuant to Section
2.02(a) of the Agreement, (ii) all rights of Seller under any physical damage
or other individual insurance policy (including a "FORCED PLACED" policy, if
any) relating to any such Contract, an Obligor or a Motorcycle securing a
Contract, (iii) all security interests in each such Motorcycle, (iv) all
documents contained in the related Contract Files, (v) all rights of the
Seller in the Lockbox, Lockbox Account and related Lockbox Agreement to the
extent they relate to the Contracts, (vi) all rights (but not the
obligations) of the Seller under any motorcycle dealer agreements between the
dealers originating the Contracts and the Seller, and (vii) 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 Sale and Servicing Agreement dated
as of [____________] made by and among the undersigned, as servicer, the
Trust Depositor, Harley-Davidson Motorcycle Trust [_____], as issuer, and
[_____________], as indenture trustee.
IN WITNESS WHEREOF, the undersigned has caused this Assignment
to be duly executed this ___ day of [_____________].
HARLEY-DAVIDSON CREDIT CORP.
By:___________________________________________
Printed Name: Perry A. Glassgow
Title: Treasurer
A-1
<PAGE>
Exhibit B
Transfer of Sale
Agreement
FORM OF OFFICER'S CERTIFICATE
(See Exhibit C to the Sale and Servicing Agreement)
B-1
<PAGE>
Exhibit C
Transfer of Sale
Agreement
FORM OF SUBSEQUENT PURCHASE AGREEMENT
SUBSEQUENT PURCHASE AGREEMENT (the "AGREEMENT"), dated as of
____________, _______, by and among Harley-Davidson Customer Funding Corp., a
Nevada corporation (the "TRUST DEPOSITOR"), and Harley-Davidson Credit Corp.,
a Nevada corporation (the "SELLER"), pursuant to the Transfer and Sale
Agreement referred to below.
WITNESSETH:
WHEREAS, the Trust Depositor and the Seller are parties to the
Transfer and Sale Agreement, dated as of [____________] (the "TRANSFER AND
SALE AGREEMENT");
WHEREAS, pursuant to the Transfer and Sale Agreement, the Seller
wishes to sell the Subsequent Contracts to the Trust Depositor, and the Trust
Depositor wishes to purchase the same, for the purchase price set forth in
SECTION 3 below; and
WHEREAS, the Seller has timely delivered an Addition Notice related
to such conveyance as required in the Sale and Servicing Agreement dated as
of [____________] among the Seller (in the capacity of Servicer thereunder),
the Trust Depositor and the Trustee as defined therein (the "SALE AND
SERVICING AGREEMENT").
NOW, THEREFORE, the Trust Depositor and the Seller hereby agree as
follows:
SECTION 1. Capitalized terms used herein shall have the meanings
ascribed to them in the Sale and Servicing Agreement unless otherwise defined
herein.
"SUBSEQUENT CUTOFF DATE" shall mean, with respect to the
Subsequent Contracts transferred hereby, [_________].
"SUBSEQUENT CONTRACTS" shall mean, for purposes of this
Agreement, the Subsequent Contracts listed in the Subsequent
List of Contracts attached hereto as Exhibit A.
"SUBSEQUENT TRANSFER DATE" shall mean, with respect to the
Subsequent Contracts transferred hereby, [__________].
SECTION 2. SUBSEQUENT LIST OF CONTRACTS. The Subsequent List of
Contracts attached hereto as Exhibit A is a supplement to the initial List of
Contracts attached as EXHIBIT H to the Sale and Servicing Agreement. The
Contracts listed in the Subsequent List of Contracts
C-1
<PAGE>
constitute the Subsequent Contracts to be transferred pursuant to this
Agreement on the subsequent Transfer Date.
SECTION 3. TRANSFER OF SUBSEQUENT CONTRACTS. Subject to and upon
the terms and conditions set forth in Section 2.04(b) of the Transfer and
Sale Agreement and this Agreement, Seller hereby sells, transfers, assigns,
sets over and otherwise conveys to Trust Depositor, in consideration of Trust
Depositor's payment of $[_______] as the purchase price therefor, (i) all the
right, title and interest of Seller 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 Subsequent Cutoff Date, including any
liquidation proceeds therefrom, but excluding any rights to receive payments
which were collected pursuant thereto prior to the Subsequent Cutoff Date),
(ii) all rights of Seller 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, (ii)
all security interests in each such Motorcycle, (iv) all documents contained
in the related Contract Files, (v) all rights of the Seller in the Lockbox,
the Lockbox Account and the related Lockbox Agreement to the extent they
relate to such Contracts, (vi) all rights (but not the obligations) of Seller
under any related motorcycle dealer agreements between dealers (i.e., the
originators of such Contracts) and the Seller, and (vii) all proceeds and
products of the foregoing. It is the intention of the Seller and the Trust
Depositor that the transfer contemplated by this Agreement shall constitute a
sale of the Subsequent Contracts from the Seller to the Trust Depositor,
conveying good title thereto free and clear of any Liens, and that the
Subsequent Contracts shall not be part of the Seller's estate in the event of
the filing of a bankruptcy petition by or against Seller under any bankruptcy
or similar law.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER. (a) Seller
hereby represents and warrants to the Trust Depositor that the
representations and warranties of Seller in Section 3.01 of the Transfer and
Sale Agreement are true and correct as of the Subsequent Transfer Date.
(b) Seller hereby repeats and remakes with respect to the Subsequent
Contracts as of the Subsequent Transfer Date (i) the representations and
warranties of Seller in Sections 3.02, 3.03 and 3.04 of the Transfer and Sale
Agreement, except that, with respect to subsection (b) of Section 3.03, (A)
approximately _____% of the Principal Balance of the Contracts as of the
Subsequent Cutoff Date is attributable to loans for purchases of new
Motorcycles and approximately ___% is attributable to loans for purchases of
used Motorcycles, and (B) no Contract was originated after the Subsequent
Cutoff Date, as well as (ii) covenants to provide the certificate required by
Section 2.02(h) (solely with respect to the Subsequent Contracts).
(c) Seller hereby represents and warrants that (a) the aggregate
Principal Balance of the Subsequent Contracts listed on the Subsequent List
of Contracts and conveyed to the Trust Depositor pursuant to this Agreement
is $[ ] as of the Subsequent Cutoff Date, and (b) the conditions set forth
in Section 2.04(b) of the Transfer and Sale Agreement have been satisfied as of
the Subsequent Transfer Date.
C-2
<PAGE>
SECTION 5. RATIFICATION OF AGREEMENT. As supplemented by this
Agreement, the Transfer and Sale Agreement is in all respects ratified and
confirmed and, as so supplemented by this Agreement, shall be read, taken and
construed as one and the same instrument.
SECTION 6. COUNTERPARTS. This Agreement may be executed in two or
more counterparts (and by different parties in separate counterparts), each
of which shall be an original but all of which together shall constitute one
and the same instrument.
SECTION 7. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Illinois, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
C-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first written above.
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
By:____________________________________________
Printed Name: Perry A. Glassgow
Title: Treasurer
HARLEY-DAVIDSON CREDIT CORP.
By:________________________________________________
Printed Name: Perry A. Glassgow
Title: Treasurer
<PAGE>
EXHIBIT 10.2
================================================================================
FORM OF
SALE AND SERVICING AGREEMENT
among
HARLEY-DAVIDSON MOTORCYCLE TRUST [________],
as Issuer,
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,
as Trust Depositor,
HARLEY-DAVIDSON CREDIT CORP.,
as Servicer
and
[______________],
as Indenture Trustee
Dated as of [________]
================================================================================
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
TABLE OF CONTENTS
ARTICLE ONE DEFINITIONS...............................................................................1
SECTION 1.01. DEFINITIONS...............................................................................1
SECTION 1.02. USAGE OF TERMS...........................................................................20
SECTION 1.03. SECTION REFERENCES.......................................................................20
SECTION 1.04. CALCULATIONS.............................................................................20
SECTION 1.05. ACCOUNTING TERMS.........................................................................20
ARTICLE TWO ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS............................................20
SECTION 2.01. CLOSING..................................................................................20
SECTION 2.02. CONDITIONS TO THE CLOSING................................................................22
SECTION 2.03. ACCEPTANCE BY OWNER TRUSTEE..............................................................23
SECTION 2.04. 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....................................28
ARTICLE FOUR PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS..............................30
SECTION 4.01. CUSTODY OF CONTRACTS.....................................................................30
SECTION 4.02. FILING...................................................................................31
SECTION 4.03. NAME CHANGE OR RELOCATION................................................................32
SECTION 4.04. CHIEF EXECUTIVE OFFICE...................................................................32
SECTION 4.05. 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.........................................37
SECTION 5.10. SUCCESSOR SERVICER/LOCKBOX AGREEMENTS....................................................38
ARTICLE SIX THE TRUST DEPOSITOR......................................................................38
SECTION 6.01. CORPORATE EXISTENCE......................................................................38
SECTION 6.02. LIABILITY OF TRUST DEPOSITOR; INDEMNITIES................................................39
SECTION 6.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, TRUST DEPOSITOR;
CERTAIN LIMITATIONS......................................................................41
SECTION 6.04. LIMITATION ON LIABILITY OF TRUST DEPOSITOR AND OTHERS....................................42
SECTION 6.05. TRUST DEPOSITOR NOT TO RESIGN............................................................42
SECTION 6.06. TRUST DEPOSITOR WILL OWN CERTIFICATES....................................................42
ARTICLE SEVEN DISTRIBUTIONS; RESERVE FUND..............................................................42
SECTION 7.01. MONTHLY DISTRIBUTIONS....................................................................42
SECTION 7.02. FEES.....................................................................................42
SECTION 7.03. ADVANCES; REALIZATION OF CARRYING CHARGE.................................................43
SECTION 7.04. INTEREST RESERVE ACCOUNT.................................................................43
SECTION 7.05. DISTRIBUTIONS............................................................................44
SECTION 7.06. RESERVE FUND.............................................................................45
SECTION 7.07. ESTABLISHMENT OF PRE-FUNDING ACCOUNT.....................................................46
SECTION 7.08. REPURCHASES OF CONTRACTS FOR BREACH OF REPRESENTATIONS AND WARRANTIES....................47
SECTION 7.09. REASSIGNMENT OF REPURCHASED CONTRACTS....................................................48
SECTION 7.10. SELLER'S REPURCHASE OPTION...............................................................48
i
<PAGE>
ARTICLE EIGHT EVENTS OF TERMINATION; SERVICE TRANSFER..................................................48
SECTION 8.01. EVENTS OF TERMINATION....................................................................48
SECTION 8.02. SERVICE TRANSFER.........................................................................50
SECTION 8.03. SUCCESSOR SERVICER TO ACT; APPOINTMENT OF SUCCESSOR SERVICER.............................50
SECTION 8.04. NOTIFICATION TO SECURITYHOLDERS..........................................................51
SECTION 8.05. EFFECT OF TRANSFER.......................................................................51
SECTION 8.06. DATABASE FILE............................................................................52
SECTION 8.07. SUCCESSOR SERVICER INDEMNIFICATION.......................................................52
SECTION 8.08. RESPONSIBILITIES OF THE SUCCESSOR SERVICER...............................................52
ARTICLE NINE REPORTS..................................................................................54
SECTION 9.01. MONTHLY REPORTS..........................................................................54
SECTION 9.02. OFFICER'S CERTIFICATE....................................................................54
SECTION 9.03. OTHER DATA...............................................................................54
SECTION 9.04. ANNUAL REPORT OF ACCOUNTANTS.............................................................54
SECTION 9.05. ANNUAL STATEMENT OF COMPLIANCE FROM SERVICER.............................................55
SECTION 9.06. MONTHLY REPORTS TO SECURITYHOLDERS.......................................................56
ARTICLE TEN TERMINATION..............................................................................58
SECTION 10.01. SALE OF TRUST ASSETS.....................................................................58
ARTICLE ELEVEN MISCELLANEOUS............................................................................59
SECTION 11.01. AMENDMENT................................................................................59
SECTION 11.02. PROTECTION OF TITLE TO TRUST.............................................................60
SECTION 11.03. GOVERNING LAW............................................................................62
SECTION 11.04. NOTICES..................................................................................62
SECTION 11.05. SEVERABILITY OF PROVISIONS...............................................................64
SECTION 11.06. ASSIGNMENT...............................................................................64
SECTION 11.07. THIRD PARTY BENEFICIARIES................................................................64
SECTION 11.08. COUNTERPARTS.............................................................................64
SECTION 11.09. HEADINGS.................................................................................64
SECTION 11.10. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE TRUSTEE...........................64
</TABLE>
ii
<PAGE>
EXHIBITS
<TABLE>
<S> <C> <C>
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 Repurchased Contracts G-1
Exhibit H List of Contracts H-1
Exhibit I Form of Monthly Report to Noteholders and Certificateholders 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
</TABLE>
iii
<PAGE>
SALE AND SERVICING AGREEMENT, dated as of [________], among
Harley-Davidson Motorcycle Trust [________] (together with its successors and
assigns, the "ISSUER" or the "TRUST"), Harley-Davidson Customer Funding Corp.
(together with its successor and assigns, the "TRUST DEPOSITOR"),
[______________] (solely in its capacity as Indenture Trustee together with
its successors and assigns, the "INDENTURE TRUSTEE") and Harley-Davidson
Credit Corp. (solely in its capacity as Servicer together with its successor
and assigns, "HARLEY-DAVIDSON CREDIT" or the "SERVICER").
WHEREAS the Issuer desires to purchase from the Trust Depositor an
initial and subsequent pool of fixed-rate, simple interest motorcycle
conditional sales contracts relating to Harley-Davidson motorcycles or,
motorcycles manufactured by an affiliate of Harley-Davidson, Buell Motorcycle
Company, (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 sell 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.
"ADMINISTRATION AGREEMENT" means the Administration Agreement dated as
of the date hereof among the Issuer, Harley-Davidson Credit Corp., as
administrator, the Trust Depositor and the Indenture Trustee, as amended,
supplemented or otherwise modified from time to time.
"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,
1
<PAGE>
"CONTROL" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "CONTROLLING" or "CONTROLLED" have meanings correlative to the
foregoing.
"AGREEMENT" means this Sale and Servicing Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"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 Certificate
Balance and outstanding principal balance of the Class A-1 Notes, Class A-2
Notes and Class B Notes as of such Distribution Date.
"AVAILABLE AMOUNT" means, with respect to any Distribution Date, the
amount of funds on deposit in the Reserve Fund on such Distribution Date before
giving effect to any unrealized investment earnings and any reduction thereto on
such date.
"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 Repurchase Prices for Contracts repurchased 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 repurchase 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 Repurchase Prices for Contracts repurchased 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 repurchase of the
Contracts pursuant to Section 7.10.
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"AVERAGE DELINQUENCY RATIO" means, for any Distribution Date, the
arithmetic average of the Delinquency Ratios for such Distribution Date and the
two immediately preceding Distribution Dates.
"AVERAGE LOSS RATIO" means, for any Distribution Date, the arithmetic
average of the Loss Ratios for such Distribution Date and the two immediately
preceding Distribution Dates.
"BASE PROSPECTUS" means the Prospectus dated [___________] relating to
the Harley-Davidson Motorcycle Trusts.
"BUELL" means Buell Motorcycle Company, a wholly-owned subsidiary of
Harley-Davidson.
"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 Pass-Through 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 BALANCE" equals $[____________] on the Closing Date, and,
thereafter, equals the Initial Certificate Balance, reduced by all amounts
allocable to principal previously distributed to Certificateholders.
"CERTIFICATE DEPOSITORY AGREEMENT" has the meaning specified in the
Trust Agreement.
"CERTIFICATE DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Certificate Principal Distributable Amount and
the Certificate Interest Distributable Amount for such Distribution Date.
"CERTIFICATE DISTRIBUTION ACCOUNT" shall have the meaning specified in
the Trust Agreement.
"CERTIFICATE FINAL DISTRIBUTION DATE" means the February 2008
Distribution Date.
"CERTIFICATE INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess of the sum of the Certificate Monthly Interest
Distributable Amount for the immediately preceding Distribution Date and any
outstanding Certificate Interest Carryover
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Shortfall on such preceding Distribution Date, over the amount in respect of
interest on the Certificates that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, plus interest on such
excess, to the extent permitted by law, at the Pass-Through Rate for the related
Interest Period.
"CERTIFICATE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Certificate Monthly Interest Distributable
Amount for such Distribution Date and the Certificate Interest Carryover
Shortfall for such Distribution Date.
"CERTIFICATE MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect
to any Distribution Date, 30 days of interest (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 Pass-Through Rate on the Certificate
Balance on the immediately preceding Distribution Date, after giving effect to
all payments of principal to the Certificateholders on such preceding
Distribution Date (or, in the case of the first Distribution Date, on the
Initial Certificate Balance).
"CERTIFICATE MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" will mean, with
respect to any Distribution Date, the Certificate Percentage of the Principal
Distributable Amount for such Distribution Date.
"CERTIFICATE PERCENTAGE" means (i) for each Distribution Date to but
excluding the Distribution Date on which the principal amount of all of the
Notes is reduced to zero, 0%; (ii) on the Distribution Date on which the
principal amount of all of the Notes is reduced to zero, such percentage that
equals 100% minus the Note Percentage for such Distribution Date; and (iii) 100%
thereafter.
"CERTIFICATE POOL FACTOR" means, as of the close of business on any
Distribution Date, a seven-digit decimal figure equal to the Certificate Balance
(after giving effect to any reductions therein to be made on such Distribution
Date) divided by the Certificate Initial Balance. The Certificate Pool Factor
will be 1.0000000 as of the Closing Date; thereafter, the Certificate Pool
Factor will decline to reflect reductions in the Certificate Balance.
"CERTIFICATE PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess of the Certificate Principal Distributable Amount
with respect to the immediately preceding Distribution Date, over the amount in
respect of principal that is actually deposited in the Certificate Distribution
Account on such preceding Distribution Date.
"CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Certificate Monthly Principal Distributable
Amount with respect to such Distribution Date and the Certificate Principal
Carryover Shortfall; PROVIDED, HOWEVER, that the Certificate Principal
Distributable Amount shall not exceed the Certificate Balance. In addition, on
the Certificate Final Distribution Date, the principal required to be deposited
into the Certificate Distribution Account will include the amount necessary to
reduce the Certificate Balance to zero.
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"CERTIFICATE REGISTER" shall have the meaning specified in the Trust
Agreement.
"CERTIFICATEHOLDERS" shall have the meaning specified in the Trust
Agreement.
"CERTIFICATES" means the Trust Certificates (as such term is defined in
the Trust Agreement).]
"CLASS" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"CLASS A-1 FINAL DISTRIBUTION DATE" means the [___________]
Distribution Date.
"CLASS A-1 NOTEHOLDER" means the Person in whose name a Class A-1 Note
is registered in the Note Register, as such term is defined in the Indenture.
"CLASS A-1 RATE" means [_____]% per annum.
"CLASS A-2 FINAL DISTRIBUTION DATE" means the [___________]
Distribution Date.
"CLASS A-2 NOTEHOLDER" means the Person in whose name a Class A-2 Note
is registered in the Note Register.
"CLASS A-2 RATE" means [_____]% per annum.
"CLASS B SCHEDULED DISTRIBUTION DATE" means the [_______________]
Distribution Date.
"CLASS B NOTEHOLDER" means the Person in whose name a Class B Note is
registered in the Note Register.
"CLASS B RATE" means [____]% per annum.
"CLEARING AGENCY" shall have the meaning specified in the Indenture.
"CLOSING DATE" means [___________].
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall have the meaning specified in the "granting clause"
of the Indenture.
"COLLECTION ACCOUNT" means a trust account as described in Section 5.05
maintained in the name of the Indenture Trustee and which shall be an Eligible
Account.
"COMPUTER DISK" means the computer disk generated by the Servicer which
provides information relating to the Contracts and which was used by the Seller
in selecting the Contracts sold to the Trust Depositor pursuant to the Transfer
and Sale Agreement (and any Subsequent Purchase Agreement) by the Trust
Depositor in selecting the Contracts sold to the Trust pursuant
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to this Agreement (and any Subsequent Transfer Agreement), and includes the
master file and the history file as well as servicing information with respect
to the Contracts.
"CONTRACT ASSETS" has the meaning assigned in Section 2.01 (and 2.04,
as applicable in the case of Subsequent Contracts) of the Transfer and Sale
Agreement.
"CONTRACT FILE" means, as to each Contract, (a) the original copy of
the Contract, including the executed conditional sales contract or other
evidence of the obligation of the Obligor, (b) the original title certificate to
the Motorcycle and, where applicable, the certificate of lien recordation, or,
if such title certificate has not yet been issued, an application for such title
certificate, or other appropriate evidence of a security interest in the covered
Motorcycle; (c) the assignments of the Contract; (d) the original copy of any
agreement(s) modifying the Contract including, without limitation, any extension
agreement(s) and (e) documents evidencing the existence of physical damage
insurance covering such Motorcycle.
"CONTRACT RATE" means, as to any Contract, the annual rate of interest
specified in the Contract.
"CONTRACTS" means the motorcycle conditional sales contracts described
in the List of Contracts and constituting part of the Trust Corpus (as such list
may be supplemented from time to time to reflect transfers of Subsequent
Contracts), and includes, without limitation, all related security interests and
any and all rights to receive payments which are collected pursuant thereto on
or after the Initial Cutoff Date or, with respect to any Subsequent Contracts,
any related Subsequent Cutoff Date, but excluding any rights to receive payments
which are collected pursuant thereto prior to the Initial Cutoff Date, or with
respect to any Subsequent Contracts, any related Subsequent Cutoff Date.
"CORPORATE TRUST OFFICE" means the office of the 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 Cutoff Date
through the end of the related Due Period by (ii) the sum of (A) the Principal
Balance of the Contracts as of the Cutoff Date plus (B) the Principal Balance of
any Subsequent Contracts as of the related Subsequent Cutoff Date.
"CUTOFF DATE" means either or both (as the context may require) the
Initial Cutoff Date and any Subsequent Cutoff Date.
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"DEFAULTED CONTRACT" means a Contract with respect to which there has
occurred one or more of the following: (i) all or some portion of any payment
under the Contract is 120 days or more delinquent, (ii) repossession (and
expiration of any redemption period) of a Motorcycle securing a Contract or
(iii) the Servicer has determined in good faith that an Obligor is not likely to
resume payment under a Contract.
"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 (any such payment being "DELINQUENT" for purposes of this definition), all
interest accrued on such Contract from the Due Date in the Due Period one month
prior to the Due Period in which the payment is delinquent.
"DELINQUENCY RATIO" means, for any Distribution Date, the fraction
(expressed as a percentage) computed by dividing (a) the Delinquency Amount
during the immediately preceding Due Period by (b) the Principal Balance of the
Contracts as of the beginning of the related Due Period.
"DELTA LOAN" means a loan made by the Seller pursuant to the program
designated as the Delta Program.
"DETERMINATION DATE" means the fourth Business Day following the
conclusion of a Due Period during the term of this Agreement.
"DISTRIBUTION DATE" means the fifteenth day of each calendar month
during the term of this Agreement, or if such day is not a Business Day, the
next succeeding Business Day, with the first such Distribution Date hereunder
being [___________].
"DUE DATE" means, with respect to any Contract, the day of the month on
which each scheduled payment of principal and interest is due on such Contract,
exclusive of days of grace.
"DUE PERIOD" means a calendar month during the term of this Agreement,
and the Due Period related to a Determination Date or Distribution Date shall be
the calendar month immediately preceding such date; PROVIDED, HOWEVER, that with
respect to the Initial Determination Date or Initial Distribution Date, the Due
Period shall be the period from the Initial Cutoff Date to and including
[____________].
"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 have the meaning specified in Section 7.05(b).
"FINAL DISTRIBUTION DATE" means with respect to (i) the Notes, the
Class A-1 Final Distribution Date or the Class A-2 Final Distribution Date, as
the case may be or (ii) the Certificates, the Certificate Final Distribution
Date.
"FUNDING PERIOD" means the period beginning on the Closing Date and
ending on the first to occur of (a) the Distribution Date on which the amount on
deposit in the Pre-Funding Account (after giving effect to any transfers
therefrom in connection with the transfer of Subsequent Contracts to the Trust
on such Distribution Date) is less than $150,000, (b) the date
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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 [____]% 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 $[___________].
"INITIAL CLASS A-2 NOTE BALANCE" means $[___________].
"INITIAL CLASS B NOTE BALANCE" means $[___________].
["INITIAL CERTIFICATE BALANCE" means $[___________].]
"INITIAL CONTRACTS" means those Contracts conveyed to the Trust on the
Closing Date.
"INITIAL CUTOFF DATE" means [___________].
"INSOLVENCY EVENT" means, with respect to a specified Person, (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
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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 $699,251.08.
"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 [________].
"LATE PAYMENT PENALTY FEES" means any late payment fees paid by
Obligors on Contracts after all sums received have been allocated first to
regular installments due or overdue and all such installments are then paid in
full.
"LIEN" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Contract by operation of law.
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"LIQUIDATED CONTRACT" means a Contract with respect to which there has
occurred one or more of the following: (i) [ ] days have elapsed following the
date of repossession (and expiration of any redemption period) with respect to
the Motorcycle securing such Contract, (ii) such Contract is a Defaulted
Contract with respect to which the Servicer has determined in good faith that
all amounts expected to be recovered have been received, or (iii) all or any
portion of any payment is delinquent [ ] 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 Fourth Amended and Restated Lockbox
Administration Agreement dated as of April 1, 1998 by and among the Servicer,
the Trust Depositor, Eaglemark Customer Funding Corporation-II, Eaglemark
Customer Funding Corporation-III, Norwest Bank Minnesota, National Association
(the "PREDECESSOR TRUSTEE"), Harris Trust and Savings Bank and Financial
Security Assurance Inc. ("FSA", with respect to certain prior trusts, the "PRIOR
TRUSTS"), with respect to the Lockbox Account, unless such agreement shall be
terminated in accordance with its terms, in which event "LOCKBOX AGREEMENT"
shall mean such other agreement, in form and substance acceptable to the
above-described parties.]
"LOCKBOX BANK" means the financial institution maintaining the Lockbox
Account and identified on EXHIBIT K hereto or any successor thereto acceptable
to a majority of the [Certificateholders].
"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 SPECIAL REDEMPTION" means the prepayment, in part, made to
the Class A-1 Noteholders and Class A-2 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
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on deposit in the Pre-Funding Account after giving effect to the purchase of all
Subsequent Contracts, including any such purchase on such date.
"MONTHLY REPORT" shall have the meaning specified in Section 9.06.
"MONTHLY SERVICING FEE" means, as to any Distribution Date, the product
of one-twelfth of [ ] and the Principal Balance of the Contracts as of the
beginning of the related Due Period.
"MOODY'S" means Moody's Investors Service, Inc. or any successor
thereto.
"MOTORCYCLE" means a motorcycle manufactured by Harley-Davidson, Inc.
or Buell securing a Contract.
"NET LIQUIDATION LOSSES" means, as of any Distribution Date, with
respect to a Liquidated Contract, the amount, if any, by which (a) the
outstanding Principal Balance of such Liquidated Contract plus accrued and
unpaid interest thereon at the Contract Rate to the date on which such
Liquidated Contract became a Liquidated Contract exceeds (b) the Net Liquidation
Proceeds for such Liquidated Contract.
"NET LIQUIDATION PROCEEDS" means, as to any Liquidated Contract, the
proceeds realized on the sale or other disposition of the related Motorcycle,
including proceeds realized on the repurchase of such Motorcycle by the
originating dealer for breach of warranties, and the proceeds of any insurance
relating to such Motorcycle, after payment of all reasonable expenses incurred
thereby, together, in all instances, with the expected or actual proceeds of any
recourse rights relating to such Contract as well as any post-disposition
proceeds received by the Servicer.
"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, (a) with respect to the
Initial Distribution Date and each Class of Notes, zero and (b) with respect to
any Distribution Date and a Class of Notes, the excess, if any, of the Note
Interest Distributable Amount for such Class for the immediately preceding
Distribution Date, over the amount in respect of interest that is actually
deposited in the Note Distribution Account with respect to such Class on such
preceding Distribution Date, plus, interest on such excess to the extent
permitted by applicable law, at the related Interest Rate for the related
Interest Period.
"NOTE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date and a Class of Notes, the sum of the Note Monthly Interest
Distributable Amount and the Note Interest Carryover Shortfall for such Class of
Notes with respect to such Distribution Date.
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"NOTE MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, 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 MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the Note Percentage of the Principal Distributable Amount
for such Distribution Date.
"NOTE PERCENTAGE" means, (i) for each Distribution Date to but
excluding the Distribution Date on which the principal amount of all of the
Notes is reduced to zero, 100%; (ii) for the Distribution Date on which the
principal amount of all of the Notes is reduced to zero, such percentage which
represents the fraction of the Principal Distributable Amount necessary to
reduce the principal amount of all of the Notes to zero; and (iii) for each
Distribution Date thereafter, 0.0%.
"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, with respect to any
Distribution Date, the excess of the Note Principal Distributable Amount with
respect to the immediately preceding Distribution Date over the amount in
respect of principal that is actually deposited in the Note Distribution Account
on such preceding Distribution Date.
"NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Note Monthly Principal Distributable Amount
with respect to such Distribution Date and the Note Principal Carryover
Shortfall with respect to such Distribution Date; PROVIDED, HOWEVER, that the
Note Principal Distributable Amount shall not exceed the outstanding principal
amount of the Notes; and PROVIDED, FURTHER, that the Note Principal
Distributable Amount (i) on the Class A-1 Scheduled 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 on such Distribution Date and
allocable to principal) to reduce the outstanding principal amount of the Class
A-1 Notes to zero, (ii) on the Class A-2 Scheduled 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 on such Distribution Date and
allocable to principal) to reduce the outstanding principal amount of the Class
A-2 Notes to zero, and (iii) on the Class B Scheduled 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 on such Distribution
Date and allocable to principal) to reduce the outstanding principal amount of
the Class B Notes to zero.
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"NOTE REGISTER" shall have the meaning specified in the Indenture.
"OBLIGEE" means the Person to whom an Obligor is indebted under a
Contract.
"OBLIGOR" means a Motorcycle buyer or other person who owes payments
under a Contract.
"OFFICER'S CERTIFICATE" means a certificate signed by the Chairman, the
President, a Vice President, the Treasurer, an Assistant Treasurer, the
Controller, an Assistant Controller, the Secretary or an Assistant Secretary of
any Person delivering such certificate and delivered to the Person to whom such
certificate is required to be delivered, including any certificate delivered
under any of the Transaction Documents required to be executed by a Servicing
Officer. In the case of an Officer's Certificate of the Servicer, at least one
of the signing officers must be a Servicing Officer. Unless otherwise specified,
any reference herein to an Officer's Certificate shall be to an Officers'
Certificate of the Servicer.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be
counsel to the Trust Depositor or the Servicer) acceptable to the Indenture
Trustee or the Owner Trustee, as the case may be.
"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.
["PASS-THROUGH RATE" means [____]% per annum.]
"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, limited liability company,
estate, 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
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payments received by the Servicer as of such date allocable to principal and (y)
any Cram Down Loss in respect of such Contract; PROVIDED, HOWEVER, that (i) if
(x) a Contract is repurchased by the Seller pursuant to Section 5.01 of the
Transfer and Sale Agreement and Section 7.08 hereof because of a breach of
representation or warranty, or if (y) the Trust Depositor gives notice of its
intent to purchase the Contracts in connection with an optional termination of
the Trust pursuant to Section 5.02 of the Transfer and Sale Agreement and
Section 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 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 in the name of the Indenture Trustee or endorsed by
effective endorsement to the Indenture Trustee or in blank; (B) if
uncertificated securities, the ownership of which has been registered to the
Indenture Trustee on the books of the issuer thereof (or another person, other
than a securities intermediary, either becomes the registered owner of the
uncertified security on behalf of the Indenture Trustee or, having previously
become the registered owner, acknowledges that it holds for the Indenture
Trustee); or (C) if securities entitlements (within the meaning of Section 8-102
of the UCC as enacted in Illinois) representing interests in securities or other
financial assets (or interests therein) held by a securities intermediary
(within the meaning of said Section 8-102), a securities intermediary indicates
by book entry that a security or other financial asset has been credited to the
Indenture Trustee's securities account with such securities intermediary. Any
such Qualified Eligible Investment may be purchased by or through the Indenture
Trustee or any of its affiliates.
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"RATING AGENCY" means each of Moody's and Standard & Poor's, so long as
such Persons maintain a rating on one or more classes of the Securities; and if
either Moody's or Standard & Poor's no longer maintains a rating on any class of
the Securities, such other nationally recognized statistical rating organization
selected by the Trust Depositor.
"RECORD DATE" means, with respect to any Distribution Date, the last
Business Day of the preceding calendar month.
"REIMBURSEMENT AMOUNT" has the meaning assigned in Section 7.03 hereof.
"REPURCHASE PRICE" means, with respect to a Contract to be repurchased
hereunder an amount equal to (a) the Principal Balance of such Contract, plus
(b) accrued and unpaid interest at the Contract Rate on such Contract through
the end of the immediately preceding Due Period.
"RESERVE FUND" means the Reserve Fund established and maintained
pursuant to Section 7.06 hereof.
"RESERVE FUND INITIAL DEPOSIT" means $[_____________].
"RESERVE FUND DEPOSITS" means all moneys deposited in the Reserve Fund
from time to time including, but not limited to, the Reserve Fund Initial
Deposit as well as any monies deposited therein pursuant to Section 7.05(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) [____]% with respect to any Distribution Date
which occurs within the period from the Closing Date to, and inclusive of, the
first anniversary of the Closing Date, (b) [____]% with respect to any
Distribution Date which occurs within the period from the day after the first
anniversary of the Closing Date to, and inclusive of, the second anniversary of
the Closing Date, or (c) [____]% with respect to any Distribution Date which
occurs within the period from the day after the second anniversary of the
Closing Date to, and inclusive of, the third anniversary of the Closing Date or
(d) [____]% with respect to any Distribution Date occurring after the third
anniversary of the Closing Date; (ii) the Average Loss Ratio for such
Distribution Date is equal to or greater than (a) [____]% with respect to any
Distribution Date which occurs within the period from the Closing Date to, and
inclusive of, the eighteen months following the Closing Date or (b) [____]% with
respect to any Distribution Date which occurs following the eighteen month
period following the Closing Date; or (iii) the Cumulative Loss Ratio for such
Distribution Date is equal to or greater than (a) [____]% with respect to any
Distribution Date which occurs within the period from the Closing Date to, and
inclusive of, the first anniversary of the Closing Date, (b) [____]% with
respect to any Distribution Date which occurs within the period from the day
after the first anniversary of the Closing Date to, and inclusive of, the second
anniversary of the Closing Date, (c) [____]% with respect to any Distribution
Date which occurs within the period from the day after the second anniversary of
the Closing Date to, and inclusive of, the third
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anniversary of the Closing Date, or (d) [____]% with respect to any Distribution
Date occurring after the third anniversary of the Closing 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 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 and the Certificates.
"SECURITYHOLDERS" means the Holders of the Notes or the Certificates.
"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.
"SERVICER DEFAULT" means an event specified in SECTION 8.01.
"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 as determined in
accordance with Section 7.05(a), the amounts described in clauses (v) through
(viii) thereof over Available Monies (after the payment of amounts described in
clauses (i) through (iv) of Section 7.05 on such Distribution Date) in the
Collection Account with respect to the related Due Period.
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"SPECIFIED RESERVE FUND BALANCE" means with respect to any Distribution
Date will be an amount equal to the greater of (a) [ ] of the Principal Balance
of the Contracts in the Trust as of the first 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 consecutive
Distribution Dates (inclusive of the respective Distribution Date), the
Specified Reserve Fund Balance shall be equal to [ ] of the Principal Balance of
the Contracts in the Trust as of the first day of the immediately preceding Due
Period and (b) [ ] of the aggregate of the Initial Class A-1 Note Balance,
Initial Class A-2 Note Balance, Initial Class B Note Balance [and Initial
Certificate 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 sold and 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.
"SUBSEQUENT PURCHASE AGREEMENT" means, with respect to any Subsequent
Contracts, the agreement between the Seller and the Trust Depositor pursuant to
which the Seller will transfer the Subsequent Contracts to the Trust Depositor,
the form of which is attached to the Transfer and Sale Agreement as EXHIBIT C.
"SUBSEQUENT RESERVE FUND AMOUNT" means the amount on each Subsequent
Transfer Date equal to [_____]% of the aggregate balance of the Subsequent
Contracts conveyed to the Trust.
"SUBSEQUENT TRANSFER AGREEMENT" means the agreement described in
Section 2.04(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 [___________].
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"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, the Certificate
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 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(b)
hereof (and in Section 2.04(a) hereof in respect of Subsequent Contracts and
related assets transferred to the Trust pursuant to Subsequent Transfer
Agreements).
"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 enacted in Illinois or
Nevada, as applicable.
"UNCOLLECTIBLE ADVANCE" means with respect to any Determination Date
and any Contract, the amount, if any, advanced by the Servicer pursuant to
Section 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 Trustee.
"UNDERWRITERS" means [____________] and [____________].
"UNITED STATES" means the United States of America.
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"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.
"[NAME OF OWNER TRUSTEE]" means [______________], in its individual
capacity.
SECTION 1.02. USAGE OF TERMS. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "WRITING" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "INCLUDING" means "INCLUDING WITHOUT LIMITATION."
SECTION 1.03. SECTION REFERENCES. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
SECTION 1.04. CALCULATIONS. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder will be made on the basis
of a 360-day year and twelve 30-day months and will be carried out to at least
three decimal places.
SECTION 1.05. ACCOUNTING TERMS. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
ARTICLE TWO
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
SECTION 2.01. CLOSING. (a) There is hereby created by the Trust
Depositor, as settlor, a separate trust which shall be known as the
Harley-Davidson Motorcycle Trust [________]. The Trust shall be administered
pursuant to the provisions of this Agreement for the benefit of the Noteholders
and Certificateholders. The Owner Trustee is hereby specifically empowered to
conduct business dealings on behalf of the Trust in accordance with the terms
hereof.
(b) On the Closing Date, the Trust Depositor shall sell, transfer,
assign, set over and otherwise convey to the Trust by execution of an assignment
substantially in the form of EXHIBIT 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
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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 (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 sale of ownership of the Trust Corpus, rather than the granting
of a security interest to secure a borrowing, and that the Trust Corpus shall
not be property of the Trust Depositor, in the event such transfer is deemed to
be of a mere security interest to secure a borrowing, the Trust Depositor shall
be deemed to have granted the 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.
(c) The Trust Depositor also hereby pledges and grants a first priority
perfected security interest in, in favor of the Indenture Trustee for the
benefit of the Securityholders, all its right, title and interest in and to the
following (all being collectively referred to herein as the "OTHER COLLATERAL"):
(i) the Reserve Fund established pursuant to Section 7.06
hereof (including, without limitation, the Reserve Fund Initial
Deposit, made therein by the Trust Depositor on the Closing Date, and
all additional monies, checks, securities, investments and other items
or documents at any time held in or evidencing the Reserve Fund,
including all rights to receive any amounts to be deposited from time
to time therein);
(ii) all of the Trust Depositor's right, title and interest in
and to investments made with proceeds of the property described in
clause (i) above; and
(iii) all distributions, revenues, products, substitutions,
benefits, profits and proceeds, in whatever form, of any of the
foregoing;
in each case as collateral security for the obligations of the Trust in respect
of the Notes and the Certificates which, in accordance with and subject to the
limitations and provisions hereof, may be satisfied or paid from such Other
Collateral.
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SECTION 2.02. CONDITIONS TO THE CLOSING. On or before the Closing Date,
the Trust Depositor shall deliver or cause to be delivered the following
documents to the 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 Arthur Andersen 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 offices in
Nevada and Illinois of UCC financing statements executed by the Seller,
as debtor, naming the Trust Depositor as secured party (and the Owner
Trustee as assignee) and identifying the Contract Assets as collateral;
and evidence of proper filing with the appropriate offices in Nevada
and Illinois of UCC financing statements executed by the Trust
Depositor, as debtor, naming the Owner Trustee as secured party and
identifying the Trust Corpus as collateral; and evidence of proper
filing with appropriate officers in Delaware of UCC financing
statements executed by the Trust and naming the Indenture Trustee, as
secured party and identifying the Collateral, as collateral; and
evidence of proper filing with the appropriate offices in Nevada and
Illinois of UCC financing statements executed by the Trust Depositor,
as debtor, naming the Indenture Trustee, as secured party and
identifying the Other Collateral, as collateral.
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(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 Trust Depositor.
(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. ACCEPTANCE BY OWNER TRUSTEE. On the Closing Date, if the
conditions set forth in Section 2.02 have been satisfied, [the Owner Trustee
shall issue on behalf of the Trust to, or upon the order of, the Trust Depositor
the Certificates representing ownership of a beneficial interest in 100% of the
Trust and] the Owner Trustee shall execute and issue, and the Indenture Trustee
shall authenticate and deliver to, or upon the order of, the Trust Depositor the
Notes secured by the Collateral.
SECTION 2.04. CONVEYANCE OF SUBSEQUENT CONTRACTS. (a) Subject to the
conditions set forth in paragraph (b) below, the Trust Depositor, shall sell,
transfer, assign, set over and otherwise convey to the Trust, without recourse
other than as expressly provided herein and therein, (i) all the right, title
and interest of the Trust Depositor in and to the Subsequent Contracts 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
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2.01(b)), including but not limited to the Trust Depositor's related rights
under Article V thereof, as well as all rights, but not the obligations, of the
Trust Depositor under the Subsequent Purchase Agreement related to such
Contracts, (viii) the remittances, deposits and payments made into the Trust
Accounts from time to time and amounts in the Trust Accounts from time to time
related to such Contracts (to the extent not already conveyed under Section
2.01(b)) (and any investments of such amounts), and (ix) all proceeds and
products of the foregoing (the property in clauses (i)-(ix) above, upon such
transfer, becoming part of the "TRUST CORPUS"). Although the Trust Depositor and
the Owner Trustee agree that such transfer is intended to be a sale of
ownership, rather than the granting of a security interest to secure a
borrowing, and that the Trust Corpus following such transfer shall not be
property of the Trust Depositor, in the event such transfer is deemed to be of a
mere security interest to secure a borrowing, the Trust Depositor shall be
deemed to have granted the 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
Certificates 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 Certificateholders 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 or Certificateholders
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 12.65% 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 70
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 sold to the Issuer
pursuant to this Agreement and the Transfer and Sale Agreement; and
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(xvi) the Seller shall have taken any action required to
maintain the first perfected ownership interest of the Issuer in the
Owner Trust Estate and the first perfected security interest of the
Indenture Trustee in the Collateral.
(c) The Trust Depositor covenants to transfer (at or prior to the end
of the Funding Period) to the Trust pursuant thereto Subsequent Contracts with
an aggregate Principal Balance equal to $[__________]; PROVIDED, HOWEVER, that
in complying with such covenant, the Trust Depositor agrees to make no more than
one separate transfer of Subsequent Contracts per monthly period (as measured by
the corresponding Distribution Dates). In the event that the Trust Depositor
shall fail to deliver and sell 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 sale, transfer and assignment of the
Contracts to the Trust. Pursuant to Section 2.01 of this Agreement, the Trust
Depositor has sold, assigned, transferred and conveyed to the 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 repurchase any Contract in accordance with the Transfer and Sale
Agreement. It is understood and agreed that the representations and warranties
set forth or referred to in this Section shall survive delivery of the Contract
Files to the Owner Trustee or any custodian.
The Trust Depositor hereby represents and warrants to the Owner Trustee
and the Indenture Trustee that it has entered into the Transfer and Sale
Agreement with the Seller, that the Seller has made the representations and
warranties in the Transfer and Sale Agreement as set forth in EXHIBIT J hereto,
that such representations and warranties run to and are for the benefit of the
Trust Depositor, and that pursuant to Section 2.01 of this Agreement the Trust
Depositor has transferred and assigned to the Owner Trustee all rights of the
Trust Depositor to cause the Seller under the Transfer and Sale Agreement to
repurchase Contracts in the event of a breach of such representations and
warranties.
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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 Owner Trustee, the
Indenture Trustee, the Noteholders and the Certificateholders 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 sale, transfer and assignment of the Trust Corpus,
enforceable against the Trust Depositor and creditors of and purchasers
from the Trust Depositor. This Agreement and the other Transaction
Documents to which the Trust Depositor is a party constitute the legal,
valid and binding obligation of the Trust Depositor enforceable in
accordance with their terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and by the availability of
equitable remedies.
(d) NO CONSENT REQUIRED. The Trust Depositor is not required
to obtain the consent of any other party or any consent, license,
approval or authorization from, or registration or declaration with,
any governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement or the other Transaction Documents to which it is a party.
(e) NO VIOLATIONS. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which it is a
party by the Trust Depositor, and the consummation of the transactions
contemplated hereby and thereby,
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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 Securities (1) which, if adversely determined, would in the opinion
of the Trust Depositor have a material adverse effect on the business,
properties, assets or condition (financial or otherwise) of the Trust
Depositor or the Trust or the transactions contemplated by this
Agreement or the other Transaction Documents to which the Trust
Depositor is a party or (2) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the
Certificates or Notes.
(g) PLACE OF BUSINESS; NO CHANGES. The Trust Depositor's sole
place of business (within the meaning of Article 9 of the UCC) is as
set forth in Section 11.04 below. The Trust Depositor has not changed
its name, whether by amendment of its Articles of Incorporation, by
reorganization or otherwise, and has not changed the location of its
place of business, within the four months preceding the Closing Date.
[(h) The Trust Depositor will always own a Certificate equal
to at least one percent (1.00%) of the outstanding certificate
balance.]
Such representations speak as of the execution and delivery of this Agreement
and as of the Closing Date in the case of the Initial Contracts, and as of the
applicable Subsequent Transfer Date in the case of the Subsequent Contracts, but
shall survive the sale, transfer and assignment of the Contracts to the Trust
and the pledge thereof to the Indenture Trustee.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER.
The Servicer represents and warrants to the Owner Trustee, the Indenture
Trustee, the Noteholders and the Certificateholders that:
(a) ORGANIZATION AND GOOD STANDING. The Servicer is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has the corporate
power to own its assets and to transact the business in which it is
currently engaged. The Servicer is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in
which the character of the
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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.
(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 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
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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
Noteholders, the Certificateholders, the Indenture Trustee and the Owner Trustee
as the owner thereof.
(b) The Servicer agrees to maintain the related Contract Files at its
offices where they are currently maintained, or at such other offices of the
Servicer in the State of Nevada as shall from time to time be identified to the
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 9-305 of the Uniform Commercial Code of the State in which the
Contract Files are located.
(c) As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Contract Files on behalf of the Noteholders and
the Certificateholders and the Owner Trustee and the Indenture Trustee,
maintain accurate records pertaining to each Contract to enable it to
comply with the terms and conditions of this Agreement, maintain a
current inventory thereof, conduct annual physical inspections of
Contract Files held by it under this Agreement and certify to the 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 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 Noteholders and the
Certificateholders, the Owner Trustee and the Indenture Trustee;
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(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) within 30 days of the Closing Date (or Subsequent
Transfer Date, as the case may be) 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 Certificateholders, 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 Certificateholders, the
Owner Trustee and the Indenture Trustee as the result of any act or omission by
the Servicer relating to the maintenance and custody of the Contract Files;
PROVIDED, HOWEVER, that the Servicer will not be liable for any portion of any
such amount resulting from the gross negligence or willful misconduct of any
Noteholder, Certificateholder, the Owner Trustee or the Indenture Trustee. The
Trustees shall have no duty to monitor or otherwise oversee the Servicer's
performance as custodian hereunder.
SECTION 4.02. FILING. On or prior to the Closing Date, the Servicer
shall cause the UCC financing statement(s) referred to in Section 2.02(g) hereof
to be filed and from time to 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
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other persons, including, without limitation, the filing of financing
statements, amendments thereto and continuation statements, the execution of
transfer instruments and the making of notations on or taking possession of all
records or documents of title.
SECTION 4.03. NAME CHANGE OR RELOCATION. (a) During the term of this
Agreement, neither the Seller nor the Trust Depositor shall change its name,
identity or structure or relocate its chief executive office without first
giving at least 30 days' prior written notice to the 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 place of business (within the
meaning of Article 9 of the UCC) from the location specified in Section 11.04
below unless it has first taken such action as is advisable or necessary to
preserve and protect the Trust's interest in the Trust Corpus. Promptly after
taking any of the foregoing actions, the Servicer shall deliver to the 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 Owner Trustee and the Indenture Trustee in the
Trust Corpus have been filed, and reciting the details of such filing.
SECTION 4.04. CHIEF EXECUTIVE OFFICE. During the term of this
Agreement, the Trust Depositor will maintain its chief executive office in one
of the States of the United States, except Louisiana, Tennessee, Colorado,
Kansas, New Mexico, Oklahoma, Utah or Wyoming.
SECTION 4.05. COSTS AND EXPENSES. The Servicer agrees to pay all
reasonable costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the Trust's right,
title and interest in and to the Contracts (including, without limitation, the
security interest in the Motorcycles granted thereby).
ARTICLE FIVE
SERVICING OF CONTRACTS
SECTION 5.01. RESPONSIBILITY FOR CONTRACT ADMINISTRATION. The Servicer
will have the sole obligation to manage, administer, service and make
collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Owner Trustee, at the written request of a Servicing Officer, shall
furnish the Servicer with any powers of attorney or other documents necessary or
appropriate in the opinion of the Owner Trustee to enable the Servicer to carry
out its servicing and
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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 Principal Balance on any Contract.
SECTION 5.03. RECORDS. The Servicer shall, during the period it is
servicer hereunder, maintain such books of account and other records as will
enable the 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 Certificateholders.
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 and the Certificateholders,
respectively. 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 and Net Liquidation
Proceeds received directly by the Servicer), without deposit into any
intervening account, into the Collection Account as promptly as practical (but
in any case not later than the second Business Day following the receipt
thereof):
(i) With respect to principal and interest on the Contracts
(as well as Late Payment Penalty Fees and extension fees) received on
or after the Initial Cutoff Date or
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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 Repurchase Prices for Contracts
repurchased 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 repurchase 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) 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, gains upon sale and other income from, or earnings on,
investments of funds in the Trust Accounts (other than the Reserve Fund) shall
be deposited in the Collection Account pursuant to Section 5.05(b) and
distributed on the next Distribution Date pursuant to Section 7.05. The Trust
Depositor and the Trust agree and acknowledge that the Indenture Trustee is to
have "CONTROL" (within the meaning of Section 8-102 of the UCC as enacted in
Illinois) of collateral comprised
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of "INVESTMENT PROPERTY" (within the meaning of Section 9-115 of the UCC as
enacted in Illinois) for all purposes of this Agreement.
(d) Notwithstanding anything to the contrary herein, the Servicer may
remit payments on the Contracts and Net Liquidation Proceeds to the Collection
Account in next-day funds or immediately available funds no later than ___ a.m.,
Central time, on the Business Day prior to the next succeeding Distribution
Date, but only for so long as (a)(i) the short-term certificate of deposit
ratings of the Servicer are at least P-1 by Moody's and "A-1" by Standard &
Poor's or (ii) the Rating Agency shall have notified the Servicer, the Indenture
Trustee and the Owner Trustee, in writing, that monthly remittances of
collections will not result in reduction or withdrawal of any then outstanding
rating of any outstanding Note or Certificate and (b) the Servicer is
Harley-Davidson Credit Corp.
(e) As of the Business Day immediately preceding the related
Distribution Date, all collections for the related Collection Period with
respect to each Contract shall be applied by the Servicer as follows:
(i) First, to reimburse any outstanding Advances made by the
Servicer with respect to such Contract;
(ii) Second, first to interest accrued on such Contract as
of such date and then to principal until the Principal Balance of such
Contract is brought current; and
(iii) Third, to reduce the unpaid late charges or extension
fees (if any) as provided in such Contract.
(f) Any collections on a Contract remaining after application in
accordance with the provisions of SECTION 5.05(e) shall constitute an excess
payment (an "EXCESS PAYMENT"). Excess Payments shall be applied as a prepayment
of the Principal Balance of such Contract.
(g) The Servicer will, from time to time as provided herein, be
permitted to withdraw from the Collection Account any amount deposited therein
that, based on the Servicer's good-faith determination, was deposited in error
or required to be repaid to the related Obligor.
SECTION 5.06. ENFORCEMENT. (a) The Servicer will, consistent with
Section 5.02, act with respect to the Contracts in such manner as will maximize
the receipt of principal and interest on such Contracts. The Servicer will act
in a commercially reasonable manner with respect to the repossession and
disposition of a Motorcycle following a default under the related Contract with
a view to realizing proceeds at least equal to the Motorcycle's fair market
value. If the Servicer determines that eventual payment in full of a Contract is
unlikely, the Servicer will follow its normal practices and procedures to
recover all amounts due upon that Contract, including repossessing and disposing
of the related Motorcycle at a public or private sale or taking other action
permitted by applicable law. The Servicer will be entitled to recover all
reasonable out-of-pocket expenses incurred by it in liquidating a Contract and
disposing of the related Motorcycle.
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(b) The Servicer may sue to enforce or collect upon Contracts, in its
own name, if possible, or as agent for the Trustees. If the Servicer elects to
commence a legal proceeding to enforce a Contract, the act of commencement shall
be deemed to be an automatic assignment of the Contract to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the Owner Trustee (or the Indenture Trustee) on behalf of the Trust
shall, at the Servicer's expense, take such steps as the Servicer deems
reasonably necessary to enforce the Contract, including bringing suit in its
name or the names of the Noteholders under the Indenture and the
Certificateholders as owners 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 Owner Trustee's behalf to reassign the Defaulted Contract or
the related Motorcycle to the Person against whom recourse exists at the price
set forth in the document creating the recourse; PROVIDED, HOWEVER, the Servicer
in exercising recourse against any third persons as described in the immediately
preceding sentence shall do so in such manner as to maximize the aggregate
recovery with respect to the Contract; and PROVIDED FURTHER, HOWEVER, that
notwithstanding the foregoing the Servicer in its capacity as such may exercise
such recourse only if such Contract (i) was not required to be repurchased by
the Seller pursuant to the Transfer and Sale Agreement or (ii) was required to
be repurchased by the Seller and the Seller has defaulted on such repurchase
obligation.
(d) The Servicer will not permit any rescission or cancellation of any
Contract due to the acts or omissions of the 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 [____]% of the aggregate of the Initial Class A-1 Note
Balance, the Initial Class A-2 Note Balance, the Initial Class B Note Balance
[and the Initial Certificate Balance].
(f) The Servicer will not add to the outstanding Principal Balance of
any Contract the premium of any physical damage or other individual insurance on
a Motorcycle securing such Contract it obtains on behalf of the Obligor under
the terms of such Contract, but may create a separate Obligor obligation with
respect to such premium if and as provided by the Contract.
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(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 repurchased 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 Securityholders' rights and remedies with respect to
Contracts.
SECTION 5.08. COSTS AND EXPENSES. All costs and expenses incurred by
the Servicer in carrying out its duties hereunder, fees and expenses of
accountants and payments of all fees and expenses incurred in connection with
the enforcement of Contracts (including enforcement of Defaulted Contracts and
repossessions of Motorcycles securing such Contracts when such Contracts are not
repurchased pursuant to Section 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.
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 hereby
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authorizes the Servicer to take such steps as are necessary to perfect such
security interest and to maintain the first priority thereof in the event of a
relocation of a Motorcycle or for any other reason.
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.
ARTICLE SIX
THE TRUST DEPOSITOR
SECTION 6.01. COVENANTS OF THE TRUST DEPOSITOR.
(a) CORPORATE EXISTENCE. 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.
(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.
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(d) NO BORROWING. The Trust Depositor shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Securities and (ii) any other Indebtedness
permitted by or arising under the other Transaction Documents. The proceeds of
the Notes and the Certificates 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, 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 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, securities or a combination thereof, to
the Owner Trustee or any owner of a beneficial interest in the Trust Depositor
or otherwise with respect to any ownership or equity interest or security in or
of the Trust Depositor or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
PROVIDED, HOWEVER, that the Trust Depositor may make, or cause to be made, (A)
distributions to the Servicer, the Owner Trustee and the Certificateholders as
contemplated by, and to the extent funds are available for such purpose under,
this Agreement, the Indenture or the Trust Agreement and (B) payments to the
Indenture Trustee and the Owner Trustee pursuant to SECTION 1(a) of the
Administration Agreement.
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, [______], 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 sale 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
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of distributions on the Certificates 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, [______], 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, [______] 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 [______], as the case may be, shall be due to the willful
misfeasance, bad faith or negligence of the Owner Trustee or [______], as the
case may be, or shall arise from the breach by the Owner Trustee or [______], 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 Certificateholder in the capacity of an investor in the
Trust Certificates 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 Certificates described in the Trust Agreement, which
for purposes of the Business Trust Statute shall be deemed to be a separate
class of Trust Certificates from all other Trust Certificates issued by the
Trust; provided that the rights and obligations evidenced by all Trust
Certificates, regardless of class, shall, except as provided in this Section, be
identical.
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.
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SECTION 6.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, TRUST DEPOSITOR; CERTAIN LIMITATIONS.
(a) The Trust Depositor shall not consolidate with or merge into any
other corporation or convey, transfer or lease substantially all of its assets
as an entirety to any Person unless the corporation 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. 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 or the
Certificates. The Trust Depositor and Harley-Davidson Credit shall maintain
separate corporate offices.
(b) Notwithstanding any other provision in this Section and any
provision of law, the Trust Depositor shall not do any of the following:
(i) engage in any business or activity other than as set forth
in its Articles of Incorporation;
(ii) 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) (A) dissolve or liquidate, in whole or in part, or institute
proceedings to be adjudicated bankrupt or insolvent, (B) consenting to
the institution of bankruptcy or insolvency proceedings against it, (C)
file a petition seeking or consent to reorganization or relief under
any applicable federal or state law relating to bankruptcy, (D) 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, (E) make a general assignment for the
benefit of creditors, (F) admit in writing its inability to pay its
debts generally as they become due, or (G) take any corporate action in
furtherance of the actions set forth in clauses (A) through (F) 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
(iii) 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.
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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.
SECTION 6.06. TRUST DEPOSITOR MAY OWN CERTIFICATES. The Trust Depositor
and any Affiliate thereof may in its individual or any other capacity become the
owner or pledgee of Notes or Certificates with the same rights as it would have
if it were not the Trust Depositor or an Affiliate thereof, except as expressly
provided herein or in any Transaction Document. Notes or Certificates so owned
by or pledged to the Trust Depositor or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority or distinction as among all of the Notes or Certificates,
as the case may be.
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 Certificateholders 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 Certificateholders.
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
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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 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") such Delinquent Interest by depositing the aggregate amount of such
Delinquent Interest in the Collection Account; PROVIDED, HOWEVER, that the
Servicer shall be obligated to advance Delinquent Interest only to the extent
that the Servicer, in its sole discretion, expects that such Advance will not
become an Uncollectible Advance. The Servicer shall indicate on each Monthly
Report (i) the amount of Delinquent Interest, if any, on the Contracts for the
related Due Period and (ii) the amount of the Advance, if any, made by the
Servicer in respect of such Delinquent Interest pursuant to this Section 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
desires 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).
(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
[________] - [______________], 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, Certificates or with any other monies.
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(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.
(a) On each Distribution Date, the Indenture Trustee, at the Servicer's
direction, will make the following distributions in the following order of
priority:
(i) to the Mandatory Special Redemption subaccount in the Note
Distribution Account to the Class A-1 Noteholders and Class A-2
Noteholders, the amount of any Mandatory Special Redemption, pro rata,
calculated on the then current principal balance of the Class A-1 and
Class A-2 Notes with the amounts derived from draws on the Pre-Funding
Account (which amounts are available for payment of such Mandatory
Special Redemptions and not for any other purpose), to be distributed
(i) to the Class A-1 Noteholders, in an amount equal to the Class A-1
Percentage multiplied by the amount in the Mandatory Special Redemption
Subaccount and (ii) to the Class A-2 Noteholders, in an amount equal to
the Class A-2 Percentage multiplied by the amount in the Mandatory
Special Redemption Subaccount with the amounts derived from draws on
the Pre-Funding Account (which amounts are available solely for payment
of such Mandatory Special Redemptions and not for any other purpose);
PROVIDED, HOWEVER, in the event the amount in the Mandatory Special
Redemption subaccount is less than $150,000 such amount shall be
distributed solely to the Class A-1 Noteholders;
(ii) to the Servicer from Available Monies, the Reimbursement
Amount to the Servicer for Advances previously made;
(iii) to the Servicer from Available Monies, the Servicing
Fee, including any unpaid Servicing Fee with respect to one or more
prior Due Periods;
(iv) to the Indenture Trustee from Available Monies, any
accrued and unpaid Indenture Trustee Fee with respect to one or more
prior Due Periods;
(v) to the Note Distribution Account from Available Monies,
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;
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[(vi) to the Certificate Distribution Account from Available
Interest, together with any amounts deposited therein pursuant to
Section 7.06, the Certificate Interest Distributable Amount with
respect to such Distribution Date.]
(vii) to the Note Distribution Account from Available Monies,
together with any amounts deposited therein pursuant to Section 7.06,
the Note Principal Distributable Amount with respect to such
Distribution Date;
[(viii) to the Certificate Distribution Account from Available
Principal, together with any amounts deposited therein pursuant to
Section 7.06, the Certificate Principal Distributable Amount with
respect to such Distribution Date; and]
(b) in the event that the distributions described in clauses (i)
through (viii) above have been funded exclusively from Available Monies, any
remaining Available Monies ("EXCESS AMOUNTS") will be deposited into the Reserve
Fund in accordance with Section 7.06(d), until the amount on deposit therein
equals the Specified Reserve Fund Balance with respect to such Distribution Date
and the Indenture Trustee will pay any excess over such Specified Reserve Fund
Balance to the Trust Depositor.
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. The Reserve Fund will be
held by the Indenture Trustee for the benefit of the Noteholders in order to
effectuate the subordination of the rights of the Certificateholders to the
extent described above.
(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, second, to the Certificate Distribution Account, the
amount of such Shortfall relating to the Certificate Interest Distributable
Amount; third, to the Note Distribution Account, the amount of such Shortfall
relating to the Note Principal Distributable Amount; and fourth, to the
Certificate Distribution Account, the amount of such Shortfall relating to the
Certificate Principal Distributable Amount.
(c) The Servicer shall at the written direction of the Trust Depositor
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
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Trustee shall, consistent with the definition of Qualified Eligible Investment
herein, make an appropriate notation of 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. The Trust Depositor and the Indenture
Trustee shall not 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 with respect to such Distribution Date, the Indenture Trustee shall
withdraw such excess funds and pay them 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 [________]
- - [______________], 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
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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
equal to or 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 (ii) if the Pre-Funded Amount is greater than $150,000, deposit the
Pre-Funded Amount in the Note Distribution Account for payment as principal of
the Class A-1 Notes and Class A-2 Notes, pro rata, calculated on the then
current principal balance of the Class A-1 and Class A-2 Notes.
SECTION 7.08. REPURCHASES 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 Trust Depositor as set forth
in Section 3.01(a) or 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 Trust Depositor or 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 repurchase a Contract at its Repurchase
Price, two Business Days prior to the first Determination Date after the Seller
becomes aware, or should have become aware, or receives written notice from the
Trustee, the Servicer or the Trust Depositor of any breach of a representation
or warranty of the Seller set forth in Article III of the Transfer and Sale
Agreement that materially 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 repurchase under the Transfer and Sale Agreement, the
Trust Depositor may, in lieu of repurchasing such Contract, deposit in the
Collection Account not later than one Business Day after such Determination Date
cash in an amount sufficient to cure such deficiency or discrepancy; and
PROVIDED FURTHER that with respect to a breach of representation or warranty
relating to the Contracts in the aggregate and not to any particular Contract
the Seller may select Contracts (without adverse selection) to repurchase such
that had such Contracts not been included as part of the Trust Corpus there
would have been no breach of such representation or warranty; PROVIDED FURTHER
that (a) the failure of a Contract File to be complete or of the original
certificate of title and evidence of recordation of such certificate to be
included in the Contract File as of 180 days after the Closing Date (or
Subsequent Transfer Date, in the case of Subsequent Contracts) or (b) the
failure to maintain perfection of the security interest in the Motorcycle
securing a Contract in accordance with Section 5.09, shall be deemed to be a
breach materially and adversely affecting the Trust's interest in the Contract
or in the related Contracts. Notwithstanding any other provision of this
Agreement, the obligation of the Seller under the Transfer and Sale Agreement
and described in this Section 7.08 shall not terminate or be deemed released by
any party hereto upon a Service Transfer pursuant to Article
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VIII. The repurchase 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 REPURCHASED CONTRACTS. Upon receipt by
the Indenture Trustee for deposit in the Collection Account of the Repurchase
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 assign to the Seller all of the Trust's right, title and
interest in the repurchased Contract without recourse, representation or
warranty, except as to the absence of liens, charges or encumbrances created by
or arising as a result of actions of the Trustee.
SECTION 7.10. SELLER'S REPURCHASE 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 sum of (i) the aggregate
unpaid principal balance of the Class A-1 Notes, the Class A-2 Notes and the
Class B Notes and (ii) the Certificate Balance on such Distribution Date is 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) repurchase on that Distribution Date all outstanding Contracts (and
related Contract Assets) at a price equal to the sum of (i) the aggregate unpaid
principal balance of the Class A-1 Notes, the Class A-2 Notes and the Class B
Notes and (ii) the Certificate Balance as of that Distribution Date plus the
aggregate of the Note Interest Distributable Amount and the Certificate 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 Fees to the date of such repurchase. Such price will be deposited in the
Collection Account not later than one (1) Business Day before such Distribution
Date, against the Trustees' 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 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 five (5) Business Days after receipt of written notice
from the Trustees or discovery by the Servicer of such failure;
(b) Failure on the Servicer's part to observe or perform in any
material respect any covenant or agreement in this Agreement (or in any
Subsequent Transfer Agreement) (other than a covenant or agreement, the breach
of which is specifically addressed elsewhere in this
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Agreement) which (i) materially and adversely affects the rights of the
Securityholders and (ii) continues unremedied for thirty (30) days after receipt
of written notice from the Trustees or by Noteholders of more than 25% of the
aggregate principal amount of the Class A-1 Notes and Class A-2 Notes, or, if
there are no Class A-1 Notes or Class A-2 Notes outstanding, by Noteholders of
more than 25% of the aggregate principal amount of the Class B Notes, or, if
there are no Notes outstanding, by Certificateholders of more than 25% of the
Certificate Balance;;
(c) Any assignment by the Servicer of its duties or rights hereunder
(or under any Subsequent Transfer Agreement), except as specifically permitted
hereunder or thereunder, or any attempt to make such an assignment;
(d) An involuntary case under any applicable bankruptcy, insolvency or
other similar law shall have been commenced in respect of the Servicer and shall
not have been dismissed within 90 days, or a court having jurisdiction in the
premises shall have entered a decree or order for relief in respect of either
the Servicer in an involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
either the Servicer, or for any substantial liquidation or winding up of its
affairs;
(e) The Servicer shall have commenced a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall have consented to the entry of an order for relief in an
involuntary case under any such law, or shall have consented to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, custodian
or sequestrator (or other similar official) of the Servicer or for any
substantial part of its property, or shall have made any general assignment for
the benefit of its creditors, or shall have failed to, or admitted in writing
its inability to, pay its debts as they become due, or shall have taken any
corporate action in furtherance of the foregoing;
(f) Any failure by the Servicer to deliver to the 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 by either Trustee or by Noteholders of
more than 25% of the aggregate principal amount of the Class A-1 Notes and Class
A-2 Notes or, if there are no Class A-1 Notes or Class A-2 Notes outstanding, by
Noteholders of more than 25% of the aggregate principal amount of the Class B
Notes, or, if there are no Notes outstanding, by Certificateholders of more than
25% of the Certificate Balance, the circumstances or condition in respect of
which such representation, warranty or statement was incorrect shall not have
been eliminated or otherwise cured..
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SECTION 8.02. WAIVER OF SERVICER DEFAULT. Noteholders representing more
than 50% of the outstanding balance of the Class A-1 Notes and the Class A-2
Notes, voting as a single class, or if there are no Class A-1 Notes or Class A-2
Notes outstanding, Noteholders representing more than 50% of the outstanding
balance of the Class B Notes or, if there are no Notes outstanding,
Certificateholders representing more than 50% of the Certificate Balance, 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 a Servicer Default has occurred
and is continuing and has not been waived pursuant to SECTION 8.02, (x)
Noteholders representing more than 50% of the outstanding balance of the Class
A-1 Notes and the Class A-2 Notes, voting as a single class, or if there are no
Class A-1 Notes or Class A-2 Notes outstanding, Noteholders representing more
than 50% of the outstanding balance of the Class B Notes or, if there are no
Notes outstanding, Certificateholders representing more than 50% of the
Certificate Balance or (y) the Indenture Trustee or, if there are no Notes
outstanding, the Owner Trustee may, by written notice delivered to the parties
hereto, terminate all (but not less than all) of the Servicer's management,
administrative, servicing, custodial and collection functions (such termination
being herein called a "SERVICE TRANSFER").
(b) Upon receipt of the notice required by Section 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
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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 8.04 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,
Noteholders representing more than 50% or more of the outstanding balance of
each Class of Notes and Certificateholders with aggregate fractional interests
representing more than 50% or more of the Trust, 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.
SECTION 8.05. NOTIFICATION TO SECURITYHOLDERS. (a) Promptly following
the occurrence of any Servicer Default, 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. The Indenture Trustee shall give written
notice to the Noteholders and the Owner Trustee shall give written notice
thereof to the Certificateholders at their respective addresses appearing on the
Note Register and the Certificate Register, respectively.
(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 and the Owner Trustee shall give
written notice to the Certificateholders at their addresses appearing in the
Certificate Register, respectively..
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.
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SECTION 8.07. DATABASE FILE. The Servicer will provide the Successor
Servicer with a magnetic tape containing the database file for each Contract (i)
as of the Cutoff Date, (ii) the Subsequent Cutoff Date, (iii) thereafter, as of
the last day of the preceding Due Period on each Determination Date prior to a
Servicer Default and (iv) on and as of the Business Day before the actual
commencement of servicing functions by the Successor Servicer following the
occurrence of a Servicer Default.
SECTION 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 8.08 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 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. LIABILITY OF SERVICER; INDEMNITIES. (a) The
Servicer shall indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee and the Securityholders from and against any
loss, liability or expense incurred by reason of the Servicer's willful
misfeasance, bad faith or gross negligence (other than errors in judgment) in
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the performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement.
(b) Indemnification under this Section shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Servicer 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 Servicer, without interest.
SECTION 8.11. LIMITATION OF LIABILITY OF SERVICER.
(a) Neither the Servicer nor any of the directors, officers, employees
or agents of the Servicer shall be under any liability to the Issuer, the Owner
Trustee, the Indenture Trustee, the Certificateholders 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 Certificateholders under the Trust Agreement and 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.
SECTION 8.12. MERGER OR CONSOLIDATION OF SERVICER. Any Person into
which the Servicer may be merged or consolidated, or any corporation, or
other entity resulting from any merger conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of
the Servicer (which Person assumes the obligations of the Servicer), shall be
the successor of the Servicer hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding. The Servicer shall give
prior written notice of any such merger or consolidation to which it is a
party to the Issuer, the Owner Trustee, the Indenture Trustee and the Rating
Agencies.
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SECTION 8.13. 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 a Successor Servicer
shall have assumed the responsibilities and rights of the predecessor
Servicer in accordance with SECTION 8.04.
SECTION 8.14. APPOINTMENT OF SUBSERVICER. So long as Harley-Davidson
Credit Corp. acts as the Servicer, the Servicer may at any time without
notice or consent subcontract substantially all its duties under this
Agreement to any corporation more than 50% of the voting stock of which is
owned, directly or indirectly, by Harley-Davidson, Inc.. The Servicer may at
any time perform specific duties as servicer under this Agreement through
other subcontractors; PROVIDED, HOWEVER, that no such delegation or
subcontracting shall relieve the Servicer of its responsibilities with
respect to such duties as to which the Servicer shall remain primarily
responsible with respect thereto.
ARTICLE NINE
REPORTS
SECTION 9.01. MONTHLY REPORTS. No later than 10:00 a.m. Chicago,
Illinois time on each Determination Date, the Servicer shall cause the Trustees
and each Rating Agency to receive a "MONTHLY REPORT" substantially in the form
of EXHIBIT I hereto.
SECTION 9.02. OFFICER'S CERTIFICATE. On or before [_________] of each
yeaer, the Servicer shall deliver to each Trustee and Rating Agency a Servicing
Officer substantially in the form of EXHIBIT C, certifying the accuracy of the
Monthly Reports and that no Servicer Default or event that with notice or lapse
of time or both would become a Servicer Default has occurred, or if such event
has occurred and is continuing, specifying the event and its status.
SECTION 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, the Seller or to the Trust
Depositor, to deliver to the Trustees, the Underwriters and
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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, 2001, 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 the Seller
and issued its report thereon and that such audit:
(1) was made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting
records and such other auditing procedures as such firm considered
necessary in the circumstances;
(2) included an examination of documents and records relating
to the servicing of motorcycle conditional sales contracts under
pooling and servicing agreements substantially similar to one another
(such statement to have attached thereto a schedule setting forth the
pooling and servicing agreements covered thereby, including this
Agreement);
(3) included an examination of the delinquency and loss
statistics relating to the Seller'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 procedures agreed upon with
the Seller 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 the Seller and the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
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, 2001, 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
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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 SECURITYHOLDERS. (a) On or before each
Distribution Date, the Servicer shall prepare and, concurrently with each
distribution to Certificateholders and Noteholders pursuant to Article VII,
deliver to the Trustees and the Trustees shall cause to be delivered and mailed
to each Noteholder and each Certificateholder at the address appearing on the
Note Register and Certificate Register, respectively a statement as of the
related Distribution Date setting forth (the "MONTHLY REPORT"):
(i) the amount of distribution allocable to principal of each
Class of Notes and the amount of distribution allocable to the
Certificate Balance;
(ii) the amount of the distribution allocable to interest on
each Class of Notes and the amount of Certificateholder'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, Note
Principal Carryover Shortfall, Certificate Interest Carryover Shortfall
and Certificate 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 outstanding principal amount and Note Pool Factor for
each Class of Notes and the Certificate Balance and Certificate Pool
Factor, in each case of such Distribution Date each after giving effect
to the distribution of principal to each Class of Notes and the
Certificates;
(vi) the amount of the distributions described in (i) or (ii)
above payable with funds from 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;
(vii) the amount of any Mandatory Special 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;
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(x) the remaining Principal Balance after giving effect to the
distribution of principal (and Mandatory Special Redemption, if any) to
each class of Notes and Certificates to be made on such Distribution
Date;
(xi) the amount otherwise distributable to the Class B Notes
or the Certificates that has instead been distributed to one or more
senior Class of Notes on such Distribution Date;
(xii) 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;
(xiii) 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;
(xiv) the Loss Ratio, Average Loss Ratio, Cumulative Loss
Ratio, the Delinquency Ratio and the Average Delinquency Ratio as of
such Distribution Date;
(xv) 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);
(xvi) the aggregate Principal Balance and number of Contracts
that were repurchased by the Seller pursuant to the Agreement with
respect to the related Due Period, identifying such Contracts and the
Repurchase Price for such Contracts; and
(xvii) 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 Certificateholders to prepare their tax returns.
(b) Within 75 days after the end of each calendar year, the Servicer
shall prepare and the Indenture Trustee and Owner Trustee, respectively, shall
mail to each Noteholder or Certificateholder 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 or
Certificateholder.
(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, (ii) the initial Clearing Agency under the Certificate
Depository Agreement or any qualified successor appointed pursuant to Section
3.14 of the Trust Agreement and (iii) each Securityholder or party to this
Agreement.
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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 and
any funds remaining on deposit in the Reserve Fund (including the proceeds of
any sale of investments therein as described in the following sentence):
(i) to the Note Distribution Account, any portion of the Note
Interest Distributable Amount not otherwise deposited into the Note
Distribution Account on such Distribution Date;
(ii) to the Note Distribution Account, the outstanding principal
amount of the Notes (after giving effect to the reduction in the
outstanding principal amount of the Notes to result from the deposits
made in the Note Distribution Account on such Distribution Date and on
prior Distribution Dates);
(iii) to the Certificate Distribution Account, any portion of the
Certificate Interest Distributable Amount not otherwise deposited into
the Certificate Distribution Account on such Distribution Date; and
(iv) to the Certificate Distribution Account, the Certificate
Balance (after giving effect to the reduction in the Certificate
Balance to result from the deposits made in the Certificate
Distribution Account on such Distribution Date).
(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
Certificateholders 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 from time to time by the Trust
Depositor, the Servicer, the Indenture Trustee and the Owner Trustee on behalf
of the Issuer, collectively, but without the consent of any Securityholders, (i)
to correct manifest error, to cure any ambiguity, to correct or supplement any
provisions in this Agreement which are inconsistent with the provisions herein
which may be ambiguous or inconsistent with any other provisions herein or in
any other Transaction Document, as the case may be, 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 or the Certificates
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, materially and 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 Moody's is a
Rating Agency) to the effect that such amendment will not cause its then-current
rating on any Class of Notes or the Certificates 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 Noteholders of more than 50% of the
aggregate principal amount of the Class A-1 Notes and Class A-2 Notes or, if
there are no Class A-1 Notes or Class A-2 Notes outstanding, with the consent of
the Noteholders of more than 50% of the aggregate principal amount of the Class
B Notes or, if there are no Notes outstanding, with the consent of
Certificateholders of more than 50% of the Certificate Balance, 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 Certificateholders; PROVIDED, HOWEVER, that no such amendment
shall (i) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on the Contracts or distributions which
are required to be made on any Note or Certificate, (ii) except as otherwise
provided in SECTION 10.01(a), the Specified Reserve Fund Balance or the manner
in which the Reserve Fund is funded, (iii) change the interest rate on any Notes
or Certificates which such change adversely affects the priority of payment of
principal or interest made to the Noteholders or Certificateholders or (iv)
reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the Noteholders and Certificateholders then outstanding;
and PROVIDED, FURTHER, that no such amendment or consent shall be effective
unless each Rating Agency delivers written confirmation that such amendment or
consent will not cause its then-current rating on any Class of Notes or
Certificates to be qualified, reduced or withdrawn.
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(c) Promptly after execution of any 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
Certificateholder and Noteholder, respectively. It shall not be necessary for
the consent of Noteholders and Certificateholders 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 substance thereof. The
manner of obtaining such consents and of evidencing the authorization by
Noteholders and Certificateholders 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) Upon the execution of any amendment or consent pursuant to this
SECTION 11.01, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every holder of Notes and Certificates theretofore or thereafter issued
hereunder shall be bound thereby.
SECTION 11.02. PROTECTION OF TITLE TO TRUST.
(a) The Servicer shall execute and file such financing statements and
cause to be executed and 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, the Indenture Trustee
and the Owner 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.
(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 9-402(7) 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, the Trust Depositor and the Servicer shall give the
Issuer, the Owner Trustee and the Indenture Trustee at least 30 days' prior
written notice of any relocation of the principal executive office of
Harley-Davidson Credit or the Trust Depositor and the Servicer (in the case of
notice provided by the Servicer) if, as a result of such relocation, the
applicable provisions of the UCC would require filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall promptly file any such amendment or new financing statement.
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 sale 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 repurchased 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 sold 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 Schedule 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,
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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 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.
150 South Wacker Drive, Suite 3100
Chicago, Illinois 60606
Attention: Perry A. Glassgow
Telecopier No.: (312) 368-4372
(ii) If to the Trust Depositor:
Harley-Davidson Customer Funding Corp.
4150 Technology Way
Carson City, Nevada 89706
Telecopier No.: (775) 884-4469
(iii) If to the Indenture Trustee:
______________________________
______________________________
______________________________
Telecopier No.: ______________
(iv) If to the Owner Trustee:
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______________________________
______________________________
______________________________
Telecopier No.: ______________
(v) If to Moody's:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Department
Telecopier No.: (212) 553-1350
(vi) If to Standard & Poor's:
Standard & Poor's Ratings Services, A
Division of The McGraw Hill Companies
55 Water Street
New York, New York 10004
Telecopier No.: (212) 438-2657
(vii) If to the Underwriters:
______________________________
______________________________
______________________________
Telecopier No.: ______________
______________________________
______________________________
______________________________
Telecopier No.: ______________
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.
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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
Certificates 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 8.03, 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 and
Certificateholders evidencing not less than 66-2/3% of the Certificate Balance
or the Rating Agencies rating the Securities confirm that such assignment will
not result in a reduction or withdrawal of any rating on any Security.
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. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE.
(a) Notwithstanding anything contained herein to the contrary, this
instrument has been countersigned by [____________], not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer, and in no
event shall [_____________] 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 countersigned by [______________], not in its individual
capacity but solely as Indenture Trustee, and in no event shall [______________]
have any liability for the 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.
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[signature page follows]
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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 [________]
By: [______________], not in
its individual capacity but
solely as Owner Trustee on
behalf of the Trust
By: _____________________________________
Printed Name:________________________
Title:_______________________________
HARLEY-DAVIDSON CUSTOMER FUNDING
CORP., as Trust Depositor
By:_____________________________________
Printed Name: Perry A. Glassgow
Title: Treasurer
HARLEY-DAVIDSON CREDIT CORP., as Servicer
By:_____________________________________
Printed Name: Perry A. Glassgow
Title: Treasurer
[______________], not in its
individual capacity but solely as Indenture
Trustee
By:_____________________________________
Printed Name:______________________
Title:_____________________________
Signature Page to Sale and Servicing Agreement
<PAGE>
EXHIBIT A
[Form of Assignment]
In accordance with the Sale and Servicing Agreement (the "SALE AND
SERVICING AGREEMENT") dated as of [________] made by and between the
undersigned, as Trust Depositor ("TRUST DEPOSITOR"), Harley-Davidson Credit
Corp., as Servicer, [______________], as Indenture Trustee and Harley-Davidson
Motorcycle Trust [________] (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 Sale and Servicing Agreement and no others.
Capitalized terms used herein but not otherwise defined shall have the
meanings assigned to such terms in the Sale and Servicing Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed this _____ day of [___________].
HARLEY-DAVIDSON CUSTOMER FUNDING
CORP.
By:_________________________________________
Printed Name: Perry A. Glassgow
Title: Treasurer
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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 [________] (the "EFFECTIVE DATE") by and among the
Trust Depositor, [______________] (the "INDENTURE Trustee"), as Indenture
Trustee, Harley-Davidson Credit Corp. ("HARLEY-DAVIDSON CREDIT"), as Servicer,
and Harley-Davidson Motorcycle Trust [________] ("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
October 23, 1996, 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 [__________] 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, as amended, which were in full
force and effect on October 30, 1996, and at all times subsequent
thereto.
(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 [_____________] (the
"Owner Trustee"), as Owner Trustee; the Administration 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 [____________] among the Trust Depositor,
Harley-
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Davidson Credit and [______________] and [______________]
(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 Certificates.
(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 transfer and assignment of the Collateral
by the Trust to the Indenture Trustee nor the issuance and sale of the
Certificates and the Notes, nor the execution and delivery of the
Program Agreements, nor the consummation of any other of the
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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
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IN WITNESS WHEREOF, I have affixed my signature hereto this ___ day of
[_________].
By: _____________________________________
Printed Name: Donna F. Zarcone
Title: President
<PAGE>
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 [________] (the "EFFECTIVE DATE") by and among
Harley-Davidson Credit, as Servicer, Harley-Davidson Customer Funding Corp.
("CFC"), [______________], as Indenture Trustee and Harley-Davidson Motorcycle
Trust [________] ("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 [__________]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 [__________] among Harley-Davidson Credit, CFC,
[_______________] and [_____________] (the "UNDERWRITING AGREEMENT");
and the Administration Agreement dated [________] among Harley-Davidson
Credit, CFC, the Issuer and [______________], as Indenture Trustee (the
"INDENTURE TRUSTEE") (the
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<PAGE>
"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 Certificates.
(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 transfer and assignment by the Trust of the Collateral to
the Indenture Trustee, nor the issuance and sale of the Notes or
Certificates or the entering into of the Program Agreements, nor the
consummation of any other of the transactions contemplated therein,
will violate or
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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.
* * * * * *
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IN WITNESS WHEREOF, I have affixed my signature hereto this
___ day of [_________].
By: _____________________________________
Printed Name: Donna F. Zarcone
Title: President
<PAGE>
EXHIBIT D
[Form of Opinion of Counsel for Trust Depositor
Regarding General Corporate Matters
(Including Perfection Opinion)]
D-1
<PAGE>
EXHIBIT E
[Form of Opinion of Counsel for Trust
Depositor Regarding the "TRUE SALE" Nature
of the Transaction]
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<PAGE>
EXHIBIT F
[Form of Opinion of Counsel for Trust
Depositor Regarding Non-consolidation]
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<PAGE>
EXHIBIT G
[Form of Certificate Regarding Repurchased Contracts]
Harley-Davidson Credit Corp.
Certificate Regarding Repurchased 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 [________] by and among Harley-Davidson Customer Funding Corp., as
Trust Depositor, the Servicer, [______________], as Indenture Trustee, and
Harley-Davidson Motorcycle Trust [________] (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 repurchased
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 Repurchase Price for such Contracts, such
Contracts may, pursuant to Section 7.08 of the Agreement, be
assigned by the Issuer to the Seller.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ______
day of _____________.
Harley-Davidson Credit Corp.
By: ___________________________________
Printed Name: Perry A. Glassgow
Title: Treasurer
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<PAGE>
EXHIBIT H
[List of Contracts]
H-1
<PAGE>
EXHIBIT I
[Form of Monthly Report to Noteholders And Certificateholders]
Harley-Davidson Motorcycle Trust [________]
$[__________][____]% Harley-Davidson Motorcycle Contract Backed Notes, Class A-1
$[__________][____]% Harley-Davidson Motorcycle Contract Backed Notes, Class A-2
$[__________] [____]% Harley-Davidson Motorcycle Contract Backed Notes, Class B
[$[__________] [____]% Harley-Davidson Motorcycle Contract Backed Certificates]
Monthly Report
For the [ ] Distribution Date
<TABLE>
<S><C>
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 (l. 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 $____________
1. Note Percentage for such Distribution Date
(a) for each Distribution Date to but excluding
the Distribution Date on which the principal amount of
the Class B Notes is reduced to zero 100.00%
(b) on the Distribution Date on which the principal
amount of the Class B Notes is reduced to zero 100.00%
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(c) after the principal amount of the Class B Notes
have been reduced to zero 0.00%
2. Principal Distributable Amount (from B) $____________
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) Special Mandatory Redemption Amounts (from
Pre-Funding Account as defined in Article I of the
Sale and Servicing Agreement) $____________
(f) Note Monthly Principal Distributable Amount
(the sum of items 3(a), 3(b) and 3(c) $____________
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<PAGE>
E. Calculation of Note Monthly Interest Distributable Amount.
1. Class A-l 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 $_____________
7. Note Monthly Interest Distributable Amount (the sum of items 5,
6 and 7) $_____________
F. Calculation of Note Distributable Amount (sum of D.3(e) plus E.6.) $_____________
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<PAGE>
G. Calculation of Certificate Principal Distributable Amount
1. Certificate Balance $____________
2. Available Principal $____________
3. Certificate Percentage for each respective Distribution Date 0.00%
3(a). for each Distribution Date to but excluding the Distribution
Date on which the Principal Amount of the Class B Notes is
reduced to zero 0.00%
3(b). on any Distribution Date until the Principal Amount of the
Class B Notes is reduced to zero 100.00%
3(c). thereafter
4(a). Available Principal multiplied by the Certificate Percentage $____________
for such Distribution Date
4(b). Certificate Principal Carryover Shortfall for such
Distribution Date $____________
5. Certificate Principal Distributable Amount (the sum of 4.(a)
and 4.(b)) $____________
H. Calculation of Certificate Interest Distributable Amount
1. Certificate Pass-Through Rate ___%
2(a). One-twelfth of the Certificate Pass-Through Rate times the
Certificate Balance on the immediately preceding Distribution
Date, after giving effect to all payments of principal to
the Certificateholders and such preceding Distribution Date
(or in case of the first Distribution Date on the original
Principal Amount of the Certificates) based on a 360-day
year of 12 months of 30 days each. $____________
2(b). Certificate Interest Carryover Shortfall for such Distribution
Date $____________
3. Certificate Interest Distributable Amount (sum of 2.(a) and
2.(b)) $____________
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<PAGE>
I. Calculation of Certificate Distributable Amount (sum of G.5 and H.3) $____________
J. Fees
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 .005% 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 Repurchase Prices for
Contracts required to be repurchased by the Seller as
described in Section 7.08 of the Sale and Servicing
Agreement $_____________
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<PAGE>
d. All Advances made by Servicer pursuant to
Section 7.03(a) of the Sale and Servicing Agreement $_____________
e. All amounts paid by the Seller in connection
with an optional repurchase 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 $_____________
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<PAGE>
c. Amounts to be paid to the Indenture Trustee
in respect of the Indenture Trustee's Fee for the
related Due Period $_____________
d. Amounts to be paid to the Owner Trustee in
respect of the Owner Trustee Fee for the related Due
Period $_____________
e. 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 $____________
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<PAGE>
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. $____________
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) [___]% of the Principal Balance
of the Contracts in the Trust as of the first 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 [___]% of the Principal Balance of the
Contracts in the Trust as of the first day of the immediately
preceding Due Period) and (b) [___]% of the aggregate of the Initial
Class A-1 Note Balance, Initial Class A-2 Note Balance, Initial Class
B Note Balance and Initial Certificate 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 Certificate Pool Factor immediately after such
Distribution Date ____________
5. The Class A-1 Note Pool Factor immediately before such
Distribution Date ____________
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<PAGE>
6. The Class A-2 Note Pool Factor immediately after such
Distribution Date ____________
7. The Class B Note Pool Factor immediately after such
Distribution Date ____________
8. The Certificate Pool Factor immediately after such
Distribution Date ____________
U. Delinquent Contracts
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 $____________
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<PAGE>
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. Repurchased Contracts
1. Number of Contracts to be repurchased by the Seller pursuant
to Section 7.08 of the Sale and Servicing Agreement $____________
2. Principal Amount of such Contracts $____________
3. Related Repurchase 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 $____________
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<PAGE>
10. Pre-Funded Amount as of end of Due Period $____________
Z. Interest Reserve Account
1. Interest Reserve Amount as of previous Distribution Date $____________
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) $_____________
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<PAGE>
(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 _____%
(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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<PAGE>
(1) Average Delinquency Ratio (if (a) (i) Average
Delinquency Ratio [____]% 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) [____]% 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) [____]% 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) [____]% 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) [____]% with respect to any
Distribution Date which occurs within the period from
the Closing Date to, and inclusive of, the eighteen
months following the Closing Date or (ii) [____]%
with respect to any Distribution Date which occurs
following the eighteen month period following the
Closing Date, then a Reserve Fund Trigger Event has
occurred) _____%
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<PAGE>
(3) Cumulative Loss Ratio (if Cumulative Loss Ratio is
equal to or greater than (i) [____]% 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) [____]% 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) [____]% 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) [____]%
following the third anniversary of the Closing Date,
then a Reserve Fund Trigger Event has occurred) _____%
</TABLE>
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<PAGE>
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) PLACE OF BUSINESS; NO CHANGES. Seller's sole place of
business (within the meaning of Article 9 of the UCC) is as follows:
Harley-Davidson Credit Corp.
4150 Technology Way
Carson City, Nevada 89706
Seller 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 (except within Carson City, Nevada),
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.
(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.
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<PAGE>
(d) BINDING OBLIGATION. Each Contract is the genuine, legal,
valid and binding obligation of the Obligor thereunder and is
enforceable in accordance with its terms, except as such enforceability
may be limited by 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 time of origination of the Contract, 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 sale,
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 or pursuant to transfers of the Certificates 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 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
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Trustee's inspection, and shall deliver to Trust Depositor or the
Trustee upon demand, evidence of compliance with all such requirements.
(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 and Owner Trustee
pursuant to this Agreement. Immediately after the sale, 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).
(1) 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
J-4
<PAGE>
full right to transfer the Contract to Trust Depositor and to permit
Trust Depositor to transfer the same to the Issuer and Owner Trustee,
and, as of the Closing Date (or the applicable Subsequent Transfer Date
in the case of Subsequent Contracts), the Issuer and the Owner Trustee
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.
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<PAGE>
(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.
(v) CHATTEL PAPER. The Contracts constitute chattel paper
within the meaning of the UCC as in effect in the States of Nevada and
Illinois.
(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 Issuer 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 Certificate Notes, the Class
A-2 Notes, the Class B Notes and Certificates 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 [___] months;
and (iii) the final scheduled payment on the Initial Contract with the
latest maturity is due not later than [__________]. Approximately
[______]% 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 [____]% 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 [____]%. The first scheduled payment date of the Contracts
(including any Subsequent Contracts) is due no later than [_________].
(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 under the
Transfer and Sale Agreement hereunder and concurrently reconveyed by
the Trust Depositor to the Trust and pledged by the Trust to the
Indenture Trustee to be clearly and unambiguously marked to indicate
that such
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<PAGE>
Contracts constitute part of the Trust, are owned by the Trust and
constitute security for the Notes.
(d) NO ADVERSE SELECTION. No selection procedures adverse to
Noteholders and Certificateholders 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 [____]% 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 the Seller
pursuant to the Transfer and Sale Agreement or any Subsequent Purchase
Agreement and by Trust Depositor pursuant to the Sale and Servicing
Agreement or any Subsequent Transfer Agreement is not subject to the
bulk transfer or any similar statutory provisions in effect in any
applicable jurisdiction.
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<PAGE>
EXHIBIT K
[Lockbox Bank and Lockbox Account]
LOCKBOX
Harley-Davidson Credit Corp.
135 South LaSalle Street
Chicago, Illinois 60674
LOCKBOX BANK
LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60674
K-1
<PAGE>
EXHIBIT L
[Form of Contract Stamp]
This Contract/Note is subject to a security interest granted to
Harley-Davidson Motorcycle Trust [________]. UCC-1 Financing Statements covering
this Contract/Note have been filed with the Secretary of State of the State of
Nevada and the Secretary of State of the State of Illinois. 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
<PAGE>
EXHIBIT M
[Form of Subsequent Transfer Agreement]
[see EXHIBIT C of the Transfer and Sale Agreement]
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<PAGE>
EXHIBIT 10.3
FORM OF
POOLING AND SERVICING AGREEMENT
BY AND AMONG
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
as Trust Depositor
HARLEY-DAVIDSON CREDIT CORP.
as Servicer
AND
[_______________]
not in its individual capacity but solely as Trustee of
HARLEY-DAVIDSON MOTORCYCLE TRUST [___]
Dated as of [________]
CERTIFICATES FOR HARLEY-DAVIDSON MOTORCYCLE CONTRACTS
[_____] GRANTOR TRUST
[___]% CLASS A CERTIFICATES
[___]% CLASS B CERTIFICATES
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
TABLE OF CONTENTS.................................................................................................2
ARTICLE I.........................................................................................................6
Section 1.01. General.......................................................................................6
Section 1.02. Specific Terms................................................................................6
ARTICLE II.......................................................................................................24
Section 2.01. Closing......................................................................................24
Section 2.02. Conditions to the Closing....................................................................25
Section 2.03. Acceptance by Trustee........................................................................26
Section 2.04. Conveyance of Subsequent Contracts...........................................................26
Section 2.05. Tax Treatment................................................................................29
ARTICLE III......................................................................................................29
REPRESENTATIONS AND WARRANTIES...................................................................................29
Section 3.01. Representations and Warranties Regarding the Trust Depositor.................................29
Section 3.02. Representations and Warranties Regarding the Servicer........................................31
ARTICLE IV.......................................................................................................32
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS;.....................................................32
Section 4.01. Custody of Contracts.........................................................................32
Section 4.02. Filing.......................................................................................34
Section 4.03. Name Change or Relocation....................................................................34
Section 4.04. Chief Executive Office.......................................................................35
Section 4.05. Costs and Expenses...........................................................................35
ARTICLE V........................................................................................................35
SERVICING OF CONTRACTS...........................................................................................35
Section 5.01. Responsibility for Contract Administration...................................................35
Section 5.02. Standard of Care.............................................................................35
Section 5.03. Records......................................................................................35
Section 5.04. Inspection...................................................................................35
Section 5.05. Trust Accounts...............................................................................36
Section 5.06. Enforcement..................................................................................38
Section 5.07. Trustee to Cooperate.........................................................................39
Section 5.08. Costs and Expenses...........................................................................40
Section 5.09. Maintenance of Security Interests in Motorcycles.............................................40
ARTICLE VI.......................................................................................................40
REPORTS..........................................................................................................40
Section 6.01. Monthly Reports..............................................................................40
Section 6.02. Officer's Certificate........................................................................41
Section 6.03. Other Data...................................................................................41
Section 6.04. Annual Report of Accountants.................................................................41
Section 6.05. Annual Statement of Compliance from Servicer.................................................42
Section 6.06. Statements to Certificateholders:............................................................42
ARTICLE VII......................................................................................................44
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<PAGE>
SERVICER DEFAULTS; SERVICE TRANSFER..............................................................................44
Section 7.01. Servicer Defaults............................................................................44
Section 7.02. Service Transfer.............................................................................45
Section 7.03. [Reserved]...................................................................................46
Section 7.04. Notification to Certificateholders...........................................................46
Section 7.05. Effect of Transfer...........................................................................47
Section 7.06. Database File................................................................................47
Section 7.07. Successor Servicer Indemnification...........................................................47
ARTICLE VIII.....................................................................................................50
PAYMENTS AND RESERVE FUND........................................................................................50
Section 8.01. Monthly Payments.............................................................................50
Section 8.02. Fees.........................................................................................50
Section 8.03. Advances; Realization of Carrying Charge.....................................................50
Section 8.04. Payments.....................................................................................51
Section 8.05. Withdrawal from Reserve Fund to Cover a Shortfall............................................52
Section 8.06. Repurchases of Contracts for Breach of Representations and Warranties........................52
Section 8.07. Reassignment of Repurchased Contracts........................................................53
ARTICLE IX.......................................................................................................54
THE CERTIFICATES.................................................................................................54
Section 9.01 The Certificates.............................................................................54
Section 9.02 Authentication of Certificates...............................................................54
Section 9.03 Registration of Transfer and Exchange........................................................54
Section 9.04 Certain Transfer Restrictions. [RESERVED]....................................................55
Section 9.05 Mutilated, Destroyed, Lost or Stolen Certificates............................................55
Section 9.06 Persons Deemed Owners........................................................................56
Section 9.07 Access to List of Certificateholders' Names and Addresses....................................56
Section 9.08 Book-Entry Certificates......................................................................56
Section 9.09 Notices to Clearing Agency...................................................................57
ARTICLE X........................................................................................................57
INDEMNITIES......................................................................................................57
Section 10.01. Servicer Indemnification......................................................................57
Section 10.02. Liabilities to Obligors.......................................................................58
Section 10.03. Tax Indemnification...........................................................................58
Section 10.04. Servicer's Indemnities........................................................................58
Section 10.05. Operation of Indemnities......................................................................58
ARTICLE XI.......................................................................................................58
THE TRUSTEE......................................................................................................59
Section 11.01. Duties of Trustee.............................................................................59
Section 11.02. Certain Matters Affecting the Trustee.........................................................60
Section 11.03. Trustee Not Liable for Certificates or Contracts..............................................62
Section 11.04. Trustee May Own Certificates..................................................................62
Section 11.05. Rights to Direct Trustee and to Waive Servicer Defaults.......................................62
Section 11.06. The Servicer to Pay Trustee's Expenses........................................................62
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Section 11.07. Eligibility Requirements for Trustee..........................................................63
Section 11.08. Resignation or Removal of Trustee.............................................................63
Section 11.09. Successor Trustee.............................................................................64
Section 11.10. Merger or Consolidation of Trustee............................................................65
Section 11.11. Tax Returns...................................................................................65
Section 11.12. Obligor Claims................................................................................65
Section 11.13 Appointment of Co-Trustee or Separate Trustee.................................................66
Section 11.14 Representations and Warranties of Trustee.....................................................67
ARTICLE XII......................................................................................................68
MISCELLANEOUS....................................................................................................68
Section 12.01. Servicer Not to Resign........................................................................68
Section 12.02. Prohibited Transactions with Respect to the Trust.............................................68
Section 12.03. Maintenance of Office or Agency...............................................................69
Section 12.04. Termination...................................................................................69
Section 12.05. Acts of Certificateholders....................................................................69
Section 12.06. Calculations..................................................................................70
Section 12.07. Assignment or Delegation by Trust Depositor...................................................70
Section 12.08. Amendment.....................................................................................70
Section 12.09. Notices.......................................................................................71
Section 12.10. Merger and Integration........................................................................72
Section 12.11. Headings......................................................................................72
Section 12.12. Governing Law.................................................................................72
Section 12.13. No Insolvency Petition........................................................................72
Section 12.14. Third Party Beneficiary.......................................................................73
Section 12.15. No Additional Securities......................................................................73
Section 12.16. No Additional Indebtedness by the Trust Depositor.............................................73
Exhibit A-1......................................................................................................75
Certificate for Harley-Davidson Motorcycle Contracts.............................................................75
Certificate for Harley-Davidson Motorcycle Contracts.............................................................83
</TABLE>
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<PAGE>
This Agreement, dated as of [_____], is made by and among
Harley-DavidsonCustomer Funding Corp., a Nevada corporation (the "TRUST
DEPOSITOR"), Harley-Davidson Credit Corp., a Nevada corporation, as Servicer (in
such capacity, the "SERVICER") and [_____________], a ________________ not in
its individual capacity but solely as Trustee (in such capacity, the "TRUSTEE")
of Harley-Davidson Motorcycle Trust [_____] (the "TRUST").
In consideration of the premises and the mutual agreements hereinafter
set forth, the Trust Depositor, the Servicer and the Trustee agree as provided
herein:
ARTICLE I
DEFINITIONS
SECTION 1.01. GENERAL. For the purpose of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, the terms
defined in this Article include the plural as well as the singular, the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular article, section or other
subdivision, and Section references refer to Sections of this Agreement.
SECTION 1.02 SPECIFIC TERMS.
"ACT" HAS THE MEANING ASSIGNED IN SECTION 9.02 (B).
"ADDITION NOTICE" means, with respect to any transfer of Subsequent
Contracts to the Trust pursuant to Section 2.04 and the Deposit Agreement and
the Trust Depositor's corresponding prior purchase of such Contracts from the
Seller, a notice, which shall be given at least 10 days prior to the related
Subsequent Transfer Date, identifying the Subsequent Contracts to be transferred
and the aggregate Principal Balance of such Subsequent Contracts.
"ADVANCE" means, with respect to any Payment Date, the amounts, if any,
deposited by the Servicer in the Collection Account for such Payment Date
pursuant to Section 8.03.
"AFFILIATE" of any specified Person means any other Person controlling
or controlled by, or under common control with, such specified Person. For the
purposes of this definition, "CONTROL" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "CONTROLLING" or "CONTROLLED" have meanings
correlative to the foregoing.
"AGREEMENT" means this Pooling and Servicing Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"APPLICANTS" has the meaning assigned in Section 9.06.
"AUTHENTICATING AGENT" means any authenticating agent appointed
pursuant to Section 9.07.
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<PAGE>
"AVAILABLE FUNDS" means, with respect to any Payment Date, the sum of
the Available Interest and the Available Principal for such Payment Date.
"AVAILABLE INTEREST" means, with respect to any Payment Date, the total
(without duplication) of the following amounts received by the Servicer on or in
respect of the Contracts during the related Due Period: (i) all amounts received
in respect of interest on the Contracts (as well as Late Payment Penalty Fees
and Extension Fees), (ii) the interest component of all Net Liquidation
Proceeds, (iii) the interest component of the aggregate of the Repurchase Prices
for Contracts repurchased by the Seller pursuant to Section 8.06, (iv) all
Advances made by the Servicer pursuant to Section 8.03, (v) the interest
component of all amounts paid by the Seller in connection with an optional
repurchase of the Contracts pursuant to Section 8.08, (vi) all amounts received
in respect of Carrying Charges transferred from the Interest Reserve Account
pursuant to Section 8.03, and (vii) all amounts received in respect of interest,
dividends, gains, income and earnings on investment of funds in the Trust
Accounts as contemplated in the last sentence of Section 5.05(d).
"AVAILABLE PRINCIPAL" means, with respect to any Payment Date, the
total (without duplication) of the following amounts received by the Servicer on
or in respect of the Contracts during the related Due Period: (i) all amounts
received in respect of principal on the Contracts, (ii) the principal component
of all Net Liquidation Proceeds, (iii) the principal component of the aggregate
of the Repurchase Prices for Contracts repurchased by the Seller pursuant to
Section 8.06, and (iv) the principal component of all amounts paid by the Seller
in connection with an optional repurchase of the Contracts pursuant to Section
8.08.
"AVERAGE DEFAULT RATIO" means, for any Payment Date, the arithmetic
average of the Default Ratios for such Payment Dates and the two immediately
preceding Payment Dates.
"AVERAGE DELINQUENCY RATIO" means, the arithmetic average of the
Delinquency Ratios for that Payment Date and the two immediately preceding
Payment Dates.
"AVERAGE LOSS RATIO" means, for a Payment Date is equal to the
arithmetic average of the Loss Ratios for such Payment Date and the two
immediately preceding Payment Dates.
"BOOK-ENTRY CERTIFICATES" means beneficial interests in Class A
Certificates or Class B Certificates, ownership and transfers of which shall be
registered through book entries by a Clearing Agency as described in Section
9.08.
"BUELL" means Buell Motorcycle Company.
"BUSINESS DAY" means any day other than (a) a Saturday or a Sunday, or
(b) another day on which banking institutions in the city of Chicago, Illinois
are authorized or obligated by law, executive order, or governmental decree to
be closed.
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<PAGE>
"CARRYING CHARGES" means the sum of (i) the product of (A) one-twelfth
of the sum of (x) the Class A Pass-Through Rate and (y) [___]% times (B) the
Class A Percentage of the Pre-Funded Amount as of the beginning of the related
Due Period plus (ii) the product of (A) one-twelfth of the sum of (x) the Class
B Pass-Through Rate and (y) [___]% times (B) the Class B Percentage of the
Pre-Funded Amount as of the beginning of the related Due Period.
"CERTIFICATEHOLDER" or "HOLDER" means the person in whose name either a
Class A Certificate or a Class B Certificate is registered on the Certificate
Register, except that, solely for the purposes of giving any consent, waiver,
request or demand pursuant to this Agreement, any Certificate registered in the
name of the Trust Depositor or any Affiliate of the Trust Depositor shall be
deemed not to be outstanding and the Fractional Interest evidenced thereby shall
not be taken into account in determining whether the requisite Fractional
Interest necessary to effect any such consent, request, waiver or demand has
been obtained; PROVIDED, HOWEVER, that in determining whether the Trustee shall
be protected in relying upon any such consent, waiver, request or demand only
Certificates which the Trustee knows to be so owned shall be so disregarded.
"CERTIFICATE OWNER" means, with respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency or on the books of a Person
maintaining an account with the Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of the Clearing Agency).
"CERTIFICATE REGISTER" means the register maintained pursuant to
Section 9.02(a).
"CERTIFICATE REGISTRAR" or "REGISTRAR" means the registrar appointed
pursuant to Section 9.02.
"CERTIFICATES" means the Class A Certificates and the Class B
Certificates.
"CLASS" means all Certificates whose form is identical except for
variation in denomination, principal amount or Holder.
"CLASS A CERTIFICATE" means a Certificate for Harley-Davidson
Motorcycle Contracts evidencing a Fractional Interest executed and delivered by
the Trustee substantially in the form of EXHIBIT A-1.
"CLASS A CERTIFICATE BALANCE" shall initially equal the Class A Initial
Certificate Balance and, on any date thereafter, shall equal the Class A
Certificate Balance, reduced by all amounts previously distributed to Class A
Certificateholders and allocable to principal.
"CLASS A CERTIFICATE FACTOR" means, at any time, the percentage
(carried out to seven decimal places) derived from a fraction, the numerator of
which is the Class A Certificate Balance at such time and the denominator of
which is the Class A Initial Certificate Balance.
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"CLASS A DISTRIBUTABLE AMOUNT" means, with respect to any Payment Date,
the sum of the Class A Principal Distributable Amount and the Class A Interest
Distributable Amount.
"CLASS A INITIAL CERTIFICATE BALANCE" means $[_____], which is equal to
the aggregate Principal Balance of the Initial Contracts as of the Initial
Cutoff Date plus the Pre-Funded Amount as of the Closing Date multiplied by the
Class A Percentage, and with respect to a particular Certificate means the
amount set forth on the face thereof.
"CLASS A INTEREST CARRYOVER SHORTFALL" means, with respect to any
Payment Date, (i) the excess of the Class A Interest Distributable Amount for
the preceding Payment Date over the amount of interest that was actually
distributed to Class A Certificateholders on such preceding Payment Date, plus
(ii) 30 days of interest on the amount specified in clause (i), to the extent
permitted by law, at the Class A Pass-Through Rate.
"CLASS A INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date (other than the first Payment Date), the sum of (i) the product of
(A) one-twelfth (or, with respect to the first Payment Date, a fraction, the
numerator of which equals the number of days from and including the Closing Date
to but excluding the first Payment Date and the denominator of which equals 360)
of the Class A Pass-Through Rate and (B) the Class A Certificate Balance as of
the immediately preceding Payment Date (after giving effect to distributions of
principal made on such immediately preceding Payment Date) or, in the case of
the first Payment Date, the Class A Initial Certificate Balance plus (ii) the
Class A Interest Carryover Shortfall for such Payment Date.
"CLASS A PASS-THROUGH RATE" means [___]% per annum computed on the
basis of a 360-day year consisting of twelve 30-day months.
"CLASS A PERCENTAGE" means [___]%.
"CLASS A POOL FACTOR" means, at any time, the percentage (carried out
to seven decimal places) derived from a fraction, the numerator of which is the
Class A Certificate Balance at such time and the denominator of which is the
Class A Initial Certificate Balance.
"CLASS A PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any
Payment Date, (i) the excess of the Class A Principal Distributable Amount over
(ii) the amount of principal that was actually distributed to Class A
Certificateholders on such preceding Payment Date.
"CLASS A PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date, the sum of (i) the product of (a) the Class A Percentage and (b)
the Monthly Principal with respect to such Payment Date plus (ii) the Class A
Principal Carryover Shortfall with respect to such Payment Date; PROVIDED,
HOWEVER, that the Class A Principal Distributable Amount on the Final Scheduled
Payment Date shall not be less than the amount that is necessary (after giving
effect to other amounts to be deposited in the Collection Account on such
Payment Date and allowable to principal) to reduce the outstanding principal
amount of the Class A Certificates to zero.
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"CLASS B CERTIFICATE" means a Certificate for Harley-Davidson
Motorcycle Contracts evidencing a Fractional Interest executed and delivered by
the Trustee substantially in the form of EXHIBIT A-2.
"CLASS B CERTIFICATE BALANCE" shall initially equal the Class B Initial
Certificate Balance and, on any Payment Date (after giving effect to all
payments made to Certificateholders on such date) shall equal the amount by
which the sum of (i) the Pool Balance as of the last day of the related Due
Period and (ii) the Pre-Funded Amount as of such day exceeds the Class A
Certificate Balance on such Payment Date (after giving effect to all payments
made to the Class A Certificateholders on such date).
"CLASS B CERTIFICATE FACTOR" means, at any time, the percentage
(carried out to seven decimal places) derived from a fraction, the numerator of
which is the Class B Certificate Balance at such time and the denominator of
which is the Class B Initial Certificate Balance.
"CLASS B DISTRIBUTABLE AMOUNT" means, with respect to any Payment Date,
the sum of the Class B Principal Distributable Amount and the Class B Interest
Distributable Amount.
"CLASS B INITIAL CERTIFICATE BALANCE" means $[____], which is equal to
the aggregate Principal Balance of the Initial Contracts as of the Initial
Cutoff Date plus the Pre-Funded Amount as of the Closing Date multiplied by the
Class B Percentage, and with respect to a particular Certificate means the
amount set forth on the face thereof.
"CLASS B INTEREST CARRYOVER SHORTFALL" means, with respect to any
Payment Date, (i) the excess of the Class B Interest Distributable Amount for
the preceding Payment Date over the amount of interest that was actually
distributed to Class B Certificateholders on such preceding Payment Date, plus
(ii) 30 days of interest on the amount specified in clause (i), to the extent
permitted by law, at the Class B Pass-Through Rate.
"CLASS B INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date (other than the first Payment Date), the sum of (i) the product of
(A) one-twelfth (or, with respect to the first Payment Date, a fraction the
numerator of which equals the number of days from and including the Closing Date
to but excluding the first Payment Date and the denominator of which equals 360)
of the Class B Pass-Through Rate and (B) the Class B Certificate Balance as of
the immediately preceding Payment Date (after giving effect to distributions of
principal made on such immediately preceding Payment Date) or, in the case of
the first Payment Date, the Class B Initial Certificate Balance plus (ii) the
Class B Interest Carryover Shortfall for such Payment Date.
"CLASS B PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any
Payment Date, (i) the excess of the Class B Principal Distributable Amount over
(ii) the amount of principal that was actually distributed to Class B
Certificateholders on such preceding Payment Date.
"CLASS B PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date, the sum of (i) the product of (A) the Class B Percentage and (B)
the Monthly Principal for such
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Payment Date plus (ii) the Class B Principal Carryover Shortfall for such
Payment Date; PROVIDED, HOWEVER, that the Class B Principal Distributable Amount
on the Final Scheduled Payment Date shall not be less than the amount that is
necessary (after giving effect to other amounts to be deposited in the
Collection Account on such Payment Date and allocable to principal) to reduce
the outstanding principal amount of the Class B Certificates to zero.
"CLASS B PASS-THROUGH RATE" means [___]% per annum computed on the
basis of a 360-day year consisting of twelve 30-day months. The Class B
Pass-Through Rate includes (i) at any time during the Funding Period, the sum of
(a) the Class A Pass-Through Rate multiplied by the Class B Percentage
multiplied by the Pool Balance, (b) 1.75 basis points on the Pool Balance and
(c) a portion of the amount deposited to the Collection Account from the
Interest Reserve Account during the Funding Period equal to the difference
between the Class B Pass-Through Rate multiplied by the Class B Certificate
Balance and the sum of items (a) and (b) above and (ii) at any time after the
Funding Period, the sum of (a) the Class A Pass-Through Rate multiplied by the
Class B Certificate Balance and (b) 1.75 basis points on the Pool Balance. In no
event will the Class B Pass-Through Rate exceed 7.00% per annum.
"CLASS B PERCENTAGE" means [___]%
"CLASS B POOL FACTOR" means, at any time, the percentage (carried out
to seven decimal places) derived from a fraction, the numerator of which is the
Class B Certificate Balance at such time and the denominator of which is the
Class B Initial Certificate Balance.
"CLEARING AGENCY" means an organization registered as a "CLEARING
AGENCY" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"CLOSING DATE" means [_______].
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL AGENT" means the Collateral Agent named in the Security
Agreement and any successor thereto pursuant to the terms of the Security
Agreement.
"COLLECTION ACCOUNT" means a trust account as described in Section 5.05
maintained in the name of the Trust which shall be an Eligible Account.
"COMPUTER DISK" means the computer disk generated by the Servicer which
provides information relating to the Contracts and which was used by the Seller
in selecting the Contracts sold to the Trust Depositor pursuant to the Transfer
and Sale Agreement (and any Subsequent Purchase Agreement) by the Trust
Depositor in selecting the Contracts sold to the Trust pursuant
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to this Agreement (and any Subsequent Transfer Agreement), and includes the
master file and the history file as well as servicing information with respect
to the Contracts.
"CONTRACT ASSETS" has the meaning assigned in Section 2.01 (and 2.04,
as applicable in the case of Subsequent Contracts) of the Transfer and Sale
Agreement.
"CONTRACT FILE" means, as to each Contract, (a) the original copy of
the Contract, including the executed conditional sales contract or other
evidence of the obligation of the Obligor, (b) the original title certificate to
the Motorcycle and, where applicable, the certificate of lien recordation, or,
if such title certificate has not yet been issued, an application for such title
certificate, or other appropriate evidence of a security interest in the covered
Motorcycle; (c) the assignments of the Contract; (d) the original copy of any
agreement(s) modifying the Contract including, without limitation, any extension
agreement(s) and (e) documents evidencing the existence of physical damage
insurance covering such Motorcycle.
"CONTRACT RATE" means, as to any Contract, the annual rate of interest
specified in the Contract.
"CONTRACTS" means the motorcycle conditional sales contracts described
in the List of Contracts and constituting part of the Trust Corpus (as such list
may be supplemented from time to time to reflect transfers of Subsequent
Contracts), and includes, without limitation, all related security interests and
any and all rights to receive payments which are collected pursuant thereto on
or after the Initial Cutoff Date or, with respect to any Subsequent Contracts,
any related Subsequent Cutoff Date, but excluding any rights to receive payments
which are collected pursuant thereto prior to the Initial Cutoff Date, or with
respect to any Subsequent Contracts, any related Subsequent Cutoff Date.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of the execution of this Agreement is
located at the address set forth in Section 12.09.
"CRAM DOWN LOSS" means, with respect to a Contract, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Principal Balance of such Contract the amount of such reduction
(with a "CRAM DOWN LOSS" being deemed to have occurred on the date of issuance
of such order).
"CUMULATIVE LOSS RATIO" means, as of any Payment Date, the fraction
(expressed as a percentage) computed by the Servicer by dividing (i) the
aggregate Net Liquidation Losses for all Contracts since the Cutoff Date through
the end of the related Due Period by (ii) the sum of (A) the Principal Balance
of the Contracts as of the Cutoff Date plus (B) the Principal Balance of any
Subsequent Contracts as of the related Subsequent Cutoff Date.
"CUTOFF DATE" means either or both (as the context may require) the
Initial Cutoff Date and any Subsequent Cutoff Date.
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"DEFAULTED CONTRACT" means a Contract with respect to which there has
occurred one or more of the following: (i) all or some portion of any payment
under the Contract is 120 days or more delinquent, (ii) repossession (and
expiration of any redemption period) of a Motorcycle securing a Contract or
(iii) the Servicer has determined in good faith that an Obligor is not likely to
resume payment under a Contract.
"DEFAULT RATIO" means, as of any Payment Date, the fraction (expressed
as a percentage) derived by dividing (x) the Principal Balance for all Contracts
that become Defaulted Contracts during the immediately preceding Due Period
multiplied by twelve by (y) the outstanding Principal Balances of all Contracts
as of the beginning of the related Due Period.
"DELINQUENCY AMOUNT" means, as of any Payment Date means the Principal
Balance of all Contracts that were delinquent 60 days or more as of the end of
the related Due Period (including Contracts in respect of which the related
Motorcycles have been repossessed and are still inventory).
"DELINQUENT INTEREST" means, for each Contract and each Determination
Date as to which the full payment due in the related Due Period has not been
paid (any such payment being "DELINQUENT" for purposes of this definition), all
interest accrued on such Contract from the Due Date in the Due Period one month
prior to the Due Period in which the payment is delinquent.
"DELINQUENCY RATIO" means, for any Payment Date, the fraction
(expressed as a percentage) computed by dividing (a) the Delinquency Amount
during the immediately preceding Due Period multiplied by twelve by (b) the
Principal Balance of the Contracts as of the beginning of the related Due
Period.
"DEPOSIT AGREEMENT" means the Agreement to Deposit Contracts, dated as
of [___], from the Trust Depositor in favor of the Trustee for the benefit of
the Trust, which comprises part of the Trust Corpus.
"DETERMINATION DATE" means the fourth Business Day following the
conclusion of a Due Period during the term of this Agreement.
"DUE DATE" means, with respect to any Contract, the day of the month on
which each scheduled payment of principal and interest is due on such Contract,
exclusive of days of grace.
"DUE PERIOD" means a calendar month during the term of this Agreement,
and the Due Period related to a Determination Date or Payment Date shall be the
calendar month immediately preceding such date; PROVIDED, however, that with
respect to the Initial Determination Date or Initial Payment Date, the Due
Period shall be the period from the Initial Cutoff Date to and including
[_____].
"ELIGIBLE ACCOUNT" means a segregated direct deposit account maintained
with a depository institution or trust company organized under the laws of the
United States of America, or any of the States thereof, or the District of
Columbia, having a certificate of deposit,
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short-term deposit or commercial paper rating of at least A-1+ by Standard &
Poor's and P-1 by Moody's.
"ELIGIBLE INVESTMENTS" means any one or more of the following types of
investments:
(a) (i) direct interest-bearing obligations of, and
interest-bearing obligations guaranteed as to timely payment of
principal and interest by, the United States or any agency or
instrumentality of the United States the obligations of which are
backed by the full faith and credit of the United States; and (ii)
direct interest-bearing obligations of, and interest-bearing
obligations guaranteed as to timely payment of principal and interest
by, the Federal National Mortgage Association or the Federal Home Loan
Mortgage Corporation, but only if, at the time of investment, such
obligations are assigned the highest credit rating by each Rating
Agency;
(b) demand or time deposits in, certificates of deposit of, or
bankers' acceptances issued by any depositary institution or trust
company organized under the laws of the United States or any State and
subject to supervision and examination by federal and/or State banking
authorities (including, if applicable, the Trustee or any agent of the
Trustee acting in their respective commercial capacities); PROVIDED
that the short-term unsecured debt obligations of such depositary
institution or trust company at the time of such investment, or
contractual commitment providing for such investment, are assigned the
highest credit rating by each Rating Agency;
(c) repurchase obligations pursuant to a written agreement (i)
with respect to any obligation described in clause (a) above, where the
Trustee has taken actual or constructive delivery of such obligation in
accordance with Section 5.05, and (ii) entered into with a depositary
institution or trust company organized under the laws of the United
States or any State thereof, the deposits of which are insured by the
Federal Deposit Insurance Corporation and the short-term unsecured debt
obligations of which are rated "A-1+" by Standard & Poor's and "P-1" by
Moody's (including, if applicable, the Trustee or any agent of the
Trustee acting in their respective commercial capacities);
(d) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States or
any State whose long-term unsecured debt obligations are assigned the
highest credit rating by each Rating Agency at the time of such
investment or contractual commitment providing for such investment;
PROVIDED, HOWEVER, that securities issued by any particular corporation
will not be Eligible Investments to the extent that an investment
therein will cause the then outstanding principal amount of securities
issued by such corporation and held as part of the Trust to exceed 10%
of the Eligible Investments held in the Trust (with Eligible
Investments valued at par);
(e) commercial paper that (i) is payable in United States
dollars and (ii) is rated in the highest credit rating category by each
Rating Agency;
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(f) money market mutual funds registered under the Investment
Company Act of 1940, as amended, having a rating, at the time of such
investment, from each of the Rating Agencies in the highest investment
category granted thereby; and
(g) any other demand or time deposit, obligation, security or
investment as may be acceptable to each Rating Agency and as may from
time to time be confirmed in writing to the Trustee by each Rating
Agency;
PROVIDED, HOWEVER, that securities issued by any entity (except as provided in
paragraph (a)) will not be Eligible Investments to the extent that an investment
therein will cause the then outstanding principal amount of securities issued by
such entity and held in the Pre-Funding Account to exceed $10 million (with
Eligible Investments held in the Pre-Funding Account valued at par).
"EXTENSION FEE" means any extension fee paid by the Obligor on a
Contract.
"FINAL SCHEDULED PAYMENT DATE" means [____].
"FRACTIONAL INTEREST" means an undivided interest in the Trust and, as
to a particular Certificateholder, means the undivided interest in the Trust
owned by that Certificateholder equal to the percentage obtained by dividing (a)
the Certificate Balance of all Certificates held by such Certificateholder at
the time of determination by (b) the aggregate of the Certificate Balance of all
of the Certificates held by all Certificateholders at such time.
"FUNDING PERIOD" means the period beginning on the Closing Date and
ending on the first to occur of (a) the Payment Date on which the amount on
deposit in the Pre-Funding Account (after giving effect to any transfers
therefrom in connection with the transfer of Subsequent Contracts to the Trust
on such Payment Date) is less than $100,000, (b) the date on which a Servicer
Default occurs, (c) the date on which an Insolvency Event occurs with respect to
the Seller and (d) the close of business on the date which is 90 days from and
including the Closing Date.
"HOLDER" means a Person in whose name a Certificate is registered in
the Certificate Register.
"INITIAL CONTRACTS" means those Contracts conveyed to the Trust on the
Closing Date.
"INITIAL CUTOFF DATE" means [_____].
"INSOLVENCY EVENT" means with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs,
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and such decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable Federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by such Person to the entry of an
order for relief in an involuntary case under any such law, or the consent by
such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general assignment for the benefit of creditors, or the failure by
such Person generally to pay its debts as such debts become due, or the taking
of action by such Person in furtherance of any of the foregoing.
"INTEREST RESERVE ACCOUNT" means the account designated as the
Interest Reserve Account in, and which is established and maintained pursuant
to, Section 3.01 of the Security Agreement.
"INTEREST RESERVE AMOUNT" means, as of any date of determination,
the amount on deposit in the Interest Reserve Account on such date, and as of
the Closing Date shall be $[___].
"Late Payment Penalty Fees" means any late payment fees paid by
Obligors on Contracts after all sums received have been allocated first to
regular installments due or overdue and all such installments are then paid in
full.
"LIQUIDATED CONTRACT" means a Contract with respect to which there has
occurred one or more of the following: (i) 90 days have elapsed following the
date of repossession (and expiration of any redemption period) with respect to
the Motorcycle securing such Contract, (ii) such Contract is a Defaulted
Contract with respect to which the Servicer has determined in good faith that
all amounts expected to be recovered have been received, or (iii) all or any
portion of any payment is delinquent 150 days or more.
"LIQUIDATED DAMAGES" means the amounts payable by the Trust Depositor
to the Trust upon the end of the Funding Period under Section 2.02 of the
Deposit Agreement, to be derived from any remaining Pre-Funded Amount at the end
of the Funding Period, and described as "Liquidated Damages" in Section 2.02 of
the Deposit Agreement.
"LIST OF CONTRACTS" means the list identifying each Contract
constituting part of the Trust Corpus, which list shall consist of the initial
List of Contracts reflecting the Initial Contracts transferred to the Trust on
the Closing Date, together with any Subsequent List of Contracts reflecting the
Subsequent Contracts transferred to the Trust on the related Subsequent Transfer
Date, and which list (a) identifies each Contract and (b) sets forth as to each
Contract (i) the Principal Balance as of the applicable Cutoff Date, (ii) the
amount of monthly payments due from the Obligor, (iii) the Contract Rate and
(iv) the maturity date, and which list (as in effect on the Closing Date) is
attached to this Agreement as EXHIBIT I.
"LOCKBOX" means the Lockbox maintained by the Lockbox Bank identified
on EXHIBIT L hereto.
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"LOCKBOX ACCOUNT" means the account maintained with the Lockbox Bank
and identified on EXHIBIT L hereto.
"LOCKBOX AGREEMENT" means the Third Amended and Restated Lockbox
Administration Agreement dated as of March 1, 1996 by and among the Servicer,
the Trust Depositor, Eaglemark Customer Funding Corporation-II, NBD Bank, N.A.,
Bank of America National Trust and Savings Association ("BOFA"), Norwest Bank
Minnesota, National Association (the "PREDECESSOR TRUSTEE"), the Trustee,
Financial Security Assurance Inc. ("FSA," with respect to certain prior trusts,
the "PRIOR TRUSTS"), with respect to the Lockbox Account, unless such agreement
shall be terminated in accordance with its terms, in which event "LOCKBOX
AGREEMENT" shall mean such other agreement, in form and substance acceptable to
the above-described parties and FSA, or if an Insurer Default (as defined in
FSA's documentation relating to such Prior Trusts) shall have occurred and be
continuing or FSA is owed no obligation with respect to such Prior Trusts, the
majority of the Certificateholders with respect to such Prior Trusts), the
Servicer, the Trustee and the Lockbox Bank.
"LOCKBOX BANK" means the financial institution maintaining the Lockbox
Account and identified on EXHIBIT L hereto or any successor thereto acceptable
to a majority of the Certificateholders.
"LOSS RATIO" means, for any Payment Date, the fraction (expressed as a
percentage) derived by dividing (x) Net Liquidation Losses for all Contracts
that became Liquidated Contracts during the immediately preceding Due Period
multiplied by twelve by (y) the outstanding Principal Balances of all Contracts
as of the beginning of the Due Period.
"MONTHLY PRINCIPAL" means, as to any Payment Date, the following amount
calculated as of the related Determination Date: the difference between (i) the
sum of (A) the Principal Balance of the Contracts as of the first day of the Due
Period preceding the Due Period in which such Payment Date occurs (or, in the
case of the first Payment Date, the Principal Balance of the Contracts as of the
Initial Cutoff Date), plus (B) the Pre-Funded Amount on such date (or, in the
case of the first Payment Date, the Pre-Funded Amount on the Closing Date) and
(ii) the sum of (A) the Principal Balance of the Contracts as of the first day
of the Due Period in which such Payment Date occurs, plus (B) the Pre-Funded
Amount on such day, plus (C) the amount of any Special Distribution occurring
from the day referred to in clause (i)(A) above to the day referred to in clause
(ii)(A) above; provided, that on the Final Scheduled Payment Date, Monthly
Principal shall equal the aggregate of the Class A Certificate Balance and the
Class B Certificate Balance. For purposes of determining the amount in clause
(ii)(C) above as to any particular Payment Date and with respect to the Due
Period preceding such Payment Date, if the Funding Period ends during such Due
Period and Liquidated Damages (as defined in the Security Agreement) are
consequently paid from the Pre-Funding Account during such Due Period but will
not be distributed as a Special Distribution until the Payment Date occurring in
the following Due Period (i.e., the particular Payment Date referred to above),
then the amount calculated in clause (ii)(C) for such preceding Due Period shall
be deemed to include such Special Distribution, in such amount (although paid as
a Special Distribution) on the Payment
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Date occurring during the following Due Period) will not be included in the next
calculation of clause (ii)(C) to be made with respect to the following Due
Period.
"MONTHLY REPORT" has the meaning assigned in Section 6.01.
"MONTHLY SERVICING FEE" means, as to any Payment Date, one-twelfth of
the product of 1% and the Principal Balance of the Contracts as of the beginning
of the related Due Period.
"MOODY'S" means Moody's Investors Service, Inc. or any successor
thereto.
"MOTORCYCLE" means a motorcycle manufactured by Harley-Davidson, Inc.
(or in certain limited instances Buell) securing a Contract.
"NET LIQUIDATION LOSSES" means, as of any Payment Date, with respect to
a Liquidated Contract, the amount, if any, by which (a) the outstanding
Principal Balance of such Liquidated Contract plus accrued and unpaid interest
thereon at the Contract Rate to the date on which such Liquidated Contract
became a Liquidated Contract exceeds (b) the Net Liquidation Proceeds for such
Liquidated Contract.
"NET LIQUIDATION PROCEEDS" means, as to any Liquidated Contract, the
proceeds realized on the sale or other disposition of the related Motorcycle,
including proceeds realized on the repurchase of such Motorcycle by the
originating dealer for breach of warranties, and the proceeds of any insurance
relating to such Motorcycle, after payment of all reasonable expenses incurred
thereby, together, in all instances, with the expected or actual proceeds of any
recourse rights relating to such Contract as well as any post-disposition
proceeds received by the Servicer.
"OBLIGOR" means a Motorcycle buyer or other person who owes payments
under a Contract.
"OFFICER'S CERTIFICATE" means a certificate signed by the Chairman of
the Board, President, or any Vice President of the Seller, the Trust Depositor
or the Servicer and delivered to the Trustee.
"PAYING AGENT" has the meaning assigned in Section 8.01(b).
"PAYMENT DATE" means the fifteenth day of each calendar month during
the term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, with the first such Payment Date hereunder being
[_____].
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"POOL BALANCE" means, as of any date, the aggregate Principal Balance
of Contracts as of the close of business on such date.
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"PRE-FUNDED AMOUNT" means as of any date, the amount on deposit in the
Pre-Funding Account at the close of business on such date.
"PRE-FUNDING ACCOUNT" means the account designated as the Pre-Funding
Account in, and which is established and maintained pursuant to, Section 3.01 of
the Security Agreement.
"PRINCIPAL BALANCE" means (a) with respect to any Contract as of any
date, an amount equal to the unpaid principal balance of such Contract as of the
opening of business on the Initial Cutoff Date or related Subsequent Cutoff
Date, as applicable, reduced by the sum of (x) all payments received by the
Servicer as of such date allocable to principal and (y) any Cram Down Loss in
respect of such Contract; provided, however, that (i) if (x) a Contract is
repurchased by the Seller pursuant to Section 5.01 of the Transfer and Sale
Agreement and Section 8.06 hereof because of a breach of representation or
warranty, or if (y) the Seller gives notice of its intent to purchase the
Contracts in connection with an optional termination of the Trust pursuant to
Section 5.02 of the Transfer and Sale Agreement and Section 8.08 hereof, in each
case the Principal Balance of such Contract or Contracts shall be deemed as of
the related Determination Date to be zero for the Due Period in which such event
occurs and for each Due Period thereafter, (ii) from and after the third Due
Period succeeding the final Due Period in which the Obligor is required to make
the final scheduled payment on a Contract, the Principal Balance, if any, of
such Contract shall be deemed to be zero, and (iii) from and after the Due
Period in which a Contract becomes a Liquidated Contract, the Principal Balance
of such Contract shall be deemed to be zero; and (b) where the context requires,
the aggregate of the Principal Balances described in clause (a) for all such
Contracts.
"RATING AGENCY" means each of Moody's and Standard & Poor's, so long as
such Persons maintain a rating on the Certificates; and if either Moody's or
Standard & Poor's no longer maintains a rating on the Certificates, such other
nationally recognized statistical rating organization selected by the Trust
Depositor.
"RECORD DATE" means, with respect to any Payment Date, the last
Business Day of the preceding calendar month.
"REIMBURSEMENT AMOUNT" has the meaning assigned in Section 8.03 hereof.
"REPURCHASE PRICE" means, with respect to a Contract to be repurchased
hereunder, an amount equal to (a) the remaining principal balance of such
Contract, plus (b) accrued and unpaid interest at the Contract Rate on such
Contract through the end of the immediately preceding Due Period.
"REQUISITE INTEREST RESERVE AMOUNT" means, as of the Closing Date,
$[_____] and as of any Payment Date thereafter during the Funding Period an
amount equal to the product of (i) a fraction, the numerator of which equals the
difference between (x) the sum of the weighted average of the Class A
Pass-Through Rate and the Class B Pass-Through Rate and ___% and (y) ___%, and
the denominator of which equals 360, times (ii) the Pre-Funded Amount on such
date
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times (iii) the number of days remaining in the Funding Period. The Requisite
Interest Reserve Amount for any Subsequent Transfer Date shall be calculated
after taking into account the transfer of Subsequent Contracts to the Trust on
such Payment Date.
"RESERVE AGENT" means the Reserve Agent named in the Reserve Fund
Agreement, and any successor thereto pursuant to the terms of the Reserve Fund
Agreement.
"RESERVE FUND" means with respect to the Trust, the Reserve Fund
established and maintained pursuant to the Reserve Fund Agreement. The Reserve
Fund shall in no event be deemed part of the Trust Corpus.
"RESERVE FUND ADDITIONAL DEPOSITS" means, with respect to any transfer
of Subsequent Contracts to the Trust, the amount (if any) required to be
deposited in the Reserve Fund on or prior to such transfer in satisfaction of
the condition set forth in Section 2.04(b)(vi) hereof.
"RESERVE FUND AGREEMENT" means the Reserve Fund Agreement, dated as of
[____] among the Trust Depositor, the Reserve Agent and the Trustee (as amended,
supplemented or otherwise modified from time to time).
"RESERVE FUND DEPOSITS" shall have the meaning provided in the Reserve
Fund Agreement.
"RESERVE FUND INITIAL DEPOSIT" means $[____].
"RESERVE FUND TRIGGER EVENT" means as of any particular Payment Date
(i) the Average Delinquency Ratio is equal to or greater than ___%; (ii) the
Average Loss Ratio is equal to or greater than ___%, (iii) the Cumulative Loss
Ratio is equal to or greater than (a) ___% with respect to any Payment Date
which occurs within the period from the Closing Date to, and inclusive of, the
first anniversary of the Closing Date, (b) ___% with respect to any Payment Date
which occurs within the period from the day after the first anniversary of the
Closing Date to, and inclusive of, the second anniversary of the Closing Date,
or (c) ___% for any Payment Date following the second anniversary of the Closing
Date or (iv) the Average Default Ratio is equal to or greater than ___%.
"RESERVE FUND REQUISITE AMOUNT" means, with respect to any Payment
Date, an amount equal to ___% of the Principal Balance of the Contracts in the
Trust as of the first day of the immediately preceding Due Period or, upon the
occurrence of a Reserve Fund Trigger Event which has not terminated for three
consecutive Payment Dates (inclusive of the respective Payment Date), an amount
equal to ___% of the Principal Balance of the Contracts in the Trust as of the
first day of the immediately preceding Due Period; provided, however, in no
event, after the Funding Period, shall the Reserve Fund Requisite Amount be less
than ___% of the aggregate of the Initial Class A Certificate Balance and
Initial Class B Certificate Balance.
"RESPONSIBLE OFFICER" means, with respect to the Trustee, the chairman
and any vice chairman of the board of directors, the president, the chairman and
vice chairman of any
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executive committee of the board of directors, every vice president, assistant
vice president, the secretary, every assistant secretary, cashier or any
assistant cashier, controller or assistant controller, the treasurer, every
assistant treasurer, every trust officer, assistant trust officer and every
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by persons who at the time shall be such
officers, respectively, or to whom a corporate trust matter is referred because
of knowledge of, familiarity with, and authority to act with respect to a
particular matter.
"SECURITY AGREEMENT" means the Security Agreement, dated as of [____]
among the Trust Depositor, the Collateral Agent and the Trustee, securing the
Trust Depositor's obligations to the Trust under the Deposit Agreement.
"SELLER" means Harley-Davidson Credit Corp., a Nevada corporation, or
its successor, in its capacity as Seller of Contract Assets under the Transfer
and Sale Agreement and any Subsequent Purchase Agreement.
"SERVICER" means Harley-Davidson Credit Corp., a Nevada corporation, or
its successor, until any Service Transfer hereunder and thereafter means the
[____] appointed pursuant to Article VII below with respect to the duties and
obligations required of the Servicer under this Agreement.
"SERVICER DEFAULT" has the meaning assigned to such term in SECTION
8.01.
"SERVICE TRANSFER" has the meaning assigned in Section 7.02(a).
"SERVICING FEE" means, on any Determination Date, the sum of (a) the
Monthly Servicing Fee payable on the related Payment Date, (b) Late Payment
Penalty Fees received by the Servicer during the related Due Period, and (c)
Extension Fees received by the Servicer during the related Due Period.
"SERVICING OFFICER" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Trustee by the Servicer, as the same may be amended from time
to time.
"SHORTFALL" means, with respect to a Payment Date as determined in
accordance with Section 8.04(b), the amounts described in clauses (v) through
(viii) thereof over Available Funds (after the payment of amounts described in
clauses (i) through (iv) of Section 8.04(b) on such Payment Date) in the
Collection Account with respect to the related Due Period.
"SPECIAL DISTRIBUTION" means a distribution on a Payment Date of
amounts deposited in the Special Distribution Subaccount derived from the
payment of Liquidated Damages under the Deposit Agreement, which shall be deemed
a distribution of principal with respect to the Certificates.
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"SPECIAL DISTRIBUTION SUBACCOUNT" means the account described in
Section 5.05(a) established for the purpose of Special Distributions.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
division of The McGraw Hill Company or any successor thereto.
"SUBSEQUENT CONTRACTS" means all Contracts sold and transferred to the
Trust pursuant to Section 2.04 hereof and Section 2.01 of the Deposit Agreement.
"SUBSEQUENT CUTOFF DATE" means the date specified as such for
Subsequent Contracts in the related Subsequent Transfer Agreement.
"SUBSEQUENT LIST OF CONTRACTS" means a list, in the form of the initial
List of Contracts delivered on the Closing Date, but listing each Subsequent
Contract transferred to the Trust pursuant to the related Subsequent Transfer
Agreement.
"SUBSEQUENT PURCHASE AGREEMENT" means, with respect to any Subsequent
Contracts, the agreement between the Seller and the Trust Depositor pursuant to
which the Seller transferred the Subsequent Contracts to the Trust Depositor,
the form of which is attached to the Transfer and Sale Agreement as EXHIBIT C.
"SUBSEQUENT TRANSFER AGREEMENT" means the agreement described in
Section 2.04 hereof and Section 2.01 of the Deposit Agreement.
"SUBSEQUENT TRANSFER DATE" means any date during the Funding Period on
which Subsequent Contracts are transferred to the Trust.
"TRANSACTION DOCUMENTS" means this Agreement, the Transfer and Sale
Agreement, the Reserve Fund Agreement, the Deposit Agreement, the Security
Agreement, the Lockbox Agreement, any Subsequent Transfer Agreement and any
Subsequent Purchase Agreement.
"TRANSFER AND SALE AGREEMENT" means the Transfer and Sale Agreement
dated as of [____] by and between the Trust Depositor and the Seller, as
amended, supplemented or otherwise modified from time to time.
"TRUST" means the trust created by this Agreement, comprised of the
Trust Corpus.
"TRUST ACCOUNTS" means, collectively, the Collection Account and the
Special Distribution Subaccount therein, or any of them.
"TRUST CORPUS" has the meaning given to such term in Section 2.01(b)
hereof (and in Section 2.04(a) hereof in respect of Subsequent Contracts and
related assets transferred to the Trust pursuant to Subsequent Transfer
Agreements). Although the Trust Depositor has pledged the Reserve Fund to the
Trustee pursuant to the Reserve Fund Agreement, the Reserve Fund
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shall not under any circumstances be deemed to be a part of or otherwise
includable in the Trust or the Trust Corpus.
"TRUST DEPOSITOR" has the meaning assigned such term in the preamble
hereunder or any successor thereto.
"TRUSTEE'S FEE" means, with respect to any Payment Date, one-twelfth of
the product of ___% and the sum of (i) the Principal Balance of the Contracts as
of the beginning of the related Due Period and (ii) the Pre-Funded Amount as of
the beginning of such period; provided, however, in no event shall such fee be
less than $200.00 per month.
"UCC" means the Uniform Commercial Code as enacted in Illinois or
Nevada, as applicable.
"UNCOLLECTIBLE ADVANCE" means with respect to any Determination Date
and any Contract, the amount, if any, advanced by the Servicer pursuant to
Section 8.03 which the Servicer has as of such Determination Date determined in
good faith will not be ultimately recoverable by the Servicer from insurance
policies on the related Motorcycle, the related Obligor or out of Net
Liquidation Proceeds with respect to such Contract. The determination by the
Servicer that it has made an Uncollectible Advance shall be evidenced by an
Officer's Certificate delivered to the Trustee.
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ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
Section 2.01. Closing. (a) There is hereby created by the Trust
Depositor, as settlor, a separate trust which shall be known as the
Harley-Davidson Motorcycle Trust [_____]. The Trust shall be administered
pursuant to the provisions of this Agreement for the benefit of the
Certificateholders. The Trustee is hereby specifically empowered to conduct
business dealings on behalf of the Trust in accordance with the terms hereof.
(b) On the Closing Date, the Trust Depositor shall sell, transfer,
assign, set over and otherwise convey to the Trust by execution of an assignment
substantially in the form of EXHIBIT B hereto, without recourse other than as
expressly provided herein, (i) all the right, title and interest of the Trust
Depositor in and to the Initial Contracts listed on the initial List of
Contracts delivered on the Closing Date (including, without limitation, all
security interests and all rights to receive payments which are collected
pursuant thereto on or after the Initial Cutoff Date, including any liquidation
proceeds therefrom, but excluding any rights to receive payments which were
collected pursuant thereto prior to the Initial Cutoff Date), (ii) all rights of
the Trust Depositor under any physical damage or other individual insurance
policy (and rights under a "forced placed" policy, if any) relating to any such
Contract, an Obligor or a Motorcycle securing such Contract, (iii) all security
interests in each such Motorcycle, (iv) all documents contained in the related
Contract Files, (v) all rights (but not the obligations) of the Trust Depositor
under any related motorcycle dealer agreements between dealers (i.e., the
originators of such Contracts) and the Seller, (vi) all rights of the Trust
Depositor in the Lockbox, the Lockbox Account and related Lockbox Agreement to
the extent they relate to such Contracts, (vii) all rights (but not the
obligations) of the Trust Depositor under the Transfer and Sale Agreement,
including but not limited to the Trust Depositor's rights under Article V
thereof, (viii) the remittances, deposits and payments made into the Trust
Accounts from time to time and amounts in the Trust Accounts from time to time
(and any investments of such amounts), and (ix) all proceeds and products of the
foregoing (the property in clauses (i)-(ix) above, along with the Deposit
Agreement (which has been executed directly in favor of the Trustee for the
benefit of the Trust), being the "TRUST CORPUS"). Although the Trust Depositor
and the Trustee agree that such transfer is intended to be a sale of ownership
of the Trust Corpus, rather than the granting of a security interest to secure a
borrowing, and that the Trust Corpus shall not be property of the Trust
Depositor, in the event such transfer is deemed to be of a mere security
interest to secure a borrowing, the Trust Depositor shall be deemed to have
granted the Trustee for the benefit of the Trust a perfected first priority
security interest in such Trust Corpus and this Agreement shall constitute a
security agreement under applicable law.
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Section 2.02. Conditions to the Closing. On or before the Closing
Date, the Trust Depositor shall deliver or cause to be delivered the following
documents to the Trustee:
(a) The initial List of Contracts, certified by the Chairman
of the Board, President or any Vice President of the Trust Depositor,
together with an assignment substantially in the form of EXHIBIT B
hereto.
(b) A certificate of an officer of the Seller substantially in
the form of EXHIBIT B to the Transfer and Sale Agreement and of an
Officer of the Trust Depositor substantially in the form of EXHIBIT C
hereto.
(c) Opinions of counsel for the Seller and the Trust Depositor
substantially in the form of EXHIBITS D-1, D-2 and D-3 hereto (and
including as an addressee thereof each Rating Agency).
(d) A letter from Arthur Andersen LLP, or another nationally
recognized accounting firm, addressed to the Trustee and stating that
such firm has reviewed a sample of the Initial Contracts and performed
specific procedures for such sample with respect to certain contract
terms and which identifies those Initial Contracts which do not
conform.
(e) Copies of resolutions of the Board of Directors of each of
the Seller/Servicer and the Trust Depositor or of the Executive
Committee of the Board of Directors of each of the Seller/Servicer and
the Trust Depositor approving the execution, delivery and performance
of this Agreement and the other Transaction Documents to which any of
them is a party, as applicable, and the transactions contemplated
hereunder and thereunder, certified in each case by the Secretary or an
Assistant Secretary of the Seller/Servicer and the Trust Depositor.
(f) Officially certified recent evidence of due incorporation
and good standing of each of the Seller and the Trust Depositor under
the laws of Nevada.
(g) Evidence of proper filing with the appropriate offices in
Nevada and Illinois of UCC financing statements executed by the Seller,
as debtor, naming the Trust Depositor as secured party (and the Trustee
as assignee) and identifying the Contract Assets as collateral; and
evidence of proper filing with the appropriate offices in Nevada and
Illinois of UCC financing statements executed by the Trust Depositor,
as debtor, (i) naming the Trustee as secured party and identifying the
Trust Corpus as collateral, and (ii) naming the Trustee as secured
party and identifying the Reserve Fund Deposits therein as collateral,
and (iii) naming the Trustee as secured party and identifying the
Collateral (as defined in the Security Agreement) as collateral.
(h) An Officer's Certificate listing the Servicer's Servicing
Officers.
(i) Evidence of deposit in the Collection Account of all funds
received with respect to the Initial Contracts on or after the Initial
Cutoff Date to the Closing Date,
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together with an Officer's Certificate from the Seller to the effect
that such amount is correct.
(j) The Officer's Certificate of the Seller specified in
Section 2.02(i) of the Transfer and Sale Agreement.
(k) A fully executed copy of the Reserve Fund Agreement,
together with evidence of deposit in the Reserve Fund of the Reserve
Fund Initial Deposit by the Depositor in accordance with the Reserve
Fund Agreement.
(l) Evidence of deposit in the Interest Reserve Account of
$[_____].
(m) A fully executed Deposit Agreement.
(n) A fully executed Security Agreement.
(o) A fully executed Transfer and Sale Agreement.
Section 2.03. Acceptance by Trustee. On the Closing Date, if the
conditions set forth in Section 2.02 have been satisfied, the Trustee shall
issue on behalf of the Trust to, or upon the order of, the Trust Depositor the
Class A Certificates and Class B Certificates representing ownership of a
beneficial interest in 100% of the Trust.
Section 2.04. Conveyance of Subsequent Contracts. (a) Subject to
the conditions set forth in paragraph (b) below, the Trust Depositor, pursuant
to the mutually agreed upon terms contained in the Deposit Agreement and
pursuant to one or more Subsequent Transfer Agreements, shall sell, transfer,
assign, set over and otherwise convey to the Trust, without recourse other than
as expressly provided herein and therein, (i) all the right, title and interest
of the Trust Depositor in and to the Subsequent Contracts (including, without
limitation, all security interests and all rights to receive payments which are
collected pursuant thereto on or after the related Subsequent Cutoff Date,
including any liquidation proceeds therefrom, but excluding any rights to
receive payments which were collected pursuant thereto prior to such Subsequent
Cutoff Date), (ii) all rights of the Trust Depositor under any physical damage
or other individual insurance policy (or a "forced placed" policy, if any)
relating to any such Contract, an Obligor or a Motorcycle securing such
Contract, (iii) all security interests in each such Motorcycle, (iv) all
documents contained in the related Contract Files, (v) all rights (but not the
obligations) of the Trust Depositor under any related motorcycle dealer
agreements between dealers (i.e., the originators of such Contracts) and the
Seller, (vi) all rights of the Trust Depositor in the Lockbox, the Lockbox
Account and related Lockbox Agreement to the extent they relate to such
Contracts, (vii) all rights (but not the obligations) of the Trust Depositor
under the Transfer and Sale Agreement related to such Contracts (to the extent
not already conveyed under Section 2.01(b)), including but not limited to the
Trust Depositor's related rights under Article V thereof, as well as all rights,
but not the obligations, of the Trust Depositor under the Subsequent Purchase
Agreement related to such Contracts, (viii) the remittances, deposits and
payments made into the Trust Accounts from time to time and amounts in the Trust
Accounts from time to
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time related to such Contracts (to the extent not already conveyed under Section
2.01(b)) (and any investments of such amounts), and (ix) all proceeds and
products of the foregoing (the property in clauses (i)-(ix) above, upon such
transfer, becoming part of the "TRUST CORPUS"). Although the Trust Depositor and
the Trustee agree that such transfer is intended to be a sale of ownership,
rather than the granting of a security interest to secure a borrowing, and that
the Trust Corpus following such transfer shall not be property of the Trust
Depositor, in the event such transfer is deemed to be of a mere security
interest to secure a borrowing, the Trust Depositor shall be deemed to have
granted the Trustee for the benefit of the Trust a perfected first priority
security interest in such Trust Corpus and this Agreement shall constitute a
security agreement under applicable law.
(b) The Trust Depositor shall transfer to the Trust the Subsequent
Contracts and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) The Seller shall have provided the Trustee, the Placement
Agent and the Rating Agencies with a timely Addition Notice and shall
have provided any information reasonably requested by any of the
foregoing with respect to the Subsequent Contracts;
(ii) the Funding Period shall not have terminated;
(iii) the Trust Depositor shall have delivered to the Trustee
a duly executed written assignment (including an acceptance by the
Trustee) in substantially the form of EXHIBIT N hereto (the "SUBSEQUENT
TRANSFER AGREEMENT"), which shall include a Subsequent List of
Contracts listing the Subsequent Contracts;
(iv) the Trust Depositor shall have deposited or caused to be
deposited in the Collection Account all collections received with
respect to the Subsequent Contracts on or after the related Subsequent
Cutoff Date;
(v) as of each Subsequent Transfer Date, neither the Seller
nor the Trust Depositor was insolvent nor will either of them have been
made insolvent by such transfer nor is either of them aware of any
pending insolvency;
(vi) the applicable Reserve Fund Additional Deposit for such
Subsequent Transfer Date (if any is required) shall have been made;
(vii) each Rating Agency shall have notified the Trust
Depositor and the Trustee in writing that following such transfer the
Class A Certificates will be rated in the highest rating category by
such Rating Agency and the Class B Certificates will be rated at least
"BBB" by Standard & Poor's and Baa2 by Moody's;
(viii) such addition will not result in a material adverse tax
consequence to the Trust or the Certificateholders as evidenced by an
Opinion of Counsel to be delivered by the Seller to the Trustee, the
Rating Agency and the Placement Agent;
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(ix) the Trust Depositor shall have delivered to the Trustee
an Officers' Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b);
(x) the Trust Depositor shall have delivered to the Rating
Agencies and the Placement Agent one or more opinions of counsel with
respect to the transfer of the Subsequent Contracts substantially in
the form of the opinions of counsel delivered to such Persons on the
Closing Date;
(xi) the Trust Depositor shall have taken any action necessary
to maintain the first perfected ownership interest of the Trust in the
Trust Corpus and the first perfected security interest of the Reserve
Agent in the Reserve Fund Deposits;
(xii) no selection procedures believed by the Trust Depositor
to be adverse to the interests of the Certificateholders shall have
been utilized in selecting the Subsequent Contracts;
(xiii) the Trust Depositor shall have delivered to the Rating
Agencies evidence that (A) the weighted average annual percentage rate
of the Contracts collectively, following the transfer of the Subsequent
Contracts, is not less than ___%, and (B) that the weighted average
calculated remaining term to maturity of the Contracts collectively,
following the transfer of the Subsequent Contracts, does not exceed 66
months ; and
(xiv) the Trust Depositor shall have delivered to the Rating
Agencies, a report with respect tocertain agreed-upon procedures
relating to the Subsequent Contracts being transferred, confirming that
procedures were performed substantially similar to such procedures as
were performed in connection with the transfer of the Initial
Contracts.
(c) As provided in the Deposit Agreement, the Trust Depositor covenants
to transfer (at or prior to the end of the Funding Period) to the Trust pursuant
thereto Subsequent Contracts with an aggregate Principal Balance equal to
$[_____]; PROVIDED, HOWEVER, that in complying with such covenant the Trust
Depositor agrees to make no more than one separate transfer of Subsequent
Contracts per monthly period (as measured by the corresponding Payment Dates),
and PROVIDED FURTHER, HOWEVER, that the sole remedy of the Trust or the
Certificateholders with respect to a failure to comply with such covenant shall
be to enforce the provisions of Section 2.02 of the Deposit Agreement by
demanding the payment of Liquidated Damages thereunder.
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SECTION 2.05. TAX TREATMENT. It is the intention of the Trust
Depositor that, for federal income tax purposes, the Trust will be classified as
a grantor trust and not as an association taxable as a corporation. The Trust
Depositor and the Servicer by entering into this Agreement, and each
Certificateholder by the purchase of a Certificate, agree to report such
transactions for federal income tax purposes in a manner consistent with such
characterization.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Seller under the Transfer and Sale Agreement has made, and upon execution of
each Subsequent Purchase Agreement is deemed to remake, each of the
representations and warranties set forth in EXHIBIT K hereto and has consented
to the assignment by the Trust Depositor to the Trustee of the Trust Depositor's
rights with respect thereto. Such representations speak as of the execution and
delivery of this Agreement and as of the Closing Date in the case of the Initial
Contracts, and as of the applicable Subsequent Transfer Date in the case of the
Subsequent Contracts, but shall survive the sale, transfer and assignment of the
Contracts to the Trust. Pursuant to Section 2.01 of this Agreement, the Trust
Depositor has sold, assigned, transferred and conveyed to the Trustee as part of
the Trust Corpus its rights under the Transfer and Sale Agreement, including
without limitation, the representations and warranties of the Seller therein as
set forth in EXHIBIT K attached hereto, together with all rights of the Trust
Depositor with respect to any breach thereof including any right to require the
Seller to repurchase any Contract in accordance with the Transfer and Sale
Agreement. It is understood and agreed that the representations and warranties
set forth or referred to in this Section shall survive delivery of the Contract
Files to the Trustee or any custodian.
The Trust Depositor hereby represents and warrants to the Trustee that
it has entered into the Transfer and Sale Agreement with the Seller, that the
Seller has made the representations and warranties in the Transfer and Sale
Agreement as set forth in EXHIBIT K hereto, that such representations and
warranties run to and are for the benefit of the Trust Depositor, and that
pursuant to Section 2.01 of this Agreement the Trust Depositor has transferred
and assigned to the Trustee all rights of the Trust Depositor to cause the
Seller under the Transfer and Sale Agreement to repurchase Contracts in the
event of a breach of such representations and warranties.
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING THE TRUST
DEPOSITOR. By its execution of this Agreement and each Subsequent Transfer
Agreement, the Trust Depositor represents and warrants to the Trustee and the
Certificateholders that:
(a) ASSUMPTION OF SELLER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in EXHIBIT K are true and
correct.
(b) ORGANIZATION AND GOOD STANDING. The Trust Depositor is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of
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its organization and has the corporate power to own its assets and to
transact the business in which it is currently engaged. The Trust
Depositor is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires
such qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets, or
condition (financial or other) of the Trust Depositor or the Trust.
(c) AUTHORIZATION; VALID SALE; BINDING OBLIGATIONS. The Trust
Depositor has the power and authority to make, execute, deliver and
perform this Agreement and the other Transaction Documents to which it
is a party and all of the transactions contemplated under this
Agreement and the other Transaction Documents to which it is a party,
and to create the Trust and cause it to make, execute, deliver and
perform its obligations under this Agreement and the other Transaction
Documents to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party
and to cause the Trust to be created. This Agreement and the related
Subsequent Transfer Agreement, if any, shall effect a valid sale,
transfer and assignment of the Trust Corpus, enforceable against the
Trust Depositor and creditors of and purchasers from the Trust
Depositor. This Agreement and the other Transaction Documents to which
the Trust Depositor is a party constitute the legal, valid and binding
obligation of the Trust Depositor enforceable in accordance with their
terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies.
(d) NO CONSENT REQUIRED. The Trust Depositor is not required
to obtain the consent of any other party or any consent, license,
approval or authorization from, or registration or declaration with,
any governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement or the other Transaction Documents to which it is a party.
(e) NO VIOLATIONS. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which it is a
party by the Trust Depositor, and the consummation of the transactions
contemplated hereby and thereby, will not violate any provision of any
existing law or regulation or any order or decree of any court or of
any Federal or state regulatory body or administrative agency having
jurisdiction over the Trust Depositor or any of its properties or the
Articles of Incorporation or Bylaws of the Trust Depositor, or
constitute a material breach of any mortgage, indenture, contract or
other agreement to which the Trust Depositor is a party or by which the
Trust Depositor or any of the Trust Depositor's properties may be
bound, or result in the creation or imposition of any security
interest, lien, charge, pledge, preference, equity or encumbrance of
any kind upon any of its properties pursuant to the terms of any such
mortgage, indenture, contract or other agreement, other than as
contemplated by the Transaction Documents.
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(f) LITIGATION. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently
pending, or to the knowledge of the Trust Depositor threatened, against
the Trust Depositor or any of its properties or with respect to this
Agreement, the other Transaction Documents to which it is a party or
the Certificates (1) which, if adversely determined, would in the
opinion of the Trust Depositor have a material adverse effect on the
business, properties, assets or condition (financial or otherwise) of
the Trust Depositor or the Trust or the transactions contemplated by
this Agreement or the other Transaction Documents to which the Trust
Depositor is a party or (2) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the
Certificates.
(g) PLACE OF BUSINESS; NO CHANGES. The Trust Depositor's sole
place of business (within the meaning of Article 9 of the UCC) is as
set forth in Section 12.09 below. The Trust Depositor has not changed
its name, whether by amendment of its Articles of Incorporation, by
reorganization or otherwise, and has not changed the location of its
place of business, within the four months preceding the Closing Date.
Such representations speak as of the execution and delivery of this Agreement
and as of the Closing Date in the case of the Initial Contracts, and as of the
applicable Subsequent Transfer Date in the case of the Subsequent Contracts, but
shall survive the sale, transfer and assignment of the Contracts to the Trust.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER.
The Servicer represents and warrants to the Trustee and the Certificateholders
that:
(a) ORGANIZATION AND GOOD STANDING. The Servicer is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has the corporate
power to own its assets and to transact the business in which it is
currently engaged. The Servicer is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in
which the character of the business transacted by it or properties
owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or otherwise) of
the Servicer or the Trust. The Servicer is properly licensed in each
jurisdiction to the extent required by the laws of such jurisdiction to
service the Contracts in accordance with the terms hereof.
(b) AUTHORIZATION; BINDING OBLIGATIONS. The Servicer has the
power and authority to make, execute, deliver and perform this
Agreement and the other Transaction Documents to which the Servicer is
a party and all of the transactions contemplated under this Agreement
and the other Transaction Documents to which the Servicer is a party,
and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and the other
Transaction Documents to which the Servicer is a party. This Agreement
and the other Transaction Documents to which the Servicer is a party
constitute the legal, valid and binding obligation of the Servicer
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enforceable in accordance with their terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies.
(c) NO CONSENT REQUIRED. The Servicer is not required to
obtain the consent of any other party or any consent, license, approval
or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement and the other Transaction Documents to which the Servicer is
a party.
(d) NO VIOLATIONS. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which the
Servicer is a party by the Servicer will not violate any provisions of
any existing law or regulation or any order or decree of any court or
of any Federal or state regulatory body or administrative agency having
jurisdiction over the Servicer or any of its properties or the Articles
of Incorporation or Bylaws of the Servicer, or constitute a material
breach of any mortgage, indenture, contract or other agreement to which
the Servicer is a party or by which the Servicer or any of the
Servicer's properties may be bound, or result in the creation of or
imposition of any security interest, lien, pledge, preference, equity
or encumbrance of any kind upon any of its properties pursuant to the
terms of any such mortgage, indenture, contract or other agreement,
other than this Agreement.
(e) LITIGATION. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently
pending, or to the knowledge of the Servicer threatened, against the
Servicer or any of its properties or with respect to this Agreement,
any other Transaction Document to which the Servicer is a party or the
Certificates which, if adversely determined, would in the opinion of
the Servicer have a material adverse effect on the business,
properties, assets or condition (financial or otherwise) of the
Servicer or the Trust or the transactions contemplated by this
Agreement or any other Transaction Document to which the Servicer is a
party.
ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS;
Section 4.01. Custody of Contracts. (a) Subject to the terms and
conditions of this Section 4.01, the contents of each Contract File shall be
held in the custody of the Servicer for the benefit of, and as agent for, the
Certificateholders and the Trustee as the owner thereof.
(b) The Servicer agrees to maintain the related Contract Files at its
offices where they are currently maintained, or at such other offices of the
Servicer in the State of Nevada as shall from time to time be identified to the
Trustee by written notice. The Servicer may temporarily move individual Contract
Files or any portion thereof without notice as necessary to conduct collection
and other servicing activities in accordance with its customary practices and
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procedures; PROVIDED, HOWEVER, that the Servicer will take all action necessary
to maintain the perfection of the Trust's interest in the Contracts and the
proceeds thereof. It is intended that by the Servicer's agreement pursuant to
Section 4.01(a) above and this Section 4.01(b) the Trustee shall be deemed to
have possession of the Contract Files for purposes of Section 9-305 of the
Uniform Commercial Code of the State in which the Contract Files are located.
(c) As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Contract Files on behalf of the
Certificateholders and the Trustee, maintain accurate records
pertaining to each Contract to enable it to comply with the terms and
conditions of this Agreement, maintain a current inventory thereof,
conduct annual physical inspections of Contract Files held by it under
this Agreement and certify to the Trustee annually that it continues to
maintain possession of such Contract Files;
(ii) implement policies and procedures in writing and signed
by a Servicing Officer with respect to persons authorized to have
access to the Contract Files on the Servicer's premises and the
receipting for Contract Files taken from their storage area by an
employee of the Servicer for purposes of servicing or any other
purposes;
(iii) attend to all details in connection with maintaining
custody of the Contract Files on behalf of the Certificateholders and
the Trustee;
(iv) at all times maintain the original of the fully executed
Contract and store such original Contract in a fireproof vault;
(v) stamp each Contract on both the first and the signature
page (if different) as of the Closing Date (or Subsequent Transfer
Date, as the case may be) in the form attached hereto as EXHIBIT M;
(vi) within 30 days of the Closing Date (or Subsequent
Transfer Date, as the case may be) deliver an Officer's Certificate to
the Trustee certifying that as of a date no earlier than the Closing
Date (or Subsequent Transfer Date, as the case may be) it has conducted
an inventory of the Contract Files (which in the case of Subsequent
Contracts, need be only of the Contract Files related to such
Subsequent Contracts) and that there exists a Contract File for each
Contract and stating all exceptions to such statement, if any; and
(vii) within 185 days of the Closing Date (or Subsequent
Transfer Date, as the case may be) deliver an Officer's Certificate to
the Trustee listing each Contract with respect to which there did not
exist as of 180 days of the Closing Date (or Subsequent Transfer Date,
as the case may be) an original title certificate to the motorcycle and
the certificate of lien recordation relating thereto.
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(d) In performing its duties under this Section 4.01, the Servicer
agrees to act with reasonable care, using that degree of skill and care that it
exercises with respect to similar contracts for the installment purchase of
consumer goods owned and/or serviced by it, and in any event with no less degree
of skill and care than would be exercised by a prudent servicer of motorcycle
conditional sales contracts. The Servicer shall promptly report to the Trustee
any failure by it to hold the Contract Files as herein provided and shall
promptly take appropriate action to remedy any such failure. In acting as
custodian of the Contract Files, the Servicer further agrees not to assert any
legal or beneficial ownership interest in the Contracts or the Contract Files,
except as provided in Section 5.06. The Servicer agrees to indemnify the
Certificateholders, the Trustee for any and all liabilities, obligations,
losses, damages, payments, costs, or expenses of any kind whatsoever which may
be imposed on, incurred by or asserted against the Certificateholders, or the
Trustee as the result of any act or omission by the Servicer relating to the
maintenance and custody of the Contract Files; PROVIDED, HOWEVER, that the
Servicer will not be liable for any portion of any such amount resulting from
the gross negligence or willful misconduct of any Certificateholder, or the
Trustee. The Trustee shall have no duty to monitor or otherwise oversee the
Servicer's performance as custodian hereunder.
Section 4.02. Filing. On or prior to the Closing Date, the Servicer
shall cause the UCC financing statement(s) referred to in Section 2.02(g) hereof
to be filed and from time to time the Servicer shall take and cause to be taken
such actions and execute such documents as are necessary or desirable or as the
Trustee may reasonably request to perfect and protect the Trust's first priority
perfected interest in the Trust Corpus against all other persons, including,
without limitation, the filing of financing statements, amendments thereto and
continuation statements, the execution of transfer instruments and the making of
notations on or taking possession of all records or documents of title.
Section 4.03. Name Change or Relocation. (a) During the term of
this Agreement, neither the Seller nor the Trust Depositor shall change its
name, identity or structure or relocate its chief executive office without first
giving at least 30 days' prior written notice to the Trustee.
(b) If any change in either the Seller's or the Trust Depositor's name,
identity or structure or other action would make any financing or continuation
statement or notice of lien filed under this Agreement seriously misleading
within the meaning of applicable provisions of the UCC or any title statute, the
Servicer, no later than five days after the effective date of such change, shall
file such amendments as may be required to preserve and protect the Trust's
interests in the Trust Corpus and the proceeds thereof. In addition, neither the
Seller nor the Trust Depositor shall change its place of business (within the
meaning of Article 9 of the UCC) from the location specified in Section 12.09
below unless it has first taken such action as is advisable or necessary to
preserve and protect the Trust's interest in the Trust Corpus. Promptly after
taking any of the foregoing actions, the Servicer shall deliver to the Trustee
an opinion of counsel reasonably acceptable to the Trustee stating that, in the
opinion of such counsel, all financing statements or amendments necessary to
preserve and protect the interests of the Trustee in the Trust Corpus have been
filed, and reciting the details of such filing.
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Section 4.04. Chief Executive Office. During the term of this
Agreement, the Trust Depositor will maintain its chief executive office in one
of the States of the United States, except Louisiana, Tennessee, Colorado,
Kansas, New Mexico, Oklahoma, Utah or Wyoming.
Section 4.05. Costs and Expenses. The Servicer agrees to pay all
reasonable costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the Trust's right,
title and interest in and to the Contracts (including, without limitation, the
security interest in the Motorcycles granted thereby).
ARTICLE V
SERVICING OF CONTRACTS
Section 5.01. Responsibility for Contract Administration. The
Servicer will have the sole obligation to manage, administer, service and make
collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Trustee, at the written request of a Servicing Officer, shall
furnish the Servicer with any powers of attorney or other documents necessary or
appropriate in the opinion of the Trustee to enable the Servicer to carry out
its servicing and administrative duties hereunder. The Servicer is hereby
appointed the servicer hereunder until such time as any Service Transfer may be
effected under Article VII.
Section 5.02. Standard of Care. In managing, administering,
servicing and making collections on the Contracts pursuant to this Agreement,
the Servicer will exercise that degree of skill and care consistent with the
skill and care that the Servicer exercises with respect to similar contracts
serviced by the Servicer, and, in any event no less degree of skill and care
than would be exercised by a prudent servicer of motorcycle conditional sales
contracts; PROVIDED, HOWEVER, that notwithstanding the foregoing, the Servicer
shall not release or waive the right to collect the unpaid balance on any
Contract.
Section 5.03. Records. The Servicer shall, during the period it is
servicer hereunder, maintain such books of account and other records as will
enable the Trustee to determine the status of each Contract.
Section 5.04. Inspection. (a) At all times during the term hereof,
the Servicer shall afford the Trustee and its respective authorized agents
reasonable access during normal business hours to the Servicer's records
relating to the Contracts and will cause its personnel to assist in any
examination of such records by the Trustee, or such authorized agents and allow
copies of the same to be made. The examination referred to in this Section will
be conducted in a manner which does not unreasonably interfere with the
Servicer's normal operations or customer or employee relations. Without
otherwise limiting the scope of the examination the Trustee may, using generally
accepted audit procedures, verify the status of each Contract and review the
Computer Disk and records relating thereto for conformity to Monthly Reports
prepared pursuant to Article VI and compliance with the standards represented to
exist as to each Contract in this Agreement.
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(b) At all times during the term hereof, the Servicer shall keep
available a copy of the List of Contracts at its principal executive office for
inspection by Certificateholders.
Section 5.05. Trust Accounts. (a) On or before the Closing Date,
the Trust Depositor shall establish the Collection Account and the Special
Distribution Subaccount therein, each in the name of the Trustee for the benefit
of the Certificateholders. The Trustee is hereby required to ensure that each of
the Trust Accounts is established and maintained as an Eligible Account.
(b) The Trustee shall deposit (or the Servicer shall deposit, with
respect to payments by or on behalf of the Obligors and Net Liquidation Proceeds
received directly by the Servicer), without deposit into any intervening
account, into the Collection Account as promptly as practical (but in any case
not later than the second Business Day following the receipt thereof):
(i) With respect to principal and interest on the Contracts
(as well as Late Payment Penalty Fees and Extension Fees) received on
or after the Initial Cutoff Date or Subsequent Cutoff Date, as
applicable (which for the purpose of this paragraph (b)(i) shall
include those monies in the Lockbox Account allocable to principal and
interest on the Contracts), all such amounts received by the Trustee or
Servicer;
(ii) All Net Liquidation Proceeds related to the Contracts;
(iii) The aggregate of the Repurchase Prices for Contracts
repurchased by the Depositor as described in Section 9.06 which amounts
shall come from the Seller pursuant to Section 5.01 of the Transfer and
Sale Agreement;
(iv) All Advances made by the Servicer pursuant to Section
8.03(a);
(v) All amounts paid by the Seller in connection with an
optional repurchase of the Contracts described in Section 8.08;
(vi) All amounts realized in respect of Carrying Charges
transferred from the Interest Reserve Account as contemplated in
Section 8.03(b); and
(vii) All amounts received in respect of interest, dividends,
gains, income and earnings on investments of funds in the Trust
Accounts (except the Reserve Fund) as contemplated in the last sentence
of Section 5.05(d) hereof.
(c) The Trustee shall, if amounts remain on deposit in the Pre-Funding
Account at the expiration of the Funding Period, make demand, immediately upon
expiration of the Funding Period, upon the Trust Depositor and the Collateral
Agent for the payment of Liquidated Damages as contemplated in Section 2.02 of
the Deposit Agreement and Section 3.03 of the Security Agreement. The Trustee
shall deposit the amounts received from the Deposit Collateral Agent in respect
of such Liquidated Damages into the Special Distribution Subaccount in the
Collection Account to be distributed on the next upcoming Payment Date as
contemplated in Section 8.04(b) hereof.
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(d) If the Servicer so directs, in writing, the Trustee shall in its
capacity as Trustee hereunder, invest the amounts in the Trust Accounts in
Eligible Investments that mature not later than one Business Day prior to the
next succeeding Payment Date. Once such funds are invested, the Trustee shall
not change the investment of such funds. Any loss on such investments shall be
deposited in the applicable Trust Account by the Servicer out of its own funds
immediately as realized. Funds in the Trust Accounts not so invested must be
insured to the extent permitted by law by the Bank Insurance Fund or the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation. Subject
to the restrictions herein, the Trustee may purchase an Eligible Investment from
itself or an Affiliate. Any investment of funds in the Trust Accounts shall be
made in Eligible Investments (a) held in the possession of the Trustee or
maintained with another institution as an Eligible Account with respect to which
such institution has noted the Trustee's interest therein on its books and
records and a confirmation of the Trustee's interest has been sent to the
Trustee by such institution, and (b) with respect to Eligible Investments
comprised of securities, the Trustee has purchased such securities for value in
good faith without notice of any adverse claim thereto, and which securities (A)
if certificated and in bearer form, have been delivered to the Trustee, or in
registered form, have been issued or endorsed to the Trustee or in blank, (B) if
uncertificated, the transfer of which is registered on the books of the issuer
thereof, or (C) have been transferred (x) through acquisition or possession by a
financial intermediary of a certificated security specially endorsed to or
issued in the name of the Trustee, or (y) through confirmation by a financial
intermediary (not a clearing corporation) of the Trustee's purchase of a
certificated security and appropriate identification of its interest in the
records of such intermediary, or (z) through the making of appropriate entries
to the Trustee's (or its designee's) account on the books of a clearing
corporation in accordance with Section 8-320 of the applicable Uniform
Commercial Code. Subject to the other provisions hereof, the Trustee shall have
sole control over each such investment and the income thereon, and any
certificate or other instrument evidencing any such investment, if any, shall be
delivered directly to the Trustee or its agent, together with each document of
transfer, if any, necessary to transfer title to such investment to the Trustee
in a manner which complies with this Section 5.05(d). All interest, dividends,
gains upon sale and other income from, or earnings on, investments of funds in
the Trust Accounts shall be deposited in the Collection Account pursuant to
Section 5.05(b)(ii) and distributed on the next Payment Date pursuant to Section
8.04(b).
(e) Notwithstanding anything to the contrary herein, the Servicer may
remit payments on the Contracts and Net Liquidation Proceeds to the Collection
Account in next-day funds or immediately available funds no later than ____
a.m., Central time, on the Business Day prior to the next succeeding Payment
Date, but only for so long as (a)(i) the short-term certificate of deposit
ratings of the Servicer are at least P-1 by Moody's and "A-1" by Standard &
Poor's or (ii) the Rating Agency shall have notified the Servicer and the
Trustee, in writing, that monthly remittances of collections will not result in
reduction or withdrawal of any then outstanding rating of any outstanding Note
or Certificate and (b) the Servicer is Harley-Davidson Credit Corp.
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(f) As of the Business Day immediately preceding the related Payment
Date, all collections for the related Collection Period with respect to each
Contract shall be applied by the Servicer as follows:
(i) First, to reimburse any outstanding Advances made by the
Servicer with respect to such Contract;
(ii) Second, first to interest accrued on such Contract as of
such date and then to principal until the Principal Balance of such
Contract is brought current; and
(iii) Third, to reduce the unpaid late charges or extension
fees (if any) as provided in such Contract.
(g) Any collections on a Contract remaining after application in
accordance with the provisions of Section 5.05(f) shall constitute an excess
payment (an "EXCESS PAYMENT"). Excess Payments shall be applied as a prepayment
of the Principal Balance of such Contract.
(h) The Servicer will, from time to time as provided herein, be
permitted to withdraw from the Collection Account any amount deposited therein
that, based on the Servicer's good-faith determination, was deposited in error
or required to be repaid to the related Obligor.
Section 5.06. Enforcement. (a) The Servicer will, consistent with
Section 5.02, act with respect to the Contracts in such manner as will maximize
the receipt of all payments called for under the terms of the Contracts. The
Servicer will act in a commercially reasonable manner with respect to the
repossession and disposition of a Motorcycle following a default under the
related Contract with a view to realizing proceeds at least equal to the
Motorcycle's fair market value. If the Servicer determines that eventual payment
in full of a Contract is unlikely, the Servicer will follow its normal practices
and procedures to recover all amounts due upon that Contract, including
repossessing and disposing of the related Motorcycle at a public or private sale
or taking other action permitted by applicable law. The Servicer will be
entitled to recover all reasonable out-of-pocket expenses incurred by it in
liquidating a Contract and disposing of the related Motorcycle.
(b) The Servicer may sue to enforce or collect upon Contracts, in its
own name, if possible, or as agent for the Trustee. If the Servicer elects to
commence a legal proceeding to enforce a Contract, the act of commencement shall
be deemed to be an automatic assignment of the Contract to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the Trustee on behalf of the Trust shall, at the Servicer's expense,
take such steps as the Servicer deems reasonably necessary to enforce the
Contract, including bringing suit in its name or the names of the
Certificateholders.
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(c) The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Contract in accordance with the
Servicer's usual practice. In exercising recourse rights, the Servicer is
authorized on the Trustee's behalf to reassign the defaulted Contract or the
related Motorcycle to the person against whom recourse exists at the price set
forth in the document creating the recourse; PROVIDED, HOWEVER, the Servicer in
exercising recourse against any third persons as described in the immediately
preceding sentence shall do so in such manner as to maximize the aggregate
recovery with respect to the Contract; and PROVIDED FURTHER, HOWEVER, that
notwithstanding the foregoing the Servicer in its capacity as such may exercise
such recourse only if such Contract was not required to be repurchased by the
Seller pursuant to the Transfer and Sale Agreement or was required to be
repurchased by the Seller and the Seller has defaulted on such repurchase
obligation.
(d) The Servicer will not permit any rescission or cancellation of any
Contract due to the acts or omissions of the Servicer.
(e) The Servicer may grant to the Obligor on any Contract an extension
of payments due under such Contract, PROVIDED that (i) the extension period is
limited to 45 days, (ii) the Obligor has been in good standing for the previous
twelve-month period, (iii) such extension is consistent with the Servicer's
customary servicing procedures and is consistent with Section 5.02, (iv) such
extension does not extend the maturity date of the Contract beyond the latest
maturity date of any of the Contracts as of the Initial Cutoff Date (or, if a
transfer of Subsequent Contracts to the Trust occurs, beyond the latest maturity
date of such Subsequent Contracts) and (v) the aggregate Principal Balances of
Contracts which have had extensions granted does not exceed more than 3.00% of
the aggregate of the Class A Initial Certificate Balance and the Class B Initial
Certificate Balance.
(f) The Servicer will not add to the outstanding Principal Balance of
any Contract the premium of any physical damage or other individual insurance on
a Motorcycle securing such Contract it obtains on behalf of the Obligor under
the terms of such Contract, but may create a separate Obligor obligation with
respect to such premium if and as provided by the Contract.
(g) If the Servicer shall have repossessed a Motorcycle on behalf of
the Trust, the Servicer shall either (i) maintain at its expense physical damage
insurance with respect to such Motorcycle, or (ii) indemnify the Trust against
any damage to such Motorcycle prior to resale or other disposition. The Servicer
shall not allow such repossessed Motorcycles to be used in an active trade or
business, but rather shall dispose of the Motorcycle in a reasonable time in
accordance with the Servicer's normal business practices.
Section 5.07. Trustee to Cooperate. Upon payment in full on any
Contract, the Servicer will notify the Trustee and the Trust Depositor on the
next succeeding Payment Date by certification of a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such payments which are required to be deposited in the
Collection Account pursuant to Section 5.05 have been so deposited) and shall
(if the Servicer is not then in possession of the Contracts and Contract Files)
request delivery of the Contract and
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Contract File to the Servicer. Upon receipt of such delivery and request, the
Trustee shall promptly release or cause to be released such Contract and
Contract File to the Servicer. Upon receipt of such Contract and Contract File,
each of the Trust Depositor and the Servicer is authorized to execute an
instrument in satisfaction of such Contract and to do such other acts and
execute such other documents as the Servicer deems necessary to discharge the
Obligor thereunder and eliminate the security interest in the Motorcycle related
thereto. The Servicer shall determine when a Contract has been paid in full; to
the extent that insufficient payments are received on a Contract credited by the
Servicer as prepaid or paid in full and satisfied, the shortfall shall be paid
by the Servicer out of its own funds. From time to time as appropriate for
servicing and repossession in connection with any Contract, if the Servicer is
not then in possession of the Contracts and Contract Files, the Trustee shall,
upon written request of a Servicing Officer and delivery to the Trustee of a
receipt signed by such Servicing Officer, cause the original Contract and the
related Contract File to be released to the Servicer and shall execute such
documents as the Servicer shall deem reasonably necessary to the prosecution of
any such proceedings. Such receipt shall obligate the Servicer to return the
original Contract and the related Contract File to the Trustee when the need by
the Servicer has ceased unless the Contract shall be repurchased as described in
Section 8.09. Upon request of a Servicing Officer, the Trustee shall perform
such other acts as reasonably requested by the Servicer and otherwise cooperate
with the Servicer in the enforcement of the Certificateholders' rights and
remedies with respect to Contracts.
Section 5.08. Costs and Expenses. All costs and expenses incurred
by the Servicer in carrying out its duties hereunder, fees and expenses of
accountants and payments of all fees and expenses incurred in connection with
the enforcement of Contracts (including enforcement of defaulted Contracts and
repossessions of Motorcycles securing such Contracts when such Contracts are not
repurchased pursuant to Section 8.06) and all other fees and expenses not
expressly stated hereunder to be for the account of the Trust shall be paid by
the Servicer and the Servicer shall not be entitled to reimbursement hereunder.
Section 5.09. Maintenance of Security Interests in Motorcycles. The
Servicer shall take such steps as are necessary to maintain continuous
perfection and the first priority of the security interest created by each
Contract in the related Motorcycle. The Trustee hereby authorizes the Servicer
to take such steps as are necessary to perfect such security interest and to
maintain the first priority thereof in the event of a relocation of a Motorcycle
or for any other reason.
ARTICLE VI
REPORTS
Section 6.01. Monthly Reports. No later than 10:00 a.m. Chicago,
Illinois time two Business Days following each Determination Date, the Servicer
shall cause the Trustee and each Rating Agency to receive a "Monthly Report"
substantially in the form of EXHIBIT J hereto.
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Section 6.02. Officer's Certificate. Each Monthly Report delivered
pursuant to Section 6.01 shall be accompanied by a certificate of a Servicing
Officer substantially in the form of EXHIBIT F, certifying the accuracy of the
Monthly Report and that no Servicer Default or event that with notice or lapse
of time or both would become a Servicer Default has occurred, or if such event
has occurred and is continuing, specifying the event and its status.
Section 6.03. Other Data. In addition, the Trust Depositor and the
Servicer shall, on request of the Trustee, Moody's or Standard & Poor's, furnish
the Trustee, Moody's or Standard & Poor's, as the case may be, such underlying
data as may be reasonably requested.
Section 6.04. Annual Report of Accountants.
(a) The Servicer shall cause a firm of nationally recognized
independent certified public accountants (the "INDEPENDENT ACCOUNTANTS"), who
may also render other services to the Servicer or to the Trust Depositor, to
deliver to the Trustee, the Placement Agent and each Rating Agency, on or before
March 31 (or 90 days after the end of the Servicer's fiscal year, if other than
December 31) of each year, beginning on March 31, 1997, with respect to the
twelve months ended the immediately preceding December 31 (or other applicable
date), a statement (the "ACCOUNTANT'S REPORT") addressed to the Board of
Directors of the Servicer to the Trustee to the effect that such firm has
audited the financial statements of the Servicer and issued its report thereon
and that such audit
(1) was made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting
records and such other auditing procedures as such firm considered
necessary in the circumstances;
(2) included an examination of documents and records relating
to the servicing of motorcycle conditional sales contracts under
pooling and servicing agreements substantially similar to one another
(such statement to have attached thereto a schedule setting forth the
pooling and servicing agreements covered thereby, including this
Agreement);
(3) included an examination of the delinquency and loss
statistics relating to the Servicer's portfolio of motorcycle
conditional sales contracts; and
(4) except as described in the statement, disclosed no
exceptions or errors in the records relating to motorcycle loans
serviced for others that, in the firm's opinion, generally accepted
auditing standards requires such firm to report.
The Accountant's Report shall further state that
(1) a review in accordance with agreed upon procedures was
made of one randomly selected Monthly Report and
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(2) except as disclosed in the Report, no exceptions or errors
in the Monthly Report so examined were found.
(b) The Accountant's Report shall also indicate that the firm is
independent of the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants.
Section 6.05. Annual Statement of Compliance from Servicer. The
Servicer will deliver to the Trustee and each of the Rating Agencies, on or
before January 31 of each year commencing January 31, 19__, an Officer's
Certificate stating that (a) a review of the activities of the Servicer during
the prior calendar year and of its performance under this Agreement was made
under the supervision of the officer signing such certificate and (b) to such
officer's knowledge, based on such review, the Servicer has fully performed all
its obligations under this Agreement, or, if there has been a default in the
performance of any such obligation, specifying each such default known to such
officer and the nature and status thereof. A copy of such certificate may be
obtained by any Certificateholder by a request in writing to the Trustee.
Section 6.06. Statements to Certificateholders. (a) On or before
two Business Days prior to each Payment Date, the Servicer shall prepare and,
concurrently with each distribution to Certificateholders pursuant to Article
VIII, the Trustee, in its capacity as Certificate Registrar and Paying Agent,
shall cause to be delivered and mailed to each Holder of a Class A Certificate
and each Holder of a Class B Certificate at the address appearing on the
Certificate Register a statement as of the related Payment Date setting forth:
(i) the amount distributed on such date and allocable to
principal of the Class A Certificates and the Class B Certificates;
(ii) the amount distributed on such date and allocable to
interest on the Class A Certificates and the Class B Certificates;
(iii) the amount of the Class A and Class B Principal and
Interest Carryover Shortfalls, if any, for such Payment Date and the change in
the Class A and Class B Principal and Interest Carryover Shortfalls from the
immediately preceding Payment Date;
(iv) the amount otherwise distributable to the Class B
Certificateholders that will be distributed to the Class A Certificateholders on
such Payment Date;
(v) the amount of the distributions described in (i) or (ii)
above payable pursuant to a claim on the Reserve Fund or from any other
source not constituting Available Funds and the amount remaining in the
Reserve Fund after giving effect to all deposits and withdrawals from
the Reserve Fund on such date;
(vi) the amount of any Special Distribution to be made on such
Payment Date;
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(vii) for each Payment Date during the Funding Period, the
remaining Pre-Funded Amount;
(viii) for each Payment Date to and including the Payment Date
immediately following the end of the Funding Period, the Principal
Balance and number of Subsequent Contracts conveyed to the Trust during
the related Due Period;
(ix) the remaining Class A Certificate Balance and Class B
Certificate Balance after giving effect to the distribution of
principal (and Special Distribution, if any) to be made on such Payment
Date;
(x) the Pool Balance as of the close of business on the last
day of the related Due Period;
(xi) the Class A Pool Factor and the Class B Pool Factor
immediately before and immediately after such Payment Date;
(xii) the amount of fees payable out of the Trust, separately
identifying the Monthly Servicing Fee and the Trustee Fee;
(xiii) the number and aggregate Principal Balance of Contracts
delinquent 31-59 days, 60-89 days and 90 or more days, computed as of
the end of the related Due Period;
(xiv) the number and aggregate Principal Balance of Contracts
that became Liquidated Contracts during the immediately preceding Due
Period, the amount of liquidation proceeds for such Due Period, the
amount of liquidation expenses being deducted from liquidation proceeds
for such Due Period, and the Net Liquidation Proceeds for such Due
Period;
(xv) the Loss Ratio, Average Loss Ratio, Cumulative Loss
Ratio, Default Ratio, Average Default Ratio, Delinquency Ratio and
Average Delinquency Ratio each as of such Payment Date;
(xvi) the number of Contracts and the aggregate Principal
Balance of such Contracts, as of the first day of the Due Period
relating to such Payment Date and as of the end of such Payment Date
(after giving effect to payments received during such Due Period and to
any transfers of Subsequent Contracts to the Trust occurring on or
prior to such Payment Date);
(xvii) the aggregate Principal Balance and number of Contracts
that were repurchased by the Seller pursuant to Section 8.06 with
respect to the related Due Period, identifying such Contracts and the
Repurchase Price for such Contracts; and
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(xix) such other customary factual information as is available
to the Servicer as the Servicer deems necessary and can reasonably
obtain from its existing data base to enable Certificateholders to
prepare their tax returns.
(b) Within 75 days after the end of each calendar year, the Servicer
shall prepare and the Certificate Registrar shall mail to each Certificateholder
of record at any time during such year a report as to the aggregate amounts
reported pursuant to subsections (a)(i), (ii) and (xii) of this Section 6.06,
attributable to such Certificateholder.
ARTICLE VII
SERVICER DEFAULTS; SERVICE TRANSFER
SECTION 7.01. SERVICER DEFAULTS. "SERVICER DEFAULT" means the
occurrence of any of the following:
(a) Any failure by the Servicer (i) to make any payment or
deposit required to be made hereunder or (ii) to direct the Trustee to
make any payment or distribution required to be made hereunder and the
continuance of such failure for a period of five (5) Business Days
after receipt of written notice from the Trustee or discovery by the
Servicer thereof;
(b) Failure on the Servicer's part to observe or perform in
any material respect any covenant or agreement set forth herein (other
than a covenant or agreement, the breach of which is specifically
addressed elsewhere in this Agreement) which (i) materially and
adversely affects the rights of the Certificateholders and (ii)
continues unremedied for thirty (30) days after receipt of written
notice from the Trustee or by Certificateholders with aggregate
Fractional Interests representing 25% or more of the Trust;;
(c) Any assignment by the Servicer of its duties or rights
hereunder or under the Transfer and Sale Agreement (or under any
Subsequent Purchase Agreement or Subsequent Transfer Agreement), except
as specifically permitted hereunder or thereunder, or any attempt to
make such an assignment;
(d) An involuntary case under any applicable bankruptcy,
insolvency or other similar law shall have been commenced in respect of
the Servicer and shall not have been dismissed within 90 days, or a
court having jurisdiction in the premises shall have entered a decree
or order for relief in respect of either the Servicer in an involuntary
case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of the
Servicer, or for any substantial liquidation or winding up of its
affairs;
(e) The Servicer shall have commenced a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall have
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consented to the entry of an order for relief in an involuntary case
under any such law, or shall have consented to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee,
custodian or sequestrator (or other similar official) of the Servicer
or for any substantial part of its property, or shall have made any
general assignment for the benefit of its creditors, or shall have
failed to, or admitted in writing its inability to, pay its debts as
they become due, or shall have taken any corporate action in
furtherance of the foregoing;
(f) Any failure by the Servicer to deliver to the Trustee the
Monthly Report pursuant to the terms of this Agreement which remains
uncured for five Business Days after the date which such failure
commences;
(g) Any representation, warranty or statement of the Servicer
made in this Agreement, in any Subsequent Transfer Agreement or any
certificate, report or other writing delivered pursuant hereto shall
prove to be incorrect in any material respect as of the time when the
same shall have been made and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Trust and,
within 30 days after written notice thereof shall have been given to
the Servicer by either the Trustee or by the Certificateholders with
aggregate Fractional Interests representing 25% or more of the Trust,
the circumstances or condition in respect of which such representation,
warranty or statement was incorrect shall not have been eliminated or
otherwise cured.
Section 7.02. WAIVER OF SERVICER DEFAULT. Certificateholders with
aggregate Fractional Interests representing more than 50% or more of the Trust,
may, by written notice delivered to the parties hereto, waive any Servicer
Default other than a Servicer Default described in SECTION 8.01(a).
Section 7.03. Service Transfer. (a) If a Servicer Default has
occurred and is continuing, (x) Certificateholders with aggregate Fractional
Interests representing more than 50% or more of the Trust or (y) the Trustee
may, by written notice delivered to the parties hereto, terminate all (but
not less than all) of the Servicer's management, administrative, servicing,
custodial and collection functions (such termination being herein called a
"SERVICE TRANSFER").
(b) Upon receipt of the notice required by Section 7.03(a) (or, if
later, on a date designated therein), all rights, benefits, fees,
indemnities, authority and power of the Servicer under this Agreement,
whether with respect to the Contracts, the Contract Files or otherwise, shall
pass to and be vested in the [ ] (the "SUCCESSOR SERVICER") pursuant to and
under this Section 7.03; and, without limitation, the Successor Servicer is
authorized and empowered to execute and deliver on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments,
and to do any and all acts or things necessary or appropriate to effect the
purposes of such notice of termination. The Servicer agrees to cooperate with
the Successor Servicer in effecting the termination of the responsibilities
and rights of the Servicer hereunder, including, without limitation, the
transfer to the Successor Servicer for administration
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by it of all cash amounts which shall at the time be held by the Servicer for
deposit, or have been deposited by the Servicer, in the Collection Account, or
for its own account in connection with its services hereafter or thereafter
received with respect to the Contracts. The Servicer shall transfer to the
Successor Servicer all records held by the Servicer relating to the Contracts in
such electronic form as the Successor Servicer may reasonably request and (ii)
any Contract Files in the Servicer's possession. In addition, the Servicer shall
permit access to its premises (including all computer records and programs) to
the Successor Servicer or its designee, and shall pay the reasonable transition
expenses of the Successor Servicer. Upon a Service Transfer, the Successor
Servicer shall also be entitled to receive the Servicing Fee for performing the
obligations of the Servicer.
SECTION 7.04. SUCCESSOR SERVICER TO ACT; APPOINTMENT OF SUCCESSOR
SERVICER. On and after a Service Transfer pursuant to SECTION 8.03, the
Successor Servicer shall be the successor in all respects to the Servicer in
its capacity as servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject to all the responsibilities,
duties and liabilities relating thereto placed on the Servicer by the terms
and provisions hereof, and the terminated Servicer shall be relieved of such
responsibilities, duties and liabilities arising after such Service Transfer;
PROVIDED, HOWEVER, that [(i) the Successor Servicer will not assume any
obligations of the Servicer described in SECTION 8.03 and (ii)] the Successor
Servicer shall not be liable for any acts or omissions of the Servicer
occurring prior to such Service Transfer or for any breach by the Servicer of
any of its representations and warranties contained herein or in any related
document or agreement. Notwithstanding the above, if the Successor Servicer
is legally unable or unwilling to act as Servicer, it may appoint or petition
a court of competent jurisdiction to appoint an established financial
institution (x) having a net worth of not less than $100,00,000 as of the
last day of the most recent fiscal quarter for such institution and (y) whose
regular business shall include the servicing of automobile receivables, act
as Servicer. As compensation therefor, the Successor Servicer shall be
entitled to receive reasonable compensation equal to the Monthly Servicing
Fee. The Trustee and such Successor Servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. To the extent the terminated Servicer has made Advances, it shall
be entitled to reimbursement of the same notwithstanding its termination
hereunder, to the same extent as if it had continued to service the Contracts
hereunder.
Section 7.05. Notification to Certificateholders. (a) Promptly
following the occurrence of any Servicer Default, the Servicer shall give
written notice thereof to the Trustee, the Trust Depositor, the Back-up Servicer
and each Rating Agency at the addresses described in Section 12.09 hereof and to
the Certificateholders at their respective addresses appearing on the
Certificate Register.
(b) Within 10 days following any termination or appointment of a
Back-up Servicer pursuant to this Article VII, the Trustee shall give written
notice thereof to each Rating Agency and the Trust Depositor at the addresses
described in Section 12.09 hereof, and to the Certificateholders at their
respective addresses appearing on the Certificate Register.
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Section 7.06. Effect of Transfer. (a) After a Service Transfer, the
terminated Servicer shall have no further obligations with respect to the
management, administration, servicing, custody or collection of the Contracts
and the Successor Servicer appointed pursuant to Section [___] shall have all of
such obligations, except that the terminated Servicer will transmit or cause to
be transmitted directly to the Successor Servicer for its own account, promptly
on receipt and in the same form in which received, any amounts (properly
endorsed where required for the Successor Servicer to collect them) received as
payments upon or otherwise in connection with the Contracts.
(b) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Seller pursuant to Article X and Section 11.06), other than those
relating to the management, administration, servicing, custody or collection of
the Contracts.
Section 7.07. Database File. The Servicer will provide the
Successor Servicer with a magnetic tape containing the database file for each
Contract (i) as of the Cutoff Date, (ii) the Subsequent Cutoff Date, (iii)
thereafter, as of the last day of the preceding Due Period on each Determination
Date prior to a Servicer Default and (iv) on and as of the Business Day before
the actual commencement of servicing functions by the Successor Servicer
following the occurrence of a Servicer Default.
Section 7.08. Successor Servicer Indemnification. The Servicer
shall defend, indemnify and hold the Successor Servicer and any officers,
directors, employees or agents of the Successor Servicer harmless against any
and all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments and any other costs, fees, and expenses that the Successor
Servicer may sustain in connection with the claims asserted at any time by third
parties against the Successor Servicer which result from (i) any willful or
grossly negligent act taken or omission by the Servicer or (ii) a breach of any
representations of the Servicer in Section 3.02 hereof. The indemnification
provided by this Section 7.07 shall survive the termination of this Agreement.
Section 7.09. RESPONSIBILITIES OF THE SUCCESSOR SERVICER. The
Successor Servicer will not be responsible for delays attributable to the
Servicer's failure to deliver information, defects in the information supplied
by the Servicer or other circumstances beyond the control of the Successor
Servicer.
The Successor Servicer will make arrangements with the Servicer for the
prompt and safe transfer of, and the Servicer shall provide to the Successor
Servicer, all necessary servicing files and records, including (as deemed
necessary by the Successor Servicer at such time): (i) microfiche loan
documentation, (ii) servicing system tapes, (iii) Contract payment history, (iv)
collections history and (v) the trial balances, as of the close of business on
the day immediately preceding conversion to the Successor Servicer, reflecting
all applicable loan information.
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The Successor Servicer shall have no responsibility and shall not be in
default hereunder nor incur any liability for any failure, error, malfunction or
any delay in carrying out any of its duties under this Agreement if any such
failure or delay results from the Successor Servicer acting in accordance with
information prepared or supplied by a Person other than the Successor Servicer
or the failure of any such Person to prepare or provide such information. The
Successor Servicer shall have no responsibility, shall not be in default and
shall incur no liability (i) for any act or failure to act by any third party,
including the Servicer, the Depositor or the Trustee or for any inaccuracy or
omission in a notice or communication received by the Successor Servicer from
any third party or (ii) which is due to or results from the invalidity,
unenforceability of any Contract with applicable law or the breach or the
inaccuracy of any representation or warranty made with respect to any Contract.
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Section 7.10. LIMITATION OF LIABILITY OF SERVICER.
(a) Neither the Servicer nor any of the directors, officers, employees
or agents of the Servicer shall be under any liability to the Issuer, the
Trustee or the Certificateholders, except as provided under this Agreement, for
any action taken or for refraining from the taking of any action pursuant to
this Agreement or for errors in judgment; PROVIDED, HOWEVER, that this provision
shall not protect the Servicer or any such person against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer and any director,
officer, employee or agent of the Servicer may rely in good faith on the advice
of counsel or on any document of any kind, prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Contracts in accordance
with this Agreement, and that in its opinion may cause it to incur any expense
or liability; PROVIDED, HOWEVER, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of the Transaction
Documents and the rights and duties of the parties to the Transaction Documents
and the interests of the Certificateholders. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Servicer and the Servicer will not be
entitled to be reimbursed therefor.
Section 7.11. MERGER OR CONSOLIDATION OF SERVICER. Any Person into
which the Servicer may be merged or consolidated, or any corporation, or other
entity resulting from any merger conversion or consolidation to which the
Servicer shall be a party, or any Person succeeding to the business of the
Servicer (which Person assumes the obligations of the Servicer), shall be the
successor of the Servicer hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. The Servicer shall give prior written
notice of any such merger or consolidation to which it is a party to the Issuer,
the Indenture Trustee and the Rating Agencies.
Section 7.12. SERVICER NOT TO RESIGN. Subject to the provisions of
SECTION 8.03, Servicer shall not resign from the obligations and duties hereby
imposed on it as Servicer under this Agreement except upon determination that
the performance of its duties under this Agreement shall no longer be
permissible under applicable law. Notice of any such determination permitting
the resignation of Servicer shall be communicated to the Trustee at the earliest
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustee concurrently with or promptly after such notice. No
such resignation shall become effective until a Successor Servicer shall have
assumed the responsibilities and rights of the predecessor Servicer in
accordance with SECTION 8.04.
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Section 7.13. APPOINTMENT OF SUBSERVICER. So long as
Harley-Davidson Credit Corp. acts as the Servicer, the Servicer may at any time
without notice or consent subcontract substantially all its duties under this
Agreement to any corporation more than 50% of the voting stock of which is
owned, directly or indirectly, by Aon Corporation. The Servicer may at any time
perform specific duties as servicer under this Agreement through other
subcontractors; PROVIDED, HOWEVER, that no such delegation or subcontracting
shall relieve the Servicer of its responsibilities with respect to such duties
as to which the Servicer shall remain primarily responsible with respect
thereto.
ARTICLE VIII
PAYMENTS AND RESERVE FUND
SECTION 8.01. MONTHLY PAYMENTS. (a) Each Certificateholder as of
the related Record Date shall be paid on the next succeeding Payment Date by
check mailed to such Certificateholder at the address for such Certificateholder
appearing on the Certificate Register or by wire transfer if such
Certificateholder provides written instructions to the Trustee at least ten days
prior to such Payment Date.
(b) The Trustee shall serve as the paying agent hereunder (the "PAYING
AGENT") and shall make the payments to the Certificateholders required
hereunder. The Trustee hereby agrees that all amounts held by it for payment
hereunder will be held in trust for the benefit of the Certificateholders.
SECTION 8.02. FEES. The Trustee shall be paid the Trustee's Fee and
the Servicer shall be paid the Monthly Servicing Fee, each of which shall be
paid solely from the monies and in accordance with the priorities described in
Section 8.04(b). No recourse may be had to the Seller, Trust Depositor, Trustee,
Servicer, or any of their respective Affiliates in the event that amounts
available under Section 8.04(b) are insufficient for payment of the Trustee Fee
and the Monthly Servicing Fee.
Section 8.03. Advances; Realization of Carrying Charge. (a) On each
Determination Date, the Servicer shall compute the amount of Delinquent
Interest, if any, on the Contracts for the immediately preceding Due Period. Not
later than each Determination Date, the Servicer shall advance (each, an
"ADVANCE") such Delinquent Interest by depositing the aggregate amount of such
Delinquent Interest in the Collection Account, PROVIDED, HOWEVER, that the
Servicer shall be obligated to advance Delinquent Interest only to the extent
that the Servicer, in its sole discretion, expects that such Advance will not
become an Uncollectible Advance. The Servicer shall indicate on each Monthly
Report (i) the amount of Delinquent Interest, if any, on the Contracts for the
related Due Period and (ii) the amount of the Advance, if any, made by the
Servicer in respect of such Delinquent Interest pursuant to this Section 8.03.
If the amount of such Advance is less than the amount of the Delinquent
Interest, the relevant Monthly Report shall be accompanied by a certificate of a
Servicing Officer setting forth in reasonable detail the basis for the
determination by the Servicer that the portion of the Delinquent Interest not
advanced would become an Uncollectible Advance. By each Determination Date, the
Servicer
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shall determine the amount of prior unreimbursed Advances for which it desires
to be reimbursed pursuant to the provisions of Section 8.03 (such amount, the
"REIMBURSEMENT AMOUNT"). The Servicer shall be entitled to be reimbursed for any
outstanding Advance with respect to a Contract by means of a first priority
withdrawal from the Collection Account of such Reimbursement Amount as provided
in Section 8.04(b)(i).
(b) The Servicer shall determine no later than 12:00 noon, New York
City time, on the second Business Day prior to a Payment Date the Carrying
Charges in respect of the upcoming Payment Date. To the extent of such amount,
the Trustee shall, pursuant to the Deposit Agreement, make demand upon the Trust
Depositor for payment of the Carrying Charges, to be satisfied from (and solely
to the extent of) the amount then on deposit in the Interest Reserve Account.
Such demand shall be effected by giving the notice to the Collateral Agent
described in Section 3.03 of the Security Agreement. Amounts realized from such
demand shall be deposited immediately into the Collection Account as
contemplated in Section 5.05(b)(vi) hereof.
Section 8.04. Payments. (a) On each Determination Date, the
Servicer shall determine the amount of the Available Funds for the related
Payment Date and shall calculate the Available Interest, the Available
Principal, the Class A Distributable Amount, the Class B Distributable Amount,
and all other distributions to be made on the related Payment Date.
(b) On each Payment Date, the Trustee will, based on the information in
the Monthly Report, distribute as a Special Distribution from the Special
Distribution Subaccount (a) to the Holders of the Class A Certificateholders,
pro rata, in an amount equal to the Class A Percentage multiplied by the amount
in the Special Distribution Subaccount and (b) to the Class B
Certificateholders, pro rata, in an amount equal to the Class B Percentage
multiplied by the amount in the Special Distribution Subaccount, and shall also
distribute the following amounts in the following order of priority:
(i) from Available Funds, the Reimbursement Amount to the
Servicer;
(ii) from Available Interest, the Servicing Fee for the
related Due Period to the Servicer;
(iii) from Available Interest, the Trustee's Fee for the
related Due Period to the Trustee;
(iv) to the Class A Certificateholders of record, from
Available Interest, an amount equal to the Class A Interest
Distributable Amount for such Payment Date and, if such Available
Interest is insufficient, the Class A Certificateholders will receive
such shortfall first, from the Class B Percentage of Available
Principal and second, if such amounts are still insufficient, from
monies on deposit in the Reserve Fund;
(v) to the Class B Certificateholders of record, from
Available Interest, an amount equal to the Class B Interest
Distributable Amount for such Payment Date and, if
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such Available Interest is insufficient, the Class B Certificateholders
will receive such shortfall from monies on deposit in the Reserve Fund;
(vi) to the Class A Certificateholders of record, from
Available Principal, an amount equal to the Class A Principal
Distributable Amount for such Payment Date and, if such Available
Principal is insufficient, the Class A Certificateholders will receive
such shortfall first, from Available Interest, and second, if such
amounts are still insufficient, from monies on deposit in the Reserve
Fund;
(vii) to the Class B Certificateholders of record, from
Available Principal, an amount equal to the Class B Principal
Distributable Amount for such Payment Date and, if such Available
Principal is insufficient, the Class B Certificateholders will receive
such shortfall first, from Available Interest, and second, if such
amounts are still insufficient, from monies on deposit in the Reserve
Fund; and
(viii) any remaining Available Funds after the payments
described in clauses (i) through (vii) above shall be paid to the
Reserve Agent for deposit in the Reserve Fund.
Any monies intended for the payment of Class A Distributable Amounts or
Class B Distributable Amounts but which remain unclaimed by Certificateholders
for a period of two years after the Final Scheduled Payment Date shall, upon the
written request of the Trust Depositor, be paid to the Trust Depositor, and such
Certificateholders shall thereafter look only to the Trust Depositor for
payment, and then only to the extent of the amounts so received without interest
thereon; PROVIDED, HOWEVER, that within thirty days prior to the expiration of
the two-year period mentioned above, the Trustee, before being required to make
any such repayment, may, at the expense of the Trust Depositor, cause to be
published in a financial journal a notice that after a date named therein said
monies will be returned to the Trust Depositor.
Section 8.05. Withdrawal from Reserve Fund to Cover a Shortfall.
The Trustee shall determine no later than 10:00 a.m., Chicago, Illinois time, on
the Payment Date (but after making, and taking into account, the determination,
demand and transfer of funds contemplated in Section 8.03(b) above) whether
there exists a Shortfall with respect to the upcoming Payment Date. In the event
that the Trustee determines that there exists a Shortfall, the Trustee shall
furnish to the Reserve Agent no later than 12:00 noon, Chicago, Illinois time,
on such Payment Date a written notice specifying the Shortfall for such Payment
Date and directing the Reserve Agent to remit monies in respect of such
Shortfall (to the extent of funds available to be so distributed pursuant to the
Reserve Fund Agreement) to the Trustee for deposit in the Collection Account.
Upon receipt of any such funds the Trustee shall deposit such amounts into the
Collection Account.
Section 8.06. Repurchases of Contracts for Breach of
Representations and Warranties. Upon a discovery by the Servicer, the Trust
Depositor or the Trustee of a breach of a representation or warranty of the
Seller as set forth in EXHIBIT K hereto or as made in any
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Subsequent Purchase Agreement relating to Subsequent Contracts that materially
adversely affects the Trust's interest in such Contract (without regard to the
benefits of the Reserve Fund), the party discovering the breach shall give
prompt written notice to the other parties PROVIDED, that the Trustee shall have
no duty or obligation to inquire or to investigate the breach by the Seller of
any of such representations or warranties. The Seller, as provided in the
Transfer and Sale Agreement and in accordance with this Section 8.06, shall
repurchase a Contract at its Repurchase Price, two Business Days prior to the
first Determination Date after the Seller becomes aware, or should have become
aware, or receives written notice from the Trustee, the Servicer or the Trust
Depositor of any breach of a representation or warranty of the Seller set forth
in Article III of the Transfer and Sale Agreement that materially adversely
affects such Contract or the Trust's interest in such Contract and which breach
has not been cured; PROVIDED, HOWEVER, that with respect to any Contract
incorrectly described on the List of Contracts with respect to unpaid Principal
Balance which the Seller would otherwise be required to repurchase under the
Transfer and Sale Agreement, the Seller may, in lieu of repurchasing such
Contract, deposit in the Collection Account not later than one Business Day
after such Determination Date cash in an amount sufficient to cure such
deficiency or discrepancy, and PROVIDED FURTHER that with respect to a breach of
representation or warranty relating to the Contracts in the aggregate and not to
any particular Contract the Seller may select Contracts (without adverse
selection) to repurchase such that had such Contracts not been included as part
of the Trust Corpus there would have been no breach of such representation or
warranty; PROVIDED FURTHER that (a) the failure of a Contract File to be
complete or of the original certificate of title and evidence of recordation of
such certificate to be included in the Contract File as of 180 days after the
Closing Date (or Subsequent Transfer Date, in the case of Subsequent Contracts)
or (b) the failure to maintain perfection of the security interest in the
Motorcycle securing a Contract in accordance with Section 5.09, shall be deemed
to be a breach materially and adversely affecting the Trust's interest in the
Contract or in the related Contracts. Notwithstanding any other provision of
this Agreement, the obligation of the Seller under the Transfer and Sale
Agreement and described in this Section 8.06 shall not terminate or be deemed
released by any party hereto upon a Service Transfer pursuant to Article VII.
The repurchase obligation described in this Section 8.06 is in no way to be
satisfied with monies in the Reserve Fund.
Section 8.07. Reassignment of Repurchased Contracts. Upon receipt
by the Trustee for deposit in the Collection Account of the Repurchase Price as
described in Section 8.06 or Section 8.08, and upon receipt of a certificate of
a Servicing Officer in the form attached hereto as EXHIBIT G, the Trustee shall
assign to the Seller all of the Trust's right, title and interest in the
repurchased Contract without recourse, representation or warranty, except as to
the absence of liens, charges or encumbrances created by or arising as a result
of actions of the Trustee.
Section 8.08. Seller's Repurchase Option. As provided in the
Transfer and Sale Agreement, on written notice to the Trustee at least 20 days
prior to a Payment Date, and provided that aggregate of the Class A Certificate
Balance and Class B Certificate Balance is then less than 10% of the Class A
Initial Certificate Balance and Class B Initial Certificate Balance, and
provided a valuation letter is delivered as required in Section 5.02 of the
Transfer and Sale Agreement, the Seller may (but is not required to) repurchase
on that Payment Date all
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outstanding Contracts at a price equal to the aggregate of the Class A and Class
B Certificate Balance on the previous Payment Date plus the aggregate of the
Class A Interest Distributable Amount and the Class B Interest Distributable
Amount for the current Payment Date thereon, the Reimbursement Amount (if any)
as well as accrued and unpaid Monthly Servicing Fees and Trustee Fees to the
date of such repurchase. Such price is to be deposited in the Collection Account
one Business Day before such Payment Date, against the Trustee's release of the
Contracts and the Contract Files to the Seller in the manner described in
Section 8.07 above.
ARTICLE IX
THE CERTIFICATES
Section 9.01. The Certificates. The Class A Certificates and the
Class B Certificates shall be substantially in the form of Exhibit A-1 and
Exhibit A-2, respectively. The Certificates shall be issued in fully registered
form in minimum denominations of $[ ] and integral multiples of $[ ] in excess
thereof, except that one Class A Certificate and one Class B Certificate may be
issued in a denomination representing the remainder of the Class A Certificate
Balance or Class B Certificate Balance, as applicable. The Certificates shall be
executed on behalf of the Trust by manual or facsimile signature of an
authorized officer of the Trustee. Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures were
affixed, authorized to sign on behalf of the Trustee shall be validly issued and
entitled to the benefit of this Agreement, notwithstanding the fact that such
individuals or any of them have ceased to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of authentication and delivery of such Certificates.
Section 9.02. Authentication of Certificates. Concurrently with the
conveyance of the Contracts to the Trust, the Trustee shall cause the
Certificates to be executed on behalf of the Trust by an authorized Trust
officer, and authenticated and delivered to or upon the written order of the
Trust Depositor, without further corporate action by the Trust Depositor, in
authorized denominations. No Certificate shall entitle its Holder to any benefit
under this Agreement or be valid for any purpose unless there shall appear on
such Certificate a certificate of authentication, executed by the Trustee by
manual signature. Such authentication shall constitute conclusive evidence that
such Certificate shall have been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
Section 9.03. Registration of Transfer and Exchange. (a) The
Trustee shall cause to be kept a register (the "CERTIFICATE REGISTER") in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and the registration of transfers
of Certificates. The Trustee shall be the initial "CERTIFICATE REGISTRAR" for
the purpose of registering Certificates and transfers of Certificates as herein
provided. Upon the resignation of any Certificate Registrar, the Trustee shall
promptly appoint a successor or, if it elects not to make such an appointment,
assume the duties of Certificate Registrar.
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If a Person other than the Trustee is appointed as Certificate
Registrar, the Trustee shall give prompt written notice of the appointment of
such Certificate Registrar and of the location, and any change in the location,
of the Certificate Register, and the Trustee shall have the right to inspect the
Certificate Register at all reasonable times, to obtain copies thereof and to
rely conclusively upon a certificate executed on behalf of the Certificate
Registrar by an authorized officer thereof as to the names and addresses of the
Certificateholders and the principal amounts and number of the Certificates.
Upon surrender for registration of transfer of any Certificate at the
office or agency of the Trustee to be maintained as provided in Section 6.08,
the Trustee shall execute, authenticate and deliver to the designated transferee
or transferees, one or more new Certificates in any authorized denominations of
a like aggregate principal amount.
At the option of the Certificateholder, Certificates may be exchanged
for other Certificates in any authorized denominations of a like aggregate
principal amount. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute, authenticate and deliver to the Certificateholder the
Certificates that the Certificateholder making the exchange is entitled to
receive.
All Certificates issued upon any registration of transfer or exchange
of Certificates shall be the valid obligations of the Trust, evidencing the same
interest in the Trust and entitled to the same benefits under this Agreement as
the Certificates surrendered upon such registration of transfer or exchange.
(b) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by, the
holder thereof or such holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located or having a
correspondent located in [________] or the city in which the Corporate Trust
Office is located or by a member firm of a national securities exchange, and
such other documents as the Trustee may require.
(c) No service charge shall be made to a Certificateholder for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates.
SECTION 9.04. CERTAIN TRANSFER RESTRICTIONS. [RESERVED]
Section 9.05. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate shall be surrendered to the Certificate Registrar
or if the Certificate Registrar shall receive evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (b) there shall be
delivered to the Certificate Registrar and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then in the
absence of notice that such
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Certificate has been acquired by a bona fide purchaser, the Trustee on behalf of
the Trust shall execute, and the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and denomination. In connection
with the issuance of any new Certificate under this Section, the Trustee and the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of ownership of a beneficial interest in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 9.06. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate is registered in
the Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 8.04 and for all other purposes
whatsoever, and neither the Trustee nor the Certificate Registrar shall be bound
by any notice to the contrary.
Section 9.07. Access to List of Certificateholders' Names and
Addresses. The Certificate Registrar will furnish to the Trustee, the Trust
Depositor and the Servicer, within five days after receipt by the Certificate
Registrar of a request therefor from the Trustee or the Certificateholder in
writing, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Certificateholders as of the most recent Record Date.
If Class A Certificateholders or Class B Certificateholders with aggregate
Fractional Interests representing 25% or more of the Class A Certificate Balance
or Class B Certificate Balance, respectively, (hereinafter referred to as
"APPLICANTS") apply in writing to the Trustee, and such application states that
the Applicants desire to communicate with other Certificateholders with respect
to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants access during normal business hours to
the most recent list of Certificateholders held by the Trustee. If such list is
as of a date more than 90 days prior to the date of receipt of such Applicants'
request, the Trustee shall promptly request from the Certificate Registrar a
current list as provided above, and shall afford such Applicants access to such
list promptly upon receipt. Every Certificateholder, by receiving and holding a
Certificate, agrees with the Certificate Registrar and the Trustee that none of
the Trust Depositor, the Certificate Registrar or the Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Certificateholders
Section 9.08. Book-Entry Certificates. Unless the Holder thereof
requests that Class A Certificates be delivered in definitive, fully registered
form ("DEFINITIVE CERTIFICATES"), the Class A Certificates, upon original
issuance, will be issued in the form of one or more typewritten Certificates
representing Book-Entry Certificates, to be delivered to the Depository Trust
Company, the initial Clearing Agency, by or on behalf of the Trust. The
Book-Entry Certificates
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shall be registered initially on the Certificate Register in the name of Cede &
Co., the nominee of the initial Clearing Agency. With respect to the Book-Entry
Certificates:
(1) the provisions of this Section shall be in full force and
effect;
(2) the Depositor, the Servicer, the Certificate Registrar and the
Trustee may deal with the Clearing Agency for all purposes
(including the making of distributions on the Book-Entry
Certificates) as the sole Holder of such Book-Entry
Certificates and shall have no obligation to the related
Certificate Owner;
(3) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of
this Section shall control;
(4) the rights of such Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those
established by law and agreements between such Certificate
Owners and the Clearing Agency and/or the Clearing Agency
Participants pursuant to the Depository Agreement. The initial
Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit
distributions of principal and interest on the Book-Entry
Certificates to such Clearing Agency Participants; and
(5) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of
Certificateholders evidencing a specified percentage of the
Certificate Balance, the Clearing Agency shall be deemed to
represent such percentage only to the extent that it has
received instructions to such effect from Certificate Owners
and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial
interest in the Book-Entry Certificates and has delivered such
instructions in writing to the Trustee.
Neither the Trustee nor the Certificate Registrar shall have any responsibility
to monitor or restrict the transfer of beneficial ownership in any Certificate
an interest in which is transferable through the facilities of the Depository.
Section 9.09. Notices to Clearing Agency. Whenever a notice or
other communication to Holders of the Book-Entry Certificates is required under
this Agreement, the Trustee and the Servicer shall give all such notices and
communications specified herein to be given to Holders of Certificates to the
Clearing Agency.
ARTICLE X
INDEMNITIES
Section 10.01. Servicer Indemnification. The Servicer agrees to defend
and indemnify the Trust, the Trustee the Paying Agent, the Certificateholders
and any agents of the Trustee,
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and the Certificateholders against any and all costs, expenses, losses, damages,
claims and liabilities, and shall also assume the obligations of the Trust
Depositor to pay expenses and costs incurred pursuant to the terms of the
Security Agreement (which expenses and costs shall not be borne by the
Collateral as defined therein), including reasonable fees and expenses of
counsel and expenses of litigation arising out of or resulting from this
Agreement or any of the related Transaction Documents, or the use, ownership or
operation of any Motorcycle by the Servicer or any Affiliate of the Servicer.
Notwithstanding any other provision of this Agreement, the obligation of the
Servicer described in this Section 10.01 shall not terminate or be deemed
released upon a Service Transfer pursuant to Article VII and shall survive any
termination of this Agreement.
Section 10.02. Liabilities to Obligors. No obligation or liability to
any Obligor under any of the Contracts is intended to be assumed by the Trust or
the Certificateholders under or as a result of this Agreement and the
transactions contemplated hereby and, to the maximum extent permitted and valid
under mandatory provisions of law, the Trust and the Certificateholders
expressly disclaim any such assumption.
Section 10.03. Tax Indemnification. As provided in the Transfer and
Sale Agreement, the Seller has agreed to pay, and to indemnify, defend and hold
harmless the Trust, the Trustee and the Certificateholders from, any taxes which
may at any time be asserted with respect to, and as of the date of, the transfer
of the Contracts to the Trust, including, without limitation, any sales, gross
receipts, general corporation, personal property, privilege or license taxes
(but not including any federal, state or other taxes arising out of the creation
of the Trust and the issuance of the Certificates) and costs, expenses and
reasonable counsel fees in defending against the same, whether arising by reason
of the acts to be performed by the Trust Depositor, the Seller or the original
Servicer under this Agreement or imposed against the Trust, a Certificateholder
or otherwise. Notwithstanding any other provision of this Agreement, the
obligation of the Seller described in this Section 10.03 shall not terminate or
be deemed released upon a Service Transfer pursuant to Article VII and shall
survive any termination of this Agreement.
Section 10.04. Servicer's Indemnities. The Servicer shall defend and
indemnify the Trust, the Trustee and the Certificateholders against any and all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel and expenses of litigation, in respect of any
action taken by such Servicer with respect to any Contract. This indemnity shall
survive any Service Transfer (but the original Servicer's obligations under this
Section 10.04 shall not relate to any actions of any subsequent Servicer after a
Service Transfer) and any payment of the amount owing under, or any repurchase
by the Seller of, any such Contract and shall survive any termination of this
Agreement.
Section 10.05. Operation of Indemnities. Indemnification under this
Article X shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If the Servicer has made any indemnity
payments to the Trustee pursuant to this Article X and the Trustee thereafter
collects any of such amounts from others, the Trust will repay such amounts
collected to the Servicer, without interest.
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ARTICLE XI
THE TRUSTEE
Section 11.01. Duties of Trustee. The Trustee, prior to the occurrence
of a Servicer Default and after the curing of all Servicer Defaults which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If a Servicer Default has occurred
(which has not been cured), the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform as to form to the requirements of this Agreement and shall promptly
notify the Servicer and each Certificateholder of any failure of any of the
foregoing to so conform.
Subject to Section 11.03, no provision of this Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act (including actions or omissions within its
control resulting in the failure of Certificateholders to receive timely payment
of either the Class A Distributable Amount or the Class B Distributable Amount)
or its own misconduct; PROVIDED, HOWEVER, that:
(a) Prior to the occurrence of a Servicer Default, and after
the curing of all such Servicer Defaults which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(b) The Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(c) The Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of Certificateholders with aggregate
Fractional Interests representing 25% or more of the Trust relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement; and
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(d) The Trustee shall not be charged with knowledge of any
event referred to in Section 7.01 unless a Responsible Officer of the
Trustee at the Corporate Trust Office obtains actual knowledge of such
event or the Trustee receives written notice of such event from the
Seller, the Trust Depositor, the Servicer or the Certificateholders
with aggregate Fractional Interests representing 25% or more of the
Trust.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it,
PROVIDED, HOWEVER, that nothing contained herein shall relieve the Trustee of
the obligations, upon the occurrence of a Servicer Default (which has not been
cured), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
None of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Seller, the Trust Depositor or the Servicer
under this Agreement.
Without limiting the generality of this Section 11.01, the Trustee
shall have no duty (i) to see to any recording, filing or depositing of this
Agreement or any agreement referred to herein or any financing statement
evidencing a security interest in the Motorcycles or to see to the maintenance
of any such recording or filing or depositing or to any re-recording, refiling
or redepositing of any thereof, (ii) to see to any insurance of the Motorcycles
or Obligors or to effect or maintain any such insurance, (iii) to see to the
payment or discharge of any tax, assessment or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against any part of the Trust, (iv) to confirm or verify the contents of any
reports or certificates delivered to the Trustee pursuant to this Agreement
believed by the Trustee to be genuine and to have been signed or presented by
the proper party or parties, or (v) to inspect the Motorcycles at any time or
ascertain or inquire as to the performance or observance of any of the Seller's
or the Servicer's representations, warranties or covenants or the Servicer's
duties and obligations as Servicer and as custodian of the Contract Files under
this Agreement.
SECTION 11.02. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as
otherwise provided in Section 11.01 and provided the Paying Agent shall also
benefit from the provisions of this Section 11.02:
(a) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, certificate of a
Servicing Officer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
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(b) The Trustee may consult with counsel and any opinion of any counsel
for the Seller, the Trust Depositor or the Servicer shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by the Trustee hereunder in good faith and in accordance with such
opinion of counsel;
(c) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation hereunder or in relation hereto, at the request, order or
direction of any of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; PROVIDED, HOWEVER, that nothing
contained herein shall relieve the Trustee of the obligations, upon the
occurrence of a Servicer Default (which has not been cured), to exercise such of
the rights and powers vested in it by this Agreement, and to use the same degree
of care and skill in their exercise as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs;
(d) Prior to the occurrence of a Servicer Default and after the curing
of all Servicer Defaults which may have occurred, the Trustee shall not be bound
to make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in writing so
to do by Certificateholders with aggregate Fractional Interests representing 25%
or more of the Trust; PROVIDED, HOWEVER, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to so proceeding. The reasonable expense of
every such examination shall be paid by the Servicer or, if paid by the Trustee,
shall be reimbursed by the Servicer upon demand; and
(e) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or co-trustees or a custodian and shall not be liable for any acts or
omissions of such agents, attorneys or co-trustees or custodians if appointed by
it with due care hereunder; PROVIDED, HOWEVER, if the Servicer is acting as
custodian, the Servicer is deemed by all parties to have been appointed with due
care.
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Section 11.03. Trustee Not Liable for Certificates or Contracts. The
Trustee assumes no responsibility for the correctness of the recitals contained
herein or in the Certificates (other than the Trustee's execution thereof). The
Trustee makes no representations as to the validity or sufficiency of this
Agreement, the Trust or of the Certificates (other than its execution thereof)
or of any Contract, Contract File or related document. The Trustee shall not be
accountable for the use or application by the Servicer or the Trust Depositor of
funds paid to the Trust Depositor in consideration of conveyance of the
Contracts to the Trust by the Trust Depositor or deposited in or withdrawn from
the Collection Account by the Servicer.
Section 11.04. Trustee May Own Certificates. The Trustee in its
individual or other capacity may become the owner or pledgee of Certificates
representing less than all the beneficial interest in the Trust with the same
rights as it would have if it were not Trustee.
Section 11.05. RIGHTS TO DIRECT TRUSTEE AND TO WAIVE SERVICER DEFAULTS.
Certificateholders with aggregate Fractional Interests representing 25% or more
of the Trust shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee under this
Agreement or any Transaction Document assigned to the Trustee, or exercising any
trust or power conferred on the Trustee under this Agreement or any Transaction
Document assigned to the Trustee; PROVIDED, HOWEVER, that, subject to Section
11.01, the Trustee shall have the right to decline to follow any such direction
if the Trustee being advised by counsel determines that the action so directed
may not lawfully be taken, or if the Trustee in good faith shall, by a
Responsible Officer or Responsible Officers of the Trustee, determine that the
proceedings so directed would be illegal or involve the Trustee in personal
liability or (in the case of directions by the Certificateholders) be unduly
prejudicial to the rights of Certificateholders not parties to such direction;
and PROVIDED FURTHER that nothing in this Agreement shall impair the right of
the Trustee to take any action deemed proper by the Trustee and which is not
inconsistent with such direction by the Certificateholders. Certificateholders
with aggregate Fractional Interests representing 51% or more of the Trust may
waive any past Servicer Default hereunder and its consequences, and upon any
such waiver, such Servicer Default shall cease to exist and shall be deemed to
have been cured for every purpose of this Agreement; but no such waiver shall
extend to any subsequent or other Servicer Default or impair any right
consequent thereon. The Trustee shall have no liability for acting upon the
direction of the Certificateholders.
Section 11.06. The Servicer to Pay Trustee's Expenses. The Servicer
agrees to indemnify the Trustee for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on the Trustee's
part, arising out of or in connection with the acceptance or administration of
this trust and its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder.
This Section 11.06 shall be for the benefit of the Trustee in its
capacities as Trustee, Paying Agent, and Certificate Registrar hereunder, and
shall not terminate or be deemed released
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upon a Service Transfer pursuant to Article VII and shall survive the
termination of this Agreement.
Section 11.07. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a financial institution organized and doing
business under the laws of the United States of America or any state, authorized
under such laws to exercise corporate trust powers, whose long term Unsecured
debt is rated at least Baa3 by Moody's and shall have a combined capital and
surplus of at least $50,000,000 or shall be a member of a bank holding system
the aggregate combined capital and surplus of which is $50,000,000 and subject
to supervision or examination by Federal or state authority, PROVIDED that the
Trustee's separate capital and surplus shall at all times be at least the amount
required by Section 310(a)(2) of the Trust Indenture Act of 1939, as amended. If
such Person publishes reports of condition at least annually, pursuant to law or
to the requirements of a supervising or examining authority, then for the
purposes of this Section 11.07, the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section 11.07,
the Trustee shall resign immediately in the manner and with the effect specified
in Section 11.08.
Section 11.08. Resignation or Removal of Trustee. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer with a copy to the Trust Depositor, the
Seller, and the Certificateholders. Upon receiving such notice of resignation,
the Servicer shall promptly appoint a successor Trustee by written instrument,
in duplicate, one copy of which instrument shall be delivered to each of the
Trust Depositor, the Seller, and the Certificateholders and one copy to the
successor Trustee. If no successor Trustee shall have been so appointed and
shall have accepted such appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 11.07 and shall fail to resign after written
request therefor by the Servicer, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Servicer may
remove the Trustee. If the Servicer shall have removed the Trustee under the
authority of the immediately preceding sentence, the Servicer shall promptly
appoint a successor Trustee by written instrument one copy of which instrument
shall be delivered to the Trustee so removed, the Trust Depositor and the Seller
and one copy to the successor trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 11.08 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 11.09.
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Any resigning or removed Trustee shall be entitled to payment of all
Trustee's Fees earned and reimbursement for all expenses incurred by it up to
the date of resignation. All indemnification obligations of the Servicer and the
Seller shall survive such resignation or removal.
Section 11.09. Successor Trustee. Any successor Trustee appointed as
provided in Section 11.08 shall execute, acknowledge and deliver to the
Servicer, the Trust Depositor and to its predecessor Trustee, with a copy to the
Certificateholders, an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The predecessor Trustee shall deliver or cause to be delivered
to the successor Trustee the Contracts and the Contract Files (if any such
Contracts and Contract Files are in the Trustee's possession) and any related
documents and statements held by it hereunder; and, if the Contracts are then
held by a custodian pursuant to a custodial agreement, the predecessor Trustee
and the custodian shall amend such custodial agreement to make the successor
Trustee the successor to the predecessor Trustee thereunder; and the Servicer,
the Trust Depositor and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Trustee all such rights,
powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section 11.09 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 11.07.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 11.09, the Servicer shall cause notice of the succession of such
Trustee hereunder to be mailed to each Rating Agency and to each
Certificateholder at their addresses as shown in the Certificate Register. If
the Servicer fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Servicer.
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Section 11.10. Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such Person shall be eligible under the provisions
of Section 11.07, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. Upon such occasion, the Servicer shall cause notice thereof to
be mailed to each Rating Agency and each Certificateholder. If the Servicer
fails to mail such notice within ten days after such succession, the successor
Trustee shall cause such notice to be mailed at the expense of the Servicer with
a copy to each Certificateholder.
Section 11.11. Tax Returns.
(a) The Servicer, on behalf of the Trust, shall request that the
Trustee furnish the Servicer with all such information in the Trustee's
possession as may be reasonably required in connection with the preparation of
all tax returns of the Trust and the Trustee shall, upon such request, furnish
such information and execute such returns; and
(b) As directed by the Servicer in writing, the Trustee shall take all
action specified in such writing relating to (i) certain withholding
requirements applicable to non-U.S. persons; (ii) backup withholding
requirements; and (iii) certain taxpayer certification requirements relating to
clauses (i) and (ii) above.
Section 11.12. Obligor Claims. In connection with any offset defenses,
or affirmative claims for recovery, asserted in legal actions brought by
Obligors under one or more Contracts based upon provisions therein complying
with, or upon other rights or remedies arising from, any legal requirements
applicable to the Contracts, including, without limitation, the Federal Trade
Commission's Trade Regulation Rule Concerning Preservation of Consumers' Claims
and Defenses (16 C.F.R. Section 433) as amended from time to time:
(a) The Trustee is not, and shall not be deemed to be, either
in any individual capacity, as trustee hereunder or otherwise, a
creditor, or a joint venturer with or an Affiliate of, or acting in
concert or cooperation with, any seller of Motorcycles, in the
arrangement, origination or making of Contracts. The Trustee is the
holder of the Contracts only as trustee on behalf of the
Certificateholders, and not as a principal or in any individual or
personal capacity;
(b) The Trustee shall not be personally liable for or
obligated to pay Obligors any affirmative claims asserted thereby, or
responsible to Certificateholders for any offset defense amounts
applied against Contract payments pursuant to such legal actions;
(c) The Trustee will pay, solely from available Trust monies,
affirmative claims for recovery by Obligors only pursuant to final
judicial orders or judgments, or judicially approved settlement
agreements, resulting from such legal actions; and
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(d) The Servicer has agreed to indemnify, hold harmless and
defend the Trustee and Certificateholders from and against any and all
liability, loss, costs and expenses of the Trustee and
Certificateholders resulting from any affirmative claims for recovery
asserted or collected by Obligors under the Contracts. Notwithstanding
any other provision of this Agreement, the obligation of the Servicer
described in this Section 11.12(d) shall not terminate or be deemed
released upon a Service Transfer pursuant to Article VII and shall
survive termination of this Agreement.
Section 11.13. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction having authority over the
Trust, the Contracts or the Obligors, the Servicer and Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section 11.13, such powers, duties, obligations, rights and
trusts as the Servicer and the Trustee may consider necessary or desirable. If
the Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, or in case a Servicer Default shall have
occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 11.07
hereunder and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 11.09
hereof; PROVIDED, HOWEVER, that notice of appointment of any co-trustee or
separate trustee shall be provided to Moody's, and any co-trustee or separate
trustee shall have a long-term debt rating from Moody's of Baa3 or higher.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 11.13, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such co-trustee or separate trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such co-trustee or separate trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then co-trustees and separate trustees,
as effectively as if given to each of them. Every instrument appointing any
co-trustee or separate trustee shall refer to this Agreement and the conditions
of this Article XI. Each co-trustee and separate trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of
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this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed with
the Trustee.
Any co-trustee or separate trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any co-trustee or separate trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 11.14. Representations and Warranties of Trustee. The Trustee,
solely in its capacity as Trustee, makes the following representations and
warranties:
(a) The Trustee is duly organized and validly existing as a
_________________ in good standing under the laws of the [State of
__________], with trust powers and with power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted.
(b) The Trustee has the power and authority to execute and
deliver this Agreement and to carry out its terms; and the execution,
delivery, and performance of this Agreement has been duly authorized by
the Trustee by all necessary corporate action.
(c) This Agreement constitutes a legal, valid, and binding
obligation of the Trustee, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights in general and by general principles of equity,
regardless of whether such enforceability shall be considered in a
proceeding in equity or at law.
(d) The consummation of the transactions contemplated by this
Agreement, and the fulfillment of the terms hereof, do not conflict
with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under,
the charter or by-laws of the Trustee or any indenture, agreement, or
other instrument to which the Trustee is a party or by which it is
bound; nor result in the creation or imposition of any lien upon any of
its properties pursuant to terms of any such indenture, agreement, or
other instrument; nor violate any law or any order, rule, or regulation
applicable to the Trustee of any court or of any Federal or state
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Trustee or its properties.
(e) There are no proceedings or investigations pending or, to
the best knowledge of the Trustee, threatened before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Trustee or its properties
(i) asserting the invalidity of this Agreement, or (ii) seeking to
prevent the
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consummation of any of the transactions contemplated by this Agreement,
or (iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Trustee of its obligations
under, or the validity or enforceability of, this Agreement.
(f) In no event shall the Trustee be required to perform, or
be responsible for the manner of performance of, any of the obligations
of the Servicer, or any other party, under this Agreement.
(g) The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Agreement, the
Trust Corpus or the Certificates, it shall not be accountable for the
Trust Depositor's use of the proceeds from the Certificates, and it
shall not be responsible for any statement of the Trust Depositor in
the Agreement or in any document issued in connection with the sale of
the Certificates or in the Certificates other than the Trustee's
certificate of authentication.
ARTICLE XII
MISCELLANEOUS
Section 12.01. Servicer Not to Resign. The Servicer shall not resign
from the obligations and duties hereby imposed on it except upon a determination
that the performance of its duties hereunder is no longer permissible under
applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced by an opinion of counsel for the Servicer to such
effect delivered to the Trustee. No such resignation shall become effective
until a Successor Servicer shall have assumed the responsibilities and
obligations of the Servicer in accordance with Section 7.03.
Section 12.02. Prohibited Transactions with Respect to the Trust.
Neither the Servicer nor the Trust Depositor shall:
(a) Provide credit to any Certificateholder for the purpose of
enabling such Certificateholder to purchase Certificates;
(b) Purchase any Certificates in an agency or trustee
capacity; or
(c) Except as provided herein, lend any money to the Trust.
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Section 12.03. Maintenance of Office or Agency. The Trustee shall
maintain an office or agency in Chicago, Illinois where Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Trustee in respect of the Certificates and this Agreement
may be served. On the date hereof the Trustee's office for such purposes is
located at the address set forth in Section 12.09. The Trustee will give prompt
written notice to Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
Section 12.04. Termination. This Agreement shall terminate (after
distribution of all Class A Distributable Amounts and Class B Distributable
Amounts due to Certificateholders pursuant to Sections 8.01 and 8.04) on the
Payment Date on which the Class A Certificate Balance and Class B Certificate
Balance is reduced to zero; PROVIDED, that in no event shall the trust created
hereby continue beyond the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late Ambassador of the
United States to the Court of St. James, living on the date hereof, and
PROVIDED, FURTHER, that the Servicer's and the Trust Depositor's representations
and warranties and the indemnities by the Seller and Servicer shall survive
termination. Upon such termination, the Trustee shall provide each Rating Agency
written notice of such termination. Additionally, upon such termination any
amounts remaining in the Collection Account after distribution of all amounts
payable to the Certificateholders in respect of Class A Distributable Amounts
and Class B Distributable Amounts and payment of all other amounts owed to the
Certificateholders shall be paid to the Seller.
Section 12.05. Acts of Certificateholders. (a) Except as otherwise
specifically provided herein, whenever Certificateholder approval,
authorization, direction, notice, consent, waiver or other action is required
hereunder, such approval, authorization, direction, notice, consent, waiver or
other action shall be deemed to have been given or taken on behalf of, and shall
be binding upon, all Certificateholders if agreed to by Certificateholders with
aggregate Fractional Interests representing 51% or more of the Trust.
(b) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
an agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where required, to the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and (subject to Section 11.01)
conclusive in favor of the Trustee, the Servicer, the Trust Depositor and the
Seller if made in the manner provided in this Section 12.05.
(c) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
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(d) The ownership of Certificates shall be proved by the Certificate
Register, absent manifest error.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind every holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done
by the Trustee, the Servicer or the Trust Depositor in reliance thereon, whether
or not notation of such action is made upon such security.
(f) The Trustee may require such additional proof of any matter
referred to in this Section 12.05 as it shall deem necessary.
Section 12.06. Calculations. Except as otherwise provided in this
Agreement, all interest rate and basis point calculations under this Agreement
will be made on the basis of a 360-day year comprised of twelve 30-day months
and will be carried out to at least three decimal places.
Section 12.07. Assignment or Delegation by Trust Depositor. Except as
specifically authorized hereunder, the Trust Depositor may not convey and assign
or delegate any of its rights or obligations hereunder absent the prior written
consent of 100% of the Class A Certificateholders and the Class B
Certificateholders, and any attempt to do so without such consent shall be void.
Section 12.08. Amendment. (a) This Agreement may be amended from time
to time by the Servicer, the Trust Depositor and the Trustee, without the
consent of any of the Certificateholders, to correct manifest error, to cure any
ambiguity, to correct or supplement any provisions herein or therein which may
be inconsistent with any other provisions herein or therein, as the case may be,
or to add any other provisions with respect to matters or questions arising
under this Agreement which shall not be inconsistent with the provisions of this
Agreement; PROVIDED, HOWEVER, that such action shall not, as evidenced by an
opinion of Counsel for the Trust Depositor, adversely affect the interests of
any Certificateholder.
(b) This Agreement may also be amended from time to time by the
Servicer, the Trust Depositor and the Trustee, with the consent of
Certificateholders with aggregate Fractional Interests representing 66-2/3% or
more of each Class voting as a separate Class, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the
Certificateholders; and any Servicer Default may be waived by the
Certificateholders with aggregate Fractional Interests representing 51% of the
Trust; PROVIDED, HOWEVER, that no such amendment or waiver described above shall
(a) reduce in any manner the amount of, or delay the timing of, collections of
payments on the Contracts or distributions which are required to be made on any
Certificate or (b) reduce the aforesaid percentage required to consent to any
such amendment, without the consent of the holders of all Certificates then
outstanding. Notwithstanding anything to the contrary contained herein, the
Depositor may, from time to time after the date of this Agreement, request each
Rating Agency to approve a formula for determining the Reserve Fund Requisite
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Amount that is different from that on the Closing Date and would result in a
decrease in the Reserve Fund Requisite Amount or the manner by which the Reserve
Fund is funded. In the event each Rating Agency delivers a letter to the Trustee
to the effect that the use of any such new formulation will not result in a
qualification, reduction or withdrawal of its then-current rating of the Class A
Certificates and the Class B Certificates, then either the Reserve Fund
Requisite Amount will be determined in accordance with such new formula or the
manner by which the Reserve Fund is funded will be modified.
(c) Promptly after the execution of any amendment or consent pursuant
to this Section 12.08, the Trustee shall furnish written notification of the
substance of such amendment and a copy of such amendment to each
Certificateholder, and to each Rating Agency.
(d) It shall not be necessary for the consent of Certificateholders
under this Section 12.08 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
(e) The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
(f) In connection with any amendment pursuant to this Section 12.08,
the Trustee shall be entitled to receive an opinion of counsel to the Servicer
and acceptable to the Trustee to the effect that such amendment is authorized or
permitted by this Agreement.
(g) Upon the execution of any amendment or consent pursuant to this
Section 12.08, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every holder of Certificates theretofore or thereafter issued hereunder
shall be bound thereby.
Section 12.09. Notices. All communications and notices pursuant hereto
to the Servicer, the Trust Depositor, the Servicer, the Trustee, the Seller,
Standard & Poor's, Moody's and the Placement Agent shall be in writing and
delivered or mailed to it at the appropriate following address:
If to the Servicer: Harley-Davidson Credit Corp.
150 South Wacker Drive
Chicago, Illinois 60606
Attention: [ ]
If to the Trust Depositor: Harley-Davidson Customer Funding Corp.
4150 Technology Way
Carson City, Nevada 89706
Attention: President
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If to the Trustee: __________________
__________________
__________________
If to the Seller: Harley-Davidson Credit Corp.
4150 Technology Way
Carson City, Nevada 89706
Attention: [ ]
If to Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Department
If to Standard & Poor's: Standard & Poor's Ratings Services, a
division of The McGraw Hill Company,
25 Broadway
New York, New York 10004
Attention: Asset Backed Securities Surveillance
If to the Placement Agent [ ]
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Certificateholder
shall be in writing and delivered or mailed at the address shown in the
Certificate Register.
Section 12.10. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
Section 12.11. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 12.12. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Illinois.
Section 12.13. No Insolvency Petition. The Trustee and the Servicer
hereby covenant and agree that, prior to the date which is one year and one day
after the payment in full of the Certificates, they will not institute against,
or join with any other Person in instituting against the Trust Depositor or the
Trust any involuntary insolvency proceedings under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or requesting the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar
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official), or for the substantial liquidation of their respective affairs. This
Section 12.13 shall survive the termination of this Agreement.
Section 12.14. Third Party Beneficiary. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as otherwise provided in this Article
XII, no other Person shall have any right or obligation hereunder.
Section 12.15. No Additional Securities. Notwithstanding anything to
the contrary contained herein, the Trust shall not issue any additional
Certificates or issue any other form of securities. Moreover, except as provided
for herein during the Funding Period or in Section 5.05(d), the Trust will not
purchase, or otherwise obtain any assets after the Closing Date or reinvest
amounts received with respect to the assets in the Trust.
Section 12.16. No Additional Indebtedness by the Trust Depositor. The
Trust Depositor hereby covenants that it shall not incur any indebtedness other
than indebtedness necessary to meet its obligations under the Transaction
Documents or any other similar documentation relating to any future grantor
trusts in which the Trust Depositor participates.
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In WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
HARLEY-DAVIDSON CUSTOMER FUNDING
CORP., as Trust Depositor
By___________________________________
Name:
Title:
HARLEY-DAVIDSON CREDIT CORP.,
as Servicer
By___________________________________
Name:
Title:
[TRUSTEE]
By___________________________________
Name:
Title:
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EXHIBIT A-1
CERTIFICATE FOR HARLEY-DAVIDSON MOTORCYCLE CONTRACTS
Harley-Davidson Motorcycle Trust ___
___.% Certificate, Class A
This Class A Certificate does not represent an obligation of or an
interest in Harley-Davidson Customer Funding Corp., Harley-Davidson Credit Corp.
or any affiliate thereof, except to the extent set forth in the Agreement. This
Class A Certificate has not been registered under the Securities Act of 1933 or
any state securities laws and may not be sold, transferred or pledged in the
absence of an effective Registration Statement under such Act and laws or unless
the conditions set forth in Section 9.02 of the Agreement have been complied
with.
The principal represented by this Class A Certificate is payable in
installments, as described herein and in the Agreement. Accordingly, the unpaid
Class A Certificate Balance of this Class A Certificate may be less than that
set forth below. Anyone acquiring this Class A Certificate may ascertain the
current unpaid Class A Certificate Balance represented by this certificate by
inquiry of the Trustee.
No. Class A Initial Certificate Principal Balance:$_________
Fractional Interest: ______%
This certifies that ____________________________ is the registered owner of the
undivided Fractional Interest represented by the Class A Initial Certificate
Principal Balance set forth above in Harley-Davidson Motorcycle Trust _____ (the
"TRUST"), which includes among its assets a pool of fixed-rate, simple interest
Harley-Davidson motorcycle conditional sales contracts (including, without
limitation, all security interests and any and all rights to receive payments
which are collected pursuant thereto on or after the Initial Cutoff Date or the
related Subsequent Cutoff Date in respect of Subsequent Contracts as described
below) (the "CONTRACTS") and rights under the Deposit Agreement described
herein. The Trust has been created pursuant to a Pooling and Servicing Agreement
(the "AGREEMENT"), dated as of _______________, by and among Harley-Davidson
Customer Funding Corp., as trust depositor (the "TRUST DEPOSITOR"),
Harley-Davidson Credit Corp., as servicer (in such capacity, the "SERVICER"),
and [______________], as Trustee of the Trust (in such capacity, the "TRUSTEE").
This Class A Certificate is one of the Class A Certificates described in the
Agreement and is issued, together with the Class B Certificates, pursuant and
subject to the Agreement. By acceptance of this Class A Certificate the holder
assents to and becomes bound by the Agreement. The Agreement provides that the
holder of a Class A Certificate agrees to report the income on the Class A
Certificate in a manner consistent with the intended characterization of the
Trust as a grantor trust. To the extent not defined herein, all capitalized
terms have the meanings assigned to such terms in the Agreement and all Section
references, unless otherwise specified, are to Sections of the Agreement.
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It is contemplated by the Transaction Documents that the proceeds from
the issuance of the Certificates will be used in their entirety to purchase
Contracts, including the Subsequent Contracts. To the extent that proceeds from
the Certificates are intended to purchase Subsequent Contracts, those proceeds
shall be deposited at Closing in the Pre-Funding Account and will be withdrawn
therefrom from time to time during the Funding Period only to purchase
Subsequent Contracts. Any funds remaining in the Pre-Funding Account at the end
of the Funding Period shall be distributed as a Special Distribution of
principal to the Class A Certificateholders in an amount equal to the Class A
Percentage multiplied by the amount on deposit in the Special Distribution
Account. The Pre-Funding Account and the funds therein are not a part of the
Trust but will be held by the Collateral Agent for the benefit of the Trustee
pursuant to the Security Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (each, a "PAYMENT DATE") of each calendar month commencing
_________, so long as the Agreement has not been terminated, by check from funds
drawn from the Collection Account (or in certain instances the Special
Distribution Account) to the registered Class A Certificateholder at the address
appearing on the Certificate Register (or by wire transfer if the Class A
Certificateholder delivers written instructions to the Trustee at least ten days
prior to such Payment Date) as of the last Business Day of the immediately
preceding calendar month (each such month during the term of the Agreement
constituting a "DUE PERIOD"), an amount equal to the Class A Certificateholder's
Fractional Interest of the Class A Principal Distributable Amount and the Class
A Interest Distributable Amount (as well as, in certain instances, the
Fractional Interest of Special Distributions). The final scheduled Payment Date
of this Certificate is_________________, which relates to the month following
the latest maturity date of the Contracts (including any Subsequent Contracts).
This Class A Certificate does not represent an obligation of or an
interest in the Trust Depositor, the Servicer, the Back-up Servicer or the
Trustee and the Trustee in its individual capacity is not personally liable to
the Class A Certificateholder for any amounts payable under this Class A
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Class A Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class A Certificateholder
free of charge upon a written request to the Trustee, at its Corporate Trust
Department, 311 West Monroe Street, 12th Floor, Chicago, Illinois 60606.
"CLASS A INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date (other than the first Payment Date), the sum of (i) the product of
(A) one-twelfth (or, with respect to the first Payment Date, a fraction, the
numerator of which equals the number of days from and including the Closing Date
to but excluding the first Payment Date and the denominator of which
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equals 360) of the Class A Pass-Through Rate and (B) the Class A Certificate
Balance as of the immediately preceding Payment Date (after giving effect to
distributions of principal made on such immediately preceding Payment Date) or,
in the case of the first Payment Date, the Class A Initial Certificate Balance
plus (ii) the Class A Interest Carryover Shortfall for such Payment Date. "CLASS
A PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Payment Date, the
sum of (i) the product of (a) the Class A Percentage and the (b) Monthly
Principal for such Payment Date plus (ii) the Class A Principal Carryover
Shortfall for such Payment Date. "AVAILABLE INTEREST" means, with respect to any
Payment Date, the total (without duplication) of the following amounts received
by the Servicer on or in respect of the Contracts during the related Due Period:
(i) all amounts received in respect of interest on the Contracts (as well as
Late Payment Penalty Fees and Extension Fees), (ii) the interest component of
all Net Liquidation Proceeds, (iii) the interest component of the aggregate of
the Repurchase Prices for Contracts repurchased by the Seller pursuant to
Section 8.06, (iv) all Advances made by the Servicer pursuant to Section 8.03,
(v) the interest component of all amounts paid by the Seller in connection with
an optional repurchase of the Contracts pursuant to Section 8.08, (vi) all
amounts received in respect of Carrying Charges transferred from the Interest
Reserve Account pursuant to Section 8.03, and (vii) all amounts received in
respect of interest, dividends, gains, income and earnings on investment of
funds in the Trust Accounts as contemplated in the last sentence of Section
5.05(d). "AVAILABLE PRINCIPAL" means, with respect to any Payment Date, the
total (without duplication) of the following amounts received by the Servicer on
or in respect of the Contracts during the related Due Period: (i) all amounts
received in respect of principal on the Contracts, (ii) the principal component
of all Net Liquidation Proceeds, (iii) the principal component of the aggregate
of the Repurchase Prices for Contracts repurchased by the Seller pursuant to
Section 8.06, and (iv) the principal component of all amounts paid by the Seller
in connection with an optional repurchase of the Contracts pursuant to Section
8.08. "CLASS A INTEREST CARRYOVER SHORTFALL" means, with respect to any Payment
Date, (i) the excess of the Class A Interest Distributable Amount for the
preceding Payment Date over the amount of interest that was actually distributed
to Class A Certificateholders on such preceding Payment Date, plus (ii) 30 days
of interest on the amount specified in clause (i), to the extent permitted by
law, at the Class A Pass-Through Rate. "CLASS A PRINCIPAL CARRYOVER SHORTFALL"
means, with respect to any Payment Date, (i) the excess of the Class A Principal
Distributable Amount over (ii) the amount of principal that was actually
distributed to Class A Certificateholders on such preceding Payment Date.
"PRINCIPAL BALANCE" means (a) with respect to any Contract as of any date, an
amount equal to the unpaid principal balance of such Contract as of the opening
of business on the Initial Cutoff Date or related Subsequent Cutoff Date, as
applicable, reduced by the sum of (x) all payments received by the Servicer as
of such date allocable to principal and (y) any Cram Down Loss in respect of
such Contract; PROVIDED, HOWEVER, that (i) if (x) a Contract is repurchased by
the Seller pursuant to Section 5.01 of the Transfer and Sale Agreement and
Section 8.06 because of a breach of representation or warranty or if (y) the
Seller gives notice of its intent to purchase the Contracts in connection with
an optional termination of the Trust pursuant to Section 5.02 of the Transfer
and Sale Agreement and Section 8.08, in each case the Principal Balance of such
Contract or Contracts shall be deemed as of the related Determination Date to be
zero for the Due Period in which such event occurs and for each Due Period
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<PAGE>
thereafter, (ii) from and after the third Due Period succeeding the final Due
Period in which the Obligor is required to make the final scheduled payment on a
Contract, the Principal Balance, if any, of such Contract shall be deemed to be
zero, and (iii) from and after the Due Period in which a Contract becomes a
Liquidated Contract, the Principal Balance of such Contract shall be deemed to
be zero; and (b) where the context requires, the aggregate of the Principal
Balances described in clause (a) for all such Contracts. "MONTHLY PRINCIPAL"
means, as to any Payment Date, the following amount calculated as of the related
Determination Date: the difference between (i) the sum of (A) the Principal
Balance of the Contracts as of the first day of the Due Period preceding the Due
Period in which such Payment Date occurs (or, in the case of the first Payment
Date, the Principal Balance of the Contracts as of the Initial Cutoff Date),
plus (B) the Pre-Funded Amount on such date (or, in the case of the first
Payment Date, the Pre-Funded Amount on the Closing Date) and (ii) the sum of (A)
the Principal Balance of the Contracts as of the first day of the Due Period in
which such Payment Date occurs, plus (B) the Pre-Funded Amount on such day, plus
(C) the amount of any Special Distribution occurring from the day referred to in
clause (i)(A) above to the day referred to in clause (ii)(A) above; provided,
that on the Final Scheduled Payment Date, Monthly Principal shall equal the
aggregate of the Class A Certificate Balance and the Class B Certificate
Balance. For purposes of determining the amount in clause (ii)(C) above as to
any particular Payment Date and with respect to the Due Period preceding such
Payment Date, if the Funding Period ends during such Due Period and Liquidated
Damages (as defined in the Security Agreement) are consequently paid from the
Pre-Funding Account during such Due Period but will not be distributed as a
Special Distribution until the Payment Date occurring in the following Due
Period (i.e., the particular Payment Date referred to above), then the amount
calculated in clause (ii)(C) for such preceding Due Period shall be deemed to
include such Special Distribution in such amount (although paid as a Special
Distribution on the Payment Date occurring during the following Due Period) will
not be included in the next calculation of clause (ii)(C) to be made with
respect to the following Due Period.
On each Payment Date, the Trustee will cause to be distributed from
Available Funds, Available Interest and Available Principal for such Payment
Date in the Collection Account to the Certificateholders the following amounts
(after the payment of the Reimbursement Amount, the Servicing Fee, the Trustee's
Fee and the Back-up Servicer Fee) in the following priorities (which includes
the benefit of (a) the subordination (as described below) of the Class B
Percentage of Available Interest and Available Principal and (b) the Reserve
Fund) (l) to the Class A Certificateholders of record, from Available Interest,
an amount equal to the Class A Interest Distributable Amount for such Payment
Date and, if such Available Interest is insufficient, the Class A
Certificateholders will receive such shortfall first, from the Class B
Percentage of Available Principal and second, if such amounts are still
insufficient, from monies on deposit in the Reserve Fund; (2) to the Class B
Certificateholders of record, from Available Interest, an amount equal to the
Class B Interest Distributable Amount for such Payment Date and, if such
Available Interest is insufficient, the Class B Certificateholders will receive
such shortfall from monies on deposit in the Reserve Fund; (3) to the Class A
Certificateholders of record, from Available Principal, an amount equal to the
Class A Principal Distributable Amount for such Payment Date and, if such
Available Principal is insufficient, the Class A
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<PAGE>
Certificateholders will receive such shortfall first, from Available Interest,
and second, if such amounts are still insufficient, from monies on deposit in
the Reserve Fund; and (4) to the Class B Certificateholders of record, from
Available Principal, an amount equal to the Class B Principal Distributable
Amount for such Payment Date and, if such Available Principal is insufficient,
the Class B Certificateholders will receive such shortfall first, from Available
Interest, and second, if such amounts are still insufficient, from monies on
deposit in the Reserve Fund. Any Available Funds remaining in the Collection
Account after such distributions will be paid to the Trust Depositor subject to
the conditions of the Reserve Fund Agreement.
The Seller will repurchase a Contract by depositing the Repurchase
Price for such Contract into the Collection Account no later than two Business
Days prior to the Determination Date which is more than ninety days after the
Trust Depositor becomes aware, or should have become aware or receives written
notice from the Trustee, of breach of a warranty of the Seller set forth in
Article III of the Transfer and Sale Agreement that materially adversely affects
the Trust's interest in such Contract, which breach has not been cured (the
Seller's obligation to repurchase such Contract constituting the
Certificateholders' sole remedy with respect to such a breach of a
representation and warranty set forth in the Transfer and Sale Agreement).
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights of the Certificateholders
under the Agreement at any time by the Servicer, the Back-up Servicer, the Trust
Depositor, and the Trustee with the consent of the holders of Class A
Certificates evidencing Fractional Interests representing 66-2/3% or more of
such Class voting as a separate Class and holders of Class B Certificates
evidencing Fractional Interests representing 66-2/3% or more of the Class B
Certificates voting as a separate Class. Any such consent by the holder of this
Class A Certificate shall be conclusive and binding on such holder and upon all
future holders of this Class A Certificate and of any Class A Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Class A Certificate. The Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of any of the Certificateholders.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class A Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this Class A
Certificate for registration of transfer at the office or agency maintained by
the Trustee in Chicago, Illinois as previously described, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder thereof or his or her attorney
duly authorized in writing, and upon receipt by the Trustee of either (i)
evidence of the effectiveness or continued effectiveness of a registration
statement under the Securities Act of 1933, as amended, with respect to this
Class A Certificate, and registration under the applicable state laws, or (ii) a
certificate in writing of the transferee satisfactory to the Trust Depositor
regarding the facts surrounding such disposition; PROVIDED, HOWEVER, at the
election of the Trust Depositor, the Trust Depositor may, in addition, if such
certification is not substantially in the form of Exhibit H-2 to the Agreement,
require the delivery of an opinion of counsel satisfactory to the Trustee (which
shall not be at the expense of the Trust Depositor or the Trustee) that no such
registration is required, and thereupon one or
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<PAGE>
more new Class A Certificates evidencing the same aggregate Fractional Interest
will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain limitations therein
set forth, Class A Certificates are exchangeable for new Class A Certificates of
authorized denominations evidencing the same aggregate Fractional Interest as
requested by the holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Certificate Registrar
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Trust Depositor, the Servicer, the Back-up Servicer, the Trustee,
the Paying Agent and the Certificate Registrar and any agent of the Trust
Depositor, the Servicer, the Back-up Servicer, the Trustee, the Paying Agent or
the Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trust
Depositor, the Servicer, the Back-up Servicer, the Trustee, the Paying Agent,
the Certificate Registrar nor any such agent shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate (after distribution of all Class A
Distributable Amounts and Class B Distributable Amounts) on the Payment Date on
which the Class A Certificate Balance and Class B Certificate Balance is reduced
to zero; PROVIDED, that in no event shall the trust created thereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
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<PAGE>
IN WITNESS WHEREOF, Harley-Davidson Motorcycle Trust _____ has caused this Class
A Certificate to be duly executed by the manual signature of a duly authorized
officer of the Trustee or of a duly appointed Authenticating Agent.
HARLEY-DAVIDSON MOTORCYCLE TRUST ______
DATED: __________
[_________________], NOT IN ITS INDIVIDUAL
CAPACITY BUT SOLELY AS TRUSTEE
BY________________________________
AUTHORIZED OFFICER
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<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_____________________________________________ the within ___% Certificate, Class
A for Harley-Davidson Motorcycle Contracts, Harley-Davidson Motorcycle Trust
_____, and does hereby irrevocably constitute and appoint
_____________________________________ Attorney to transfer the said certificate
on the Certificate Register maintained by the Trustee, with full power of
substitution in the premises.
--------------------------------
Signature
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<PAGE>
EXHIBIT A-2
CERTIFICATE FOR HARLEY-DAVIDSON MOTORCYCLE CONTRACTS
Harley-Davidson Motorcycle Trust ____
_____% Certificate, Class B
This Class B Certificate does not represent an obligation of or an
interest in Harley-Davidson Customer Funding Corp., Harley-Davidson Credit Corp.
or any affiliate thereof, except to the extent set forth in the Agreement. This
Class B Certificate has not been registered under the Securities Act of 1933 or
any state securities laws and may not be sold, transferred or pledged in the
absence of an effective Registration Statement under such Act and laws or unless
the conditions set forth in Section 9.02 of the Agreement have been complied
with. Distributions on this Class B Certificate are subordinate to distributions
on the Class A Certificates as described in the Agreement.
The principal represented by this Class B Certificate is payable in
installments, as described herein and in the Agreement. Accordingly, the unpaid
Class B Certificate Balance of this Class B Certificate may be less than that
set forth below. Anyone acquiring this Class B Certificate may ascertain the
current unpaid Class B Certificate Balance represented by this certificate by
inquiry of the Trustee.
No. Class B Initial Certificate Principal Balance:$________
Fractional Interest: _______%
This certifies that ______________________________ is the registered owner of
the undivided Fractional Interest represented by the Class B Initial Certificate
Principal Balance set forth above in Harley-Davidson Motorcycle Trust _____ (the
"TRUST"), which includes among its assets a pool of fixed-rate, simple interest
Harley-Davidson motorcycle conditional sales contracts (including, without
limitation, all security interests and any and all rights to receive payments
which are collected pursuant thereto on or after the Initial Cutoff Date or the
related Subsequent Cutoff Date in respect of Subsequent Contracts as described
below) (the "CONTRACTS") and rights under the Deposit Agreement described
herein. The Trust has been created pursuant to a Pooling and Servicing Agreement
(the "AGREEMENT"), dated as of ________, by and among Harley-Davidson Customer
Funding Corp., as trust depositor (the "TRUST DEPOSITOR"), Harley-Davidson
Credit Corp., as servicer (in such capacity, the "SERVICER"), and
[_______________], as Trustee of the Trust (the "TRUSTEE"). This Class B
Certificate is one of the Class B Certificates described in the Agreement and is
issued, together with the Class A Certificates, pursuant and subject to the
Agreement. By acceptance of this Class B Certificate the holder assents to and
becomes bound by the Agreement. The Agreement provides that the holder of a
Class B Certificate agrees to report the income on the Class B Certificate in a
manner consistent with the intended characterization of the Trust as a grantor
trust. To the extent not defined herein, all
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<PAGE>
capitalized terms have the meanings assigned to such terms in the Agreement and
all Section references, unless otherwise specified, are to Sections of the
Agreement.
It is contemplated by the Transaction Documents that the proceeds from
the issuance of the Certificates will be used in their entirety to purchase
Contracts, including the Subsequent Contracts. To the extent that proceeds from
the Certificates are intended to purchase Subsequent Contracts, those proceeds
shall be deposited at Closing in the Pre-Funding Account and will be withdrawn
therefrom from time to time during the Funding Period only to purchase
Subsequent Contracts. Any funds remaining in the Pre-Funding Account at the end
of the Funding Period shall be distributed as a Special Distribution of the
Class B percentage of principal to the Class B Certificateholders in an amount
equal to the Class B Percentage multiplied by the amount on deposit in the
Special Distribution Account. The Pre-Funding Account and the funds therein are
not a part of the Trust but will be held by the Collateral Agent for the benefit
of the Trustee pursuant to the Security Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (each, a "PAYMENT DATE") of each calendar month commencing
__________, so long as the Agreement has not been terminated, by check from
funds drawn from the Collection Account (or in certain instances the Special
Distribution Account) to the registered Class B Certificateholder at the address
appearing on the Certificate Register (or by wire transfer, if the Class B
Certificateholder delivers written instructions to the Trustee at least ten days
prior to such Payment Date) as of the last Business Day of the immediately
preceding calendar month (each such month during the term of the Agreement
constituting a "DUE PERIOD"), an amount equal to the Class B Certificateholder's
Fractional Interest of the Class B Principal Distributable Amount and the Class
B Interest Distributable Amount (as well as, in certain instances, the
Fractional Interest of Special Distributions). The final scheduled Payment Date
of this Certificate is ____________, which relates to the month following the
latest maturity date of the Contracts (including any Subsequent Contracts).
This Class B Certificate does not represent an obligation of or an
interest in the Trust Depositor, the Servicer, the Back-up Servicer or the
Trustee and the Trustee in its individual capacity is not personally liable to
the Class B Certificateholder for any amounts payable under this Class B
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Class B Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class B Certificateholder
free of charge upon a written request to the Trustee, at its Corporate Trust
Department, 311 West Monroe Street, 12th Floor, Chicago, Illinois 60606.
"CLASS B INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date (other than the first Payment Date), the sum of (i) the product of
(A) one-twelfth (or, with respect to the first Payment Date, a fraction, the
numerator of which equals the number of days from and
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<PAGE>
including the Closing Date to but excluding the first Payment Date and the
denominator of which equals 360) of the Class B Pass-Through Rate and (B) the
Class B Certificate Balance as of the immediately preceding Payment Date (after
giving effect to distributions of principal made on such immediately preceding
Payment Date) or, in the case of the first Payment Date, the Class B Initial
Certificate Balance plus (ii) the Class B Interest Carryover Shortfall for such
Payment Date. "CLASS B PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Payment Date, the sum of (i) the product of (a) the Class B Percentage and
(b) the Monthly Principal for such Payment Date plus (ii) the Class B Principal
Carryover Shortfall for such Payment Date. "AVAILABLE INTEREST" means, with
respect to any Payment Date, the total (without duplication) of the following
amounts received by the Servicer on or in respect of the Contracts during the
related Due Period: (i) all amounts received in respect of interest on the
Contracts (as well as Late Payment Penalty Fees and Extension Fees), (ii) the
interest component of all Net Liquidation Proceeds, (iii) the interest component
of the aggregate of the Repurchase Prices for Contracts repurchased by the
Seller pursuant to Section 8.06, (iv) all Advances made by the Servicer pursuant
to Section 8.03, (v) the interest component of all amounts paid by the Seller in
connection with an optional repurchase of the Contracts pursuant to Section
8.08, (vi) all amounts received in respect of Carrying Charges transferred from
the Interest Reserve Account pursuant to Section 8.03, and (vii) all amounts
received in respect of interest, dividends, gains, income and earnings on
investment of funds in the Trust Accounts as contemplated in the last sentence
of Section 5.05(d). "AVAILABLE PRINCIPAL" means, with respect to any Payment
Date, the total (without duplication) of the following amounts received by the
Servicer on or in respect of the Contracts during the related Due Period: (i)
all amounts received in respect of principal on the Contracts, (ii) the
principal component of all Net Liquidation Proceeds, (iii) the principal
component of the aggregate of the Repurchase Prices for Contracts repurchased by
the Seller pursuant to Section 8.06, and (iv) the principal component of all
amounts paid by the Seller in connection with an optional repurchase of the
Contracts pursuant to Section 8.08. "CLASS B INTEREST CARRYOVER SHORTFALL"
means, with respect to any Payment Date, (i) the excess of the Class B Interest
Distributable Amount for the preceding Payment Date over the amount of interest
that was actually distributed to Class B Certificateholders on such preceding
Payment Date, plus (ii) 30 days of interest on the amount specified in clause
(i), to the extent permitted by law, at the Class B Pass-Through Rate. "CLASS B
PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any Payment Date, (i) the
excess of the Class B Principal Distributable Amount over (ii) the amount of
principal that was actually distributed to Class B Certificateholders on such
preceding Payment Date. "PRINCIPAL BALANCE" means (a) with respect to any
Contract as of any date, an amount equal to the unpaid principal balance of such
Contract as of the opening of business on the Initial Cutoff Date or related
Subsequent Cutoff Date, as applicable, reduced by the sum of (x) all payments
received by the Servicer as of such date allocable to principal and (y) any Cram
Down Loss in respect of such Contract; PROVIDED, HOWEVER, that (i) if (x) a
Contract is repurchased by the Seller pursuant to Section 5.01 of the Transfer
and Sale Agreement and Section 8.06 because of a breach of representation or
warranty or if (y) the Seller gives notice of its intent to purchase the
Contracts in connection with an optional termination of the Trust pursuant to
Section 5.02 of the Transfer and Sale Agreement and Section 8.08, in each case
the Principal Balance of such Contract or Contracts shall be deemed as of the
related Determination
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<PAGE>
Date to be zero for the Due Period in which such event occurs and for each Due
Period thereafter, (ii) from and after the third Due Period succeeding the final
Due Period in which the Obligor is required to make the final scheduled payment
on a Contract, the Principal Balance, if any, of such Contract shall be deemed
to be zero, and (iii) from and after the Due Period in which a Contract becomes
a Liquidated Contract, the Principal Balance of such Contract shall be deemed to
be zero; and (b) where the context requires, the aggregate of the Principal
Balances described in clause (a) for all such Contracts. "MONTHLY PRINCIPAL"
means, as to any Payment Date, the following amount calculated as of the related
Determination Date: the difference between (i) the sum of (A) the Principal
Balance of the Contracts as of the first day of the Due Period preceding the Due
Period in which such Payment Date occurs (or, in the case of the first Payment
Date, the Principal Balance of the Contracts as of the Initial Cutoff Date),
plus (B) the Pre-Funded Amount on such date (or, in the case of the first
Payment Date, the Pre-Funded Amount on the Closing Date) and (ii) the sum of (A)
the Principal Balance of the Contracts as of the first day of the Due Period in
which such Payment Date occurs, plus (B) the Pre-Funded Amount on such day, plus
(C) the amount of any Special Distribution occurring from the day referred to in
clause (i)(A) above to the day referred to in clause (ii)(A) above; provided,
that on the Final Scheduled Payment Date, Monthly Principal shall equal the
aggregate of the Class A Certificate Balance and the Class B Certificate
Balance. For purposes of determining the amount in clause (ii)(C) above as to
any particular Payment Date and with respect to the Due Period preceding such
Payment Date, if the Funding Period ends during such Due Period and Liquidated
Damages (as defined in the Security Agreement) are consequently paid from the
Pre-Funding Account during such Due Period but will not be distributed as a
Special Distribution until the Payment Date occurring in the following Due
Period (i.e., the particular Payment Date referred to above), then the amount
calculated in clause (ii)(C) for such preceding Due Period shall be deemed to
include such Special Distribution in such amount (although paid as a Special
Distribution on the Payment Date occurring during the following Due Period) will
not be included in the next calculation of clause (ii)(C) to be made with
respect to the following Due Period
On each Payment Date, the Trustee will cause to be distributed from
Available Funds, Available Interest and Available Principal for such Payment
Date in the Collection Account to the Certificateholders the following
amounts (after the payment of the Reimbursement Amount, the Servicing Fee,
the Trustee's Fee and the Back-up Servicer Fee) in the following priorities
(subject to the subordination of the Class B Certificates as described below
but including the benefit of the Reserve Fund) (l) to the Class A
Certificateholders of record, from Available Interest, an amount equal to the
Class A Interest Distributable Amount for such Payment Date and, if such
Available Interest is insufficient, the Class A Certificateholders will
receive such shortfall first, from the Class B Percentage of Available
Principal and second, if such amounts are still insufficient, from monies on
deposit in the Reserve Fund; (2) to the Class B Certificateholders of record,
from Available Interest, an amount equal to the Class B Interest
Distributable Amount for such Payment Date and, if such Available Interest is
insufficient, the Class B Certificateholders will receive such shortfall from
monies on deposit in the Reserve Fund; (3) to the Class A Certificateholders
of record, from Available Principal, an amount equal to the Class A Principal
Distributable Amount for such Payment Date and, if such Available
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<PAGE>
Principal is insufficient, the Class A Certificateholders will receive such
shortfall first, from Available Interest, and second, if such amounts are
still insufficient, from monies on deposit in the Reserve Fund; and (4) to
the Class B Certificateholders of record, from Available Principal, an amount
equal to the Class B Principal Distributable Amount for such Payment Date
and, if such Available Principal is insufficient, the Class B
Certificateholders will receive such shortfall first, from Available
Interest, and second, if such amounts are still insufficient, from monies on
deposit in the Reserve Fund. Any Available Funds remaining in the Collection
Account after such distributions will be paid to the Trust Depositor subject
to the conditions of the Reserve Fund Agreement.
The Seller will repurchase a Contract by depositing the Repurchase
Price for such Contract into the Collection Account no later than two Business
Days prior to the Determination Date which is more than ninety days after the
Trust Depositor becomes aware, or should have become aware or receives written
notice from the Trustee, of breach of a warranty of the Seller set forth in
Article III of the Transfer and Sale Agreement that materially adversely affects
the Trust's interest in such Contract, which breach has not been cured (the
Seller's obligation to repurchase such Contract constituting the
Certificateholders' sole remedy with respect to such a breach of a
representation and warranty set forth in the Transfer and Sale Agreement).
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights of the Certificateholders
under the Agreement at any time by the Servicer, the Back-up Servicer, the Trust
Depositor and the Trustee with the consent of the holders of Class B
Certificates evidencing Fractional Interests representing 66-2/3% or more of
such Class voting as a separate Class and holders of Class A Certificates
evidencing Fractional Interests representing 66-2/3% or more of the Class A
Certificates voting as a separate Class. Any such consent by the holder of this
Class B Certificate shall be conclusive and binding on such holder and upon all
future holders of this Class B Certificate and of any Class B Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Class B Certificate. The Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of any of the Certificateholders.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class B Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this Class B
Certificate for registration of transfer at the office or agency maintained by
the Trustee in Chicago, Illinois as previously described, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder thereof or his or her attorney
duly authorized in writing, and upon receipt by the Trustee of either (i)
evidence of the effectiveness or continued effectiveness of a registration
statement under the Securities Act of 1933, as amended, with respect to this
Class B Certificate, and registration under the applicable state laws, or (ii) a
certificate in writing of the transferee satisfactory to the Trust Depositor
regarding the facts surrounding such disposition; PROVIDED, HOWEVER, at the
election of the Trust Depositor, the Trust Depositor may, in addition, if such
certification is not substantially in the form of Exhibit H-2 to the Agreement,
require the delivery of an opinion of counsel satisfactory to the Trustee (which
shall not be at the expense of
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<PAGE>
the Trust Depositor or the Trustee) that no such registration is required, and
thereupon one or more new Class B Certificates evidencing the same aggregate
Fractional Interest will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain limitations therein
set forth, Class B Certificates are exchangeable for new Class B Certificates of
authorized denominations evidencing the same aggregate Fractional Interest as
requested by the holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Certificate Registrar
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Trust Depositor, the Servicer, the Back-up Servicer, the Trustee,
the Paying Agent and the Certificate Registrar and any agent of the Trust
Depositor, the Servicer, the Back-up Servicer, the Trustee, the Paying Agent or
the Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trust
Depositor, the Servicer, the Back-up Servicer, the Trustee, the Paying Agent,
the Certificate Registrar nor any such agent shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate (after distribution of all Class A
Distributable Amounts and Class B Distributable Amounts on the Payment Date on
which the Class A Certificate Balance and Class B Certificate Balance is reduced
to zero; PROVIDED, that in no event shall the trust created thereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
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<PAGE>
IN WITNESS WHEREOF, Harley-Davidson Motorcycle Trust _____ has caused this Class
B Certificate to be duly executed by the manual signature of a duly authorized
officer of the Trustee or of a duly appointed Authenticating Agent.
HARLEY-DAVIDSON MOTORCYCLE TRUST _________
DATED:__________
[__________________], NOT IN ITS INDIVIDUAL
CAPACITY BUT SOLELY AS TRUSTEE
BY________________________________
AUTHORIZED OFFICER
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<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_____________________________________________ the within ___% Certificate, Class
B for Harley-Davidson Motorcycle Contracts, Harley-Davidson Motorcycle Trust
_____, and does hereby irrevocably constitute and appoint
_____________________________________ Attorney to transfer the said certificate
on the Certificate Register maintained by the Trustee, with full power of
substitution in the premises.
--------------------------------
Signature
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<PAGE>
EXHIBIT 10.4
================================================================================
FORM OF
ADMINISTRATION AGREEMENT
among
HARLEY-DAVIDSON MOTORCYCLE TRUST [______],
as Issuer,
HARLEY-DAVIDSON CREDIT CORP.,
as Administrator
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,
as Trust Depositor,
and
[_________________],
as Indenture Trustee
Dated as of [_________]
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
SECTION 1. DUTIES OF THE ADMINISTRATOR..........................................2
SECTION 2. RECORDS..............................................................7
SECTION 3. COMPENSATION.........................................................7
SECTION 4. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER.................7
SECTION 5. INDEPENDENCE OF THE ADMINISTRATOR....................................8
SECTION 6. NO JOINT VENTURE.....................................................8
SECTION 7. OTHER ACTIVITIES OF ADMINISTRATOR....................................8
SECTION 8. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF ADMINISTRATOR..........8
SECTION 9. ACTION UPON TERMINATION, RESIGNATION OR REMOVAL......................9
SECTION 10. NOTICES.............................................................10
SECTION 11. AMENDMENTS..........................................................10
SECTION 12. SUCCESSORS AND ASSIGNS..............................................11
SECTION 13. GOVERNING LAW.......................................................12
SECTION 14. HEADINGS............................................................12
SECTION 15. COUNTERPARTS........................................................12
SECTION 16. SEVERABILITY........................................................12
SECTION 17. NOT APPLICABLE TO HARLEY-DAVIDSON CREDIT IN OTHERCAPACITIES.........12
SECTION 18. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE TRUSTEE......12
SECTION 19. THIRD-PARTY BENEFICIARY.............................................13
SECTION 20. SURVIVABILITY.......................................................13
SECTION 21. NO PETITION.........................................................13
</TABLE>
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This Administration Agreement, dated as of [_________], among
Harley-Davidson Motorcycle Trust [______] (the "ISSUER"), Harley-Davidson Credit
Corp. (together with its successors and assigns "HARLEY-DAVIDSON CREDIT") in its
capacity as administrator, the "ADMINISTRATOR"), Harley-Davidson Customer
Funding Corp. (the "TRUST DEPOSITOR") and [_______________], not in its
individual capacity but solely as Indenture Trustee (together with its
successors and assigns, the "INDENTURE TRUSTEE").
W I T N E S S E T H:
WHEREAS, the Issuer is issuing [____]% Harley-Davidson Motorcycle
Contract, Class A-1 Notes, [____]% Harley-Davidson Motorcycle Contract, Class
A-2 Notes and [____]% Harley-Davidson Motorcycle Contract, Class B Notes
(collectively, the "NOTES") pursuant to the Indenture, dated as of the date
hereof (the "INDENTURE"), between the Issuer and the Indenture Trustee
(capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in the Indenture) [and the ___% Harley-Davidson
Motorcycle Contract Certificates (the "CERTIFICATES") pursuant to the Trust
Agreement (the "TRUST AGREEMENT") dated as of the date hereof between the
Depositor and [_______________], as owner trustee (the "OWNER TRUSTEE")];
WHEREAS, the Issuer has entered into certain agreements in connection
with the issuance of the Notes and Certificates, including (i) a Sale and
Servicing Agreement, dated as of the date hereof (the "SALE AND SERVICING
AGREEMENT"), among the Issuer, [______________], not in its individual capacity
but as Indenture Trustee, the Trust Depositor and Harley-Davidson Credit Corp.,
as servicer (in such capacity, the "SERVICER"), and (ii) the Indenture
(collectively referred to hereinafter as the "TRANSACTION DOCUMENTS");
WHEREAS, pursuant to the Transaction Documents, the Issuer and the
Owner Trustee are required to perform certain duties in connection with (i) the
Notes and the collateral therefor pledged pursuant to the Indenture (the
"COLLATERAL") and (ii) the Certificates (the registered holders of the
Certificates being referred to herein as the "OWNERS");
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner Trustee
referred to in the preceding clause and to provide such additional services
consistent with the terms of this Agreement and the Transaction Documents as the
Issuer and the Owner Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
NOW, THEREAFTER, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
<PAGE>
SECTION 1. DUTIES OF THE ADMINISTRATOR.
(a) Duties with respect to the Indenture.
(i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer and the Owner Trustee under
the Transaction Documents. In addition, the Administrator shall consult
with the Owner Trustee regarding the duties of the Issuer or the Owner
Trustee under the Indenture. The Administrator shall monitor the
performance of the Issuer and shall advise the Owner Trustee when
action is necessary to comply with the respective duties of the Issuer
and the Owner Trustee under the Indenture. The Administrator shall
prepare for execution by the Issuer or shall cause the preparation by
other appropriate persons of, all such documents, reports, filings,
instruments, certificates and opinions that it shall be the duty of the
Issuer or the Owner Trustee to prepare, file or deliver pursuant to the
Indenture. In furtherance of the foregoing, the Administrator shall
take all appropriate action that the Issuer or the Owner Trustee is
required to take pursuant to the Indenture including, without
limitation, such of the foregoing as are required with respect to the
following matters under the Indenture (references are to Sections of
the Indenture):
(A) the duty to cause the Note Register to be kept and to give
the Indenture Trustee notice of any appointment of a new Note Registrar
and the location, or change in location, of the Note Register (Section
2.04);
(B) the notification of Noteholders of the final principal
payment on their Notes (Section 2.07(b));
(C) the fixing or causing to be fixed of any special record
date and the notification of the Indenture Trustee and Noteholders with
respect to special payment dates, if any (Section 2.07(c));
(D) the preparation of or obtaining of the documents and
instruments required for execution and authentication of the Notes and
delivery of the same to the Indenture Trustee (Section 2.02);
(E) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release
of Collateral (Section 2.12);
(F) the maintenance of an office in the City of Chicago,
Illinois, for registration of transfer or exchange of Notes (Section
3.02);
(G) the duty to cause newly appointed Paying Agents, if any,
to deliver to the Indenture Trustee the instrument specified in the
Indenture regarding funds held in trust (Section 3.03);
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(H) the direction to the Indenture Trustee to deposit monies
with Paying Agents, if any, other than the Indenture Trustee (Section
3.03);
(I) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of the Indenture, the Notes, the collateral and each
other instrument and agreement included in the Collateral (Section
3.04);
(J) the preparation of all supplements and amendments to the
Indenture and all financing statements, continuation statements,
instruments of further assurance and other instruments and the taking
of such other action as is necessary or advisable to protect the
Collateral other than as prepared by the Servicer (Section 3.05);
(K) the delivery of the Opinion of Counsel on the Closing Date
and certain other statements as to compliance with the Indenture
(Sections 3.06 and 3.09);
(L) the identification to the Indenture Trustee in an
Officer's Certificate of a Person with whom the Issuer has contracted
to perform its duties under the Indenture (Section 3.07(b));
(M) the notification of the Indenture Trustee and each Rating
Agency of a Servicer Default under the Sale and Servicing Agreement;
(N) the duty to cause the Servicer to comply with Sections
4.09, 4.10, 4.11 and 5.07 and Article Five and Article Nine of the Sale
and Servicing Agreement (Section 3.14);
(O) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 3.10(b) and Section 3.11(b));
(P) the delivery of written notice to the Indenture Trustee
and each Rating Agency of each Event of Default under the Indenture and
each Servicer Default by the Servicer under the Sale and Servicing
Agreement (Section 3.18);
(Q) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officer's Certificate and the obtaining of the Opinion of Counsel and
the Independent Certificate relating thereto (Section 4.01);
(R) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Collateral in a commercially
reasonable manner if an Event of Default shall have occurred and be
continuing (Section 5.04);
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<PAGE>
(S) the preparation and delivery of notice to Noteholders of
the removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee (Section 6.08);
(T) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee
and any written instruments necessary in connection with the
resignation or removal of the Indenture Trustee or any co-trustee or
separate trustee (Sections 6.08 and 6.10);
(U) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee
is not the Note Registrar (Section 7.01);
(V) the opening of one or more accounts in the Indenture
Trustee's name, the preparation and delivery of Issuer Orders,
Officer's Certificates and Opinions of Counsel and all other actions
necessary with respect to investment and reinvestment of funds in the
Trust Accounts (Sections 8.02 and 8.03);
(W) the preparation of an Issuer Request and Officer's
Certificate and the obtaining of an Opinion of Counsel and Independent
Certificates, if necessary, for the release of the Collateral (Sections
8.04 and 8.05);
(X) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the Noteholders of notices with respect
to such supplemental indentures (Sections 9.01, 9.02 and 9.03);
(Y) the execution and delivery of new Notes conforming to any
supplemental indenture (Section 9.06);
(Z) the duty to notify Noteholders of redemption of the Notes
or to cause the Indenture Trustee to provide such notification (Section
10.02);
(AA) the preparation and delivery of all Officer's
Certificates, Opinions of Counsel and Independent Certificates with
respect to any requests by the Issuer to the Indenture Trustee to take
any action under the Indenture (Section 11.01(a));
(BB) the preparation and delivery of Officer's Certificates
and the obtaining of Independent Certificates, if necessary, for the
release of property from the lien of the Indenture (Section 11.01(b));
(CC) the notification of the Rating Agencies, upon the failure
of the Issuer, the Owner Trustee or the Indenture Trustee to provide
notification;
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(DD) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment
and notice provisions (Section 11.06);
(EE) the recording of the Indenture, if applicable
(Section 11.14); and
(FF) the appointment of a successor Indenture Trustee.
(ii) The Administrator will:
(A) except as otherwise expressly provided in the Indenture,
pay the Indenture Trustee's Fees and reimburse the Indenture Trustee
upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Indenture Trustee in accordance with
any provision of the Indenture (including the reasonable compensation,
expenses and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its
negligence or bad faith;
(B) indemnify the Indenture Trustee and its agents for, and
hold them harmless against, any loss, liability or expense incurred
without negligence or bad faith on their part, arising out of or in
connection with the acceptance or administration of the transactions
contemplated by the Indenture, including the reasonable costs and
expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or
duties under the Indenture; and
(C) indemnify the Owner Trustee and its agents for, and hold
them harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection
with the acceptance or administration of the transactions contemplated
by the Trust Agreement, including the reasonable costs and expenses of
defending themselves against any claim or liability in connection with
the exercise or performance of any of their powers or duties under the
Trust Agreement.
(b) ADDITIONAL DUTIES.
(i) In addition to the duties set forth in Section 1(a)(i),
the Administrator shall perform such calculations and shall prepare or
shall cause the preparation by other appropriate persons of, and shall
execute on behalf of the Issuer or the Owner Trustee, all such
documents, reports, filings, instruments, certificates and opinions
that the Issuer or the Owner Trustee are required to prepare, file or
deliver pursuant to the Transaction Documents or Section 5.05 of the
Trust Agreement, and at the request of the Owner Trustee shall take all
appropriate action that the Issuer or the Owner Trustee are required to
take pursuant to the Transaction Documents. In furtherance thereof, the
Owner Trustee shall, on behalf of itself and of the Issuer, execute and
deliver to the Administrator and to each successor Administrator
appointed pursuant to the terms hereof, one or more powers of attorney
substantially in the form of EXHIBIT A hereto,
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appointing the Administrator the attorney-in-fact of the Owner Trustee
and the Issuer for the purpose of executing on behalf of the Owner
Trustee and the Issuer all such documents, reports, filings,
instruments, certificates and opinions. Subject to Section 5, and in
accordance with the directions of the Issuer, the Administrator shall
administer, perform or supervise the performance of such other
activities in connection with the Collateral (including the
Transaction Documents) as are not covered by any of the foregoing
provisions and as are expressly requested by the Issuer and are
reasonably within the capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the
Transaction Documents to the contrary, the Administrator shall be
responsible for promptly notifying the Owner Trustee in the event that
any withholding tax is imposed on the Trust's payments (or allocations
of income) to an Owner as contemplated in Section 5.02(c) of the Trust
Agreement. Any such notice shall specify the amount of any withholding
tax required to be withheld by the Owner Trustee pursuant to such
provision.
(iii) Notwithstanding anything in this Agreement or the
Transaction Documents to the contrary, the Administrator shall be
responsible for performance of the duties of the Owner Trustee set
forth in Section 5.05(a), (b), (c) and (d), the penultimate sentence of
Section 5.05 and Section 5.06(a) of the Trust Agreement with respect
to, among other things, accounting and reports to Owners; PROVIDED,
HOWEVER, that the Owner Trustee shall retain responsibility for the
distribution of the Schedule K-1s necessary to enable each Owner to
prepare its federal and state income tax returns.
(iv) The Administrator shall satisfy its obligations with
respect to clauses (ii) and (iii) above by retaining, at the expense of
the Trust payable by the Administrator, a firm of independent public
accountants (the "ACCOUNTANTS") acceptable to the Owner Trustee, which
shall perform the obligations of the Administrator thereunder.
(v) The Administrator shall perform the duties of the
Administrator specified in Section 10.02 of the Trust Agreement
required to be performed in connection with the resignation or removal
of the Owner Trustee, and any other duties expressly required to be
performed by the Administrator under the Trust Agreement.
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions or otherwise deal with any of its Affiliates; PROVIDED,
HOWEVER, that the terms of any such transactions or dealings shall be
in accordance with any directions received from the Issuer and shall
be, in the Administrator's opinion, no less favorable to the Issuer
than would be available from unaffiliated parties.
(c) Non-Ministerial Matters.
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<PAGE>
(i) With respect to matters that in the reasonable judgment of
the Administrator are non-ministerial, the Administrator shall not take
any action unless within a reasonable time before the taking of such
action, the Administrator shall have notified the Owner Trustee of the
proposed action and the Owner Trustee shall not have withheld consent
or provided an alternative direction. For the purpose of the preceding
sentence, "NON-MINISTERIAL MATTERS" shall include, without limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Contracts);
(C) the amendment, change or modification of the Transaction
Documents;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of successor Administrators or a successor
Servicer, or the consent to the assignment by the Note Registrar,
Paying Agent or Indenture Trustee of its obligations under the
Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Administrator shall not be obligated to, and shall not,
(A) make any payments to the Noteholders under the Transaction
Documents, (B) sell the Collateral pursuant to clause (iv) of Section
5.04 of the Indenture, (C) take any other action that the Issuer
directs the Administrator not to take on its behalf or (D) take any
other action which may be construed as having the effect of varying the
investment of the Holders.
SECTION 2. RECORDS. The Administrator shall maintain appropriate
books of account and records relating to services performed hereunder, which
books of account and records shall be accessible for inspection by the Issuer
and the Owner Trustee at any time during normal business hours.
SECTION 3. COMPENSATION. As compensation for the performance of
the Administrator's obligations under this Agreement and as reimbursement for
its expenses related thereto, the Administrator shall be entitled to a monthly
fee which shall be solely an obligation of the Trust Depositor and shall be
agreeable to the Trust Depositor and the Administrator.
SECTION 4. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER.
The Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
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<PAGE>
SECTION 5. INDEPENDENCE OF THE ADMINISTRATOR. For all purposes
of this Agreement, the Administrator shall be an independent contractor and
shall not be subject to the supervision of the Issuer or the Owner Trustee with
respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by the Issuer, the
Administrator shall have no authority to act for or represent the Issuer or the
Owner Trustee in any way and shall not otherwise be deemed an agent of the
Issuer or the Owner Trustee.
SECTION 6. NO JOINT VENTURE. Nothing contained in this Agreement
(i) shall constitute the Administrator and either of the Issuer or the Owner
Trustee as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
SECTION 7. OTHER ACTIVITIES OF ADMINISTRATOR. Nothing herein
shall prevent the Administrator or its Affiliates from engaging in other
business or, in its sole discretion, from acting in a similar capacity as an
administrator for any other Person or entity even though such person or entity
may engage in business activities similar to those of the Issuer, the Owner
Trustee or the Indenture Trustee.
SECTION 8. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF
ADMINISTRATOR. This Agreement shall continue in force until the dissolution of
the Issuer, upon which event this Agreement shall automatically terminate.
(a) Subject to Section 8(d) and Section 8(e), the Administrator may
resign its duties hereunder by providing the Issuer with at least 60 days' prior
written notice.
(b) Subject to Section 8(d) and Section 8(e), the Issuer may remove the
Administrator without cause by providing the Administrator with at least 60
days' prior written notice.
(c) Subject to Section 8(d) and Section 8(e), at the sole option of the
Issuer, the Administrator may be removed immediately upon written notice of
termination from the Issuer to the Administrator if any of the following events
shall occur:
(i) the Administrator shall default in the performance of any of its
duties under this Agreement and, after notice of such default, shall not cure
such default within ten days (or, if such default cannot be cured in such time,
shall not give within ten days such assurance of cure as shall be reasonably
satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall enter a decree
or order for relief, and such decree or order shall not have been vacated within
60 days, in respect of the Administrator in any involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect or appoint a receiver, liquidator, assignee, custodian,
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<PAGE>
trustee, sequestrator or similar official for the Administrator or any
substantial part of its property or order the winding-up or liquidation of its
affairs; or
(iii) the Administrator shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator or similar official for
the Administrator or any substantial part of its property, shall consent to the
taking of possession by any such official of any substantial part of its
property, shall make any general assignment for the benefit of creditors or
shall fail generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified in clauses
(ii) or (iii) above shall occur, it shall give written notice thereof to the
Issuer and the Indenture Trustee within seven days after the occurrence of such
event.
(d) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator shall have been
appointed by the Issuer and (ii) such successor Administrator shall have agreed
in writing to be bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder.
(e) The appointment of any successor Administrator shall be effective
only after the satisfaction of the Rating Agency Condition with respect to the
proposed appointment.
(f) Subject to Section 8(d) and 8(e), the Administrator acknowledges
that upon the appointment of a Successor Servicer pursuant to the Sale and
Servicing Agreement, the Administrator shall immediately resign and such
Successor Servicer shall automatically become the Administrator under this
Agreement.
SECTION 9. ACTION UPON TERMINATION, RESIGNATION OR REMOVAL.
Promptly upon the effective date of termination of this Agreement pursuant to
Section 8 or the resignation or removal of the Administrator pursuant to Section
8(a), (b) or (c) respectively, the Administrator shall be entitled to be paid
all fees and reimbursable expenses accruing to it to the date of such
termination, resignation or removal. The Administrator shall forthwith upon such
termination pursuant to Section 8 deliver to the Issuer all property and
documents of or relating to the Collateral then in the custody of the
Administrator. In the event of the resignation or removal of the Administrator
pursuant to Section (a), (b) or (c), respectively, the Administrator shall
cooperate with the Issuer and take all reasonable steps requested to assist the
Issuer in making an orderly transfer of the duties of the Administrator.
SECTION 10. 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
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<PAGE>
(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 Administrator:
Harley-Davidson Credit Corp.
150 South Wacker Drive, Suite 3100
Chicago, Illinois 60606
Attention: Perry A. Glassgow
Telecopier No.: (312) 368-4372
(ii) If to the Trust Depositor:
Harley-Davidson Customer Funding Corp.
4150 Technology Way
Carson City, Nevada 89706
Telecopier No.: (775) 884-4469
(iii) If to the Indenture Trustee:
________________________________
________________________________
________________________________
Telecopier No.: ______________
(iv) If to the Issuer or the Owner Trustee:
________________________________
________________________________
________________________________
Telecopier No.: ______________
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. AMENDMENTS.(a) This Agreement may be amended from
time to time by a written amendment duly executed and delivered by the parties
hereto, with the written consent of the Owner Trustee but without the consent of
the Securityholders, to correct manifest error, to cure any ambiguity, to
correct or supplement any provisions herein which may be ambiguous or
inconsistent with any other provision herein or in any other Transaction
Document, as the case may be, or to add any other provisions with respect to
matters or questions arising under
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<PAGE>
this Agreement that shall not be inconsistent with the provisions of this
Agreement; PROVIDED, HOWEVER that any such action shall not, as evidenced by an
Opinion of Counsel, materially and adversely affect the interests of any
Securityholder.
(b) This Agreement may also be amended from time to time with the
consent of the Owner Trustee and the Noteholders of more than 50% of the
aggregate principal amount of the Class A-1 Notes and Class A-2 Notes, voting
together as a single class, or, if there are no Class A-1 Notes or Class A-2
Notes outstanding, with the consent of the Noteholders of more than 50% of the
aggregate principal amount of the Class B Notes, [or, if there are no Notes
outstanding, the consent of Certificateholders of more than 50% of the
Certificate Balance], 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 Certificateholders;
PROVIDED, HOWEVER, that no such amendment shall (x) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on the Contracts or distributions which are required to be made on any
Note or Certificate, (y) change the interest rate on any Notes or Certificates
which such change adversely affects the priority of payment of principal or
interest made to the Noteholders or Certificateholders or (z) reduce the
aforesaid percentage required to consent to any such amendment, without the
consent of the Noteholders and Certificateholders then outstanding; and
PROVIDED, FURTHER, that no such amendment or consent shall be effective unless
each Rating Agency delivers written confirmation that such amendment or consent
will not cause its then-current rating on any Class of Notes or Certificates to
be qualified, reduced or withdrawn.
(c) Notwithstanding the foregoing, the Administrator may not amend this
Agreement without the permission of the Trust Depositor, which permission shall
not be unreasonably withheld.
SECTION 12. SUCCESSORS AND ASSIGNS. This Agreement may not be
assigned by the Administrator unless such assignment is previously consented to
in writing by the Issuer, the Indenture Trustee and the Owner Trustee and
subject to the satisfaction of the Rating Agency Condition in respect thereof.
An assignment with such consent and satisfaction, if accepted by the assignee,
shall bind the assignee hereunder in the same manner as the Administrator is
bound hereunder. Notwithstanding the foregoing, this Agreement may be assigned
by the Administrator without the consent of the Issuer or the Owner Trustee to a
corporation or other organization that is a successor (by merger, consolidation
or purchase of assets) to the Administrator; provided that such successor
organization executes and delivers to the Issuer, the Owner Trustee and the
Indenture Trustee an agreement, in form and substance reasonably satisfactory to
the Owner Trustee and the Indenture Trustee, in which such corporation or other
organization agrees to be bound hereunder by the terms of said assignment in the
same manner as the Administrator is bound hereunder. Subject to the foregoing,
this Agreement shall bind any successors or assigns of the parties hereto.
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SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 14. HEADINGS. The section and subsection headings hereof
have been inserted for convenience of reference only and shall not be construed
to affect the meaning, construction or effect of this Agreement.
SECTION 15. COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same agreement.
SECTION 16. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 17. NOT APPLICABLE TO HARLEY-DAVIDSON CREDIT IN OTHER
CAPACITIES. Nothing in this Agreement shall affect any obligation
Harley-Davidson Credit may have in any other capacity.
SECTION 18. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND
INDENTURE TRUSTEE.
(a) Notwithstanding anything contained herein to the contrary, this
instrument has been countersigned by [_______________] not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer and in no
event shall [_______________] 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 countersigned by [_______________] not in its individual
capacity but solely as Indenture Trustee and in no event shall
[_______________] have any liability for the 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.
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<PAGE>
SECTION 19. THIRD-PARTY BENEFICIARY. The Owner Trustee is a
third-party beneficiary to this Agreement and is entitled to the rights and
benefits hereunder and may enforce the provisions hereof as if it were a party
hereto.
SECTION 20. SURVIVABILITY. The obligations of the Administrator
described in Section 1(a)(ii) hereof shall survive termination of this
Agreement.
SECTION 21. NO PETITION. (a) The Administrator will not at any
time institute against the Issuer or the Trust Depositor any bankruptcy
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Trust Certificates, the
Notes, this Agreement or any of the other Transaction Documents.
[signature page follows]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
HARLEY-DAVIDSON MOTORCYCLE
TRUST [______]
By: [__________________], not in its
individual capacity but solely as Owner
Trustee
By: _____________________________________
Printed Name: _____________________
Title: ___________________________________
HARLEY-DAVIDSON CUSTOMER FUNDING
CORP., as Trust Depositor
By: _____________________________________
Printed Name: Perry A. Glassgow
Title: Treasurer
[_______________], not in
its individual capacity but solely as Indenture
Trustee
By: _____________________________________
Printed Name: ______________________
Title: __________________________________
HARLEY-DAVIDSON CREDIT CORP.,
as Administrator
By: _____________________________________
Printed Name: Perry A. Glassgow
Title: Treasurer
Signature Page to Administration Agreement
<PAGE>
EXHIBIT A
LIMITED POWER OF ATTORNEY
State of Illinois )
) SS.
County of Cook )
KNOW ALL PERSONS BY THESE PRESENTS, that [______________], a Delaware
banking corporation (the "OWNER TRUSTEE"), whose principal executive office is
located at [__________________________________] Attention: [_______________], by
and through its duly elected and authorized officer, ________________________, a
___________________, on behalf of itself and of Harley-Davidson Motorcycle Trust
[______] (the "TRUST") as Issuer under the Administration Agreement, dated as of
[_________] (the "ADMINISTRATION AGREEMENT"), among the Trust, Harley-Davidson
Customer Funding Corp., [_______________], as Indenture Trustee, and
Harley-Davidson Credit Corp., as Administrator, does hereby nominate, constitute
and appoint Harley-Davidson Credit Corp., a Nevada corporation, each of its
officers from time to time and each of its employees authorized by it from time
to time to act hereunder, jointly and each of them severally, together or acting
alone, its true and lawful attorney-in-fact, for the Owner Trustee and the
Issuer in their name, place and stead, in the sole discretion of such
attorney-in-fact, to perform such calculations and prepare or cause the
preparation by other appropriate persons of, and to execute on behalf of the
Issuer or the Owner Trustee, all such documents, reports, filings, instruments,
certificates and opinions that the Issuer or the Owner Trustee is required to
prepare, file or deliver pursuant to the Administration Agreement, and to take
any and all other action, as such attorney-in-fact may deem necessary or
desirable in accordance with the directions of the Owner Trustee and in
connection with its duties as Administrator or successor Administrator under the
Administration Agreement. Capitalized terms used herein that are not otherwise
defined shall have the meanings ascribed thereto in the Administration
Agreement.
The Owner Trustee hereby ratifies and confirms the execution, delivery
and performance (whether before or after the date hereof) of the above-mentioned
documents, reports, filings, instruments, certificates and opinions, by the
attorney-in-fact and all that the attorney-in-fact shall lawfully do or cause to
be done by virtue hereof.
The Owner Trustee hereby agrees that no person or other entity dealing
with the attorney-in-fact shall be bound to inquire into such attorney-in-fact's
power and authority hereunder and any such person or entity shall be fully
protected in relying on such power of authority.
This Limited Power of Attorney may not be assigned without the prior
written consent of the Owner Trustee. It is effective immediately and will
continue until it is revoked.
A-1
<PAGE>
This Limited Power of Attorney shall be governed and construed in
accordance with the laws of the State of Illinois without reference to
principles of conflicts of law.
Executed as of this _____ day of [_______________].
[________________], not in its individual
capacity but solely as Owner Trustee
By: _______________________________
Printed Name: _______________________
Title: ______________________________
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT OF
NOTARY PUBLIC
State of Delaware )
) SS.
County of New Castle )
On _____________, ______ before me, __________________________________
[Insert name and title of notary]
personally appeared ________________________.
/ / personally known to me, or
/ / proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ties), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature: ________________________________________
[SEAL]
<PAGE>
EXHIBIT 99.1
FORM OF
HARLEY-DAVIDSON MOTORCYCLE TRUST [___]
______________________________
AGREEMENT TO DEPOSIT CONTRACTS
Between
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
AS TRUST DEPOSITOR
AND
[_________________]
As Trustee
dated as of
[______]
________________________________
<PAGE>
AGREEMENT TO DEPOSIT CONTRACTS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I DEFINITIONS..................................................1
Section 1.01. ......................................................1
ARTICLE II AGREEMENT TO DEPOSIT CONTRACTS...............................2
Section 2.01. Deposit of Contracts..................................2
Section 2.02. Remedy for Breach.....................................2
ARTICLE III CARRYING CHARGES.............................................2
Section 3.01. Payment of Carrying Charges...........................2
Section 3.02. Demand on Collateral Agent............................2
ARTICLE IV MISCELLANEOUS PROVISIONS.....................................3
Section 4.01. Amendments; Waivers...................................3
Section 4.02. Severability..........................................3
Section 4.03. Nonpetition Covenant..................................3
Section 4.04. Notices...............................................3
Section 4.05. Governing Law.........................................4
Section 4.06. Limitation of Trustee Responsibility..................5
Section 4.07. Counterparts..........................................5
Section 4.08. Headings..............................................5
</TABLE>
i
<PAGE>
AGREEMENT TO DEPOSIT CONTRACTS dated as of [_____], between
Harley-Davidson Customer Funding Corp., as Trust Depositor (the "TRUST
DEPOSITOR"), and [_________________], as Trustee (the "TRUSTEE").
WITNESSETH that:
WHEREAS, the Trust Depositor has acquired and, concurrently with the
execution and delivery hereof and pursuant to a Pooling and Servicing Agreement,
dated as of [_____] (the "POOLING AND SERVICING AGREEMENT"), has deposited,
transferred, assigned and set over in trust to the Trustee certain Contract
Assets in partial consideration of the Trust's issuance of the Certificates,
which the Trust Depositor has sold to investor(s); and
WHEREAS, the Trust Depositor has applied certain of the proceeds of
such sale to pay for its purchase of Contract Assets on the Closing Date from
the Seller, but will retain the remainder of the proceeds pending their
application for the purchase of Subsequent Contracts from the Seller; and
WHEREAS, the Trustee for the benefit of the Trust and the
Certificateholders has issued the Certificates to or upon the order of the Trust
Depositor, in consideration of the Trust Depositor's conveyance pursuant to the
Pooling and Servicing Agreement of the Contract Assets and in consideration of
the Trust Depositor's agreement hereunder to purchase and transfer the
Subsequent Contracts and related assets to the Trust, and to pay certain
Carrying Charges (as defined below); and
WHEREAS, the Trust Depositor has agreed pursuant to the Security
Agreement to secure the payment and performance of its obligations hereunder in
accordance with the terms thereof;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Trust Depositor and the Trustee agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Capitalized terms used in this Agreement (including
in the recitals above) and not specifically defined shall have the meaning given
such terms in the Pooling and Servicing Agreement. Whenever used in this
Agreement, the following words and phrases shall have the following meanings:
"CARRYING CHARGES" means the amount which the Trust Depositor is
obligated to pay to the Trust hereunder in accordance with Section 3.01 below.
"LIQUIDATED DAMAGES" means the amount which is payable as liquidated
damages to the Trust hereunder in the event of the Trust Depositor's failure to
timely transfer Subsequent Contracts to the Trust in accordance with Section
2.02 below.
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<PAGE>
ARTICLE II
AGREEMENT TO DEPOSIT CONTRACTS
Section 2.01. Deposit of Contracts. The Trust Depositor hereby
undertakes and agrees, not later than the end of the Funding Period, to acquire
from the Seller by purchase for cash pursuant to one or more Subsequent Purchase
Agreements, and thereupon transfer to the Trust pursuant to one or more
Subsequent Transfer Agreements, Subsequent Contracts in an aggregate Principal
Balance, as of the respective Subsequent Cutoff Dates, equal to $[____] which is
equal to the amount deposited with the Collateral Agent on the Closing Date in
respect of the Pre-Funded Amount. The Trust Depositor shall effect such
purchases from the Seller using the funds on deposit in the Pre-Funding Account
in accordance with the terms of the Security Agreement.
Section 2.02. Remedy for Breach. If the Trust Depositor fails to
perform the obligation described in Section 2.01 in its entirety by the end of
the Funding Period, the Trustee shall take remedial action upon the expiration
of the Funding Period by giving written notice of non-performance to the Trust
Depositor, accompanied by written demand upon the Trust Depositor for the
payment of liquidated damages ("LIQUIDATED DAMAGES") hereunder in respect of
such non-performance. Such Liquidated Damages shall be payable immediately upon
demand. Liquidated Damages shall in all events equal the amount then on deposit
in the Pre-Funding Account, and such written demand shall concurrently be made
upon the Collateral Agent as provided in Section 3.03 of the Security Agreement.
The Trustee shall deposit all amounts received from the Collateral Agent in
respect of Liquidated Damages into the Special Distribution Subaccount
established under the Pooling and Servicing Agreement. The right to payment of
Liquidated Damages from the Pre-Funding Account shall be the sole remedy of the
Trustee for the Trust Depositor's failure to perform its obligations as
described above.
ARTICLE III
CARRYING CHARGES
Section 3.01. Payment of Carrying Charges. The Trust Depositor
hereby agrees to pay to the Trustee for the benefit of the Trust, immediately
upon demand, Carrying Charges to the extent that the Trustee demands payment of
such Carrying Charges in accordance with, and subject to the limitations of,
Section 8.03(b) of the Pooling and Servicing Agreement. No such Carrying Charges
shall be payable on or after the second Payment Date succeeding the date on
which the Pre-Funded Amount shall be zero.
Section 3.02. Demand on Collateral Agent. The Trust Depositor
agrees that the Trustee may effect demand for payment of Carrying Charges by
making demand directly upon the Collateral Agent instead of the Trust Depositor,
and consents to the Collateral Agent's payment of such Carrying Charges from
amounts on deposit in the Interest Reserve Account.
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<PAGE>
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. Amendments; Waivers. No amendment, modification,
waiver or supplement to this Agreement or any provision of this Agreement shall
in any event be effective unless the same shall have been made or consented to
in writing by each of the parties hereto and the Rating Agencies shall have
received written notification of such amendment modification, waiver or
supplement.
Section 4.02. Severability. In the event that any provision of this
Agreement or the application thereof to any party hereto or to any circumstance
or in any jurisdiction governing this Agreement shall, to any extent, be invalid
or unenforceable under any applicable statute, regulation or rule of law, then
such provision shall be deemed inoperative to the extent that it is invalid or
unenforceable and the remainder of this Agreement, and the application of any
such invalid or unenforceable provision to the parties, jurisdictions or
circumstances other than to whom or to which it is held invalid or
unenforceable, shall not be affected thereby nor shall the same affect the
validity or enforceability of any other provision of this Agreement.
Section 4.03. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, each of the parties hereto agrees that it shall
not, prior to one year and one day after the Payment Date first occurring
following the final disbursement of funds under the Security Agreement,
acquiesce, petition or otherwise invoke or cause the Trust Depositor to invoke
the process of the United States of America, any State or other political
subdivision thereof or any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government for the
purpose of commencing or sustaining a case by or against the Trust Depositor or
the Trust under a Federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Trust Depositor or the Trust or all or any part of
its property or assets or ordering the winding up or liquidation of the affairs
of the Trust Depositor or the Trust. The parties agree that damages will be an
inadequate remedy for breach of this covenant and that this covenant may be
specifically enforced.
Section 4.04. 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 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 Trust Depositor:
Harley-Davidson Customer Funding Corp.
4150 Technology Way
Carson City, Nevada 89706
Attention: President
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<PAGE>
Telecopier No.: (775) 884-4469
(ii) If to the Trustee:
__________________________
__________________________
__________________________
Telecopier No.: ________________
(iii) If to the Collateral Agent:
__________________________
__________________________
Telecopier No.: ________________
(iv) If to Moody's:
Moody's Investor's Service, Inc.
99 Church Street
New York New York 10007
Attention: ABS Monitoring Department
Telecopier No.: (212) 553-0344
(v) If to Standard & Poor's:
Standard & Poor's Ratings Group, a
division of The McGraw Hill Companies
26 Broadway - 15th Floor
New York, New York 10004
Attention: Asset-Backed Securities Surveillance
Telecopier No.: (212) 208-1582
A copy of each notice given hereunder to any party hereto shall also be given to
(without duplication), the Trust Depositor, the Trustee and the Collateral
Agent. 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 4.05. Governing Law. This Agreement shall be governed by
and construed, and the obligations, rights and remedies of the parties hereunder
shall be determined, in accordance with, the laws of the State of Illinois.
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<PAGE>
Section 4.06. Limitation of Trustee Responsibility. It is expressly
understood and agreed by the parties hereto that (a) [_______________] is
executing this Agreement not in its individual capacity but solely in its
capacity as Trustee of the Trust pursuant to the Pooling and Servicing
Agreement, and (b) in no case whatsoever shall [_______________] be personally
liable on, or for any loss in respect of, any of the statements,
representations, warranties, covenants, agreements or obligations of the Trust
(if any) hereunder, all such liability, if any, being expressly waived by the
parties hereto, except and to the extent such loss is caused by gross
negligence, bad faith or willful misconduct of the Trustee.
Section 4.07. Counterparts. This Agreement may be executed in two or
more counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.
Section 4.08. Headings. The headings of sections and paragraphs and the
Table of Contents contained in this Agreement are provided for convenience only.
They form no part of this Agreement and shall not affect its construction or
interpretation.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth on the first page hereof.
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.
By _______________________________
Printed Name:_____________________
Title: ___________________________
[___________________], as Trustee
By ______________________________
Printed Name:____________________
Title:___________________________
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<PAGE>
EXHIBIT 99.2
FORM OF
SECURITY AGREEMENT
dated as of [_____]
between
HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,
and
[________________],
as Trustee and as Collateral Agent
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Security Agreement................................................................1
SECURITY AGREEMENT................................................................3
RECITALS..........................................................................3
AGREEMENTS........................................................................3
ARTICLE I.........................................................................4
DEFINITIONS.......................................................................4
ARTICLE II........................................................................6
THE COLLATERAL....................................................................6
ARTICLE III.......................................................................8
THE ACCOUNTS......................................................................8
ARTICLE IV.......................................................................12
COLLATERAL AGENT.................................................................12
ARTICLE V........................................................................16
COVENANTS OF THE TRUST DEPOSITOR.................................................16
Section 5.06. Trust Depositor Changes......................................17
ARTICLE VI.......................................................................18
[RESERVED].......................................................................18
ARTICLE VII......................................................................18
REMEDIES UPON DEFAULT............................................................18
ARTICLE VIII.....................................................................19
MISCELLANEOUS....................................................................19
</TABLE>
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<PAGE>
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of [_____] (the "AGREEMENT"), is by
and between HARLEY-DAVIDSON CUSTOMER FUNDING CORP., a Nevada corporation (the
"TRUST DEPOSITOR"), and [_______________], an Illinois banking corporation in
its capacities as Trustee under the [_____] Pooling and Servicing Agreement
referred to below (the "TRUSTEE") and as Collateral Agent (as defined below).
RECITALS
1. [________________] (the "TRUST") is being formed contemporaneously
herewith pursuant to a Pooling and Servicing Agreement, dated as of [_____] (the
"POOLING AND SERVICING AGREEMENT"), by and among the parent and sole shareholder
of the Trust Depositor, Harley-Davidson Credit Corp. ("HDCC") (in its capacity
as Servicer), the Trust Depositor and the Trustee.
2. Pursuant to the Pooling and Servicing Agreement, the Trust Depositor
is transferring to the Trust all of its right, title and interest in and to the
Initial Contracts, certain related assets and certain other assets including an
Agreement to Deposit Contracts, dated as of [_____] between the Trust Depositor
and the Trustee for the benefit of the Trust (the "DEPOSIT AGREEMENT") in
exchange for the Certificates.
3. Upon sale of the Certificates to investor(s), the Trust Depositor is
applying part of the proceeds thereof to the purchase of Contract Assets
relating to the Initial Contracts from HDCC (in an aggregate Principal Balance
of $[____] as of the related Cutoff Date) to be concurrently transferred to the
Trust on the Closing Date, but is retaining the remainder of the proceeds of
such sale (in the amount of $[____]) to use for purchases of Subsequent
Contracts from HDCC (or to pay Liquidated Damages) in order to satisfy its
obligations to the Trust under the Deposit Agreement.
4. In order to secure the payment and performance of the Secured
Obligations (as defined below) of the Trust Depositor under the Deposit
Agreement, and in consideration of the Trust's issuance of the Class A
Certificates and the Class B Certificates (collectively, the "SERIES
CERTIFICATES") to or upon the order of the Trust Depositor, the Trust Depositor
has agreed to pledge the Collateral (as defined below) to the Collateral Agent
for the benefit of the Secured Party (as defined below).
AGREEMENTS
In consideration of the premises, and for other good and valuable
consideration, the adequacy, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless defined in this Agreement,
capitalized terms used in this Agreement (including in the recitals above) shall
have the meaning given such terms in the Pooling and Servicing Agreement. The
following terms shall have the following respective meanings:
"Accounts" means, collectively, the Pre-Funding Account and the
Interest Reserve Account, or either of them as the context requires.
"Authorized Officer" means, (i) with respect to the Trustee or the
Collateral Agent, any Vice President or Trust Officer thereof, (ii) with respect
to HDCC, the President or any Vice President thereof, and (iii) with respect to
the Trust Depositor, the President or any Vice President thereof.
"COLLATERAL" has the meaning specified in Section 2.01(a) hereof.
"COLLATERAL AGENT" means, initially, [_______________], in its capacity
as collateral agent on behalf of the Secured Party, including its successors in
interest, until a successor Person shall have become the Collateral Agent
pursuant to Section 4.05 hereof, and thereafter "COLLATERAL AGENT" shall mean
such successor Person.
"DEFAULT" means, at any time, any failure by the Trust Depositor to
make payment or render performance when due hereunder or under the Deposit
Agreement.
"ELIGIBLE INVESTMENTS" has the meaning given such term in the Pooling
and Servicing Agreement, but with references, respectively, to the Trustee and
the Trust in the definition thereof contained therein being deemed, for purposes
of this Agreement, to be references to, respectively, the Collateral Agent and
(collectively) the Interest Reserve Account and Pre-Funding Account.
"HDCC" means Harley Davidson Credit Corp., a Nevada corporation.
"Interest Reserve Account" has the meaning given such term in Section
3.01 below.
"LIEN" means, as applied to the property or assets (or the income,
proceeds, products, rents or profits therefrom) of any Person, in each case
whether the same is consensual or nonconsensual or arises by contract, operation
of law, legal process or otherwise: (a) any mortgage, lien, pledge, attachment,
charge, lease, conditional sale or other title retention agreement, or other
security interest or encumbrance of any kind; or (b) any arrangement, express or
implied, under which such property or assets (and/or such income, proceeds,
products, rents or profits) are transferred, sequestered or otherwise identified
for the purpose of subjecting or making available the same for payment of debt
or performance of any other obligation in priority to the payment of the
general, unsecured creditors of such Person.
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<PAGE>
"PRE-FUNDING ACCOUNT" has the meaning given such term in
Section 3.01 below.
"PRINCIPAL BALANCE" with respect to a Contract or Contracts in the
aggregate, has the meaning given such term in the [_____] Pooling and Servicing
Agreement.
"SECURED OBLIGATIONS" means all obligations and amounts of the Trust
Depositor owed or owing at any time hereunder or under the Deposit Agreement.
"SECURED PARTY" means the Trustee for the benefit of the Trust.
"SECURITY INTERESTS" means the security interest and Lien in the
Collateral granted pursuant to Section 2.01 hereof.
"QUALIFIED ELIGIBLE INVESTMENTS" means Eligible Investments acquired by
the Collateral Agent in its name and in the capacity of Collateral Agent
hereunder, which are held by the Collateral Agent in the Pre-Funding Account or
the Interest Reserve Account and with respect to which (a) the Collateral Agent
has noted the Secured Party's interest therein on its books and records, and (b)
the Collateral Agent 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 of the Collateral Agent,
or (ii) such investments, (A) if certificated securities and in bearer form,
have been delivered to the Collateral Agent, or in registered form, have been
delivered to the Collateral Agent and either registered by the issuer in the
name of the Collateral Agent or endorsed by effective endorsement to the
Collateral Agent or in blank; (B) if uncertificated securities, the ownership of
which has been registered to the Collateral Agent 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 Collateral
Agent or, having previously become the registered owner, acknowledges that it
holds for the Collateral Agent); 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 Collateral Agent's securities account
with such securities intermediary. Any such Qualified Eligible Investment may be
purchased by or through the Collateral Agent or any of its affiliates.
"TRUSTEE TERMINATION DATE" means the date on which the Trustee shall
have received, as Trustee for the holders of the Certificates, payment and
performance in full of all Secured Obligations hereunder.
"UNIFORM COMMERCIAL CODE" or "UCC" means the Uniform Commercial Code in
effect in the relevant jurisdiction, as the same may be amended from time to
time.
Section 1.02. Rules of Interpretation. The terms "HEREOF," "HEREIN"
or "HEREUNDER," unless otherwise modified by more specific reference, shall
refer to this Agreement in its
-5-
<PAGE>
entirety. Unless otherwise indicated in context, the terms "ARTICLE," "SECTION,"
"APPENDIX," "EXHIBIT" or "ANNEX" shall refer to an Article or Section of, or
Appendix, Exhibit or Annex to, this Agreement. The definition of a term shall
include the singular, the plural, the past, the present, the future, the active
and the passive forms of such term.
ARTICLE II
THE COLLATERAL
Section 2.01. Grant of Security Interest by the Trust Depositor.
(a) In order to secure the performance of the Secured Obligations, the Trust
Depositor hereby pledges, assigns, grants, transfers and conveys to the
Collateral Agent, on behalf of and for the benefit of the Secured Party to
secure such Secured Obligations, a lien on and security interest in (which lien
and security interest is intended to be prior to all other Liens), all of its
right, title and interest in and to the following (all being collectively
referred to herein as the "COLLATERAL"):
(i) the Pre-Funding Account established pursuant to Section
3.01 hereof (including, without limitation, the initial deposit of
$[____] (the "INITIAL PRE-FUNDED AMOUNT") therein on the Closing Date,
and all additional monies, checks, securities, investments and other
items or documents at any time held in or evidencing the Pre-Funding
Account);
(ii) the Interest Reserve Account established pursuant to
Section 3.01 hereof (including, without limitation, the initial deposit
of $[____] therein by the Trust Depositor on the Closing Date, and all
additional monies, checks, securities, investments and other items or
documents at any time held in or evidencing the Interest Reserve
Account);
(iii) all of the Trust Depositor's right, title and interest
in and to investments made with proceeds of the property described in
clauses (i) and (ii) above; and
(iv) all distributions, revenues, products, substitutions,
benefits, profits and proceeds, in whatever form, of any of the
foregoing.
(b) In order to effectuate the provisions and purposes of this
Agreement, including for the purpose of perfecting the security interests
granted hereunder, the Trust Depositor represents and warrants that it has,
prior to (or coterminously with) the execution of this Agreement, executed and
filed (or submitted for filing) an appropriate Uniform Commercial Code financing
statement in Nevada and Illinois sufficient to assure that the Collateral Agent,
as agent for the Secured Party, has a first priority perfected security interest
in all Collateral which can be perfected by the filing of a financing statement.
The Trust Depositor agrees and acknowledges that the Collateral Agent is to have
"control" (within the meaning of Section 8-102 of the UCC as enacted in
Illinois) of Collateral comprised of "Investment Property" (within the meaning
of Section 9-115 of the UCC as enacted in Illinois) for all purposes of this
Agreement.
Section 2.02. Priority. The Trust Depositor intends the security
interests in favor of the Secured Party to be prior to all other Liens in
respect of the Collateral, and the Trust Depositor
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<PAGE>
shall take all actions necessary to obtain and maintain, in favor of the
Collateral Agent, for the benefit of the Secured Party's, a first lien on and a
first priority, perfected security interest in the Collateral. Subject to the
provisions hereof, the Collateral Agent for the benefit of the Secured Party
shall have all of the rights, remedies and recourse with respect to the
Collateral afforded a secured party under the Uniform Commercial Code, and all
other applicable law in addition to, and not in limitation of, the other rights,
remedies and recourse granted to the Collateral Agent for the benefit of the
Secured Party by this Agreement or any other law relating to the creation and
perfection of liens on, and security interests in, the Collateral.
Section 2.03. Trust Depositor Remains Liable. The Security Interest
is granted as security only and shall not (i) transfer or in any way affect or
modify, or relieve the Trust Depositor from, any obligation to perform or
satisfy any term, covenant, condition or agreement to be performed or satisfied
by the Trust Depositor under or in connection with this Agreement or any other
Transaction Document to which it is a party or (ii) impose any obligation on any
of the Secured Party or the Collateral Agent to perform or observe any such
term, covenant, condition or agreement or impose any liability on any of the
Secured Party or the Collateral Agent for any act or omission on its part
relative thereto or for any breach of any representation or warranty on its part
contained therein or made in connection therewith, except, in each case, to the
extent provided herein and in the other Transaction Documents.
Section 2.04. Maintenance of Collateral. (a) SAFEKEEPING. The
Collateral Agent on behalf of and for the benefit of the Secured Party agrees to
maintain the Collateral received by it (or evidence thereof, in the case of
book-entry securities in the name of the Collateral Agent) and all records and
documents relating thereto at the office of the Collateral Agent specified in
Section 8.06 hereof or such other address within the State of Illinois (unless
all filings have been made or other action taken to continue the perfection of
the security interest in the Collateral to the extent such security interest can
be perfected by filing a financing statement or taking such other action, as
evidenced by an Opinion of Counsel delivered to the Trustee). The Collateral
Agent shall keep all Collateral and related documentation in its possession
separate and apart from all other property that it is holding in its possession
and from its own general assets and shall maintain accurate records pertaining
to the initial deposits to the Accounts, the Accounts themselves and the
Qualified Eligible Investments therein included in the Collateral in such a
manner as shall enable the Collateral Agent and the Secured Party to verify the
accuracy of such record-keeping. The Collateral Agent's books and records shall
at all times show that the Collateral is held by the Collateral Agent as agent
of the Secured Party and is not the property of the Collateral Agent. The
Collateral Agent will promptly report to the Secured Party and the Trust
Depositor any failure on its part to hold the Collateral as provided in this
Section 2.04(a) and will promptly take appropriate action to remedy any such
failure.
(b) ACCESS. The Collateral Agent shall permit the Secured Party, or its
duly authorized representatives, attorneys, auditors or designees, to inspect
the Collateral in the possession of or otherwise under the control of the
Collateral Agent pursuant hereto at such reasonable times during normal business
hours as any such Secured Party may reasonably request upon not less than one
Business Day's prior written notice. The costs and expenses associated with any
such inspection will be paid by the party making such inspection.
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Section 2.05. Termination and Release of Rights. Upon the
occurrence of both (i) the termination of the Funding Period and the payment
(and receipt by the Trust) of all associated Liquidated Damages or, if earlier,
upon the exhaustion of the Pre-Funding Account in its entirety for the purpose
of acquiring Subsequent Contracts from HDCC at or prior to the termination of
the Funding Period, (ii) the elapsing of a Payment Date following the event
described in clause (i), and (iii) the application of such funds as provided
under the Pooling and Servicing Agreement, the rights, remedies, powers, duties,
authority and obligations conferred upon the Collateral Agent for the benefit of
the Secured Party pursuant to this Agreement in respect of the Collateral shall
terminate and be of no further force and effect and all rights, remedies,
powers, duties, authority and obligations of the Collateral Agent for the
benefit of the Secured Party with respect to such Collateral shall be
automatically released. The Secured Party in such event agrees, at the expense
of the Trust Depositor, to execute and deliver such instruments as the Trust
Depositor may reasonably request to effectuate such release, and any such
instruments so executed and delivered shall be fully binding on the Secured
Party.
Section 2.06. Non-Recourse Obligations of Trust Depositor.
Notwithstanding anything herein or in the other Transaction Documents to the
contrary, the parties hereto agree that the obligations of the Trust Depositor
hereunder (without limiting the obligation to apply distributions from the
respective Accounts hereunder in accordance with Section 3.03) shall be recourse
only to the extent of the Collateral available hereunder. The Trust Depositor
agrees that it shall not declare or make payment of (i) any dividend or other
payment on or in respect of any shares of its capital stock or (ii) any payment
on account of the purchase, redemption, retirement or acquisition of (x) any
shares of its capital stock or (y) any option, warrant or other right to acquire
shares of its capital stock, unless (in each case) at the time of such
declaration or payment (and after giving effect thereto) no amount payable by
the Trust Depositor under any Transaction Document is then due and owing but
unpaid. Nothing contained herein shall be deemed to limit the rights of the
Certificateholders under any other Transaction Document.
ARTICLE III
THE ACCOUNTS
Section 3.01......Establishment of Accounts; Initial Deposits into
Accounts. (a) On or prior to the Closing Date, the Trust Depositor shall direct
the Collateral Agent to establish, and the Collateral Agent shall establish, in
its name and at its office or at another depository institution or trust
company, separate Eligible Accounts, designated respectively the
"Harley-Davidson Customer Funding Corp. Pre-Funding Account - [ ] -
[_______________], as Collateral Agent for the benefit of the Secured Party"
(such account being the "PRE-FUNDING ACCOUNT") and the "Harley-Davidson Customer
Funding Corp. Interest Reserve Account - [ ] - [_______________], as Collateral
Agent for the Secured Party" (such account being the "INTEREST RESERVE
ACCOUNT"). All Accounts established under this Agreement shall be
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maintained at the same depository institution (which depository institution may
be changed by the Collateral Agent from time to time in accordance with Section
3.04 of this Agreement).
(b) No withdrawals may be made of funds in any Account except as
provided in Section 3.03 of this Agreement. Except as specifically provided in
this Agreement, funds in any Account shall not be commingled with funds in any
other account or accounts established with respect to the Certificates, another
of trust certificates, or with any other moneys. All moneys deposited from time
to time in such Accounts and all investments made with such moneys shall be held
by the Collateral Agent as part of the Collateral hereunder.
(c) On the Closing Date, the Collateral Agent shall deposit the initial
Pre-Funded Amount, if any, received from the Trust Depositor into the
Pre-Funding Account, and shall deposit any amounts received from the Trust
Depositor in respect of the Interest Reserve Amount in the Interest Reserve
Account.
(d) Each Account shall be separate from the Trust and amounts on
deposit therein will not constitute a part of the Trust Corpus. The Accounts
shall be maintained by the Collateral Agent at all times separate and apart from
any other account of the Trust Depositor, HDCC, the Servicer or the Trust. All
income or loss on investments of funds in any Account shall be reported by the
Trust Depositor as taxable income or loss of the Trust Depositor.
Section 3.02. Investments. (a) The Collateral Agent shall invest
and reinvest funds which may at any time be held in any Account established
hereunder, at the written direction (which may include, subject to the
provisions hereof, general standing instructions) of the Trust Depositor or its
designee received by the Collateral Agent by 1:00 P.M. New York City time on the
Business Day prior to the date on which such investment shall be made, in one or
more Qualified Eligible Investments. If no written direction with respect to any
portion of such Account is received by the Collateral Agent, the Collateral
Agent shall invest such funds overnight in such Qualified Eligible Investments
as the Collateral Agent may select, provided that the Collateral Agent shall not
be liable for any loss or absence of income resulting from such investment.
(b) Each investment made pursuant to this Section 3.02 on any date
shall mature not later than (i) in the case of the Interest Reserve Account, the
Business Day immediately preceding the Payment Date next succeeding the day such
investment is made, and (ii) in the case of the Pre-Funding Account, the
Business Day immediately preceding a Subsequent Transfer Date or the end of the
Funding Period; PROVIDED that any investment of funds held in any Account
maintained with the Collateral Agent (which shall be qualified as a Qualified
Eligible Investment) in any investment as to which the Collateral Agent in its
individual capacity is the obligor (including any repurchase agreement on which
the Collateral Agent in its commercial capacity is liable as principal) may
mature upon the succeeding Payment Date, Subsequent Transfer Date or end of the
Funding Period, as the case may be, rather than on the Business Day immediately
preceding such dates.
(c) Subject to the other provisions hereof, the Collateral Agent shall
have sole control over each Qualified Eligible Investment and the income
thereon, and any certificate or other instrument evidencing any such investment,
if any, shall be delivered directly to the Collateral
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Agent or its agent, together with each document of transfer, if any, necessary
to transfer title to such investment to the Collateral Agent in a manner which
complies with Section 2.04 and the requirements of the definition of "Qualified
Eligible Investments" herein.
(d) If amounts on deposit in any Account are at any time invested in a
Qualified Eligible Investment payable on demand, the Collateral Agent shall (i)
consistent with any notice required to be given thereunder, demand that payment
thereon be made on the last day such Qualified Eligible Investment is permitted
to mature under the provisions hereof and (ii) demand payment of all amounts due
thereunder promptly upon receipt of written notice from the Trustee to the
effect that such investment does not constitute a Qualified Eligible Investment.
(e) Subject to Section 4.03 hereof, the Collateral Agent shall not be
liable by reason of any insufficiency in any Account resulting from any loss on
any Qualified Eligible Investment included therein except for losses
attributable to the Collateral Agent's failure to make payments on Qualified
Eligible Investments as to which the Collateral Agent, in its individual
capacity, is obligated.
Section 3.03. Distributions from Accounts. 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. 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 Trustee), the
Collateral Agent will disburse the amount demanded from the Pre-Funding Account
to HDCC upon the order of the Trust Depositor for the purpose of purchasing
Subsequent Contracts from HDCC 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), and upon receipt from the Trustee of a written demand for payment in
respect of Liquidated Damages, the Collateral Agent shall immediately disburse
all funds remaining in the Pre-Funding Account to the Trustee for deposit in the
Special Distribution Account maintained by the Trustee. With respect to amounts
on deposit in the Interest Reserve Account, the Collateral Agent shall disburse
from such funds to the Trustee immediately upon receipt of the Trustee's written
demand therefor, the amount specified in such demand in respect of Carrying
Charges in accordance with Section 8.03(b) of the Pooling and Servicing
Agreement. In addition, on the Payment Date with respect to which such
disbursement of Carrying Charges was made, and following such disbursement and
the distribution thereof pursuant to the [_____] Pooling and Servicing
Agreement, the Collateral Agent shall release to the Trust Depositor, free and
clear of the Lien and security interest established hereunder, an amount equal
to the excess (if any) of the Interest Reserve Amount at such time over the
Requisite Interest Reserve Amount for such Payment Date. 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 Payment Date has elapsed
following the occurrence of both (i) and (ii), and (iv) all amounts referred to
in clause (ii) have been applied in accordance with the Pooling and Servicing
Agreement, then any amounts remaining in the Interest Reserve Account
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shall be distributed to the Trust Depositor free and clear of the Lien and
security interest established hereunder.
Section 3.04. General Provisions Regarding Accounts. (a) Promptly
upon the establishment (initially or upon any relocation) of an Account
hereunder, the Collateral Agent shall advise the Trust Depositor and the Secured
Party in writing of the name and address of the depository institution or trust
company where such Account has been established (if not [_______________] or any
successor Collateral Agent in its commercial banking capacity), the name of the
officer of the depository institution who is responsible for overseeing such
Account, the account number and the individuals whose names appear on the
signature cards for such Account. The Trust Depositor shall cause each such
depository institution or trust company to execute a written agreement, in form
and substance satisfactory to the Trustee, waiving, and the Collateral Agent by
its execution of this Agreement hereby waives (except to the extent expressly
provided herein), except for amounts or fees due the Collateral Agent hereunder
in each case to the extent permitted under applicable law, (i) any banker's or
other statutory or similar Lien, and (ii) any right of set-off or other similar
right under applicable law with respect to such Account and any other Account
and agreeing, and the Collateral Agent by its execution of this Agreement hereby
agrees, to notify the Trust Depositor, the Collateral Agent, and the Secured
Party of any charge or claim against or with respect to such Account. The
Collateral Agent shall give the Trust Depositor and the Secured Party at least
ten Business Days' prior written notice of any change in the location of such
Account or in any related account information. If the Collateral Agent changes
the location of any Account, it shall change the location of each other Account,
so that all Accounts shall at all times be located at the same depository
institution. Anything herein to the contrary notwithstanding, unless otherwise
consented (not to be unreasonably withheld) to by the Secured Party in writing,
the Collateral Agent shall have no right to change the location of any Account.
(b) Upon the written request of the Secured Party or the Trust
Depositor and at the expense of the Trust Depositor, the Collateral Agent shall
cause, at the expense of the Trust Depositor, the depository institution at
which any Account is located to forward to the requesting party copies of all
monthly account statements for such Account.
(c) If at any time any Account ceases to be an Eligible Account, the
Collateral Agent shall, upon obtaining actual knowledge of such event, notify
the Secured Party of such fact and shall establish within ten Business Days of
such determination, in accordance with paragraph (a) of this Section, a
successor Account thereto, which shall be an Eligible Account, at another
depository institution acceptable to the Secured Party and shall establish
successor Accounts with respect to all other Accounts, each of which shall be an
Eligible Account, at the same depository institution.
(d) No passbook, certificate of deposit or other similar instrument
evidencing an Account shall be issued, and all contracts, receipts and other
papers, if any, governing or evidencing an Account shall be held by the
Collateral Agent.
Section 3.05. Reports by the Collateral Agent. The Collateral Agent
shall report to the Trust Depositor, the Trustee and the Servicer on a monthly
basis no later than each Payment Date with respect to the amount on deposit in
each Account and the identity of the investments
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included therein as of the last day of the related Due Period. The Collateral
Agent shall provide accountings of deposits into and withdrawals from the
Accounts, and of the investments made therein, upon the written request of the
Trustee, Servicer and the Trust Depositor.
ARTICLE IV
COLLATERAL AGENT
Section 4.01......Appointment and Powers. Subject to the terms and
conditions hereof, the Secured Party hereby appoints [_______________] as the
Collateral Agent with respect to the Collateral, and [_______________] hereby
accepts such appointment and agrees to act as Collateral Agent with respect to
the Collateral for the Secured Party, to maintain custody and possession of such
Collateral (except as otherwise provided hereunder) and to perform the other
duties of the Collateral Agent in accordance with the provisions of this
Agreement, and the Collateral Agent in accepting such appointment affirms that
it is not acting as an agent for HDCC or the Trust Depositor for such purposes.
The Secured Party hereby authorizes the Collateral Agent to take such action on
its behalf, and to exercise such rights, remedies, powers and privileges
hereunder, as the Secured Party may in writing direct and as are specifically
authorized to be exercised by the Collateral Agent by the terms hereof, together
with such actions, rights, remedies, powers and privileges as are reasonably
incidental thereto. The Collateral Agent shall act upon and in compliance with
the written instructions of the Secured Party delivered pursuant to this
Agreement promptly following receipt of such written instructions; provided that
the Collateral Agent shall not act in accordance with any instructions (i) which
are not authorized by, or in violation of the provisions of, this Agreement,
(ii) which are in violation of any applicable law, rule or regulation or (iii)
for which the Collateral Agent has not received reasonable indemnity.
Section 4.02. Performance of Duties. The Collateral Agent shall
have no duties or responsibilities except those expressly set forth in this
Agreement and the other Transaction Documents to which the Collateral Agent is a
party or, subject to Section 4.01 above, as directed in writing by the Secured
Party in accordance with this Agreement. The Collateral Agent shall not be
required to take any discretionary actions hereunder except at the written
direction and with the indemnification of the Secured Party.
Section 4.03. Limitation on Liability. Neither the Collateral Agent
nor any of its directors, officers or employees, shall be liable for any action
taken or omitted to be taken by it or them hereunder, or in connection herewith,
except that the Collateral Agent shall be liable for its negligence, bad faith
or willful misconduct; nor shall the Collateral Agent be responsible for the
validity, effectiveness, value, sufficiency or enforceability against the Trust
Depositor of this Agreement or any of the Collateral (or any part thereof).
Notwithstanding any term or provision of this Agreement, the Collateral Agent
shall incur no liability to the Trust Depositor or the Secured Party for any
action taken or omitted by the Collateral Agent in connection with the
Collateral, except for the negligence or willful misconduct on the part of the
Collateral Agent, and, further, shall incur no liability to the Secured Party
except for negligence or willful misconduct in carrying out its duties to the
Secured Party. Subject to Section 4.04, the Collateral Agent shall be protected
and shall incur no liability to any such party in relying upon the
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accuracy, acting in reliance upon the contents, and assuming the genuineness of
any notice, demand, certificate, signature, instrument or other document
reasonably believed by the Collateral Agent to be genuine and to have been duly
executed by the appropriate signatory, and (absent actual knowledge to the
contrary) the Collateral Agent shall not be required to make any independent
investigation with respect thereto. The Collateral Agent shall at all times be
free independently to establish to its reasonable satisfaction, but shall have
no duty to independently verify, the existence or nonexistence of facts that are
a condition to the exercise or enforcement of any right or remedy hereunder or
under any of the Transaction Documents. The Collateral Agent may consult with
counsel, and shall not be liable for any action taken or omitted to be taken by
it hereunder in good faith and in accordance with the written advice of such
counsel. The Collateral Agent shall not be under any obligation to exercise any
of the remedial rights or powers vested in it by this Agreement or to follow any
direction from the Secured Party unless it shall have received reasonable
security or indemnity satisfactory to the Collateral Agent against the costs,
expenses and liabilities which might be incurred by it.
Section 4.04. Reliance upon Documents. In the absence of bad faith
or negligence on its part, the Collateral Agent shall be entitled to rely on any
communication, instrument, paper or other document reasonably believed by it to
be genuine and correct and to have been signed or sent by the proper Person or
Persons and shall have no liability in acting, or omitting to act, where such
action or omission to act is in reasonable reliance upon any statement or
opinion contained in any such document or instrument.
Section 4.05. Successor Collateral Agent. (a) MERGER. Any Person
into which the Collateral Agent may be converted or merged, or with which it may
be consolidated, or to which it may sell or transfer its trust business and
assets as a whole or substantially as a whole, or any Person resulting from any
such conversion, merger, consolidation, sale or transfer to which the Collateral
Agent is a party, shall (provided it is otherwise qualified to serve as the
Collateral Agent hereunder) be and become a successor Collateral Agent hereunder
and be vested with all of the title to and interest in the Collateral and all of
the trusts, powers, discretions, immunities, privileges and other matters as was
its predecessor without the execution or filing of any instrument or any further
act, deed or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding, except to the extent, if any, that any
such action is necessary to perfect, or continue the perfection of, the security
interest of the Secured Party in the Collateral.
(b) RESIGNATION. The Collateral Agent and any successor Collateral
Agent may resign only (i) upon a determination that by reason of a change in
legal requirements the performance of its duties under this Agreement would
cause it to be in violation of such legal requirements in a manner which would
result in a material adverse effect on the Collateral Agent, and the Secured
Party does not elect to waive the Collateral Agent's obligation to perform those
duties which render it legally unable to act or elect to delegate those duties
to another Person, or (ii) with the prior written consent of the Secured Party
not to be unreasonably withheld. The Collateral Agent shall give not less than
60 days' prior written notice of any such permitted resignation by registered or
certified mail to the Secured Party and the Trust Depositor; PROVIDED, that such
resignation shall take effect only upon the date which is the latest of (i) the
effective date of the appointment of a successor Collateral Agent and the
acceptance in writing by such successor Collateral Agent of such appointment and
of its obligation to perform its duties hereunder in
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accordance with the provisions hereof, (ii) delivery of the Collateral to such
successor to be held in accordance with the procedures specified in Article II
hereof, and (iii) receipt by the Secured Party of an Opinion of Counsel to the
effect described in Section 5.02. Notwithstanding the preceding sentence, if by
the contemplated date of resignation specified in the written notice of
resignation delivered as described above no successor Collateral Agent or
temporary successor Collateral Agent has been appointed Collateral Agent or
becomes the Collateral Agent pursuant to subsection (d) hereof, the resigning
Collateral Agent may petition a court of competent jurisdiction in New York, New
York for the appointment of a successor.
(c) REMOVAL. The Collateral Agent may be removed by the Secured Party
at any time, with or without cause, by an instrument or concurrent instruments
in writing delivered to the Collateral Agent and the Trust Depositor. A
temporary successor may be removed at any time to allow a successor Collateral
Agent to be appointed pursuant to subsection (d) below. Any removal pursuant to
the provisions of this subsection (c) shall take effect only upon the date which
is the latest of (i) the effective date of the appointment of a successor
Collateral Agent and the acceptance in writing by such successor Collateral
Agent of such appointment and of its obligation to perform its duties hereunder
in accordance with the provisions hereof, (ii) delivery of the Collateral to
such successor to be held in accordance with the procedures specified in Article
II hereof and (iii) receipt by the Secured Party of an Opinion of Counsel to the
effect described in Section 5.02.
(d) ACCEPTANCE BY SUCCESSOR. The Secured Party shall have the sole
right to appoint each successor Collateral Agent. Every temporary or permanent
successor Collateral Agent appointed hereunder shall execute, acknowledge and
deliver to its predecessor and to the Secured Party and the Trust Depositor an
instrument in writing accepting such appointment hereunder and the relevant
predecessor shall execute, acknowledge and deliver such other documents and
instruments as will effectuate the delivery of all Collateral to the successor
Collateral Agent to be held in accordance with the procedures specified in
Article II hereof, whereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates, properties, rights,
powers, duties and obligations of its predecessor and such predecessor shall be
relieved and released of its obligations hereunder. Such predecessor shall,
nevertheless, on the written request of either the Secured Party or the Trust
Depositor, execute and deliver an instrument transferring to such successor all
the estates, properties, rights and powers of such predecessor hereunder. In the
event that any instrument in writing from the Trust Depositor or the Secured
Party is reasonably required by a successor Collateral Agent to more fully and
certainly vest in such successor the estates, properties, rights, powers, duties
and obligations vested or intended to be vested hereunder in the Collateral
Agent, any and all such written instruments shall, at the request of the
temporary or permanent successor Collateral Agent, be forthwith executed,
acknowledged and delivered by the Trust Depositor. The designation of any
successor Collateral Agent and the instrument or instruments removing any
Collateral Agent and appointing a successor hereunder, together with all other
instruments provided for herein, shall be maintained with the records relating
to the Collateral and, to the extent required by applicable law, filed or
recorded by the successor Collateral Agent in each place where such filing or
recording is necessary to effect the transfer of the Collateral to the successor
Collateral Agent or to protect or continue the perfection of the security
interests granted hereunder.
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Section 4.06. Indemnification. The Trust Depositor shall indemnify
the Collateral Agent, its directors, officers, employees and agents for, and
hold the Collateral Agent, its directors, officers, employees and agents
harmless against, any loss, liability or expense (including the costs and
expenses of defending against any claim of liability) arising out of or in
connection with the Collateral Agent's acting as Collateral Agent hereunder,
except such loss, liability or expense as shall result from the negligence, bad
faith or willful misconduct of the Collateral Agent or its officers or agents.
The obligation of the Trust Depositor under this Section shall survive the
termination of this Agreement and the resignation or removal of the Collateral
Agent. The Collateral Agent covenants and agrees that the obligations of the
Trust Depositor hereunder and under Section 4.07 shall be limited to the extent
provided in Section 2.06, and further covenants not to take any action to
enforce its rights to indemnification hereunder with respect to the Trust
Depositor and to payment under Section 4.07 except in accordance with the
provisions of Section 8.05, or otherwise to assert any Lien or take any other
action in respect of the Collateral or the Trust Corpus.
Section 4.07. Compensation and Reimbursement. The Trust Depositor
agrees for the benefit of the Secured Party and as part of the Secured
Obligations (a) to pay to the Collateral Agent, from time to time, reasonable
compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
collateral trustee); and (b) to reimburse the Collateral Agent upon its request
for all reasonable expenses, disbursements and advances incurred or made by the
Collateral Agent in accordance with any provision of, or carrying out its duties
and obligations under, this Agreement (including the reasonable compensation and
fees and the expenses and disbursements of its agents, any independent certified
public accountants and counsel), except any expense, disbursement or advances as
may be attributable to negligence, bad faith or willful misconduct on the part
of the Collateral Agent.
Section 4.08. Representations and Warranties of the Collateral
Agent. The Collateral Agent represents and warrants to the Trust Depositor and
to the Secured Party in its capacity as Collateral Agent as follows:
(a) DUE ORGANIZATION. The Collateral Agent is an Illinois
banking corporation, duly organized, validly existing and in good
standing under the laws of the United States and is duly authorized and
licensed under applicable law to conduct its business as presently
conducted.
(b) CORPORATE POWER. The Collateral Agent has all requisite
right, power and authority to execute and deliver this Agreement and to
perform all of its duties as Collateral Agent hereunder.
(c) DUE AUTHORIZATION. The execution and delivery by the
Collateral Agent of this Agreement and the other Transaction Documents
to which it is a party, and the performance by the Collateral Agent of
its duties hereunder and thereunder, have been duly authorized by all
necessary corporate proceedings and no further approvals or filings,
including any governmental approvals, are required for the valid
execution and delivery by the Collateral Agent, or the performance by
the Collateral Agent, of this Agreement and such other Transaction
Documents.
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(d) VALID AND BINDING AGREEMENT. The Collateral Agent has duly
executed and delivered this Agreement and each other Transaction
Document to which it is a party, and each of this Agreement and each
such other Transaction Document constitutes the legal, valid and
binding obligation of the Collateral Agent, enforceable against the
Collateral Agent in accordance with its terms, except as (i) such
enforceability may be limited by bankruptcy, insolvency, reorganization
and similar laws relating to or affecting the enforcement of creditors'
rights generally and (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability.
SECTION 4.09. WAIVER OF SETOFFS. The Collateral Agent hereby
expressly waives any and all rights of setoff that the Collateral Agent may
otherwise at any time have under applicable law with respect to any Account and
agrees that amounts in the Accounts shall at all times be held and applied
solely in accordance with the provisions hereof.
Section 4.10. Control by the Secured Party. The Collateral Agent
shall comply with notices and instructions given by the Trust Depositor only if
accompanied by the written consent of the Secured Party, except that if any
Default shall have occurred and be continuing, the Collateral Agent shall act
upon and comply with written notices and instructions given by the Secured Party
alone in the place and stead of the Trust Depositor.
ARTICLE V
COVENANTS OF THE TRUST DEPOSITOR
SECTION 5.01. PRESERVATION OF COLLATERAL. Subject to the rights,
powers and authorities granted to the Collateral Agent and the Secured Party in
this Agreement, the Trust Depositor shall take such action as is necessary and
proper with respect to the Collateral in order to preserve and maintain such
Collateral and to cause (subject to the rights of the Secured Party) the
Collateral Agent to perform its obligations with respect to such Collateral as
provided herein. The Trust Depositor will do, execute, acknowledge and deliver,
or cause to be done, executed, acknowledged and delivered, such instruments of
transfer or take such other steps or actions as may be necessary, or required by
the Secured Party, to perfect the Security Interests granted hereunder in the
Collateral, to ensure that such Security Interests rank prior to all other Liens
and to preserve the priority of such Security Interests and the validity and
enforceability thereof. Upon any delivery or substitution of Collateral, the
Trust Depositor shall be obligated to execute such documents and perform such
actions as are necessary to create in the Collateral Agent for the benefit of
the Secured Party a valid first Lien on, and valid and perfected, first priority
security interest in, the Collateral so delivered and to deliver such Collateral
to the Collateral Agent, free and clear of any other Lien, together with
satisfactory assurances thereof, and to pay any reasonable costs incurred by any
of the Secured Party or the Collateral Agent (including its agents) or otherwise
in connection with such delivery.
Section 5.02. Opinions as to Collateral. Not less than 10 days
prior to each date on which the Trust Depositor proposes to take any action
contemplated by Section 5.06, the Trust Depositor shall, at its own cost and
expense, furnish to the Secured Party and the Collateral Agent an Opinion of
Counsel reasonably acceptable to such parties stating either (a) that, in the
opinion of such counsel, such action has been taken with respect to the
execution and filing of
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any financing statements and continuation statements and other actions as are
necessary to perfect, maintain and protect the lien and security interest of the
Collateral Agent (and the priority thereof), on behalf of the Secured Party,
with respect to such Collateral against all creditors of and purchasers from the
Trust Depositor and reciting the details of such action, or (b) stating that, in
the opinion of such counsel, no such action is necessary to maintain such
perfected lien and security interest. Such Opinion of Counsel shall further
describe each execution and filing of any financing statements and continuation
statements and such other actions as will, in the opinion of such counsel, be
required to perfect, maintain and protect the lien and security interest of the
Collateral Agent, on behalf of the Secured Party, with respect to such
Collateral against all creditors of and purchasers from the Trust Depositor for
a period, specified in such Opinion, continuing until a date not earlier than
eighteen months from the date of such Opinion.
Section 5.03. Notices. In the event that the Trust Depositor
acquires knowledge of the occurrence and continuance of any event of default or
like event, howsoever described or called, under any of the Transaction
Documents, the Trust Depositor shall immediately give notice thereof to the
Collateral Agent and the Secured Party.
Section 5.04. Waiver of Stay or Extension Laws; Marshalling of
Assets. The Trust Depositor covenants, to the fullest extent permitted by
applicable law, that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law wherever enacted, now or at any
time hereafter in force, in order to prevent or hinder the enforcement of this
Agreement or any absolute sale of the Collateral or any part thereof, or the
possession thereof by any purchaser at any sale under Article VII of this
Agreement; and the Trust Depositor, to the fullest extent permitted by
applicable law, for itself and all who may claim under it, hereby waives the
benefit of all such laws, and covenants that it will not hinder, delay or impede
the execution of any power herein granted to the Collateral Agent, but will
suffer and permit the execution of every such power as though no such law had
been enacted. The Trust Depositor, for itself and all who may claim under it,
waives, to the fullest extent permitted by applicable law, all right to have the
Collateral marshalled upon any foreclosure or other disposition thereof.
Section 5.05. Noninterference, etc. The Trust Depositor shall not
(i) waive or alter any of its rights under the Collateral (or any agreement or
instrument relating thereto) without the prior written consent of the Collateral
Agent and the Secured Party; or (ii) fail to pay any tax, assessment, charge or
fee levied or assessed against the Collateral, or to defend any action, if such
failure to pay or defend may adversely affect the priority or enforceability of
the Trust Depositor's right, title or interest in and to the Collateral or the
Collateral Agent's lien on, and security interest in, the Collateral for the
benefit of the Secured Party; or (iii) take any action, or fail to take any
action, if such action or failure to take action will interfere with the
enforcement of any rights under the Transaction Documents.
Section 5.06. Trust Depositor Changes.
(a) CHANGE IN NAME, STRUCTURE, ETC. The Trust Depositor shall not
change its name, identity or corporate structure unless it shall have given the
Secured Party and the Collateral Agent at least 10 days' prior written notice
thereof, shall have effected any necessary or
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appropriate assignments or amendments thereto and filings of financing
statements or amendments thereto, and shall have delivered to the Collateral
Agent and the Secured Party an Opinion of Counsel of the type described in
Section 5.02.
(b) RELOCATION OF THE TRUST DEPOSITOR. The Trust Depositor shall not
change its principal executive office unless it gives the Secured Party and the
Collateral Agent at least 10 days' prior written notice of any relocation of its
principal executive office. If the Trust Depositor relocates its principal
executive office or principal place of business from Nevada, the Trust Depositor
shall give prior notice thereof to the Secured Party and the Collateral Agent
and shall effect whatever appropriate recordations and filings are necessary and
shall provide an Opinion of Counsel to the Secured Party and the Collateral
Agent, to the effect that, upon the recording of any necessary assignments or
amendments to previously-recorded assignments and filing of any necessary
amendments to the previously filed financing or continuation statements or upon
the filing of one or more specified new financing statements, and the taking of
such other actions as may be specified in such opinion, the security interests
in the Collateral shall remain, after such relocation, valid and perfected.
ARTICLE VI
[RESERVED]
ARTICLE VII
REMEDIES UPON DEFAULT
Section 7.01. Remedies upon a Default. If a Default has occurred
and is continuing, the Collateral Agent shall, at the written direction of the
Secured Party, take whatever action at law or in equity as may appear necessary
or desirable in the judgment of the Secured Party to collect and satisfy all
outstanding Secured Obligations including, but not limited to, foreclosure upon
the Collateral and all other rights available to Secured Party under applicable
law or to enforce performance and observance of any obligation, agreement or
covenant under any of the Transaction Documents.
Section 7.02. Waiver of Default. The Secured Party shall have the
sole right, to be exercised in its complete discretion, to waive any Default in
respect of a failure to pay Carrying Charges under the Deposit Agreement, but no
waiver is permitted with respect to the Trust Depositor's obligation, on or
prior to the end of the Funding Period, either to transfer to the Trust
Subsequent Contracts with an aggregate Principal Balance equal to the initial
Pre-Funded Amount or to pay Liquidated Damages in the event of a failure to do
so. Any waiver permitted hereunder shall be binding upon the Collateral Agent.
Unless such writing expressly provides to the contrary, any waiver so granted
shall extend only to the specific event or occurrence which gave rise to the
Default so waived and not to any other similar event or occurrence which occurs
subsequent to the date of such waiver.
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Section 7.03. Restoration of Rights and Remedies. If the Collateral
Agent has instituted any proceeding to enforce any right or remedy under this
Agreement, and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to such Collateral Agent, then and in
every such case the Trust Depositor, the Collateral Agent and the Secured Party
shall, subject to any determination in such proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Collateral Agent and the Secured Party shall continue as
though no such proceeding had been instituted.
Section 7.04. No Remedy Exclusive. No right or remedy herein
conferred upon or reserved to the Collateral Agent or the Secured Party is
intended to be exclusive of any other right or remedy, and every right or remedy
shall, to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law, in
equity or otherwise (but, in each case, shall be subject to the provisions of
this Agreement limiting such remedies), and each and every right, power and
remedy whether specifically herein given or otherwise existing may be exercised
from time to time and as often and in such order as may be deemed expedient by
the Secured Party, and the exercise of or the beginning of the exercise of any
right or power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or remedy.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Further Assurances. Each party hereto shall take such
action and deliver such instruments to any other party hereto, in addition to
the actions and instruments specifically provided for herein, as may be
reasonably requested or required to effectuate the purpose or provisions of this
Agreement or to confirm or perfect any transaction described or contemplated
herein.
Section 8.02. Waiver. Any waiver by any party of any provision of
this Agreement or any right, remedy or option hereunder shall only prevent and
stop such party from thereafter enforcing such provision, right, remedy or
option if such waiver is given in writing and only as to the specific instance
and for the specific purpose for which such waiver was given. The failure or
refusal of any party hereto to insist in any one or more instances, or in a
course of dealing, upon the strict performance of any of the terms or provisions
of this Agreement by any party hereto or the partial exercise of any right,
remedy or option hereunder shall not be construed as a waiver or relinquishment
of any such term or provision, but the same shall continue in full force and
effect.
Section 8.03. Amendments, Waivers in Writing. No amendment,
modification, waiver or supplement to this Agreement or any provision of this
Agreement shall in any event be effective unless the same shall have been made
or consented to in writing by each of the parties hereto and each Rating Agency
shall have confirmed in writing that such amendment will not cause a reduction
or withdrawal of a rating on the Certificates.
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Section 8.04. Severability. In the event that any provision of this
Agreement or the application thereof to any party hereto or to any circumstance
or in any jurisdiction governing this Agreement shall, to any extent, be invalid
or unenforceable under any applicable statute, regulation or rule of law, then
such provision shall be deemed inoperative to the extent that it is invalid or
unenforceable and the remainder of this Agreement, and the application of any
such invalid or unenforceable provision to the parties, jurisdictions or
circumstances other than to whom or to which it is held invalid or
unenforceable, shall not be affected thereby nor shall the same affect the
validity or enforceability of any other provision of this Agreement. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by the Collateral Agent or the Secured Party, hereunder
is unavailable or unenforceable shall not affect in any way the ability of the
Collateral Agent or the Secured Party to pursue any other remedy available to it
or them (subject, however, to the provisions of this Agreement limiting such
remedies).
Section 8.05. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, each of the parties hereto agrees that it shall
not, prior to one year and one day after the Final Scheduled Payment Date with
respect to the Certificates, acquiesce, petition or otherwise invoke or cause
the Trust Depositor to invoke the process of the United States of America, any
State or other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government for the purpose of commencing or sustaining a case by or against
the Trust Depositor or the Trust under a Federal or state bankruptcy, insolvency
or similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Trust Depositor or the
Trust or all or any part of its property or assets or ordering the winding up or
liquidation of the affairs of the Trust Depositor or the Trust. The parties
agree that damages will be an inadequate remedy for breach of this covenant and
that this covenant may be specifically enforced.
Section 8.06. 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 Trust Depositor:
Harley-Davidson Customer Funding Corp.
4150 Technology Way
Carson City, Nevada 89706
Attention: President
Telecopier No.: (775) 884-4469
(iii) If to the Trustee:
[______________________]
___________________________________
___________________________________
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Telecopier No.: __________________
(iv) If to the Collateral Agent:
[______________________]
___________________________________
___________________________________
Telecopier No:_____________________
(v) If to Moody's:
Moody's Investor's Service, Inc.
99 Church Street
New York New York 10007
Attention: ABS Monitoring Department
Telecopier No.: (212) 553-0344
(vi) If to Standard & Poor's:
Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies
25 Broadway
New York, New York 10004
Telecopier No.: (212) 208-1582
A copy of each notice given hereunder to any party hereto shall also be given to
(without duplication), the Trust Depositor, the Trustee and the Collateral
Agent. 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 8.07. TERM OF THIS AGREEMENT;. This Agreement shall take
effect on the Closing Date of the Certificates and shall continue in effect
until the Trustee Termination Date. On such date, this Agreement shall
terminate, all obligations of the parties hereunder shall cease and terminate
and the Collateral, if any, held hereunder and not to be used or applied in
discharge of any obligations of the Trust Depositor in respect of the Secured
Obligations or otherwise under this Agreement, shall be released to and in favor
of the Trust Depositor, PROVIDED that the provisions of Sections 4.06, 4.07 and
8.05 shall survive any termination of this Agreement and the release of any
Collateral upon such termination.
SECTION 8.08. ASSIGNMENTS. This Agreement shall be a continuing
obligation of the parties hereto and shall (i) be binding upon the parties and
their respective successors and assigns, and (ii) inure to the benefit of the
Secured Party and be enforceable by the Secured Party and the Collateral Agent,
and by their respective successors, transferees and assigns. The Trust Depositor
may not assign this Agreement, or delegate any of its duties hereunder, without
the prior written consent of the Secured Party.
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Section 8.09. Consent of Secured Party. In the event that the
Secured Party's consent is required under the terms hereof or under the terms of
any Transaction Document, it is understood and agreed that, except as otherwise
provided expressly herein, the determination whether to grant or withhold such
consent shall be made solely by the Secured Party in its sole discretion.
Section 8.10. Trial by Jury Waived. Each of the parties hereto
waives, to the fullest extent permitted by law, any right it may have to a trial
by jury in respect of any litigation arising directly or indirectly out of,
under or in connection with this Agreement, any of the other Transaction
Documents or any of the transactions contemplated hereunder or thereunder. Each
of the parties hereto (a) certifies that no representative, agent or attorney of
any other party has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce the foregoing waiver and
(b) acknowledges that it has been induced to enter into this Agreement and the
other Transaction Documents to which it is a party, by among other things, this
waiver.
Section 8.11. Governing Law. This Agreement shall be governed by
and construed, and the obligations, rights and remedies of the parties hereunder
shall be determined, in accordance with, the laws of the State of Illinois.
Section 8.12. Consents to Jurisdiction. Each of the parties hereto
irrevocably submits to the jurisdiction of the United States District Court for
the Northern District of Illinois, any court in the state of Illinois located in
the city of Chicago, and any appellate court from any thereof, in any action,
suit or proceeding brought against it and related to or in connection with this
Agreement, the other Transaction Documents or the transactions contemplated
hereunder or thereunder or for recognition or enforcement of any judgment and
each of the parties hereto irrevocably and unconditionally agrees that all
claims in respect of any such suit or action or proceeding may be heard or
determined in such Illinois state court or, to the extent permitted by law, in
such federal court. Each of the parties hereto agrees that a final judgment in
any such action, suit or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. To the extent permitted by applicable law, each of the parties hereby
waives and agrees not to assert by way of motion, as a defense or otherwise in
any such suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of such courts, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that this Agreement or any of the other Transaction
Documents or the subject matter hereof or thereof may be litigated in or by such
courts. The Trust Depositor hereby irrevocably appoints and designates
[_______________], as its true and lawful attorney and duly authorized agent for
acceptance of service of legal process. The Trust Depositor agrees that service
of such process upon such Person shall constitute personal service of such
process upon it. Subject to Section 8.05 hereof, nothing contained in this
Agreement shall limit or affect the rights of any party hereto to serve process
in any other manner permitted by law or to start proceedings relating to any of
the Transaction Documents against the Trust Depositor or their respective
property in the courts of any jurisdiction.
Section 8.13. Limitation of Trustee Responsibility. It is expressly
understood and agreed by the parties hereto that (a) [_______________] is
entering into and executing this Agreement solely in its capacity as Trustee of
the Trust pursuant to the Pooling and Servicing
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Agreement and as Collateral Agent, and (b) in no case whatsoever shall
[_______________] be personally liable on, or for any loss in respect of, any of
the statements, representations, warranties, covenants, agreements or
obligations of the Trust (if any) hereunder, all such liability, if any, being
expressly waived by the parties hereto.
Section 8.14. Counterparts. This Agreement may be executed in two
or more counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.
Section 8.15. Headings. The headings of sections and paragraphs and the
Table of Contents contained in this Agreement are provided for convenience only.
They form no part of this Agreement and shall not affect its construction or
interpretation.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth on the first page hereof.
HARLEY-DAVIDSON CUSTOMER FUNDING
CORP.
By ______________________________________
Printed Name: ___________________________
Title: __________________________________
[___________________],
as Trustee
By ______________________________________
Printed Name: ___________________________
Title: __________________________________
[__________________],
as Collateral Agent
By ______________________________________
Printed Name: ____________________________
Title: ___________________________________
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